Sunday, April 11, 2010

Got Toilet Paper?

Is it just another coincidence that Gold and Silver have been rising and have broken out of their consolidations since the CFTC hearings in Washington on March 25th? One wonders...

The structure of the Precious Metals markets prior to those hearings had clearly suggested that Gold and Silver should be, at the very least, multiples higher than where they were trading. Has the exposure of the fraud on the NY CRIMEX, and it appears the LMBA as well, triggered the long sought Mother Of All Short Squeezes in the Precious Metals? It is still too early to say, but it would certainly appear as though the CRIMEX goons may be cornered here. Beware a cornered Rat Bastid...

The weak shine on the Dollar may be about to come off quickly as rumours of a Chinese currency revaluation gain attention. With a confirmed bailout of Greece now on the table, will the Euro stabilize and stop the Dollar "rally" dead in it's tracks? The fundamentals of the Dollar alone should drag it to the bottom of the currency sea. Without the Euro's weak back to climb on, the path of least resistance for the Dollar would appear to be DOWN.

China and the yuan: What's at stake
NEW YORK ( -- Chinese and U.S. officials are reportedly close to a deal on boosting the value of China's currency, the yuan -- the first step to making U.S.-made goods more competitive versus Chinese exports.

While a stronger yuan -- and a weaker dollar -- is widely considered to be a good thing for U.S. manufacturers, some experts say it won't be accomplished without some problems for Americans.

Much of the nearly $300 billion in Chinese exports annually are not going to suddenly start being produced at U.S. factories simply because of a rise in the value of the yuan. Labor costs are still going to be lower in China, and environmental and safety regulations will not be as strict.

"The labor-intensive parts of the manufacturing base that have been lost here are never coming back," said Vitner.

Instead, the higher yuan will mean Chinese products will become more expensive for U.S. consumers.

In addition, China has been keeping the yuan cheap by buying massive amounts of U.S. dollars and Treasurys.

Let the yuan float free and China won't need to buy as much. And that could mean higher interest rates on U.S. Treasurys, and thus higher borrowing costs for many U.S. homeowners and businesses.

It also could lead to a slide in the value of the dollar, which in turn could raise the price of imports from elsewhere in the globe, such as oil.

I suspect it might push the price of Gold and Silver up as well.

Greece Wins EU45 Billion Aid Pledge to Blunt Crisis
April 11 (Bloomberg) -- European governments offered debt- burdened Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates as they try to end its fiscal crisis and restore confidence in the euro.

Forced into action by a surge in Greek borrowing costs to an 11-year high, euro-region finance ministers said they would offer as much as 30 billion euros in three-year loans in 2010 at around 5 percent. That’s less than the current three-year Greek bond yield of 6.98 percent. Another 15 billion euros would come from the International Monetary Fund.

“This is a step of clarification that markets are waiting for -- it shows there is money behind this,” Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels today after chairing the ministers’ conference call. “The initiative for activating the mechanism rests with the Greek government.”

With the euro facing the sternest test since its debut in 1999, the 16-nation bloc maneuvered around rules barring the bailout of debt-stricken countries, aiming to prevent Greece’s financial plight from spreading and to mute concerns about the currency’s viability. Germany also abandoned an earlier demand that Greece pay market rates.

The 30 billion euros from the EU “will not fully cover the Greek government’s financing needs for the next 12 months, let alone for 3 years, so Greece will still rely on commercial money beyond the April-May payments, and whether such money will become available will very depend on how credible the policy framework is and what investors think will happen beyond the program period,” he said. “Unfortunately, this thing is unlikely to go to bed any time soon.”

The teleconference of euro-region officials, which included European Central Bank President Jean-Claude Trichet, left open was how much Greece might need in 2011 and 2012, the final years covered by today’s decision.

Aid will flow to the Greeks “when they ask for it,” Cypriot Finance Minister Charilaos Stavrakis told reporters in Nicosia. “The decision was unanimous.”

European governments would put up about two thirds of any aid, with the IMF chipping in the rest, European Union Economic and Monetary Commissioner Olli Rehn said.

Gold Hurdles Above $1140
By James Turk
April 10, 2010 – Gold climbed $36.00 this past week, a substantial 3.2% weekly gain. Importantly, gold has finally hurdled above resistance around $1140. In fact, it literally blew right through it.

It has been nearly a month since I wrote that we should “note how strong gold has been throughout this correction.” Even though gold at the time remained stuck below $1140, I believed its trading action to be “very significant because it signals the power of the underlying demand for physical metal.” As a consequence, I concluded back then that the demand for physical metal “will soon send gold hurdling above $1140 and to overhead resistance around $1200.”

