Tuesday, April 21, 2009

Behind The Curtain

"Patience is bitter, but its fruits are sweet."
-Jean-Jacques Rousseau

Looking Behind The Curtain [absolute MUST READ]
By Martin Armstrong
To characterize Martin's report, it's as if the current financial system is a very large airplane, full of holes, crashing to earth at horrific speed, but those in power continue to wildly shoot their fellow passengers, and tear more holes in the plane, as they continue to jocky for position for the best seats in first class. Nobody in power is even thinking yet of dashing for the few remaining parachutes, being silver and gold.

It's as if those who are in charge are the decendants of the decendants of the decendants who set everything up, and are squandering their inheritance, because they have all totally forgotten that silver and gold are the only real money, and in short supply. They would know that silver and gold are in short supply if they paid any attention to fundamental analysis, but they do not.
-Jason Hommel

The Ususal Suspects
By Matthew Malone
The Goldman Sachs "conspiracy" to take over the U.S. financial system.

Believers point to the one degree of separation between Goldman bankers and recent financial events. Bush’s Treasury secretary, Hank Paulson, is a former Goldman C.E.O., and his replacement at Treasury, Tim Geithner, was mentored by Goldman alumni. Mario Draghi, who is leading the crisis response for the E.U., is a former Goldman vice chairman.

Merrill Lynch C.E.O. John Thain was once Goldman’s co-president, and Wachovia chief Robert Steel was a vice chairman. Ed Liddy, the new C.E.O. of A.I.G., was Goldman’s vice chairman. World Bank president Robert Zoellick was a managing director. Even Neel Kashkari, the 35-year-old tapped to oversee the $700 billion Troubled Assets Relief Program, served at Goldman as a vice president. Are they plotting to take over the world? Who knows. They sure are a tight-knit group, and potential conflicts abound.

When we asked the participants about their roles in the alleged conspiracy, some didn’t appreciate the joke. Goldman said that such claims are ludicrous. In fact, a spokesman said that the firm is at a disadvantage, since its alums must go out of their way to avoid the appearance of favoritism. Geithner, Paulson, the S.E.C., and others also dismissed the theories.

Jack Bauer can't stop 'The Goldman Conspiracy'
10 reasons why Wall Street has absolute power over America's democracy
ARROYO GRANDE, Calif. (MarketWatch) -- Two mind-numbing fast-paced dramas. Two parallel worlds. One real, one fiction, both deadly. Jack Bauer, mythic hero of "24." Dying from a deadly bio-pathogen leaked from weapons developed by Starkwood, a rogue mercenary army attacking the presidency, hell-bent on taking over America.

The other drama in play: "Hank the Hammer" Paulson, iconic Wall Street hero, a Trojan Horse placed inside Washington by Goldman Sachs as Treasury Secretary in control of America's $15 trillion economy. Goldman, a modern dynasty with vast financial powers much like those once used by the de' Medici, Rothschilds and Morgans to control nations.

Both dramas play high-stakes games with financial WMDs that have lethal consequences. Jack compresses thrills, kills and chills into 24 hours. Hank, Goldman and their army of Wall Street mercenaries move with equally blinding speed, heart-pounding action.

Drama? You bet. Six short months ago Hank led an assault on Congress. The scene parallels one in "24:" Sangala War Lord Juma's brazen attack inside the White House. But no AK-47s necessary. The Hammer assaulted Congress with just a two-and-a-half page memo in hand. Like a crack special-ops warrior, he took down the enemy, demanding $750 billion, absolute control, total secrecy, no accountability and emergency powers to act immediately ... warning that inaction was not an option, that collapse of America's banking system was imminent, would bring down the global monetary system, pushing world's economies into a "Great Depression II." Congress surrendered.

Here's the whole plot:


ECB invested 2008 gold sale proceeds in U.S. dollars
FRANKFURT, April 21 (Reuters) - The European Central Bank said on Tuesday it used proceeds from gold sales to boost its U.S. dollar reserves in 2008, although dollar holdings fell as a proportion of overall currency reserves.

Its foreign currency portfolio was worth 38.5 billion euros at the end of last year compared with 32.1 billion euros at the end of 2007, the ECB said in its annual report.

The ECB also confirmed it had not intervened in currency markets in 2008. The last time it intervened was in 2000.


