Tuesday, April 7, 2009

G20: A 'new world order' is simply fantasy
Those who thought that Dr Goebbels came to an end on a stretch of waste ground in Berlin in 1945 have been forced to think again. The piece of theatre that concluded in London on Thursday was one of the great confidence tricks of our lifetimes. Just getting the 20 most important heads of government on the planet together in one place and not being unpleasant about each other was, we must concede, something of an achievement. But it won't make a blind bit of difference to the world's economy. Nor, I imagine, will it have any effect on the result of the next general election. In the months ahead, as thousands more people go on to the dole every week, more businesses go under and confidence continues to seep out of a system wrecked by politicians, few will link in their minds the words "Gordon Brown" and "triumph". I have long thought that our Prime Minister was around elevenpence ha'penny to the shilling. His fantasy press conference at the end of the G20, with his grandiloquent (and preposterous) claim to have founded a "new world order", confirmed it.
- UK Telegraph

The great triumphs of the G20, trumpeted around the world, were more propaganda than practical reality in our opinion. In fact, the funds for the International Monetary Fund were already in the pipeline, the regulatory accomplishments supposedly hammered out in last week still need a good deal more work before any implementing can begin, and the international regulator that Nicolas Sarkozy was so steamed about never materialized.

The main accomplishments of the G20, according to reports, were to boost IMF lending capacity to developing countries, agree on sanctions for blacklisted tax havens and commit to regulate the biggest hedge funds and other financial institutions. But all of these agreements still have to be IMPLEMENTED.

According to the Wall Street Journal, the G20 failed on numerous fronts. They "didn't agree on a fiscal-stimulus target, failed to find a solution for getting banks to lend again, [and didn't arrive at] any enforceable agreement against protectionism or much support for Doha trade talks."

So we are left with a vague determination to punish tax havens, an idea that hedge funds should register and proclaim their trades and a commitment to keep pouring funds into the dysfunctional IMF. In fact, it is a testament to a certain bankruptcy of imagination of the G20 that the best they could come up with is resolute backing for an agency (the IMF) that is truly hated by a large portion of the globe.

Okay, I think we have successfully beaten the dead horse known as the G20 to death. Let us leave it now to the land of ignorance to which it dutifully belongs, and once again focus on uncovering the lies propagated by the US Government in the never ending effort to CON Americans into believing that "everything is under control".

Before we move ahead, did everybody stop and watch Bill Moyers sit down with William K. Black the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. This is a MUST SEE interview as Mr Black points a finger squarely at the scoundrels behind the hijacking of our financial system, and the pocket picking of the American Taxpayer by an elite cast of bank CEOs. If you haven't watched this important interview, stop what you're doing immediately and do so now http://www.pbs.org/moyers/journal/04032009/watch.html .
If you have seen the interview, are you outraged? Please send the link to every taxpayer you know. This story MUST BE TOLD!

Treasuries rose slightly as the Dow, Nasdaq, and S&P fell on worries over a likely GM filing for bankruptcy and also on concern over the success of today’s TALF auction that took place towards the end of trade. All three indices dropped over 2% as the results of that auction were released and stocks remained near their lows as the auction went even worse than the poor expectations that were priced in. This is quite significant as it is these Term Asset-Backed Securities Loan Facility (TALF) auctions that are supposed to be the savior to the problems in the credit system. Of the $8.2 billion of TALF-eligible deals that were on offer, only $2.57 billion were sold.
-Gold Seeker Closing Report

The gold market seemed to mount a combination technical and fundamental bounce on Tuesday. After seeing aggressive selling over the prior four trading session's the market seemed too oversold and in need of a technical bounce. With the rumor mill swirling with talk of an impending bankruptcy at GM, talk that the Treasury's delay in releasing bank stress test was due to potential major problems in the US banking system and finally ongoing speculation on the magnitude of the global toxic asset tally all seemed to rekindle the flight to quality interest in the gold market. While the Dollar was mostly higher during the trade Tuesday, the Dollar wasn't the only currency higher on the day and that might have moderated the negative influence of the currency market action on the gold market.

The silver market showed some signs of bounce on Tuesday but in general the magnitude of the gains were less than stellar when compared to the action in the gold market. Perhaps renewed macro economic concern and a much weaker equity market undermined the physical commodity component of the silver trade, even though the industrial metals and some soft commodities managed to post positive trades. In the end, the silver bulls seemed to be disappointed with the magnitude of the silver gains Tuesday, especially in the wake of possible interest rate cuts from two key international central banks.”

- The Hightower Report, Futures Analysis and Forecasting

IMF to warn on spiraling toxic debt: report
TOKYO (Reuters) - Toxic debts racked up by banks and insurers could spiral to $4 trillion, new forecasts from the International Monetary Fund are set to suggest, British daily The Times reported on its website without citing sources.

The IMF said in January that it expected the deterioration in U.S.-originated assets to reach $2.2 trillion by the end of next year.

But it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21, the newspaper reported.

In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia, the Times said.

NY gold finishes up as safe-haven buying resumes


Central banks expected to buy any IMF gold offered
LONDON -- Gold sales by the International Monetary Fund are unlikely to depress the metal's price because central banks would be likely buyers.

The concluding statement from the Group of 20 industrial and developing nations last week said the IMF will raise $50 billion for aid to the poorest countries, with part of that money expected to come from IMF gold sales.

