Thursday, October 29, 2009

The Recovery Is Fake, And The Whole World Knows It

“The US government has a technology, called a printing press… that allows it to produce as many US dollars as it wishes at essentially no cost.”
– Ben Bernanke

Perhaps it was the realization that today's "concocted" third quarter GDP number was "fueled by government-supported spending on cars and homes" that encouraged traders to flee the "safety" of the US Dollar. After all, with the economic "recovery" already in doubt because it was fabricated by "government stimulus", why would traders want to hold Dollars if further growth can only be maintained by spending more Dollars "printed out of thin air"?

We saw this bounce in Gold coming earlier this week. As soon as the Treasury was done "selling $153 BILLION of new debt", the price of Gold would rebound. We never expected it to explode off the bottom like it did this morning however. Good economic has proven time and time again to be "bad news for the buck" lately as it increases traders and investors appetite for risk. I know, it's difficult to consider the currency of the "largest debtor nation on Earth "safe", and Gold risky, but that's how the financial media paints the picture. We know nothing could be further from the truth. THERE IS NOTHING SAFE ABOUT THE US DOLLAR. About the only thing "safe" to say about the US Dollar is that it is the root of ALL financial ruin.

The Dollar experienced a wicked outside reversal day on it's chart today as the feeble Fed/Treasury induced Dollar rally to support the mammoth Treasury auctions this week fizzled. Gold found support, as hoped by many, at the old 2008 high near 1024. Silver found support near it's June 2009 swing high of 16.23. It would be beneficial to both if we were to see a few days of flat/sideways pricing in the very near-term before moving towards new highs through the month of November, traditionally one of Gold and Silver's strongest months annually. 1042 in Gold, and 16.61 in Silver remain key price points.

Golden Accumulation Opportunity
By: Jim Willie CB,
Actually, the golden opportunity is for buying silver at current prices. The motive for lifting the USDollar was the gargantuan $115 billion in USTreasurys offered this week. With bond yields rising from gargantuan supply, the USGovt and USDept Treasury and USFed did not wish to have both bond principal values fall and the USDollar fall. So the witch doctors engineered a meager semi-lifeless US$ rally, and a full 100-cent silver price discount. The claim again came that the bond auction bid/cover was strong at over 3:1 ratio. But 1.0 of that comes from the primary dealers who are bound to bid. The rest came in majority from foreign central banks. Same Modus Operandi by the Big Boyz. The difference is that precious metals were taken down in price, using the typical naked shorting of futures contracts sponsored and endorsed by the USGovt, which refuses to enforce the regulatory requirement to maintain 80% metal in inventory. ... The silver price after some stabilizing days will be ready for a serious assault on the $20 price level.

The stories pushed out by the increasingly lost USGovt officials, supported by the armada of Wall Street henchmen to carry out marching orders, and issued by the wholly subservient US financial press, have become downright laughable. In the last several days, on numerous occasions on the tube and on numerous occasions in published articles, the phrases ‘flight to safety’ or ‘seeking safe haven’ or ‘safety & security’ were heard and read. On its face, each description is an affront to any thinking man or woman, entirely in conflict with the Global Paradigm Shift movement away from the USDollar, and in sharp contrast with most deep seated monetary practices in full speed on American shores. The United States financial arena is the home of the most gargantuan monetary inflation in the history of mankind (as in scores of centuries), as central bank balance sheets hit $3000 billion. The United States financial arena is the home of the most gargantuan federal deficit, with almost no visible end. The United States financial arena is the home of the most gargantuan illicit (not well hidden) debt monetization, as each and every mammoth auction would fail without the purchase from the Printing Pre$$. The United States financial arena is the home of the most gargantuan secretive payment for ruinous credit derivative losses under its offered shelter for Fannie Mae mortgage toxic bond manager and the American Intl Group credit default swap insurer. The United States financial arena is the home of the most gargantuan carte blanche sacred budgets for aggressive war, widely debated as primarily for private firm gains. The point is that the fundamentals and financials of the United States contradict any hint of a global movement drawn to safety, security, stability, wisdom, or leadership. This is pure Orwellian rubbish!

Few opportunities are so striking and promising. One can purchase silver under $17 per ounce. One very well connected colleague said recently “Silver is an absolute steal at any price under $20, but the coming breakdown in the Western banks and monetary system will be centered on their gold mismanagement.” The silver price filled an early October gap evident in the faster charts. In the view shown below, the old resistance, now new support at 16.1 held firm. The price revisited the 50-day moving average. The moving averages are all on the rise. Who knows? The price must have felt the urgent need to touch the 50dMA after having spent all this time since mid-August above it. Nah! The Powerz are scared white, are soiling their stolen underwear, and are increasingly desperate. They get away with their corrupt games, using paper still to push down metal prices, as they anger the world further. They motivate the search and establishment of alternatives to the USDollar in its key role. The real motive was the huge $115 billion in USTreasury for sale at auction this week. They needed some cloud cover, and a listless US$ rally would serve the purpose. The ultimate problem they have is the grossly inadequate silver supply in physical form. They more they offer silver at a deep discount, the more they drain their physical supply for delivery, and the more they tighten the noose around their own necks.

The USDollar is the object of international scorn. No credible evidence whatsoever indicates a global flight to the USDollar. In fact, a deeply oversold condition has persisted for several months. The Buck cannot find its true value well below the 70 level unless it relieves the oversold condition, finds some semblance of contract balance, enables fresh new shorts to be put into place, and allows time to pass as the world continues its abandonment. The Paradigm Shift away from the beleaguered discredited USDollar continues on a path that cannot be reversed. The nations that depart from it will be the leaders of the next era, plainly spoken. The US$ DX index seems to search for technical validation, like a touch of the 50-day moving average just below the 77 level. Either passage of time or a slight increase will manifest a touch. By the way, now that the week is almost over, and most of the USTreasury auctions have been completed, the USDollar has executed an ‘Outside Day’ with a higher intraday high hit, but a strong selloff in reversal, to log a close at the daily low. It seeks its true wrecked value.

Gold Party Intermission Nearly Over
By: Trace Mayer, J.D.
The recent gold bull upleg is in the midst of a predictable slight correction and consolidation. When that finishes it is highly probable, based on seasonality and technicals, that the next part of the upleg will commence. The Federal Reserve and Washington are only making matters worse through their extremely damaging policies.

This upleg in gold and silver will have significant strength because of the long period of consolidation just like in 2004 and 2006 which provided the foundation for the uplegs in 2005 and 2007 that took gold from $400 to $700 and $650 to $1,000, respectively. If the current upleg is similar to the previous two then the 200 day relative prices for gold and silver at the top of this upleg would be about 1.5x and 1.7x, respectively.

This puts $1,300 gold and $25 silver within range without greatly exceeding previous trading norms

The October intermission is likely coming to a close.

The Next Crisis: Spiraling Inflation - Part 1
By Nick Barisheff
The US economy contracted for four consecutive quarters since October 2008, something we have not seen since the Great Depression. A V-shaped recovery is simply not in the cards because the credit crisis has caused deep, systemic damage. Having said that, if the recession ends this year, it certainly won’t be because the global economy is healthy.

Bank of Canada Governor John Carney and US Federal Reserve Chairman Ben Bernanke are proudly predicting that GDP will turn positive later in 2009, but much of that growth will be the result of trillions of dollars of government spending. There is only one politically acceptable way to pay for those trillions, and that is to expand the money supply at an explosive rate. That is exactly what the US Federal Reserve has been doing for the past year. But history and economics tell us that rapid increases in the money supply spell big trouble for investors because they set the stage for spiralling inflation.

Here are four big reasons to worry about inflation.





Rising Gold Dances but Won't Die with the Dollar
The Gold Report: John, why hasn't the mainstream media caught on to what's going on with gold?

John Doody: The CNBC types are always talking their own "book," which is mainstream stocks. If no one buys the broad market stocks, there are no jobs for the talking heads, et al., at CNBC. They're always pooh-poohing gold and love saying that gold at the current price, $1,060, hasn't really done much from the $850 high in 1980. That's a false comparison. If you want to use that, then why not point to the S&P high in the 1500s or the Dow high in the 14,000s as a measure, instead of the March 2009 lows?

