Monday, January 5, 2009
This Stink Is Going To Be With Us For Years
Happy New Year? Not so fast. Those expecting change...you're gonna get A LOT MORE of the same. As in Bull Sh*t. Oh look, the London Markets have opened on the first full week of the "new year" at 3:30 est this morning, and Gold and Silver have been HAMMERED. Nothing shocking there. Check the seasonal charts of Gold and Silver posted above. As the CRIMEX opened a further destruction of price. What a joke. It's 2009, who wants Gold..Obama is going to fix EVERYTHING! LOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOL!!!
The Dollar is up strongly today...for what ever reason you care to give it. I like to think of it as a severe case of bad gas and bloating that will once again soon be relieved by it's offensive flatulence. The US Dollar is a carcass, roadkill waiting patiently to have it's eyes picked out by the vultures now circling in mass above it.
Oil prices desperately want to move higher, and will be soon enough. Whether through OPEC "production cuts" or geopolitical event, Oil prices will move higher through 2009. Consider if you will the growing insolvency of the Russian state dependant now on energy sales to keep the states coffers full.
Russia controls 25% of Western Europe's gas supplies thru pipelines in the Ukraine. Russia is having a "cash crisis" that threatens the country's solvency. Russian "wealth" has been threatened with destruction by the collapse in commodity prices. Does Russia "create a crisis"
to pressure commodity prices [Oil] higher in an effort to refill their coffers?
Agri-food prices are set for a massive rebound this year. Global food stocks are at 50 year lows. The Us Government sponsored take down of the commodity markets is going to prove to be the single biggest mistake they have made in contending with this global financial crisis.
The government knows the average human wrongly believes that falling prices equals falling inflation. [We know nothing could be further from the truth.] The present deflation scare is all a cover for the government behind the curtain explosion in real inflation soon to be unleashed upon the global landscape. The consequences of these artificially contrived falling prices is going to prove to be catastrophic as the shortages we're experiencing globally in food stocks becomes a "crisis in food supply". In many countries, the credit crisis is denying farmers the most essential input for planting a crop, the money to purchase seed, fuel, and fertilizers to plant and harvest a crop. Without the money to put the crops in the ground this coming year, agri-food production will fall. Suddenly "recognized" shortages will create a surge in food prices that is sure to be exacerbated by the "real" inflation the fed has so loquaciously baked into their New Years Cake.
Extrapolate the same phony falling prices of the second half of 2008 to the entire commodities sector, particularly the energy sector and Gold. Falling energy prices have forced producers to curtail production AND exploration. This will eventually lead to shortages in this other essential commodity. Don't get too used to $1.50 gasoline...it won't be around for long. The CRIMEX scam has done nothing good for Gold producers. Present prices are not very cost effective when it comes to pulling this treasure from the ground. Shortages in Gold have already made an appearance, and they are very real. Recent backwardation in the CRIMEX price of Gold has made it clear to anybody paying attention that Gold is no longer available for sale at any price. Those that have it in their possession intend to hang on to it. In time, this development is going to CRUSH those dumb enough to still be short Gold. I'll give them 9 more months on the outside before the price of Gold absolutely erupts to the upside. Silver prices will most likely explode in unison with Gold, but because Silver is in much shorter supply than Gold, it would not be surprising to see Silver lead Gold higher much like it did a year ago at this time.
It is time to trot out the Gold/Silver ratio for a peek now. See the chart posted above. The crash in Gold and Silver prices is made clear by the rising chart from July thru mid-October. Since Mid-October the ratio has been range bound and in consolidation. A ratio of 83 suggests going long, and a ratio of 76 suggests going short. Today's dump in prices bears this out once again. But pay close attention should the ratio fall below. A move below 76 would suggest that Gold and Silver prices are breaking their chains of bondage at the CRIMEX, particularly Silver. The farther the ratio falls below 76 the faster Silver prices are likely to be rising.
Look back to the seasonal chart of Gold and Silver posted above. We should expect this dip in the metals prices to come to an end quickly, and rebound for the balance of January. Based on today's action, February's annual decline in prices should be respected, and planned for as we go forward.
Once again, HAPPY NEW YEAR. I can't emphasise enough though the foolishness, and the folly, of expecting change just because the calender has. I saw a couple of articles over the holidays ponder what we should call this decade. It seems this has created quite a quandary for those worried about it. It's really simple I think. This has been the Decade Of Deception, aka the Bull Sh*t Years. If you aren't used to the smell yet, get used to it. This stink is going to be with us for years.
