Tuesday, August 31, 2010

Breaking Down The Walls

"Unfortunately, neither Bernanke, nor Obama is capable of saying what needs to be said, or doing what needs to be done. Unless and until they are, all the yapping by Obama and Bernanke will be as productive as giving a bullhorn to a bullfrog.''
-Michael ''Mish'' Shedlock

Gold Poised for Biggest Monthly Advance Since April on Investment Demand
Kim Kyoungwha
Gold is set for the biggest monthly advance since April as signs that the global economic recovery may be faltering prompt investors to boost their holdings to try to preserve their wealth.

Gold for immediate delivery was little changed at $1,236.20 an ounce at 12:56 p.m. in Singapore, climbing 4.7 percent this month. The metal, which reached a record $1,265.30 an ounce in June, climbed 5.9 percent in April. The December contract in New York was also little changed today at $1,238.50 an ounce.

“Driven by stronger investor interest, gold prices have made significant gains lately,” Eugen Weinberg, head of commodity research at Commerzbank AG, wrote in a report. “As long as weak economic data releases continue, investor interest should remain high.”

Analysts have raised 2011 forecasts for gold more than for any other precious metal in the past two months, predicting a 10th annual gain, data compiled by Bloomberg show. Gold may rise as high as $1,500 next year, according to the median estimate in a Bloomberg survey of 29 analysts, traders and investors.


And Gold looks eager to challenge that April move this morning as August comes to a close. Gold is at $1244 up over $8 as I type this at 9AM est. this morning. Silver is roaring to life off it's overnight low of 18.80, and is at 19.22 here and now.

Home Prices in 20 U.S. Cities Rose More Than Forecast in June
By Timothy R. Homan
Home prices in 20 U.S. cities rose more than forecast in June from a year earlier, reflecting the influence of a government tax incentive and a sign the market was stabilizing before sales plunged in July.

The S&P/Case-Shiller index of property values increased 4.2 percent from June 2009, the group said today in New York. The median estimate of economists surveyed by Bloomberg News called for a 3.5 percent advance.

The Case-Shiller index is a moving three-month average, which means the June data are still being influenced by transactions in April and May that may have benefitted from the government incentive. A pullback in demand since the credit ended, mounting foreclosures and an unemployment rate near a 26- year high may weigh on prices in coming months.


"More than expected"! Well la-dee-da... This "news" only reinforces the obvious, US Government tax subsidies didn't save the housing market, they only slowed it's plunge by pulling sales forward...and robbing home buyers of even better pricing deals to come in real estate as home prices continue their reversion to the mean...and below.

The Yen is up again, the Euro is up...AND THE DOLLAR IS DOWN.

Recovery? I tell you what's recovering...The American hang over that lead to the election of The Obama and this pathetic Congress. America is recovering it's senses, it's focus...real change is coming in November.

Poll: GOP takes unprecedented lead in midterms
Republicans lead Democrats 51% to 41% on a generic ballot heading into November's midterm election, the largest gap in favor of the GOP in Gallup's 68-year history of tracking the critical political benchmark.

The Republican lead has steadily increased from 5 percentage points earlier this month to the 10-point spread, suggesting Republicans have the upper hand and momentum.

Previously, the largest GOP advantage measured by the poll, 5 points, was found in 2002 and 1994. Republicans made significant gains in the U.S. House both years.

"The last Gallup weekly generic ballot average before Labor Day underscores the fast-evolving conventional wisdom that the GOP is poised to make significant gains in this fall's midterm congressional elections," according to Gallup's website.

Republicans are twice as likely as Democrats to be "very" enthusiastic about voting, according to the poll. Half of Republican registered voters said they are "very" enthusiastic, compared with 28% of independents and 25% of Democrats.


Gold hits $1246...

Focus on Silver
Gene Arensberg
Silver turned in an “outside reversal” Tuesday, August 24 (which happened to coincide with COT reporting cutoff day), and in the process it surged up and out of the wide triangular consolidation which, as regular readers know, we have been following here at Got Gold Report all along. An outside reversal occurs when the trading breaks below the previous day’s lows and then reverses to close higher than the previous day’s high. Outside reversals often, but not always, mark significant turning points and technically minded traders view such action as a more bullish event.

Outside reversals are fairly common. What separates the “impressive” outside reversals from the mediocre in our own opinion, can be measured by the “follow through” which occurs or doesn’t occur immediately following the event.

In this particular event silver reversed, turning a potential 23-cent loss into a 35-cent gain on Tuesday, and then followed through with another 56-cent advance on Wednesday. That’s impressive. For the week, silver surged USD $1.07, an advance of 5.9%, strongly outperforming its larger cousin gold, which added $10.15 to $1,237.88, up 0.8%.

The fact that the new silver surge occurred just ahead of options and futures expiry (even if it was just the “who cares” August contract) makes it all the more impressive to us. It suggests that even in the light liquidity of August, the Big Sellers of gold and silver were unable to use their CFTC-granted COMEX futures position limit exemption trading advantage to overwhelm buying pressure to the downside as has happened so often in the past at this time of the trading month.

We can all conclude that something material has changed in the COMEX futures silver market.
Silver has surged in late August. Something has potentially changed. Silver has broken out of its triangular consolidation and is now challenging its longer-term resistance and the area that has been heavily defended by the Big Sellers of silver in the recent past (in the $19s).

We also note that silver closed the week in minor backwardation with the cash price at $19.06 and the near-active September ’10 contract at $19.03 – meaning that there was heavier demand for actual physical silver than there were sell orders to accommodate it and/or traders were unwilling to wait a fairly short time for metal even though it would be less expensive. Most traders view backwardation in silver, even the most minor of examples of it, as more bullish than bearish short term.

In addition, the September contract shows a 13,880 contract open interest with first notice day looming just ahead on Tuesday, August 31. That represents about 69 million ounces of silver metal which “could” be stopped for delivery. Not all the September contracts will actually be delivered into, but the potential is interesting because there is not 69 million ounces of physical silver in the Registered category today at the COMEX. Indeed, as of Friday’s CME report, the COMEX warehouses held about 51.9 million ounces of Registered silver.

Another roughly 59 million ounces are currently stored in the COMEX vaults in the Eligible category. That silver could be coaxed into the Registered category at some price theoretically.

We mention the COMEX inventory to show that it would not take all that many silver contracts standing for delivery to completely exhaust the relatively small amount of physical silver metal that backs up all the COMEX contracts trading today. The open interest plunged by 4,663 contracts to 124,185 contracts open in this week’s COT report (roughly 621 million ounces worth), but with the sharp rally the open interest was back up to over 128,000 by Thursday.