The gold price was controlled from the 1930s until March 1968 by eight Central Banks (CBs) that were the gold cartel and fixed the price of gold at $35 an ounce. That ended in March 1968 when market forces overwhelmed the CBs. Unable to enforce $35/oz, they let gold's price float in the free market. Between themselves, they still traded at $35 and then, of course, all of that fell apart when Nixon went off the gold standard entirely in '71.

The appropriate measure for me as to how gold has performed is to go back to when the price was set free, March 1968. If you take the $35 gold price and adjust it for 41 years of the U.S. CPI increases, the gold price would be about $220 an ounce, increasing at an average compound rate of about 4.5% a year. But since being set free in 1968, the gold price is now $1,060. So gold has provided great inflation protection, and growth. From $35 to $1,060 — that's about an 8.5% compounded annual rate per year. That's the true measure of gold's value for inflation protection.

Tuesday, October 27, 2009


POW! POW! The reaction you've been waiting for has arrived, and right on schedule. 10AM the day of options expiration and "whoops" there go the Precious Metals. So much for the "Gold Cartel Surprise".

Silver has gotten whacked pretty good over the past two day's 10AM CRIMEX raids. Gold has stood up to the fiends admirably. Silver slipped into our first buy zone today at 16.61 and it was apparent that buyers were waiting at the reading to snap up Silver at markdown prices. We should know by late Thursday if answering opportunity's knock at 16.61 was a good plan.

Gold slipped below 1042 quickly just after the 10AM knock. Gold found solid support at the March 16, 2008 intraday high of 1032.20, stopping it's slide this morning at a 1032.50 low. Old resistance pops up as new support, and stumps the frumpy CRIMEX bears. Gold quickly rebounded to our friendly 1038.40 Fibonacci line and has hung out within it's vicinity for the balance of the day. Like Silver, we should know by late Thursday afternoon if Gold has weathered this recent Bear Raid intact and fueled to move higher in November.

Of significance in the currency markets today was the YEN. Note that as the EURO fell today, the YEN was rising. 91.75 on our YEN/DOLLAR chart is of major significance to the whole enchilada. The rising YEN will support Gold prices, it proved that today. Keep an eye on this line. Above it is bad for Gold, below it is good. The Euro needs to maintain support above 1.4773 to embolden Gold.

Gold Blast-Off Starts Friday?
By Patrick A. Heller
There are two significant events this week that could exert pressure for higher gold prices. Because of this, I expect to see major behind-the-scenes actions to try to suppress gold (and silver) prices until the middle of Thursday afternoon.

First, the U.S. government’s Treasury debt auctions will sell the greatest amount of debt ever sold in one week. The net debt increase of $153 billion is so high it will exceed the current authorized federal debt limit. Flooding the financial markets with so much debt is a sign of weakness for the U.S. dollar. As the dollars declines in value, the price of gold in U.S. dollars invariably rises.

Second, we will also see the expiration of options contracts in two days. If the spot price at the close of trading on the day that gold (and silver) options contracts expire is higher than the contract price on a call option, the owner will exercise the option to demand immediate delivery of physical gold. The higher the price of gold, the more call options that will be exercised. Conversely, a lower gold spot price will reduce the demand for gold for immediate delivery. There is a major block of call options at $1,050, so expect prices to stay below that level through Wednesday night.

As we have seen previously in 2009 with large Treasury debt auctions and options expirations, the price of gold was clobbered before these events, and not allowed to rise quickly until after the last Treasury auction closed on Thursday afternoon. I see no reason to expect a different pattern this week.

The cataclysm awaiting gold is just disclosure
By Adrian Douglas
Let's forget the discussion of inflation and deflation, because it seems that there can be no consensus on this. Let's imagine that some cataclysmic event suddenly reduced physical stocks of gold above ground from 210,000 tonnes to only 160,000 tonnes. In other words, 50,000 tonnes of gold just vanished in this cataclysmic event.

In such circumstances what would happen to the price of gold?

This would be equivalent to the imaginary cataclysmic event that we just considered that made 20 percent of world oil reserves suddenly unavailable. It would represent 21 percent of all above-ground gold stocks just disappearing.

Wouldn't you agree that from an economics standpoint the resulting stampede to redistribute 160,000 tonnes in a market that believed 210,000 tonnes was not only available but had actually been sold would drive the gold price to unimaginable levels?

What sort of cataclysmic event could trigger this?

Revealing the true condition of the gold market could trigger it.

From the most recent work of the Gold Anti-Trust Action Committee there are strong indications that the London bullion market operates on a fractional-reserve basis. It would appear that at least 64,000 tonnes of gold have been sold via unallocated accounts against a maximum reserve of only 15,000 tonnes.

The cataclysmic event in gold could be triggered by an audit or simply by purchasers asking for delivery of their gold.

Further, with this supply-and-demand problem in the gold market, inflation and deflation do not have to enter the discussion, because the adjustment in price could happen so quickly that the fiat money supply could remain totally static.

TARP chief: Banks possibly ‘in more danger now’
WASHINGTON (CNN) – The banking system today may be in a more precarious position than it was a year ago, the man charged with overseeing a $700 billion bailout program said Wednesday.

Neil Barofsky, the special inspector general managing the Troubled Asset Relief Program, told CNN’s Wolf Blitzer on Wednesday that the government’s decision to support bank mergers over the past year may have put the U.S. economy more at risk.

"These banks that were too big to fail are now bigger," Barofsky said. "Government has sponsored and supported several mergers that made them larger and that guarantee, that implicit guarantee of moral hazard, the idea that the government is not going to let these banks fail, which was implicit a year ago, is now explicit, we’ve said it. So if anything, not only have there not been any meaningful regulatory reform to make it less likely, in a lot of ways, the government has made such problems more likely.

"Potentially we could be in more danger now than we were a year ago," he added.

Earlier in the day, Barofsky issued a scathing report criticizing the Treasury Department for not being transparent enough about how bailout money was being spent. He warned that this could have lasting effects.

Anything Less Than Full Disclosure is Unacceptable
By: Dr. Ron Paul, U.S. Congressman
Last week a new bill was introduced in the Senate to audit the Federal Reserve. Some backers of my bill HR1207 and the existing Senate companion bill S.604 were a little miffed at this, but depending on how you think about it, this new legislation poses no great threat to our efforts.

With the economy in shambles, people are looking for answers - not just because of lost savings on Wall Street, but because of lost houses on Main Street. Because of the many problems we face, the Federal Reserve and its powers over the economy have come under scrutiny. This translates into a lot of political pressure on Congress. With all the House Republicans signed on as co-sponsors and over half of the Democrats, HR 1207 has enormous bipartisan support. It would be disingenuous for Washington not to embrace the principles behind this bill after all the promises for transparency. How can one credibly argue for more transparency in government in one breath and defend the secrecy of the Federal Reserve in the next?

However, there is still very powerful resistance to the disclosures that HR 1207 would require and efforts to weaken it will continue to pop up before this issue is settled.

The good news is that Washington is responding and the Federal Reserve has become the issue. Concerned Americans need to keep the pressure on by continuing to define what we want, and what we do not want.

One major concern is that HR 1207 constitutes some kind of power grab for Congress. Congress would not do a better job dictating interest rates or managing money supply growth than the Federal Reserve does for exactly the same reasons: Congress is not the free market. Any select group of people, no matter how wise and educated, simply cannot replace the wisdom of the market. HR 1207 does not seek to replace the wisdom of the Fed with the wisdom of Congress. That would be a giant step backwards. HR 1207 simply asks for full disclosure, and I am agreeable to allowing for a reasonable lag time to calm the fears that Congress intends to dictate monetary policy.

What we do want, what we insist upon, is that no longer will decisions that carry so much economic weight be made in absolute secrecy. We want to know what arrangements the Fed makes with other governments and central banks. We want to know who is benefiting from the actions of the Fed and what deals are being made. The Fed is already reacting to pressure by scaling back its liquidity facilities and returning to more traditional monetary policy through direct asset purchases. With nearly $800 billion in mortgage-backed securities on its books already, $800 billion in Treasury securities, and no real limit to what the Fed can acquire, there is a tremendous opportunity for malfeasance. We need to know who the Fed deals with, what they buy, how much they spend, and who benefits. As good as any step towards Federal Reserve transparency is, anything less than full disclosure at this point is unacceptable.

