Saturday, July 31, 2010

Gold Shot Heard Round The World

"When 45 ounces of gold are sold but only 1 ounce is sourced, the result is a massive suppression of the gold price. But the converse is also true: When 45 ounces of gold are demanded for every 1 ounce that is in the vault, the price explosion is beyond imagination."
-Adrian Douglas

Adrian Douglas: What's unravelling is gold price suppression

We interrupt my trip back in time to relay to you this VERY IMPORTANT update on the BIS Gold Swap. The run on the bullion banks has begun in earnest. Follow the link above as this is a MUST READ story.

Harvey Organ of "Truth In Gold" comments on Adrians story above:

First of all, the FT has now confirmed that 10 commercial banks were involved in the swap with central banks not one bank.

They also confirmed that the BIS has been credited with unallocated gold and this unallocated gold came from customer deposits at European banks.

Thus, the commercial banks used as collateral depositors gold and not their own and then swapped this unallocated gold with the BIS. The BIS will thus be a creditor

to the commercial banks if the swap cannot be unwound. The central bank and/or the commercial bullion bank would have complete use of physical gold that they are now dishoarding to meet the massive demand on gold that they are facing!!

In other words, they used their double accounting trick. The BIS gets unallocated gold which is basically a paper claim on gold. The central banks mobilized

gold as demand from Europeans for physical gold caused tremendous grief for our bankers.

Adrian is correct..the bullion banks are "awash" in gold liabilities for the record number of oz that they are suppose to hold. Investors are now mistrusting

the bankers and are asking for their metal back. The unallocated ledger at the bullion banks is turning over as fast as possible to allocated gold.

Those who get physical first wins, those who delay have nothing but a paper obligation.

Now wonder, the BIS was silent on the matter.

I hope to be back monitoring the Precious Metals by the middle of next right and sit tight.

Wednesday, July 28, 2010

I will be going back to visit my roots in Detroit, Michigan for the next few days. It will be nice to get away from this nonsense in the Precious Metals markets. It is really getting under my skin. Thanks to everybody that's stoped by to see and read what I have to share...I hope you all find it enlightening and beneficial.

I'll go now, and leave a couple more stories from the crack financial media coverage of the Obamagasm's cratering recovery. He might ceaselessly blame Bush for this mess, but this IS the messiah's recovery.

Unemployment rises in 75 pct of metro areas- AP

Fed survey: Recovery slows in some places- AP

Orders for big-ticket goods fall 1 percent in June- AP

Economy erodes election hope for Democrats Reuters

Economic Recovery Anything But Durable[great observations]
Marko's Take
While investors are drinking the Obama Administration's Kool-Aid and popping champagne corks over the slew of optimistic earnings reports and guidance, the economy continues to quietly deteriorate. This morning we were treated to another disappointment: durable goods. Add to that the ongoing weakness in real estate and sub-par retail sales and it's hard to understand the unbridled optimism that has suddenly gripped the markets.

Not that economic statistics are a good barometer of future market prices. Like earnings, they are backward looking and generally have ZERO predictive value. Markets typically turn well before the economy and corporate earnings. So, what's my beef?

The main problem with these economic data is that they are occurring in the middle of a so called "recovery" and one that began more than a year ago. At this stage, we should be seeing growth in employment, sales, economic output and an increase in taking on credit. None of those are happening.

“Betting against gold is the same as betting on governments. He who bets on governments and government money bets against 6000 years of recorded human history.”
- Charles DeGaulle

The US Mint Fraud
By Bix Weir
One of the more disingenuous frauds the citizens of the United States are being subjected to these days is coming out of the US Mint. For over 2 years the Mint has been illegally rationing gold and silver American Eagles and now the Director of the U.S. Mint, Edmond Moy, is finally on the hot seat.

"A congressional subcommittee has been asked to investigate the growing backlog in and foreign procurement of U.S. bullion and collectors' precious metals coin blanks manufactured by the U.S. Mint."

Hoping for a Break
By Toby Connor, GoldScents
When a large fund wants to buy, it can’t just simply start buying stock like you or I would. Doing so would run the market up causing them to fill at higher and higher prices. Unlike the average retail trader, smart money attempts to buy into weakness and sell into strength. (Buy low, sell high). In order to buy in the kind of size they need without moving the market against themselves, a large trader needs very liquid conditions. Ask yourself, when do those kind of conditions exist? They happen when markets break technical levels.

If big money is selling it is because it is trying to push the market below a significant technical level so all the technicians will puke up their shares to him. By running an important technical level it can cause a ton of sell stops to activate, allowing it to accumulate a large position without moving the market against itself in the process. We saw this very thing happen in the oil market recently and also in February as gold bottomed.

Technical traders wrongly assume these breaks are continuation patterns but the reality is that very often they are just smart money “playing” the technical crowd so they can enter large positions. The key to watch for is an immediate reversal of a technical break. When that happens you know there was someone in the market buying when everyone else was selling. 9 times out of 10 it was smart money.

At the moment everyone is jumping on the bear side for gold. Remember we saw this exact same sentiment in the stock market 3 weeks ago. I knew the bears were going to be wrong simply because the market was way too late in the intermediate cycle for there to be enough time left for a significant decline.

The gold bears are going to be wrong also and for the exact same reason. It is just too late in the intermediate cycle for there to be enough time left for anything other than a minor decline.

Central banks will push gold up to rescue asset prices
Stewart Thompson
"There is a middle step between quantitative easing and money printing, and it is gold revaluation. No confiscation is needed in the current crisis to make revaluation 'work,' because so few people own gold. The major central banks are already committed to major long-term gold buy programs (the opposite of the 1990s), and these buy programs are the mechanism of gold revaluation under a sort of guise of currency reserves diversification.

"The central 'banksters' aren't stupid; they didn't get the market all wrong and accidentally sell their gold holdings into the end of the gold bear market, any more than the current buy programs are 'knee-jerk' reactions to a rising gold price.

"The buy program is about gold revaluation, not rushing to buy gold as an asset. As QE is more and more broadly deemed a failure in the fund community, the central banks will step up their gold buy programs, stepping UP the price they pay for the gold, with tremendous vigor.

"The buy programs of the central banks are not about adding gold to diversify their forex reserves; they are about devaluing paper money to raise asset prices, as blown marked-to-model OTC derivatives can then be marked to market."

Gold and Silver Capitulation is Near
On Tuesday, the price of gold fell $25.10 to $1,158 per ounce while the price of silver declined by $0.57 to $17.63 per ounce. Based on the emails and phone calls we have received in recent days, NIA believes we are approaching a capitulation point in gold and silver prices. The sentiment on gold and silver has abruptly changed to the negative like nothing we have ever seen before and to us this means the big move to the upside is right around the corner.

If you do a Google search for, "There is no inflation", it will bring up a shocking 385,000 web results and almost all of the articles are related to the U.S. economy. Investors around to globe are pointing to the consumer price index (CPI), which shows prices only up 1.05% from one year ago, and saying that inflation in the U.S. is not a problem. The most popular forecast by Wall Street analysts today is that the U.S. is headed for a long period of deflation, similar to Japan's "Lost Decade". NIA is currently in the process of dissecting exactly what took place during Japan's "Lost Decade". We are producing a short movie comparing Japan's economy to the U.S. economy and it will be released in the coming weeks.

NIA considers gold to be the best gauge of inflation, not the CPI. Most experts on Wall Street chalk up gold's rise from $255.95 to $1,158 this decade to rising fears and uncertainties and increasing jewelry demand from India, while maintaining that there is no inflation because the CPI says so. They fail to realize that the government has an agenda to minimize CPI increases in order to keep Social Security payment increases as low as possible. In the future, if the government decides to bailout their banker friends from hyperinflation by adjusting mortgage contracts to the rate of inflation, NIA predicts they will adjust mortgage principles based on the price of gold and not the CPI.

This past weekend, the New York Times wrote a front page article about how hedge fund manager Anthony Ward, through his private investment fund Armajaro, has purchased enough cocoa to make five billion chocolate bars. Ward took delivery of 240,100 tonnes of cocoa, the biggest delivery in 14 years and about 7% of the world's annual production of cocoa. Some are calling this an attempt to corner the cocoa market, similar to how the Hunt brothers tried to corner the silver market decades ago. Many people believe Ward is trying to create an artificial cocoa shortage in an attempt to artificially manipulate cocoa prices to the upside for his personal benefit and to the detriment of chocolate lovers everywhere.

