The Federal Reserve Is Crushing The American Dream

Unlocking the Money Matrix - The Summers Gold Price Suppression Scheme
By Jake Towne, the Champion of the Constitution
Here is how the scheme works:

1. Central banks, like the FED, takes gold bars from their vaults and leases them to cartel entities like Goldman Sachs at a low rate typically around 1%. Unless the sale is announced like Gordon Brown's infamous sale of 60% of England's gold reserves from 1999-2002 at $275/oz., the central bank continues to carry gold on lease and gold in the vault as one line item on their balance sheet.

2. The cartel then sells the physical gold into the futures market at spot price. The spot and future prices were suppressed by this extra supply. Large dumps can be orchestrated to cause "waterfalls" in the price due to algorithm or stop-loss trading.

3. Now the cartel has plenty of capital which could be leveraged by an investment bank at 30:1 or higher and used for ANY transaction. (Similar plays on interest rate mismatches were also executed on fiat currencies, most infamously the Japanese Yen-US Treasury carry trade, but these plays were made far easier with the golden 'canary' silenced.)

4. The physical gold bars leave the exchanges. Most of the central bank gold is melted down to meet the supply deficit, and now adorns the necks of Indian women or rests in the vaults of investors.

There are approximately 160,000 metric tons of aboveground gold stock. The World Gold Council reports that the world's central bank gold reserves are at 29,698 metric tons as of June 2009, and this is a fall from the 35,582 metric tons reported in 1990 while the world's money supply has more than tripled since then. However, the WGC statistics do not have the rigor of independent audits and are incorrect as shown by the abrupt doubling of China's disclosed reserves overnight. As Ed Wener of GATA reported in 2005 and James Turk related in 2009, it is highly probable that 12,000 to 15,000 additional metric tons has been leased by the central banks into the marketplace.

In the March 2001 audit of the Exchange Stabilization Fund (ESF), the Treasury refers its (unconstitutional) powers to "deal in gold, foreign exchange, and other instruments of credit and securities the Secretary considers necessary" to promote "orderly exchange arrangements and a stable system of exchange rates." Along with the blatant remark by Greenspan above, this appears to me to be a carte blanche to trade in the gold market, and as late as 2000 the FED still publicly reported the ESF as controlling an unspecified portion of our nation's gold. To this day, the US government and the FED report gold stock on lease and gold in the vault as a single line item.

It is not outside the realm of possibility – though unproven - that the US government completed a gold swap transaction with Germany, where we traded gold stored in the US for gold stored in Germany as Turk surmised in "Behind Closed Doors," which was based on FED meeting minutes in 2001. Of course, the swapped gold from Germany would then have been used by the US government to dump gold on the London market. Recent events with Germany and subsequent Obama-Merkel meetings hint that they may be calling for the return of their gold. The Bundesbank even published a document back in 2000 that gave a hypothetical example of a gold swap with the FED.
http://news.goldseek.com/GoldSeek/1247554800.php

Federal Reserve Warns of Economic Disaster If HR 1207 Passes
Presently, the Government Accountability Office has not been able to audit the Federal Reserve System. Mr. Kohn said on this topic, “The Federal Reserve strongly believes that removing the statutory limits on GAO audits of monetary policy matters would be contrary to the public interest by tending to undermine the independence and efficacy of monetary policy.” Mr. Kohn, and others within the Federal Reserve, believes that government meddling in the U.S. Central Bank could come at a high cost, “The bond rating agencies view operational independence of a country’s central bank as an important factor in determining sovereign credit ratings, suggesting that a threat to the Federal Reserve’s independence could lower the Treasury’s debt rating and thus raise its cost of borrowing.”
http://blog.puppetgov.com/2009/07/13/federal-reserve-warns-of-economic-disaster-if-hr-1207-passes/

Government meddling in the US Central Bank? Who is this jackass kidding? Himself, obviously. The money the US Central bank plays with is, quite frankly, the government's money. The government created the Federal Reserve, and if the government so choses they can destroy the Federal Reserve just as easily. The US Government backs the money, NOT the Federal Reserve. Their assertion here is ludicrus. Mr Kohn, Mr Bernanke, and their bankster buddies have all gotten far to big for their britches. It is high time the American people demand the death penalty for these thieves. The Federal Reserve is a 100% unconstitutional entity that has been stealing the wealth of the American People for FAR TO LONG. Contact your congressman and senator today and DEMAND the destruction of the US Federal Reserve.

