Wednesday, September 30, 2009

Is The Gold Cartel Facing Destruction?

When you see that trading is done, not by consent, but by compulsion — when you see that in order to produce, you need to obtain permission from men who produce nothing — when you see money flowing to those who deal, not in goods, but in favors — when you see that men get richer by graft and pull than by work, and your laws don’t protect you against them, but protect them against you — when you see corruption being rewarded and honesty becoming a self-sacrifice — you may know that your society is doomed.
-Ayn Rand
Atlas Shrugged, page 413

Well, well, well... The third quarter has ended. For many, the financial fiscal year has ended. Gold began the quarter at $955, and ended it at $1007, up 5.5%. Silver began the quarter at $14.07, and end it at $16.62, up 18%. Gold might be the place to be to "insure" your wealth, but Silver is the place to be to "increase" your wealth.

Both Gold and Silver roared back to life today at precisely 10AM when the Chicago Purchasing Managers Index for September came out not only FAR below expectations, but below the Mendoza Line of growth versus contraction. This negative Chicago PMI news shot out of the sky a budding Dollar rally on the back of unexpectedly negative employment numbers from the always inaccurate ADP Employment report for September. Bad news is that was good for the Dollar gave way to bad news that was bad for the Dollar...go figure. The Precious Metals were the prime beneficiary of today's mix of bad news.

It would appear that the bottoms may be in now on both Gold and Silver as both exploded off their recent lows on expanding volume. The short squeeze we suggested may develop on the massive short position in the COT may have bubbled to life today. Chart technicals suggest that this may be the case. A break above 1009 in Gold and 16.91 in Silver should confirm as much.

Surmounting The Cartels’ ‘End Game’ Juggernaut, An Overview & Update Of Cartel Strategy
By: DeepCaster_LLC
Various international private banks, several of which are headquartered in Europe, own the “United States” Federal Reserve Bank. The European Banks were among the founding banks whose representatives, including Paul Warburg who wrote the charter at the Jekyll Island Georgia meeting, as documented in “The Creature from Jekyll Island”, by G. Edward Griffin.

These International Bankers, acting through their “U.S.” Fed, make money by creating money out of “thin air” as eloquently described by the Dean of the Newsletter Writers, Richard Russell:

“I still can’t get over the whole Federal Reserve racket.

Consider the following - - let’s take a situation where the U.S. government needs money. The U.S. doesn’t just issue United States Notes, which, of course it could. These notes would be dollars backed by the full faith and credit of the United States. No, the U.S. doesn’t issue dollars straight out of the U.S. Treasury.

This is what the U.S. does - - it issues Treasury Bonds. The U.S. then sells these bonds to the Fed. The Fed buys the bonds. Wait, how does the Fed pay for the bonds? The Fed simply creates money “out of thin air” (book-keeping entry) with which it buys the bonds. The money that the Fed creates from nowhere then goes to the U.S. The Fed holds the U.S. bonds, and the unbelievable irony is that the U.S. then pays interest on the very bonds that the U.S. itself issued. (With great profit to the private owners of The Fed - - Ed. Note) The mind boggles.

The damnable result is that the Fed effectively controls the U.S. money supply. The Fed is …not even a branch of the U.S. government. The Fed is not mentioned in the Constitution of the United States. No Constitutional amendment was ever created or voted on to accept the Fed. The Constitutionality of the Federal Reserve has never come before the Supreme Court. The Fed is a private bank that keeps the U.S. forever in debt - - or I should say in increasing debt along with ever rising interest payments.

How did the Fed get away with this outrage? A tiny secretive group of bankers sneaked through a bill in 1913 at a time when many in Congress were absent. Those who were there and voted for the bill didn’t realize (as so often happens) what they were voting for (shades of the shameful 2002 vote to hand over to President Bush the power to decide on war with Iraq).”

Richard Russell, “Richards Remarks,”, March 27 2007

After President Wilson signed the Federal Reserve Act into law in 1913, he reportedly said, “I am a most unhappy man, I have unwittingly ruined my country…a great industrial nation is now controlled by its system of credit…the growth of the nation, therefore, and all of our activities are in the hands of a few men…” Thus we have an early statement about the threat to “democracy” occasioned by The Fed.

The Supply of Oxen at the IMF
Antal E. Fekete
Professor of Money and Banking
San Francisco School of Economics
The IMF is trotting out its old war-horse, the threat of auctioning off its monetary gold. This time it appears to be for real. The IMF is making preparations to get rid of a sizeable chunk of that part of its capital that has no counterparty liability attached in the form of central bank IOU-nothings, or government bonds alias certificates of guaranteed confiscation.

The IMF sounds very emphatic about its intentions of doing the self-mutilation in such a delicate manner as not to disrupt the gold markets. Pity the IMF. It is worried about upsetting the gold market, not about frittering its capital away. The IMF promises to do the auctions in a “transparent” fashion. It is true that the gold market is small in todays’ metric where the trillion-dollar unit will soon appear inadequate. Still, the IMF’s sting operation, and the accompanying soothing words sound more like the mosquito saying to the elephant before the blood-meal: “baby, my darling, it won’t hurt”.

It is abundantly clear that the IMF and its puppet-masters behind the screen want to hurt the gold bugs, and hurt them badly. As paper currencies without exceptions are engaged in a game of “all fall down”, and do it impulsively and competitively, gold is the only money that stands up. It must be clubbed down, or else. That has been the rule of the game ever since president Nixon on the advice of Milton Friedman “made the gold markets free” in 1971. In the beginning it was US Treasury gold that was auctioned off in order to club down the rising gold price. But then the managers of the paper dollar found it cheaper to auction off other people’s gold for that purpose through arm-twisting tactics. The selling of paper gold through futures markets and the leasing of gold through bullion bank intermediaries has been thoroughly discredited. Only fools believe that those outstanding forward contracts will be settled in specie. Holders of paper gold will be lucky if their contracts will be settled in paper. The market is crying for physical gold. Nothing less will pacify it. By now the US Treasury has run out of arms to twist, after it has twisted the arms of smaller countries holding gold such as Belgium, the Netherlands, and Switzerland making them to sell their gold reserve. The recalcitrant Congressmen who had blocked the IMF gold sales in the past have been bought off. The IMF gold is now ripe for the picking. Not to see the life-and-death struggle of the managers of global paper money fighting gold — the stern taskmaster of all banks, real or virtual, and of all governments — is tantamount to turning a blind eye to reality.

The question is whether the IMF — like the proverbial kid in the forest playing false alarm on the lumberjacks — “has cried wolf” once too many times. The wolf around the corner may be real this time, ready to devour the prankster. To be sure, the gold price will fall on the news that the gold auction has started in earnest. The market will obligingly bring down the price to make it easier for the IMF to unload its burden. But after the IMF relieved itself, the price will go back and on to new records. It’s inevitable. It can be predicted with the certainty of science.

Why will the price of gold reach new highs after the IMF gold auctions have been completed? There is a very simple reason: the assets backing the dollar, against which the gold is being sold, has been diluted. The IMF is exchanging its hard asset, that is nobody’s liability, for the soft: the liability of the Fed printing money as if there is no tomorrow. Under these circumstances it is suicidal to sell hard assets. Yet there it is: IMF gold is on the block.

The excuse the IMF uses to justify the gold sale is to raise funds for bailing out over-indebted countries. It is a lame excuse indeed. A bank, if it is run on a rational basis, will worry about its capital structure before embarking upon a course of extended lending, especially lending to bankrupt governments. You never ever dilute your capital base.

This does not mean that gold bugs will not be fooled — again. Some, perhaps many, will be. They will sell their gold into weakness making it look like the bloom is off the golden roses. But all what this game of hoopla means is that gold is passing from weaker into stronger hands. The weak hands are fading into oblivion, as they must.

Sunday, September 27, 2009

Go For The Jugular

The Price of Pretense in Pittsburgh
By: Peter Schiff, Euro Pacific Capital, Inc.
As another G20 meeting rolls around, this time on home soil, the time comes once again for the economically curious but politically unconnected to wonder what is really happening behind closed doors. But while admiring the pageantry, chuckling at the awkward group photos, and parsing the joint communiqu├ęs like newly found Dead Sea scrolls, the overwhelming majority of observers will miss the meeting's dominant theme: hypocrisy.

Everyone agrees that the principal agenda item in Pittsburgh will be the need to rein in the 'global imbalances' that created the late economic crisis. Everyone also agrees that these imbalances involve too much spending and borrowing by Americans and too little of both by the Chinese and other developing nations. In his remarks this week at the United Nations, President Obama used his peerless rhetorical skill to frame the issues clearly and plainly. Noting that a return to pre-crisis economics is impossible, the president assured the world that his administration will pursue policies to increase savings and decrease spending at home and challenged his Chinese counterparts to enact measures with the opposite effect in their own country.

