Thursday, May 28, 2009

Debt Relief?

Stocks jump on relief over gov't debt auction
The bond market recovered on Thursday, bringing stocks along with it, a day after panicky selling pushed long-term borrowing rates to their highest level in six months.

The yield on the 10-year Treasury note, a widely used benchmark for mortgages and other kinds of loans, moved decisively lower to 3.62 percent from 3.75 percent the day before as investors were relieved to see ample demand at an auction for Treasury debt.

The note's yield had surged the day before, triggering a selloff in stocks, on concerns that a flood of U.S. government debt coming to market this year would overwhelm demand. In addition to raising borrowing costs for the government, higher yields on long-term Treasurys could threaten a recovery by driving up borrowing costs for consumers. The Federal Reserve has said it would buy large amounts of Treasurys and other kinds of debt in an effort to keep borrowing costs low.

Stock trading could remain jumpy going forward as investors look closely at interest rates as well as economic data for confirmation that the market's aggressive bet this spring on an economic recovery is still sound.

"The market is absolutely being held hostage to the data," said David Joy, chief market strategist at Ameriprise Financial Inc.'s RiverSource Investments.

Joy pointed to the market's immediate reaction after the Treasury auction Thursday of $26 billion in 7-year notes, part of the $101 billion in debt the government offered this week. "There was a real sigh of relief," he said.

What a load of BS. A sigh of relief because the Treasury successfully auctioned off $101 BILLION of debt this week. Read that again! $101 BILLION of debt...IN ONE WEEK! There could not be a better reason to run from the stock market than this news. Why the excitement? How much of this debt was actually bought by "investors" vs how much was bought by the Fed?

This is horrible news people! In just ONE WEEK our government sold $101 BILLION of debt! Whether they actually sold the debt or not is irrelevant. This is horrific! Please bear in mind that in ALL of 2008 the government sold just under $500 BILLION of debt. What's going to happen next auction, and the ones after that? Do people really believe this debt will continue to be bought? Do they really believe that "investors" are buying this junk? What a charade! The rise in interest rates has only just begun...

Martin Weiss at Money and Markets tells it like it is in an email I received from him today:

Yesterday, Washington dumped yet another Mt. Everest of new Treasury bonds onto the market ... crushed bond prices ... and drove the yield on the ten-year bond up a staggering 20 basis points.

Worse, mortgage rates took off like a house afire, surging by FORTY basis points (almost a HALF percentage point). Auto loan and credit card rates are about to do the same.

All over America, millions of beleaguered consumers are going to get slammed with the full weight of their rapidly rising monthly payments — panicking as they suddenly find themselves one, giant step closer to defaulting on their debts.

Make no mistake: Massive government borrowing drives interest rates up, up, UP. So far, just since December alone, the interest rate on 10-year Treasury notes has surged by more than 70% (1.7 times its earlier level)!

And Washington has only begun to borrow the money it needs to fund the deficit plus the trillions in bailouts it has guaranteed so far. It will likely have to sell another $3.25 TRILLION in treasuries this year to refund maturing bonds, fund its bank bailouts, automaker bailouts, stimulus bills and record budget deficits.

Rising interest rates are anathema at a time like this — pure poison for a sick economy. As rates rise, consumer spending craters. As monthly payments on mortgages, auto loans and credit cards rise, spending craters again. Corporate earnings are replaced with corporate losses. Stocks plunge.

U.S. Economy: Durable-Goods Orders Near 13-Year Low
May 28 (Bloomberg) -- Durable-goods orders hovered near a 13-year low and the number of Americans collecting unemployment insurance reached a 17th straight record, offering no sign of an imminent rebound from the worst U.S. recession in half a century.

Orders rose 1.9 percent in April after a 2.1 percent drop in March that was more than twice as large as previously estimated, the Commerce Department said in Washington. Meanwhile, the Labor Department said 6.79 million people are collecting jobless benefits, and another report showed new-home sales were lower than forecast in April.

Today’s figures indicate that while the pace of the economy’s contraction may be easing, there’s no signal yet that it is ready to grow. Rising unemployment will keep consumer spending in check, making companies reluctant to ramp up investment and builders hesitant to start work on properties.

“We have a tough slog ahead of us,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “The recovery is going to be very slow in its emergence.”

I guess investors were so caught up in the euphoria of the governemnt's "success" in adding to their mountain of debt they overlooked these other more ominous economic data points. Only a fool is buying general equities here on this even more foolhardy notion of "green shoots" of growth.

Crude hits $65 on steep inventory drop
NEW YORK, May 28 (Reuters) - U.S. crude oil futures surgedabove $65 on Thursday, setting a fresh high for the year, asthey continued to rally after government data showed a steepldrop in oil inventories last week.

Traders also factored in better-than expected economic data and OPEC's decision to hold production to current levels. Gasoline futures traded well below their early, seven-month
high, after data showed a lower than expected drawdown and pressured by position squaring ahead of front-month refined product futures expiration on Friday.

Heating oil futures gained, on data showing a far less than
forecast inventory increase.

"It was definitely bullish for crude oil. No one was expecting a draw like that as the refinery rates soared much higher than expected. That's the shocking number," said Mike Zarembski, senior commodities analiyst at optionsXpress in Chicago. "The gasoline draw wasn't nearly as big as expected, but we had a large increase in demand. That was a mixed message," he added.

In its meeting in Vienna, OPEC kept output targets unchanged, as expected, betting on a strengthening world economy and tentative signs of increased demand to boost oil

OPEC is betting on a strengthening world economy? That is amusing. Yes Oil was up today on falling inventories, but was it? Or was it up on a falling US Dollar? I suspect the latter. For that matter, was the stock market up on "relief" about the Treasury bond auction, or was it up on rising Oil company stocks?

We have been told repeatedly lately that rising commodity prices, particularly Oil and copper, are a signal that traders see an economic recovery in the near future. I think that is a truck load of pure BS. The media is ignoring the fall in the Dollar completely. They refuse to put two and two together and report that rising commodity prices are the result of a falling US Dollar.

The charts of Oil and The US Dollar above tell the whole story. And the story is that since December Oil prices have consolidated when the Dollar is rising, and Oil prices have risen dramatically when the Dollar is falling. All rallies in the Dollar now are phony. The commodity markets understand this. They pause and consolidate when the Dollar "rallies", and rise when the Dollar falls. The US Dollar's future is down. To suggest otherwise is complete ignorance. Today's "relief" over the "success" of the Treasury's bond auction is all the proof you need that the Dollar is headed lower. At $101 BILLION a week, the Dollar is headed much much lower.

The Dollar is not going to head straight down, few markets do. The Dollar is due a relief rally, and we could see one as early as late next week. But it will be brief, and unlikely to exceed 83 on the USD Index. At that point, the Dollar Bulls might consider grabbing their ankles, and kissing their sorry asses goodbye...

I have also included a Silver chart today. Silver is in the midst of a major momentum move. Clearing 14.90 today should send the Silver Bears scurrying for cover. A move through 15.25 could be devastating for the Silver Bears. A brief rally in the Dollar is all that is likely to slow Silver's ascent here. Support at the Fibonacci lines on the chart above will be key areas to look to buy any dips.

Gold Troops Massing For CRIMEX Assault?

I was working on some charts this morning to show that Oil's recent rally is less about "green shoots" and economic recovery, and more about the fall of the US Dollar. That will have to wait until tomorrow. At this moment I am amused at the equity markets reaction to the "durable goods" data... More "green shoots", more misleading information, more lemmings lead to the coming slaughter in the equity markets.

And then like a bolt of lightning, the latest from Jim Willie came across my screen. This is a MUST READ for everybody interested in Gold and Silver, and the future of the global economic system. Once again Jim Willie nails it:

Hitmen Contracts to Bust COMEX
By: Jim Willie CB,
It has come to my attention that several private parties have accepted contract assignments to neuter the COMEX and London Metals Exchange, to render ruin to its gold market. That bears repeating from the rooftops. MUTLIPLE HIRED HITMEN HAVE ASSIGNMENTS TO KILL THE COMEX GOLD MARKET. That is the lynchpin to control the USDollar, the USTreasurys, and the corrupt mechanisms used by the New York and London syndicates. Their clear criminal behavior is beyond the reach of law enforcement, but they are not beyond the reach of hitmen. The USDollar has been in violation of the US Constitution since 1971, perpetuated by a renegade series of administrations. The global creditors for the USTreasury Bonds are so angry at the past suffered losses, the prospect of deep future losses, and the corruption laced throughout the US financial system, that they have hired third parties to kill off the US$-gold platforms, to destroy the burdensome banking ballast dominated by protected entrenched fraud experts, to lay waste to the vehicles used by the US-UK bond trafficking syndicate totally saturated with corruption, dishonesty, and collusion, replete with greed, totally absent conscience. They have systemically been dismantling the COMEX pillars and levers over the last several months, quietly and without fanfare, surely without publicity. If gold investors knew of their actions, they would become much bolder. Some want the bankers in their gunsights not to be warned. They await their fate with the Financial Grim Reaper. Their executions will be as swift as brutal.

The HITMEN have been hired, with highly lucrative contracts and wide berth in methods to be put to use. Their assigned task is to castrate the levered family jewels from some of the major players who illegally keep the gold price and silver price artificially low. The targeted victims know their awaited fate, and are presently defecating in their skivvies. The executions will be sudden. The missing US-UK levers will be immediate. Since last autumn, the global powers have aligned against Wall Street, even if the central bankers have supported it. If one wants to destroy a building, then weaken its pillars, cut a few support beams, then rush in a crowd of people, and wait for a turbulent storm. In the case of the COMEX, the wicked players will crowd the corrupted building. They will sink into ruin and then oblivion.