Harvey Organ notes in his Daily Gold & Silver report:
What is even more alarming is that the current silver Comex OI and the amount of silver standing this delivery month of September was 6400 contracts or 32 million of silver. We must wait for the end of the monthto find out how many options were exercised. Needless to say we have a "Houston we have a problem".

Adrian Douglas today pointed out that the silver lease rates spiked on the month contract to over .6%.Please remember that they have been negative for quite some time.This means scarcity of metal and the Comex is having fits trying to obtain the necessary metal to satisfyour patient longs who have been waiting months for their metal.

It should be noted that many investors have been waiting patiently, as far back as March of this year, to receive delivery of Silver they stood for under contract. The threat of a September default in CRIMEX Silver grows by the day.

After opening down this morning, the DOW is now green. The NIKKEI 225 in Japan was down over 325 points last night. The plunge protection team works wonders...

"...the gold market is an economic signal that cannot be ignored, no matter how much the powers that be want you to. If the powers that be are trying this hard to suppress this invaluable economic signal, then this is one ominous sign that we are in for a large economic ‘adjustment’ period."
-Robert Kientz

Be right, and sit tight...or add to your positions. The age of economic cataclysm is upon us.

Monday, August 30, 2010

Ben Bernanke's Electric Kool-Aid Acid Test

"Our mission, as set forth by the Congress is a critical one: to preserve price stability, to foster maximum sustainable growth in output and employment, and to promote a stable and efficient financial system that serves all Americans well and fairly."
-Ben Bernanke

The US Federal Reserve: A national disgrace, a national tragedy.

Desperation on the part of global central banks seems to be the order of the day. That the "promise" of further government stimulus is applauded by investors as "positive" is alarming. What kind of recovery do you have if that recovery is solely supported by government stimulus? That's an easy one: No Recovery.

World stocks up after Bank of Japan eases policy
LONDON (AP) -- Japanese stocks led the way in world markets Monday after the country's central bank eased monetary policy again in its latest attempt to shore up the economy.

Last Friday's hint from the Federal Reserve chief that the U.S. central bank was ready to do more to help the U.S. economy had already helped stocks around the world start the week on a positive tone.

Nevertheless, the Nikkei 225 stock average proved to be the standout, closing up 158.20 points, or 1.8 percent, to 9,149.26 after the Bank of Japan decided at an emergency board meeting to further ease monetary policy by expanding a low-interest loan program for financial institutions to 30 trillion yen ($355 billion) from 20 trillion yen.

Sentiment in the U.S. was buoyed Friday after Federal Reserve chairman Ben Bernanke indicated the central bank would back further stimulus measures if the U.S. economy continues to weaken. Figures on Friday showed that the world's largest economy grew by an annualized rate of 1.6 percent in the second quarter of the year, down from the previous estimate of 2.4 percent.

"Sentiment will at least begin this week on a positive note in the knowledge that the Fed stands ready to act although double-dip fears are far from over," said Mitul Kotecha, an analyst at Credit Agricole.

The willingness of major central banks to take more action to prevent a slide back into recession has generally reassured equity market investors who have been unnerved over the past couple of months by evidence from the U.S. to China that the global economic recovery is losing momentum.


A global delusion appears to have take firm root. If markets are "reassured" by government moves to increase liquidity, and or "promises" to do the same, then you can only bet that the global economy is going to get much worse before it gets better. Economic growth, REAL ECONOMIC GROWTH, does not spring from the well of the government printing press. Only the delusion of growth can come from spending more money conjured up out of thin air.

Fed Ready to Dig Deeper to Aid Growth, Chief Says
JACKSON HOLE, Wyo. — The Federal Reserve chairman, Ben S. Bernanke, signaled once again on Friday that the central bank was prepared to act if the economy continued to weaken, as yet another economic report confirmed that the recovery had slowed to a crawl.

Hours before Mr. Bernanke spoke, the Commerce Department lowered its estimate of economic growth in the second quarter to an annual rate of 1.6 percent, after originally reporting last month that growth from April through June was 2.4 percent. Economists had been predicting a steeper decline, and stock prices rose after the markets opened.

While Mr. Bernanke announced no new steps that the Fed would take immediately, he said the central bank was determined to prevent the economy from slipping into a cycle of falling wages and prices, a situation he said he did not think was likely. Instead he predicted that growth would continue modestly in the second half of the year and pick up in 2011.

As Mr. Bernanke’s remarks were released publicly, stock prices immediately fell, a sign that investors were hoping for some concrete signs that the Fed would step in to try to bolster the economy. But as the market digested the chairman’s full remarks, prices rebounded and the Dow Jones industrial average rose 164.84 points, or 1.65 percent, to 10,150.65.


Noticeably, the equity markets fell when Bernanke did not offer "some concrete signs that the Fed would step in to bolster the economy." The equity markets are like drug addicts. Terrified of the fall from their high should their fix of easy money be cut off at the source. The markets remain delude that an economic recovery rests solely on the open wallet of the Federal Reserve. Only after the markets convinced themselves that the "fix" was still in did it rejoice in the Feds "promise" to do whatever was necessary to "bolster the economy".

The Fed has already spent upwards of $2 TRILLION bolstering the economy. Where is the recovery? Folks, as long as the government is printing money, there ain't gonna be no recovery. The illusion of one might persist for a little while longer, but pouring money down a bottomless hole ain't gonna fill it up, no matter how much you print.

Bernanke Hallucinating
by Martin D. Weiss, Ph.D.
If Fed Chairman Ben Bernanke honestly believes what he said at Jackson Hole on Friday — that he can save the economy by printing more money and buying more bonds — he’s hallucinating.

Through the first quarter of this year, he printed $1.5 trillion of paper money and promptly bought $1.5 trillion in mortgage bonds, government agency bonds, and Treasury bonds.

But the entire effort was a dismal failure; the U.S. economy is still sinking and most large American banks are still weak.

The underlying reason: While the government has been borrowing massively, nearly everyone else has embarked on unprecedented debt LIQUIDATIONS.

In other words …

While Washington is gorging itself on new debts, nearly every other sector is undergoing massive liposuctions.

In sum, nearly all the money Bernanke has printed — plus all the money he has supposedly poured into the economy — is going nowhere, except perhaps down the drain. He’s clearly running on a treadmill … pushing on a string.