While this is roughly what needs to happen, President Obama is actually doing everything in his power to prevent it. In point of fact, every policy move undertaken by his administration has exacerbated the very imbalances he supposedly wants to curtail. To so seamlessly profess one goal while simultaneously undermining it is an impressive piece of political theater. Unfortunately, this particular drama is likely to have an unhappy ending – and the ticket price will be staggering.

Obama: G20 brought economy back from brink
PITTSBURGH — World leaders on Friday issued sweeping promises to fix a malfunctioning global economic system in hopes of heading off future financial meltdowns. President Barack Obama said actions taken so far "brought the global economy back from the brink."

"We leave here today confident and united," Obama said at the conclusion of a two-day gathering of the world's 20 top economies to deal with the worst financial crisis since the 1930s.

The leaders agreed to keep stimulus plans, which include government spending and low interest rates, generally in place in their respective countries for now to avoid derailing still-fragile recoveries. Obama had pressed for just such a course and praised the decision.

"Our coordinated stimulus plans played an indispensable role in averting catastrophe. Now we must make sure that when growth returns, jobs do, too," he said at a wrap-up news conference. "That's why we will continue our stimulus efforts until our people are back to work and phase them out when our recovery is strong."

In a statement, all the G-20 leaders declared major progress from what they called their coordinated efforts and "forceful response."

"It worked," they said.

Although many of the pronouncements and actions taken by the leaders lacked specifics or details on follow-through, leaders were bold in pronouncing the gathering - the third G-20 summit in a year - as a big success.

Or so they would like you to believe. By continuing government stimuli across the board, the G20 has guaranteed the global economy will be propped up at best, and collapse under the weight of massive global inflation at worst. In short, they accomplished nothing, and fixed even less.

Hearings Held on Ron Paul's "Audit the Fed" Bill
Thomas Wood argued that the Fed’s independence is a myth. “The bill is not designed to empower politicians to increase the money supply, choose interest-rate targets, or adopt any of the Fed’s central planning apparatus, all of which is better left to the free market than to the Fed or Congress.” Moreover, “ with its chairman up for reappointment by the president every four years…. Fed chairmen have been known to ingratiate themselves into the president’s favor close to election time by means of loose monetary policy and the false (and temporary) prosperity it brings about.”

Woods intimated that the Fed is “independent” in ways that ought to alarm a free people who base their economic lives on an assumption that their money is sound: “The Fed may reward favored friends and constituencies with trillions of dollars in various kinds of assistance, while keeping the public completely in the dark. If that is the independence we are talking about, no self-respecting American would hesitate for a moment to challenge it.”

He argued further that monetary policy is already politicized and favors the well-connected: “Most Americans, not unreasonably, seem convinced of another thesis: that Goldman Sachs, for instance, might be just a little bit more politically well connected than the rest of us.”

Finally, if the Fed is already adequately audited, then “why is the Fed in panic mode over this bill? It is the broad areas these audits exclude that the American public is increasingly interested in investigating, and these are the gaps that H.R. 1207 seeks to fill.”

Woods asked “if our monetary system were really as strong, robust, and beyond criticism as its cheerleaders claim, why does it need to rely so heavily on public ignorance? How can it be a sound banking system that depends on keeping the public in the dark about the condition of its financial institutions?”

In closing, he turned on its head a remark that is often made by those of an authoritarian stripe who believe we should trust our political and financial overlords in all things, including when we believe our rights and privacy are being violated: “The Fed should take to heart the words of consolation the American people are given whenever a new government surveillance program is uncovered: if you’re not doing anything wrong, you have nothing to worry about.”

Does the Fed Manipulate the Stock Market? Where's the Gold? Rep. Alan Grayson SLAMS Alvarez[video]
I see that Rep. Alan Grayson really laid the lumber on the Fed's General Council, Mr. Alvez, about whether they rig the markets and how much gold the Fed really has. It was an electrifying exchange to say the least.
-Ed Steer

Who is this worm the Fed sent up to the Hill to defend their "independence". Watch this mans body language and listen to the tone of his this man not absolutely full of shit? Rep. Alan Grayson. God bless this man. He is a shark and he smells blood. If only more of our elected officials were as voracious about defending the public and the constitution. More light has now been shed on the Fed's Gold market manipulations.

Ron Paul - Bernanke hasn't averted a crisis, he's made it that much bigger[video]
Ron Paul on Kudlow & Company discusses his questioning of Ben Bernanke and the Audit The Fed bill. This aired on CNBC July 21st, 2009.

Alan Grayson slices, dices, chops and smashes little Benny Bernanke![video]
Alan Grayson reveals through his questioning how the FED appropriates your money AS IT PLEASES to select elite groups. You of course bear the risk and the losses. Grilling date: July 21, 2009.

Senator Sanders asks Bernanke WHERE IS THE MONEY[video]
Senator Sanders puts the screws to the duplicitous Ben Bernanke.

The Fed - Out of Control - End the FEDERAL RESERVE. Audit the FED[video]

The Federal Reserve Has Attempted A Market Corner
Daniel Aaronson and Lee Markowitz
During a market corner, a buyer accumulates an asset with the intention of driving the price higher without any regard for its true value. Additionally, the buyer amasses such a large holding that market prices cannot remain elevated without continuous buying. For example, when the Hunt Brothers cornered the silver market, silver rose from $11 per ounce in September 1979 to nearly $50 an ounce in January 1980. Eventually, the Hunt Brothers stopped buying silver as they ran out of capital and the market for silver dried up. As happens with all market corners, when the buyer disappeared from the market, the price of silver spiraled downward. The Federal Reserve, knowingly or not, has cornered the credit market.

At the beginning of the credit crisis the Federal Reserve lowered short-term interest rates in an attempt to ease financial market strains. With the credit markets still not functioning properly, despite the Federal Funds rate being set in a range of 0 – 0.25%, the Federal Reserve devised a new plan to lower market interest rates for individuals and corporations. This plan, otherwise known as quantitative easing, called for the Federal Reserve to print money in order to buy bonds on the open market as well as guarantee investors from losses on other bonds.

Currently, the Federal Reserve is in the process of buying $1.25 trillion of agency mortgage-backed securities, $200 billion of agency debt, and nearly $300 billion of private credit (this excludes the $300 billion of Treasury purchases and also assumes that all buying programs are completed as stated by the Federal Reserve). To put this $1.75 trillion buying spree into perspective, PIMCO, the world’s largest bond fund manager, managed $841 billion as of June 30, 2009. Essentially, the Federal Reserve has not only become a new bond market participant, but also will have grown to twice the size of the largest market participant in approximately one year. The entrance of such a large indiscriminate buyer helps to explain the rapid resurgence of credit markets.

The end of the Federal Reserve’s credit market corner (assets that are cornered always collapse) could be sparked by a number catalysts. First, private investors may realize that bond prices are unjustifiably high and will sell them into the market faster than the Federal Reserve can buy them. Secondly, the Federal Reserve could slow its purchases, leading to lower marginal demand for bonds if not eliminating demand entirely. A third and more devastating outcome that could result from the Federal Reserve’s quantitative easing would be a Dollar collapse.

Interestingly, on Wednesday, the Federal Reserve announced that it would slow its involvement in credit markets. Previously, the Federal Reserve was going to complete its $1.75 trillion program by December 2009, but now it has extended the program until March 2010. In doing so, the Federal Reserve has lowered its average purchases for the coming 3 months. This maneuver should prove problematic because the Federal Reserve’s buying power has been paramount in reinflating the credit market bubble. While the Federal Reserve hopes that the recovering economy allows for moderate tightening, the real reason for altering the purchase program is the Dollar’s continued decline and the Federal Reserve’s fear of ending its purchases too abruptly.

The Federal Reserve’s attempt to manipulate the credit market is a path to ruin. Although Ben Bernanke might believe that the recession and economic crisis are over, the Dollar’s decline to new 2009 lows is a signal that an orchestrated market corner cannot succeed. As a result, the Federal Reserve’s ability to continue its supportive endeavor is clearly being undermined. Despite the market corner appearing effective during the past six months with most asset prices having rallied, bond prices will one day begin to fall, and when they do, it will be clear that the market corner has failed.

Merkel heading for new coalition
Chancellor Angela Merkel has been returned to power in Germany, with forecasts showing her conservative bloc on course for a clear election victory.

Mrs Merkel told supporters they had achieved "something magnificent", but said she wanted to be a chancellor of all Germans at a moment of crisis.

Mrs Merkel's bloc now looks set to form a centre-right alliance with her preferred partner, the pro-reform FDP.

She says the alliance will get Germany out of its worst crisis in 60 years.