Sources from GATA (the Gold Anti-Trust Action committee) report growing distress for participants in the COMEX gold contracts, where a commercial party is very short and in deep trouble. They have sold more gold bullion than they can deliver. They are likely one of the big banks who violate the law with impunity, with USGovt sanctioned protection. By that is meant they routinely do not post 90% of the metal as collateral that they illegally sell. This is naked shorting by any other name. There are reports of grave concern over the upcoming June gold option expiration. If too many deliveries are ordered, then the commercial shorts would be under stress for exposure for naked shorting. They will eventually be caught in a bind and default on contracts. The important loaded monthly contracts are March, June, September, and December. The COMEX has tried to limit the ability of buyers to take delivery, running them around in circles, and entangling them in red tape, all clearly restraint of trade endorsed by the USGovt. Such rules are not in effect for cotton or soybeans or crude oil or pork bellies. After all, a financial crime syndicate has taken control of the USGovt, ever since Robert Rubin took charge at the USDept Treasury in 1992. His major project was to gut the nation of its gold, for the private profit of his friends. Recall Rubin came from Goldman Sachs. Rubin was the author of the Strong Dollar Policy which brought ruin to the nation. Hey, just my opinion!

Background inventory strain has come from unexpected sources. The Germans have demanded that gold bullion held in US custodial accounts be returned to their owners, with physical gold shipped back to Germany. The Dubai bankers have demanded that gold bullion held in London custodial accounts be returned to their owners, with physical gold shipped back to the United Arab Emirates. They are following the hired German counsel. In all likelihood, neither US nor London sources are in possession of all the gold held in those custodial accounts, since at least some of it probably was improperly leased. By that is meant without owner permission or knowledge. So an uproar could come soon with charges of gold bullion theft, or at least failure of fiduciary responsibility. Theft is a simpler description.

China is the biggest gold producer in the world now, but none of its output is directed to the open market. Russia is a significant gold producer also, but none of its output is directed to the open market either. A near default occurred in early April from a close call to Deutsche Bank on 850 thousand ounces of gold. The tarnished bankers at D-Bank dug up over a million ounces on the quick from the ready Euro Central Bank mine shifts in the nick of time. Never ignore the basic fact that COMEX lies through its teeth about the gold bullion in its vaults, since audits do not occur, some is leased (replaced by paper certificates), and some is committed in some fashion to very wealthy parties (unavailable). Far less gold bullion rests in COMEX vaults than is advertised. All signals point to serious strain in COMEX gold supply.

To the fools, dolts, and morons out there who cling to notions of recovery and Green Shoots, bless your heart. Hope has clouded your minds. Once more you believe the liars and purveyors of propaganda, after being nearly fatally burned. You must believe in the Easter Bunny, Santa Claus, and the Tooth Fairy. You should not be in charge of investment funds, but rather of crayon supply cabinets and Beanie Baby collector items. The Case Shiller housing price index this week reported a 19.1% annual decline in 1Q2009 from Q1 last year. Foreclosures in April were up 32% over last year, as the nightmare continues. That is 1 in 374 homes with mortgages in America in some process of foreclosure. A relentless decline in home prices erases household wealth, and the source of consumer spending. Consumer confidence is ephemeral and baseless. The mortgage rate has just gone above the pre-March levels, when the USFed announced they would monetize $1050 billion in both USTreasury Bonds and USAgency Mortgage Bonds. The benefit has been erased. Today’s underwater mortgage is tomorrow’s foreclosure, made worse by job losses. The FDIC this week reported a 25% rise in non-current loans in 1Q2009 from Q4 of last year. Greater bank losses will come, much like floods follow hurricanes. And lastly, give credit to the USGovt statrats in their busy laboratories. They decided to ramp up the Q2 Gross Domestic Product by including all USGovt rescue funds for the big banks, including the diverse funds from the many liquidity facilities. All those funds will go directly into the GDP for Q2 as a special line item. Expect a miraculous economic recovery in the second quarter, based in vapor. The stock rally since March was based in accounting fraud. These are true American innovations, but too bad they are not exportable! They are not, since they have no value.

Tuesday, May 26, 2009

Obvious Attempts To Suppress Gold Prices Are A Sign Of Desperation

Another Smoking Gun
By: Theodore Butler
From almost the day of the recent price lows in gold and silver, as measured from the COT as of April 21 to the close of business May 19, the commercials have increased their total net short position in silver by more than 16,000 contracts (80 million ounces) and in gold by more than 33,000 contracts (3.3 million ounces). The reciprocal of this is that the non-commercials and non-reportable traders have increased their net long positions by those same amounts. In a moment, I’ll introduce some new data intended to show why this is manipulation. Further, since the cut-off in the most recent COT, there appears to have been an orgy of additional speculative buying and dealer selling, especially in gold, maybe in excess of another 30,000 contracts.

We are now at COT levels in silver and gold more negative than anytime since last summer. (Including the amount thought added in gold since the cut-off Tuesday). Please don’t interpret this as a suggestion to sell long-term positions. That is not my intent, nor the purpose of this article. There are many positive factors, just not the COTs any longer. Silver is going much higher in the long run, for sure, regardless of what happens in the short term. The COTs are short term in nature and have nothing to do with the long term. Besides, the manipulative silver shorts could always get overrun and that would add incredible fuel to an upside move.

A manipulation cannot occur when many unrelated and diverse entities buy or sell. The free market thrives on many unrelated participants buying and selling. You can have mass hysteria and a price bubble on extreme group behavior, but not a manipulation. A manipulation can only occur due to the buying or selling by one or a few entities, where such buying or selling influences price. With that in mind, let’s take a detailed look at the recent data in the COTs for silver and gold.

As I indicated above, COT data shows more than 16,000 silver contracts and 33,000 gold contracts were sold by the commercials and bought by all other traders on the price rally, with more since the cut-off. As expected, most of the commercial selling was by the raptors, the smaller commercials who were net long. But roughly 40% of the commercial silver and gold contracts sold were by the four largest traders, commercials who already held a large concentrated short position. In fact, the 4 big shorts accounted for all the new short selling in silver and nearly all the new short selling in gold, and that includes all the other traders in every category - commercial, non-commercial, and non-reporting. Both before the recent rally commenced and since, there would be no commercial short position, at all, in silver and a tiny total commercial short position in gold, were it not for the four large traders. A very few big traders exist on one side of the market - the classic hallmark of manipulation. Nothing new here.

What is new is this. On the rally, in which the 4 big traders accounted for almost all the short selling, what was the concentration on the long side? You don’t hear me talking often about the 4 big long traders in COMEX silver and gold futures. There’s a good reason for that. The concentrated long position is tiny compared to the concentrated short position. In gold, the largest four short traders hold a position almost double the position held by the largest four long traders. In silver, the big 4 shorts hold a position more than four times the size of the big 4 longs. As lopsided as that is, the data on the recent rally is even more extreme.

Whereas the four big shorts in silver and gold accounted for nearly all of the short selling on the recent rally, guess how much buying the big four longs accounted for? The answer is zero. In fact, less than zero, in that the four big gold longs sold 9,000 contracts net, while the four big silver longs sold 2300 contracts net. Let me repeat that - while the 4 big gold and silver shorts added significantly to their already large short position, the 4 big longs in gold and silver reduced their long positions. No buying by the big longs, massive short selling by the big shorts. What does this mean? It means lots of smaller entities bought, while just a few giant traders sold a lot. Many bought, few sold.

Remember, you can’t have a manipulation if many diverse entities are buying or selling. You can only have a manipulation when a few entities act in concert to influence price. This is exactly what just occurred in COMEX gold and silver. It couldn’t be clearer and it comes from government data. Alarms and whistles should be blaring at the CFTC, at least enough to wake them from their deep slumber. And to those who might say prices did actually rise in spite of this additional and concentrated short selling, so what? If these big four shorts in silver and gold hadn’t added to their already concentrated short positions, wouldn’t prices have rallied much more than they did? That’s why rising prices alone don’t negate the possibility of short side manipulation.

How is it possible that the short concentration in gold and silver futures can run to record levels when all reports of hedging by the miners is shown to be at a decade low? What are they hedging?

Gold derivatives -- The tide turns
Reginald H. Howe
On May 19, 2009, the Bank for International Settlements released its regular semi-annual report on the over-the-counter derivatives of major banks and dealers in the G-10 countries and Switzerland for the six months ending December 31, 2008. See A. Moses, Derivatives Market Declines for First Time on Record (Update1), (May 19, 2009). The total notional value of all gold derivatives declined from $649 billion at mid-year to $395 billion at year-end, or almost 40%. Although gold prices fell from $930 to $870 (London PM) during the period, gross market values dropped only marginally from $68 to $65 billion, probably reflecting the impact of increased volatility on valuing options.

Forwards and swaps declined from $222 to $152 billion, and options from $428 to $243 billion. Converted to metric tonnes at period-end gold prices, total gold derivatives dropped by almost 7600 tonnes during the last half of 2008, with forwards and swaps falling nearly 2000 tonnes to somewhat over 5400, and options by over 5600 tonnes to almost 8700.

The significant declines in worldwide gold derivatives reported by the BIS for the last half of 2008 stand in stark contrast to the figures for U.S. commercial banks reported by the Office of the Comptroller of the Currency. From June 30 to December 31, 2008, the total notional amount of gold derivatives held by U.S. commercial banks fell from $114 billion to $107 billion, or just over 6%, compared to the 40% drop for all major banks and dealers in the G-10 plus Switzerland. JP Morgan Chase's gold derivatives fell from $85.3 to $82.5 billion, scarcely 3.3%, and HSBC's from $27.5 to $19.2 billion.