The Game Changer?
By: Theodore Butler
I am convinced that the CFTC now fully appreciates the position limit and manipulation problem in silver. Fix the position limit problem in silver and the manipulation is over. Let me repeat that. If the CFTC sets position limits in COMEX silver at 1000 to 1500 contracts for both longs and shorts and discontinues the phony hedging exemptions currently granted to the big US banks and other shorts, the silver manipulation is history. I think this is in the cards. I think this is what Chairman Gensler and Commissioner Chilton intend. But it won’t happen if the big shorts get their way. If they are allowed to continue to hold their manipulative short positions, then we must wait for the physical shortage to break the manipulation.

For more than 20 years, the CFTC has turned a blind eye and a deaf ear to the problem of legitimate position limits in silver. Apparently, that has changed. The new Chairman appears to be interested in the public’s opinion on this issue. It’s time for you to speak up. It’s time to be specific. The issue is position limits, not the budget deficit, not the dollar, not his previous employment at Goldman Sachs. He is doing what he should be doing and as such, deserves to be treated with respect. Ask him and the other commissioners to reduce the position limits in silver to between 1000 to 1500 contracts, or please explain why that limit is not appropriate. Ask him to do away with the phony exemptions granted to a few big shorts or make transparent the reason why they are short. Make it short, sweet and specific - lower the silver limits to equal all other commodities and disallow phony exemptions. Send this article if you want. This could be a game changer. Don’t delay.

Ggensler@cftc.gov
Mdunn@cftc.gov
Bchilton@cftc.gov
Jsommers@cftc.gov

http://news.silverseek.com/TedButler/1247586939.php

US Mint AGAIN Suspends Gold Coin Sales
Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. Currently, all available 22-karat gold blanks are being allocated to the American Eagle Gold Bullion Coin Program, as the United States Mint is required by Public Law 99-185 to produce these coins “in quantities sufficient to meet public demand . . . .”

The United States Mint will resume the American Eagle Gold Proof and Uncirculated Coin Programs once sufficient inventories of gold bullion blanks can be acquired to meet market demand for all three American Eagle Gold Coin products. Additionally, as a result of the recent numismatic product portfolio analysis, fractional sizes of American Eagle Gold Uncirculated Coins will no longer be produced.
http://prudentinvestor.blogspot.com/2009/07/us-mint-again-suspends-gold-coin-sales.html

Commodity exchanges can dump gold debts on ETFs
Dear Friend of GATA and Gold:
GATA board member Adrian Douglas discloses in the report below, titled "The Alchemists," that the New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs). This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold.

Thus it is likely that the paper claims to the world's supply of gold are greater than even GATA has suspected -- that the gold supply is even more oversubscribed and that "paper gold" is being created at an ever more frantic rate to suppress gold's price.

The ability to offload futures contract gold obligations to the ETFs could become the principal mechanism of the gold price suppression scheme. GATA asks its supporters to call Douglas' report to the attention of financial journalists, market regulators, and elected officials everywhere.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
The Alchemists
By Adrian DouglasSaturday, July 11, 2009
http://www.stockhouse.com/BULLBOARDS/MessageDetail.aspx?p=0&m=27281188&s=HGU&t=LIST&l=0&r=0

Fed Independence or Fed Secrecy?
By: Dr. Ron Paul, U.S. Congressman
Last week I was very pleased that hearings were held on the independence of the Federal Reserve system. My bill, HR 1207, known as the Federal Reserve Transparency Act, was discussed at length, as well as the general question of whether the Federal Reserve should continue to operate independently.

The public is demanding transparency in government like never before. A majority of the House has cosponsored HR 1207. Yet, Sen. Jim DeMint's heroic efforts to attach it to another piece of legislation elicited intense opposition by the Senate leadership.

The hearings on Capitol Hill provided us with a great deal of information about the types of arguments that will be levied against meaningful transparency and how the secretive central bankers will defend the status quo that is so beneficial to them.

Claims are made that auditing the Fed would compromise its independence. However, by independence, they really mean secrecy. The Fed clearly cherishes its vast power to create and spend trillions of dollars, diluting the value of every other dollar in circulation, making deals with other central banks, and bailing out cronies, all to the detriment of the taxpayer, and to the enrichment of themselves. I am happy to challenge this type of "independence."

They claim the Fed is endowed with special intellectual abilities with which to control the market and that central bankers magically know what the market needs. We should just trust them. This is patently ridiculous. The market is a complex and intricate thing. No one knows what the market needs other than the market itself. It sends signals, such as prices, that should be reacted to and respected, not thwarted and controlled. Bankers are not all-knowing and cannot ignore the rules of supply and demand. They might act as if they are, but their manipulation of the market just ends up throwing it wildly off balance, which gives us the boom and bust cycles.