All of the last weeks roadblocks to Gold's continued rise appear to have been lifted, save one...the colossal short position COT has on both Gold AND Silver. Could the Precious Metals be setting up for a massive short squeeze much like in the Fall of 2005 when Gold finally rushed past the $450 marker and rose towards $700? This short squeeze of the COT shorts also coincided uncharacteristically with a rally in the US Dollar. The recent record short positions in COT broke the records set back in 2005. COT failed then to keep the Precious Metals from rising, will they fail again today. Will a rally in the US Dollar be ignored for the fraud that it is as global investors watch their own currencies sink in a US Dollar rally and turn to Gold locally to "protect their wealth"? Prepare NOW for the next leg up in Gold and Silver.

Robbed Blind
Warren Bevan
The week was highlighted by the G20 and federal bank non-decision. There was little said about Ron Paul’s bill to audit the fed. Would you have expected anything else. The mainstream tells you what they want you to know, not what you want and need to know.

Another ignored fact was the options expiry this past week for gold. The most blatant and disturbing occurrence that would outrage the public if they knew about it was how gold was moved below the $1,000 level just before the options expired, pocketing that much more cash for their efforts to push gold down lower. I don’t think this correction will last since their tricks are well known among traders. Now that the options expiry has closed it free’s the road for gold to move into all-time high territory in the very near future even though gold does look slightly weak right now. Dip buying has been taking place and should continue and it will move gold higher likely early Monday morning.

Gold only lost 1.66% on the week, but has panicked investors flooding my inbox. Dollar wise it may seem like a big move, but percentage-wise it’s not and that is what is to be focused on. If you owned a stock and it moved from $10, to $9.90 you wouldn’t even call it a correction.

All the indicators are showing bearish signs and sell signals, however this is good since it refreshes them for a fresh charge much higher. I firmly believe the $990 area will be the floor with no major long lasting moves lower. But if it does break that level significantly then the $970 area will be the next stop. The moving averages are trending higher with the 50 day just below support at $970 closing the week out at $9.66.

The COT report showed a minor change with the commercials reducing long futures positions by 1,044 and increasing shorts by 1,905. This leaves the group long 83,338 contracts and short 367,948 contracts, or net short 287,610 contracts. Lopsided would be an understatement.

This will be a crucial week for gold but I think that it will move back above the $1,000 level as buying occurs on dips. Buyers have been waiting for dips to buy lately and this one should be no exception. My stance remains cautiously very bullish.

Friday, September 25, 2009

Ain't This Grand???

"Ain't no power like the power of the people, 'cause the power of the people don't stop."
-G20 protesters in Pittsburg

I find it amusing that as the G20 countries come together for another pow-wow about the Global Financial Mess, the news media chooses to focus almost entirely on the protesters. Is that the story? Perhaps, inevitably, the common mans complete disenchantment with their governments will be the story, but not today. The story today is the fate of the US Dollar. And it's fate looks sealed.

A number of events this week are conspiring with the CRIMEX goons to keep the Precious metals in check. Options on commodity futures expired, the weekends G20 pow-wow, a major election in Germany Sunday, futures contracts expire on Monday the 28th, and the 3rd quarter ends on Tuesday the 30th as does the fiscal year for many mutual funds and banks. Volatility in the markets has been limited, but caution must be used the balance of the period.

Sale prices on Gold and Silver are beginning to look attractive, but we could see better by the 1st of October. It will be interesting to hear the blah-blah coming out of the G20, and the Dollars reaction to it. NONE of the World's largest currency producers wants to see a collapse in the Dollar. Will there be a backroom agreement to "slow" it's descent? Or will the BRIC nations simply tell Little Timmy, "you made your bed, now lie in it." Be prepared to react to market signals accordingly on Monday morning.

'Da Boyz' Are Back in Town! But For How Long?
Between the opening in the Far East yesterday morning, right up until shortly before 9:00 a.m. in Comex trading in New York, gold managed to tack on about 12 bucks. And, for a microsecond, the gold price had the audacity to poke it's nose briefly above $1,020 the ounce. Then the lights went out.

From that point... and in the hour leading up to the London p.m. gold fix at 3:00 in their afternoon... 10:00 a.m. in New York, gold got sold off $10 by the usual not-for-profit sellers. But once the p.m. fix was in, the N.Y. bullion banks pulled their bids, and gold fell over $20 in less than half an hour. Its low was $989.70. So, from it's high of $1,020.20 [spot]... gold got clocked for a hair over $30... all in less than two hours.

Silver's pattern followed gold's in virtual lock-step... and when the smoke cleared at the end of New York trading yesterday, silver had 'lost' another 55 cents, and closed on its low of the day. Silver is the centre of the precious metals universe for da boyz, and that's why it gets hit as hard as it does. Gold they got lots of... silver they've got none.

You will carefully note that Thursday's U.S. dollar began it's rally at the precise moment that gold and silver began their respective declines. Not five minutes later, or twenty minutes later... or an hour. But precisely at the same moment. Was this whole thing orchestrated? You betcha! Like I said yesterday... "If it happens, we'll know who did it, why... and how."

The other thing that was going on in the silver world yesterday, that was below everyone's radar screen, involved the huge short position that the SLV ETF managers currently have. As I mentioned on several occasions, Ted Butler felt the SLV ETF was owed about 30 million ounces. When the bullion banks were covering their short positions on the Comex, the SLV managers were [at the same time] covering their short positions in SLV shares... because they couldn't get the metal, they're forced to short their own shares. If the price correction is deep enough [courtesy of JPMorgan, the biggest silver short on the planet, who just happens to be the custodian of all the silver in the SLV], then the fund can cover its short position and not have to deliver a single ounce of metal into the fund... which they don't have [and can't get] without driving the price to the moon. Ain't this grand???

G-20 plans to approve greater role for Asia
PITTSBURGH (AP) -- The G-20 summit on Friday plans to approve a greater voice for Asian countries, while European leaders were also expected to secure a limit on bankers' bonuses.

The leaders of the world's 20 largest economies began a two-day meeting Thursday dedicated to fostering a healthy global recovery with a historic shift recognizing the rising influence of countries such as China, South Korea and India.

The leaders decided the G-20 will serve as the board of directors on global economic cooperation, a function that for more than three decades had been performed by a smaller club: the U.S., Japan, Britain, Germany, France, Italy, Canada and later Russia.

The G-8 will, however, continue to meet on matters of common importance such as national security. President Barack Obama initiated the move, to be announced Friday, according to a White House fact sheet.

The measure underscores how the world's balance of power has shifted since a small club of wealthy, industrial countries began meeting in the mid-1970s in an effort to respond to oil shocks, stagflation and other economic crises of that period.

The Pittsburgh meeting marked the third G-20 leaders summit in less than a year as the countries continued to grapple with a debilitating downturn that has resulted in millions of unemployed around the world, the loss of trillions of dollars in wealth and massive amounts of government stimulus spending designed to jump-start economic growth.

Election in Germany to shape economy's direction
FRANKFURT — Economic recovery is the main issue in Germany's elections Sunday, and Chancellor Angela Merkel says tax cuts should be used to spur more growth — something her challenger disputes.

The conservative leader's current government — a "grand coalition" with the center-left Social Democrats — has won respect for taking a levelheaded approach to the crisis in Europe's biggest economy, launching massive bank bailout and stimulus packages and keeping unemployment down.

But Merkel says her Christian Democrats need a different political partner to get the economy back on track — the pro-business Free Democrats. Polls suggest that the combination may win a thin majority Sunday, but it is far from certain.

The economy returned to modest growth in the second quarter and business confidence is rising, but Germany's gross domestic product is still expected to shrink by 5 percent or more this year — easily the worst performance since World War II.

"I am pleased with the positive signals, but the crisis is not over when we reach the bottom," Merkel said recently. "The crisis will be over when we are back where we were before the crisis."

New Deadly Dollar Carry Trade
By: Jim Willie CB,
Welcome a new carry trade to town! Here in the present, the new carry trade has begun to take root with the USDollar as its basis. Its requirements are simply stated. It needs a crippled bank system that offers a reliable 0% interest rate, a crippled currency that offers little risk of a rise in exchange rate, and plenty of targeted opportunities to invest in rising asset groups in competition. The gold asset is one such object asset. One is hard pressed to identify a sovereign bond security pitched by a government with any credibility. Their deficits, boatloads of bond issuance, and public statements in desire of weaker currencies tend to rule them out. So Govt Bonds are not a viable object. They are too busy ruining their currencies in the midst of the Competing Currency War. Why just two weeks ago, the Swiss Govt announced their frustration at a rising currency, despite all efforts to undermine their Franc currency. They will be forced to redouble their destructive efforts. The Europeans did NOT want to reduce interest rates a year ago, but they did, a correct Jackass forecast that went directly against some banker contacts. That shows the power of the Competing Currency War, since the Euro currency had risen to 160, sufficient to render considerable harm to the European Union Economy in its export trade. With numerous currencies ‘frozen’ from programmed destruction, the time is ripe for the USDollar Carry Trade to be launched. It has been launched. THIS CARRY TRADE WILL PUNISH THE USDOLLAR BADLY AS IT WEARS A BADGE OF SHAME!