As argued in numerous earlier commentaries on gold derivatives, the best approximation of the total net short physical position in gold arising largely as the result of gold lending in one form or another by central banks is the total notional value of gold forwards and swaps as reported by the BIS and converted into tonnes. Accordingly, the recent data suggests that this short position was reduced by some 2000 tonnes in the last half of 2008, and that as a consequence of the fall financial crisis, official gold lending is now definitely on the ebb even if, like a modern King Canute, the Federal Reserve and JP Morgan Chase are trying to stand against the tide.

Gold bugs at last have their perfect trinity
By Ambrose Evans-Pritchard
The world's top hedge fund manager John Paulson has built a gold position of at least $5.5bn, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993.

Britain has become the first of the Anglo-Saxon "AAA" club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores.

Gold prices tend to slide in late May and languish through the summer, because of the seasonal ups and downs of jewellery demand. The trader reflex would be to short gold at this stage after its $90 vault to $959 an ounce over the past month. They may think again this year.

Paulson & Co has bought $2.9bn in SPDR Gold Trust, the biggest of the gold exchange traded funds (ETFs), which now holds 1106 tonnes − three times the Brown-gutted reserves of the United Kingdom.

GMO's Jeremy Grantham says in his latest note, Last Hurrah And Seven Lean Years, that the market value of equities, houses and commercial property in the US reached $50 trillion in the boom. This "perceived wealth" sustained $25 trillion of debt.

The crash has cut this wealth to $30 trillion, but the debts are still there. America's debt-gearing has exploded, as it has in the UK and Europe. This looks awfully like Irving Fisher's "debt deflation" trap of 1933. It will be a long slog for households to bring their debt-to-wealth ratios down to manageable levels.

You can argue – as do UBS, Merrill Lynch, ING, and Capital Economics, to name a few – that massive global stimulus is merely struggling to off-set a massive deflationary shock.
So how will gold fare in a "Japanese" stalemate world where neither inflation nor deflation gets the upper hand? The eight-year rally that has lifted gold from $254 to $959 may lose momentum for a while.

"The air is getting thin up here," said John Reade, precious metals guru at UBS. "Rich investors are no longer rushing out to buying gold bars as they did after the Lehman collapse. Still, we think it is highly significant that both China and Russia – two of the biggest holders of foreign reserves – are both buying gold," he said.

Personally, I remain a gold bug out of fear that the most corrosive phase of this crisis lies ahead. There are two more boils to lance: Europe and China. As the IMF keeps telling us, Europe's banks are still covering up their vast toxic debts. Nor has the G20 begun to address the root cause of the global crisis, which lies in excess exports from East (aided by currency manipulation) to an over-spending West. China is putting off the day of reckoning with its crisis response, which is to build yet more plant to flood the world with yet more over-capacity.

For "political bears" the risk is that the EU polity fragments under strain, and that governments restrict basic markets to defend themselves – whether by imposing exchange controls to stop bond flight, or shutting derivatives markets used as hedges, or putting up trade barriers. We will find out if and when unemployment hits 10pc in America, 12pc in Germany, and 20pc in Spain, or if migrant workers rampage in Shenzhen.

James Turk: Updating the charts
GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report anad consultant to GATA, writes that Treasury note yields have made "a huge round trip" and now are rising as the U.S. government devalues the dollar by turning debt into currency. "The more Treasury paper the Fed buys, the lower the dollar will fall in the foreign exchange markets and, more to the point, the higher gold will rise." Turk's new commentary is headlined "Updating the Charts" and you can find it at the GoldMoney site here:

US bonds sale faces market resistance
By Ambrose Evans-Pritchard
The interest yield on 10-year US Treasuries – the benchmark price of long-term credit for the global system – jumped 33 basis points last week to 3.45pc week on contagion effects after Standard & Poor's issued a warning on Britain's "AAA" credit rating.

The yield has risen over 90 basis points since March when the US Federal Reserve first announced its controversial plan to buy Treasury bonds directly, a move designed to force down the borrowing costs and help stabilise the housing market.

The yield-spike may be nearing the point where it threatens to short-circuit economic recovery. While lower spreads on mortgage rates have kept a lid on home loan costs so far, mortgage rates have nevertheless crept back up to 5pc.

The Obama administration needs to raise $2 trillion this year to cover the fiscal stimulus plan and the bank bail-outs. It has to fund $900bn by September.

"The dynamic is just getting overwhelming," said RBC Capital Markets.

The US Treasury is selling $40bn of two-year notes on Tuesday, $35bn of five-year bonds on Wednesday, and $25bn of seven-year debt on Thursday. While the US has not yet suffered the indignity of a failed auction – unlike Britain and Germany – traders are watching closely to see what share is being purchased by US government itself in pure "monetisation" of the deficit.

The US is not alone in facing a deficit crisis. Governments worldwide have to raise some $6 trillion in debt this year, with huge demands in Japan and Europe. Kyle Bass from the US fund Hayman Advisors said the markets were choking on debt.

"There isn't enough capital in the world to buy the new sovereign issuance required to finance the giant fiscal deficits that countries are so intent on running. There is simply not enough money out there," he said. "If the US loses control of long rates, they will not be able to arrest asset price declines. If they print too much money, they will debase the dollar and cause stagflation.

"The bottom line is that there is no global 'get out of jail free' card for anyone", he said.

Why Wall Street Is Deserting Treasuries and the Dollar
By Tom Petruno, Los Angeles Times
This week couldn't end fast enough for the Treasury bond market or the dollar, both of which were hammered again today as investors bailed out in thin pre-holiday trading.

The yield on the 10-year T-note jumped to 3.45%, up from 3.35% on Thursday and 3.14% a week ago. The yield now is the highest since mid-November.

So much for the idea of Treasuries being a haven: The iShares Barclays 20+Year Treasury exchange-traded fund, which owns long-term government bonds, has lost 22% of its value since the start of the year as rising market yields have depressed older bonds' prices.

In the currency market the euro shot up to a five-month high of $1.40 from $1.39 on Thursday and $1.35 a week ago. The dollar also slumped further against most other major currencies and a lot of minor ones.

As for the stock market, it performed a modest levitation act for much of today's session, only to surrender to gravity in the last hour.

Global investors and traders suddenly seem to have every reason in the book to sell Treasuries and the greenback, and no reason to buy.

The Obama administration might not care much about rising Treasury yields and a falling dollar, except for the velocity of the moves: The U.S. can't afford a continuing spiral up in yields and spiral down in the dollar's value because they could feed on themselves and unnerve our foreign creditors, particularly China.

And although it hasn't happened yet, at some point the jump in Treasury yields will begin to push up mortgage rates. Then say goodbye to any hopes for a housing recovery.

All of this sets up markets for another big test next week, when the Treasury plans to sell a total of $101 billion of two-, five-, and seven-year notes Tuesday through Thursday.

"When the market is against you it's very hard to have a successful intervention," warns Dominic Konstam, an interest-rate strategist at Credit Suisse in New York.

*****Who sold 65 tons of COMEX gold in the last two days?*****
by Eric deCarbonnel
Notice the dollar breaking down? This is very bullish for gold.

Normally, a very bullish development, such as the dollar’s current freefall, would lead to a decrease in bearish bets against gold.

Despite what one might normally expect, open interest on the COMEX did not fall. In fact, it rose by 22,992 contracts in two days. That is 65 tons in just 2 days.

So then, who sold 65 tons (2.3 million ounces) of gold on the COMEX in the last two days? Where did this 65 tons come from? Why sell it now, as gold soars and the dollar crashes?The only logical answer is that this is a blatantly obvious attempt to keep gold prices in check. The 65 tons of gold was conjured out of thin air.

Conclusion: There are two key points to take away from this.

1) Despite the best efforts of gold shorts, physical demand is driving prices higher. The 65 tons of paper gold sold on the COMEX was to absorb as much investor demand as possible, keeping it out of the physical market where it would send prices upwards.

2) Such obvious attempts to suppress gold prices are a sign of desperation. Each new piece of evidence of manipulation pushes new investors into the physical gold markets, which can’t be controlled. So while shorts on the COMEX managed to absorb 2 billion dollars of gold demand, they also provided near indisputable proof that the COMEX gold market is rigged, damaging faith in the US financial system.

Monday, May 25, 2009

...And The Sh*t Moves Closer To The Fan

Loud Paradigm Shift Rumblings
By: Jim Willie CB,
Numerous events have taken place of global importance. Alone, each story seems of some significance. Together, they paint a mosaic of extreme change in a very dangerous sequence of events that fit together. The greater aggregate story is that a tremendous paradigm shift is underway, with early steps and major moves by global players in clear view. The Western analysts and pundits and mavens are missing it. A PARADIGM SHIFT HAS BEGUN, WITH BANKING POWER SHIFTING TO THE CREDITOR NATIONS AS THE USDOLLAR IS SUPPLANTED, MADE POSSIBLE BY SEVERAL NEW INSTITUTIONAL PILLARS AS WELL AS NEWLY FORGED ALLIANCES. The consequences are significant and will change the face of global banking and commerce. Some in the United States and England believe that a return to normalcy comes. They are wrong by 180 degrees. The G20 Meeting of finance ministers and heads of state was the warning. The message from that meeting in London has been long forgotten, a call made in my public article immediately after its conclusion. This article provides an outline of events that have occurred only in the last few weeks, as the pace is accelerating for transformation that begins at the foundation. Piece it all together, use some mental power, sprinkle with only a little imagination, connect some dots easily, and take a look at the global picture that is emerging. Yesterday came the crowning blow, as the United Arab Emirates rejected the Saudis in the Gulf monetary union. My belief is that the rising power in the UAE wants Russia instead of the Saudis, who are tied at the US hip.