IMF Managing Director Dominique Strauss-Kahn said the sales refer to the 403.3 metric tons already under discussion and still subject to U.S. congressional approval. No further sales were planned, he said. A metric ton equals 2,204.62 pounds.

Gold prices initially fell 3.5%, dipping below $900 a troy ounce, on Thursday's statement. Analysts said that if the sales go forward, they would be slow, orderly and absorbed by central banks. Friday, nearby April gold fell $11.80, or 1.3%, to $895.60 a troy ounce on the Comex division of the New York Mercantile Exchange.

"Central banks such as those in China, Russia, and Japan are obvious counterparties to this kind of sale," said Morgan Stanley analyst Hussein Allidina.

Mr. Allidina said those central banks could diversify their large U.S. dollar holdings and buy IMF gold off-market, limiting the effect on gold prices on the spot and Comex markets.

There it is, straight from the horses mouth. Speaking of beating dead horses, the IMF has been "talking" about selling this 403 metric tonnes of Gold for close to two years now. IT IS OLD NEWS! And would somebody please contact Jon Nadler at Kitco.com and tell him that there will be no IMF Gold sales in "addition" to this 403 metric tonnes. He was adamant about "additional IMF sales seeing the market" in a terse rebuttal to my criticism of his recent "reporting" on IMF Gold sales. Now there's a dead horse if ever there was one.

Gold could ‘easily’ return to $1,000
Gold prices could “easily” re-attain the $1,000 an ounce level this year and could even push through the $1,100 barrier, setting a new record high, according to GFMS, the precious metals research consultancy that released its Gold Survey 2009 today.

GFMS said that it was “only a question of time” before investment demand proved sufficiently powerful to overcome weak fabrication demand, particularly in the gold jewellery market, and surging scrap supplies, the the twin obstacles which have managed to halt the advance in gold prices short of the $1,000 an ounce level.

Although the spur for safe haven buying of gold from concerns over the stability of the banking sector might wane as the credit crisis eases, GFMS said investors would increasingly focus on a new worry: the probable inflationary consequences of the fiscal and monetary policies being adopted by governments in response to the global financial crisis.

“Investors who are currently sitting on record amounts of cash will be looking for a secure inflation hedge for which purpose gold fits the bill perfectly,” said Philip Klapwijk, chairman of GFMS.

Inflows into the gold market reached $26bn last year, a relatively small amount compared to the flows into mainstream asset classes but enough to drive gold prices to record levels.
Mr Klapwijk said last year’s inflows could be “dwarfed” if gold’s appeal to investors widened substantially on the back of government’s willingness to attempt an inflationary solution to the current global economic crisis.


Unquestionably, the hardest part of being a "Gold Bug" is being patient with the "price" of Gold. Clearly, the fundamentals of Gold all point to a higher price. It is foolish to expect Gold to "go to the Moon" overnight. The price of Gold was just $250 an ounce in 2001, today it trades near $900. EVERY effort has been made to keep the price of Gold in check, and EVERY effort has failed. At it's most recent high, Gold has quadrupled in price. I'd be ecstatic if Gold quadrupled in price again over the next eight years. And I'm willing to wait for it...

The following is a MUST READ. Combined with the William Black interview above, we get closer to the truth about how the world was tossed into this financial abyss by a very small cadre of greedy Americans who couldn't give a damn about either you or me.

This article from Stanford Magazine -- an absolutely amazing read -- details how Summers, Rubin and Greenspan led the way in blocking any regulatory efforts of the derivatives market whatsoever on the ground that the financial industry and its lobbyists were objecting:

Prophet and Loss
Brooksley Born warned that unchecked trading in the credit market could lead to disaster, but power brokers in Washington ignored her. Now we're all paying the price.

Interestingly, the Obama nominee to head the Commodity Futures Trading Commission has been called on the carpet by a now suspicious US Senate:

Goldman Vet Sparks Conflict On Hill
Obama's plan to name another Goldman Sachs alum to his economic team proving too much for

Sen. SandersBarack Obama's plan to name yet another Goldman Sachs alum to his economic team is proving too much for Sen. Bernie Sanders (I-VT). Sanders put a hold on the nomination of Gary Gensler to head the Commodity Futures Trading Commission, effectively stopping the nomination process in its tracks. Sanders says Gensler, who spent 17 years at Goldman Sachs and then joined the Treasury Department under Bill Clinton, played too big a role in deregulating derivatives in the '90s to be trusted to reregulate the market now. Senate Majority Leader Harry Reid (D-NV), however, has told ANP that he plans "move forward" with Gensler's nomination despite Sanders' hold. To Christopher Hayes, Washington editor of The Nation Magazine, the Majority Leader's defense of Gensler and Goldman is a disturbing indication that it may be business as usual on the Hill when it comes to meaningful regulation on Wall Street.

In closing, we update you on what is turning into a Tsunami of Silver leaving the NY CRIMEX. Today, April 7, 2009, ANOTHER 2,151,389 ounces of Silver were taken from the CRIMEX warehouse. This amount brings the Four Day running total of Silver deliveries OUT of the CRIMEX warehouse at 8,013,883 ounces. CRIMEX warehouse stocks have now fallen 6.5% in the past four business days. This is getting interesting...

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