The ruinous bursted bubble from Japan around 1990 and the seemingly endless years of 0% Japanese money enabled the Yen Carry Trade against a backdrop of a chronically insolvent Japanese bank system. A critical characteristic of that carry trade was that heavy leverage applied enormous pressure in a way so as to maintain the low Yen currency and the high US$ currency. In the summer 2008 when the USFed took the official interest down to 0.25% and stuck it there, the USDollar Carry Trade was assured of a vigorous run through the financial factories. Here is what is so important about its upcoming entrenchment. The US$ exchange rates will be heavily subdued, with any rebounds totally smothered, resulting in a relentless Gold rise with gusto. The shorting of the US$ is key for the supply of funds. It comes as borrowed US$ funds used outside the US Sphere, thus net bearish. It comes as leveraged instruments designed to capitalize on a continued US$ decline integrated into securities like with short DX contracts.

The coordinated and systematic ruin of major currencies, through monetizations, through vast federal deficits, through sustained near 0% official rates, and through chronically insolvent national bank systems, will assure that the Gold asset will be a favorite for the USDollar Carry Trade for at least a couple years, maybe more. Furthermore, installation of the USDollar Carry Trade will assure that No Exit Strategy will be available to the USFed also. Wall Street firms will participate in this free lunch carry trade, just like all others. Wall Street will not permit a USFed rate hike to firm the US$ exchange rate. Talk about a strong perverse factor behind the USDollar. This is every bit as powerful as the ‘Beijing Gold Put’ analyzed in the Hat Trick Letter issued in September.

Continued forces will be at work in a variety of ways to continue the thrust and duration of this new USDollar Carry Trade, sure to keep it badly subdued. The risk is so great that a USTreasury Bond default could even become the last stop on its pathogenesis pathway. Just today, the compromised erudite spokesman Lawrence Meyers actually said the USFed will probably remain on hold for its near 0% interest rate until the end of 2011. That is NOT a misprint!!! The USFed will justify its decision not to hike rates, not to halt money creation, all the while discussing theoretically an Exit Strategy. Try not to laugh too hard! Also, the US$ Swap Facilities are scheduled to end in October 2009. Their extension should be very harmful for the USDollar, from the bad publicity and the understood urgent implicit desperate need. The next wave of US bank losses will arrive to coincide with the falling of the leaves in autumn, an apt parallel. The inability of the USFed to conduct and execute any Exit Strategy at all is powerful impetus behind the development of the USDollar Carry Trade, and the powerful lift it gives the Gold price. They cannot raise interest rates. The Stimulus Bill has run its measly course. The monetary stimulus must remain in place. The Uncle Sam patient is imprisoned in the Intensive Care Ward.

Tuesday, September 22, 2009

The Beat Goes On

Gold AND Silver bounced hard overnight Monday into Tuesday as the US Dollar was given a thrashing in the Asian markets. Shorts in the markets covered quickly and furiously as the Dollar fell towards new lows on it's move down towards the abyss.

The fact that the sudden rise in both markets was curtailed as the Precious Metals went on the clock in New York was somewhat telling. Where are the "real buyers"? Short covering is the only buying Gold has really seen up here above $1000. These markets need "real buying" from investors up here to push Gold over the hump. Real buying in volume would force a major short squeeze in these markets. Absent that, bullish sentiment may evaporate quickly, and allow the shorts to press their advantage here.

The Reason Why Gold Hasn’t Skyrocketed.(new video)
By Adam Hewison, President,
With the printing presses in full printing mode, many people are questioning why gold prices haven’t gone higher - much higher.

In my new video, I explain some of the subtle market cycles that are at play right now in this market. These short-term cycles have been the dominant force in gold all year and appear to be still in control of price action.

I believe the longer-term upward trend in gold is very much intact; short-term we could see more of a trading range that has a downward bias. I think when you watch this video you will get a much better understanding about the rhythm of this market.

If I am correct, you will see some amazing opportunities that I believe will be presented to traders in Q4. In fact, if everything goes according to plan are we could all be looking at some very nice Christmas/holiday profits.

This an EXCELLENT video chart presentation. Adam builds a solid case for a near-term reaction in Gold and a move to new highs by Christmas. I encourage you to watch it in its entirety.

Got Gold Report: Gold, silver stage at new heights
ATLANTA – Gold spent almost the entire week above the psychologically important $1,000 level. Up to now trips above that benchmark had been fleeting. A quick look at the two-year gold graph still paints a bullish technical picture, but some of the indicators we follow can’t confirm that story … at least not just yet.

Breakout attempts are always dicey, always a little scary and they rarely launch higher without a significant retest of the breakout at least once shortly after the event. Trouble is, speaking on a very short-term level, that breakouts above important, long-established, historic resistance fail about as often as or even more often than they succeed.

Even more trouble is that bearish technical interests love failed breakouts even more than bulls love the originals. Jack Schwager, pro futures trader, technical analyst and author of several books on technical analysis says, “A failed signal is more reliable than the original signal.”

Just as bullish interests now await gold to print something above $1,033 in order to press the upside, an entire boatload of other actors are watching the action ready at a moment’s notice to pounce on the metal should the current breakout above $1,000 “give it up.”

In order for the yellow metal to continue higher it will take buying, new buying and lots of it in order to overcome the intense amount of selling by the largest of the largest gold futures actors. Instead of blasting higher on massive short covering once it cleared the four-digit barrier, gold has set up a “high flag” and the most visible short side players are adding to their net short positioning in record amounts as if convinced that gold has more downside than the opposite. (Much more about that in the Gold COT section.)

Gold is acting like everyone is waiting for the new buying to occur. Waiting for “something” to happen. Gold is waiting for the “trigger event,” … the “switch to be thrown,” … “the next wave of buying.”

The most bullish of analysts are giddy and cocksure, certain that we have embarked on the next leg much higher. The usual cadre of veteran bearish market watchers are just as convinced that gold has reached stratospheric nosebleed territory and claim the short-dollar trade has too many people on one side of the trading boat.

Meanwhile, most of the indicators we follow are acting the same way, as if they all now hail from Missouri and will wait to be shown that this is the “Big One.”

Technically speaking, both the gold and silver charts remain bullish, but unless the large numbers of new buyers show up soon, bullishness will very quickly morph into nervousness in the hottest of hot money that have joined the party in the wee hours of this breakout attempt.,-silver-stage-at-new-heights

Silver Investigation Update
By: Theodore Butler
Yesterday, I received a number of emails from readers who had been communicating with Commissioner Bart Chilton of the Commodity Futures Trading Commission. Obviously, Commissioner Chilton intended this to be made public and I do so here. My comments will follow.

Statement of

Commissioner Bart Chilton

Regarding the

CFTC Investigation of Silver Markets

September 21, 2009

It has now been one year since the Commodity Futures Trading Commission initiated its investigation of the silver markets. In that time, it has invested over 2,318 staff hours in this investigation, 32 individual interviews have been conducted, and approximately 40,000 documents have been reviewed. We have worked with our colleague regulators in the United States and in other nations. In addition, the agency has taken the extra step of engaging an eminent outside expert to assist in its analytical review of this matter. In sum, we’ve put an incredible amount of energy and resources into this effort.

While there are some who I’m sure wish these things could be accomplished faster, let me assure them that we are far from over in our aggressive investigation of this market. Our Division of Enforcement is leaving no stone unturned to ensure that, if there is any illegal activity going in silver, we will find it and we will prosecute it to the fullest extent of our authority under the law.

In the meantime, we have moved in a new direction with regard to assertive and uncompromising oversight of commodity markets in furtherance of the Agency’s mission to protect consumers and markets. In that vein, we have recently completed three days of hearings regarding positions limits and hedge exemptions. In those hearings, we heard from academics, exchanges, end users, commercials, and non-commercials. After hearing their testimonies, it is clear that new authorities in this area, combined with legislative changes to enhance the agency’s oversight in the OTC arena, could significantly increase market transparency and our ability to protect against fraud, abuse and manipulative activity. Accordingly, I am hopeful that, should new authorities be promulgated in these areas, that they would also extend to the metals markets as appropriate, and I will continue to work toward that objective.

