Friday, February 29, 2008

Wise Man vs. Con Man

Congressman Ron Paul was robbed of an opportunity to run for the office of President of the United States by a media machine that refused to allow his message to be heard by the masses. By most in the media, this man is considered an "oddball". Nothing could be further from the truth. As a matter of fact, Congressman Ron Paul just may be the ONLY voice of truth on Capitol Hill.

Please view the video, linked below, of Congressman Paul lecturing the bumbling Capt. Bernanke on the TRUTH of inflation. Congressman Paul all but calls the Fed Chairman on the carpet over his deceptions and destruction of wealth in our society. If ever there was a man in Washington that would fight for the American People, Congressman Ron Paul is that man. But because he is deemed by the media machine that determines who gets to run for the "highest office in the land" as being too far "outside the box", the American people can look forward to being lead to financial slaughter by more of the same lies and deceptions spewed by the likes of Fed Chairman Ben Bernanke.

view video here:

Thursday, February 28, 2008

Pinocchio's Moment Of Truth

Fed Tries to Stave Off Stagflation

WASHINGTON (AP) -- The Federal Reserve is ready to lower interest rates again to brace the wobbly economy even as zooming oil prices spread inflation, Chairman Ben Bernanke signaled to Congress on Wednesday.

The Fed may be more than ready to lower interest rates again, but Zooming oil prices" are not what is spreading inflation. The World's central banks are the ones spreading inflation, and the one whose chief steward is Capt. "Bumbling" Ben Bernanke is leading the inflation surge. For the last time people, rising prices DO NOT cause inflation. Rising prices are a "symptom" of inflation. Inflation is caused by a rising money supply, and the World's central banks are working 24/7 to see to it that that money supply remains staggering. Quit blaming Oil prices for inflation, and start holding the clowns running these central banks accountable.

"The economic situation has become distinctly less favorable" since the summer, the Fed chief told lawmakers.


The country should prepare for "sluggish economic activity in the near term," Bernanke said.


Were energy prices to continue to rise at a sharp clip -- something the Fed does not anticipate -- it would "create a very difficult problem" for the economy, Bernanke said.

TRUE. [But only those with their heads where the sun don't shine do not anticipate higher energy prices.]

Bernanke was asked when he thought the housing market might stabilize. It's possible, he said, that by "later this year it will stop being such a big drag directly" on the economy. But home prices probably will decline into next year, he added.

"It is very difficult to know, and we've been wrong before," Bernanke said.

TRUE!!! Very wrong, and many times wrong! Capt. Ben, it took a very brave fella to come here before us today and not only tell us the truth, but to admit you were wrong. Thank you. [But you're still a bumbling idiot.]

"Should high rates of overall inflation persist," Bernanke said, "the possibility also exists that inflation expectations could become less well-anchored." If people think inflation is escalating, they will act in ways that could make things even worse, a sort of self-fulfilling prophecy. Bernanke said that could complicate the Fed's job of trying to nurture growth while keeping inflation under control.

If oil prices continue to skyrocket this year, it would be "hard to maintain low inflation," Bernanke acknowledged.

If you ever need proof that the US Government is trying to pull the wool over your eyes about inflation, this last comment by Capt. Ben makes it pretty clear. Read it again. The Fed will NEVER admit that they are the sole source of inflation...NEVER. "Should high rates of inflation persist..."? Capt. Ben, you and your cronies at the Treasury Department are the ones counterfeiting money. We'd go to jail if we were caught doing it. Damn it Ben! High rates of inflation WILL persist as long as you keep throwing your funny money at the country's fiscal ineptitude. Turn off the presses if you want to see inflation cease. Quit blaming everybody else for a problem you and Elmer and the rest of your brotherhood have created. Quit lying about. There are no more "expectations" about inflation. The cat is out of the bag, and it's tail is on fire...inflation is running wild.

Tuesday, February 26, 2008

The Silver Train Has Left The Station

As I sit down to type this, Silver has just cleared $19.00 an ounce. Squeeze dem Rat Bastids balls! +1,049,289 ounces of Silver were delivered to the COMEX warehouse today. You borrow Silver, you gotta pay it back.

The Silver chart above was made as Silver soared mid-day today as the US Dollar swooned and Oil broke to new all-time highs. Silver has since blown thru the top of all three trend channels in this monstrous move higher. Traders, protect your profits, investors enjoy the ride. There is no IMF Silver...

