Let's consider some isolated events and try to connect some dots......looking at spot gold , 1711.67 on December 12 , 2012. Spot silver was 32.98....... December 20th saw gold plumb a low of 1634.30 while silver hit 29.51 !

1) Manipulation and Paulson in a vise......

http://www.silverdoctors.com/gold-to-1650-silver-headed-towards-29-handle-as-week-long-post-qe4-raid-continues/#more-19043

Gold to $1650, Silver Reaches $29 Handle As Week-Long Post QE4 Raid Continues

December 20, 2012 By The Doc 57 Comments

It’s that time of the morning again for the COMEX open waterfall smash of gold and silver, a daily occurrence in the now week-long post QE4 massive cartel intervention in the gold and silver markets.
Gold has been smashed all the way back to Sinclair’s famous $1650, and silver has been smashed to a $29 handle.
*Update: 2nd wave of smash sends silver to $29.71, gold to $1641!

While the rumors/excuse among the financial media for the week long smash of the metals are that Paulson’s fund is liquidating his gold position, we find it highly difficult to believe that Paulson would be dumping his positions without regard to price daily on the COMEX open. Paulson selling/ fiscal cliff fears are merely the cover used by the cartel for one last massive smash of the metals prior to full blown monetization by the Fed.

That said, buyers in size (ie China) continue to step aside and allow the selling to continue, meaning there is now a legitimate chance that the cartel will achieve their ultimate goal in silver, and paint a negative annual return on the charts for the 2nd consecutive year.

Silver to $29.91:

*Update: 2nd wave of smash sends silver to $29.71

Gold to $1651

*Update: $1650 support breaks, as gold now down another $10 to $1641:

And Morgan Stanley dropping Advantage and Advantage Plus of the Paulson Fund could be adding some selling pressure so let's not totally ignore that.... but we're just talking 100 million for those two funds....

http://dealbreaker.com/2012/12/morgan-stanley-suggests-paulson-and-co-advantage-investors-pull-their-money-and-run/

19 Dec 2012 at 5:08 PM

Morgan Stanley Suggests Paulson And Co ‘Advantage’ Investors Pull Their Money And Run

By Bess Levin

They were willing to ‘em a chance, but no more.

Morgan Stanley Wealth Management has become the second major brokerage to drop hedge fund manager John Paulson’s Advantage and Advantage Plus Funds from their retail offerings, CNBC has learned. The move was not expected. Back in May, put the funds on “watch” because of their poor performance. In an email sent to the unit’s financial advisers on Tuesday, it changed the status of the funds to “redeem” from “watch,” telling clients they should redeem their holdings in the funds. Morgan Stanley cited the poor performance of the funds as the reason behind its decision… The source said other Paulson funds continue to be offered by Morgan Stanley Wealth Management.

Morgan Stanley Wealth Management Dumps Two Paulson Funds [CNBC]

http://blogs.barrons.com/focusonfunds/2012/12/19/morgan-stanley-drops-john-paulson-cnbc-report/

CNBC’s Mary Thompson is reporting this afternoon that Morgan Stanley Wealth Management (MS) has dropped John Paulson’s Advantage and Advantage Plus funds, changing the status of the funds from “watch” to “redeem.”

MS’s wealth-management unit had put the funds on “watch” midyear on account of their poor performance, she notes. It’s not a big hit in terms of assets, if Thompson’s numbers are correct:

: Bloomberg

Paulson’s firm declined comment. A person familiar with the funds said assets in the two funds held by Morgan Stanley’s brokerage clients totaled around $100 million. The two funds managed a combined $5.7 billion as of November 1, 2012. The source said other Paulson funds continue to be offered by Morgan Stanley Wealth Management.

The move follows a tough 2011 and what has been shaping up as a relatively weak 2012.

The 2011 troubles, driven by unsuccessful bets on the financial sector, gave way this year to disappointing bets on the gold sector.

Paulson is the biggest single holder of the SPDR Gold Trust (GLD) ETF, which is ahead by 6% or so YTD. But bets on mining companies haven’t panned out.

Among the stocks Paulson owned at the end of the third quarter, the latest glimpse at his portfolio: Gold Fields (GFI) is down by 19%, AngloGold Ashanti (AU) is off 24% andNovaGold Resources (NG) is down by 45%.