Numerous events mark major milestones.

1) The US-UK banking systems are shattered by deep bond asset losses, shrouded in fraud, deep with leverage, teeming with collusion, which renders them as insolvent and in need of transfusions. The reality is that Wall Street firms remain in control of the USGovt financial operations despite their responsibility for both the collapse and clear legal violations. The USDollar image is badly tarnished.

2) Incredible volumes of money have been committed by the US Federal Reserve and the USGovt, much already delivered, with staggering future rescues, bailouts, and stimulus packages assured. The sums total $12.8 trillion at last count. The undermine, if not debauchery, to the USDollar and its vehicle the USTreasury Bond is vividly clear, a palpable threat to foreign creditors.

4) Foreign creditors have owned over half the US$-based government and mortgage agency bonds for almost a decade. With the dependence upon foreign institutions (central banks and sovereign wealth funds), the United States has quietly lost control of its fate. It can no longer make decisions without consulting major creditors.

11) Numerous nations have stated publicly that they regard the USDollar as inadequate and unqualified to serve any longer as the sole global reserve currency. The isolated revolt has turned into a uniformly global revolt. They are blaming the US$ for their internal crises

14) The Germans have demanded all of their gold held in custodial accounts inside the United States to be returned to German soil. The story is not public, but details have come to me from a private source close to the action. The Germans have also given counsel for Dubai to demand all of their gold held in custodial accounts inside London to be returned to Dubai, where a new gold trading center will spring up. In my view, THIS IS THE BIGGEST NEWS FOR GOLD THIS ENTIRE YEAR. The hidden arch-enemy for the US-UK on all matters pertaining to gold bullion is Germany. This is not a well-known concept. Insults were hurled at the US delegation during the London G20 by their ministers. Germany is also advising the Chinese on currency and gold matters. Can one detect some coordination?

16) A near default was averted at the Eleventh Hour when Deutsche Bank found almost a million ounces of gold to cover its (naked) short in gold futures at the COMEX at the end of March. Thanks to the Euro Central Bank, which happened to sell over a million ounces for some reason. My conjecture is that the Germans decided the time was not right to bust the COMEX. From sources, that date might be this September in a coordinated attack that requires preparations to remove the levers and kick out the pillars that support the COMEX.

18) The Chinese announced an increase in their gold reserves from 400 tonnes to 1050 tonnes in the last five years. At the same time, they have been harping on the extreme risk to their $2000 billion in savings, held in USTreasury Bonds, USAgency Mortgage Bonds, and USCorporate Bonds. They openly complain about US$ mismanagement, unbridled USGovt spending (for numerous crisis projects), and the resulting risk to the US$ exchange rate. They have engaged a war of words, precursor to trade war, with USDept Treasury officials, one that has lasted for at least two years. The Chinese have openly talked about a covert USTreasury Bond default, which is a very serious accusation to make.

21) Meanwhile, the big US banks are maneuvering themselves to return T.A.R.P. funds when their insolvency is obvious, their balance sheet accounting is phony, and numerous events have begun or are planned to raise equity capital. They are rectifying their capital inadequacy and vanished loan loss reserves. The real reason they plan to return USGovt funds is to put an end to the extreme risk of underlings at the USDept Treasury, Congressional Budget Office, Govt Accountability Office, and various Congressional Banking Committees who have had access to records, the paper trails. Eight months have passed since TARP funds were injected into big banks, giving way too many eyes too much access. The situation is not manageable, an unexpected grand intrusion after fund confiscation. The financial (crime) syndicate must be protected. Quite a contrast event, in view of foreign actions listed above.

The Chinese strategy remains hidden, to execute a grand paradigm shift that will take tacit control of the United States, which is now in disarray. Its leadership is too busy being coopted by the Wall Street banksters. The objective by Beijing leaders is to avoid violence and military actions altogether. Sun Tzu would be proud. Beijing is gradually subjugating the USGovt as a vassal in debt, the risk to the US being a transition toward servitude to their credit master. We are in the midst of an historical global paradigm shift, to date a quiet process. Power is shifting from WashingtonDC and New York City and London directly to Beijing.

The United States has little choice but to acquiesce and comply with Beijing wishes. The insolvent indebted nation with little industry left and a destroyed banking system can endure the shameful process of bankruptcy receivership, forced by the creditors, or the nation can permit a ‘New Alliance’ with China that involves obedient hidden directives. The US possesses a powerful defense contractor industry, half the world’s agricultural output, and many spectacular locations for residence. The practical consequence of the US ‘listening’ to Beijing wishes on a regular basis will be for the European Union to be pushed into a ‘New Alliance’ with Russia. Such a deal is practical, due to distances and supply lines. The United Kingdom is in all likelihood to be left out in the cold.

Bob Chapman, The International Forecaster
US Treasuries and gold have waged a silent fight for dominance in investors’ flight to safety over the past 22 months. Gold has been suppressed over that period by manipulation by the President’s “Working Group on Financial Markets,” via the US Treasury and the privately owned Federal Reserve. In spite of this ongoing intervention into what are supposed to be free markets gold has held its own.

Since the beginning of the year when the 10-year Treasury note yielded 2.35% it has steadily lost ground. It recently rose to 3.36% and is currently at 3.27%. That is a lot of ground lost in spite of manipulation of that market by the Federal Reserve. The Fed’s efforts have been hindered by an enormous amount of debt issued by the Treasury in order to meet funding operations as well as to assist in funding commercial banks’ balance sheets. This is our Treasury taking funds from responsible Americans to finance and subsidize those in the financial world who turned our financial system into a vast gambling casino. In the process the Treasury and the Fed have crowed out commercial investment, which has led our economy into depression. You cannot have recovery without investment. When history studies what has gone on over the past 22 months it will be aghast that those who created the problem have been designated to fix it. These are the greedy, corrupt destroyers of capital that are about to serve us up hyperinflation as part of a cure to gain time in a senseless effort to save the unsavable, our financial system. A system that teeters on the edge of insolvency. Not only have shareholders and bondholders been wiped out, but so have depositors. If you are patient you will see what we mean. This charade cannot go on indefinitely. Sooner or later Murphy’s Law will come into play. That untoward event that no one expects takes place. The money has already been spent and the only way to continue is to issue more money and credit. That issuance currently is about 18% and climbing, and as a result daily the US dollar loses ground to other currencies and to gold. The sale of Treasury securities are absorbing domestic and foreign savings so much so that the Treasury has the Fed buying its bonds, notes and bills directly from the Treasury and from out of the market, along with collateralized debt obligations. The problem with that is that the Fed with limited assets has to create money and credit to do this, and in this process monetize the debt, which is very inflationary immediately.

Then there is another $900 billion to purchase CDOs, collateralized mortgage obligations, better known as toxic waste. These are also purchased by creating money out of thin air. When the Fed purchases these CDOs they are removed from the sellers’ balance sheets and replaced with cash. That cash is then deposited with the Fed and now earns interest. It sits there sterilized until used. When it is eventually used it is very inflationary. On the other hand rather than keep the money on deposit the banks can use the funds to buy Treasuries, which becomes immediately inflationary. The bottom line is the Treasury meets its deficit with manufactured money, the banks improve their balance sheets and the Fed’s balance sheet looks like a garbage pit.

What this means is that either way any recovery is at risk because the absorption of government debt will push interest rates higher, monetary velocity will increase and hyperinflation will ensue. That unfortunately is underway as we write. The die is cast and again as in 2002 there is no turning back. The point of no return has past. There can only be one reason for this unsound monetary policy and that is the financial companies have to be bailed out at any cost and the public must foot the bill. The only time we know of that this has been attempted on this scale was in the Weimar Republic and we all know what happened in that experiment. Trillions of dollars of investment are being crowed out of the market stopping any recovery. There is no chance as well that excess liquidity will be withdrawn from the system. If it is withdrawn deflation will overwhelm inflation and collapse will ensue. As a result of monetization the liquidity is already in the system. When more liquidity is needed the exercise has to be done over and over again, unless sufficient savings are available. Even at 4.2% of GDP that is not nearly enough. The economy hasn’t improved one bit in the last 22 months and we see nothing that tells us that this is going to change for the better.

Gold Battle Lines Drawn at $1,000 Again
By James West
Here we go again. The forces of legitimate money versus the incumbent purveyors of the candy floss economy squared off at the $1,000 an ounce line over which yet another battle will be fought. Arrayed against either side are formidable new elements and tried and true old ones. As usual, the first volley has been catapulted over the walls of the hucksters by the defenders of the essential timeless truth of gold’s naturally stored value against the counterfeit paper currencies.

The liabilities of the enemy have increased, and the short positions in the COMEX market are sufficiently stacked that the big bank defenders simply cannot allow gold to win decisively. G7 governments are allied against gold to a man, while emerging economic behemoths China and Russia stand in opposition.

Goldbugs are salivating at the prospect of vindication, but seasoned veterans of the war know that the governments and central banks arrayed against gold are not fair fighters. Since the largest players in the futures market occupy both sides of the contract, and never take delivery of the physical gold, they can orchestrate a perpetual negative sentiment towards gold by driving the future price downward by simply amping up the short positions, thus making gold appear poised for a sell-off. This has been standard operating procedure for the last decade, and it is interesting to note that ever-bigger short positions are having less influence over shorter durations before the bulls shrug off the flimsy performance and take gold higher.