NIA considers it to be outrageous for so much attention to be paid to Ward and his long position in cocoa, when the mainstream media continues to ignore JP Morgan and their concentrated short position in silver. Ward's long position of 7% of the world's annual cocoa production pales in comparison to JP Morgan's short position of 20% of the world's annual silver production. Ward purchased this cocoa using his firm's own funds. JP Morgan sold silver that it neither owned or legitimately borrowed.

Tuesday, July 27, 2010

Deflation or Hyperinflation? BUY GOLD!

Deflation or Hyperinflation, that is the question. And it's been eating away at me. A casual observation of the economy reveals that the only thing "deflating" is the M3money supply, and the prices of leveraged assets, in particular, home prices.

If all money is debt, it is easy to understand why the M3 money supply is falling along with the prices of leveraged assets, home prices being the perfect example. As money is borrowed, or rather, as debt is created, it finds it's way into the money supply to purchase assets on credit. A mortgage on a house is a large debt, and a large creation of money.

If the supply of debt, or rather money, begins to fall, further purchases of assets become difficult or impossible. When demand for assets decreases, and supply begins to overwhelm demand, prices for assets begin to drop. This is today's housing market. A market that is clearly experiencing a deflation in asset prices.

Because the housing market has become such a key cog in our economy's growth cycle, falling home prices [Deflation] can have a tremendous negative effect on the overall economy. Particularly in light of the consumers use of their home equity as an ATM machine to fund discretionary purchases over the past 10 years.

Focusing on home prices in a Deflation/Hyperinflation debate is important if one agrees that the entire financial crisis we are presently enduring was the result of a collapse in the housing market. Could a Deflation/Hyperinflation event be focused on a single sector of an economy much like an asset bubble can be?

What if we look at home prices as already having been in a Hyperinflation from 2000 to 2007, then followed by the Deflation we are experiencing now. This would be much more in line with the Wiemar Germany Hyperinflation we hear so much about. Hyperinflation in Germany in the 1920s was followed by a severe Deflation in the 1930's Nazi Germany.

Recall that a Deflation always precedes a Hyperinflation. But in today's housing market, the Deflation appears to have followed a Hyperinflation of prices. True, but what precedes the hyperinflation in housing prices? 9/11 and a recession [deflation]...and low interest rates. What do we have today? A Great Recession [Deflation] and low interest rates.

Low interest rates are designed to encourage the growth of debt, or rather, the creation of money. And what follows the creation of mountains of debt/money? Hyperinflation. Has the stage been set for a Hyperinflation of the general economy in response to the Deflation that has followed a Hyperinflation of the housing market?

During the Hyperinflation of the housing market between 200 and 2007, home prices rose by 100% while incomes only rose 2%. Can you imagine the consequences if a similar scenario in prices and wages occurs in the general economy and not just an isolated sector of the economy?
Heaven help us all.

Gold is easily recognized as the "ultimate hedge against Inflation". The buzz today is that Gold will fail to protect ones wealth in a Deflation. Ignore the fact that we are more likely on the cusp of a severe Hyperinflation event than a Deflationary the general economy. Deflation so far has been confined to leveraged assets, and it is the fight to save the "value" of these assets that is going to lead to a Hyperinflation in the general economy next, NOT a Deflation. The Deflation will come AFTER the Hyperinflation we are about to enter has run its course.

But how will Gold react to a Deflation? Look no further than our housing crisis to see the answer to that question. Gold has performed true to form on every level during the housing boom AND bust. Shockingly to many, Gold has actually performed BETTER during the housing bust [Deflation] than during the Hyperinflation run up between 2000 and 2007. The following two charts are worth 10,000 words on the subject of Golds performance in a Deflation.

I don't know that it could be any clearer. Gold rises during Hyperinflation, AND rises not only higher, but faster in Deflation. Gold is the superior asset for not only protecting the buying power of your wealth during a Hyperinflation, but it protects your accumulated wealth during a Deflation.

Therefore I declare the question of Hyperinflation or Deflation moot as it pertains to Gold.


Gold as a deflation hedge - What happens if the bottom falls out of the economy
By: Michael J. Kosares, USAGOLD
In an inflationary scenario, investor concern centers around the preservation of purchasing power. In a deflationary scenario, investor concern swings to protection against institutional failure and default, i.e., the complete loss, or expropriation, of one’s capital. The old saw, “I am not so much worried about the return on my capital,as I am the return of my capital,” comes to dominate investor thinking.

Typically deflations -- like the 1930s Great Depression and the Long Depression mentioned by Krugman -- occur in gold standard economies where the state is prevented from running up debt and then financing those obligations in varying degrees with printing press money. The downside of fiat money economies is typically that odd mixture of inflation and deflation called disinflation or stagflation (United States, 1970s) which occurs when the financial authorities, or outside events, apply the brakes. Deflation generally occurs in fiat money economies only after the state has exhausted all the inflationary possibilities and faith in the currency has become non-existent (Germany, 1930s). So to consider how gold would perform in a fiat money economy that somehow falls into the deflationary abyss, one would need to look to more weimar Germany and its aftermath (the Nazi Party) in order to find an historical equivalent, than the United States in the 1930s. To make a long story short, the rare German citizen who had siginificant assets after the virulent weimar inflation probably owned gold, and that same gold probably insured his or her financial survival in the subsequent deflationary breakdown as well -- for the reasons mentioned above. There is more to this scenario however than meets the eye.

Though gold preserved Americans’ capital during the Great Depression of the 1930s, the official price was fixed and as prices fell gold’s purchasing power increased. Under the current fiat monetary system, gold is free to seek its own price level. As a result, theoretically, we could experience a situation in which the price of gold rises while the price level is generally declining. For the gold owner that would amount to the best of all possible worlds. Oddly enough, after weimar Germany, the best case study for gold under these kind of circumstances might be the United States from 2008 to present. That period encompassed on a limited scale the circumstances one might expect in a deeper, full-blown crisis -- high systemic risk, investor flight to quality, massive government and central bank intervention, a financial market breakdown, etc. All in all, the net effect was severe disinflationary pressure that, though not deflationary, could be considered circumstantially a close cousin. with capital preservation suddenly the most hunted objective, investors took investment gold demand to record levels, and the price went from $750 at the end of 2008 to $1250 today. Gold, if we are to take this hint seriously, could turn out to be an even more effective hedge now than it was in the 1930s.

Comparing gold to home prices as measure of purchasing power

To illustrate the point, let’s consider a theoretical home purchase during both periods. In the 1930s as housing prices fell, the price of gold remained the same -- fixed at $35 by government mandate. Gold’s purchasing power increased as a result -- the sort of favorable outcome gold owners’ had hoped would be the case.

Since the onset of residential real estate correction in 2006 housing prices have fallen by one-third in some key urban areas in the United States. Simultaneously, gold has more than doubled from $530 in January, 2006 to roughly $1250 today. The increase in gold’s purchasing power with respect to housing inflation, as a result of free market pricing, has been extraordinary. A similar result, by the way, could be drawn by comparing gold’s recent performance against commodity prices and consumer prices -- two standard comparisons or determining the purchasing power of one’s savings.

(It should be added as a caveat that gold certainly could correct downward along the way and the relationship between gold and the general price structure would change as well.)

I give a full-blown deflationary depression in the United States about a 20% chance of occuring and even if it does occur, that is unlikely to happen until after all inflationary avenues have been exhausted. There will be abundant discussion about austerity measures, but quadrupling the annual deficit to nearly $2 trillion in rapid fashion and then promising to cut it by half is not my idea of a real belt tightening. Simultaneously, the Federal reserve, putting it politely, has been more than accomodative with its policies over the past few years, and there is talk of it becoming even more so if we drop into the double dip many economists are now predicting.

If the effort to kickstart the economy fails, which is a possibility, we more likely to experience more disinflation, or stagflation, than an outright deflation -- something similar to what Japan has experienced since the 1980s. At the same time, with so much talk of a depression, including among economic luminaries like the Nobel laureate, Paul Krugman, this short study is for those curious how gold might perform in deflationary circumstances under the current monetary regime.

Yet here were are once again this morning witnessing the absolute [insert expletive here] joke that is the NY COMEX Commodities and Futures Exchange. AKA, the CRIMEX. Home prices are up in another spin of the truth. Oh my, the housing crisis MUST be over...sell your Gold! What a crock! This "news" hit the wires at 9AM est., and from there the price of Gold and Silver tanked. Let's look past the BS associated with options expiration today for just a moment...this is pure bullshit.

Since the first week of June the US Dollar has fallen almost 8% as measured by the US Dollar Index. Over this same frame of time, the price of Gold has fallen 7%. Is this for real? HA! Gold ONLY falls in New York. Wall Street is trying to paint the delusion that the Dollar is as good as Gold [or as bad at this time].