To the headlines now:

Energy, food push January's PPI 1% higher
Year-over-year increase highest since 1981; monthly core PPI up 0.4%

The high prices at the wholesale level will add to concern that the nation's economic slowdown is doing little to ease inflationary pressures, with implications for the Federal Reserve and monetary policy.

Fed chief Ben Bernanke will discuss the inflation statistics on Wednesday when he delivers his monetary policy report to Congress.

"It will be hard for Mr. Bernanke to testify...and hold to the fiction of inflation as under control and the Fed as master of tamed inflation expectations," said Robert Brusca, chief economist at FAO Economics.

I don't care what Capt. Ben has to say to Congress, I just want to see if his nose grows any longer.

Americans are 'financially illiterate'

Americans don't understand debt, which may be one reason that they have too much of it, according to a survey released Tuesday.

The survey presented 1,000 people with a hypothetical scenario about credit card debt and asked them to compute how long it would take to pay it off. Only 35.9% of the 1,000 respondents could figure out how many years it would take for the amount they owe on their credit cards to double. A full 18.2% did not know how to respond and 31.9% of those surveyed over-estimated the timeframe.

Of those polled, 26% said they consider the debt they are carrying to be unmanageable, while 61% said their debt level was "just right."

Only in a "Goldilocks Economy" could 61% of Americans say their debt level was "just right". This news is priceless.

Gold Bugs Could Call IMF’s Bluff

...if the IMF receives a go-ahead from the U.S. to sell 400 tonnes of bullion from its inventory. The prospect surfaced yesterday when it was revealed that the Treasury Department apparently has been lobbying Congress to approve the sale, proposed last May by the IMF to cover a widening income shortfall. At a current price of around $939 an ounce, the auction would raise a little more than $12 billion.

That may sound like a lot of money, but in comparison to, say, the quarterly losses that any number of large banks have reported recently, it would be barely enough to shore up the books of even one of them for more than a few months. But those 400 metric tons of gold would look microscopically small in comparison to pent-up demand for bullion from the very largest buyers, most particularly sovereign governments that hold sizable dollar reserves and who presumably are eager to hedge them against further erosion in value.

Bernanke's Recession Is Here: 11 Reasons It Will Last Till 2011

ARROYO GRANDE, Calif. -- Remember that hot 1973 Stealer's Wheel song marking the end of the Nixon era? "'Cause I don't think that I can take anymore. Clowns to the left of me, jokers to the right, here I am stuck in the middle with you!"

It's still a perfect metaphor. Testifying before Congress: Fed Chairman Ben Bernanke on the left. Treasury Secretary Henry Paulson on the right. The American public stuck in the middle.

Last summer they assured us the subprime-credit crisis was "contained." We now know that was a big lie. They knew, had the facts, early warnings, lied and are still lying. More proof? They just told Congress: "America will avoid a recession." New data tells a different story.


How do you spell HOT AIR. Gold Bugs spell it IMF GOLD. Case in point, yesterdays blather from the US Treasury regarding "pending IMF Gold sales. Note that the Gold the IMF supposedly holds is "signatory Gold" contributed by member states upon it's inception...and thus it needs approval by 85% of the voting members to sell said Gold.

US to support IMF gold sales if linked to cost-cutting, reforms
WASHINGTON (Thomson Financial) - The US Treasury, in a significant policy shift, has decided it will support gold sales from the International Monetary Fund's reserves if they are part of a comprehensive package of reforms in the way the international financial organization operates.

'The IMF must reform to remain relevant,' Under Secretary for International Affairs David McCormick said in a speech in Washington today. 'The world economy is constantly changing, and the IMF must now change with it.'

In particular, the Bush administration wants major cost-cutting and a change in the IMF's mission, 'placing greater emphasis on surveillance and financial stability and less emphasis on lending.'

Mr. McCormick forgot to mention the dog collar the IMF would have to wear as the currency lapdog of the USA. Be careful what you wish for Dave, financial stability is nothing the USA can brag about right now.

In response to questions today, McCormick said the administration has done a 'fair amount of work' in getting congressional support for the change, but again stressed that Congress and the administration will want to see the IMF's plans for reform before the sales are approved. He also said he hopes this could be achieved while the Bush administration is still in office.

He "hopes this could be achieved while the Bush administration is still in office"? David, why not just come right out and say the IMF is barking up a tree? Congress can barely pass a spending bill these days for one, and the IMF is a broken institution. Reform the IMF in 8 weeks? Convince Congress to vote yes on anything President Bush backs? David, save the hot air for the balloons at Mr. Presidents going away party.