Monday, October 26, 2009

Don't Blink!

The break lower we have been "expecting" in the Precious Metals finally materialized this morning. Within minutes of the PM London Gold Fix being put in at 10AM est, the US Dollar mysteriously caught a bid, and the slow descent of the Precious Metals began.

Is it just me, or does this Dollar bid smell strongly of a currency intervention? Or was it simply a short squeeze of the US Dollar shorts set in motion by confusion over remarks out of China regarding it's US Dollar reserves?

China central bank official downplays dollar remarks
HONG KONG (MarketWatch) -- A researcher at the People's Bank of China downplayed on Monday comments that the Chinese central bank should rebalance its reserves away from the U.S. dollar, after the remarks sent the greenback plunging.

Zhou Hai -- a Harbin, China-based member of the central bank's financial research department -- was cited Monday in a PBOC-affiliated publication as saying that, while the dollar should remain the principal currency in China's $2.27 trillion foreign-exchange reserves, the proportion of euros and Japanese yen should increase.

Zhou also said China should reduce pressure from foreign-exchange inflows by gradually improving the yuan exchange-rate mechanism and promoting some capital outflows.

The remarks sent the U.S. dollar to a fresh 14-month low against the euro. See Currencies.

The central bank researcher later told Reuters that the statements were "purely my personal view."

Still, Reuters said that other central-bank have expressed similar views.

"While the move has garnered the market's attention and stands out on a short-term basis, there does not appear to be any practical reasoning behind today's move other than what started as a short-term correction that gained momentum as dollar shorts started to cover their positions resulting in a short squeeze," wrote Robert Pavlik, chief market strategist banyan partners.

Whatever the case may be, today's currency moves were used by the Gold Cartel in an attempt to break Gold's rise over $1000 and set the market up for this weeks options expiration's.

I would suggest that a dollar rally, lower euro and gold is more than just good luck with option expiration's and the largest of all US Treasury auctions this week.
-Jim Sinclair

It may have done little more than offer investors an opportunity to get into the Precious Metals at a discount. The charts above pretty much tell a simple story. The Dollar is at resistance. The YEN and EURO are at support. Gold and Silver have come into near support, and are tempting investors and traders to buy them at a discount. patience by traders hoping to get into these markets at a price are being rewarded. With options expiration Tuesday, a further dip at the open may be in the offing. Be nimble and be quick if opportunity at a price presents itself.

Why the Rise in the Gold Price is Different this Time.
by Julian D.W. Phillips
For over more than 18 months we have watched the gold price churn below $1,000 and in the process forming three tops, before breaking out to above $1,050 in early October 2009. Why will it not fall back to well below $1,000 and possibly as far as $850 this time?

For many months now too, while traders played the gold price against the U.S. $ the gold price has been precise in its inverse correlation to the $. We believe that this has mistakenly led commentators to place far too much emphasis on the $, as the inverse measure of gold.

We say this because the moves occurred at a time when many facets of the gold market were absent from the gold market, such as investment demand, low jewelry demand and central bank demand. Traders held sway over the gold price and it is they that decided that the moves of the $: € decided the price of gold. This lacked a reasonable basis to it. Why should the gold price be tied to the €? Such a relationship implies that the $ in isolation, is the most important factor in the gold market. We counter that and say, yes COMEX is a U.S. market and such traders do have enormous pricing power, but when the full force of all sides of the gold market come into play, COMEX diminishes in importance, just as the waves of the sea are of less important than tides are, to where the sea will climb on the shoreline.

Yes, the state of the $ is important in pricing gold and it is the ‘hub’ of the currency world, but to gaze at it alone is to ignore the much bigger world of gold in its entirety, acting together in synthesis, in deciding the gold price.

This is amply demonstrated by the fact that the U.S. $ is sitting not far off the same place, against the €, as it was when gold was just below $1,000. We now foresee a larger de-coupling from the $ by gold, as we move forward. Yes, the waves of the $ will ebb and flow and continue to cause traders to move the gold price against the $ as before, but the tide of investment demand and other factors in the gold market will flow and dominate these moves over time.

...while the facts of the article in the Independent [British] newspaper, informing the market that France, China, Russia and select Persian Gulf oil producers were going to price oil in a ‘new’ currency were denied, the market is convinced that this will happen in time, even if it takes another decade. The reaction in the gold market was to bring in new investment demand via bullion itself, to prompt heavier central bank selling, to slow scrap sales and to cause traders to add some more gold to their holdings.

On top of the consolidation phase the gold price has been going through over the last 18+ months, this was a breakout pointing to an end of that phase. Now it sits on top of the $1,000 level, which forms a huge support to the price.

The point for gold is that even central banks are wary of the U.S. $ and consequently expect uncertainty to spread like the plague through other dependent currencies, as they try to keep their exports competitive in the world market. Despite it being money in earlier times only, gold remains the only money that can be exchanged when confidence is lost and still hold its value. This reality is rapidly rushing at us and is why gold is rising in price.

When the Titanic sank, there was a point in time, when the ‘unsinkable’ ship in the passenger’s minds, changed to a sinking ship. The breakout in the gold price was just such a point in time.

The ailments hitting the U.S. $ can affect other currencies, all of which are controlled ultimately by their central banks and governments. If the U.S. Administration can’t hold financial confidence why should any other currency do so? The road down for the $ will eventually lead to something that cannot be debauched by governments. The actions of the Chinese and Russian central banks, tells us that they trust a ‘basket of currencies’ [which minimize the impact of any individual government] and, to some extent, gold.

The Defining Moment
By Bix Weir
The following are some of the important converging events that, in retrospect, will have foretold the end of the Banking Cabal that controls EVERYTHING in our lives today.

1) The CFTC has finally made the decision to limit concentration positions and, according to Chairman Gensler, will implement the position limits sooner rather than later.

2) China and India are actively promoting gold and silver purchasing to their population in advance of the price explosion.

3) The media has begun to focus attention on the banking cabal ...

4) The Federal Reserve is being dragged before Congress with the people publically demanding to look "behind the curtain".

5) Leveraged lending has destroyed the Tier 1 capital at EVERY bank around the world. A bank that leverages its assets 20-1 loses 100% of its capital base when those asset values drop only 5%.

6) Almost all US States are bankrupt and in need of massive bailouts. With rapidly falling tax revenues the ONLY way out of this problem is to crash the system and start fresh.

7) The “Public Healthcare Option” is back on the table and will be included in the health care reform package.

8) The US Citizens are on their knees in debt to the banking cabal. Mortgages, credit cards, school loans, small business loans, gas cards…you name it! The bankers have twisted the laws in their favor so you can NEVER get out from under their grip.'s their own fault for signing the debt contracts but did you ever ask where the bankers got the money to lend you in the first place? THEY CREATED IT OUT OF THIN AIR! (ps -your "Credit Rating" is truly a sick and twisted invention by the bankers to make you feel obligated to transfer your wealth to them in exchange for their paper.)

Boiling Point
By Warren Bevan
There are three obvious stages to a bull market, smart money
accumulation being the first. That stage is just winding down now. We are only
at the beginning of the second stage where gold climbs the so called wall of
worry as institutions and funds accumulate before telling their clients to get
into the market.

It may still be years away from the blowoff top which will see gold priced
in the many thousands of dollars and silver in the hundreds. It’s been a slow
and rewarding journey so far, but the real fun is just beginning.

All that being said this coming week is the Comex options expiry for gold
and silver. These expiries have been plagued by weakness in the past. I expect
the metals to come under major pressure right off the bat Monday, but the
kicker will be whether the buyers have enough conviction and cash to keep
prices stable or even move them higher. This week will without a doubt be the
most important week of this century when referring to the precious metals.
Don’t blink.,%202009%20pdf.pdf

Saturday, October 24, 2009


Long before the meltdown, one woman tried to warn about a threat to the financial system.

This PBS program was broadcast for the first time last week on 10/19/09. It EXPOSES the US Government's complicity in the destruction of our [and the World's] Financial System. A US public servant offered to help put in place safeguards to "protectect the American peoples money", and avert this financial catastrophe. The US Government and their Wall Street puppet masters told her to go F*ck herself. Today we live with the result of their arrogance.

