Thursday, October 30, 2008

Nothing Shocking

Gold hit a wall right at 776 overnight shortly after the London markets opened. Imagine that. Price slid all the way back to support at 730 this afternoon. Silver of course followed in Gold's shadow. Oil puked up all of yesterday's gains as the debate over "demand destruction" rages on. The Dollar got a bounce on general market weakness today. Bear in mind going forward: A strong stock market is BAD for the Dollar, and a weak stock market is GOOD for the Dollar.

Despite today's set back in Gold, it will be constructive if support holds here at 730. Higher lows are the first sign of a market reversal. A break above 776 in Gold and 10.50 in Silver are necessary to establish interim lows in these markets and bring "real" buyers back into them. Post election targets remain at 835 Gold and 11.73 Silver. Volatility does not appear ready to subside anytime soon.

Upcoming Gold Default
By: Jim Willie CB
The COMEX gold & silver markets are each hurtling down a dangerous path toward default. The artificial paper price has created enormous physical demand, and hampered supply production, if not delivery. The gap between the JPMorgan-led corrupted phony paper price and the legitimate physical price in actual trading markets has grown sharply, enough to force a breakdown like in any distorted market. When December contracts in gold & silver are demanded to be satisfied via delivery of the metal, it will be clear that the COMEX is running a scam. A default is highly likely. Of course, they can continue to deny contract holders the right to benefit from delivery, as they have been doing for months to ‘Non-Economic Customers’ but soon the ‘Commercial Customers’ will be defrauded. Arrests are warranted. We will see how this corruption unfolds.

The USFed cut the official interest rate again by 50 basis points, now to 1.0% on the Fed Funds target, in utter desperation. Other central banks did not join in rate cut exercises. The Euro Central Bank is expected to cut next week, reluctantly. So is the beleaguered Bank of England. The pressure is building on gold demand. Now with the official US price inflation at CPI = 5% or so, the real rate of money cost is minus 4%. The actual price inflation runs more like 10% to 12%, making the real cost of money more like minus 9% to minus 11%. GOLD RESPONDS TO NEGATIVE REAL RATES VERY FAVORABLY.

If you think the bank crisis is bad now, wait until the USEconomic recession achieves galloping speed downhill. The stagflation will eclipse that seen in the late 1970 decade. Today the economic growth in the GDP was posted for 3Q2008 at minus 0.25%, even with a hefty 5.4% PCE (personal consumption expenditures). This is another fairy tale told. The US consumer activity cut the GDP back by 2.25%, while the government activity added to the GDP by 1.15% in retrograde style. So the USDollar has rallied amidst economic decay, doing its death dance. Bear in mind that the stated admitted price inflation for Q2 was only 1.5% in that GDP corrupt calculation, which avoided a negative GDP for 2Q2008. They called inflation growth, the usual corrupted modus operandi. The second quarter was when prices skyrocketed for everything under the sun, if memory serves properly. Clearly, the wizards in the USGovt stat-rat offices, employing advanced techniques, moved some price inflation from Q2 into Q3, so that a recession would not be admitted all summer long. With the USFed rate cut to 1.0% again, they are admitting the recession.

The Shadow Govt Statistics folks pitch in a comment to provide light upon corrupted data. “Narrower Than Expected GDP Contraction Is Nonsense. The difference between the reported 0.3% annualized Gross Domestic Product (GDP) and the consensus expectation of a 0.5% contraction is no more than statistical noise, yet the reported result most certainly was manufactured so as to allow the hypesters on Wall Street and in Washington to spin their fairy tales of a ‘less-severe recession’ in order to help draw the gullible back into stocks, at least for a day or two before next week’s election. This follows earlier economic scare tactics aimed at the public to help sell the ‘Bailout’ package… With a 95% confidence interval of +/- 3% around this morning’s estimate of an annualized 0.25% contraction in real (inflation adjusted), annualized quarterly third-quarter GDP growth, the number was not even statistically indistinguishable from growth or contraction in the 3% range. A quarterly contraction in excess of 2% would have been more realistic… U.S. Economy is in a severe recession. With real retail sales, housing, non-farm payrolls, new orders for durable goods, and industrial production all showing quarterly and annual growth patterns never seen outside of a recession still in deterioration, GDP reporting eventually should show a string of quarterly contractions, with the recession dating back to fourth-quarter 2006, long before the exacerbation of the current systemic solvency crisis.”