Yesterday we get the spin that new home sales were up 23% over the previous month. Never mind the fact that the previous months record low sales number was revised lower [along with the prior tow months before that]. And why were they revised lower? Because on average, at least 25% of new home "sales" actually close as real sales. You see, new home sales are measured by purchase contracts, NOT ACTUAL PURCHASES. This is called spin. And like a drunken sailor spinning in a bar room in some foreign port, the fools on Wall Street believe, once again' that a sign of the bottom in housing has appeared. It's a mirage you fools!

Home prices increase 1.3 pct. in May from April
NEW YORK (AP) -- Home prices rose in May for the second straight month as federal tax incentives pulled more buyers into the market.

The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday posted a 1.3 percent increase in May from April.

Nineteen of 20 cities showed price gains month over month. Only Las Vegas recorded a price decline.

The gains underscore the impact of the government's homebuying tax credits. Buyers rushed to purchase before the credits expired at the end of April.

The report also noted that May is typically a strong month for selling homes and that the price gains are unlikely to last through the year.

Nationally, prices have risen 5.1 percent from their April 2009 bottom. But they remain 29 percent below their July 2006 peak.

Some Monday Observations...
By Dave Kranzler, The Golden Truth
New Home Sales - The media ushered in the Commerce Department's new home sales for June with unusual ebullience and positive spin. Seasonally adjusted new home sales, as reported, came in a little better than Wall Street was forecasting at 330,000 (please note: seasonally adjusted - no one outside of the Govt's Ministry of Truth really knows what this means). The "spin" was evident in the headlined "23.6% sales increase" from May. What wasn't spelled out is that May's record low new home sales number was revised down even more from the originally reported - seasonally adjusted - 300,000 to 267,000. The 300,000 reported for May is the lowest new home sales number ever reported going back to 1963. That should put the 267,000 in perspective. However, arithmetically, that downward revision lets the media/CNBC jump all over the "23.6% increase" from May to June. See how this game works? The seasonally adjusted, annualized number for June was 16.7% below the sales rate for June 2009 AND it was the worst June on record. In terms of the inventory being reported as declining, don't put any stock in that number. The way the Census Bureau accounts for new home sales and cancellations - it's been running around a 20% cancellation rate industry-wide for about 3 years now - cancelled homes are not added back into the new homes inventory. So the real inventory of new homes has been significantly understated for at least 3 years. Given that the Government is the entity that accounts for the new home sales market, this should not surprise anyone.

New Home Sales: Worst June on Record
Ignore all the month to previous month comparisons. May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.

You see how simple it is to peer past the bullshit and find the truth? Nothing has changed. The housing sector is STILL in the toilet, and the bowl is still swirling to boot. The CRIMEX is still laden with criminals, and lower prices for Gold and Silver will only INCREASE demand for them, not chase investors away.

The Dollars reaction to this wondrous housing news has been a return to the 82.22 line in the sand. Gold has gotten beaten down disproportionately to say the least, Silver even more so considering it's "industrial connections" to the economy. More proof of the fraud that is the CRIMEX.

Gold's on sale again today, and so is silver. Thank the fools on Wall Street. Relieve them of their burden, and pocket those Precious Metals for yourself...while you still can.

This just in:

Consumer Confidence at Lowest Since February- AP
A monthly consumer survey shows that Americans' confidence in the economy eroded further in July amid job worries. The reading raises concern about the economic recovery and the back-to-school shopping season.

Monday, July 26, 2010

Reading is fundamental

Reading is fundamental...and I did some reading this weekend. The number one topic of "confusion" being discussed is without question "Deflation or Hyperinflation". Flip a coin. In my humble opinion, the stories about Deflation are "after the fact". The global ecomomy has been dealing with Deflation for almost three years now. It has become so obvious, that it has become the number one topic of discussion of the financial news media, AND taken the top spot on the "Things To Fear Most" list.

Being a contrarian, the stories about Deflation need to be taken with a grain of salt these days. The threat of Hyperinflation should be on everybody's lips and fingertips instead. Historically, in EVERY instance of a Hyperinflation there has been a period of Deflation that proceeded it.

A crisis in confidence is all that remains to signal the end of Deflation and the beginning of Hyperinflation. Hyperinflation is not a monetary event, it is a "loss of confidence in the currency" event.

Despite all the efforts by the US Federal Reserve to prop up prices and give the economy an illusion of growth over the past two years, it is beginning appear that confidence in their success is an illusion as well. The Fed controls the current global reserve currency. If the public loses confidence in the Feds ability to stabilize prices and maximize employment [their mandate by law], a loss of confidence in the US Dollar will not be too far behind. The road to Hyperinflaion will be open.

You've got plenty of reading to do...

Unusually Uncertain Outlook Shows The Fed is Killing the Economy
The Federal Reserve is mandated by law to maximize employment. The relevant statute states:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

However, PhD economist Dean Baker

The country now has almost 25 million people who are unemployed or underemployed as a result of the Fed's disastrous policies. Millions of people are losing their homes and tens of millions are losing their life savings. The country is likely to lose more than $6 trillion in output ($20,000 per person) due to the Fed's inept job performance.

The Fed could have stemmed the unemployment crisis by demanding that banks lend more as a condition to the various government assistance programs, but Mr. Bernanke failed to do so.

Ryan Grim argues that the Fed might have broken the law by letting unemployment rise in order to keep inflation low:

The Fed is mandated by law to maximize employment, but focuses on inflation -- and "expected inflation" -- at the expense of job creation. At itsmost recent meeting, board members bluntly stated that they feared banks might increase lending, which they worried could lead to inflation.

Board members expressed concern "that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation." That summary was spotted by Naked Capitalism and is included in a summary of the minutes of the most recent meeting...

Suffering high unemployment in order to keep inflation low cuts against the Fed's legal mandate. Or, to put it more bluntly, it may be illegal.

Smoking Guns of USTreasury Monetization[MUST READ]
By: Jim Willie CB
A significant feature of fiat money systems is the privilege for the custodian to commit fraud, big fraud, gargantuan fraud, even counterfeit. Fannie Mae might function as the clearinghouse for numerous massive role programs with $trillion fraud behind each, hidden from view, especially since it was conveniently nationalized. Follow some other fraud schemes, right out in the open. Surely such recount only touches the surface, but these shenanigans are advanced forms of fraud. They are smoking guns of USTreasury fraud and counterfeit, with strong whiffs of monetization. Full Story

International Forecaster July 2010
By: Bob Chapman, The International Forecaster
Now mind you, the Federal Reserve, which Congress has now put in charge of our entire financial system, is the privately owned, and largely foreign owned, central bank of the US which has always operated, and which continues to operate, in total secrecy, and with zero accountability. So, after the Fed destroyed our economy with malice aforethought, it certainly must have made perfect sense to the apparent morons and village idiots in Congress to put the Fed completely in charge. Full Story

The Coming Rise In Prices
Howard S. Katz
Keynesianism is not a theory of economics. It is a confidence game, and the question is not whether they can correctly predict the future. The question is, can they gain your confidence and get you to act in such a manner that they can steal your wealth.? This is why they continually talk about confidence. “It is important that everyone have confidence in the economy.” They are confidence men, and the only question that matters to them is can they get you to have confidence in them? They are liars, frauds and thieves, and they are trying to reduce the American people to the status of serfs so that a collection of rich riff-raff can live off the product of their labor. That, by the way, is the explanation for the “taxpayer” bailout of Wall Street in 2008. The normal method of robbing you by having the Fed counterfeit money was too slow for the establishment crisis of that year. So they just went in and took it. Now the political polls tell us that the Republicans who opposed that bailout are going to win an enormous victory thus proving that a paper money system is inimical to democracy. They want you to become like the medieval serf so that they can steal the product of your labor any time they like. The serf, of course, did not have democracy. His only recourse was to grab his pitchfork and confront his feudal lord by sheer numbers. (Neither was the 2008 Wall Street bailout ever paid back, as you are being told. What happened was that the slower process of having the Fed steal from you via the counterfeiting of money went to work in ’08 and ’09, and the Wall St. firms were able to pay back their “loans” from the Government with the money made for them by the Fed. That is, they stole from you in ’08, disguised as a loan, and then “repaid” the loans in ’09 and ’10 with more money stolen from you. If you buy these lies, you are on your way to becoming a modern serf. Not only will your life be wretched, not only will the paper aristocracy be able to steal from you any time it feels the need but you will have the added disgrace of having given up your liberty when you had received it as a gift (from the Founding Fathers).