Most stunning is the fact that one of the main US Government employees who helped subvert efforts to regulate Wall Street, today sits at the side of the President as the leader of his Council of Economic Advisors. How can we as Americans expect this President to "change" the regulatory guidelines of Wall Street, if his "top" financial advisor was behind the destruction of the financial system to begin with? If, after taking the time to view this program, you still believe that the politicians we elect to positions on Capitol Hill and the White House are there to "protect" the nations citizens, stop, and think again.

Please take the time to watch this exceptional program. Pass it along to EVERYONE. Think about it as the midterm elections roll around in the Fall of 2010. Bear in mind, despite what you may read or hear on the news, the worst of the financial meltdown is NOT behind is just over the horizon. DOW 10,000 is just a number, it represents nothing relevent to the soundness of our financial system. Today, we are in the eye of the storm. Batten down the hatches folks, the backside of this financial hurricane is about to come ashore and knock down what little has been left standing and "propped up" by our irresponsible Federal Government.

Do your homework...

Friday, October 23, 2009

Oil, The Dollar, and The TRUTH About Inflation

Oil at $80: That's good news and bad news.
By Paul R. La Monica, editor at large
Of course, the knee-jerk reaction is to declare that rising oil prices must be a bad sign. After all, increased energy prices could be considered the equivalent of a big fat tax increase for an already cash-strapped consumer.

On the other hand, oil prices were hovering around a low of near $30 a barrel back in February. And at that time, the average price of gas was below $2 a gallon. But how good did you feel about the economy back then?

Fears about a massive wave of big bank failures and another depression were running rampant. So cheaper oil and gas were little consolation.

It's hard to deny that things simply feel better now than they did seven months ago. The economy may still be in rough shape but few are predicting a financial apocalypse.

Stocks have soared in the past few months because of renewed expectations of a global economic recovery, and the spike in oil prices is also a reflection of these hopes. Sure, there are some out there who are writing off the rise in oil as another example of momentum traders playing the evil speculation game.

But many commodity experts argue that the main reason oil prices are rising is because there are signs of increased demand for oil from emerging markets such as China and India as well as the U.S. and Europe.

What's more, the continued weakness of the greenback is helping to push oil higher because oil is priced in dollars -- despite the occasional rumor to the contrary.

And the dollar's weakness is, to a certain extent, a byproduct of investors flocking to riskier assets like stocks and commodities because of the aforementioned recovery hopes.

So the most important question to ask about oil probably shouldn't be whether rising prices are bad or good. Instead, it should be this: How high do oil prices need to go before higher prices are no longer a sign of recovery but something that can actually threaten the recovery?

Rising Oil prices are NEVER good for the economy Period. It is absurd to even make the suggestion. This entire piece of financial "journalism" above is but one more effort to confuse the public into maintaining "CONfidence" in the crumbled economy and the clowns in Washington running it into the ground.

It is excruciatingly amusing that the writer considers the falling US Dollar's effect on Oil as an afterthought and attributes the Dollar's weakness to a flight to "riskier assets" like commodities. The financial press are clearly "coached" by the government to report Oil prices relative to rising and/or falling demand with regards to the expectations of "economic recovery". It is a Bozo No-No to suggest that Oil prices are rising because of the weakness in the US Dollar caused by the government's flooding the globe with them.

And speaking of "economic recovery". Since when is an economic recovery defined by phony bank earnings, no revenue growth, no sales growth, and no jobs growth? Beating earnings "expectations" does not a recovery make, but I digress.

The price of Oil is clearly the result of the value of the US Dollar. If you doubt me, please take a moment to look at the two charts above. Note that the price of Oil peaked in July of 2008 at $147. At the same time the US Dollar index bottomed at 71. As the Dollar rose through the last six months of 2008 on the false sense that it was a "safe haven", the price of Oil fell dramatically. As Winter turned to Spring in 2009, the Dollar rally peaked near 90 and Oil bottomed near $40. As the US Dollar began it's now seven month descent, Oil began it's seven month ascent. It's as clear as the nose on your face. "Demand" for Oil has had NOTHING to do with the rise in the price, because supply has been constant if not "plentiful" over the past 12 months. The World has a complete understanding of what the clowns in Washington are doing to the value of the US Dollar. As the value of the Dollar falls, the cost of goods in Dollars increases. It is an undeniable economic fact.

Inflation: In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.

Inflation and the price of Oil. Inflation is far too often blamed on the rising price of "energy". Conversely, falling inflation is far too often credited to falling energy prices. The government have become "wizards" at hiding "real Inflation" behind rising and falling energy prices. Over the past year as the government has flooded markets with Dollars, the government has used the year over year disparity in Oil prices to offer the unassuming public the notion that Inflation is in check, even falling dramatically at times. This has worked to great advantage to the government "con-job" that has kept the massive growth in the money supply "hidden" from a blind public. This lie is days away from being exposed for the true fraud that it is.

Year over year "drops" in the price of Oil are about to come to a screeching halt. As this anomaly passes before us, the real spectre of Inflation is going to hit us like a sledgehammer to the side of the head. An inflationary knockout blow is just behind the curtain.

The notion that Inflation is being held in check, even falling, has been being squeezed the past two quarters as Oil prices have risen off their lows. What has been sold to the public as "signs of growth" has actually been Inflation rising to the surface. Consider:

In June 2008 Oil closed at $140.

In June 2009 Oil closed at $71.49.

The price of Oil dropped $68.51 year over year, or -49%.

In September 2008 Oil closed at $100.64.

In September 2009 Oil closed at $70.61.

The price of Oil dropped $30.03 year over year, or -30%.

In October 2008 Oil closed at $67.81.

In October 2009 [thru Oct 22] Oil closed at $81.19.

The price of Oil rose $13.38 year over year, or +20%.

SUDDENLY, between September and October of this year, the year over year swing in the price of Oil has gone from DOWN 30% to UP 20%. The government cover for the rate of inflation is about to be exposed naked as a jaybird. If the public has been "led to believe" over the years that the rate of Inflation is tied to energy prices, it will be difficult for the financial media to explain away the explosion in the rate of Inflation when Octobers PPI and CPI are released in November.

The Day of Reckoning is about to arrive for the US Government. It has been hiding behind rigged Inflation statistics and lies for months, years even, and now that lie is about to be exposed to an unsuspecting American public. The rest of the World of course has been on to this scam for sometime now, and has prepared themselves by buying Gold at a rapid pace in anticipation of the US Government's Inflation cover being blown.

The US Government has it's back firmly against the wall, options going forward are limited. They could tank the stock market and thus put an artificial bid under the Dollar to arrest the rise in Oil [and Gold] prices. But going down this road destroys the sense of recovery the rising stock market has given the American public, and will crush their bubbling "recovery expectations". Or they can take it like men and accept the consequences for their meddling in the markets and their flooding of the globe with funny money. This of course would ignite the hyperinflation scenario so many have feared and warned about for the past nine months. Of course, that scenario will play out eventually no matter the choice the US Government makes here.

What's the public's best option? No matter what the government chooses to do, or pretend to do, the public's ONLY and BEST option, from here to as far as the minds eye can see, is to simply buy Precious Metals.

Gold and Silver remained pressured today by a falling Yen, and an overbought Euro. Rising existing home sales [courtesy of the governments $8,000 tax credit] lent a bid to the floundering US Dollar this morning. The bid in the Dollar attacked the overbought equities markets in a market choreography reminiscent of a bad daytime soap opera.

The Yen has tested and slipped through the first line of support at 91.75 on the Yen/Dollar chart. A move lower to 92.50 is now on the Yen's radar.

Gold and Silver continue to consolidate recent gains in spite of the blah-blah swirling around them in the markets and the economy. Gold remains tightly wound between 1067 on the upside, and 1042 on the downside. Silver wound equally tight between 17.93 on the upside, and 17.17 on the downside. Both will face a fierce fight and test support as we move forward towards next weeks options and futures expiration's. Options on futures expire Tuesday the 27th with last day to trade futures on Thursday the 28th. First notice for November Delivery is on Friday the 31st. Gold and Silver, seasonally, and on average, both tend to bottom hard at the end of October and the beginning of November. Time is running out for the shorts, an Inflation time bomb is ticking louder by the day.