I think the intent of Commissioner Chilton’s statement may be different than first assumed. I don’t think it was solely intended to provide an update to those who had been inquiring about the investigation. I think it was intended as a warning to the shorts. Intention aside, the message to the big shorts is that the Commission is taking allegations of a silver manipulation seriously. That’s because the evidence is compelling. Taken together with the no-nonsense approach and pragmatism of the new chairman, Gary Gensler, the message is clear. Be short silver at your own risk.
International Forecaster
By: Bob Chapman, The International Forecaster
To borrow from an old joke about politicians, we ask our subscribers if they know how to tell when Helicopter Ben Bernanke, the current Fed Head, is lying. Answer: Whenever his lips are moving. Now we hear from the Dollar-Destroyer that our recession has technically ended (heaven forbid that we should call our current Fed-caused calamity a depression, which is what it has been since Obama took office). So we guess that we should take his word for it, seeing that every call he has made during his short tenure as Chairman of the Federal Reserve Board has been 100% wrong.
Surely you're joking, Mr. Bernanke!!! Apparently, we are just supposed to ignore our tanking dollar, rising unemployment, ever-weakening consumer spending (which only accounts for 70% of our GDP), a moribund real estate market, trillions in losses lying dormant in the zombie bank mark-to-model scam, not to mention all the off-the-books losses in derivatives pawned off on bank customers after Glass-Steagall was repealed as well as a glowing, smoking Quadrillion Dollar Derivative Death Star waiting to go supernova to the tune of tens of trillions in losses that will vaporize the entire world banking system thanks to the total deregulation of OTC derivatives courtesy of the Commodities Futures Modernization Act. Then there are the ongoing multi-trillion dollar money siphons in Iraq and Afghanistan, thousands of banks, including all the "anointed" legacy banks, that are buried in derivatives and about to fail, a bankrupt Social Security System, a totally naked FDIC, a Fed printing trillions of dollars out of thin air, in secret, without any accountability, and future multi-trillion dollar budget deficits being incurred to keep a totally comatose economy on artificial, taxpayer-sponsored life support. If that sounds like the end of a recession to the people on planet earth, then beam us up Scotty, we're on a planet full of psychopaths suffering from hallucinations and delusions of grandeur. Oh, and Scotty, make sure you remember to beam our gold and silver up with us. We're certainly going to need it the next time we come back to Planet Earth for an exploratory visit to see if the collective, ongoing phantasmagoric, mushroom-induced hallucinations of its inhabitants have finally run their course.

Saturday, September 19, 2009

History in The Making

Governments should also decrease the role of economists – they're no more reliable than astrologers, and they do more damage.
- Nassim Nicholas Taleb

Americans Have Been Taken Hostage
By Dylan Ratigan
The American people have been taken hostage to a broken system.

It is a system that remains in place to this day.

A system where bank lobbyists have been spending in record numbers to make sure it stays that way.

A system that corrupts the most basic principles of competition and fair play, principles upon which this country was built.

It is a system that so far has forced the taxpayer to provide the banks with the use of $14 trillion from the Federal Reserve, much of the $7 trillion outstanding at the US Treasury and $2.3 trillion at the FDIC.

A system partially built by the very people who currently advise our President, run our Treasury Department and are charged with its reform.

And most stunningly -- it is a system that no one in our government has yet made any effort to fundamentally change.

Like health care, this is a referendum on our government's ability to function on behalf of the American people. Ask yourself how long you are willing to be held hostage? How long will you let our elected officials be the agents of those whose business it is to exploit our government and the American people at any cost?

As a country, we must demand that our politicians stop serving those whose business models are based on systemic theft and start serving those who seek to create value for others -- the workers, innovators and investors who have made this country great.

The 4 Key Reasons an Economic Collapse is Likely Imminent
1.The U.S. has unprecedented, massive amounts of current and coming debt.

2.Foreign countries have experienced their own crises, and they cannot offer added levels of debt funding for the U.S. Even if they could, they are unlikely to do so.

3.Productivity is declining, and everything the government is doing is further hurting productivity.

4.The U.S. is printing unprecedented, massive amounts of money and no longer has an ability to control inflation and deflation.

Four major developments all gold investors should watch
Jason Hamlin,
Gold has finally breached the $1,000 level and looks like it might hold the line on this latest attempt. I anticipate that this psychologically-important level will turn from resistance into support as gold makes new highs towards the end of 2009. If I am correct, right now is the last chance investors will have to purchase gold for under $1,000/ounce.

A series of new and significant events have unfolded over the past few weeks that have influenced the precious metals markets and will likely continue to support gold’s price advance. If you are a gold investor, it is important that you understand these events and the impact they are likely to have on your investments.

Development #1 – China Encouraging Citizens to Buy Gold and Repatriating Gold Holdings from London

Development # 2 -The World’s Largest Gold Producer, Barrick Gold Corp, Announced a Decision to Close Its Massive Hedge Book

Development # 3 – COMEX Commercial Traders Have Taken the Largest Net Short Position Against Gold & Silver Ever on Record

Development # 4 – Gold and Silver Slipped into Backwardation Last Week

Any way that you look at it, we are entering intense times in the financial markets and a reality check for the monetary system that has brought great advantage to the United States since establishing the dollar as the world’s reserve currency. With the U.S. government creating an unfathomable amount of debt in a very condensed time period and China growing increasingly impatient, I believe it is only a matter of time before we experience a severe inflationary period. Those in power might be able to manufacture one last rally for the dollar and correction for gold, but each attempt seems to be dwindling it both its potency and stamina. The “banksters” are literally running out of arrows in their quiver. Reducing your exposure to the dollar and protecting your assets with a sensible allocation of gold and silver seems like an obvious move at this juncture.

Could China Push Gold to the Moon?
by David Galland, Managing Director, Casey Research
Inside sourceshave recently confirmed the Chinese government is actively promoting gold and silver investment to the masses.

Some analysts now contend that China can no longer afford to let the gold or silver price slump. The rationale behind that contention is that with the Chinese government now telling the general populace to buy precious metals, it would be highly problematic should gold and silver subsequently take a nose dive.

In many cases, what a government wants and what ultimately occurs can be wildly different, due to unintended consequences rarely foreseen by officialdom, and because once the masses get it into their heads to break one way or another, government’s desires are largely ignored.

“You shall not smoke marijuana,” says the government. “Roll me another,” says John Q. Public.

But in the case of gold, interestingly enough, the Chinese government has the means at its disposal to actually do something about prices. Namely, at $1,000 an ounce, the total value of all the gold ever mined comes to about $5 trillion.

Of that amount, less than $1 trillion is held in official reserves, the rest under mattresses, in jewelry and family heirlooms, and in various ETFs – GLD being the biggest, by far, holding about $34 billion worth of gold.

Against these totals, China has foreign reserves in excess of $2 trillion. In other words, more than enough to push the tiny gold market around in any way it wishes. Given that much of its reserves are now denominated in fragile U.S. dollars that it would sorely love to replace with something more tangible, and that China is the world’s largest gold producer, the country’s involvement with gold is something more than just a passing fancy.

Simply, there is a new gorilla in the room in global gold markets.

Massive Inflation Has Already Arrived in the U.S.
Ben Bernanke said this week that the recession is "very likely over." Yes, therecession may be over in nominal terms, but massive inflation has just begunand prices of stocks and real estate will continue to plummet when valued inreal money, gold and silver. You can't just print your way out of a recessionwithout increasing production. Sure, if you print enough money prices ofstocks and real estate will rise when priced in dollars, but that won't mean athing when it costs $10,000 to fill your refrigerator with food.

NIA Officially Declares Gold and Silver Mania is Here
While the mainstream media has officially declared the U.S. recession over and an economic recovery here, NIA believes what the media sees as an economic recovery is nothing but inflation. We believe the U.S. recession has just begun, but declare that gold and silver mania is officially here. Of course, this is just the first inning of gold and silver mania. The mania won't reach its height until everybody you know who invested into the real estate bubble, abandons real estate and starts investing into gold and silver.

Last year during the U.S. financial crisis, Americans rushed out of stocks and real estate and into U.S. dollars as a safe haven. Unfortunately, these Americans who already lost so much in stocks and real estate, will soon get hit by a hyperinflation tidal wave that washes away what little wealth they have left. The only people who will survive are those who wake up and realize that gold and silver are the only real safe havens because the Federal Reserve can't print them out of thin air; gold and silver supplies will always be scarce.

Global systemic crisis: In pursuit of the impossible recovery
Before this summer, LEAP/E2020's team announced that there would be no recovery in sight in September 2009, and not until summer 2010 in any event. Well indeed, contrary to the claims of the media, and financial and political circles, we confirm our anticipation.

The slowdown in the speed of collapse of the global economy, at the origin of all the « good news » (1), is only due to the world's enormous public financial effort of the last twelve months (2). But the « time saved » using taxpayers' money around the world should have been dedicated to redesigning the international monetary system at the heart of the current systemic crisis (3). Yet, besides a few cosmetic considerations (4) and huge gifts to US and European banks, nothing serious has been undertaken, and, when it comes to the future, the « every man for himself » rule prevails (5).