Stocks, Commodities and Financial Markets, The Shape of Things to Come
By: Steve_Betts
Central banks are gold’s best friend, and the more they print the better gold will perform over the long run. Make no mistake about it; the Federal Reserve will print obscene amounts of fiat paper until it produces the only possible result, a complete collapse of the dollar. The question I have is whether or not the rest of the world’s central banks will follow them over the cliff like the good sheep that they are. If they do there is no end to the amount that gold’s price can rise. We know that for more than a year it has consistently risen against every major currency in the world and in spite of the fact that the dollar has rallied for almost seven months. Gold has also rallied in spite of deflationary pressure and falling commodities prices, so those of you who think gold will fold up its tent and go home now that the dollar has topped, would be wise to think again.

I don’t know how low gold can go right now. With the dollar topping and heading lower gold will now complete the transformation into money. When that happens the bull market in gold will enter the third phase characterized by the general public piling into the gold market. To date gold is the play toy of commercial traders and institutions that can, at least over the short run, move the price around almost at will. As with any transformation process it takes time, and there will be a few hiccups along the way, and that’s what we are experiencing now. Manipulation exists and it will increase as the Fed desperately tries to maintain its grip on things. Unfortunately they’ve chosen to print their way out of trouble and that is the one solution guaranteed to fail. That failure will become evident to more and more people and that will drive the price of gold higher. That’s why I maintain that gold will not suffer any serious reactions until it reaches a minimum of 1,372.80, and to date I have yet to see anything that changes my mind.

Plan For America To Control Federal Deficit Spending [BRILLIANT]
By: James_Quinn
The ONLY way to save the country from financial collapse is to take on the largest expenditures. They are:

$895 billion for Military spending
$730 billion for Social Security
$491 billion for Medicare
$297 billion for Medicaid

These 4 areas total $2.4 trillion per year out of $3.8 trillion. This is 63% of all Federal spending. A real leader would tackle these areas. A 3rd party candidate with a strong backbone would propose the following ideas:

The Banksters: Lloyd Blankfein, John Mack, Vikram Pandit, Jamie Dimon, Brian Moynihan, Et Al. Have we forgotten what lying is? [Laughter is the best medicine]
Mandleman Matters
Those names should ring some bells by now, but in case you can’t place them all, they are the names of the CEOs of Goldman, Morgan, Citi, JPM Chase, and the new guy at BofA who replaced Kenny Lewis at the beginning of this year.

Now, there are all sorts of reasons that I could go after these guys for being beyond offensive. I mean, just the fact that any of these CEOs still has her job is nothing short of astonishing. Traditionally, as far as I can remember, CEOs that captain their corporate ships only to go fatally crashing into the cliffs of insanity get canned, right? Not only did these guys keep their jobs after, at the very least, spectacularly failing, but they also picked up very nice bonuses to boot. So, I’d have to say, very well done there.

But I’m not even going to worry about any of that today. No, today I’m only concentrating on what this group of overbearing oligarchs has done lately, like as in over the last five quarters, according to the Federal Reserve Bank of New York. That’s right, new stuff. They didn’t do enough to destroy the global financial system over the last decade, so I guess it’s a matter of why-quit-on-a-winner sort of thinking?

Apparently, data released by the Federal Reserve Bank of New York shows that 18 banks, including those listed above of course, have been lying about their levels of debt that are used to fund their trading of securities at the end of the last five consecutive quarters, lowering them by an average of 42%, and then increasing those debt levels back to the real numbers in the middle of the following quarters.

Oh, I know… it’s not really “lying,” in this, our horribly-distorted-by-bank-lobbyists-world, I’m sure it’s actually perfectly legal, and equally sure there’s some banking lawyer out there who can set me straight on this. If such a lawyer ever contacts me I think I’ll introduce myself by saying: “Hi, I’m a human being. What are you?”

Wednesday, July 21, 2010

Often Wrong Bernanke Sticks Fork In US Dollar

You'd have to be dumber than dirt, blind as a bat, or asleep at the wheel not to know exactly what occurred in the Precious Metals and currency markets this afternoon. If you need any indication of how pathetically desperate the US Federal reserve is to maintain the illusion of a recovery in the economy, look no further than the price charts of the precious Metals and the currencies today.

What are the odds that at PRECISELY 2PM est this afternoon the price of Gold would suddenly drop $10 an ounce and the Dollar would rally hard against the Euro? Seriously. What are the odds?

Who needs odds. At 2PM est Bumbling Ben Bernanke, aka Pinocchio, aka Often Wrong, aka Professor of Make Believe, took a seat before the Congress to deliver the central bank's semiannual report on monetary policy. Remember folks, this is the same knucklehead that sat before this same Congress and told them that the sub-prime crisis would be contained, and that the cost of it to the government would be less than $200 MILLION. [Um, yeah right.]

How many times have we seen this pompous ass go before Congress and tell his fairy tales and NOT see Gold fall and the Dollar rise? Every time he shows up somewhere to speak in public, no matter what the sentiment of the day is, as soon as he "goes on" Gold falls and the Dollar rises.

This BS doesn't "just happen", it's made to happen. Think about it...

Today the first words out of this droolers mouth are 1000% Dollar negative:

"Even as the Federal Reserve continues prudent planning for the ultimate withdrawal of monetary policy accommodation, we also recognize that the economic outlook remains unusually uncertain."

"Unusually uncertain"? We don't make this stuff up folks. Would you buy the currency of a country whose top Central Banker was "unusually uncertain" about the prospects for his country's economy? I DON'T THINK SO. But miraculously, the Dollar rises swiftly on the "uncertain" words of this wizard of high finance. Of course this forces the price of Gold to deteriorate just as quickly...despite the fact that Gold has been joined at the Dollars hip for the past two months. What a f*ckin' joke.

"We remain prepared to take further policy actions as needed to foster a return to full utilization of our nation's productive potential in a context of price stability."

This mouthful of manure is code for, "We plan to drop money from helicopters if we have to, in order to maintain this illusion of economic recovery." This announcement is 2000% Dollar negative.

"Although fiscal policy and inventory restocking will likely be providing less impetus to the recovery than they have in recent quarters, rising demand from households and businesses should help sustain growth," Bernanke said.

Absolute BULLSHIT! Rising demand from households and businesses? Where? Not in this country Ben, you illiterate ignoramus. I guess Ben doesn't read much of the financial data making the the news headlines of late. Retail sales are down. Housing starts are down. Credit purchases are plummeting. Loans to small businesses are plummeting. Demand Ben? Is this demand similar to the containment of the sub-prime crisis? You know, more wishful thinking? Why didn't Osama blow up the Federal Reserve instead of the World trade Center?

Bernanke said a weak job market will likely remain a drag on consumer spending, and said it would take a long time before the economy can restore the nearly 8.5 million jobs lost in 2008 and 2009.

But demand from households and business will be rising. WTF? Rising demand in a weak job market that has lost nearly 8.5 million jobs. Yeah Ben, we don't call you Bumbling Ben for nothin'!

Ben of course once again blamed those silly Europeans for all our fiscal problems here in the States. Damn, if it wasn't for them, our economy would be flying high. The mark of a loser and a desperate man is the man who blames others for his own mistakes. It's called a failure to take responsibility for your own actions. Ben, the US Federal Reserve is the sole reason the United States IS in a Depression TODAY. Sugarcoat it anyway you want. Have your banking buddies "buy the Dollar" on your command. There is no recovery, and there will be no recovery unless and until the US Federal Reserve is destroyed by the American people.

So there you have it. Dollar up, and Gold down on Absolute Bullshit from that man with diarrhea of the mouth, Bumblin Ben Bernanke. This testimony could not have been more Dollar negative. The rest of the World sees that, and they will be quick to punish Pinocchio for his fib.

Bernanke: Fed will act if soft recovery falters- Reuters

Read the text of his testimony here.

Comex Silver Intrigue Builds
By Dave Kranzler, The Golden Truth
Surprisingly, the open interest on the Comex for both gold and silver declined again yesterday. This is unusual for a day in which the price of gold and silver rise like they did yesterday. Once again it calls into question the Comex's reporting credibilty. There remains 719 open silver contracts - representing nearly 3.6 million ounces of silver. This is also an unusually high amount of open contracts this late into a delivery period. In fact, if you are a large holder of SLV who aspires to one day redeem your shares for silver, and given that JPM is the custodian and the absurd short in Comex silver, I would be very afraid to look in that cupboard for fear it might be bare.