Tuesday, October 20, 2009

The Naked Truth

Stocks on Wall Street Fall After Mixed Economic Data, Earnings- AP
A report on housing starts is making investors nervous that the economy will be slower to recover even as companies post stronger-than-expected profits.

I'm not even going to quote from the report. This is posted as it was copied exactly from Yahoo/Finance Headlines this afternoon.

Investors are nervous? Seriously? Stronger-than-expected profits? Bullshit? Profits are NOT up because of top line sales growth. Profits are up ONLY because of cost in job cutting. Continued job cutting guarantees a "slow recovery" if there even ever is one. Despite all the wishful thinking spewed by the financial media, the housing market has not bottomed, and won't be anytime soon.

Bottom line: Dollar up, equities down. Dollar down, equities up. The [suspect] financial data unloaded on investors everyday is a smokescreen used to make cover for the crumbling us Dollar.

Wall Street's Naked Swindle
By Matt Taibbi, Rolling Stone
"To the rest of the world, the brazenness of the theft ˜ coupled with the conspicuousness of the government's inaction ˜ clearly demonstrates that the American capital markets are a crime in progress. To those of us who actually live here, however, the news is even worse. We're in a place we haven't been since the Depression: Our economy is so completely f--ked, [that] the rich are running out of things to steal."

Monday, October 19, 2009

Where's The Gold?

Gold and Silver took the bit back with today's morning CRIMEX lows and bounced hard. With the Dollar continuing to flounder below 76, commodities bulls ran roughshod over the bears today. Oil reached up and briefly touched 80 today and emboldened the Precious Metals bulls, particularly those in the Silver arena.

The EURO hit new 52 week highs this afternoon following the close of the equities markets in New York. The Euro looks very over bought up here, and the Dollar equally oversold. Bearish Divergence in the Euro and Bullish Divergence in the Dollar look set for a battle royale this week. We maintain our cautious stance towards the Precious Metals here primarily out of respect for the seasonal averages that suggest market consolidation and/or weakness into the first week of November. Investors sit tight and enjoy the ride. Traders, if you've got brass balls and are short the metals, keep your stops tight. This is a buy the dips market, and VERY dangerous to trade as the volatility can be overwhelming.

Where's our money?

Chairman of the Federal Reserve, Ben Bernanke, is up for confirmation to his second term, but he has still refused to disclose where he sent $2 trillion in taxpayers' money. Send a message to your Senators and ask them to make Bernanke come clean before his confirmation moves forward!

How much imaginary gold has been sold?
By Adrian Douglas
The London OTC market is where most physical gold is traded. This market is a wholesale market where trades are conducted only between the bullion trading houses on behalf of their clients. About 95 percent of the trading is by way of gold that is held in unallocated bullion accounts.

The unique characteristic of gold is that about 50 percent (80,000 tonnes) of the above-ground stocks are held as a store of wealth (investment). The other 50 percent exists as jewelry. When gold is bought as a store of wealth it can perform that function for you wherever it is in the world. Given this unique characteristic many large investors in bullion prefer to leave their gold with the bullion dealer from whom they bought it so that it can be stored in their vault and easily resold. This is identical to the situation with stocks, where most stock certificates are held by brokerage houses, not by individuals.

That people are buying and selling gold without ever taking delivery means that there is the opportunity for bullion houses to sell gold that doesn't exist.

Now the bullion houses probably don't view this as illegal or dishonest because they will operate a fractional reserve type of system, just as the banks do with fiat currency, and will make sure they have enough gold on hand for what would be the maximum estimated volume of gold that could be called for delivery. After all, trading is done with unallocated gold, so how much more unallocated can it get if it doesn't exist at all?

This basic scam is at the center of modern gold market manipulation. Instead of real gold, paper substitutes for gold are sold through derivatives, futures, pooled accounts, exchange-traded funds, gold certificates, etc. I estimate that each actual physical ounce of gold has multiple ownership claims to it.

For the scam to be sustained there must always be plentiful physical gold for those who want it. The market is, in effect, a giant inverted pyramid with a huge paper gold market being supported by a small amount of physical gold at the tip of the inverted pyramid. The scam can continue until there are indications of a shortage of physical gold. If all the claimants of each ounce of real gold demand their gold, then there is the potential for a squeeze such as has never been seen before.

Is your gold really there?
By Lawrence Williams
There are plenty of theories that the gold markets also operate on a similar principle - or perhaps worse. Not only may the banks not hold the amounts of physical gold they say they do, say the doubters, having loaned much of this to third parties, but there are now analysts and observers expressing doubts over the actual title to the gold that is still seen to be in the vaults, feeling that perhaps some of it has been sold several times over. Central Banks, for example, seem to hate being questioned over gold loans preferring to duck the question and keep any such arrangements under wraps, although most will admit to gold swaps and loans being made - but little or no detail.

It may be no coincidence that the recent surge in the gold price which burst it through the $1,000 barrier followed shortly after Hong Kong demanded repatriation of its gold held in London banks and reports suggest that Germany is also looking for its foreign-held physical gold to be returned from overseas repositories. Has this created shortages of physical gold which holders are now trying to cover?

The Gold Basis Is Dead – Long Live The Gold Basis!
By Antal E. Fekete
There seems to be circumstantial evidence that this month the gold exchanges are unable to honor their expiring contracts for which delivery notices have been issued in September. It has occurred in spite of a robust, even increasing, contango. Furthermore, circumstantial evidence exists that counterparties to these expiring contracts for future delivery — bullion banks, to be precise, the name of J.P.Morgan and Deutsche Bank being prominently mentioned — have offered bribe money up to 125 percent of the quoted spot price to holders of long contracts if they would take settlement in paper, on condition that the embarrassing affair will be kept secret. If true, these maneuvers are motivated by the desire to conceal the real gold basis, and to deny that gold is in or approaching backwardation. If the truth were widely known, then there would be a run on the bullion banks. The “let’s get physical” movement would trigger a chain-reaction culminating in all offers to sell physical gold being permanently withdrawn around the globe. “Gold would not be for sale at any price”, whether quoted in US or in Zimbabwe dollars — or, for that matter, in any irredeemable currency — the only kind of money people are allowed to have nowadays. The curtain would fall on the “Last Contango in Washington”. The day of permanent gold backwardation would dawn. The chapter on a reactionary episode of history, irredeemable currency, allowing the Treasury and its central bank to create unlimited liabilities out of nothing which they have neither the means nor the intention to honor, but could use them for check-kiting purposes to mesmerize gullible people around the world, would be closed and become but a bad memory.

We must guard ourselves against falling victim to the rumor-mills, while keeping our eyes peeled for the very real possibility that the growing shortage of physical gold can no longer be papered over with paper gold (pun intended). Another story is about GLD, a leading gold ETF, which publishes its bar-list every Friday at the close of business, reporting the serial number of every bar in inventory. The list is customarily well over a thousand pages long. But, lo and behold, on Friday, October 2, and on Friday, October 9, the bar-list shrank to a mere couple hundred pages, with no explanation offered. Could it be that the management of GLD has taken a bribe, and replaced physical gold in inventory by paper gold, in order to save the face and skin of the bullion banks that have gone naked short and subsequently got cornered?

Reports are circulating that similar audits of certain Asian depositories have already produced “good” delivery bars (400 oz or 12.5 kg gold bricks) that have been gutted and stuffed with tungsten — a metal whose specific weight approximates that of gold, so that the famous test of Archimedes (fl. 287-212 B.C.) based on the Law of Buoyancy, designed to expose fraudulent goldsmiths, would be inapplicable.

In 1933 F.D. Roosevelt did not stop at the mere confiscation of the constitutionally mandated gold coins of the realm. He sent them to the refinery in order to melt them down. He wanted to expunge the evidence from history that this great republic once had the largest pool of circulating gold coins anywhere, ever. Roosevelt betrayed his oath that he would uphold the U.S. Constitution and went ahead to rob the citizenry by calling in the gold replacing it with Federal Reserve notes, the value of which he promptly cried down by 56 percent, under the disguise of monetary reform. The melted gold was given the shape of gold bars and was stored in Fort Knox, West Point, and other depositories.