They claim the Fed must remain apolitical. No organization is apolitical that relies on the president to appoint the chairman. In fact, it is subject to the worst sort of politics -- power to create trillions of dollars and affect the value of every dollar in the country without the accountability of direct elections or meaningful oversight. The Fed typically enacts monetary policy that is favorable to particular administrations close to elections, to the detriment of long term considerations. They do this partly because of the political appointee process for the chairmanship.

The only accountability the Federal Reserve has is ultimately to Congress, which granted its charter and can revoke it at any time. It is Congress' constitutional duty to protect the value of the money, and they have abdicated this responsibility for far too long. This was the issue that got me involved in politics 35 years ago. It is very encouraging to finally see the issue getting some needed exposure and traction. It is regrettable that it took a crisis of this magnitude to get a serious debate on this issue.
http://news.goldseek.com/RonPaul/1247509937.php

Audit would harm country, Fed vice chair warns
WASHINGTON -- Federal Reserve Vice Chairman Donald Kohn on Thursday launched a robust defense of the U.S. central bank's independence and warned that efforts to put monetary policy under political sway would hurt the economy.

Curbing the Fed's independence could both result in higher long-term interest rates and hurt the United States' credit rating, Kohn said.

"Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation," Kohn said in remarks prepared for delivery before a congressional committee.

Kohn is due to testify later on Thursday. A copy of his remarks was released before the hearing.

Kohn's testimony comes as Congress debates President Barack Obama's plan for regulatory reform, which envisions the Fed taking on the role of systemic risk regulator, in a bid to fix a system that failed to prevent a financial crisis last year.

The proposal to expand the Fed's powers has increased calls for accountability at the central bank, and a bill put forward by Republican Congressman Ron Paul to expose it to a full audit by a government watchdog has won support from a majority in the House of Representatives.
Kohn said such a move could be highly detrimental.

"The bond rating agencies view operational independence of a country's central bank as an important factor in determining sovereign credit ratings, suggesting that a threat to the Federal Reserve's independence could lower the Treasury's debt rating and thus raise its cost of borrowing," he said.

Kohn said allowing that the Government Accountability Office to audit Fed monetary policy would be a bad mistake.

"The Federal Reserve strongly believes that removing the statutory limits on GAO audits of monetary policy matters would be contrary to the public interest by tending to undermine the independence and efficacy of monetary policy," he said.
http://www.reuters.com/article/companyNewsAndPR/idUSN0945907120090709

U.S. banks still dominate COMEX gold, silver shorts
By: Gene Arensberg
ATLANTA -- Both gold and silver continued to get sold down this past week, probably a case of fearful investors raising cash ahead of a perceived storm brewing. However, both metals are nearing obvious areas of implied technical support and the news lately sure seems to be more supportive of gold and silver prices than not.

Trouble is that public support for the “governistas” in Washington has become the new bear market. Barack Obama and the current majority in Congress were elected by people who expected them to fix a broken economy. Instead there is a rapidly growing sentiment in the U.S. that the new majority representation decided to take advantage of the situation (and take advantage of every American) to force their radical, big spending, socialist agenda through on the basis of their “mandate.”

“Yes we can,” has become, “Yes we can because we are in power.”

“Hope” is quickly morphing into disillusionment, mistrust and despair as more and more Americans end up in the unemployment line and the official unemployment rate approaches double digits.

Americans don’t like it when their elected officials take obvious advantage of them.

For the national economy, confidence is a prerequisite to recovery, but when the government is more interested in pushing through controversial new, higher tax plans and shaky-science “green” save-the-planet-at-our-expense proposals during a crisis (when the economy is reeling and the taxpayers are just plain unable to pay for them) … well, confidence can be hard to come by.

The economy is just going to have to recover in spite of, not because of all the “help” being thrown at it.

It may not be too late for the in-your-face politicos to reverse course and salvage or repair some of the damage done, but that seems unlikely. Moderates and independents are already distancing themselves from the crew they voted for this past big election. Unless there is a real recovery showing soon, it won’t be long before even the president’s rank and file supporters turn on him, just like they did with another smiling democratic president ridden in to “correct the economy due to Republican abuses” in 1976.

The “good news?” It was under that 1977-1981 “leadership” by Jimmy Carter that we last saw a parabolic spike higher for gold and silver.
http://www.stockhouse.com/Columnists/2009/Jul/13/U-S--banks-still-dominate-COMEX-gold,-silver-short

U.S. Budget Gap Exceeds $1 Trillion for Fiscal Year
July 13 (Bloomberg) -- The U.S. budget deficit topped $1 trillion for the first nine months of the fiscal year and broke a monthly record for June as the recession subtracted from revenue and the government spent to rejuvenate the economy.