Now there is a flip side to this "story". What if the gold the IMF proposes to sell is actually theirs to sell? Julian D.W. Phillips in his essay below explains that possibility, and why the IMF Gold sale may be allowed to proceed "this time".

Why the I.M.F. Believes the 400 tonnes of Gold it Wants to Sell is its Own!

The first question that will be asked is just whose gold do they want to sell, after all the gold held by the I.M.F. belongs to each individual nation that contributed it, so how dare the administrative side of the I.M.F. propose selling its members gold and how dare some members of the I.M F. approve of the sale without getting the OK from other members?

The answer is quite simple. The I.M.F. does not believe that the gold they propose selling belongs to any member at all, but in fact, belongs to the I.M.F itself. Consequently, the only discussion surrounds the disposal of the I.M.F.’s own assets! How could the I.M.F. get its own gold?

The purchase of two members gold by the I.M.F.

Between December 1999 and April 2000, separate but closely linked transactions involving a total of 400 tonnes [12.9 million ounces] of gold were carried out between the I.M.F. and two members (Brazil and Mexico) that had financial obligations falling due to the I.M.F.

But this was not a sale into the open market, but an “internal sale”. In the first step, the I.M.F. sold gold to the members at the prevailing market price and the profits were placed in a special account and then invested for the benefit of the HIPC Initiative.

In the second step, the I.M.F. immediately accepted back, at the same market price, the same amount of gold from the member in settlement of that member's financial obligations falling due to the Fund. The net effect of these transactions was to leave the balance of the I.M.F.' holdings of physical gold unchanged. However, ownership of that gold moved from Brazil and Mexico to the I.M.F.

To emphasize the point and giving it relevance to the present proposals, this 400 tonnes of gold no longer belongs to Brazil or Mexico it now belongs to the I.M.F. itself!
This could change the attitude of the members of the I.M.F. as it has changed the attitude of the largest members, the G-7 countries, the Group of Seven rich nations [U.S. Japan, Germany, Britain, France, Italy and Canada] already.

This increases the chances of a sale this time, while not affecting any other member’s gold. To give you a little more background on the I.M.F. so as to make sense of this, a brief look at the I.M.F. and its business will help.

All Gold Bugs should know that all previous sales of IMF Gold have proceeded major moves higher in the price of Gold. And should this meager sale of IMF Gold actually come to pass, it will only help in meeting the growing demand for the metal. For all we know, this sale will make up for the lost supply coming from South Africa this year due to the electricity crisis there. I'm certain the Chinese, the Russians, or the Saudis would jump at the chance to snap up this amount of Gold without pressuring spot prices higher. This IMF Gold sale, even the threat of it, is INSIGNIFICANT in the Big Picture. The only thing left to slow the rise in the price of Gold now is ignorance.

Monday, February 25, 2008

Looking Past The Moon

The month of February has delivered the consolidation in Gold that we had expected. Since the low established in August 2007, Gold has powered upwards in strong uplegs followed by periods of consolidation. As we move forward into March this pattern of ascent may be expected to continue. The break of consolidation in December, and now again in February, were both quickly followed by new highs. After breaking to a new high early in January at 845, a brief period of congestion occurred before Gold vaulted higher and then reacted sharply to retest the breakout to new highs at 845. It would not be unreasonable to expect Gold to perform in March much the same as it did in January. If this scenario were to come to pass, we would expect Gold to soon break above 950 and move swiftly towards the BIG $1000 station. Gold bugs could be celebrating St Patrick's day wearing Gold instead of Green. With Gold +/- 15 of 1000 by mid March we could expect a reaction back towards the breakout at 936. This reaction would be swift and likely last less than 10 trading days. A hard bounce at 936 at that time could bring Gold thru 1000 to around 1050 early in April, when we might expect one last period of consolidation before we reach our Spring blowoff top sometime in May around 1150.

