Beginner: Static Problems on Clearaudio Emotion

I am a beginner and this is my first system. The equipment is the Clearaudio emotion with Grado Reference & Grado PH-1 phono stage. I have followed the instructions very carefully. First adjustment is the antiskating at 20mn. 2nd adjustment is the tonearm height. 3rd adjustment is the cartridge positioning (with chart provided). With all that in place, there is consistent statis when I play the LP. It is driving me crazy. So far there are two grounding wires. One below the tonearm, and the other underneath the TT bearing. However, the wires are just hanging loose. Am I suppose to connect the grounding to the round thing behind the phono stage?
http://www.gradolabs.com/product_images/2002_images/PH-1/PH1D_lg.jpg
What else can I try to remove the static?