The shortfall for the fiscal year that began Oct. 1 totaled $1.1 trillion, the first time that the gap for the period surpassed $1 trillion, Treasury figures showed today in Washington. The excess of spending over revenue for June was $94.3 billion, the first deficit for that month since 1991, according to data compiled by Bloomberg.

Individual and corporate tax receipts are sliding even as the worst recession in five decades shows signs of easing because the jobless rate continues to rise -- reaching a 26-year high in June -- and companies have yet to see a sustained increase in demand. The shortfall is also widening as the government ramps up spending from the $787 billion stimulus program President Barack Obama signed into law in February.

“This is a difficult pill to have to swallow,” said Richard Yamarone, director of economic research at Argus Research Corp. in New York. “The economy and banking system need these funds to recover, yet it will ultimately hit Americans’ wallets hard. It’s a necessary evil.”

The Treasury is increasing auctions of securities to finance the government’s spending. After more than doubling Treasury note and bond offerings to $963 billion in the first half, another $1.1 trillion may be sold by year-end, according to Barclays Plc. The second-half sales would be more than the total amount of debt sold in all of last year. http://www.bloomberg.com/apps/news?pid=20601103&sid=a4huQyL1pP2k

Ignorance

Commenting on today's price action in the Precious Metals would be a waste of time. The days price action, the past 10 days price action for that matter, are representative of nothing. The price action certainly is not representative of the fundamentals of the Precious Metals Markets, and is probably even less representative of of any reaction to price action in the US Dollar.

If the Hoods of the CRIMEX want to offer you the opportunity to purchase and take delivery of Gold and Silver at discount prices, ...oblige them, and grab as much as you can.

Gold falls toward $900 on dollar rise, weak commods
NEW YORK/LONDON (Reuters) - Gold futures fell toward $900 an ounce on Wednesday on a higher dollar and heavy oil losses, losing more than 2 percent as investors preferred the U.S. currency instead of gold as a safe haven in the face of economic uncertainties.


In spite of equities market weakness amid recession worries, bullion failed to rise because of lessened inflation concerns and as flight-to-quality buying was directed into U.S. Treasury bonds and the dollar.
http://www.reuters.com/article/hotStocksNews/idUSTRE56127820090708

Nothing like a steaming bowl of bullshit spoon fed to the waiting masses of financial media disciples. The Dollar was down today -0.06...IT WASN'T HIGHER. Oil prices fell, and the financial talking heads proclaim "inflation is under control". What a load of crap. Once again: HIGH OIL PRICES DO NOT CAUSE INFLATION, HIGH OIL PRICES ARE A SYMPTOM OF INFLATION. INFLATION IS CAUSED BY A RISING MONEY SUPPLY, NOT BY RISING OIL PRICES. If oil prices have fallen for any reason it is because there appears to be a glut of it on the market...buy the dip, Oil prices will be rising again soon enough.

It is far to obvious that something is not right with the markets right now. The fall in markets relative to the Dollar do not stand up to the stink test. The charts above make that abundantly clear. Never forget, the shorts can't cover and profit, if you don't sell to them. Now is the time to buy.

In A World Of Fiction, The TRUTH Is Cast Adrift

“Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or today, it’s electronic equivalent), that allows it to produce as many U.S. dollars as it wishes, at essentially no cost.We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."
- Ben Bernanke


Obama Advisor: 2009 Deficit Likely Worse Than Planned
SINGAPORE (Dow Jones)--The U.S. government's budget deficit will likely be wider than expected this year, a top White House advisor said Tuesday.

Speaking at an economic conference in Singapore, Laura Tyson, a member of President Barack Obama's Economic Advisory Panel, said the U.S. economy faces a worse situation than previously believed, and the deficit - already the widest since World War II - may surpass a previous projection of around 12% of gross domestic product.
Tyson said, however, her remarks represent her own views and not the administration's official position.

"The government is taking (the economic crisis) as a war," Tyson said.

She said the current U.S. stimulus package is of an appropriate size and includes "a significant amount of investment in long-term growth." But a second stimulus package, with an emphasis on infrastructure, may be needed to put the U.S. economy on the right track, she said.

She added that the current stimulus package should create or sustain 3.5 million jobs, as planned, but its effect on unemployment will be less than previously expected because the crisis has had a greater impact on unemployment than anticipated.

"The question is whether the U.S. economy has reached a level of stabilization yet, but the recent unemployment numbers tell me it hasn't," she said. "Businesses are likely to rehire employees at a slower pace than in the previous two recessions, so unemployment is going to be a lagging indicator."
http://online.wsj.com/article/BT-CO-20090707-701541.html

And once again we were treated to a Precious Metals Market of PURE BULLSHIT. The mere suggestion of a "second stimulus package" should have sent the US Dollar reeling today, and Gold soaring as America's Debt Bomb explodes. It certainly dealt a blow to the equities markets as the traders there begin to see the handwriting on the wall:

"The green shoots are weeds".