In order to dispel any confusion over key expiration dates for the balance of July, as they apply to gold and silver trading, here is the Comex schedule: Options expiry for August contracts is July 27; Last trade day for July contracts is July 28; Last notice day for delivery is July 29; Last delivery day is July 30; First notice for August contracts is July 30 (anyone not funded for delivery must be out). All of this information can be found LINK.

Just for the record, I fully expect that this bulge of open silver contracts waiting for delivery will come and go with very little drama - at least for public inspection. Having said that, we have been on the waiting end of Comex silver several times, two of which HSBC was the delivering counterparty AND we did not receive our silver until well after the contractually specified last delivery day. In fact, last year we received our April silver on June 20th. I have also received reader emails detailing similar delays in receiving Comex silver. What this points to is extreme stress in Comex silver inventories and one of these months - although as noted I don't believe this month - the problems behind the scenes will become apparent to all.

"Gold Reality Charts Update"
By Stewart Thomson
9. Two of the best volume experts in the gold community have noticed the dwindling volume as gold falls. Selling volume is drying. The risk in buying gold is decreasing. The lower the price of gold, the less risky it is to buy, and there are simply less sellers pressing on that price now, so the odds that gold is near a turn to the upside are growing, not falling. Gold has now declined approx $88 from the high. Those who buy only physical gold should be looking to make a move on the buy side here and now, as we’re near the $100 price sale that is a “mandatory” buy for physical players.

10. Instead of buying the sale, there’s a growing mob standing outside the gold store chanting, “raise those prices, then we’ll buy, raise those prices, then we’ll buy!” Madness. Look at all the grandmothers walking past you into the store to get their gold on sale. Get in there!

11. I’ve talked about the “gold plank”. The pirates used to have those they didn’t want around anymore walk a plank they extended off the pirate ship. The plank walkers walked over the edge and drowned.

12. Technicians are looking at the gold chart the same way. They see gold and silver like a long plank, a trendline, and it has broken so we’re all about to die in a repeat of 2008. We’re all supposed to get down on our knees in front of the paper money photocopier God, and worship it by handing over our gold because the paper money print rate might have slowed for a microsecond.

13. Here’s the gold chart with a look at the gold investors walking over the edge of the plank and bailing. By the way, I believe this is a cartoon painting created by the banksters, not reality. The banksters are master chart painters. I’ll show you reality in the next chart, but let’s first take a look at how most investors see the gold chart right now, and their gold investments, which is how the banksters want you to see the chart.Gold Trendline Break Chart

14. The implication of the chart is that the uptrend is dead, so you should ignore the fact that the trillionaire banksters are buying all that is sold by the funds and the gold community (where did you think all the gold is going, into the garbage?), and ignore the fact that the gold store is holding an 88 dollars off gold sale. Just liquidate all your holdings now, or at least a big chunk of them.

15. Here’s my picture of chart reality, the one the banksters don’t want you to look at:

16. Gold Trendline Reality Chart Do you see where price is? 1180 is a key trendline buy point for gold. There is no broken plank. The chartists are too focused on the short term, drawing micro lines. The fact is that the trendline from 1045 is a key buy point now, and that’s leaving aside the fact that I don’t sell uptrend line breaks. I buy them. If the uptrend line from 1045 breaks, I’m an even bigger buyer, not a member of the mob in front of the gold store demanding higher prices before I’ll buy. The mob that broke out of the insane asylum?

17. The gold community needs to get a grip on the difference between fundamentals and market tactics. When price is rising, all we hear about is China, China, China. I’ve called the Chinese Gman a disgrace to gold. Unlike the relatively short “lifespans” of the Western World gov'ts, the Chinese gov't has been around for thousands of years. Yet all they have to show for those thousands of years is a few thousand tons of gold. Western gov'ts arguably have an excuse for being “gold babies”. Not China. Sadly, I wouldn’t be surprised if the private vaults of the leading Chinese bankster and Gman families have a mountain of gold in there, ripped off from their citizens. The game of keep the average citizen away from gold, and diluting your money out of gold, is not a Western gov't invention. It goes back thousands of years. The Western banksters are quick learners, however. Leaving all that aside, the fact is that the price of gold can be moved $500 in either direction, up or down, regardless of the underlying fundamentals, and that’s all the banksters need to separate most investors from their gold. We know all the bullish fundamentals for gold are not just intact, but stronger than ever. But what good are those fundamentals to you if you are whipped out of your gold on price weakness by the banksters? I know people who cheerlead gold as price rises, telling me all about how Chinese Gov't is so pro gold, how perfect and wonderful their gold juniors are, how everything is gold, gold, gold, forever! Then when gold falls, a bit, they are liquidating like there is no tomorrow, prostituting their gold, and themselves, to the paper money pimp.

Proof of gold price suppression -- gold and the U.S. dollar[fascinating reading]
GATA board member Adrian Douglas, editor of the Market Force Analysis letter (, examines the ratio between the supply of gold and the U.S. dollar and concludes that the dollar's gold backing has fallen to a mere 2.3 percent and that the real dollar value of gold now approaches $53,000 per ounce. Douglas' new study is headlined "Proof of Gold Price Suppression: Gold and the U.S. Dollar," and you can find it in PDF format with a chart at GATA's Internet site here:

When, Not If
By: Theodore Butler
Today, President Obama signed into law the historic Financial Regulatory Reform legislation package. I reviewed this in “A Done Deal” a few days ago, so I won’t restate my position here. I’m putting this short missive out to bring your attention to a new video put out by Commissioner Bart Chilton on the same issue.
I sent the link earlier to a subscriber to test if he could retrieve it, and he responded that he thought that I had produced the video. I didn’t, but it was a fair observation, since the centerpiece of Commissioner Chilton’s statement affirms that the new law mandates that the CFTC establish position limits in order to prevent market concentration. Position limits in silver to break the stranglehold of concentration on the short side of COMEX silver has been my mission for 25 years. Chilton confirms that will be the law. Please watch the video and then decide if my take is correct.

According to Commissioner Chilton, it seems clear that the new law abruptly alters the former debate of whether the Commission should adopt strict position limits in COMEX silver into what the position limits in COMEX silver should be. This is a remarkable transformation. Suddenly, it’s a question of what the position limits in silver should be and when they should be enacted, not if we should have them. Some may wonder how this remarkable transformation came into being, but there is little doubt in my mind that the architect was Gary Gensler.

What should the position limits be in COMEX silver? As I have maintained for two decades, and with which almost 3000 public comments concurred, 1500 contracts is close to the proper number. I based this on real world production and consumption, world and exchange inventories, and an objective comparison of silver with all other commodities of finite supply. The case is easy to make and has been made repeatedly. Now it is up to those opposed to the 1500 contract position limit to state what the limit should be instead and why. There has been conspicuous silence on this matter to date. It is time to break the silence and initiate an honest debate. Of course, it is not just about the level of limits, but in enforcing those limits on the big shorts, like JPMorgan. I assume Commissioner Chilton wasn’t excluding JPMorgan from the new law, but he can speak for himself.

As to when legitimate position limits in COMEX silver should be enacted, the proper answer is yesterday. That should always be the regulatory response to a crime in progress. The commissioners can take their time on what the position limits should be in other commodities, but not in silver due to presence of overt concentration and manipulation. But the timing is not up to you or me; it’s up to Commissioner Chilton and the other commissioners.

Therefore, I suggest that you ask them when legitimate limits will be initiated and what the limits will be. It’s time to stop stalling and for the CFTC to get specific. Silver has been treated as a dirty word by the Commission; something to be avoided in polite company, even though the majority of people writing to the Commission write to them about silver. Enough already. It’s time for Commission to come out from the shadows on silver and let us know where they stand. What should the limits be in silver (and why) and when will they be enacted? Don’t accept any beating around the bush. Press them to enforce the law now.

Ted Butler

July 21, 2010

Tuesday, July 20, 2010

Where There Is Smoke, There is FIRE.

"We are not living under true free market capitalism right now. Free markets require free market money. Fifty percent of every transaction involves currency. You have to allow the market to pick what money is and what interest rates are (the price of money itself).

You cannot have a group of arrogant men trying to set interest rates and manipulate the economy. You cannot have governments giving special favors to their richest friends, the corporations and special interests that can afford to do all the lobbying.