We can expect plenty of volatility along the way as dem Rat Bastids on the NY COMEX fight tooth and nail to prevent the inevitable rise of Gold thru $1000. They already tossed the kitchen sink at us, and are now left with just sticks and stones, hot air, and imaginary IMF Gold. Do not expect them to go down without putting up something resembling a fight. This mornings mysterious air pocket of deception as I write this, is a perfect example of the games they will play... Ignore the noise, stick to your convictions, and enjoy the ride higher. The Moon is still up there, and Gold has set it's sight well past the Moon. To see where Gold may be headed, please click here to see the latest photos of deep space taken by the Hubble Telescope:

Leave it to Bob Chapman, The International Forecaster for our quote of the week:

It's not just about the fall of the dollar or the discouragement of foreign investors; it's about finding anyone who can fog a mirror who is willing to buy bonds. Without buyers for bonds, nothing can get financed, and without financial credit, business comes to a screeching halt. And since lower rates, accompanied by rampant growth in M3 money supply, are driving speculation and inflation ever higher as are constant bailouts of insolvent banks and monetizations of repos, bonds cannot help but become less and less attractive as this madness goes on. We could see a complete freeze-up of the entire engine, which drives business finance. The proposed US stimulus package may turn out to be the equivalent of throwing a ping-pong ball at a tiger tank that is about to open up with its 88's.

Thursday, February 21, 2008


Fears Of Stagflation Return As Price Increases Gain Pace

Inflation is rising. Yesterday the Labor Department said consumer prices in the U.S. jumped 0.4% in January and are up 4.3% over the past 12 months, near a 16-year high. Even stripping out sharply rising food and energy costs, prices rose 0.3% in January, driven by education, medical care, clothing and hotels. They are up by 2.5% from the previous year, a 10-month high.

The same day brought a reminder of possible recession. The Federal Reserve disclosed that its policy makers lowered their forecast for economic growth this year to between 1.3% and 2%, half a percentage point below the level of their previous forecast, in October. They blamed a further slowdown on the slump in housing prices, tighter lending standards and higher oil prices. They warned the economy’s performance could fall short of even that lowered outlook.

Monday, February 18, 2008

All Wound Up


Well, at least the month is half over....outside of that I am at a loss for words...

Here is some recommended reading:

Drip, Drip, Drip: Then the Dam Collapses
By: Gary North Day after day, there is bad news from the banking sector in Europe and America. There is bad news from the housing markets all over the world. There is bad news from the Institute for Supply Management, which reports on the state of suppliers. The service sector in January fell to 41.9%, with 50% as the borderline between contraction and expansion. In December, it was 54.4%. This is a very sharp decline.

International Forecaster February 2008 (#5) - Gold, Silver, Economy + More
By: Bob Chapman, The International Forecaster The Illuminati have a huge problem. They have buried it and no one in the media is talking about it, at least not in the correct order of magnitude. They are quaking with fear as they consider the possibility of this problem being unleashed. The problem lies in the Land of the Rising Sun, or should we call it the Land of the Sinking CDO.

Profiting and Protecting From Collapsing Paper - - The Coming Climacteric
By: Deepcaster Regarding forecasting, consider one Sector - - The Bond Sector. This Sector reveals that the damage to institutions built on “collapsing paper” has only just begun. If not contained, this damage could spread throughout the entire Financial System.

Why I Could Never be a Paid Shill for the Feds
By: Jason Hommel, Silver Stock Report Yes, the U.S. financial system is perfectly fine. There is no risk of financial collapse, nor any need to worry about any dollar decline, since the people trust the U.S. more than any other system, and any other thing.

Friday, February 15, 2008

Witness To A Crime

This morning's economic data and headlines were absolutely abysmal. NOTHING in any of these numbers could be contrued as "positive". More bad news in a month of bad news for the US Dollar.

Yet, at 11:30 AM est Gold and Silver are down on the day. THE DOLLAR IS DOWN. OIL is UP. Platinum is UP ANOTHER $50 an ounce and Palladium is UP...but not the "money metals". How do you spell BULLSH*T?

Stocks Decline on Manufacturing Report- AP

Industrial Output Posts Weak Gain- AP

Consumer Confidence Plunges- Reuters

US January import prices surge 1.7%, set record for 12-month price ... Forbes

US TIC Flows Lower in December CEP News, Canada

Pissed off? Yeah I'm pissed of...aren't you? You're witnessing a crime this morning...a new definition of "Fools Gold". This too shall pass, but it certainly makes my blood boil.

Thursday, February 14, 2008

Tepid Euphoria Envelopes The Masses

Recent headlines have bouyed the stock markets, and taken the wind from Gold's sails:

Retail Sales Surprisingly Strong in Jan.The Associated Press - 13 hours agoWASHINGTON (AP) — Retail sales posted a surprising rebound in January following a dismal December, although much of the strength reflected rising gasoline ...

Buffett Unveils Proposal To Bail Out Bond InsurersWashington Post, United States - Feb 12, 2008 Warren E. Buffett says his plan to reinsure municipal bonds "would just eliminate one major cloud from the market."