While gold and silver have been selling off December 12th , who might be buying and why ? One reason is looting in advance by the banksters.....

http://www.silverdoctors.com/jim-sinclair-metals-action-is-great-train-robbery-in-which-goldmans-of-the-world-are-going-massively-long-gold/

JIM SINCLAIR: GREAT TRAIN ROBBERY IN PROGRESS- GOLDMANS OF THE WORLD ARE GOING MASSIVELY LONG GOLD

DECEMBER 20, 2012 BY THE DOC 46 COMMENTS

The legendary Jim Sinclair (who called the current bull market before anyone over a decade ago) has long maintained that the bullion banks would make the lions share of the profits in this massive secular bull market, not the average gold investor.

Sinclair has sent an alert to metals investors today, advising that the current massive take-down in the metals is the end-game, and the Great Train robbery is in progress in which the Goldmans of the world will go massively long in gold.
Sinclair states that as soon as the bullion banks have grabbed every last available ounce of gold they can lay their hands on, gold will EXPLODE to $3,500.

AMUST READ!

From Jim Sinclair:

Dear Jim,

With just about a week of trading left in 2012, Gold in Euro terms could end up negative for the first time in 11 years after making new highs some 3 months ago.

I hear CIGAs living in the Eurozone whining all around me, with friends and family thinking about cashing out their coins “while there is still a profit in them”

I am probably both young (31) and not an expert in markets, but I am fully aware of our current Western world situation.

The following serves no other purpose than to introduce my question as candidly as I can.

You have shown us recently, using technical analysis, that the Euro is currently on an up-trend against the US Dollar, and that you expect the Euro to “outpace the dollar for the significant future”.

On the interview you gave to James Turk at the 2011 GATA conference (right after Gold passed USD 1664!), you said that the USD as a reserve currency was “going to transmit its problems throughout the Western world”, and later that “the trading that will take place between the Euro and the Dollar are purely mirror images reflecting what the flavour of the day is”.

Also, you keep on reminding all CIGAs of the 3rd illustration of the skier, where you have exposed both currencies as “weak US Dollar” and “violent Euro” respectively.

Finally, the past 5 years and 2012 in particular have more than once proved you right in saying “Whatever is required, where ever it is required, be that Euroland or anywhere in the Western Financial world, will be provided”.

Taking all of the above into account, I would conclude that your overall view on Gold in Euro terms is just as bullish as in US Dollar terms.

If 0.72 on the USDX is to become the top for the USD in the future, the Euro would probably trade at 1.40 to the USD (am I too conservative?).

Gold going to and through USD 3500 therefore means Gold going to and through EUR 2500 on the same set of assumptions.

The question now: could we agree the above proposition is valid and is a Golden Truth for all desperate CIGAs living in the Eurozone in 2013 and beyond?

Many thanks for what you do for all of us Jim. Your wisdom and moral qualities are examples for all to follow.

CIGA Pierrafeu
(“Flintstones” in French)

Dear Barney Rubble,

The question now: could we agree the above proposition is valid and is a Golden Truth for all desperate CIGAs living in the Eurozone in 2013 and beyond?

What you have quoted in your emails is the Golden Truth. What is happening now is the Great Train robbery whereby the Goldmans of this world will take a huge long position in gold under the beard of manipulation and control of popular gold guys plus financial TV.

Please tell our Euroland friends to simply hunker down because this is as much of a passing cloud as was every single reaction since $248. Once these blackards take all the CIGA gold they can get, we are off to $3500 and above. This is not something I think. This is something I know.

Respectfully,
Jim

2 ) A second and underreported reason could be the end of the FDIC total deposit protection scheme .....

http://www.silverdoctors.com/us-bank-run-imminent-as-fdic-expanded-deposit-insurance-ends-dec-31st/#more-14505

US BANK RUN IMMINENT AS FDIC EXPANDED DEPOSIT INSURANCE ENDS DEC 31ST

DECEMBER 20, 2012 BY THE DOC 83 COMMENTS

With the media fixated on the fiscal cliff, no one seems to be noticing the fact that the FDIC’s expanded 100% coverage for insured deposits ends January 1st, 2013.

Submitted by SD Contributor AGXIIK:

As of January 2013 the FDIC stops offering 100% coverage for all insured deposits. That amounts to $1.6 trillion in deposits, 85-90% deposited with the TBTF mega banks. Once the insurance ramps back to $250,000 the FDIC risk amelioration offered to large depositors will cause them to flee from the insecurity of the much reduced FDIC coverage. This money will rotate immediately into short term Treasury securities. The treasury, in order to handle this flood of money, will immediately offer negative interest rates. This financing will resemble the .5% negative interest rate offered by the Swiss and Germans on the funds flooding to their banks from Spain, Greece and Italy.