This is what tilts capitalism to the point where it really isn't capitalism. This is no longer a free market. We haven't lived under free markets in the United States since 1913, when the Federal Reserve was introduced."
-Mike Maloney

Intrigue Builds In The Comex Silver Pits
By Dave Kranzler, The Golden Truth
The July silver open interest increased by 31 contracts on Friday. Those people wouldn't be buying unless they intended to take delivery AND they couldn't buy unless their account was funded for the amount needed to take delivery. I don't scrutinize the o/i like this every month, but I have never noticed open interest increasing in a delivery month this close to to the end of the delivery cycle. Here's the open interest report for Friday: Comex Metals O/I

Why is this significant? Because right now there is over 3.5 million ounces of silver standing for delivery and silver has been leaving the "eligible" vaults (i.e. customer storage vaults) nearly every day this month. I really do not believe that the Comex has the ability to deliver that much silver without tapping into an outside source, like SLV. JPM, per Ted Butler's analysis of the COT and Bank Participation Report, is short close to 30% of the entire Comex silver open interest. Not coincidentally, JP Morgan also happens to be the custodian of SLV. If you don't believe that there is foul play going on, something is wrong with your brain.

Waiting for Silver’s Upside Breakout
By James Turk
July 18, 2010 – Two months ago I stated that silver is inching closer to an upside breakout. It turns out that “inching” was the right word because since then silver has been moving at a snail’s pace. Nevertheless, the huge accumulation pattern that silver has been building over the past three years remains intact, as can be seen on the following chart.

The accumulation pattern on the above chart is nearly complete. All silver needs now is one last push above the neckline around $20. As I noted back on April 1st, silver looks ready to soar once that key level is hurdled.

In presenting my outlook for 2010 I said: “We need to start thinking about silver hurdling above $50.” Noting that this event was only a 20% probability in my view for 2010, I went on to add that “this important event – which is unimaginable to many – will I expect happen in 2011.”

That forecast remains on track, but two events are necessary. The obvious one is that silver must first hurdle above $20, but secondly, silver needs to approach $30 this year. This $30 price target is needed to keep silver on track for challenging $50 next year.

Given that we are now in mid-July, the limited time constraint means that $20 needs to be hurdled soon if silver is going to reach $30 before the end of this year. As a consequence, the next few weeks will be critically important for silver.

Did you buy Silver yesterday, Monday July 19?

I did.

Silver was forced down to it's 200 day moving average by the CRIMEX goons. The decision to buy was simple. As long as physical Silver is available, and the crooks at JPMorgan are interested in offering up sale prices, you should be buying. Supplies of physical Silver are disappearing fast.

Ed Steer in his Gold & Silver Daily report commented on the supplies of Silver outside of the US:

While on the subject of silver, my coin guy informed me yesterday that the Royal Canadian Mint is running two to four weeks behind on virtually all of their bullion products right now... especially the 0.9999 silver Maple Leaf. And, to top that off, Chris Powell sent me an e-mail from someone that had just contacted Kitco about purchasing silver coins and rounds... and this is the reply he got... "Good afternoon Sir/Madam, Thank you for your e-mail. Unfortunately, many of the Silver products we sell, are currently out of stock for Canadians. As such, the items are 'Only Shipping to the US '. Certain products are 'Only shipping to the US ' due to our inventory at our Vaults in Canada. In other words our inventory is too low (depending on the item) to accept any new orders from Canadian or International customers. As such, we would simply have sufficient inventory to sell the items to US customer[s] as we also have Vaults located in the United States from where our products are also shipped. The product will be once again available, when we receive a new shipment of inventory. In the mean time we suggest signing up for our ‘Bullion Alert Service' which provides an e-mail notification as soon as a shipment arrives for the item(s) selected." Here's a link to Kitco's product page. Except for the 1,000 ounce good delivery bar, they are completely out of all silver inventory for Canadian and international customers. Only if you live in the USA is there anything available at all.

Last night Harvey Organ in his Daily Gold blog posted the following with regards to CRIMEX Silver supply:

Even more shocking was the revelation that ZERO contracts were served upon in the silver comex. At this late stage in the silver delivery month this is
totally unheard of.

And to boot, the number of contracts left to be served increased in number to 743 or 3.7 million oz from 3.5 million oz. Anybody that buys silver comex for the july month must pluck all his money down. He no longer is allowed 10% down. It is the entire amount. So if you see the number of oz to be served rises you can bet the farm that they are standing for delivery and they are jumping queque (correct spelling anyone on queque?).

The total number of oz of silver standing so far remains at 1869 or 9.3 million oz.

The total number of oz standing for this delivery month of July is 9.3million + 3.7 million + .2 million = 13.2 million oz, a gain of 200,000 oz of silver.

As I have repeated many times there is a lot of smoke and fire at the silver comex.

Since the end of may 2010 over 18 million ounces of Silver have left the Silver ETF, SLV. This occurred while the price of Silver rose over $2 an ounce. Why would Silver be leaving the SLV if the price of bullion was rising? Is this where the CRIMEX is getting the bullion to meet physical demand in the futures pits? If so the supply side of Silver is Far, Far tighter than anybody can imagine. Now we see buyers stepping in line and buying Silver paid in full going into the close of the July delivery period. People want physical Silver, and the WANT IT NOW.

Gene Arensberg in his Got Gold Report commented over the weekend that both Gold and Silver, despite Friday's CRIMEX assult, closed last week in Backwardation:

Just as we saw two weeks ago, both gold and silver finished this harsh sell-down week with
the cash price (the price for immediate delivery metal) well above the near-active COMEX
futures. When the cash price is higher than the near futures market traders term that
condition “backwardation.” Backwardation is the opposite of the normal condition, called

As regular readers already know, backwardation in precious metals is unusual and it hints
that demand for physical metal is strong at the prevailing price. Most traders view precious
metals backwardation, even the most minor of examples, as more bullish than bearish.

Backwardation, especially if it persists for more than a day or two, is indicative of stronger,
not weaker precious metals markets. Backwardation argues that there is more demand for
metal than the amount being immediately liquidated.

For gold the cash price was higher than both the August and October contracts. For silver
the spot price was higher than September and December. In addition to suggesting strong
physical demand, backwardation also suggests that physical buyers are unwilling to wait
even for the nearest of future delivery months even though they are cheaper.

Mr. Arensberg's entire Got Gold Report is always well worth the read.

It is becoming ever clearer that the CRIMEX goons are becoming ever more desperate in their search for metal to meet the escalating demands for physical deliver out of the futures markets. The BIS gold swaps story is just the tip of the iceberg as the physical bullion market for both Gold and Silver moves closer to overwhelming and eventually crushing the phony paper market for Precious Metals that has taken root at the CRIMEX.

Recall that JPMorgan assumed control of the Silver market manipulation in March of 2008 when the Fed handed them the assets of Bear Stearns as they went belly up. This was because Bear Stearns at the time held the largest short position in Silver in the world. JPMorgan, who just happened to be the custodian of the Silver ETF, SLV, was called into "take control" of Bear Stearns assets, and this gigantic Silver short position that was threatening to unwind in a hurry as the the World Financial Sytem was on the brink of collapse. Silver promptly fell from a multi decade high of $21 to under $9 an ounce. As the price of Silver was falling, the Treasury Secretary and the Fed were claiming victory in averting a crash in the global financial system. It made one wonder how important Silver is to the World Financial System.

Today Silver sits poised to breakout above $20. JPMorgan however, after having months to unwind this huge short position in Silver has instead not only maintained it, but increased it in an effort to HALT a further rise in Silver and prevent the breakout at $20.

Why is it so important that the price of Silver be kept below $20 an ounce? Is sub-$20 Silver the key to holding together the World Financial System? The price of Gold long ago vaulted past it's 1980 high of $880 an ounce, yet Silver remains bottled up at less that one half of it's 1980 high of $50 an ounce. This is particularly peculiar, if not down right shocking, when you consider that there is less physical Silver in ounces available than there is Gold today. Yes you heard that right: THERE IS LESS SILVER IN THE WORLD TODAY THAN THERE IS GOLD. And the price of Silver is just 1.5% of the price of Gold. How can that be? And more import to ask, WHY is the price of Silver ONLY 1.5% that of Gold?

Will a breakout above $20 and ounce in Silver be a signal that the World Financial System is on the brink of collapse once again? Only time will tell, and judging by the quickly evaporating physical supply of Silver globally, time may be running out a lot faster that the global financial authorities would like.

Double-Dip Recession Does Not Mean Deflation
The National Inflation Association
In NIA's May 26th article entitled, "Don't Doubt Bernanke's Ability to Create Inflation", we said, "The U.S. Dollar Index has rallied only because it is heavily weighted against the Euro. The Euro is now overdue for a huge bounce". NIA was right, the Euro was $1.22 at the time and it has since bounced to $1.30. Meanwhile, the U.S. dollar index has declined from a high of 88 down to 82.50.