US GDP growth revised down to 1.6 percent as economy cools
The US economy rose at a 1.6 percent pace in 2010's second quarter, a number that's disappointingly tepid but still keeps hope alive that the US will avoid a dip back into recession this year.

The number represents a sharp decline in the speed of economic recovery compared to the first quarter, when the gross domestic product (GDP) grew at a 3.7 percent pace. The Friday morning report from the Commerce Department also represented a downward revision to its initial estimate for the second quarter (2.4 percent) from a month ago.

US stock indexes opened marginally higher on the news, since the downward revision was not quite as bad as expected.

$2 TRILLION along and the best the economy can do is 1.6%? Oh, but it was better than the 1.4% "expected". Hooray! Participants on Wall Street have lost there minds to the hallucinogenic ramblings Bumbling Ben Bernanke. Bumbling Ben in his own hallucinogenic haze continues to cling to the hope that anemic growth in the economy will bolster the confidence of Americans. Americans rejoice in the illusion that tepid growth is better than no growth. Both are sadly mistaken in their beliefs, but blame the bad drugs...there is NO GROWTH, and NO RECOVERY.

Bernanke will not release the helicopters laden with monopoly money until GDP goes negative again. By all real measures it already is, but by "government estimates" it is not. When the government can no longer fudge a positive GDP number, Bernanke will have no other option than to "UNLEASH THE CHOPPERS!" But Ben assures us that will never happen:

Here Is the Money Quote from Bernanke: We Will Fight Deflation and Economic Stagnation
posted by Darren Gersh, Washington Bureau Chief
For mere mortals, this is the most important thing to take away from Bernanke's speech in Jackson Hole:

Falling into deflation is not a significant risk for the United States at this time, but that is true in part because the public understands that the Federal Reserve will be vigilant and proactive in addressing significant further disinflation. . . .

Second, regardless of the risks of deflation, the FOMC will do all that it can to ensure continuation of the economic recovery. Consistent with our mandate, the Federal Reserve is committed to promoting growth in employment and reducing resource slack more generally. Because a further significant weakening in the economic outlook would likely be associated with further disinflation, in the current environment there is little or no potential conflict between the goals of supporting growth and employment and of maintaining price stability.

Translation: the Fed will do what it takes to keep this slowdown from becoming something much nastier.


So, the economy will not go into a death spiral because Bumbling Ben believes that the US Public believes that he won't let that happen? Good freaking luck with that Ben....

Ben has a history of wishful thinking. Few of his wishes have come true...most just hallucinogenic jabbering.

March 28th, 2007 – Ben Bernanke: "At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,"

May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.” and "Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,"

June 20th, 2007 – Bernanke: (the subprime fallout) ``will not affect the economy overall.''

February 29th, 2008 – Bernanke: "I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system."

June 9th, 2008 – Bernanke: Despite a recent spike in the nation's unemployment rate, the danger that the economy has fallen into a "substantial downturn" appears to have waned,

July 16th, 2008 – Bernanke: (Freddie and Fannie) “…will make it through the storm”, "… in no danger of failing.","…adequately capitalized"

September 19th, 2008 - Bernanke: "most severe financial crisis" in the post-World War II era. Investment banks are seeing "tremendous runs on their cash," Bernanke said. "Without action, they will fail soon."

September 23rd, 2008 – Bernanke: "My interest is solely for the strength and recovery of the U.S. economy,"

Over the period in time covered by these quotes above, the DOW fell from 12,268 on February 28, 2007 to 7,609 on March 31, 2009. "Often Wrong" Bernanke was wrong every time he opened his mouth. If he were a doctor, he would have been sued into homelessness for malpractice.

So, when Bernanke says that it is unlikely that the economy will slip back into a recession [as if it ever left the current one], don't get your hopes up...Bumbling Ben is "Often Wrong". Hallucinogens do that. They make you see things that aren't really there. Ben sees a recovery, but there really isn't one at all.

Japan casually throws another 10 TRILLION Yen into the money pot, and Ben pledges to see that, and raise them "whatever it takes" to thwart negative growth in the US Economy. Your only investing option is to buy more Silver and Gold, while you still can, to protect what wealth you may have, and wait for "Often Wrong" Ben Bernanke to be wrong, once again. Safe in the knowledge that the TRUTH rests with REAL money, and not Bumbling Ben's cash laden helicopters.

Consumer spending picks up
NEW YORK (CNNMoney.com) -- Consumer spending rose in July, but Americans remain wary about the future of the economy.

Personal spending rose by $44.1 billion last month, or 0.4%, after falling less than 0.1% in June. This came in above the 0.3% increase economists expected.

Data of this sort should be taken with a grain of salt. When prices rise, spending rises along with it. Consumers aren't spending more because they want to, but because the have to. Inflation is very real despite the constant "fear" of deflation. This headline and story opening is designed to raise consumer confidence, but between the lines lies the inflationary truth about "rising consumer spending". As inflation accelerates later this year, and greatly into next year, you can be certain to see many more headlines touting "rising consumer spending".

Never lose sight of the fact that consumer spending data are derived from receipts of money spent, and not on the volume of goods sold. This is the foundation of lies our economy is built on: Rising prices equals economic growth. It's silly and deceptive, but this is the honet truth about our economy and why the fear of falling prices is so rampant. Falling prices equals less spending equals no growth. It really is that simple. The Fed's #1 job is price stablity, yet without rising prices [inflation] there can be no growth in the economy. Stable prices are what we had back in the day, BEFORE the existence of the Federal Reserve. If there was ever more proof that the Fed is merely an inflation machine, look no further than Bernanke's speech in Jackson Hole, WY on Friday:

Chairman Ben S. Bernanke
At the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming
August 27, 2010

The Economic Outlook and Monetary Policy

Thursday, August 26, 2010

The Ship Is Sinking

"Because it's easy to forget what is going on. One day the Dow goes up; the next day, it goes down. One day, the economy seems to be recovering; the next, it seems to be slipping backwards. It is as though we were on a ship that has hit a submerged reef. This ship is still afloat. The bartender is still serving drinks. People stand around and argue about politics. The music is still playing. It's easy to forget that the ship is sinking."
-Bill Bonner, The Daily Reckoning

NEW YORK (AP) -- Stock futures rose moderately Thursday after a drop in claims for unemployment benefits relieved some worries about slowing economic growth.

Weekly jobless claims fall for the first time in a month, and worries about slowing economic growth are dashed? Of course, they must be joking. Or rather stroking the fractured confidence of American investors. Let's see now...