A simple statement is required to close the preface. The financial market crises, in numerous arenas, have come in large part because the banking authorities have intentionally provided rescues only for New York investment banks and other big financial firms. Up to a month ago, the USFed had sterilized most injections into the Wall Street centers of the banking system by denying the mainstream bank system via liquidity drains. Drain the national system where households work and live, and provide subsidies for the financial crime syndicate. This is a betrayal of government to the people. Elite gain came at mainstream expense. Attention has gained on the misuse, false promises, and other misdirection of USGovt funds even in the bailout packages. The big banks are ordered not to lend, but to acquire smaller banks.

Until the global interest rate cut was announced, the USFed had not created much new money, despite the numerous rate cuts on the US side. The policy was unconventional and deliberate, with a two-fold purpose to aid Wall Street and to keep a lid on the gold price. Their bad policy, emphasis upon rescue and redemption for criminal fraud, neglect of the private sector, have left the USEconomy vulnerable to an extreme breakdown. A GRAND REFLATION WILL SOON BE ATTEMPTED, TIMED OBVIOUSLY AFTER THE ELECTION. The effect will be much like blowing up a dam holding back a lake, where downstream the price inflation will be broad, deep, and powerful. That day comes soon, and if not, then the entire US financial system will go dark. That cannot be permitted, since the aristocrats need the serfs in the public fields to work, so as to be exploited for gain.

International Forecaster
By: Bob Chapman
The current dichotomy between paper and physical precious metals markets is being caused by an intentional bottleneck at the wholesale level. Wholesale gold and silver is being hoarded to fund precious metal suppression schemes, such as sales and leasing, and to maintain dominance of the commercials in the paper markets by preventing a failure to deliver. In essence, this bottleneck between the wholesale and retail levels of the market in precious metals amounts to a de facto confiscation of gold and silver from the masses.

Remember, back during the Great Depression, most people owned gold and silver which was then the main medium of exchange. So FDR had to take it from them, which he did in 1933, to make sure they had no store of value against the upcoming inflationary spiral of money creation and increased national debt that would result from make-work projects, from social entitlements and from World War II, all of which were already in the planning during the Great Depression, and most likely before the Great Depression even got started. This was done so that they could continue their fleecing of the middle class, who they would eventually allow to have some crumbs of prosperity in order to provide US taxpayers with the incentive to create the new industrial powerhouse that America was becoming, a powerhouse that would fuel and finance their future ambition to make the US into a corporatist, fascist police state. Of course, needless to say, all that new prosperity would get taxed, thus increasing their power through the federal government, which they would totally control. As an aside, FDR then increased the value of gold from $20 an ounce to $35 an ounce, giving Illuminists insiders, who had hidden their gold in Europe after being tipped off about the coming US confiscations, a whopping profit.

In any case, most people in the US no longer own gold and silver. They are slaves to the orgy of money and credit that the Fed has provided, and they now worship paper over metal. This means that no confiscation is necessary to prevent the American sheople from having a place to store the value of their savings. All you have to do today is to keep US citizens from acquiring precious metals, first, by making it look too volatile to be a good investment, and second, by making it hard to acquire, especially in larger amounts. That way, you can enslave and impoverish them by diluting the value of the dollar by doling out trillions in bailout money that will be used solely to enrich the elitists and the financial institutions which they have intentionally and malevolently trashed. Without gold and silver, the poor, ignorant sheople are totally defenseless and utterly helpless against the hyperinflationary juggernaut that will be created in the aftermath of these bailouts.

We are now hearing rumors about a potential failure to deliver on the COMEX due to what may be a large demand for physical delivery of gold and silver on the December contract. Where were all you dopey specs sleeping when we cried out for this to be done over a year ago. As usual, no one listened, and now all the hedgies who are not part of the Illuminist cadre who are cleaning up on insider trading transactions are now bankrupt or are being redeemed into oblivion. Such a tragedy, which is made all the worse by the fact that it was totally unnecessary and completely avoidable. Look at the silver market. Ten billion dollars can now buy the entire above-ground world supply of silver. That is just a 10% diversification for some of the larger hedge funds. What the freak were you people thinking?!

War of the (Gold) Worlds
At almost any time of day during the normal business week, gold bullion is being actively traded somewhere on the globe. Many observers of the international bullion trade have commented that when heavy selling pressure appears, more often than not it seems to happen during the hours when the New York markets are open for business.

This article addresses the validity of this perception from a quantitative perspective. The results will be presented in a format that is simple to interpret and does not require any specialized knowledge of Mathematical concepts. The conclusion is that the perceived pattern of a tendency towards heavier selling during the hours of the day when the New York markets are open for business is not only correct, but the forces behind this selling are more "determined" than even many "believers" might have imagined.

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