NIA has consistently said that the U.S. economic recovery is phony. With recently released Fed minutes indicating that our phony economic recovery is fading, the focus on Wall Street has shifted from the debt crisis in Europe to the risk of a double-dip recession and possible deflation in the U.S. However, NIA believes the threat of a double-dip recession and worries of deflation actually increase the risk of hyperinflation arriving a lot sooner than anybody thinks is possible.

There has been a severe plunge in stock market trading volume during the past month, but this is the calm before the storm. NIA believes the Federal Reserve is quietly getting ready to implement "The Mother of All Quantitative Easing". After all, the Federal Reserve's quantitative easing in 2009 was "successful" in causing the Dow Jones to bounce by 74% from its low of 6,469.95 in March of 2009 to a high of 11,257.93 in April of 2010. Sure, the broadest measure of unemployment also rose during this time period from 19.8% to 22%, but according to the Federal Reserve, unemployment is a lagging indicator and meaningless.

NIA believes there is no chance in hell that Time Magazine's Person of the Year Ben Bernanke is going to admit his destructive policies of artificially low interest rates aren't working. In fact, with the CPI showing a year-over-year U.S. price inflation rate in June of only 1.05%, the coast is now clear for Bernanke to raise his dosage of quantitative easing. NIA fears that come this October, Bernanke is likely to shoot up his largest ever dose of quantitative easing. If our fears come true, NIA will be forced to change our projection as to when U.S. hyperinflation will occur from the years 2014-2015 to as soon as year 2012.

NIA considers the number one catalyst to the upcoming hyperinflationary crisis to be our nation's out of control budget deficits and the Federal Reserve's need to monetize them. The White House is not projecting the U.S. to have a balanced budget ever again. In order to reduce our budget deficit from $1.56 trillion this year to $752 billion in 2015, the White House is projecting an average GDP (gross domestic product) growth rate of 5.58% over the next five years.

The Bureau of Economic Analysis (BEA) recently reported that revised 1Q 2010 GDP was up 2.42% on a year-over-year basis, compared to the previous estimate of 2.5% and an initial estimate of 2.55%. With consumer spending making up 71% of GDP and the mainstream media now focused on the risk of a double-dip recession, it will be impossible for our economy to grow at 5.58% per year in real terms.

If Bernanke decides not to implement massive quantitative easing and the U.S. government refuses to dramatically reduce spending in the short-term, by year 2015 the U.S. will likely be looking at an annual budget deficit of at least $2.2 trillion, but possibly $3 trillion or more once you take into account the likelihood of substantially higher interest rates. By that time, the Federal Reserve will be the only buyer of U.S. treasuries and all of our deficit spending will be paid for through outright money printing.

In our opinion, the Federal Reserve is likely to pull out all the stops to stimulate expansion of the money supply until the U.S. has a real annual price inflation rate of between 15% and 20%. Their hope is that with this rate of price inflation, our deficits and debts will be slowly eaten away without a complete loss of confidence in the U.S. dollar. NIA knows this is impossible. A price inflation rate of just 15-20% for five years in a row would cause the world to dump their U.S. dollar reserves and wipe out a huge part of America's remaining savings, leaving us with no way to rebuild our manufacturing base and improve the underlying fundamentals of the U.S. economy.

Americans can feel the purchasing power of their earnings and savings decline. They know that the real rate of price inflation is a lot higher than 1.05%. As long as we have a fiat currency system and Ben Bernanke as the Chairman of the Federal Reserve, there is zero risk of the U.S. experiencing deflation. If the Federal Reserve is forced to they will print up enough fiat U.S. dollars for President Obama to mail out a $1 million stimulus check to every single American.

The National Inflation Association [NIA] is an outstanding organization. They go to great lengths in an effort to warn Americans about the impending perils of hyperinflation. The are experts on the subject. I urge everyone reading this to visit there web site and become a member.

The NIA released a video last month entitled Meltup: The beginning of a U.S. currency crisis and hyperinflation. This 55 minute video presentation is a must see, and I urge you to view it at your earliest convenience. [There is an exceptional mention of the Silver manipulation at around the 24 minute mark.] The TRUTH of hyperinflation in the USA could not be more simply stated than it is in this video. If, after watching this video, you are not convinced that Gold and Silver are your best protection from the Global Financial Catastrophe that is looming just over the never will be. [It wouldn't hurt to have a stash of food, a gun, and plenty of ammo either.] Please try and find an hour to watch this video. You will be glad you did, and you will want to immediately share it with friends and family. I did.

Sunday, July 18, 2010

The Run On The Bullion Banks Has Begun

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake up homeless on the continent their fathers conquered."
-Thomas Jefferson, 1802

Isn't it amazing that the price of Gold only falls $10-20-25 in a matter of hours on the CRIMEX in New Yok, and never does it collapse in this fashion in ANY OTHER market around the world?

What happened Friday? Clearly it was the epitome of fraud, and quite possibly the pinnacle moment in the manipulation and suppression of the prices of the Precious Metals.

Friday's "shocking" crash in general equities revolved solely around the expiration of stock options for the month of July. It was imperative that gold not be allowed to rise during such a market "event".

GLD and SLV, the Gold and Silver ETFs, are stocks traded on the NYSE. Options are available on both. Being that it has become common knowledge that "despite their claims", neither ETF holds the physical bullion they claim to. And both hold ONLY paper proxies that give the investing public the illusion that they not only hold physical bullion to back up the shares in each, but that this "paper bullion" is part of the global "supply" of bullion. It only stands to reason that in order to maintain control of the price of Gold and Silver, these paper vehicles...just like the futures contracts available on the CRIMEX...must be rigged lower to prevent the rise in the price of the Precious Metals.

As I surmised in my last post, the cap on Gold and Silver prices the past 10 days was tied to the expiration of options on the GLD. The last thing the Gold Cartel wanted to see was a massive call option turn into a possession of GLD and then turn that into an obligation to get metal. The Gold Cartel does not have the metal to back up all their paper shorts on the CRIMEX, let alone the $50 BILLION worth of paper Gold funding the GLD.

Friday the Gold Cartel got to kill two birds with one stone. The stifled the Gold price in the face of a panic sell-off in general equities, and they stole millions from GLD options investors in the same way the steal millions from futures investors every month at the CRIMEX.

The Gold Cartel's worst nightmare has been exposed via the revelation of the BIS Gold swaps...they do not have access to enough Gold to cover their mountain of Gold derivatives, paper Gold, on the CRIMEX AND in the GLD. A default in the paper Precious Metals markets is imminent. Silver will be the first to go into default as the book on the September Silver contract closes. Gold will default in December. The World Financial System will collapse in January 2011.

The run on the banks has begun. The events of the past month surrounding the Precious Metals, despite their bearish nature, could not be more bullish. Be right and sit tight. Do not attempt to trade the markets, BUY WEAKNESS. It is a gift.

Ed Steer in his Gold & Silver Daily report comments on the July Bank Participation Report:

I'm going to take a few minutes of your time and walk you through the July Bank Participation Report. This report shows how many banks [both U.S. and foreign] are long and short the various markets... plus how many Comex contracts they are long and short. Silver and gold are the two commodities that are of interest here. Here's the link to the July report... with silver and gold being about two thirds of the way down the page... and it's ever so simple to follow... and I mean it.

In silver you will notice that 'X' number of U.S. bullion banks are long 257 Comex contracts and short a whopping 31,803 Comex contracts. As the numbers show... the 257 long contracts represent 0.2% of total Comex silver open interest which is stated here as 118,962 contracts. The 31,803 short contracts represents 26.7% of total open interest.

But what the silver numbers doesn't say is how many U.S. banks hold those positions. The CFTC used to publish them, but once Ted Butler discovered the Bank Participation report and started to write about it, the bullion banks screamed bloody murder, so the CFTC changed the report so that if there are less than 4 U.S. banks holding either a long or short position... the number is not shown. They don't show the number of non-U.S. banks either, because if they did... by the process of subtracting that from the total number of banks involved, you could figure it out all by yourself, dear reader... and we mustn't have that now, must we?

From past historical BPR data, the number of U.S. banks has pretty much always been two... and I see nothing in these numbers that indicate that this has changed. I can also pretty much say that 95% [or more] of that 31,803 Comex contracts held short... is held by JPMorgan... and the other 5% [or less] is most likely held by HSBC USA. So if you subtract 0.2% from 26.7%... you will see that JPMorgan and HSBC are short 26.5% of the entire Comex open interest in silver... and if you take out all the market-neutral spread trades... that shoots the percentage to well over 30% of the Comex silver market that is held short by these two banks. Any questions so far?