Now, as summer 2009 comes to a close, and as the three rogue waves start impacting the global economy hard (unemployment (6), bankruptcies (7) and monetary shocks (8)), the time to mend the system, or to prepare for a soft transition towards a new global system, is over (9). The first signs of a major decoupling (10) are beginning to appear: the rest of the world is rapidly moving away from the Dollar zone. As shown by the chart below, there is a 95 percent chance that 1,000 billion new USDs will be printed in a very near future... not very attractive for the Dollar zone.!-Global-systemic-crisis-In-pursuit-of-the-impossible-recovery_a3797.html

Thursday, September 17, 2009

The Long Side Of The Boat Looks Full

Gold AND Silver are ripe for a reaction lower here. The charts, COT numbers, and multiple market commentary suggests so. Why hasn't the price of the Precious Metals dropped then? Because so many sources suggest it should...

Huh? What? Yep. As traders enter the market on the short side, they go to battle with traders looking to buy any little dip in the market now that Gold is above $1000. If there are more buyers than sellers, weak shorts must cover their bets, and in effect, aid the Bull camp in moving prices higher. This is precisely why prices have crept higher all week even though "we all know" prices should be reacting lower. This is a trap the Bulls must fight to resist being snared in. How many times have you bought that "last dip" expecting prices to continue higher, only to see them crash?

Why do they suddenly crash? Because you finally bought in long. No, not really. Prices "crash" because they never should have gotten this high, and because the markets run out of dip buyers at such a high level. This is where the smart money is selling to the dumb money. The dumb money being those "late to the party".

Don't get me wrong. Gold AND Silver are going HIGHER...much, much higher. But to really move higher, they need to move lower first.

The Silver chart posted above speaks for itself. Key support for Gold is at 1007. Should Gold fall below 1007, a move to retest of the breakout from the 18 month consolidation triangle would seem likely. A reaction back to 970 would be in play should this happen with support at 988 in between.

The chart of the DOW posted above suggests that the six month [bear market] rally may be mercifully near it's end. Should this be true, it may complicate things in the Precious Metals camp. A severe reaction in equities has the potential to drag the Precious Metals down in the beginning. If this occurs, the support areas mentioned above may prove inadequate and the metals could get beat up pretty good before they right themselves with a safe haven bid in the ensuing panic that the recent recovery hopes promoted by western governments are just that...hopes. Should this scenario in equities play out, look for support in the Precious Metals first at their respective 200 day moving averages.

In conclusion, this is a good time to keep some powder dry for a fantastic buying opportunity in the days, and possibly weeks, ahead.

Silver Update
By: Roland Watson, The Silver Analyst
Silver has put in a real price push in the last few months having run from a low of $12.45 on the 13th July to a current best high of $17.66. Now the talk is of $25 or higher silver and $1500 gold. Buyers are coming out in force afraid to miss out on a big move and are piling into bullion, stocks and ETFs. Meanwhile the smart money is ready to take their profits and move on. Not because silver must be suppressed at all costs but rather because profits are the lifeblood of any business be it the sole trader riding the short term moves or the investment bank whose share price depends on consistently profitable buying and selling.

The chart below helps sum up the situation. assured this is not a time to buy in bulk unless you are disciplined with your stops and do not allow them to be unactionable at any time. Am I saying the silver bull is now dead and buried? Not at all! ... Prepare for greater heights but don’t get carried away at these critical junctures.

Warning: Gold Breakout...Next Week
By Warren Bevan
The message I want to portray today is the fact that tomorrow is quadruple witching day where contracts for stock index futures, stock index options, stock options and single stock futures expire.

Too many times in the past bullish investors have been sucked in at the last minute and bought bullish contracts only to lose their shirt over the next few days as the price reverses quickly and takes their contracts out of the money allowing the contract sellers to pocket the full premium.

Yesterday, options on GLD were bought heavily, many of which are already out of the money. Do not get fooled into buying a short term options this week. From the open interest on GLD options I am guessing that we will see a quick move below $980 where 21,043 positions are open, and possibly even to $960 where 26,819 contracts are open in order for the option sellers to maximize their profit. Possibly even just below $950 where 25,764 contracts are open. The simple message is tread carefully until the witching ends.

Don’t get me wrong gold has broken out, but a quick setback is in the cards in my view. Even as I type this quickly, gold is under pressure and looks to be ready to move below $1,010.

Treasury To Sell $112 Billion In Notes Next Week
NEW YORK -- The Treasury Department said Thursday it will issue $112 billion in notes next week. A record $43 billion in 2-year notes will be sold on Tuesday, followed by $40 billion in 5-year debt on Wednesday. The final offering will be $49 billion in 7-year notes on Thursday. The amounts are each $1 billion more than last month -- the most ever for each security -- and in line with estimates of some of Wall Street's biggest bond dealers. The government will also sell $85 billion in shorter-term bills. After the announcement, 2-year note yields, which move inversely to prices, remained up 1 basis point on the day, at 1%, the highest this month.

U.S. credit card defaults up, signal consumer stress
NEW YORK (Reuters) - Bank of America Corp and Citigroup Inc customers defaulted on their credit card debts in August at the highest rates since the onset of the recession, a sign that the banks' consumer lending woes are far from over.

The trend was echoed among most other major credit card issuers, dashing optimism sparked when many banks and specialty finance companies reported lower default rates for July.

"People have gotten very bullish with the July data, and (the August data) raises the question about how fast the consumer will get better," said Scott Valentin, an analyst at FBR Capital Markets. "People were assuming the pace would be pretty rapid, and this maybe slows the pace down."

The worse-than-expected August numbers bolstered the contention of some analysts that the July decline in defaults was due more to seasonal effects, like tax refunds, then an improvement in consumers' financial health.

Many analysts expect bad-loan levels will keep rising until later this year or early 2010.

"The defaults are a wake-up call for those expecting a V-shaped recovery," said Elliot Spar, options market strategist at Stifel Nicolaus & Co.

Hyperinflation Nation [Video] [MUST SEE!!!]

PLEASE watch this video documentary about inflation...the TRUTH about America's Future IS NOT VERY PRETTY. After you view it please pass the link on to friends and family. EVERY
American should know of the perils our country faces. EVERY AMERICAN SHOULD KNOW THE TRUTH.

Tuesday, September 15, 2009

Like Moths To A Flame

Like moths to a flame, investors are being drawn to $1000 Gold. And too many of them may have wax wings. The thrill of $1000 Gold is careening around the Internet like a ping-pong ball in a lotto machine. The long's side of the Gold boat is getting too full. Likewise the short side of the Dollar boat is listing. Extreme caution is urged if buying Gold here or adding to positions.

Unless the Gold Bulls can muster a way to squeeze the bears here, history dictates that Gold is ripe for a smashdown over the next couple of weeks. Investors should sit tight, Gold is going higher. Traders should think seriously about taking some money off the table for the "short-term, if they have not already done so, and/or tighten up your stops. Silver traders should do the same.

Gold has support first at the broken downtrend line of the symmetrical triangle recently broken. 970 / 960/ 945. A break of 945 could devastate the Bulls here. Silver is staring at he potential of a swift and violent $2 haircut here.

The fundamentals for Gold and Silver today could not be more solid. However "technically" both are overbought. Couple this overbought signal with the CRIMEX goons massive short position in BOTH Gold and Silver and CAUTION is the word of the day.

Gold Market Update
By: Clive Maund our experience Big Money almost always wins, which is hardly surprising given their extensive network of connections throughout the banking system, governments, the markets and policymaking in general – they know what’s going down and when. Even when it looks like they are going to lose, as during the banking crisis of last year and early this year, they simply push the bill for the consequences of their excesses onto everybody else. We therefore aim to align ourselves with them as much as possible. You have as much chance of winning when you oppose them as a hedgehog has of making it across a freeway south of Los Angeles. Bearing this in mind the latest COT chart is, or should be, disconcerting for bulls, for as we can see the Commercial short position exploded according to the latest data, which does not include the last 3 days of last week, so it can be presumed to have climbed to even higher levels as gold finished the week at a closing high. This means one of two things – either Big Money are going to have their heads handed to them on a plate as gold breaks out and rockets higher (historically unlikely), or the average investor in the PM sector, egged on by the plethora of bullish gold reports doing the rounds, is going to end up as roadkill before much longer, which could involve a false breakout to new highs and a concomitant explosion of Commercial short positions to an even greater extreme. The silver COT chart is even more extreme.

Fed will do anything to keep gold down
By Richard Russell, Dow Theory Letters
The one signal for rising inflation that the world understands is rising gold. The central banks do not want to see the gold signal, which tells the world that inflation is in command.

What the Fed really wants is asset inflation in housing. Housing is collateral for almost everything in the nation, and the Fed and Treasury are frantic to get housing prices heading higher.