This will be a bank run much larger than the Euro banks flight to safety.

I have noticed two disturbing matters that will most certainly come as a result of the Fed MBS program.
1. The funds from the Fed purchases will rotate to the Too Big To Fail Banks. This debt is already junk bond status due to the nature of the underwater mortgages and delinquencies, hence the reason for the new Fed goon Squad going after borrowers.
This debt will be as bad or worse than the debt of Greece, Spain and Italy, rated CCC-

2. The banks receiving these funds will rotate the money immediately into short term treasury securities that will be priced at NIRP. the reason for that follows:

3. As of January 2013 the FDIC stops offering 100% coverage for all insured deposits. That amounts to $1.6 trillion in deposits, 85-90% deposited with the TBTF mega banks. Once the insurance ramps back to $250,000 the FDIC risk amelioration offered to large depositors will cause them to flee from the insecurity of the much reduced FDIC coverage. This money will rotate immediately into short term Treasury securities. The treasury, in order to handle this flood of money, will immediately offer negative interest rates. This financing will resemble the .5% negative interest rate offered by the Swiss and Germans on the funds flooding to their banks from Spain, Greece and Italy. This will be a bank run much larger that the Euro banks flight to safety.

4. The Social Security Trust fund must make at least 5-6% return to maintain its balance and provide income to the SS recipients. The TF is still guaranteed to go bankrupt by 2033, 21 years from now. The TF is required by law to invest in Treasury bonds. The actuarial problem now facing the TF is that they will be rolling old bonds yielding 5.6% into a yield pool averaging 1.4%, a 75% drop in income. This dramatic yield drop coupled with a 60% increase in SS recipients from 50 million to 91 million in the next 10 years will assure the TF will go bankrupt in about 10 years.

This irreducible math is going to prove an insurmountable obstacle to those who are recently retired, have long live genes or plan to retire in the next 10 years. If the SS TF goes bankrupt then benefits will be cut by 25% . Inflation adjustments were never able to front run the lost in income. The inflation rate of 8% today and 15% tomorrow will destroy the senior investment pool.
Another few unintended consequences of QE 3. Thanks Ben. May you rot in hell!

3) A third reason is Plan B , in the process of being voted upon in the House this evening and very fluid vote indeed - in fact no vote tonight on Plan B tax bill and House recess until after christmas ... at this point certainly there won't be a Fiscal Cliff Deal before Christmas and an open question is what gets done before December 31st..... uncertainty is leading liquidation in gold and silver ( stocks have not suffered liquidation yet but that might be changing ) Stay tuned.....

http://www.zerohedge.com/news/2012-12-20/futures-flash-crash-es-plummets-limit-down

Futures Flash Crash As ES Plummets To Limit Down

Submitted by Tyler Durden on 12/20/2012 20:25 -0500

No, really, there is a big, huge, massiverotation out of those dangerous, inflationary bonds into safe, predictable equities...

http://www.zerohedge.com/news/2012-12-20/plan-c-anyone

Plan 'C', Anyone? Plan B Lacks Votes To Pass

Submitted by Tyler Durden on 12/20/2012 19:36 -0500

Debt Ceiling

Update: wow:

HOUSE SCRAPS PLAN TO VOTE ON BOEHNER'S TAX `PLAN B' TONIGHT
U.S. HOUSE PLANS NO VOTES UNTIL AFTER CHRISTMAS, BURTON SAYS
BOEHNER SAYS `PLAN B' TAX PLAN LACKED SUPPORT TO PASS
BOEHNER SAYS UP TO OBAMA TO WORK WITH REID ON BUDGET PLAN

Absolute total chaos. ES at lows of the days right now. Luckily, at least the debt ceiling is a firm deadline... Sometime in late March. Oh, and goodbye Boehner?

Market Reaction:

* * *

Following the unexpected gavel-out recess from the house, it appears Plan B is a no-go...

*REPUBLICANS ARE DELAYING VOTE ON BOEHNER'S TAX 'PLAN B'
*HOUSE REPUBLICAN LEADERS SAID TO PLAN 7:45 P.M. CONFERENCE

Plan 'C' anyone? EURUSD and ES sliding a little more on this news...

and....

http://hotair.com/archives/2012/12/20/open-thread-the-plan-b-vote/

* * *

Update: Hmmmmmmmmm:

Update: Keith Hennessey imagines what a viable fiscal-cliff deal based roughly on Plan B might look like:

I think the following bill could pass the House and Senate before the end of the year.