Looking at the six [8-2=6] non-U.S. banks' Comex silver positions... they hold 2,284 long positions and 614 short positions... for a net long position of 1,670 Comex contracts. This represents 1.9%-0.5%=1.4% of the total Comex open interest in silver.

Two U.S bullion banks are net short 26.5% of the total Comex open interest in silver... and 6 Non-U.S. banks are net long 1.4% of the total open interest. Who controls the silver price on the Comex, dear reader.

I'll leave gold up to you... which is a couple down from silver. There are 4 U.S. bullion banks here, so they show all the numbers. But even a cursory glance shows that the 4 U.S. bullion banks are net short 137,756 Comex contracts in gold [13.77 million ounces]... which represents 23.8% of the entire gold open interest on the Comex. And I'll bet you dollars to doughnuts, dear reader, that 95% of that 13.77 million ounces is held short by Morgan and HSBC. The 14 non-U.S. bullion banks are net short a whole 6,253 Comex contracts... which is 1.1% of total Comex open interest.

So, once again, 23.8% of the entire Comex open interest in gold is held short by two U.S. banks... the other two banks are virtually immaterial. But 14 non-U.S. banks are net short 1.1% of the total Comex open interest. Who controls the price?

This is a JPMorgan operation from one end to the other. But in all fairness, JPMorgan is only the executioner. They receive the order to swing their axe from either the Federal Reserve, the U.S. Treasury... or both. It's as simple as that. Then the boyz at Morgan pick up the phone, call the other bullion banks, set up the date and time... and then collectively pull the trigger... just like they did yesterday... and July 1st. That's all there is, dear reader... there's no more to it then that.

While on the subject of silver, my coin guy informed me yesterday that the Royal Canadian Mint is running two to four weeks behind on virtually all of their bullion products right now... especially the 0.9999 silver Maple Leaf. And, to top that off, Chris Powell sent me an e-mail from someone that had just contacted Kitco about purchasing silver coins and rounds... and this is the reply he got... "Good afternoon Sir/Madam, Thank you for your e-mail. Unfortunately, many of the Silver products we sell, are currently out of stock for Canadians. As such, the items are 'Only Shipping to the US '. Certain products are 'Only shipping to the US ' due to our inventory at our Vaults in Canada. In other words our inventory is too low (depending on the item) to accept any new orders from Canadian or International customers. As such, we would simply have sufficient inventory to sell the items to US customer[s] as we also have Vaults located in the United States from where our products are also shipped. The product will be once again available, when we receive a new shipment of inventory. In the mean time we suggest signing up for our ‘Bullion Alert Service' which provides an e-mail notification as soon as a shipment arrives for the item(s) selected." Here's a link to Kitco's product page. Except for the 1,000 ounce good delivery bar, they are completely out of all silver inventory for Canadian and international customers. Only if you live in the USA is there anything available at all.

Let's never forget for a minute that these CRIMEX markets are regulated by US Government regulators at the CFTC, a division of the SEC. Completely Fraudulent Trading Comission. Imagine if these markets were rigged to go higher by the bullion banks, the CFTC and the SEC would be all over these banks concentrated trading positions.

Sunday Quickie On Silver
By Dave Kranzler, The Golden Truth
A massive quantity of silver has been withdrawn from the Comex over the past month or so. On Thursday, the latest day for which data is made available, close to another million ounces was removed. Most of this silver is coming out of the "eligible" inventory. This is the inventory that belongs to private investors who are using the Comex as a depository. Some of these investors keep it there to make it convenient to re-sell on the Comex and some for convenience until they decide to take actual possession.

The total Comex silver inventory - at least the inventory which is being "reported" by the Comex - is down to 110 million ounces. I have seen the inventory this low, but it's been a long time. There is still about 3.5 million ounces worth of July silver contracts standing for delivery. This is an unusually large amount at this stage in the delivery cycle. There is no question in my mind that last week's massive paper manipulation of silver on the Comex was an attempt by JP Morgan, et al to try and shake loose a lot of those standing contracts. My bet is most the holders understand the drill and will take delivery anyway, because a year from now a $1 either way on the price of silver will be insignificant if silver does what a lot of us believe it will do.

Two questions come to mind: 1) Why are the Comex counterparties dragging their feet on delivering that 3.5 million ounces? 2) Why are an unusually large number of private investors removing their silver from Comex depositories? To be sure, in my mind these questions are strictly rhetorical. But I would suggest that anyone thinking about accumulating some silver for protection from what's coming should do so as soon as possible. To paraphrase Eric Sprott: One day you will wake up and decide to take delivery of your gold/(silver) only to find that it's not there to be delivered.

Silver – The Early Stages of Re-monetisation?
by MoneyMorning
In a recent article, we showed you how silver had become systematically de-monetised by governments over the past 150 years or so. These actions have seen the gold/silver ratio move from its long term historical average of around 15:1 to 66:1 today. In other words, one ounce of gold is now equivalent to 66 ounces of silver.

Today, we’ll show you why silver could potentially be one of the cheapest assets in the world right now. The silver market is not at all analysed by mainstream investors and for this reason remains very much overlooked as an investment opportunity.

As proponents of sound money, we believe precious metals, most notably gold, will have an increasing role to play as the current unsustainable system evolves to a more stable footing.

If gold’s role as money becomes increasingly recognised then silver will also come into the picture as a monetary metal. In the previous article quoted Milton Friedman as saying ‘the major monetary metal in history is silver, not gold.‘ This fact hasn’t been forgotten.

As you will see, investment demand for silver is beginning to grow very strongly and conditions are primed for this growth to continue. If this occurs, silver will effectively be ‘re-monetised’. As such we expect to see the gold/silver ratio to move heavily back in silver’s favour in the years ahead.

Fed's volte face sends the dollar tumbling
By Ambrose Evans-Pritchard
The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing.

Usually the dollar serves as a safe haven whenever the world takes fright, and there was plenty of sobering news from China and other quarters on Thursday. Not this time. The US itself has become the problem.

With the US trapped in depression, this really is starting to feel like 1932
Warning signals of a double-dip recession flash across the world "The worm is turning," said David Bloom, currency chief at HSBC. "We're in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, then violently swings towards another. People thought the euro would break-up. Now we're moving into a new phase because we're hearing alarm bells of a US double dip."

Mr Bloom said a deep change is under way in investor psychology as funds and central banks respond to the blizzard of shocking US data and again focus on the fragility of an economy where public debt is surging towards 100pc of GDP, not helped by the malaise enveloping the Obama White House. "The Europeans have aired their dirty debt in public and taken some measures to address it, whilst the US has not," he said.

The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.

"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.

"The Fed is throwing in the towel," said Gabriel Stein, of Lombard Street Research. "They are preparing to start QE again. This was predictable because the M3 broad money supply has been contracting for months."

The Fed minutes amount to a policy thunderbolt, evidence of how quickly the recovery has lost steam. Just weeks ago the Fed was mapping out withdrawal of stimulus.

Why would anybody sell their Gold and Silver? They're not. The bullion banks just want you to think they are... It's now a game of chicken. Sell into the bullion bank take downs and the banks win. Stand for delivery on the CRIMEX, and the banks lose. It's as simple as that according Dan Norcini at JSMineSet .

Ending The Comex Gold Charade
By: Dan Norcini
The only way to end the charade that takes place at the Comex in the gold pit is to do what I have been saying now endlessly for years – STAND FOR DELIVERY OF THE METAL.

Until the longs get it into their heads to take the actual metal out of the warehouses and force the bullion banks to come up with the gold that they are selling in unlimited quantities, the farce will continue.

It remains a source of continued astonishment to me that the longs, which have it completely in their power to end the price suppression scheme, refuse to do the ONE THING that can end it all almost overnight.

That is the Achilles’ heel of the bullion banks and until exploited the Comex bears will sell with impunity.

Any entity attempting to do in wheat or cattle for example, what the bullion banks are doing in gold, would end up having their heads handed to them on a platter. Egypt would step in and buy all the wheat they wanted to sell or a large packer would end up getting a huge discount on cattle and looking forward to hearing all those Moo-moos bellowing in the rail cars that would be coming their way knowing that it is the sound of huge profits based on someone else’s brazen stupidity.

The large traders in the gold pit (hedge funds) are run by mindless dolts who could not trade their way out of a wet paper bag if their life depended upon it. What else explains their inability to break the hold of the bullion banks in the gold market except a failure to think apart from their computerized black boxes.

Be right. Sit tight. Or buy.