Feds Announce Plan to Delay ForeclosuresThe Associated Press - Feb 12, 2008 Dubbed "Project Lifeline," the program will be available to people who have taken out all types of mortgages, not just the high-cost subprime loans that ...

...And nothing in these headlines, or the stories that follow them will change a damn thing.

On more than one occasion I have explained that retail sales numbers are merely the computation of the "dollars" spent during any given month. If prices are rising, more "dollars" will be spent. Few pointed out that business inventories are rising. The retail sales figures do not measure the "volume of goods sold", just the "dollars" spent. It can be a very misleading figure...but when you're as desperate as Wall Street for a "sign of hope", you'll clutch even pixie dust if you think it'll keep you afloat.

The Buffet "effect" has been vastly overstated by the permabulls in the media. The Sage of Omaha's offer to "reinsure" the bond insurers could easily be compared to that of a vulture descending on a fresh carcass. Mr Buffet is looking to profit at anothers expense to put it simply...he's not out to, nor can he, save anything. And if people would for once look past the headlines they would realize that the Sage is ONLY interested in the "municipal" bonds these woeful bond insures insure. He wouldn't touch the toxic derivatives they've backed with a pole a mile long.

Project Lifeline? What will these clowns in Washington think of next? They should have called it Project End Of A Rope. How many silly named plans to "fix everything" has the government devised and rolled out since August of 2006? Has any of them fixed anything? Why do you think they keep coming up with more? Hey, they have to look like they're doing something, don't they? After all, aren't we supposed to rely on the government to fix EVERYTHING? Sad, isn't it? Project Lifeline won't save anything. The stock market today reminds me of most dogs...hold your hand up over their head as if you have a treat, and they'll sit up to beg for it. LOL you dumb dog, my hands empty! And they fall for it every time too...just like the desperate bulls on Wall Street.

Gold has risen about 30% every year now since 2001, the Dow has barely kept it's head above water...and Wall Street continues to beg for empty promises from Wahington. If I can figure this out, and I'm just a produce clerk, why can't they?

Gold Rising in All Currencies

The United States is the source of the banking implosion, the source of the mortgage bond destruction, the source of the bond insurer disintegration, the source of the risk model meltdown, the site of the credit derivative pyramid topple, the source of the urgent interest rate cuts. WHAT A MISERABLE FAILURE THE US BANKER CUSTODIAN PERFORMANCE HAS BEEN FOR TWO DECADES!!! The USFed will cut rates down below 2%, perhaps even to 1%, in total desperation. The tragedy is that the lower rates will not stop the banking wreckage, will not stop the USEconomic recession, will not stop the housing crash, will not stop the credit derivative meltdown, but will ensure the eventual USDollar demise. --Jim Willie CB,

And leave it to Bob Chapman, The International Forecaster to paint a most eloquent picture of panic with his pen.

The desperation of the cartel and of the sociopathic denizens that control its many diabolical components, which include the Fed, Wall Street, corporate America and our corrupt-beyond-belief government, has become almost palpable. The Plunge Protection Team and the President's Working Group on Financial Markets must be doing double-overtime shifts judging by the laughable and nonsensical market action we continue to witness as all market logic is lost and as chartists and technicians are continually reamed by warped data that their market models could never have anticipated. Welcome to the corporatist, fascist model of government and finance, which both Mussolini and Hitler promoted. If you want some comedic entertainment, forget the Johnny Carson and Saturday Night Live reruns. Just check the market action on your computer screen for some real rib ticklers and belly laughs.

Fancy Another Stimulus Package Or Two?

George Bush might have watched 226 mortgage lenders go kaput since late 2006 (the latest count from, but he just signed that $168 billion tax-rebate bill, hoping to stop the current slump in US house prices becoming a genuine depression.

Not enough, grumbles Senate majority leader Harry Reid. The package is "far from a panacea," he says, getting ready for a Democrat White House no doubt.

"Much more should be done. Another stimulus package or two."

Or three. Or four. You just keep writing the checks, Senator – and get the Federal Reserve to keep US interest rates way below inflation.

We'll just keep
Buying Gold outright – with no default risk – and store it in privately-owned, ultra-secure gold vaults, far outside the world's banking system.