Why Gold Owners Are Targets of the Government[Insightful]
By Gary North
There is a full-scale war against you. The politicians and central bankers who are conducting this war against you are determined to see that you lose money on your investment.

The reason why you are under assault is because you have demonstrated by your purchase of gold or a gold-related investment that you do not trust the monetary policies of your nation's central bank. If you are an American, this means you do not trust the monetary policies of the Federal Reserve System. You have taken a step that confirms your lack of trust in the government and its central bank. If you think the government and the central bank will sit quietly, while millions of citizens buy gold as a way to hedge against government and central bank policies, you are terminally naive.


Who is going to win the gold wars? Holders of gold. The big winners will be Indian wives whose fathers gave them a lot of gold as a dowry. The rest of us gold bugs will also do well. The general public will never catch on in time, and by the time that it occurs to even 10% or 20% of investors that they better by gold, it will cost them so much to get into the market that they will not make the kinds of profits that today's gold investors are going to make.

Governments and central banks can continue to fight the gold war by means of gold leasing, outright gold sales, and threats of gold sales, but for as long as they inflate the money supply to obfuscate the price of economic depression, they will be running out of ammunition. They are in a war in which ordinance is in fixed supply. They cannot go into the gold market and replenish the supply of gold without driving up price of gold.

Central banks are expanding the money supply, which is providing ammunition for those of us who want to fight the gold war by buying more gold. In contrast, central banks are not expanding their holdings of gold, but rather depleting them, and so they will not be able to fight this fight indefinitely.

They may be able to fight it for as long as the threat of recession hangs over the world economy. But when the recession ends, or appears to end, as a result of the massive monetary inflation and massive deficits that the governments of the world are running, there will be a new market for gold that is unprecedented in its intensity. This does not mean that everybody is going to buy gold. It probably does not mean that even 20% of investors will buy gold. All it will take is about 10% of investors decide to put 10% of their holdings in gold. Governments and central banks are going to lose the war on gold because they refuse to fight gold by the one technique that can give them victory: stop printing money.

Bullion Bank Shenanigans Continue At The Comex
By David Duval, Trader Dan Norcini
When one looks at the present price at the Comex as of today and the short term technical chart pattern, it is not particularly encouraging for the bulls so you could say that Central Bank efforts in conjunction with their favored insiders at the bullion banks have been somewhat effective of recent weeks. However, there is one thing that no amount of market intervention and price manipulation can succeed in doing and that is in changing the basic structure of the futures market as evidenced by the relationship of the front month contracts to the later dated contracts.

In trading terms, we refer to the “spread” between the front month and a back month/months or the difference in price between the two, as a gauge of demand for that particular commodity. As a general rule, when the front month trades at a discount to the next month or to a later-dated month, the structure of that particular commodity futures market is normal or in contango. A market in contango will see those distant month contracts trading at enough of a premium to the front month to account for any storage charges, insurance against loss and interest rates. Simply put, a seller has to be recompensed for his/her expense in storing a commodity while they wait to sell it into the market at some point in the future.

Whenever a market begins to see this “spread” between the front month and the next month or more distant months begin to tighten or narrow, then something is beginning to change regarding the demand/supply picture in that particular commodity. Why is this? Because the market is ratcheting up the front month price and attempting to send a signal to potential sellers that demand is increasing and that they are better served by selling sooner rather than later. Economically speaking, the incentive to store the commodity, pay all those storage costs, insurance costs, etc,. is not worth the increased cost that they might hope to receive at some point in the future. “Sell it to us now and we will pay you more for it than if you try to sell it later”, is the message the market is sending.

When markets begin moving in this direction, narrowing the spread, they are said to be moving towards a condition known as, “backwardation”. True backwardation occurs when the front month moves to a PREMIUM over the next month and particularly over the next set of three or four different contract months ( a note here - generally a market will not go into backwardation more than a few distant contracts out because it is assumed that the increased demand will result in increased production at some point and induce producers of that particular commodity to increase production on out into the more distant future bringing the demand/supply picture into more of an equilibrium. That will serve to bring the market back into a more normal structure of contango).

Backwardation is a powerful signal of very strong demand that is attempting to send a signal to the market that it needs more of that commodity to satisfy existing levels of demand. While market price manipulation can be somewhat effective short term for fogging signals generated from a rising price in gold for example, it is generally unable to affect the spread structure of the entire set of futures contracts listed on the board at any given time.

No comments:

Post a Comment