All tax rates below $700K of income are extended permanently as they are now.
Above $700K, tax rates revert permanently to their pre-2001 rates: 39.6% for income and dividends, 20% for capital gains;
the Personal Exemption Phaseout (PEP) and Pease limit on itemized deductions are not reinstated; and
the AMT is permanently patched.

In addition, I think a separate bill or bills pass to:

extend unemployment insurance in some form;
patch the Medicare “doc fix” for another year; and
delay or mitigate the spending sequester for 6-12 months.

Update: Are they going to pull the bill?

Update: Sure sounds like they’re thinking of pulling the bill:

Rep. Tim Scott (R-S.C.), on his way to see Inouye’s casket, said “I have no clue” what would happen with Plan B — and responded “I have no clue” when asked whether he planned to vote for it…

Rep. Virginia Foxx (R-N.C.), a key Boehner ally, emerged from the Speaker’s office suite carrying a plate of Chick-Fil-A. Asked if she knew whether her conference had the votes to pass the bill, she said, “I have no idea” before rushing away. When she was asked again later as she returned to the office, Foxx grimmaced and kept walking.

Also, Rep. Kay Granger (R-Texas) nodded her head “no” when asked by reporters if she thinks the House will be able to vote and pass Plan B tonight.

Update: Embarrassing:

http://www.zerohedge.com/news/2012-12-20/house-passes-spending-cuts-bill-vote-215-209-plan-b-vote-next-live-webcast

House Passes Sequester Replacement "Spending" Bill By 215-209 Vote, "Plan B" Vote Next - Live Webcast

Submitted by Tyler Durden on 12/20/2012 18:48 -0500

Debt Ceiling

The first key vote on the House's docket - the Spending Cut Bill, i.e. the Sequester removal, has just passed as widely expected, by a vote of 215-209 with 21 Republicans voting now. Shortly thereafter, the House will vote on the "Plan B" Boehner tax proposal which too is expected to pass the House, and then be blocked by the Senate. At that point the Fiscal Cliff debate for 2012 is likely to be shelved and reopened in 2013 only after the consequences of the Fiscal Cliff have taken place. A final resolution may well stretch out into March, as we predicted previously, when the drop dead decision date is due - that coinciding with the debt ceiling increase, which by mid-March will no longer be extendable.

http://www.foxnews.com/politics/2012/12/20/republicans-plan-showdown-votes-on-fiscal-crisis-over-dem-opposition/

House Republicans on Thursday passed the first of two bills aimed at averting the looming fiscal crisis, approving a plan that would replace sweeping cuts to defense and other programs with cuts elsewhere in the budget.

The bill narrowly passed, on a 215-209 vote.

Up next, though, is a highly controversial bill that would prevent tax hikes for everyone except those making more than $1 million. Together, the bills amount to what House Speaker John Boehner is calling a "Plan B."

The tax vote is expected to be close, as Boehner already lost 21 Republicans on the first bill.

Still, Democrats in both chambers, as well as President Obama, are adamantly opposed to both proposals -- leaving uncertain how and whether lawmakers can avert tax hikes scheduled to take effect in two weeks. Without a deal, middle-class Americans could see an average tax hike of $2,000 next year.

Senate Democratic Leader Harry Reid said Thursday that the Senate will not take up the House bills. White House Press Secretary Jay Carney reiterated that "the president would veto it if it got to his desk."

Carney derisively described the votes Thursday as a "multi-day exercise in futility."

Boehner, in response, said he's not convinced the bills will die in the Senate.

Boehner and Obama had until early this week been engaged in seemingly productive talks toward a compromise package. The move to draft a "Plan B" could be aimed at strengthening Boehner's negotiating position, as he tries to extract more spending cuts and more modest tax rate hikes from the White House as part of any deal. But Democrats were so angered by the new proposal that the future of talks is unclear.

On the sidelines, senior administration officials were claiming Thursday that Boehner turned to "Plan B" because he concluded he couldn't garner enough support for Obama's counterproposal in the House. That proposal would raise taxes only on income above $400,000, though Carney indicated that might not be Obama's final offer.

Boehner spokesman Michael Steel, who caught wind of the allegations, called the theory "stupid and untrue." He said Boehner was always clear "that he could not support the president's plan, let alone recommend it to members of the House."

Boehner claimed Thursday that the problem is Obama is "unwilling to stand up to his own party" and demand serious spending cuts. "I did my part -- they did nothing," Boehner said, referencing his willingness to discuss raising tax rates.