--Adrian Ash BullionVault

Gold and Silver showed some strength overnight. The Dollar down, the Euro up. Oil steady. Gold showed some support yesterday around 900, and Silver around 17. I suspect that as the tepid euphoria over the headlines wanes on Wall Street, the winds will once again fill the sails of our Precious Metals. Wall Street will have this latest headline to wake up too:

UBS Posts Record Loss After $13.7 Billion Writedowns (Update4)Bloomberg - 1 hour agoBy Elena Logutenkova Feb. 14 (Bloomberg) -- UBS AG posted the biggest ever loss by a bank in the fourth quarter after $13.7 billion in writedowns on securities infected by US subprime mortgages.

Tuesday, February 12, 2008

Silver Flexing Some Muscle the last thirty years, the gold silver ratio has exhibited quite a bit of volatility. A higher ratio shows both gold strength and silver weakness. When the ratio declines-as it appears to be doing right now-it means silver is getting stronger. It should be noted that a declining ratio doesn’t mean the gold price is falling. It could mean that both metals are rising, but that silver is rising faster than gold.

Silver Is Leading

The price of gold and silver rarely move at the same rate. The reason for this outcome is that their respective demand is fundamentally different. To put it into economic terms, the demand for gold is inelastic, while that for silver is elastic. In other words, the demand for silver is very sensitive to changes in its price, while in contrast, the demand for gold is relatively insensitive to changes in its price.
The result is that in precious metal bull markets, the price of silver typically rises faster than the price of gold, and vice versa in precious metal bear markets.

Silver has been kicking sand in Gold's face the past four trading days. Often Silver will do this just prior to a top in Gold. Have we reached a top in Gold? NO! But no market goes straight up, and a "brief" rest for both metals has been warranted. I suggested in late January that February "could be" a frustrating month for the Bull camp, and that some consolidation was necessary to strengthen the Bull case. We won't know if that has occurred until the month comes to a close, but it's worth keeping an eye on. I note this particularly in the case of Silver...Buying "now" at these prices should be done with caution.

Why the rising gold price is a headache for G7

..."for almost a decade now central bank gold sales have been accompanied by higher gold prices, not lower," as the Bank of England can well attest. And if the G7 is looking to the IMF to sell, then it's reasonable to suggest that perhaps their own central banks have now sold as much they want -- or are able -- to. In any case, the United States would need to approve such sales, and has in the past opposed them.

So what should you do if the IMF does decide to sell? I imagine it'll be a good buying opportunity for the rest of us.

Monday, February 11, 2008

IMF Gold Sales - I s M oney F ake ?

The big news over the weekend is that "The Group of Seven rich nations on Saturday approved the sale of gold by the International Monetary Fund". The bigger news is that Gold and Silver Bulls didn't give a damn as both are higher this morning. Silver has hit a new 27 year high overnight. And the biggest news of all...when the IMF sells Gold, the price of Gold usually explodes higher. Let's check the headlines:

G7 approves IMF gold sales
TOKYO (Reuters) - The Group of Seven rich nations on Saturday approved the sale of gold by the International Monetary Fund from April as part of a broad reform of its budget, Italian Economy Minister Tommaso Padoa-Schioppa said.

"There was an acceptance among the G7 that resources should be raised by selling gold," Padoa-Schioppa, who is also the head of the IMF's steering committee (IMFC), told reporters after a meeting of G7 finance ministers in Tokyo.

"This is arguably a good time to consider selling some of these gold holdings and investing the proceeds in financial securities with positive yields," Morgan Stanley analyst Stephen Jen said.

"Financial securities with positive yields?" I asked myself. What could have a more positive yield these days than Gold? What a brilliant idea, sell your Gold and by bonds with negative real rates of return. And we wonder why the World's financial markets are in shambles...wonder no more people.

Gold's path to $1,000 an ounce now clear?
This past weekend, yet again, the International Monetary Fund announced it would like to sell some gold. Since gold went bullish in 2002, official sector noises of this type have often appeared just as gold began an important move up. Further back, the IMF gold sales in 1978-80 heralded the great gold surge of that time.

The IMF sold just 50 million ounces between 1976 and 1980 and the price of Gold more than doubled in price. The IMF could sell all their Gold it it would not stop the inevitable in Gold. And bear in mind that NONE of this Gold will ever actually see the "gold market". It will all be bought by BIG buyers. Most notably and more than likely it will be bought by all the bullion banks that are either short Gold or owe the world's central banks Gold they borrowed. This is really probably just a big plan set in motion for the US to get back all the Gold they "used to have" in Ft Knox before they loaned and/or swapped it all out as part of the FAILED effort to supress Gold prices.