Critics and observers of this U.S. Dollar image management program point to the fact that such activity, while shoring up demand for U.S. Dollar debt in the short terms, effectively undermines the entire global economy, and is among the fundamental causes of financial crises such as the housing collapse and the whole current global financial fiasco.

Proponents of this manipulation, who are increasingly legion in number, correctly predict an inevitable bursting of the damn catalyzed by investment demand overwhelming the short positions, forcing them to buy and cover to limit losses, which will, in itself, stimulate the gold price even further.

According to Bill Murphy, intrepid soldier of gold wars and standard bearer for the Gold Anti-trust Action Committee,

"The Gold Cartel is giving it all they have no, as evidenced by the sharply rising gold open interest on the Comex ... up some 23,000 contracts on Wednesday and Thursday. They are doing all they can to counter new spec buying.

My hunch is the next time we see $1,000, and that could be very soon, gold ought to take off from there, giving us more upside dynamic daily moves. The reasons to own physical gold are off the charts ... HUGE investment demand, shrinking visible central bank supply (unrelated to the cabal), shrinking mine supply, shrinking dollar, concerns over sovereign wealth debt, a horrible US economy, and a US printing press that is going flat out and will have to for some time to come.

In my opinion, all gold has to do is to stay over $1,000 for a few days, and then all kinds of bells and whistles go off."

Bill is not the only one who thinks the breakthrough is at hand. Bob Moriarty of, himself a historically prescient oracle of market crashes agrees and warns that the stock market will be the first casualty of the new financial reality.

“If you take a look at the dollar and the long bond, it looks as if they jumped off a cliff. This isn’t gold going up, it’s the dollar and bonds going down. When the market wakes up the stock market is going to take a giant dump. No more fake rally.”

Investors by now should be well equipped to read the writing on the wall. Whether gold breaks through $1,000 and holds there, charts new territory at much higher levels, or is beaten back down through the offices of JP Morgan, HSBC and Goldman Sachs, is irrelevant.

Gold on verge of historic breakout?
By Peter Brimelow, MarketWatch
After Friday's $956.50 close, Martin Pring -- decidedly not a gold bug -- set the tone in his Weekly InfoMovie Report:

"Gold could be on the verge of a historical breakout. Watch that $990-1,000 area like a hawk."

Dow Theory Letters' Richard Russell said this:

"Ordinarily I would only add gold items on a correction, but gold seems on a roll now..."

The Privateer (whose free U.S.-dollar 5X3 Point-and-Figure chart looks very handsome after Friday) describes the situation:

"What is being traced ... is a gigantic 'reverse' head-and-shoulders formation. The trading range between US$900 and US$1,000 was broken early in April. Over the month of April, a tighter range between US$870-US$910 was established. Now, gold has broken back above that range. The 'right shoulder' on the 'reverse' head-and-shoulders formation is getting wider. ... There are two major resistance points. The first is at US$955 ... where the chart is now. The second is, of course, at US$1,000, the level reached in March 2008 and again in February 2009."
See chart.

As the Gartman Letter noted on Wednesday: "The dollar does look vulnerable. ... Pushing government steadily leftward, the Obama Administration has set up the possibility of a U.S. dollar rout. ... If this persists, commodity prices generally shall rise and rise materially, and gold shall too."

FGMR's James Turk is so intrigued that in this weekend's issue he considers altering his normally cautious trading style:

"I think we are very close (7-10 months) to the beginning of a hyperinflationary spiral. ... If I am right ... there obviously is an exceptional opportunity to load up (i.e., a leveraged position) by buying gold."

But Turk has his fair share of trading scars and more.

He warns: "Comex options expire this Tuesday, May 26th, and options in the much larger over-the-counter market expire a couple of days later. We all know what has happened regularly over the years on option expiry. The gold cartel slams gold."

Turk is part of a faction I call the radical gold bugs, because they watch not merely inflation but what they believe to be the authorities' manipulation of the gold price to preserve the illusion of financial stability. See Web site.

Their expectations of a gold breakout have been frustrated repeatedly.

Nevertheless, Turk adds: "One of these days (and there's at least a 50% chance now is that time), gold will just keep rising."

Hank Paulson Admits He Doesn't Understand Mortgage Securities
This quote, from Newsweek's piece on former Treasury Secretary Hank Paulson, strikes me as a bombshell:

Paulson--by his own admission--was not paying much attention to the way banks were slicing and dicing mortgages and selling them as complex securities. "I didn't understand the retail market; I just wasn't close to it," he told NEWSWEEK.
If Newsweek won't play prosecutor, I will: "Hank Paulson, you were Goldman's chief executive as mortgage securities boomed in 2004-5. Your earned an incredible severance, partly because of it. And you say you didn't understand mortgage securities? How is that remotely possible?"

I'd like to offer a bit of analysis, but all I've got is bewilderment. The reason I find the revolving door between Wall St. and Washington somewhat acceptable is that I think it's important that those who govern Wall Street understand it. But Paulson, by his own admission, didn't really. Think about this: A guy whose $46 million compensation package was made possible by leaving during Goldman's mortgage-security boom "was not paying much attention" to the mortgage-security boom! I don't know if Paulson is fibbing, or if mortgage-securities were such a specialized and esoteric money machine that basically nobody understood what was going on, but either way, this seems devastating.

Lehman Brothers disappeared with Hank Paulson's reputation. He wants it back
Hank Paulson, former master of the universe, sits in a nondescript office in northwest Washington, D.C. He is trying to work on his memoirs, but he is struggling. He doesn't seem like the onetime All-Ivy tackle at Dartmouth, the Harvard M.B.A. who ran Goldman Sachs, the prince of Wall Street who went on to be come secretary of the Treasury. He comes across more like an athlete who has lost a game and can't stop talking about the dropped pass, the missed shot. He is trying to explain the weekend last September when Lehman Brothers went down—and the financial world collapsed.

The conventional wisdom, he admits, congealed quickly: it was a mistake for the government to let Lehman die, and the blame rested squarely with Hank Paulson. On the day that Lehman filed for bankruptcy, Paulson had tried to get out ahead of the story. If Lehman couldn't save itself, he told reporters, then he wasn't about to ask the taxpayers to step up. "I never once considered it appropriate to put taxpayer money on the line," he said. The message was that the government would no longer bail out failing companies—that would just invite more foolish risk-taking. It would create a "moral hazard."

But of course, in the weeks and months since the fall of Lehman Brothers, the government has gone on to bail out banks and other financial firms to the tune of hundreds of billions of dollars. So why didn't it save Lehman? If only the government had rescued Lehman, a financial panic could have been averted. Or so the story goes. The narrative was set from the beginning by Paulson's moralizing tone, followed by a market crash—and, as the once mighty bankers crawled out of the wreckage, the anguished testimony before Congress of Dick Fuld, the CEO of Lehman, who portrayed Paulson as a backstabbing Judas. "Until they put me in the ground," Fuld said, leaning into the microphone and baring his teeth, "I will wonder."

Paulson insists that he did not turn his back on Lehman. "There's no company that I spent more time with and worked harder to save. That's sort of the irony of the narrative that we wanted them to go under," he told NEWSWEEK in one of his first extended interviews since leaving office.

Thursday, May 21, 2009

Chart Update

Demand for Physical Gold Breaking Records Says Capital Gold Group CEO
Jonathan Rose, the President and CEO of Capital Gold Group, Inc., one of the country's premier providers of physical gold assets, stated that the demand for physical gold as a hedge against losses in paper assets such as stocks and the US dollar is breaking records.

As for those concerned about whether it is too late to enter the market, Mr. Rose was quoted as saying, "A lot of people wait to buy gold. Instead, people should buy gold and wait."

Considering gold's inverse relationship with the dollar, a shrinking US dollar bodes well for gold. The US Dollar Index has lost over 30% since 2001, and continues to decline, while gold has risen over 300%.

Mr. Rose believes that investors have a much better chance of recovering losses in the market by holding gold instead of stocks.

Tuesday, May 19, 2009

Expecting The Unexpected

Surprise drop in housing data checks market's rise
NEW YORK (AP) -- A record low in housing construction has investors doubting the economy again.

Stocks closed narrowly mixed in light trading Tuesday as the surprise drop in construction and a cautious outlook from retailer Home Depot Inc. led energy and utility stocks to pare gains.

Construction of homes and apartments fell 12.8 percent last month to the lowest pace on records going back a half-century, the Commerce Department said. Analysts had expected housing starts to rise.

WHAT!? How can this be? Just yesterday we were told that a 22% drop in Lowe's first qtr profits, and a pithy rise in the "Home Builders Sentiment Index" was a sure sign that THE BOTTOM IN HOUSING WAS IN! Hope springs eternal...

And where there's hope, there is NO sign of a bottom. The bottom will come when all hope is lost. When will these knuckleheads quit trying to "call the bottom" in housing? Bottoms in markets are seen in hindsight, NOT in real time. When will people quit putting so much faith in "analyst expectations"? Analysts are as pathetic as the weatherman, they're lucky if they're right half the time.

And when will the financial media quit trying to spin every instance of "more bad news" into something "hopeful"? Today's housing news was 100% bad. Expected or unexpected, makes no difference. There was absolutely NOTHING good about it...but you'd never know it by this headline that popped up AFTER the market closed today:

Housing bottom in sight, but recovery will be slow
WASHINGTON (AP) -- Single-family home construction posted a modest rebound in April, raising hopes that the three-year slide in U.S. housing is leveling off. But a bulging supply of unsold homes, record levels of foreclosures and still-falling home prices suggest a sustained recovery isn't likely until next spring at the earliest.