Tuesday we got the "unexpected" drop in existing home sales. Home resales dropped a record 27.2%--nearly twice as much as analysts had expected--to an annual rate of 3.83 million in July, the National Association of Realtors said Tuesday. Meanwhile, inventories rose to 12.5 months from 8.9 months in June, pressuring already depressed home prices. Inventories are at their highest level in more than a decade.

Wednesday we got the "unexpected" drop in new home sales. Sales of new homes dropped to their lowest level since the government started tracking the numbers more than four decades ago, offering an ominous sign for the direction of the already fragile housing market. New homes sold in July at an annual rate of 276,000, off 12.4 percent from June's pace while plummeting 32.4 percent from a year earlier. That's the lowest level since 1963.

Toss in a weaker than expected durable goods orders number just to make things worse, and I'd have to conclude that worries about slowing growth are more than justified. Excluding a 13.1% gain for transportation equipment, durable orders fell 3.8% in July, the biggest drop since January 2009.

There is no recovery, never has been. The recession [er, depression] has just continued to grind along. Two Trillion Dollars has been spent by the US Government to give the ILLUSION of a recovery. The money would have been better spent if it were stuffed in a rocket, and shot at the Moon. And least when the price of Gold gets there, it would have made it easier to cash in.

That the recovery is a failure is continually reported as "unexpected" is alarming. How can the results be unexpected. The economy collapsed because of excessive debt. Only a fool would believe that it could be repaired by adding even more debt to it. Without a doubt the dumbest expectation was that an $8000 tax credit for home buyers was going to turn the housing market around. It has only made the housing market worse.

Everything the government and the Fed has done to pump up the economy has only made the economy worse. Many warned that this would be the result...the same people that warned the housing market was going to implode. Nobody listened to the warnings in 2007, fewer listened to them in 2009. You can pump blood into a corpse 24/7, but a corpse is still a dead body no matter how fresh the blood.

America as we once knew her is finished. It is time for revolutionary change. It is time to end the Fed and purge the Treasury. It is time to clean The House, and reorganize the Senate. It is time to banish Wall Street from Washington, and re-establish the US Constitution as the law of the land.

18 Signs That America Is Rotting Right In Front Of Our Eyes
Sometimes it isn't necessary to quote facts and figures about government debt, unemployment and the trade deficit in order to convey how badly America is decaying. The truth is that millions of Americans can watch America rotting right in front of their eyes by stepping out on their front porches. Record numbers of homes have been foreclosed on and in some of the most run down cities as many as a third of all houses have been abandoned.

Unemployment remains at depressingly high levels and the number of Americans on food stamps continues to set new records month after month. Due to severe budget cuts, class sizes are exploding and school programs are being eliminated. In some areas of the U.S. schools are even going to four day weeks. With little to no funding available, bridges are crumbling and street lights are being turned off in many communities.

In some areas, asphalt roads are actually being ground up and turned back into gravel roads because they are less expensive to maintain. There aren't even as many police available to patrol America's decaying cities because budget problems have forced local communities across the U.S. to lay off tens of thousands of officers.

Once upon a time, the American people worked feverishly to construct beautiful, shining communities from coast to coast. But now we get to watch those communities literally crumble and decay in slow motion. Nothing lasts forever, but for those of us who truly love America it is an incredibly sad thing to witness what is now happening to the great nation that our forefathers built.

The following are 18 signs that America is rotting right in front of our eyes....

In a stunning reversal of fortune, the CRIMEX Rat Bastids were grabbed by their tiny balls the past three days and squeezed to near unconsciousness. With options expiration on the horizon, and the CRIMEX goons lining their ducks up in a row for a killing, a sudden flash surge in buying appeared Tuesday morning and continued unabated until mid-day today as options expired.

With average Gold strike prices at $1200, and Silver at $18, the CRIMEX Rat Bastids are severely underwater as options on the Precious Metals expired this afternoon far into the money. Could we be a step closer to a CRIMEX default in Silver as traders stand tall to take delivery in September? Time will tell. It will take millions in premiums from the bullion banks to coerce option holders to roll forward into November, and fore go delivery in September. With so little Silver available now, who would chance a delivery 60 days from now?

Jim Willie had this for his subscribers on August 22:


Last night in a conversation with Harvey Organ of The Daily Gold and Silver Report Jim Willie offered this:

Had a conversation with the erudite Jim Willie this morning. His sources tell him that the Chinese and Arabs are going after the gold and silver markets in London … with buying sprees every ten days. If so, the prices of gold and silver ought to go parabolic in the months ahead and probably much sooner. There is no way the LBMA crowd can cover their Ponzi-like fractional gold/silver exposure. If they have sold the same gold and silver to many multiples of parties, as we think they have, the LBMA bankers are going down … should the Arabs, Chinese, or anyone else be going after their physical holdings. They will be doomed. Jeff Christian will have to go into hiding.

David Morgan had this to say about this week's surprising action in silver:

David Morgan of The Morgan Report (www.silver-investor.com/) today posted 100 seconds of video commentary about this week's surprising action in silver, which has defied the usual pounding down of options expiration week and seems to him to be massive new buying rather than short-covering.

The CRIMEX Rat Bastids today successfully kept Silver from closing a second day in a row above 19. Silver closed at 18.97, and left the Rat Bastids gasping for air. Gold was stopped in it's tracks as it briefly vaulted key resistance at 1240 this morning, and closed at 1235.80. These are extremely powerful moves this week in the face of options expiration. Clearly the rumours of physical bullion supply shortages in London and New York are now being bought as fact.

As increasingly bearish fundamentals pile up on the US Dollar, Precious Metals investors are stepping forward to take possession of physical bullion before there is none left to scoop up. Tomorrow morning at 8:30AM the government will release the revised second quarter GDP number and it is expected to fall up to a full 1% from the 2.5% estimated late last month. A fall in GDP below 2% could launch a cascade in the bond market, and put to rest once and for all the fallacy that US Debt is a "safe-haven". If just 10% of the bond market moves into the Precious Metals, the bullion banks will be destroyed, and the US Fed left without a leg to stand on.

We can not rule out a retest of the $18.50 breakout in Silver before Silver moves higher from here. However, should Silver continue higher from here and crack $19.60 next week, the sky may well be the limit going into a potential September CRIMEX Silver default. Gold is poised to test the recent nominal highs near $1265. Should this occur, it will only add fuel to the Silver Bullet aimed at the heart of the CRIMEX.