The idea of another stimulus package affected the equities markets today as if it were a 10-gallon drum of Round-up. The realization that the much promised "second half recovery' was nothing but talk designed to assuage the public's confidence in the financial system has exposed the recent market rally for what it really was, a sucker punch.

The Great Lie of 2009: “A Recovery Is Around The Corner”
by Martin D. Weiss, Ph.D.
On March 15, Fed Chairman Ben Bernanke told CBS News’ “60 Minutes” that he detected “green shoots” in the economy. And every day since, economic soothsayers have been surveying the landscape, sifting through crops of weeds, trying to find those green shoots.

By late April, famous Wall Street gurus were lining up to declare “the end of the bear market,” and every day since, brokers have been cajoling you to buy the very same stocks they want to sell.

In early June, Obama labor officials declared “a big turnaround in nation’s job market,” proudly announcing that “only” 345,000 jobs were eliminated in May.

We immediately issued a report demonstrating these numbers were extremely deceptive. Even if you accepted them at face value, we said, “less bad news” and “slower disasters” are not exactly signs of a turnaround.

And now, with the new government data released Thursday, their thesis is already being proven dead wrong.

One week ago, California officials publicly declared that they would never default on their obligations, directly refuting the forecast of default I made in this column on June 22: According to the BusinessJournal, Tom Dresslar, a spokesman for state Treasurer Bill Lockyer told the press “Mr. Weiss’ analysis and recommendation, to put it kindly, is misinformed.”

Just two days later, California defaulted on its short-term debt obligations to countless vendors and taxpayers, unilaterally issuing millions of dollars in i.o.u.’s that no one wanted and few financial institutions accepted.

These examples barely scratch the surface of the misconceptions, distortions and outright deceptions that are being perpetrated by high authorities, flooded through the media and used to permeate the American psyche — all the while ignoring the elephant in the room …

The Giant Accumulation of High-Risk
Debts and Bets Called “Derivatives”

The nation’s mountain of derivatives is not a mirage on the future horizon. Nor is it merely a phenomenon of our distant past.

It’s real. It’s here. And it’s huge.

Just ten months ago, it reared its ugly head and shoved the U.S. and Europe to the brink of a global meltdown.

And just last week, the U.S. Comptroller of the Currency (OCC) issued its latest report showing that, despite all the talk of reducing risk and reforming the financial system, U.S. commercial banks still hold record amounts. The latest tally: $202 TRILLION in notional value derivatives. And even that pales in comparison to the global tally by the Bank of International Settlements, now at $592 trillion.
http://www.moneyandmarkets.com/the-great-lie-of-2009-5-34534

You can fool some of the people some of the time, but you can't fool all of the people all of the time. The Day Of Reckoning has arrived. "Less bad" is NOT growth no matter how you spin it and try to con the public. "Less bad" does not a recovery make. The bottom line is the financial crisis is STILL bad, and getting worse. All the "blah-blah" from Bumbling Ben Bernanke's mouth is NOT going to change that. "Hope" is NOT going to change it either. There will be NO recovery until ALL hope is lost, and the US Federal Reserve is destroyed. To suggest otherwise is only perpetuating the CON, giving life to the lie we call the US DOLLAR.

Dollar's Days of Dominance Are Over
By, Jeff Nielson
India commemorated the 4th of July by joining China and Russia in announcing they were seeking “alternatives” to the U.S. dollar (as “reserve currency”). With yet one more “prop” removed from the gangrenous greenback, this left only the submissive Japanese as the last major holder of U.S. dollars who strongly supports its continued status.

Bloomberg reported Saturday that the economic advisor to Indian Prime Minister Manmohan Singh has publicly and explicitly recommended that India reduce the U.S. dollar component of its currency reserves. “The major part of India reserves [totaling $264 billion] is in U.S. dollars – that is something that's a problem for us,” said Suresh Tendulkar.

These remarks come only one day after China's former Vice Premier, Zeng Peiyan stated, “There should be a system to maintain the stability of the major reserve currencies.”

Several comments need to be made with reference to this remark. First, China commonly uses “voices” of those associated to but not in the government to indirectly reveal its thoughts on issues. Thus the fact that Zeng is a former Vice Premier should not be taken to mean that his remark is not indicative of the position of the Chinese government.