The Commerce Department said construction of homes and apartments fell 12.8 percent last month to a seasonally adjusted annual rate of 458,000 units. That's the lowest pace on records going back a half-century.

Applications for new building permits dropped 3.3 percent to an annual rate of 494,000, also a record low.

The National Association of Homebuilders said this week that its survey of builder confidence rose for the second straight month in May, reflecting growing optimism.

The Washington-based trade group's index rose two points to 16, the highest reading since September. Even with the rebound, the index remains near historic lows. Readings lower than 50 indicate negative sentiment about the market.

The worst in half a century! Yeah, that gives me hope... There are homes all across this country sitting empty, and unsold. Why would any builder in his right mind build more homes? Because some analyst hopes he will? LOOOOOOOOOOOOOL!

Tax Revenues Tanking
By David Galland, Managing Editor, The Casey Report
While everyone else has been focused on the banks’ stress tests and how much government is spending to bail out troubled “too big to fails,” a disturbing trend on the other side of the equation is now emerging: how much (or rather, how little) the U.S. government is receiving in tax revenues.

Here’s what’s going on:

-In 2007 and 2008, government tax revenues averaged about $633.15 billion per quarter. For the first quarter of 2009, however, the numbers just in tell us that tax receipts totaled only about $442.39 billion -- a decline of 30%.

-Looking to confirm the trend, we compared the data for April – the big kahuna of tax collection months – to the 2007-2008 average, and found that individual income taxes this year were down more than 40%. The situation is even worse for corporate income taxes, which were down a stunning 67%!

-When you add in all revenue from all sources (including Social Security revenue, government fees, etc.), the fiscal year-to-date – October through April – revenue shortfall comes to 19%, vs. the 14.6% projected in Obama’s budget. If, however, the accelerating shortfall apparent year-to-date, and in April in particular, continues, the spread between projected and actual tax receipts will widen considerably.

Tellingly, for the first time since 1983, the U.S. government posted a deficit in April. That’s a big swing in the wrong direction, as the bump in personal tax collections in April historically results in a big surplus -- on average about $68 billion.

What are the implications of this tanking tax revenue?

For starters, it means the federal government deficit is going be as bad or worse than the $2.5 trillion Bud Conrad, chief economist of Casey Research, projected it to be last year.

If the shortfall in individual and corporate tax revenue persists -- and we expect it will -- then the deep hole the government is already digging for itself will be that much deeper.

Falling tax revenues is going to make it that much more expensive for The Obama to fund his grand stimulus package and gargantuan fiscal budget. With buyers turning up their noses at Treasury auctions, and a falling tax base, the Fed is going to have to turn the handle on the money printing machine ever faster. This has serious implications for the US Dollar, interest rates, and ANY HOPE of an economic recovery "in the second half". Maybe in the second half of this century, certainly not the second half of this year.

Physical Gold Is on the Move
By Trace Mayer
The entire eligible COMEX stockpile represents an immaterial 0.36% of the current assets of the five oil majors. The oil majors could drain the COMEX with a rounding error. It would be 14% of what Exxon Mobil was spending per quarter buying back stock. Why buy back stock when oil is so cheap compared to gold? Why not just buy physical gold and truck it away?

London and Zurich have been the loci of gold trading for centuries. The London gold vaults serve the needs of the London Bullion Market Association. On 11 May 2009 The LBMA reported, “Gold ounces transferred between accounts held by bullion clearers fell 7.6 percent to a daily average of 20.5 million ounces in April from a month earlier. … Ounces transferred in silver rose 2.4 percent to a daily average of 101.1 million.” This amounts to approximately $19B of physical gold and $1.4B of physical silver which exchange everyday.

On 13 May 2009 Emirates Business 247 reported that the Dubai Multi Commodities Centre has finished a state of the art vault which will become the new home for the Dubai Gold Securities’ ETF. Additionally, ”It’s a natural home for the central banks in the region to store their gold in Dubai rather than in London where they have typically held their gold. Particularly when DMCC has a state-of-the-art facility to store such precious metals,” said Jeffrey Rhodes the CEO of INTL Commodities DMCC, a Dubai-based gold dealer.”

As revealed by China’s recent announcement of an increase in gold reserves from 600 to 1,054 tons it appears that the Western central banks are overstating their physical gold reserves while the Eastern central banks are understating them. Now the Middle East is demanding physical possession of their gold. It will be interesting to see whether a failure to deliver occurs at a major exchange such as the COMEX or LBMA.

At all times and in all circumstances gold and silver are money. Even though the great credit contraction has begun there is a microscopically small amount of physical gold and silver bullion compared to the financial assets which have not yet evaporated. The GLD and SLV ETFs purportedly hold large amounts of physical bullion but their respective prospectus are riddled with risk. For decades Western central banks have bled gold through minor wounds.

But now Eastern and Middle Eastern central banks, ETFs and gold dealers are reducing their risk by taking physical delivery of bullion. In effect, they are digging into and ripping wide-open the wound and causing gold to spurt out like a failing dam. Gold is cash and to be bought when one does not know what else to buy. Like the Eastern and Middle Eastern central banks, individuals should only buy gold or silver bullion for physical delivery or use a trusted third party vaulting service that has the physical bullion in possession along with appropriate corporate governance like GoldMoney or your gold might learn how to vanish.

Have China watchers never heard of a decoy?
By Adrian Douglas
The Chinese have a $300 billion sovereign wealth fund. If that is properly positioned in commodities, it alone will hedge China's entire bond portfolio.

The notion that the Chinese have accumulated this massive U.S. debt portfolio and only now are wondering what to do about it is so naive it doesn't warrant serious consideration. I have dealt with Chinese in business and they are the sharpest knives in the drawer. My guess is that China has already diversified most of its dollar holdings.
Now, like magicians, the Chinese keep the eyes of the China watchers fixed on the hat, because we all know that is truly where the magician has hidden the rabbit, right?

The Chinese have no interest in collapsing the U.S. Treasury market, but if you think that the Chinese strategy to protect themselves against such an eventuality is to sit tight, buy more, and keep their fingers crossed that everything will work out fine, then you shouldn't go out in public alone.

The Chinese have vault-loads of intrinsically worthless Treasury bonds that they no doubt have used as collateral to buy intrinsically valuable assets. In contrast, Western central bankers had vault-loads of gold they have loaned or sold to buy intrinsically worthless interest-bearing government debt.

The US Dollar is in a world of hurt. Continued strength in the equity markets will only pressure it further. This equity market strength may be just an illusion, but it's just what the Dollar Bears doctors ordered. The growing us government deficit [and debt] is also pressuring the Dollar and it's lone crutch, the US Treasury market. The bond market is the verge of collapsing, down over 20% since the first of this year.

A head and shoulders top is now clear on the US Dollar chart. It's neckline was broken on April 28 as the Dollar slipped below 85. On may 8 the Dollar slipped below it's uptrend line off the July 2008 low at 71.31. The Dollar has now spent the last eight trading days below it's 200 day moving average. As each day passes, the cap on the Dollar at its 200 day moving average grows stronger. Today's Dollar close below 82 was its lowest close since the first week of January 2009.

There are signs that the Dollar may be about to bounce here near 82. If it should succeed in doing so, sell the rally. It will be short lived and capped by one of three areas of resistance: The 200 day moving average, the broken uptrend line, or the falling 50 day moving average. The future of the US Dollar is not bright.

A bounce in the Dollar may, or may not pressure Gold here. Doubts continue to grow about the bond market, and a strong percentage of Dollars that in the past have sought refuge in the bond market, may instead seek safety in Gold. This of course presumes a bounce in the Dollar will cause a fall in the equity markets. One thing we can count on going forward...VOLATILITY. And volatility means trading opportunities in the Precious Metals.

Monday, May 18, 2009

Recovery? You're Joking Right?

There Will Be No Recovery
by James West,
According to the definition at, equity is:

“Definition 1
Ownership interest in a corporation in the form of common stock or preferred stock. It also refers to total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net worth or book value. In real estate, it is the difference between what a property is worth and what the owner owes against that property (i.e. the difference between the house value and the remaining mortgage or loan payments on a house). In the context of a futures trading account, it is the value of the securities in the account, assuming that the account is liquidated at the going price. In the context of a brokerage account, it is the net value of the account, i.e. the value of securities in the account less any margin requirements.

Definition 2
Ownership interest in a corporation in the form of common stock or preferred stock.

Definition 3
Total assets minus total liabilities; here also called shareholder's equity or net worth or book value.

Definition 4
The value of a property minus the owner's outstanding mortgage balance.

Definition 5
Fairness in law.”

The idea of revolution keeps popping up, albeit intermittently, in the fringe blogosphere. I wonder just how far the disconnect goes between what the government-banking-media mafia thinks the public will swallow without complaint, versus the grave and solemn outrage dangerously smoldering in the hearts and minds of its victims that is the reality that brings that idea closer to an explosive existence?

This is the real and stark potential future for the United States. With crime on the rise in virtually all sectors, and the population already armed to the teeth, there is a fine line on the horizon that this organized crime gang seems intent on crossing.

The basic requirement of all humanity is food, shelter, and gainful employment. Historically, armed revolutions are ignited when those basic elements disappear from the daily lives of a majority of the population, such that most have nothing better to do than steal, beg, or roll over and die. When enough of that despair permeates any portion of humanity, there is an organic, deeply-rooted fury that, expressed collectively, has never failed to topple governments and rewrite the world order.

