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.

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