Boehner on Wednesday put the onus on the president to get Democrats on board with "Plan B."

"Tomorrow, the House will pass legislation to make permanent tax relief for nearly every American," Boehner said, during a press conference that lasted less than a minute. "Then the president will have a decision to make. He can call on the Senate Democrats to pass that bill or he can be responsible for the largest tax increase in American history."

Senior administration officials accuse Boehner of at least temporarily derailing fiscal talks with the "Plan B" move. During his own press conference Wednesday, Obama urged Republicans to "peel off the partisan war paint."

Republicans, though, said the White House was being unreasonable.

Republican House leaders said it's important for Washington to have an alternative plan just in case Boehner and Obama cannot come to an agreement.

Complicating the situation are the growing demands and red lines of the Democratic and Republican bases.

Rank-and-file Democrats and liberal advocacy groups have grown increasingly vocal about a proposal that would reduce cost-of-living increases in Social Security. Obama recently agreed to put that on the table.

Conservatives, though, were equally dismayed that Boehner had dropped his absolute opposition to tax rate increases. Even for the Plan B, one Republican member told Fox News "there's a lot of angst there."

Any deal that increases taxes above a certain income threshold, such as $1 million, would only apply to income over that threshold.

Despite the drama, a senior administration official said they believe both parties are still extremely close on a massive $4 trillion debt deal if both sides give in a little more.

Obama said Wednesday that "I'd like to get it done before Christmas" and that he remains "optimistic."

and.......

http://thehill.com/homenews/senate/274009-reid-rules-out-senate-vote-on-boehners-plan-b

Senate Majority Leader Harry Reid (D-Nev.) said Thursday the Senate will not vote on Speaker John Boehner’s (R-Ohio) "Plan B" to extend tax rates for family income below $1 million.

The Democratic leader blasted Boehner for wasting time on "fiscal cliff" legislation that will not see floor time in the upper chamber.P

“We are not taking up any of the things that they’re working on over there now,” Reid told reporters. “It’s very, very, very unfortunate the Republicans have wasted an entire week on a number of pointless political stunts.”

“The bill has no future, if they don’t know it now, tell them what I said,” he added.

Reid said Boehner should schedule a House vote on the Senate-passed bill to extend the Bush-era tax rates for family income below $250,000.

“The Senate bill is the only one that will be signed into law. We could protect middle-class families tomorrow,” Reid said. “The Speaker refuses to bring our bill to the floor because it would pass.”

Republicans argue the Senate-passed bill is not a solution to the stalemate because it would allow tax rates on inheritances and dividend income to rise dramatically.

Democratic leaders say the GOP plan will not see the light of day in the upper chamber because it raises taxes on middle-class families, does not extend the college tuition tax credit, the earned income tax credit or the child tax credit and includes an “unrealistic proposal” for the estate tax.

Boehner’s plan would keep the top estate tax rate at 35 percent. It is scheduled to rise to 55 percent without congressional action.

“It will not come up for a vote in the Senate,” said Durbin, who called it “a disastrous plan which will hurt working families.”

“It is not good for working families across this country,” said Durbin, proclaiming it “dead on arrival.”

Boehner’s bill would make permanent current income tax rates for taxpayers earning up to $1 million a year but would allow taxes to increase for those making more. Party leaders were working Thursday to cobble together enough votes to pass the legislation, which some conservatives consider a tax increase.

House Majority Leader Eric Cantor (R-Va.) on Thursday predicted that "Plan B" would pass, and said it's up to Senate Democrats to act.

“We want to avoid the fiscal cliff from happening. And again, I think the decision is for the White House and Senate Democrats to come join us so we can avoid the tax hikes for the American people and avoid the fiscal cliff,” Cantor said.

Reid said the Senate has other important things to do, such as a $60 billion bill to pay for damage caused by Hurricane Sandy in New York, New Jersey and other areas.

“We’re going to do our best to finish that in the next 24 hours or however long it takes,” Reid said.

Senate Democrats also plan votes on the Defense authorization and the Foreign Intelligence Surveillance Act authorization.

Reid said Boehner should return to the negotiating table with President Obama.

“Get back and start talking to the president,” Reid said. “You have a multitrillion dollar deal that they’ve been talking about, a multitrillion dollar deal. They’re a couple of hundred billion dollars apart.”

Catharsis Ours

Thursday, December 20, 2012

Why have gold and silver sold off since the Fed meeting of December 12 , 2012 where the Fed announced a new round of bond buying and rate guidance ? Several thoughts for what we are seeing.....