Proponents of globalization point to the fact that there has never been a longer period in the history of the planet where more people have enjoyed a peaceful and prosperous existence. That may be true, but one must question if that is because we have been living under a system that is for the most part fair and equitable, or have we just so thoroughly mastered the arts of manipulation and delusion through the offices of mass media that there has also never been a time where such astonishingly massive concentrations of personal wealth have accrued to such a proportionate few in the same time span?

The larger question in terms of a recovery is exactly what must we recover? The mafia most clearly wants us to believe that a return to over-leveraged and exuberant economic growth is the priority underlying the idea of recovery. I opine that there is something far more valuable that needs to be recovered, and issues economic are puny in comparison. For without the recovery of equity, there can be no recovery.

Bob Chapman, The International Forecaster
We have come a long way from Dow 14,168 and we have just completed a strong bear market rally based on little but hopes, dreams and the assistance of the “Working Group on Financial Markets” under the guidance of the Treasury and the Fed. We believe the bear market has a substantial distance to fall as the debt sector is purged. A 50% retraction of debt, which is far above GDP has to be completed, excess capacity has to be rung out of markets, consumer spending, which is now 70% of GDP, has to return to the long-term average of 64.5% of GDP. Once real estate bottoms in 2011 and 2012, we will probably be half way to the overall bottom. We have 2/3’s of the way to go before credit card debt is purged. We are just beginning to see failure of commercial and industrial loans and that could last another 3 to 4 years. Presently we are about 40% to the bottom. Then the question arises how long do we bump along the bottom – probably 5 years or longer – dependent on how bad the structural damage is, whether we still have a Federal Reserve; how many banks are left; whether we have WWIII or whether we have revolution. America and the world are in for a difficult time.

There are still massive imbalances in the US and world economy. Fiscal and monetary policies in almost all countries have gone over the edge. In a panic to subdue deflation governments and central banks have way overused fiscal and monetary policies, which is sure to end in hyperinflation. Any natural pause or mini recovery is doomed by the massive amount of monetary aggregates racing through the system. Over the next year and one-quarter negative GDP of 6.3% from the last quarter of 2008 should rise to even. That is no negative growth in the fall of 2010.

In spite of massive injections of money and credit worldwide the consumer price index fell to its lowest level since 1955. Those of course are US Labor Department figures. Inflation is still persistent at 9% and M3 is back to 18% annualized. Capacity utilization is 69.3%, the lowest since 1967, which means few businesses have profits. A reflection of that is that state and local taxes have fallen more than 7%. Personal income taxes are off over 1% and corporate taxes more than 15%. 80% of states have had a more than 13% decline in tax receipts year on year. Credit card balances are down more than 10%. It would be very helpful if our federal government would stop lying about our statistics.

Digging a Deeper Budgetary Hole
by Mike Larson, Money and Markets
Most Americans dread April 15. That’s when we all have to pay the fiddler — or more specifically, Uncle Sam. If you don’t get your tax check in on time, you may get a knock on your door someday from the IRS.

In Washington, though, April is a time to break out the champagne. It’s usually a windfall month for the Federal Treasury, with big budget surpluses the norm as money floods in.

But a strange thing happened this year. For the first time since 1983, the Treasury ran a DEFICIT in April. It racked up $20.9 billion in red ink. That was worse than economists were expecting … worse than the Congressional Budget Office had forecast … and a huge, huge shift from a year earlier, when Treasury recorded a SURPLUS of $159.3 billion.

What happened? Simple. Uncle Sam spent money he didn’t have!

Government spending surged 17.5 percent year-over-year, while revenue plunged 34.1 percent. You don’t need a Ph.D. in economics to know that’s a recipe for disaster.

The budget deficit for the current fiscal year is now running at $802.3 billion. That compares to $153.5 billion this time last year. In other words, we’ve ALREADY dug a budget hole that’s more than five times as deep as the one in 2008!

The Obama administration and many economists say we have no other choice. They say the $184 billion in TARP money we’ve already shoveled into the banking system this year was money well spent. And they say that the $787 billion economic stimulus package was absolutely essential to keep the recession from getting even worse.

But let me ask you two simple questions:

Do you really think we can keep this up forever?

Does it really make sense that foreign lenders will continue to underwrite this borrowing and spending bonanza?

What’s more, does Washington really expect us to keep buying the story that budget conditions will get better soon? I sure hope not, because the latest numbers show the exact OPPOSITE is happening.

The administration was just forced to raise its 2009 budget deficit estimate to $1.84trillion, up 5 percent from the outlook it shared just two months earlier. And the 2010 deficit estimate jumped 7.4 percent to $1.26 trillion. This means we’re running a deficit equal to a whopping 12.9 percent of the U.S. economy … the highest in 64 years!

Five Economic Storms Raging NOW!
by Martin D. Weiss, Ph.D., Money and Markets
Any economist fixated on so-called “signs of a recovery” needs to have his head examined.

Storm #1.
Plunging Jobs

On Friday, the Bureau of Labor Statistics announced that job losses were running at a slightly slower pace than in the first quarter. So Wall Street cheered.

But it’s a joke, and the 539,000 additional Americans out of work aren’t laughing.

Nor are the 23 million people — 15.8 percent of the work force — who are officially unemployed … are struggling with lower paying part-time jobs … or have given up looking for work entirely.

Storm #2
U.S. Housing Starts Down 77.6 Percent!

Housing is the nation’s largest industry. With it, the entire global economy boomed in the mid-2000s. Without it, a recovery is next to impossible.

The big picture: Housing starts, the best measure of the industry’s health, peaked at an annual pace of 2.3 million units in early 2006.

Now, they’re running at barely more than a 0.5 million units.

That’s a decline of 77.6 percent — three-quarters of America’s largest single industry wiped out.

Storm #3
Auto Sales Down 44 Percent!

At their peak in February 2007, U.S. and foreign-owned companies sold automobiles in America at an annual pace of 16.6 million units.

Last month, their sales pace plunged to 9.3 million, a decline of
44 percent (including the best performers like Toyota and Honda).

Storm #4
Biggest Decline in Consumer
Credit Ever Recorded!

Any economist counting on the consumer to get things going again had better go back for some more Rorschach tests …

… because you don’t need a therapist to interpret the image depicted in my chart below. It shows very clearly how the nation’s lenders are dumping consumers and making a mad dash for the exits:

In the third quarter of 2007, banks dished out $44 billion in net new loans on credit cards, autos, and other consumer credit (excluding mortgages).

Then, just 12 months later, in the third quarter of 2008, that giant credit machine collapsed to a meager $8.7 billion, a decline of 80 percent!

But the collapse didn’t end there. In last year’s fourth quarter, not only did new credit disappear, but lenders actually pulled out of the consumer credit market to the tune of $19.5 billion.

And they did it AGAIN in the first quarter of this year, pulling out another $12.2 billion.

It is the biggest collapse in consumer credit ever recorded.

Storm #5
Big Banks!

Whether the government lets big banks fail or not, the impact on the economy is similar: A massive contraction of bank loans and credit, sabotaging attempts to revive credit flows and stimulate the economy.

Reason: These banks must build capital quickly, and the only realistic way to do so is by cutting back on their lending.

The official stress test results released Thursday on 19 U.S. bank holding companies were supposed to help determine exactly how much capital they’ll need, and the total came to $75 billion.

That’s no small amount. But the stress tests will go down in history as the world’s most elaborate effort to paint lipstick on a pig.

Thursday, May 14, 2009

How Unexpected...

If it wasn't so sad, it would be funny. More of the lies we were fed last month, last week for that matter, were uncovered today for all to see. Read 'em and weep.

US Jobless Claims +32K To 637K In May 9 Week; Survey +10K
WASHINGTON -(Dow Jones)- The number of idled workers filing new unemployment benefit claims climbed more than expected last week, driven higher by filings in car-industry states.

The total number of unemployed drawing jobless benefits also rose, to a record 6.56 million; the increase suggests how hard it is for the jobless to find new work amid the recession.

Initial claims for state jobless benefits increased 32,000 to 637,000 in the week ended May 9, the Labor Department said in a weekly report Thursday.

Wall Street economists had expected a 10,000-claim increase to a level of 611,000, according to a Dow Jones Newswires survey. The prior week's level was revised to 605,000 from a previously estimated 601,000.

The four-week average, which aims to smooth volatility, rose by 6,000 to 630,500.

The larger-than-expected increase in new jobless claims was a disappointment, given a report last week that indicated a mild moderation in layoffs. The Labor Department had said 539,000 non-farm payroll jobs were lost in April. Payrols fell by 699,000 in March. Since the recession began in December 2007, the U.S. has shed 5.7 million jobs.

A Labor Department analyst said most of the increase in new claims last week happened in states that are home to the automotive industry. "A good part of the increase is due to automotive," the analyst said.

The tally of continuing jobless claims - those drawn by workers collecting benefits for more than one week - rose 202,000 in the week ended May 2 to 6,560,000, the highest level since the government started keeping track in 1967. Continuing claims lag new claims by one week.

Again, "unexpected" bad news. How naive. Last weeks suggestion that job losses were bottoming out was a cruel joke. Does anybody, can anybody, even conceive how many jobs are going to be lost because of the Chrysler Bankruptcy? And the doubled by the GM Bankruptcy? The automobile industry is a tapestry, pull on one thread and the whole thing unravels. A whole new meaning to "the domino theory" is about to be christened.

Folks, last year Wall Street blew up, this year Main Street blows up. Bottom? The bottom lies far below...

US Producer Prices Climb More Than Expected
WASHINGTON (Dow Jones)--U.S. producer prices climbed in April more than expected because of a jump in food costs, but core wholesale inflation rose only mildly as the recession robs companies of pricing power.