Silver Prices Now Rising Faster Than Gold
By: Peter J. Cooper
August is usually a quiet month in the precious metals market but this month is different. Silver has started behaving 100 per cent like a precious metal and not as an industrial commodity, and while stocks and Dr Copper have been falling, silver has been outperforming gold which is also on the up.

What is going on here? This is actually fully consistent with the bullion market rumors about the bank cartel unwinding its silver futures positions in the quietest month of the year.

You would expect gold to be falling a little with stocks under pressure. It is not. And you would expect silver to be selling off even more strongly because it is an industrial commodity as well as a precious metal. But it is not.

Does that mean that the gold price is being set up for a serious spike, and that silver will not only follow but outperform in these fireworks? Without the ability to look under the hood of the silver market – and the suspicion is that the market supply is nothing like what the market supposes – we are still in the dark.

But spot the price breakout. Silver is above $19 this morning. Gold is closing on $1,250. If this trend continues then $1,650 gold by next February could well be accompanied by $30 silver.


Cancer & Desperation of QE2[MUST READ]
By: Jim Willie CB, GoldenJackass.com
The impact from the cancer and desperation of QE2, the next undermine of the USDollar (and other major currencies), can be seen in the price of Gold. Better yet, watch the price of silver, whose price movement has actually been leading gold upward. This week, for the first time in perhaps a decade, silver defied the industrial metals and economically dependent energy sector. Silver is money. Both copper and crude oil fell in price, but silver rose strongly. By the day's end, gold was pulled up by silver. And this happened on a week that features options expiration, which usually sees a strong naked short pounce by JPMorgan, of course to make America strong and liberty exportable. Witness the beginning of outright visible lost control by the syndicate.

Watch the Gold/Oil ratio, which is poised to rise noticeably. Gold is the commodity king, since money. The galloping recession will take down the crude oil price, as demand falls. The natural gas price fell 3% just today on Wednesday. Hedging against the USDollar risk aside, the energy prices have been weak. By contrast, the gold price has risen from direct demand in response to monetary system risk and lost confidence in that monetary system. The global revolt against the USDollar continues quietly. The government bonds are gradually being considered trash backed by yet more bad paper dispensed by government approved printing houses. My analysis has long pointed to the advantages of silver over gold. Gold fights the political wars, but silver rides in on a shiny white glowing horse to win most gains. The supply factors favor silver. The demand factors favor silver. The shortage is acute for silver.

Again, basic economic thought process not within the mental caverns of US economists. The desperate action to launch QE2 will be quite evident in the coming weeks. It will even become a national priority. The bankers and politicians will rush to destroy whatever credibility remains in the USDollar, or any fiat paper currency. The challenge to banking leaders will be to conceal their desperation and panic. They have had no options or alternatives for almost two years, now painfully evident. The impact of the launch will be extremely damaging to the prestige of the USFed in general and Chairman Bernanke in particular. He has not understood much of any events, surely has proffered a string of errant views and obtuse forecasts. Witness the discredit of the central bank franchise system. Fiat paper money is dissolving before our eyes. Notice the assaults on sovereign debt in Europe, a trend which will hit the US shores, all in time. Economists do not expect it, since the American bankers possess the Printing Pre$$. They will be blindsided by Gold, which pulls the carpet from under the US$-based foundation inside its very structure. The Gold bull market will outlast the USTreasury Bond bubble run. The key word to be heard in the next few months will be CONFIDENCE, as in the absence of it when viewing the US financial helm.

The Powerz in charge will choose inflation over any combination of reform, restructure, and replacement of the helm. A recovery could have possibly been in our grasp, maybe in the future after much pain from adjustment. Unfortunately for the bankers in unchallenged power, the respect, prestige, and faith in the US Federal Reserve will fade like a sea mist after the QE launch. Its christening will be done in deep shame with a bottle of acid. The level of respect is approaching rock bottom, the lowest in decades. Even Alan Greenspan expects slippage and sputters as the housing market resumes its powerful decline. The next recession for the USEconomy could very easily result in a USTreasury default. Scenarios for precisely such a default are mapped out in the August Hat Trick Letter.

Gold & Silver are entering the most favorable season of the year, autumn. Big gains should be expected. Signals are omnipresent for substantial price gains. Shortages exist and are profound. Demand is on the strong rise on a global basis. Lost confidence and faith in the fiat paper system is slowly vanishing. It would be nice to see the investment community add to positions and put on new positions before the breakout, not afterwards, and be more successful. The return of the USEconomic recession and the simultaneous QE2 Launch will mark a major turning point for gold & silver. Fear is on the rise. The precious metals offer an alternative to conventional nutball strategies, a successful one. Check out the track record for gold, the best asset in the 1990 decade. That fact is not mentioned or cited much by the financial press networks. Their sponsors object.

Few May Imagine What Is Coming
Rick’s Picks forum contributor Steven George Fair
To a more direct point. Even the supposed perma-bears of today run helterskelter, seeking profit and gain first in that, and then in this, with no long-living devotion to any belief. Most current Bears do not care about fundamentals and history. None seem to care whether or not they are playing in a AntLion hole from which they will never escape. The greed of gaining the last drop of blood from the dying carcass of both bears and bulls is foremost on the heart of the young and younger. No person not directly from a Great Depression family is prepared for what will come. That means that unless your parents where born no later than 1920, you cannot have any basis to form an understanding for the potential pain of a real collapse.

Tuesday, August 24, 2010

Mr. Obvious Hands A Blind Squirrel A Nut

"The country cannot recover until the only thing politicians stimulate is demand for new economic leadership."
-Peter Schiff

Gold hits 1-week low on weak equities, firm dollarninemsn 24-Aug-Tue

Gold Drops for Third Straight Day as Dollar's Gain Pares Investment DemandBloomberg 24-Aug-Tue

Gold retreats on rising dollarMarketWatch 23-Aug-Mon

These headlines are a load of crap. Gold is "weak" for obvious reasons, the headline writers just don't want you to see them.

Mr. Obvious dropped a note in my email box this morning to remind me that options and futures on the Precious Metals expire on the September contracts this Thursday and Friday. Hey, even a blind squirrel finds a nut occasionally. But that doesn't mean a blind government regulator will stumble across a commodity manipulation even once in his career.

It would appear that every effort will be made to contain Silver under $18, and Gold will be pushed under $1200, for the balance of this week. Certainly, by now, we understand this is done to steal the profits of legitimate traders in the Precious Metals, and protect the bullion banks from the devastation of having to scramble to find bullion to meet delivery demands of those whose contracts might close the month in the money.