Whatever it takes, it seems, will be utilized to hold the only constitutional money down.

When a can is placed on a stove burner, the pressure builds up inside the can. At some point, we know not exactly when, the can will explode and the pressure will be released. That, I believe, is where gold is.

You can threaten gold with forthcoming central bank sales. You can sell gold in quantity. You can smother gold with short sales. But the primary trend of gold will win out. It will be expressed today, in a month, or in 2010. The trick for us is to hold onto our position -- don't trade it, don't move in and out with it, don't hold so much of it that you get the heebie jeebies every time it dips $10.

The primary trend of gold is up. We're riding the bull. The bull will try to shake us off his back. We'll hang on.

The Coming Consequences of Banking Fraud
By J.S. Kim
It is ironic that it is the same group of people that so readily accepts the Western media’s correct analysis of China’s stock market as a huge bubble through the lens of Austrian economic principles that simultaneously rejects any similar notion as applicable to US or UK stock markets, and instead, readily embraces heavily flawed and unsound Keynesian economic principles when evaluating Western stock markets. It is ironic that the same group of people that foolishly equates being “American” with blind support of the US stock market (i.e. “being bearish on the US market is un-American!”) is also completely ignorant of both the massive fraud that is perpetrated in US stock markets as well as the tenets of the US Constitution that sound great objections and warnings to the ruinous and foolish monetary policies that are implemented by bankers as their “solution” to our current economic crisis. And finally, the greatest irony of all is that the anger that brews inside those that have been tragically hurt by this crisis can coexist with the failure to recognize that it matters not in America if the President has the last name Clinton, Bush or Obama – that monetary and fiscal agenda inside the US for the last 17 years has not wavered nor changed one iota during this period of time because it was not these men that have been in charge of the economy but the men that manufactured these men’s rise to power and that control the US Federal Reserve and the world’s Central Banks, and thus the global monetary policy.

Thursday, September 10, 2009

When Push Comes To Shove

"...the U.S. dollar is about as worthless as a screen door in a submarine."
-morris374, in Tech Ticker comments on Yahoo Finance

Fed survey shows US recession may be over
WASHINGTON (AP) -- Economic activity is stabilizing or improving in the vast majority of the country, according to a new government survey, adding to evidence that the worst recession since the 1930s is over. The Federal Reserve's snapshot of economic conditions backs predictions by Fed Chairman Ben Bernanke and most other analysts that the economy has started to grow again in the current quarter.

The Kiss Of Death. ANY and ALL growth the economy "may" be experiencing is directly the result of goverment stimulus. The recession is NOT over by any stretch...unless you consider that it is morphing from a recession into a depression. It was amusing yesterday afternoon at 2PM est when the Fed report hit the wires. The Dollar caught a bid, Gold tipped over and equities tanked. Wishful thinking, a complete load of crap...

The Great Fakeroo Recovery
By: Llewellyn H. Rockwell, Jr.
Why do matters in the financial sector look better? It is wholly a consequence of trillions in artificial stimulus, a market re-jiggered and falsified through money creation and partial nationalization and bailouts. These do not last.

A few months ago, many people were worrying about the inflationary future that is suggested by the astonishing increase in phony bank reserves over the last year. Today, however, the tune has changed. Bernanke is now being heralded as the great genius of our times.

What this suggests is that no efforts are going to be undertaken to suck the phoniness out of the system. The new reserves are going to stay in the system, and every effort will be taken to convert the reserves into real money supply increases. And if this actually happens, you had better hold on for a wild inflationary ride.

Gold Waiting to Pounce On Summit’s Failures
By: Rick Ackerman, Rick's Picks
With the G-20 meeting in Pittsburgh just two weeks off, we didn’t expect gold’s widely anticipated push past $1000 to be a piece of cake. Indeed, Bernanke & Friends are probably throwing everything they’ve got at gold right now to suppress its price. And for all we know, Uncle Sam has loaned every ingot (supposedly) in Fort Knox to carry-traders at J.P. Morgan and Goldman Sachs. The ability of these well-connected bullion bankers to borrow more or less unlimited quantities of physical gold is for them even better than a license to print money, since money itself is most surely not what it used to be. The feather merchants have repaid the government’s kindness by sitting on gold futures prices. This price-fixing operation is all the more impressive because its perpetrators have managed so far to peg bullion to $1000 even though the U.S. dollar has broken some key technical supports in recent days.

Gold is seen struggling a bit here to clear $1000 with some authority. This is not to be unexpected as Gold rose to $1000 overbought, technically. The Euro is up against significant resistance at 1.46 here, so it may be difficult for Gold to bust through the $1000 barrier just yet. The longer it lingers here, the more likely weak longs will jettison their positions in frustration. "Technically" the best thing that could happen here is for Gold to retreat and retest the breakout near 970. This would give Gold a chance to work off some froth in the market and then crush the wall at $1000 in the latter half of September on it's way to the 1200s.

Derivatives Collapse and the China Gold and Silver Markets[MUST READ]
by Bob Chapman
So now the COMEX gold and silver commercial shorts, the owners of the COMEX exchange, and all the past CFTC officials who allowed this nefarious paper fraud in gold and silver to rise to new criminal heights based on bogus backing by unregulated derivative contracts written and guaranteed by an often contentious and even hostile foreign government, are all doing double shots in their knickers. If the very angry, and very duped, Chinese renege, the entire COMEX is going down, big-time baby!!! The whole system is about to blow if the Chinese renege on these contracts!!! We wonder what the Chinese want in return for not reneging! Whatever it is, we can guarantee you that the US government is not going to like it very much.

Without the Chinese OTC derivative backing, all COMEX gold and silver positions would be totally naked. That is because COMEX inventory reports for both gold and silver are a total fairytale fraud. Despite many hundreds of requests for physical delivery which were satisfied over the course of many months, the gold and silver inventories reported by COMEX have remained unchanged. The COMEX even had to enlist the help of the ECB and the Canadian mint to satisfy those requests for delivery, thereby demonstrating that what the COMEX reports as inventory is nothing but a phantasm. We recommend that any and all COMEX gold and silver positions be abandoned as being outright naked and fraudulent.

Take physical delivery of your gold and silver bullion from COMEX if they have any, or take your ETF share in lieu of physical delivery and convert it into bullion immediately, and take physical possession of it. Do not trust any bank, any mint or any ETF or pooled fund to hold your gold and silver. Otherwise you potentially face a total loss of principal

When the COMEX goes down in a blaze of glory, which is now inevitable, everyone who owns any ETF gold and silver shares, and especially those who have received these shares in settlement of their imploding COMEX contracts, are going to ask for physical delivery from the ETF's because all confidence will be lost in the system. Then comes the implosion of the ETF Ponzi schemes as everyone finds out that not only did the COMEX have no gold or silver to back its contracts, but that all the gold and silver ETF's were nothing more than gold and silver naked-shorting, leasing and price suppression schemes. We now predict that the requests for physical delivery from the ETF's will far exceed what they planned for, and further that the whole nefarious scheme will be exposed as being a Madoff-like Ponzi scheme, because their touted gold and silver bullion holdings have all been sold off, leased or otherwise encumbered.

In fact, the gold and silver being promised as backing for the holders of ETF shares may be the same gold and silver that is used to back COMEX futures contracts. The ETF's may well be leasing their gold and silver to the COMEX, which may then be handing it out to settle COMEX physical demands for delivery. Well guess what - you can't both own the same gold and silver at the same time! Now the COMEX has dropped that pretext, after sucking the ETF's dry, and they now hand you ETF shares backed by what may well turn out to be non-existent gold and silver! The cartel couldn't screw the ETF shareholders any further, so now they are screwing the COMEX investors as well. We therefore recommend the abandonment of all pooled accounts held by ETF's, mints and any gold and silver dealers that are not on our recommended list, as being potential investment scams. If any dealer offers to hold your gold and silver for you in return for a paper promise instead of physically delivering it to you, just tell them thanks, but no thanks. Many dealers may be depending on paper gold and silver themselves to cover their gold and silver promises to their customers, so if this paper gold and silver evaporates, so will your dealer's promises. This whole group of cartel henchmen-con-artists from the Illuminist cabal could easily get caught in a failure to deliver known as a commercial signal failure. The gold and silver shorts will completely implode if this occurs, and the Chinese strategy to renege on its OTC gold and silver shorts could well be the catalyst that brings such a cataclysm to fruition. Then, when gold and silver skyrocket as the shorts implode, only those who took physical possession of gold and silver, or who own gold and silver producer shares, will profit, while those holding futures contracts, ETF shares, mint certificates and precious metal derivatives will watch their contracts and shares go up in smoke like a Mission Impossible tape. That is because the major exchanges, sponsors and counterparties will go bankrupt, and you will have nothing left to go after to satisfy your paper promises.