Mobilization of IMF gold just a sign of central bank desperation
Mobilization of IMF gold suggests that individual central bank gold reserves are nearing exhaustion or that individual central banks are no longer willing to dishoard what they have left.

The GATA post just above also raises several points pertaining to just how rediculous any IMF Gold sales would be relative to today's Gold environment. It should also be seriously noted:

The IMF's gold reserves are the third largest in the world after the United States of America and Germany.

The Fund is required under United States Law to gain support from the U.S Congress before selling any gold.

The US Congress would be hard to persuade on this issue, but should they buckle and allow the sales, we'll know that a lot of the Gold in FT. Knox has been on vacation, and the guardians would like to see it return home.

Bob Chapman, The International Forecaster, said it best in his post on Goldseek this weekend:
" is not going to go through the ozone. Gold is not going into the stratosphere. Gold is not going to the moon. Gold is not going into the solar system. Gold is not even going intergalactic. Gold is going inter-dimensional as it passes through a wormhole and explodes past the Einstein-DeSitter radius at the outermost bounds of the visible universe!"

Nevertheless, as Dow Theory Letters' veteran Richard Russell put it: "Gold only 10 bucks from its high, and so far it hasn't let any of the "profit-takers" back in at lower prices. Ah well, the danger of trading out in a bull market." And that's a fact Jack. Breakouts in Gold at 910 and Silver at 16.85 Friday might now be considered support, and "possibly" offer an opportunity to reestablish postions, or add to those already owned should those prices "appear" again. However, caution is advised as the daily charts of BOTH Gold and Silver continue to show a bearish divergence in price and RSI.

I have been trying to ascertain the reason for Gold's unusual reaction to interest rate announcements and "proclamations" by the ECB last Thursday. You'll recall that Gold rose in the face of a very strong bid in the US Dollar as the EURO got kicked in the shins by the "prospect" of interest rates in Euroland inthe near future. A very little reported news item Wednesday and Thursday of last week about US Treasury auctions may explain some of the resilience in Gold late last week.

Treasuries Fall as 10-Year Auction Draws Lowest Yield Since '78
``Do investors want to bear hug a 10-year note with these yields or a 30-year bond near lifetime lows?'' said William O'Donnell, a U.S. government bond strategist at UBS Securities in Stamford, Connecticut, one of the 20 primary dealer firms that trade with the central bank. ``We don't think so.''

Investors will now turn to Gold. I think the crappy 10 year, and 30 year auctions the following day, are just the tip of the iceberg as investors begin to wake up to the inflation tsunami about to swamp the USA...and the World. Investment demand will soon over take supply concerns this year, and be the #1 driving force behind the rise in Gold and Silver prices.

IMF Fact Sheet: Gold in the IMF

Thursday, February 7, 2008

Investors Catching Gold's Scent?

Gold Traders see thru ECB’s “Smoke and Mirrors”

On Feb 7th, the ECB kept its repo rate steady at 4.00%, but Trichet placed equal stress the downside risks to the Euro zone economy, on par with worries over inflation. “Uncertainty about the prospect for economic growth is unusually high and the risk surrounding the outlook for economic activity lies on the downside. Looking ahead, the slowdown in the economies of some of the euro area major trading partners is likely to have an impact on euro area real GDP growth in 2008,” he said.

Trichet’s comments about a slowdown in the Euro zone economy were viewed as a sign of capitulation, and that the ECB is open to cutting its interest rates for the first time in almost five years. The Gold market knows what nobody knows, and understands that lower ECB interest rates will further inflate the Euro M3 money supply. The yellow metal jumped to a record 630 euros/ oz, during Trichet’s press conference, and is up roughly 16% over the past three months.

Today's reaction in Gold to the ECB's decision to keep interest rates unchanged was a bit confounding. It was surmised by many, myself included, that should the ECB indeed cut rates today, there would have been a rush to the Dollar as the Euro reacted negatively to the rate cut..and thus Gold would fall. Many also surmised prior to the ECB rate announcement that should the ECB keep rates on hold but turn dovish on possible rate cuts going forward, the Dollar would catch a bid as the Euro fell...and thus Gold would fall. Going into this mornings proceedings then, most expected a hit in Gold. It never materialized. The Euro tanked, the Dollar rose, and strangely, Gold rose right along with it. Why?