This is the BS that occurs EVERY month because our blind government regulators REFUSE to stop these bullion banks from selling Gold and Silver contracts without the Gold and Silver to back them up. I am convinced the CFTC regulators sit idly by chuckling at the stupidity of Precious Metals traders asking themselves, "If they know the markets are rigged, why do they keep doing business with these crooked banks?"

Well if these lard asses would step up and do their jobs, there would be no crooked banks. But this theory does raise an interesting thought. Why do Precious Metals traders do business with these crooked banks? Because they are traders, and NOT investors. Investors buy physical bullion to own, not trade. Investors should thank these foolish traders, and crooked banks for making available the penultimate vehicle to dollar cost average an investment.

Think about it... Despite every effort by the banks to halt the rise in the "price" of Gold, the have completely failed. Imagine the opportunity for the savvy investors that has been presented EVERY month to buy Precious Metals on sale, and add them to their hoard. It's time to quit bitchin, and buy, buy, buy at the end of every month. And don't forget to send a thank you card to Gary Gensler at the CFTC. Of course make sure it is a card written in braille.

China Swallows Obama Stimulus Meant for U.S. Economy
By Andy Xie
American pundits, Nobel laureates included, are predicting Japan-style deflation for the U.S. and Europe. They are urging the Federal Reserve to pursue another round of quantitative easing to stop the onset of an Ice Age for Western economies. The Fed didn’t oblige at its last meeting, but it threw a bone to the deflation crowd by promising not to pull money out of its previous round of asset purchases to stimulate a recovery.

On the other side of the world, consumer prices are surging. Emerging markets as a whole now have an inflation rate of more than 5 percent. India is registering price increases of more than 13 percent. China’s are more than 3 percent. But it surely feels a lot higher for average Chinese.

The emerging markets are on fire.

Deflation prophets in the West are in for a rude awakening. Eastern fire will turn Western ice into a mess, and 2012 looks like it will be the year of melting. The fuel for the fire is coming from deflation-fighting stimulus programs, such as that of U.S. President Barack Obama.

Stimulus is prescribed as a panacea for recession. In today’s global economy, it isn’t effective in the best of circumstances and is outright wrong for what ails the West now.

Trade and foreign direct investment total half of global gross domestic product. Multinational corporations drive both. They shop around the world for the lowest-cost production centers and ship goods to wherever the demand is. Demand and supply are dislocated. So when a government introduces stimulus, the initial increase in demand doesn’t necessarily boost local supply. More importantly, if multinationals decide to invest somewhere else, there wouldn’t be an increase in jobs to sustain the growth in demand beyond the stimulus.

Just as water flows down, stimulus affects low-cost economies more, wherever it is initiated. As the West pours money into the global economy through large fiscal deficits or central banks expanding balance sheets, the emerging economies are drowning in excess liquidity. Everything is turning red-hot.


Huh? No Inflation?
Dave Kranzler, The Golden Truth
So I decided to update some prices of select everyday commodities - the kinds of goods that the Government conveniently overlooks when calculating its PPI/CPI metrics. This should be eye-opening: measured over the last 12 months, prices of all these items have increased by: copper 37%, corn 35%, pork bellies (bacon anyone?) 350%, cotton 74% and heating oil 33%.

Let's be clear about one thing. The true definition of inflation is not higher prices of assets, goods and services. Prices in the system that we observe and experience are nothing more than the manifestation of the underlying cause, which is currency devaluation from an increase in the money supply in excess of a country's real economic output.

Another way to look at the devaluation of the dollar is to measure it against the price of gold. After all, up until FDR did his magic in 1933, anyone could exchange their dollar bills for gold or silver at the Fed "window." In 1971, when Nixon completely shuttered the gold window, thereby completely unleashing the dollar from its tether to to gold, the price of gold was $35.

...the price of gold has increased 3500%, or the dollar has lost 97% of its value since 1971. Again, try to think about the long term affects of this insidious, long term devaluation of the dollar. My parents bought the home I grew up in 1969 for about $45k. The last sale I heard about around the peak of Denver real estate was $450,000. Given the devaluation of the dollar vs. gold, they would have been much better off taking that $45,000 and buying gold and renting.

Let's tie this back to the opening comments about the surprisingly large 12 month price increases in basic commodities. I would argue that a significant portion of the money that the Fed/Treasury has printed and injected into the system since the credit crisis of 2008 has flowed into commodities. This would be a natural place, besides gold and silver (up 31% and 37% respectively over the last 12 months), for printed money to flow into, as they represent consumable, depletable goods which have value to everyone and could ulitmately be used in a barter system if/when the dollar is ultimately rejected as a medium of exchange. Are you better off holding gold, silver and select commodities or holding paper dollars backed by a Government that would be insolvent if it weren't for its ability to use the printing press?

Silver Velocity- The Coming Bullet
Uniquely silver has been in a multi-decade imbalance between annual "production" and demand from industrial, jewellery and investment. Ted Butler of Investment Rarities Incorporated has become the most ardent silver analyst and has done extensive research into the issues of dwindling stockpiles. His well documented research extended into the leasing market and the existence of huge short positions on Comex (namely among a few large bullion houses) that have been allegedly used to manipulate the price of silver lower for benefit of the "users". This supply of paper silver has undoubtedly arrested the rise in the price of physical silver bullion, as there would appear to be a structural imbalance in supply vs demand, which can only be resolved by a much higher increase in price in order to encourage ‘normal’ free market forces of supply and demand to interact.

The world annual silver mine output is approximately 650 million troy ounces (average of last decade), with about another 180 million ounces from recycling, and possibly another 100 million ounces from selling from other sources. Industrial consumption is almost 45%, jewellery consumes about 25%, photography is down to about 15%, leaving 15% for investor demand. Investors buy about 100 to 150 million oz. of silver per year, which is barely $2 billion. Yet the BIS estimates that most all of the worlds' banks have $200 billion in ‘other precious metal’ (i.e. silver) notional value worth of derivatives on the books. This seems somewhat incongruous with the lack of supply. It tends to point to a potentially more sinister occurrence.

In July to November 2008 silver net US bank shorts rose from 9% to 99% of the Comex commercial net short positions in one shot. Equal to some 27,000 contracts or 30mm tr.oz of silver sold, just prior to a 50% plus collapse in the silver futures price. The issue we and others in the market have with this egregious positioning is that it was concentrated between two commercial banks. Flip such a position around to the long side and regulators would be screaming ‘blue murder’ and accusations of market manipulation and market ‘cornering’ would be rife. Remember Bunker Hunt.