False Diagnosis of Deflation [must read]
by Jim Willie CB
One of the most bothersome questions from 2005 to 2007 used to be whether the Untied States would ultimately submit to inflation or deflation. This is actually the wrong question. Many analysts in my view are incorrect in their conclusion that the US suffers from a powerful deflation episode, since they endorse the wrong definition, confuse effect with cause (as usual), do not properly monitor the money flow, and then draw improper conclusions from prices. They suffer from a type of Keynesian Tunnel Vision. They are confused, and fail to adapt certain key measures after the financial sector highjacked the entire national system in the last two decades. If the tail controls the dog, then the movement of the tail must be properly monitored in the data. They add to the murky waters emanating from USFed marble-laden offices, and from USGovt agencies marred by clownish ineptitude. A divorce has occurred by the paper price of gold from the pure physical price. That is your loud unmistakable late signal of a system in a very important transition, where past indicators MUST be adjusted, so as to adapt to a new bizarre corrupt system. If deflation has won, the gold price would be closer to $500/oz than $800/oz, and surely would be to the 1995 price levels, like the housing sector. The iron rule of paper is in the process of yielding to a new power. It will be dictated by foreigners, and will involve a new monetary system linked to gold & silver just like before 1971 when the fatal schism occurred.
In my view, the entire topic of inflation is intentionally obfuscated by the economists at work across the entire financial sector spectrum. They prefer to maintain a high level of ignorance among the public, and of confusion even among the analysts, so that the USGovt officials and Wall Street bankers can continue to steal savings via confiscation by inflation, all without any formal tax levy and without any legislation in support. Worse, inflation is blessed as good, which actually enables those Elite in Power to continue vast counterfeit rings. Their vehicles are USTreasury Bonds, Fannie Mae bonds, Congressional appropriations, and sacred USMilitary budgets, each of which has had almost zero enforcement. It is my contention that each has been a principal part of syndicate activity, sanctioned and protected by USGovt agencies and US Financial titans, along with lapdog regulators. Generally, the dumber the nation remains, the more the Elite can continue to ply their privileged trade. The era of paper pusher domination is gone, as Wall Street gradually will resemble a Ghost Town that mirrors suburban residential foreclosure blight. The nation has probably never been more ignorant on matters pertaining to inflation in its history, as it is now. The next stage will feature grand exposure of lies, fraud, deceit, and corrupt relationships including routine bribery, insider trading, and counterfeit rings.
The penalty suffered is a wrecked nation, and inevitable lost sovereignty. When foreigners own over half the national debt, and the USEconomy is in tatters, and the US banking system is both dysfunctional and in failure mode, foreigners have the right to take control. They will do so. The arrogant will be swept aside as thoroughly as the billionaires will be ruined. If you think such words are wild and silly, just wait and watch! Receivership committees are being formed in foreign lands, but they must contend with military threats. Numerous bilateral trade agreements are being hammered out, designed to circumvent the corrupt paper price systems in US & UK control. Times are changing, and the door is open for some degree of colonization. Wealth will flow in the direction of those prepared. Owners of actual gold & silver, as well as crude oil & natural gas, will lead the next era.
Over $700 billion in Cash Management Bills have been sold into the credit market, which is testimony to the drain of funds to cover some of the lending facilities, which have to date subsidized massive fraud and failure on Wall Street. The other phenomenon important in the process has been the informal order by the USFed not to lend. Just this week, a subscriber to the Hat Trick Letter wrote to share information that his son in North Texas cannot obtain a development loan from his bank. The bank actually told him that land cannot be used as collateral in loans, BY ORDER FROM THE USFED ITSELF. Where is such information promulgated on the news networks? Banks are accumulating large amounts of funds, and not lending them to the people. My conclusion is that the USFed and the Federal Reserve Banks themselves are orchestrating a collapse of sorts for the USEconomy. Their purpose is unknown, but if the Great Depression Era is any teacher, this elite group of banksters harbors great lust for consolidated power. My conjecture is that they will purchase large slices of various asset groups at cheap distressed properties. The other purpose is to encourage the many private banks to engage in a basic form of carry trade. From their vast growing hoard, they borrow short-term money at the official near 0% rate, and invest in long-term USTreasurys at the higher rate. This carry trade has pushed the long rates down from 4% to 2% in amazing fashion. Like the 2002 episode urged by Greenspan, long-term rates are being directed lower, in order to aid the mortgage industry and housing market.
Moral hazard has permeated all chambers once again, a totally embraced policy, the inexorable step that Bernanke promised would never happen. Refer to the near 0% official rate. The US is so so so lost on a path into darkness. Why? Because the very cause of bubbles and their bust is once again official policy for remedy. What lunacy amidst desperation!!! Jack Daniels is served for free once again, to supply the hopeless alcoholic. Few seem to realize that the climax of a fiat system is the proliferation of crime syndicates engaged in counterfeit and fraud, whose assured systemic ruin assures myriad seeds planted. The new shoots lean toward the sunlight but coupled with violent change. Those who push for change will be labeled enemies of the state. We are witnessing the failure of the nation.