Careful as though Roosevelt was to cover his trail in getting away with the loot, he has made one major blunder. He failed to make the looted gold fungible. The coins were not made of pure gold: they were an alloy 22 carat in fineness. The reason was to make them stand up to wear and tear better in circulation. All countries striking coins for general circulation employed an alloy. Roosevelt thought that he could save the cost of refining the melted gold to the international standard of 995 fine (24 carat) so the gold bars in Fort Knox are only 22 carat fine. In consequence these gold bars are not fungible. They are easily identifiable as contraband, the proceeds of the Great Gold Heist of 1933. The shear quantity of this looted gold makes it impossible to refine it at this late hour. The U.S. gold stinks, and will keep on stinking.

The memory of the Crime of 1933 comes back to haunt the government that committed it. For 75 years nobody suspected that one day these gold bars may be needed to pacify the market. Everybody thought that they could rest in peace in the depositories till doomsday. But then, as the proverb says, ill-gotten goods seldom prosper. The Great Financial Crisis of 2007 struck and the dollar got into hot water. The U.S. Treasury ran out of fungible gold and had to dip into its hoard of looted gold. It is too late now; the bad odor cannot be expurgated from the U.S. gold hoard. Should this gold ever show up at an audit, or as bribe money, it will immediately be recognized. Everybody will see that it originated from the Great Gold Heist of Roosevelt and that the shame of the U.S. government is attached to it. Worst of all, it will also reveal that the U.S. has fallen upon hard times. The looted gold was released in desperation, in trying to stem the tide of burgeoning gold backwardation.

The result is that every time 22 carat gold pops up anywhere in the world, for example, as an offer to pacify angry possessors of expired gold futures contracts, it will be new evidence of the fact that Uncle Sam is cornered and tries to bribe his way out of the corner with looted gold. If Uncle Sam is trying to pay the blackmail on behalf of his cohorts the bullion banks, in offering 22 carat gold in settlement of contracts calling for 24 carat fineness, then the world will immediately know what’s up, even if the substandard gold is offered through intermediaries. Everybody will know that Uncle Sam is trying to cover up, or fend off, backwardation to prevent the gold basis from going permanently negative. The telltale sign will haunt him and make the gold crisis worse, not better. Most of the possessors of expired gold futures contracts will refuse to take substandard gold for settlement, but neither will they keep Uncle Sam’s secret. Apparently there are already two known instances where the looted gold turned up. Central banks, in coming to the rescue of their agent bullion banks that were caught red-handed in being naked short in gold, offered 22-carat gold to bail out their agents. This fact in itself makes the quantity of gold available for resolving the gold crisis smaller. Permanent backwardation in gold, the Nemesis of irredeemable currency, cannot be postponed much longer.

Gold bears gathering, but gold bulls defiant
By Peter Brimelow
Last week saw the highest U.S.-dollar gold price ever, just over $1,070, and the highest London P.M. fix ($1,059.50). Yet by the end of the week gold was $13.50 off its peak, less than $3 up on the week. Many voices were to be heard predicting an important -- possibly short-term -- decline.

The bears cite a variety of technical indicators. The bulls deploy sweeping fundamental arguments, often very impressively. ( See Oct. 8 column.)

The trouble with these, of course, is that you can famously drown in a 6-inch deep river -- in other words, it there a pothole straight ahead? But to this crucial challenge, the Bulls do have responses.

A powerful edition of the Australian gold letter The Privateer asserts: "We have what economists love to call a 'paradigm shift' in the US$ gold price. ... There is a HUGE difference between a three-figure U.S. gold price and a four-figure one. Now that gold looks to have consolidated ABOVE the US$1,000 level, the future of the U.S. dollar has become the number one item of global financial and economic analysis."

"When the price of something changes from $xxx to $xxxx -- from US$999 to US$1,000 in the case of gold -- holders of that investment AND people who are contemplating buying start looking ahead to HIGHER prices rather than LOWER ones."

This is not what the gold bears want to hear.

Is This the Final Blast-Off?
By David Morgan
One of the questions we are getting quite frequently is . . .

If the recession is over officially, doesn’t that, along with the thousand-dollar gold mark, trigger inflation and suggest getting in now potentially (if you’ve been sitting on the fence about gold)?

Investors are always looking for certain signs or indicators to help with their decision-making process. This is especially true in the technical community, and more people are in the technical community today than probably ever before. That is because you have trade stations and all these software programs that anyone can buy and basically run the numbers and come up with a conclusion that gold is break­ing out. However, there are no guarantees on this; it’s only a probability.

Deflation concerns still enter into my thinking. Looking at it as I do from a perspective of the real world, things are not really picking up. Not that there isn’t some of that going on, but it certainly isn’t widespread, and this breakout that we had is not very strong.

The easiest thing to say with conviction is, if you’re not in this market you absolutely need to buy physical gold and silver here. Whether it stays above a thousand or drops below is a moot point. When gold goes to 2,000 or 3,000 or more, if you bought it as it broke through 1,000 and then went back under 1,000 for a while, it might make you sad for a day, a week, maybe a month . . . but it’s going much higher in the longer term. So that’s one thing to keep in mind.

Technically, both gold and silver are overbought. The markets can stay overbought for a very long time and continue to move up and up and up in price, being over­bought the whole time. So that doesn’t concern me, as far as will it go higher or not, at this point (October 7, 2009). I do want to advise our readers that, if they’re mak­ing a decision on what to do now, be cautious. I’m very, very skeptical of what could happen in the October/November timeframe, so look out ahead.

You want to sell in the strength. Very few people seem to learn that, because there’s a philosophical adherence to gold as money and silver as money, and I hold those views myself. However, I also hold the view that if you can take a profit on part of your position—which is what we do—you might as well take it, because it’s available to you.

The idea is to stay fully invested with roughly 75 percent of your funds, and to trade with about 25 percent. That is a good approach, because if the market just takes off and blasts upward from here, you still have the lion’s share of your investment and have left only 25 percent behind. Shorter-term trading with the 25 percent can make you feel good.

Markets do move quite a bit and they are quite volatile, so when you do catch a nice move in one direction or the other, both can help you weather these long consolida­tion periods. That’s exactly what we did the last time we got a huge move up in the gold and silver price—when gold got up to the $1,000 level or actually beyond it and silver at that time was at $21.00.

I would be much more comfortable saying this is the final blast-off if silver were hitting $21.00 right now as gold is trading over $1,000—that would be confirmation in my book, and I’d be very, very bullish. Unfortunately, silver isn’t leading the charge at this time and that is acceptable. It’s certainly shown some good strength this whole year, but not quite the amount of strength I would expect if we were to see all this inflation pouring into the financial markets. Again, I still suspect that there’s probably some more recessionary, deflationary, depression type of news coming.

Thursday, October 15, 2009

Running On Empty

It was quite a shock to look in on the markets an hour before the CRIMEX open this morning and see Gold trading down over $15 and Silver knocked for about 50 cents an ounce. Lately the Precious Metals had fared best in the Asian/European markets. It was even more of a shock to see the fall in prices reverse as the CRIMEX opened at 8:20AM est. It was almost as if the prices were brought down overnight just so the crooks could cover some shorts at a profit this morning. Shocking!

And short covering may have been all that kept the markets from deteriorating further as by the end of today's equities session, Gold and Silver were at or near their lows prior to today's CRIMEX open. Caution was well advised, and patience rewarded.

15 and 30 year seasonal indicators suggest weekness in Gold the last two weeks of October.

Immediate support in Gold lies at 1043, Silver at 17.25. Further support in Gold lies at 1028, 1024, and 1019. Silver has further support at 16.99 and 16.73.

The YEN has broken lower, and Gold could remain under pressure as long as the Yen/USD cross remains above 90.20.