The two commercial banks held 140% of annual mine supply in OTC positions. These two bullion banks dominate the OTC silver market. They range in concentration from 85% to 100% at any one time.

Unwinds of these positions would require more silver than is readily available and will lead to much higher prices as sellers are sought.

The manipulation of this small market has led to low prices whilst a structural imbalance of some note has been growing.

“What’s unique to silver is that it has been in a deficit consumption pattern for more than sixty years, with very low prices over most of that time. That would be impossible for any commodity, except that it has actually occurred in silver. But the very reason it has occurred in silver is the reason I think silver is the best thing to own”.
Theodore Butler, Investment Rarities , first mentioned in 1998

The laws of supply and demand dictate that when there is a chronic production shortfall, inventory can only be bid away at higher, not lower prices. Ted argues that most of the inventories consumed over the last 60 years came from government holdings. This amounted to a stupendous 6 to 10 billion ounces, some 100-150 million ounces of silver each year for 60 years. So lets put this in perspective it took 5000 years to accumulative these stockpiles and in sixty, they have gone. Above ground silver is rarer than gold….

As Ted Butler describes it, to look ahead 50 years, it would be appropriate to look back fifty years to gain a sense of perspective. Half a century ago, at the end of World War II, total known stocks of silver amounted to ten billion ounces (with the US government holding 4 billion ounces of that total amount). At that time, we were just entering an era of unprecedented global economic expansion that has lasted to the present. In this era, silver was consumed in a variety of vital modern applications at a phenomenal rate. Today, known stocks of silver have shrunk over 95%, to maybe a half a billion ounces. The nine and a half billion ounce drawdown in total silver inventory, was the result of the persistent shortfall between supply and demand, which continues to this day. Not coincidentally, the current 150 to 200 million-ounce annual deficit in silver mirrors the long-term trend line average. This continuing deficit is remarkable in that there has been decent growth in world production of silver over the past 50 years, but obviously not enough to satisfy the surge in industrial demand.

Fast forward towards the end of 2008 and the seizing up of the financial system saw base metals plummet in value. This was down to a combination of deleveraging and lack of available financing for mining companies. Those encumbered with too much debt and ailing commodity prices had to curtail their current mining operations, in some cases to bare minimums, whilst shelving large capital expenditure projects which would bring on new supply in years to come. As over two thirds of silver production occurs as a by-product from copper, zinc and lead mining, silver mine supply into the future has been stymied.

2009 saw such a swift turnaround in copper prices that silver production was a record 709 mm troy ounces. This was 25 million ounces higher than in 2008 and arguably would have been higher had it not been for the crisis. But this is a moot point as we have just outlined. It took thousands of years to build up ten billion ounces, so to create a current surplus of over 2% does not appear feasible with the supply demand imbalance we have. We will caveat; it is exceedingly difficult to ascertain the true levels of inventories, and there is always disparity on the numbers depending on which data collector you converse with. However as can be seen below inventories remain exceedingly low, irrespective of whose data one observes.

Silver inventories have only turned up as assessed by CPM group, because they have included Silver ETFs, such as iShares SLV. This seems odd, as these inventories already existed, and were merely ‘transferred’ into these vehicles.

In a nutshell- for many decades the world has consumed more silver than it has produced. That has necessitated a draw down of previously produced silver - the existing inventories. There has never been a situation in any commodity where such conditions have failed to cause a dramatic price increase.


Big Autumn Silver Rally 2[informative reading]
Adam Hamilton, Zeal Intelligence LLC, Zeal LLC
Silver has been drifting in a rather lackluster summer. Ever since surging to $19.50 in mid-May, this often-popular white metal has been grinding sideways to lower. By late July it had fallen over 10% to about $17.50. But despite silver’s recent excitement-bereft sojourn, it actually has excellent potential for a big autumn rally in the coming months.

The primary reason is gold. Since the early 1970s, silver has closely followed and sometimes amplified the price moves of the granddaddy of precious metals. Over the vast majority of this decades-long span, silver has been nearly perfectly statistically correlated with gold. When gold is strong, traders flock to silver. And when gold is weak, they abandon its smaller cousin. In hard technical
price-chart terms, there is no doubt at all that silver is a derivative play on gold.

Of course autumn is typically an excellent time of the year for gold, and therefore for the whole precious-metals complex. Big
seasonal factors converge which tend to seriously ramp up global gold demand and hence gold prices. These include income-cycle drivers like Asian harvest, after which farmers invest some of their year’s surplus income in gold. They also include cultural drivers, like Indian wedding season where brides are adorned with intricate and expensive gold-jewelry dowries.

While the usual autumn gold rally is very bullish for silver, it certainly isn’t the only thing silver has going for it right now. This essay will explore those other factors, including silver technicals coiled like a spring and ready to launch as well as silver’s continuing undervaluation relative to gold. Even if gold somehow managed to languish flatlined this autumn, silver’s own intrinsic merits are exceptionally bullish today.


Monday, August 23, 2010

Waiting For The Dam To Burst

Anonymous said...
"I've never believed gold is a hedge against inflation (or any kind of 'flation for that matter.) It's a hedge against corruption and bad judgment."

As seen in the Wall Street Journal...
"Demand for U.S. government debt is so strong lately that not even an apparent slowdown in China's appetite for it can stop the rally in bonds."

What are they smoking over at The Journal? Pumpkin seeds? What a bunch of pumpkin heads! Bonds are rallying because the "issuers" are buying them. The greater fool theory is working overtime in the US Treasury markets. You've got to be a fool to be buying into this Mother Of All Bubbles.

It is abundantly amusing how a rally in America's debt is being painted by the US financial media as positive for the economy.

"Houston, what problem? This debt is selling like Chinese hand fans on a hot humid day along the Gulf Coast."

Looking further through The Journal, we find a couple of reporters that have skipped a dip in the punch bowl:

The Great American Bond Bubble
If 10-year interest rates, which are now 2.8%, rise to 4% as they did last spring, bondholders will suffer a capital loss more than three times the current yield.
Ten years ago we experienced the biggest bubble in U.S. stock market history—the Internet and technology mania that saw high-flying tech stocks selling at an excess of 100 times earnings. The aftermath was predictable: Most of these highfliers declined 80% or more, and the Nasdaq today sells at less than half the peak it reached a decade ago.