Second, there were two subtleties which should cause Americans (and the Obama regime) serious concern. First, Zeng spoke of “major reserve currencies” - making it explicitly clear that he (and China) no longer consider the dollar the sole “reserve currency” today. The other point to ponder is Zeng's reference of a “system to maintain stability” in currency markets. The U.S. dollar was that system.

There is much more at stake here than economic prestige. As the Obama regime floods the world with trillions of dollars more in U.S. Treasuries, the Federal Reserve has already been forced to buy-up a significant part of those Treasuries (i.e. monetizing debt). Monetizing debt alone guarantees the steady decline of the U.S. dollar versus other currencies (with the exception of the British pound and Japanese yen) because other economies have not been weakened to the point of such desperation.

However, as major economies continue diversification out of the U.S. dollar, even as economic growth in these other countries produces growing budget surpluses once again, few if any of those surpluses will be channeled into U.S. dollars.

The process is already well underway. China alone has engaged in currency swaps and trade agreements which by itself, reduces the demand for U.S. dollars by hundreds of BILLIONS per year. Many other countries are also engaged in similar measures – with varying speeds.

Countries either indifferent or antagonistic to the U.S. (Russia, Iran and Venzuela) come to mind, are already well-advanced in practically eliminating the use of dollar in their foreign trade. However, even many of the U.S.'s “allies” (with the Western-dominated Persian Gulf countries coming to mind) are also well down the path of reducing the U.S. dollar to merely one of their major currency holdings.

Indeed, the combination of rapid, extreme dilution of the U.S. dollar, along with rapidly diminishing demand mean there is no “floor” visible for the dollar – at any price level.

Keep in mind that due to the success of the U.S.'s relentless propaganda-machine, most other countries are just beginning to comprehend the dynamics of the U.S.'s unsupportable debts. As that awareness grows, the decline of the U.S. dollar is certain to accelerate rapidly.
http://seekingalpha.com/article/147047-dollar-s-days-of-dominance-are-over?source=email

And yet, despite growing economic desperation, and a global call to seek alternatives to the Dollar, the Dollar clung to the all important 80 handle on the USD Index. Fueled by misguided "safe-haven" buying as the global equity markets rolled over exposing the fallacy of their recent rallies, the Dollar's strength once again supposedly blocked a rise in Gold.

How Long Can the US-Dollar Defy the Law of Gravity?
By Gary Dorsch, Editor, Global Money Trends
In the midst of the longest and deepest, post World-War II recession, America’s financial position with the rest of the world has deteriorated sharply. Three decades of massive trade deficits have turned the United States from the world’s top lender to the world’s largest debtor, - and dependent upon the whims of the so-called emerging nations, laden with huge foreign currency reserves, to finance the bailout of Wall Street Oligarchs, and President Barack Obama’s social programs.

Foreigners own roughly half of the US-government’s publicly traded debt, or $3.47-trillion, representing nearly 25% of the size of the US-economy, the highest level in history. If foreign lenders were to significantly reduce their purchases of US-Treasury notes, without even dumping their current holdings, US long-term interest rates could zoom higher, and the US-dollar could crumble.

That would deal a double whammy to the US-economy. Higher yields on Treasury debt could translate into higher mortgage borrowing rates for homebuyers, - weighing on the housing market, while a weaker US-dollar could lift the price of crude oil to above $70 per barrel, inducing an “Oil Shock” to the world economy. This nightmare scenario has been relegated to the den of doomsayers and fear mongrels, yet is starting to become an increasingly realistic proposition.

Increasingly, some of the biggest foreign lenders to the US Treasury, such as Brazil, China, India, Russia, and Qatar, are grumbling aloud, about the endless string of trillion dollar US-budget deficits projected in the years ahead. Lenders are crying foul over the Federal Reserve’s radical experiment with “Quantitative Easing” (QE) - the printing vast quantities of US-dollars, and monetizing the US-government’s debt.

“America, through this financial crisis, is accumulating a huge amount of debt. It’s a heavy burden on the US-dollar,” warned Jassem al-Mannai, chief of the Abu Dhabi-based Arab Monetary Fund on June 28th. “You have China and Russia proposing an international reserve currency other than the US-dollar. These developments could affect negatively the dollar, and you cannot just ignore them,” he warned.

“We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets,” warned Chinese PM Wen Jiaboa on March 13th. To speak truthfully, I do indeed have some worries. So I call on the United States to maintain its creditworthiness, and abide by its commitments and insure the security of China’s assets. We have already adopted a management policy of diversifying our ($2-trillion) foreign exchange reserves,” Wen warned.
http://news.goldseek.com/GoldSeek/1246993200.php

What can ever beat the gold and silver cartel?
By: Adrian Douglas
The forces that will bring down the precious metals cartel are the forces of supply and demand that have governed economics throughout history.