International Forecaster October 2009 (#4)
By: Bob Chapman, The International Forecaster
Our view is that the elitists are currently buying time for the dollar, and stalling the rally in precious metals, by weakening other currencies until they are ready for the big stock takedown/correction. This process of supporting the dollar is becoming extremely expensive and difficult, so they had to take the Dow down 200 points on Thursday to start some stock contagion in Asia and Europe to flush some money into dollars and treasuries. The FTSE, Nikkei and Hang Seng were all down big in the aftermath of Thursday's US market takedown. We believe that the Illuminati will probably try to punish all the stock shorts in mid October on options expiration day by having one final round of short-covering before taking the markets down for the big correction to start a dollar rally just as the precious metals seasonal rally goes into full swing. This yellow fever crash is just a repeat of last year's strategy, but it will not be as severe for purely political reasons. In this manner, they will flush everyone else out of their short positions so that only they can make any money when the boom gets lowered and there will be many put options that expire worthless in yet another round of total criminality reminiscent of what they just did to the gold and silver call options this month. They will make money on the big rise from short-covering, and then will reverse course to profit from the big takedown, all through the unregulated dark pools of liquidity so no one can see what is happening. This will be their last hurrah when it comes to suppressing precious metals, and gold and silver will come roaring back as any and all confidence is lost in the stock markets and the economy, and as the elitists are forced to start driving the markets back up again to avoid revolution. The dollar rally will quickly fizzle, and the elitists will start ratcheting the dollar back down again, this time toward the 71 area on the USDX, and who knows where from there.

End of US$ Global Reserve Currency
By: Jim Willie CB,
The heralded end to the Petro-Dollar defacto standard completes the loop, the vicious cycle that will work to destroy the USDollar. In a sense, the US$ had to face an end, its sunset guaranteed when Nixon defaulted on its redemption value. The United States served as custodian for the global reserve currency. Naturally, the most damage will be to the US as a consequence of its twilight, especially after the recent era of fraud & counterfeit. Few look back to that date in 1971 as prophetic for declaring the USDollar’s days as limited and finite. The world will continue to trade the US$ in future years, but it must stand on its own value, based upon its own merit, the result of balancing its supply & demand, from the integrity of its fundamentals. Some climax events have come, or at least are previewed on an unfortunate path. Never in my memory has USGovt leadership been so disrespected. Never has Wall Street been so culpable for financial ruin, yet still in power running the USGovt finance ministries. The global revolt against the United States has many sides, but the financial aspect is most profound. It is hardly even covered in the US press. The US citizens have little comprehension of the enormity of a lost global reserve currency, with all its privileges, abused for constructing financial engineering towers and funding foreign wars. The direct effects will be felt in higher costs and assured supply, including credit.

No need to enter details, but the nation with each passing year resembles even more a very large Third World nation. Empty foreclosed homes, empty shopping malls, millions of jobless, discouraged business formation, nationalized failed firms, vanishing Middle Class, trillion$ federal deficits, monetized debt, reduced liberties, selective elite law enforcement, syndicate stronghold, huge prison population, controlled press networks, distrust of leaders, aggressive military, these are the characteristics that most people agree are unsavory. But when one takes them as a cornucopeia table display, they are described as Third World.

As the Yen Carry Trade enters its final phase in wind-down, the Dollar Carry Trade will accelerate. Imagine, the global reserve currency in the US$ is used to fund a carry trade, from a Japanese handoff !!! The world has been turned upside down in its financial axis. No doubt about it. We live in a bond-driven world. National finances matter little compared to the interest rate yield offered to financial speculators, whose efforts are amplified by leverage. Take the Japanese, for example. Their trade surplus endured for 30 years. In the last year it vanished. Yet the Japanese Yen is rising versus the USDollar. The carry trade is seeing a grand handoff. The Dollar Carry Trade is a bond-driven phenomenon once again. Its power might be best seen in the Yen currency valuation, in its surprising rise. The Yen is analyzed in the October Hat Trick Letter report. The invitation for the USMilitary to depart Okinawa has some effect. The bond arbitrage has much more. The Japanese finance firms receive little attention. They are experts at running and exploiting the carry trades. They are switching programs.

If you believe all is well in Japan and Tokyo support will continue, then you miss the ‘Lost Lackey Effect’ from the last year. The Saudis will not carry the US bags any longer. The Arab squires will carry bags with Kremlin markings. The Japanese will not carry the US bags any longer. The Toyko squires will carry bags with Beijing markings. The chief strategist at a major Japanese bank Sumitomo today warned that the US$ might fall to 50 yen this year. That would be a 45% decline. Daisuke Uno at Sumitomo expects the USEconomy to suffer a second sudden recession. He said, “The US economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger. The dollar’s fall will not stop until there is change to the global currency system.” The strong warnings reflect the growing rift between Japan and the USA. The outcome of recent elections in Japan changed the entire bilateral landscape. The pro-American LDP party was ousted, a major new piece to the ongoing Paradigm Shift.

Gold reached 1060 this week, and silver touched 18. This is just the beginning. The pullbacks like today should be exploited to purchase more at discount. Purchases of gold at the London exchanges are being interfered with, due to basic problems of not having sufficient gold bullion to satisfy delivery demand, otherwise known as DEFAULT. Reports arrived privately cite the LBMA officials offering 25% more than contract value if high volume gold futures contracts are settled in cash. Two different central banks are scrambling to locate gold for the contracts, but much of it is substandard bullion with under 90% purity. Sounds like a default is right around the corner, and some members have their nether stones caught in a vise. CLEAR EVIDENCE SCREAMS OF GOLD HAVING A $1300 CURRENT PRICE.

Happy Days Ahead With The Dow At 10,000!
By: Dan Norcini
Quite simply – The Dow has in effect gone NO WHERE in REAL TERMS for FIFTEEN YEARS! Let this sink into your mind – FIFTEEN YEARS have come and gone and all the gyrations in the Dow and all the ups and downs have accomplished not a single bit of real gains when compared to an ounce of gold.

The debauchery of the Dollar has made a mockery out of wealth preservation for those who held nothing but paper equities.

Foreclosures: 'Worst three months of all time'
NEW YORK ( -- Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report issued Thursday.

"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes.

During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

No Social Security hike, could boost new payments
WASHINGTON (AP) -- Social Security recipients won't get a cost-of-living increase next year for the first time in more than a third of a century, and that could boost President Barack Obama's plan to send seniors another round of $250 payments before the congressional elections.

Democratic leaders in Congress have signed onto the plan, greatly improving its chances, even as some budget hawks say the payments are unwarranted and could add to the federal budget deficit. Republican leaders said they, too, favor the payments but don't want to increase the deficit to pay for them.

More than 50 million Social Security recipients will see no increase in their monthly payments next year, the government said Thursday, the first year without an increase since automatic adjustments were adopted in 1975.

Blame it on falling consumer prices. By law, cost-of-living adjustments are pegged to inflation, which is negative this year because of lower energy costs. Social Security payments do not go down, even when prices drop.

Negative inflation? In a pigs eye and in phony US Government statistics maybe, but not in truth. If inflation was truly negative it is unlikely that Gold would be $1070, up almost $400 from the Fall of 2008's lows.

"Another round of $250 payments for seniors before congressional elections." Does this sound like an attempt to buy votes to you too? $250? OH, the generosity! Let's see, some quick back of the envelope math suggests that this "payment" will amount to $0.685 a day spread out over a 365 day year. Geeze folks, don't spend it all in one place. How insulting....

Wednesday, October 14, 2009

Leading The Sheep To Slaughter

DOW 10,000. The biggest CON job in financial history. Unless they own Gold and Silver, I doubt the average American investor feels any wealthier today. Call it what you want, smoke and mirrors, accounting fraud, or bald faced lies, this BEAR MARKET RALLY has deception written all over it. It's the eye of the hurricane and the sun is high in the sky.

"Better batten down the hatches," chimes the crusty beach dweller.

"Why, the storm is over," quips the New Yawker.

"No,'s not," replies the hurricane veteran as he reattaches a storm shutter.

"But, the wind has died and the sun is out," squawks the weather genius.

"You're not from around here, are you?" asks the crusty beach dweller wryly.

Dow closes above 10,000 for 1st time in a year
NEW YORK — When the Dow Jones industrial average first passed 10,000, traders tossed commemorative caps and uncorked champagne. This time around, the feeling was more like relief.

The best-known barometer of the stock market entered five-figure territory again Wednesday, the most visible sign yet that investors believe the economy is clawing its way back from the worst downturn since the Depression.