The potential for inflation, roaring global inflation, that is why Gold rose today. Investors are slowing realizing the shortcomings of paper currencies, and the virtues of Gold. With Gold writing it's own script today, it was dificult to have the confidence to chase it. Sometimes when things don't go as planned it's a good idea to step aside and watch the proceedings. You never know what kind of traps dem Rat Bastids on the NY COMEX may be laying for Gold Bulls. Especially with the Asians on Holiday celebrating the Lunar New Year Thursday and Friday.

Both Gold and Silver have established support in this dip in price either at or near the congestion zones we pointed to earlier in the week. It may yet be a bit premature to give the all clear just yet. A retest of Gold support around 885 and Silver support around 16.25 remain a possibility. However, both may be working thru congestion here now, much as they did coming off the previous low on the way to new highs. A break higher from here may be considered a call for boarding passes.

Tuesday, February 5, 2008

Gold and Silver Sale - While Supplies Last

Bernanke Makes Bulls From Dollar Bears Seeing Growth
Feb. 4 (Bloomberg) -- Ben S. Bernanke's decision to lower interest rates 1.25 percentage points last month will end the dollar's two-year slide, according to the world's biggest currency traders.

``We're not chasing dollar weakness any lower,'' said Robert Robis, a fixed-income manager in New York at OppenheimerFunds Inc., which oversees $260 billion. ``The Fed's actions have avoided a long recession and we may start to see a recovery later this year.''

``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.

This is an example of why my father always told me, "don't believe everything you read". One of three things is going on here. It's 1984 and up is down, and down is up. Wishful thinking his replaced reality. They are smoking some serious wacky tabacy on Wall Street. "The Fed's actions have avoided a long recession..."? LOOOOOOOOOOOOOOOL! The Fed's actions haven't solved a damn thing. As a matter of fact, they will probably make things worse. Wall Street, and certainly not the US Government, haven't even acknowledged that the US is even in a recession YET. How could we have avoided one, at any length, if we haven't even acknowledged the existence of one. Of course, it doesn't take a genius to realize that not only has the US already entered a recession, it's going to be long AND ugly inspite of all the tricks the Fed tries to use to make it disappear.

The Dollar has caught a bid here, temporarily, on the "news" that growth may be slowing in the Eurozone. Folks, the ECB charter does not mandate shoring up growth as does the Fed's. The ECB's "focus" is on controlling inflation. That is job number one in the ECB. It is becoming increasing clear that the ECB is not going to be led around by the nose by the US Fed. This dollar bid today is all in anticipation of a rate cut by the ECB Thursday. The ECB will hold rates steady Thursday...and the Dollar will slump yet again. It would be very surprising were they to do otherwise.

Euro slides as PMI data ups ECB rate cut pressure
London, Feb 5 (Reuters) - The euro fell sharply on Tuesday as surprisingly weak euro zone service sector data increased pressure on the European Central Bank to cut interest rates to shore up growth.

The euro fell 1 percent on the day against the dollar after figures showed that the service sector growth across the 15-nation bloc slowed in January to its slowest rate in four and a half years.

The ECB meets to set interest rates on Thursday, and is widely expected to keep them on hold at 4 percent. But investors and analysts believe the services sector data can only force the bank to soften its tough stand on inflation, sharpen its focus on growth and bring forward the timing of its first rate cut.

Yadda, yadda, yadda...pass the pipe. It's true that none of the World's central banks want to see the Dollar collapse. I believe it's also true that they are tired of Dollar hegemony as well. This interest rate issue with the ECB is merely a smoke screen to the REAL growing threat to the US Dollar. The OPEC nations are beginning to get very serious about cutting there local currency pegs to the Dollar. The Chinese have stated openly that if the Fed continues to lower interest rates, they will have to look elsewhere to invest their wealth. The diminishing demand for dollars is a serious problem.

Inflation is never pretty, and no matter what the ECB does with interest rates, or OPEC does with their Dollar Peg, or the Chinese do with their accumulated wealth...Inflation is on it's way in a GIGANTIC way, not only in the US, but around the globe...and it will be very bad for the US Dollar, the Euro, all the funny monies of the world...and very good for Gold.

Gold today has moved quite quickly into our first support zone of 880 to 890. Downside risk to the trendline at 870 grows. Silver has plumbed it's first line of defense at 16.48 and should Gold test it's trendline, Silver would quite likely visist congestion in the low 16s. Keep in mind the 50 day moving averages of both Gold and Silver. Gold: 849 Silver: 15.22 Both are rising steeply.

And what do we do when Gold and Silver are on sale? WE BUY MORE!