Paper supply can mimic real supply for quite some time but not forever. The price of gold and silver are set on the Comex futures exchange. The promise to deliver gold and silver in the future can easily swamp the future demand for gold and silver precisely because it is in the future. Investors cannot overpower the cartel in this quaint game of poker because the cartel always has enough fiat money to go "all in" and bluff the long investors.

However, the cartel cannot win this game in the physical market and the front month or cash market of the futures market. For no matter how much fiat money you can produce, it will never be real physical metal.

The world is moving into Weimar-style fiat money creation and the leading culprit is the United States. In this environment investors will take no substitute for gold and silver. They want the real metal. Even foreign central banks such as those in China, Russia, Brazil, and Venezuela are buying physical gold.

The cartel has been using some real gold to leverage its paper gold sales. This is like fractional reserves in banking, where you hope that no more than 10 percent of customers ask for their money.

In the futures and derivatives markets 1 tonne of gold can back 100 tonnes of paper gold sales because only 1 percent of these sales require real metal to be delivered. The market price responds as if 100 tonnes of gold have been sold, not just 1 tonne.

But as more investors want real metal, the leverage of paper becomes impotent. From my work and much of the work of others in GATA there are strong indications that we are getting close to a default in providing real metal. At that point the game will be over, the physical shortage will be clear to everyone, and the price will rocket.
http://news.goldseek.com/GATA/1246860420.php

Oil, Gas Market Speculation May Face Restrictions
July 7 (Bloomberg) -- U.S. regulators say they may clamp down on oil and gas price speculators by limiting the holdings of energy futures traders, including index and exchange-traded funds.

The Commodity Futures Trading Commission will hold hearings this month and next to explore the need for government-imposed restrictions on speculative trading in oil, gas and other energy markets, Chairman Gary Gensler said today in a statement.

“Our first hearing will focus on whether federal speculative limits should be set by the CFTC to all commodities of finite supply, in particular energy commodities such as crude oil, heating oil, natural gas, gasoline and other energy products,” Gensler said in the statement. “This will include a careful review of the appropriateness of exemptions from these limits for various types of market participants.”

“The CFTC currently sets and ensures adherence to position limits with respect to certain agriculture products,” Gensler said in the statement. “For energy commodities, futures exchanges set position limits and accountability levels to protect against manipulation and congestion. The exchanges are not required to set and enforce position limits to prevent the burdens of excessive speculation.”

Gensler said the CFTC is reviewing exemptions from position limits for “bona fide hedging,” after seeking public comment on whether the exemption should continue to apply to traders who are in the market for financial reasons, rather than those that actually use the commodity.

The chairman also said the agency was going to improve its weekly commitment of traders’ reports by separating out swaps dealers and hedge funds from the larger category of “commercial” traders. The agency will continue to collect and report data from swaps dealers and index investors, extending a “special call” from last year, Gensler said.

“Enhancing the quality of information in these weekly reports will better inform market participants and the public about the positions of the various types of traders,” he said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQkKJvVJLVP4

Goldman May Lose Millions From Ex-Worker’s Code Theft
July 7 (Bloomberg) -- Goldman Sachs Group Inc. may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said.

Sergey Aleynikov, a 39-year-old ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, U.S. officials said. Aleynikov, a citizen of America and Russia who joined the bank in 2007, is charged in a criminal complaint with stealing the trading software. Teza Technologies LLC, a Chicago-based firm co-founded by a former Citadel Investment Group LLC trader, said it suspended Aleynikov, who started there on July 2.

At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft -- the largest breach at Goldman Sachs -- poses a risk to U.S. markets. Aleynikov transferred the code, worth millions of dollars, to a computer server in Germany, and others may have had access to it, Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated.

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public yesterday. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”
http://www.bloomberg.com/apps/news?pid=20601103&sid=axYw_ykTBokE

GATA urges SEC, CFTC to probe Goldman trading program
by: CHRIS POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc.

GATA today urged the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission to investigate the Goldman Sachs Group Inc. computer trading program that, according to a federal prosecutor, the bank acknowledges can be used to manipulate markets.

GATA's complaint referred to the Bloomberg News story reporting the arraignment in U.S. District Court in New York of a former Goldman Sachs employee accused of stealing the program. The prosecutor, Assistant U.S. Attorney Joseph Facciponti, was quoted as telling the court: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."

In letters to the SEC and CFTC, GATA wrote: "The assistant U.S. attorney's comment can be construed to suggest Goldman Sachs considers its own manipulation of markets to be fair, while such manipulation by others would be unfair. The court proceeding described in the Bloomberg News story would seem to impugn all markets in which Goldman Sachs trades."