Importantly, that demand has not diminished. It continues to drive gold higher, so look for $1200 to be reached soon, which is an outlook confirmed by the gold chart. Gold’s chart patterns remain very bullish.

As gold climbed higher this past week, open interest on the Comex has soared. Clearly, the gold cartel tried to stop gold at $1140 again, but this time they failed. However, if they continue to offer paper at the same rate, the gold cartel may shake out some weak players on the Comex, which could cause a correction in the gold price back to test support at the $1140 break-out level.

Regardless of the frantic efforts by the gold cartel, the demand for physical metal has not diminished. Even with gold’s big jump this past week, buyers of physical metal are still accumulating, which is not hard to understand. Given the ongoing financial crisis and growing sovereign debt worries, the integrity of government promises and other debtors is becoming increasingly doubted. So tangible assets like gold are being accumulated as a simple and practical way to avoid the risk of financial assets.

In the final analysis, the demand for physical metal always drives the gold price. Consequently, if the paper shorts are unsuccessful in driving the gold price lower, they have to deliver metal, buy back their shorts, or default

Obama election-year jobs agenda stalls in Congress
WASHINGTON (AP) -- The election-year jobs agenda promised by President Barack Obama and Democrats has stalled seven months before voters determine control of Congress.

Democrats have no money to pay for the program. That's because both Republicans and the Democratic chairman of the Senate Budget Committee objected to taking money left over from the fund that bailed out banks, automakers and insurers and using it for the jobs bill.

Such a move, they insisted, would add tens of billions of dollars to the $12.8 trillion national debt.

An $80 billion-plus Senate plan promised an infusion of cash to build roads and schools, help local governments keep teachers on the payroll, and provide rebates for homeowners who make energy-saving investments. Two months after the plan was introduced, most of those main elements remain on the Senate's shelf.

Obama's proposed $250 bonus payment to Social Security recipients is dead for the year, having lost a Senate vote last month.

What's going ahead instead are small-bore initiatives. That includes modest help for small business or simple extensions of parts from last year's economic stimulus measure. None is expected to make an appreciable dent in an unemployment rate, stubbornly stuck at 9.7 percent, which is more that double what it was three years ago.

Even legislation to help the jobless has run into trouble now that Republicans, following the lead of the tea party movement, have decided to make trillion-dollar-plus budget deficits a campaign issue.

Before Congress went on spring break, Republicans blocked a one-month extension of health insurance subsidies and additional weeks of unemployment insurance for people who have been out of work more than half a year.

"You never know in politics when that magic moment comes when things really begin to change, but I believe that it has occurred now," said Arizona Sen. Jon Kyl, the second-ranking Republican. "I think you'll see a much greater commitment now to fiscal responsibility."

A greater commitment to fiscal responsibility? Yeah, countless years late and $12.5 TRILLION short. Good luck with that Senator Kyl. Is this another "sign" that the big economic recovery is on the way?

Speaking of economic "signs". Or should I say following up on our "signs" missive on Friday, this timely essay from Greg Hunter says it all when it comes to the phantom recovery that all "signs" seem to be pointing to.

Ignoring the Good News?[MUST READ]
By Greg Hunter
I heard Jim Cramer of CNBC say last night people are “ignoring the good news.” I say when it comes to the mainstream media, just the opposite is happening. The folks at the financial news networks are especially good at ignoring the bad news even though they should know better.

For example, we have been told non-stop that we are in a “recovery.” We are clearly not. Want proof that we are not in a “recovery?” Just two days ago, Fed Chief Ben Bernanke said, “We are far from being out of the woods.” According to a Bloomberg story, in a recent speech in Dallas, Texas, the Fed Chief was hardly trumpeting a huge turnaround for the economy. Bernanke said, “. . . the U.S. faces hurdles including the lack of a sustained rebound in housing, a “troubled” commercial real estate market and “very weak” hiring. . .” (Click here for the complete Bloomberg story.) Why is the Fed Chief, all of a sudden, not beating the “recovery” drum? I think someone figured out that if they keep talking up the “recovery” and that does not happen, then the Fed will lose major credibility.

Sure, the economy looks like it stopped falling, but you have to keep in mind we spent trillions of dollars just to get to where we are now. Taxpayers bailed out everything from car companies to insurance companies. ALL the big banks got taxpayer charity, and the best we can do is bottom bounce?

If we really are in a “recovery,” then why is the Fed keeping its key rate at nearly 0%? The Fed has repeatedly said this cheap money “needs” to remain for an “extended period.” If this was a big “recovery,” wouldn’t the Fed raise rates?

The eye of the financial hurricane is about to pass. The backside of this storm is going to be devastating. Got Gold? Got Silver? Got toilet paper?