The producer price index for finished goods increased a seasonally adjusted 0.3%, the Labor Department said Thursday. The PPI fell 1.2% in March.

Economists surveyed by Dow Jones Newswires expected prices would increase 0.1% in April.

The core PPI, which excludes food and energy costs, inched 0.1% higher last month from March. Economists expected a 0.1% increase.

Companies have been shedding inventories in the recession, forcing orders and production lower. Consumer spending remains weak; retail sales fell 0.4% during April, the government said this week. This climate makes it difficult for firms to hike prices.

A separate report Wednesday said U.S. import prices rose last month by the most in nearly one year, reflecting a third-straight increase in oil prices. Import prices climbed 1.6% in April from March, the Labor Department said Wednesday. Prices were down 16.3% compared to April 2008, largely due to sharp drops in crude during the period. Excluding petroleum, import prices in April were down 0.4% from March.

Oil rises despite dismal demand numbers
NEW YORK (AP) -- Oil prices hopped above $58 a barrel Thursday even though U.S. unemployment continued to rise and a new report predicted the world's petroleum appetite will shrink even more than expected this year.

Benchmark crude for June delivery climbed 60 cents to settle at $58.62 a barrel on the New York Mercantile Exchange. Prices fell as low as $56.55. In London, Brent prices lost 65 cents to settle at $56.69 a barrel on the ICE Futures exchange.

And natural gas futures fell despite a government report that showed storage levels did not rise as much as expected last week. Stores of natural gas, a major energy source for power plants, have been building since mid-March as factories shut down and people lose jobs. They remain well above historical levels.

Energy prices have recently neared five- to seven-year lows in a global economic downturn. Refiners have slashed production of gasoline in anticipation of fewer sales, which is part of the reason why prices at the pump are going up. Gasoline futures are rising on Nymex as well.

U.S. retail gas prices rose to a new national average of $2.281 a gallon (about 60 cents a liter) overnight, according to auto club AAA, Wright Express and Oil Price Information Service. That's about 23 cents more per gallon than last month, but still about $1.48 cheaper than a year ago.

Inflation isn't caused by rising prices, it is caused by a rising money supply. As the value of the Dollar falls, the prices of things sold in Dollars rise. Oil for instance. The glut of Oil on the market "may" be real, but the size of the glut is greatly exaggerated by the media. The price of Oil is rising simply because the value of the Dollar is dropping. At this point in time, there is no other reason. Gasoline prices are rising because refiners have cut production due to expected weak demand. Yes, there may be plenty of Oil, but there is an overabundance of Dollars as well. This is inflation in a nutshell, despite what you have been lead to believe about rising prices.

Inflation is just a spark today. Wait a few months. Wait until supplies of Oil and other commodities go into shortage because of across the board production cuts taking place today. Many because of a lack of financing. Wait until the shortages and the expanding money supply come face to face. Then you'll really get to see some serious inflation. There won't be a lot of extra cash for Christmas gifts this year. The price of everything you need is going to rise as the price of everything you don't need falls. The Fed will be powerless to to put out the inflation inferno once that little spark jumps the fire line.

Dollar's Purchasing Power Annihilated - The Chart They Don't Want You to See
This is the chart they don't want you to see: the purchasing power of the dollar over the past 76 years has declined by 94%.

Is America Overstretched?
Poor Obama. He seems like such a likable fellow. He would probably make a good college president. Or a good butcher. You’d enjoy going into his shop to buy cutlets.

But now the poor man finds himself in what has to be one of the tightest spots in history. At least in economic history. The crash of ’08-’09 clipped stock market investors for half their nominal wealth. The bear market in property has put one out of every four homeowners underwater. And now the recession/depression threatens to knock the stuffing out of the rest of the economy.

How can he get us out of this jam? He hasn’t a clue. So, he turns to his advisors… his hacks… his pollsters and his hangers-on…

…and what do they come up with?

“U.S. deficit four times last year’s record,” comes the press report. “Federal government will borrow almost 50 cents of every dollar it spends this year.”

This news would have taken our breath away. If we had any breath left. But after so many wonders, each one more breathtaking than the last, our lungs are all squeezed out. We can’t even give an audible sigh. Hold a mirror up to our nose and you would think we were dead.

You’ll recall that President Obama announced that he had found budget savings of $17 billion. We were exhaling on that for a moment until we realized that it represented less than 36 hours’ worth of federal spending. Then came news a week later that instead of cutting the budget, the latest estimates showed it going up by some $89 billion.

Let’s face it, at this point $89 billion is chicken feed. Here at The Daily Reckoning we carry that much in our wallet. We pass it out to subway bums and use it to tip cab drivers. So, we’re not about to get excited about such a trivial amount.

But coming on top of a budget deficit already estimated at four times the record deficit set last year…and we begin to think of straws and camels.

The idea of spending twice as much as you earn should take even a camel’s breath away. An ordinary man…hearing that fact…would feel like breaking the glass and pulling the alarm. “You can’t do that…you’ll go broke,” he would say. Basic arithmetic reveals the trap. In one year, you’ve built up debt equal to all of next year’s revenue. In two years, you’ve got debt of 200% of annual revenues. In 10 years, you’ve got debts equal to 1,000% of your annual receipts. Let’s see…say you only pay 5% interest…then, the interest alone takes up HALF your revenues. What creditor would lend you money?

Ron Paul's rEVOLution Versus the "One Ring" of the Federal Reserve
"One Ring to Rule them All... and in the Darkness Bind Them."
- from J.R.R. Tolkien's 'The Lord of the Rings'

Today's FED is a group of bankers who have the "Money Power" over all other banks and the money supply. This awesome power is like that of Tolkien's One Ring, which controlled all of the other Rings of Power worn by men, elves, and dwarves. Can you imagine what YOU could do if you could snap currency into existence simply by writing a check to yourself? I've described this money power here "The Money Matrix - How the FED Works (PART 6/15)".

Washington, DC is like Mount Doom. It is the only place that the Ring can be unmade, destroyed, and the money power returned to We the People. Only the Congress or the Supreme Court has the power to abolish the FED, and the battle royale of the moment is simply to audit the FED via HR 1207.

Frodo Baggins is no other than Congressman Ron Paul (R-TX). For most of his political career spanning 30 years, he has been isolated, sounding the clarion call for honest money from the fraudulent bankers upon the deaf ears of his fellow lawmakers. He has been struggling to place the banker's precious Ring in the fires of Mount Doom, and return prosperity to the land by ridding it of an evil, barbarous, immoral relic, the FED.

"On account of [the Federal Reserve], we ourselves are in the midst of the greatest depression we have ever known. From the Atlantic to the Pacific, our Country has been ravaged and laid waste by the evil practices of the Fed and the interests which control them. At no time in our history, has the general welfare of the people been at a lower level or the minds of the people so full of despair... They are the victims of the Fed. Their children are the new slaves of the auction blocks in the revival of the institution of human slavery."
- Congressman Louis T. McFadden, Pennsylvania's 15th District, from the 1934 Congressional Record

It is time for this farce to end. Led by the Gray Champion, freedom will come to our land once again if the people recognize that yet again we are all oppressed, that we all wear a gigantic ball and chain that is our monetary system and idiotic government behavior. If monetary policy must be the first shackle that draws noticeably amounts of blood before the chains are broken, so be it.

Trampled Green Shoots
By: Jim Willie CB,
The so-called ‘Green Shoots’ have been trampled by people walking to their Unemployment Insurance Offices to collect jobless claims in order to pay their bills. The so-called ‘Green Shoots’ have been trampled been people walking (or running) away from their homes as they are being foreclosed. The so-called ‘Green Shoots’ will continue to suffer from most water and nutrients heading to the Elite Gardens, diverted from those on Main Street. The so-called ‘Green Shoots’ have been killed off by a stubborn frost from the USEconomy. A prevailing sentiment and motivation has sadly and perversely entered into the public and financial sectors, with clear deceptive intention. The stretch of the data, the desperate misinterpretation the data, the false facade painted atop a USEconomy, such deceptions cannot stand even the most gentle taste tests and sanity checks. Then again, Wall Street and the USGovt (victim of the financial Coup d’Etat) must promote a positive sentiment in order to reinvigorate confidence. After all, the USDollar-based system depends upon trust and confidence, since no gold backs the financial foundation and debt permeates every crevice. Heck, not even much industry backs the USEconomy, the famed financially engineered miracle gone awry. The principal characteristic of a body that is bankrupt, deeply mired in debt, and must sustain itself by selling debt securities to foreigners is deception. One must struggle mightily to find much of any honesty in USGovt finance or US bank system accounting, economic statistics, or establishment of future prospects.

GOLD WILL REACH $3000 BEFORE THIS CHAPTER OF US HISTORY IS FULLY WRITTEN. SILVER WILL REACH $100 BEFORE THE LAST CHAPTER IS WRITTEN. These are easy targets. A tipping point comes just over the horizon, and the Hat Trick Letter is prepared to identify it. A massive spillover is due soon, from the money printing coffers into the streets where they people live and work and shop. When they finally receive the so-called money, it will be worth less than before, and might be worthless altogether. We are witnessing the heart attacks and seizures to the banks, the ambulances for the people, the weeds for the businesses, and the alzheimers for the press, as Pied Pipers run rampant and the USGovt vacillates between touches of fascism and communism. Sit back and watch, because we are in for a wild ride on the Weimar roller coaster. Not one in a thousand Americans even knows what that means. Try to avoid being a lamb at the slaughterhouse.