The milestone caps a stunning 53 percent comeback for the Dow since early March, when stocks were at their lowest levels in more than a decade.

"It's almost like an announcement that the bear market is over," said Arthur Hogan, chief market analyst at Jefferies & Co. in Boston. "That is an eye-opener — 'Hey, you know what, things must be getting better because the Dow is over 10,000.'"

It was the first time the Dow had touched 10,000 since October 2008, that time on the way down.

The Dow peaked at 14,164.53 in October 2007, then lost more than half its value after the financial meltdown last fall. At its low point, the average stood at 6,547.05. The breathtaking rally since then brings stocks to roughly break-even for the past 10 years.

Some market watchers see 10,000 as an illusion because there are still lingering threats to an economic recovery — rising unemployment, weak consumer spending and a battered housing market.

The investors who have driven stocks higher since March are the pros: hedge funds and institutions whose furious selling hastened the collapse of the market in the first place.

And red flags are showing up in the technical charts that professional investors use as they make their trading decisions. The Dow sits about 18 percent above its average of the past 200 days.

"The market by all technical indicators is completely overbought, just like back in March it was completely oversold," said Rich Hughes, co-president of Portfolio Management Consultants in Los Angeles.

On the other hand, Wall Street analysts say 10,000 is more than just a number — it can have legitimate psychological implications.

A recovering stock market soothes the psyche as people watch their portfolios and 401(k) retirement accounts being replenished. And if people start spending again, that may persuade more investors, including some reluctant pros, to go back into the market.

"Psychology plays a huge role in investing, so when you're trying to overcome the huge levels of panic and fear that we've seen over the last year, psychology shouldn't be discounted," said Carl Beck, a partner at Harris Financial Group.

Who said CON job? Oh yeah, I did. The stock market is a very poor barometer of economic health. This entire BEAR MARKET RALLY has been staged by the government and Wall Street with money not worthy of the game Monopoly. At least in Monopoly, we know it's just a game. DOW 10,000 is just a number, but to the talking heads on financial TV this is just the tool they need to sell Americans on the notion that "the coast is clear".

"Time to spend again."

Hopefully, the majority of Americans are on to this CON job. Besides, who can afford to spend? If you and I printed money like the Fed, we'd all be in jail. Reality DOES NOT justify the DOW being at 10,000. And sometimes, reality bites. Ignore the fundamentals at your own peril if you insist on boarding the DOW train.

Markets seldom roll over and die when you expect them to. Many have expected the DOW to die long before we got here. I count myself among those. The topping process in a market can sometimes take weeks because the early shorts are usually the "nervous shorts" and they tend to get shaken from their trades forcing the market ever higher. This is what BEARISH RSI DIVERGENCE signals. The DOW could tip over tomorrow, but we wouldn't be surprised to see it stumble higher for a few more weeks.

Another Day... Another Record High For Gold
By Ed Steer, Casey Research
In a private letter to clients yesterday, Ted Butler had this to say about the Bank Participation Report... "What JPM did in the past month [since the September BPR - Ed] is contrary to everything that Chairman Gensler has spoken out against since he has been in office. The current [and forever] silver investigation came as a direct result of the Bank Participation Report of August 2008... and my urgings for readers to write in to the Commission. This new BPR is much worse than that one. JPMorgan is now short almost 30% of world silver production. This at a time when mining companies are retreating from hedging their production."

Oh... and one more layer of icing on this particular cake. The current position limits per trading entity [for all months] is 6,000 contracts for gold, and 6,000 contracts for silver. According to this Bank Participation Report... JPMorgan and HSBC are short 116,790 contracts in gold and 35,874 in silver. If they followed the CFTC regulations, the total short [or long] position allowed is 12,000 contracts total for both banks. So, they are currently 104,790 contracts over the position limit in gold, and 23,874 contracts over the position limit in silver.

The CFTC will not even enforce these limits. At the moment, there are effectively no limits in gold or silver. The bullion banks are allowed to short whatever quantities of gold and silver on the Comex that's necessary to control their respective prices... and that's exactly what they've been doing for the last 20+ years!. And you wonder why the prices of both metals are going nowhere [relatively speaking]. And your gold and silver mining companies haven't lifted a finger to help you. Not one of them has written a letter to the CFTC and complained. The words 'fiduciary duty' [as it applies to their shareholders] appears to mean nothing to them.

In other words, Gold and Silver should be MUCH higher in price...particularly Silver.

US Dollar Crashes Through Major Support Level
By: Dan Norcini
This evening in Asian trade, the Japanese Minister of Finance once again restated the new view out of Japan that the level of the Yen is no longer an obsession with the monetary authorities of that nation. His comments were interpreted by the Forex markets that intervention to stem the advance of the Yen is most unlikely. With that, market participants wasted little time bidding the Yen into a strong advance.

Those statements of his, combined with that of Federal Reserve Vice Chairman, Donald Kohn, that the US economy would not experience a quick or sharp recovery out of its recession, were both read by traders that US interest rates were not going anywhere anytime soon. Carry traders then beat the Dollar down below critical support near the 76 level on the USDX as they rushed into higher yielding currencies such as the Aussie and Loonie. The Euro also shot up to another new yearly high.

It is looking more and more like the current Administration has set on a course of deliberate destruction of the US Dollar and with it, the economic might that the US has enjoyed since post World War II. As said many times on the pages of this web site, the profligacy of the US has inescapable consequences and we are now seeing a rapid acceleration of the same. The fall in the Dollar is picking up momentum and that is why we are witnessing gold moving into new highs.

But gold is more than a Dollar phenomenon – Gold priced in terms of British Pounds and in Euros is relentlessly moving higher as both Great Britain and Europe, the fading West, are debasing their currencies as well.

Protect yourself from the theft of your wealth by these conscienceless politicians and monetary officials for they have sold their citizenry down the river and plundered them in the process far more thoroughly than Attila and his army of Huns ever did to Rome of old. At least the Roman inhabitants were aware of the rape and pillaging of their substance – when the general public finally awakens to the despicable looting of their treasures by these reeking buzzards, they will rush into gold with a fury that will shock even many of the readers of this site.

As we suggested in our Dollar chart posted here Tuesday, a move below 76 could send the Dollar sharply lower quickly. Bullish Divergence still marks the Dollar chart, and we remain cautious at this time with regards to the Precious Metals at these levels. That the Dollar was down sharply again today for the third day running, and Gold was essentially flat, is noteworthy. The battle rages on.

Monday, October 12, 2009

Charts Suggest Caution

GoldCore Precious Metals Update
Support for gold is currently seen at $1,040 and resistance at $1,062. The record weekly dollar close was bullish from a technical perspective but gold may need a correction and consolidation (in dollar terms) prior to challenging the next psychological level of $1,100/oz.

Contrary to the popular perception that gold’s rally has been purely a function of dollar weakness is the fact that in the last 3 weeks the dollar has actually strengthened against the euro and other major currencies (EUR/USD was above 1.48 on September 22nd and is at 1.4750 today). In that same time period gold has rallied from under $1,010/oz to over $1,050/oz. Uncertainty regarding the declining value of the dollar and its prospects as the global reserve currency is leading to increasing investment demand for gold. But the outlook for the Euro, Sterling and other currencies is not much better and thus as Alan Greenspan recently warned investors are buying precious metals to hedge against declines in currencies and that this was "a monetary phenomenon." Greenspan, (significantly now an advisor to hedge fund manager John Paulson – the largest holder of the gold ETF) said that this was an indication of a very early stage endeavour “to move away from paper currencies." Few if any of the weekend papers and media even bothered to report gold reaching record highs on three consecutive days last week and gold sentiment amongst the public remains lukewarm at best with many retail investors selling and sales of gold jewellery or scrap gold remaining near record levels.
--Mark O'Byrne

Central banks are engaged in a desperate battle on two fronts
by Peter Warburton
What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.

It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November, I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil and commodity markets? Probably, no more than $200bn, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil and commodity prices.

Central banks, and particularly the US Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.

[The whole point of derivatives, and the lack of position limits in much commodity trading [particularly gold and silver] was precisely to suppress commodity prices and to divert massive monetary inflation into financial assets and away from things that might get measured by consumer price indexes. -Ed Steer, Casey Research]