The magnitude of this paper gold and silver scam will even exceed that of the Madoff Ponzi scheme. The Stanford scam will look like chump change by comparison. You should own only physical gold and silver, which is in your possession. The only paper gold and silver you should own are the producer shares, period. All futures contracts, ETF shares and mint certificates are now potentially bottomless capital loss pits.

13 Reasons For Major Gold BreakOut
By: Jim Willie CB,
An acute lack of gold comprehension is evident almost on a global basis. The entire system is wedded to toxic paper. For the most part, so-called experts, industry analysts, and network anchors have absolutely no idea why gold has risen above the $1000 level. They are blind to the Paradigm Shift away from the USDollar and cannot admit the breakdown of the global monetary system. Their jobs might require them to turn a blind eye to such catastrophic events. At best they might have spent their entire careers inside the noxious US$ Greenhouse Dome, unable to see from an external vantage point, in no position to see the Dome from an outside perspective. It will be interesting to observe how long the ‘SYSTEM’ remains ignorant of the massive changes taking place, as the stages they sit upon and work upon are slowly vanishing. Their claims for golden reasons are vacant shallow factors. THEY miss the major factors. They do notice a staggering amount of fiat money being created without basis, which would fall generally under item#2. The actual reasons are many. The list is somewhat debatable, subject to interpretation. Some argument might even come from within the gold community.

Basically the reasons extend from the many tentacles and ramifications of the Grand Paradigm Shift in progress, the complete overturn of the USDollar global financial system. It is being turned upside down before it goes inside out, and finally fractures into a million pieces. This is an irreversible process that is already one year into the collapse process. Here are reasons according to my analysis and perceptions. They only number 13 this time:

1) PARADIGM SHIFT away from a USDollar centric world manifested as the global revolt against the USDollar in reserves management and transaction settlement, extended from bank structures

2) colossal irresponsibility of major central banks with expanded balance sheets, money creation, and credit growth, endorsing their government profligacy

3) failure of the central bank franchise model, exhibited by the ongoing credit crisis, insolvency of banks, and desperate attempt by the US Federal Reserve to serve as the global bank

4) ruined global monetary system from the complete debauchery of money itself

5) perversion of the USDollar from required USMilitary subsidy, from coerced USTreasury Bond support, and from tacit acceptance of Wall Street corruption (past bond fraud and debt rating agency collusion without prosecution)

6) proliferation of OTC derivatives over $1 quadrillion in value with no prospect of resolution, no hope of regulation, and deep corruption, but with deadly dependence

7) gradual recognition of a financial crime syndicate having taken control of the USGovt finance ministry, that involves official channels of slush funds, bond counterfeit, and narcotics money laundering

8) dishonor of financial contract law, chronic lapses in financial market integrity, and constant intervention in those financial markets

9) expectation of mammoth price inflation just over the approaching horizon, unless the central bank balance sheets inflate beyond measurement in Weimar style

10) anticipation of banking system meltdown in at least the United States and United Kingdom, likely to result in bank holidays, useful for a forced Bank Consolidation with dead banks capturing the system or for a climax Wall Street theft event

11) observation of gradual economic disintegration and the decline of global trade

12) trend toward commodity stockpiles, of which gold is the financial commodity core element and crude oil is the industrial commodity core element

13) specter of numerous pockets of armed conflict, military war, and possible nuclear events, as chaos spreads and nations desperately exploit the confusion, and react to lost sponsorship relations, if not parasite-host pacts.

The move to kiss $1000 gold was the foreplay, the first dance, the initial step to capture global attention and to preview the next much bigger move. Some important less visible factors are at work to push the gold price up, somewhat hidden from view. The Intl Monetary Fund and the London G-20 Meeting bear on the gold forces. The full breakout is imminent. It could be days, or a couple weeks, probably not more than a month. Ramadan ends in ten days, and Chinese anger is spilling over. Underlying structures are breaking with each passing week. Bank ripples are being felt. Insolvency is spreading like a disease, while corruption spreads like a cancer. Central bank money creation occurs like from a garden hose. Stories will be told about these days for decades. This is history in the making. They are accumulating gold bullion here. The fools are still selling gold, unaware of its 100% rise in price upcoming. Actually, what comes is a quasi-global 50% currency devaluation. China is cutting deals with the I.M.F. to secure central bank gold in huge blocks, much like geopolitical horse trading amidst grand power shifts for global control. If the West wishes to enjoy the benefits of Chinese credit supply, then China must be given much of what it demands. In short, the gold price will break out past 1100 and past 1200, toward a 1300 target, WHEN CHINA DECIDES TO GIVE THE ORDER.

Monday, September 7, 2009

The Canary In The Gold Mine

But Did Anyone Notice Inflation?
By Adrian Douglas
The mainstream media has been elated by early signs of economic activity picking up. In particular the Institute of Supply Management (ISM) issued their Purchasing Managers Index (PMI) on September 1:

The index was reported at 52.9. This is the highest in two years and the first reading above 50 since the credit crisis began. A reading above 50 indicates expansion in manufacturing. The media was euphoric and investors have pushed the US stock indices to post recovery highs. What did not receive any attention was the prices paid component of the index. It increased to 65 from a reading of 55 in July. This is 18% increase in a single month! In May 2009 the index was at 43.5 which represents 49% increase in prices paid over 3 months. This is absolutely stunning. This is not a government massaged index; this is based on what purchasing managers are reporting they are paying. Only 8% of managers reported paying lower prices while 38% reported receiving higher prices.

This report was followed on September 3 by the Non-Manufacturing (Services) Index.

It was reported at 48.4 and while this is still indicating contraction the index was 2 points higher than in July and 8 points higher than in March. Again the media were waxing lyrical about recovery. Again what was not mentioned was the prices paid component; it increased to 63.1 from 41.3 which is a simply shocking 52% jump in one month. It increased 34.5% from its May reading. Only 6% of managers reported paying lower prices while 23% reported paying higher prices.

On September 4 the Economic Cycle Research Institute’s (ECRI) U.S. Future
Inflation Gauge (USFIG) was released:

It was 89.6 in August compared to 84.6 in July. This is a 5.9% increase in one month. The August USFIG annualized growth rate, which smoothes out monthly fluctuations, rocketed to positive 6.5% from negative 8.8% in July! In other words the annualized indicator which smoothes out volatility went from a highly deflationary picture to one of rampant inflation in just a single month! The ECRI commented that the gauge was pushed higher by rising commodity prices. This dovetails with the picture we see from the reports of actual prices being paid as reported by the ISM.

Almost everyone has their eyes glued to the money supply data and the BLS CPI and PPI. Of course the government’s proclivity to exclude everything that is rising in price from the PPI and CPI in their special brand of hedonics means that the last place to observe the affects of monetary inflation will be in these indices. John Williams at reports that his reconstructed M3 is only growing at a rate of 6% annualized. I however question the accuracy of the input data. I don’t think that all the actual monetary injections are being reported, which is probably one reason the FED does not want to be audited. Neil Barofsky, Inspector General of the TARP, recently testified before Congress that the total credit lines of the 50 or so stimulus programs totaled 23.7 Trillion dollars. A Treasury spokesman countered with a statement that only 2T$ had so far been spent. Where does that 2T$ appear in the M3 data? It doesn’t! If government officials have the capacity to access 23.7T$ of credit who will bet me that they will not spend it? Clearly money is being pumped into the system which is bypassing the reporting system.

Gold, Silver Breakout in Action
By Gene Arensberg, Got Gold Report
U.S. banks dump huge chunk of net short positioning just before surge.

Both precious metals challenge key resistance despite heavy commercial selling.

ATLANTA – Bam! Gold breaks out of its huge consolidation triangle, Wednesday, September 2. What are we going to do now? Why, for the short-term trading portion of the ammo pile, we are going to execute trading strategy and let the strategy do the trading of course. More about that below.

As the first week of September rolled in, the markets for gold and silver heated up. Why? “Tonnes” of reasons. Perhaps Adrian Day summed up one of our favorite drivers of this gold bull market in a CNBC interview with Bob Pisani Friday when he said, in essence, that gold going up now is a vote of no confidence in the world’s “leadership” and another no confidence vote in the world’s fiat currencies.

Gold is going higher primarily because the supply of paper with ink on it is seemingly inexhaustible but precious metals supply is relatively constant. Gold is going higher because more and more people are converting the former into the latter pure and simple.

China alarmed by US money printing
By Ambrose Evans-Pritchard
Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing".

"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.

China's reserves are more than – $2 trillion, the world's largest.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to buy whenever there is a price dip, putting a floor under any correction.

Labor Day Musings 09-07 [MUST SEE VIDEO]
By karl denninger
We MUST stop the madness! TickerGuy lays more truth on the table with credit, income, asset and delinquency data.