GATA asked each commission "to investigate Goldman Sachs' trading program urgently and report its findings publicly."

The text of GATA's letters is appended.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

GOLD ANTI-TRUST ACTION COMMITTEE INC.
7 Villa Louisa Road, Manchester, Connecticut 06043-7541

July 7, 2009

Gary Gensler, Chairman
U.S. Commodity Futures Trading Commission
3 Lafayette Centre
1155 21st St., N.W.
Washington, D.C. 20581

Mary L. Schapiro, Chairman
U.S. Securities and Exchange Commission
100 F St. N.E.
Washington, D.C. 20549

Dear Chairman Gensler / Dear Chairman Schapiro:

I'm enclosing a copy of a report distributed July 6 by Bloomberg News Service about the U.S. government's prosecution of a former employee of Goldman Sachs Group Inc. involving the purported theft of a Goldman Sachs computer trading program. The report quotes Assistant U.S. Attorney Joseph Faccipointi as saying in U.S. District Court in New York City: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."

If the report quotes the assistant U.S. attorney correctly, and if he was characterizing Goldman Sachs' position correctly, then Goldman Sachs claims to have possession of a computer trading program that can manipulate markets. The assistant U.S. attorney's comment can be construed to suggest Goldman Sachs considers its own manipulation of markets to be fair, while such manipulation by others would be unfair.

The court proceeding described in the Bloomberg News story would seem to impugn all markets in which Goldman Sachs trades. On behalf of the Gold Anti-Trust Action Committee Inc., I ask your commission to investigate Goldman Sachs' trading program urgently and report its findings publicly.

Thanks for your consideration.

With good wishes.

CHRIS POWELL
Secretary/Treasurer

As I Was Saying Last Friday...

So You Think Gold Fell Due To A “Strong Dollar”? Don’t Make Me Laugh
By Andy Hoffman
Just a month ago, the Dow Jones Industrial Average was completing a bizarre run from 6,800 to 8,800, following the monster decline from 14,000 less than a year ago. Aside from the obvious “dead cat bounce” phenomenon, the market (helped, of course, by the omnipresent PPT) was aglow with dreams of “green shoots of economic recovery”, a propagandist platform created by a combination of Washington, Wall Street, and scheming media outlets such as CNBC.

There was no real evidence of such a recovery (even in “massaged” government figures), other than that the freefall of economic activity that commenced last autumn had started to slow to a more normalized decline, hardly what I would call reason for excitement. And given the major bankruptcies of General Motors and Chrysler that have occurred since then, as well as continued declines in real estate prices and rising unemployment, I find it laughable that anyone would entertain such a ridiculous idea that the economy is “bottoming.” But that’s another story altogether.

At that point, on roughly June 5th, the stock market peaked following the “bombshell” (facetious) news that May U.S. non-farm payrolls had “only declined by 345,000” compared to the 530,000 estimate. Never mind that the government’s favorite new fudging tool, the employment “Birth/Death model”, added a miraculous 220,000 phantom jobs, its highest level ever by a large margin (except for April, when it added 226,000), preventing the real number from being reported as 565,000. Nor that the ADP employment report, released days earlier, claimed that 473,000 jobs had been lost. All that mattered to the public is that the U.S. government said it was just 345,000, and as we all know, the U.S. government is always truthful.

By the way, yesterday’s reported 467,000 June job loss included a 185,000 phantom job gain from the aforementioned Birth/Death Model, meaning the real number was closer to 652,000. In fact, I’d argue that, if anything, the amount of unreported jobs is going DOWN, not up. Does anyone know someone that just lost their job, and as a result is starting their own business in this environment?

Yeah, right.

In the backdrop of the above stock market scenario, gold had quietly crept up to $980-$990, where over a two-week period in late May/early June it mysteriously was blocked at least a half dozen times in its attempt to yet again reach the important psychological $1,000 level, all at a time when “inflation expectations” were soaring yielding surging interest rates and commodity prices.

However, as you can see below, gold’s rise was finally put to rest the day of the June 5th “better than expected” employment report, with the newspaper headlines gleefully shrilling “gold falls due to strong dollar, end of safe haven trade” because the dollar happened to rise that day. Of course, I challenge anyone to find even one piece of evidence to support the assumption that gold demand was falling (in fact, to the contrary), not to mention that the dollar, even after that day’s rally, was still sitting near its lows after a painful 10% correction (10% is a HUGE MOVE for a major currency).

But that’s how the Gold Cartel game works.
http://news.goldseek.com/GoldSeek/1246776300.php