A similar bubble is expanding today that may have far more serious consequences for investors. It is in bonds, particularly U.S. Treasury bonds. Investors, disenchanted with the stock market, have been pouring money into bond funds, and Treasury bonds have been among their favorites. The Investment Company Institute reports that from January 2008 through June 2010, outflows from equity funds totaled $232 billion while bond funds have seen a massive $559 billion of inflows.

We believe what is happening today is the flip side of what happened in 2000. Just as investors were too enthusiastic then about the growth prospects in the economy, many investors today are far too pessimistic.

The rush into bonds has been so strong that last week the yield on 10-year Treasury Inflation-Protected Securities (TIPS) fell below 1%, where it remains today. This means that this bond, like its tech counterparts a decade ago, is currently selling at more than 100 times its projected payout.


Certainly investors are right to be pessimistic, but this "rush to safety" in the bond markets appears to be more about desperation in a dire economy than about being overly pessimistic. Investors seem to be grateful for an opportunity to "limit losses" on their capital in the bond market, than see them waterfall in the equity markets.

When inflation rears it's monstrous head here in the USA, the run to the exits in the Treasury markets will be akin to screaming fire in a packed movie theater. Previous losses in the stock market will look acceptable when this bubble finally bursts.

Were it not for the constant disinformation spewed by the financial media and money managers about Gold, investors would know exactly where they should be running for cover when they are scared.

"Gold is a hedge against Inflation, but there is no Inflation, you don't need to own Gold."

"Gold prices will fall with everything else if there is Deflation, you don't want to own Gold."


And look here, another story in The Journal. Wow, the Journal is full of contradictions...a certain sign of uncertainty in the economy.

Rethinking Gold: What if It Isn't a Commodity After All?
For a long time, we've all heard that gold is a commodity—no different, really, from silver or wheat or pork bellies. Its price ebbs and flows (supposedly) with inflation, which historically drives commodity prices.

Odd, then, that gold's elevated price hasn't fallen in response to tepid U.S. inflation numbers. The Consumer Price Index as of July pegged inflation at just 1.2% for the previous 12 months, not counting seasonal adjustments. Nor has gold reacted to what Mohamed El-Erian, Pimco's chief executive, recently called "the road to deflation" on which he sees the U.S. traveling.

Data show that gold closely mirrors the movement of the U.S. dollar. The conventional wisdom holds that neither of those scenarios—low inflation or deflation—should be good for gold. And yet it refuses to abandon record highs in the $1,200-an-ounce range. Something seems amiss.

The implication is that gold isn't a commodity—at least not one that hews to the definition of something that people and industry consume.

Instead, "gold is a currency" whose daily price is a gauge of the market's concern about the "potential diminishment" of the purchasing power of the dollar and other paper currencies, says Paul Brodsky, a principal at New York's QB Asset Management.

If he is correct, it is the potential longer-term weakening of the dollar that is the real issue for the gold market, not inflation or deflation.

Some will note rightly that gold's record spike came amid the last great inflation surge. Those folks might be misreading the tea leaves.

Gold's four-year rally beginning in summer 1976 happened amid a four-year dollar decline. When the dollar bucked up at the end of 1980, gold prices retreated. Inflation was more of a sideshow than a driving force.

The question, with gold hanging around the $1,200 level, isn't "Is gold in a bubble?" as so many are asking. It's "What next for the dollar?"


What is next for the US Dollar. Perhaps the #1 man in charge of manufacturing those Dollars over at the US Federal Reserve can shed some light on the US Dollar's future. Unfortunately, any comment he might have of the Dollar's future will most likely be a bad guess as "Often Wrong" Bernanke proves here with a montage of comments on the US Economy.

Bernanke: Why are we still listening to this guy?[if you need a great laugh today]
This video should make people think twice about listening to anything that Chairmen of the Fed Ben Bernanke says. It's a compilation of statements he's made from 2005-2007 that will have you 100% certain America is doomed if we continue to value what this moron says.

Instead, they indict Roger Clemens for lying to Congress? Who has he hurt?

November is coming...

What Problems Lie Ahead for the U.S. Dollar?
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch - GoldForecaster.com
Quantitative Easing is a technique the Fed used to fill the holes that the credit crisis created. Writing down of assets is essentially a reduction of money in the system. The consequences of this in the banking system meant that money disappeared off bank balance sheets and reduced their lending capabilities. The actions of the Fed allowed the money that disappeared to reappear again. It works nicely if the banks keep on lending. But if they don’t the exercise is fruitless as they protect themselves by not lending, but investing back in government bonds instead.

That’s happening today, because instead of lending money, banks are investing in Treasury and Agency securities. Their holdings of such assets increased to $1.57 trillion at the end of July, up 40% from $1.12 trillion in mid-2008. The government is borrowing in a rush, to shore up its deficit, growing fast at the moment. The projected 2010 deficit of $1.47 trillion will be a record, and equivalent to 10% of the economy. China and most other people expect such a growing deficit will lead to a significantly weaker Dollar.

At worst, such a prospect has the potential to deter foreign investment in the U.S., shoving up interest rates. If the U.S. Dollar Index falls below 80 [this Index measures the Dollar against a basket consisting of the Euro, Yen, the Pound Sterling, the Canadian Dollar, the Swedish Krona and Swiss Franc], the Dollar will fall quickly and heavily and further discourage investment in Dollar assets.

The longer the government delays in stimulating the U.S. economy again, the bigger the amount of new money needed to reflate the economy. As an economy deflates, money velocity slows and consumer attitudes become more and more thrifty. This makes efforts to return the economy to growth harder and harder. A fair analogy would be to compare the situation to retrenching an employee. To bring confidence and hope back to previous levels, two employees must be hired. The longer it takes to fire up the economy, the greater the stimuli needed to do so. Experienced investors are expecting new stimuli to lead to explosive inflation because the change from deflation to recovery becomes more and more mercurially uncontrollable the longer it is delayed.


Bust It! The Legend of George Soros
Warren Bevan
While researching the GLD perspective some time ago I found that what’s
termed a “basket” can in fact be redeemed for physical bullion. A basket
consists of 100,000 shares.

That only equals $12 million as of Friday. So the new investor, Eton Park,
could in theory redeem 66 baskets. Each basket would remove 10,000 oz of
physical gold from the markets.

Now here is where my thinking takes a twist.

George Soros is smart. In fact much smarter than he lets on when talking
about his investments. He usually talks on the first level, and thinks much

He’s busted currencies before, namely the pound in the Black Wednesday
ordeal in 1992.

What’s Gold?

Gold is the ultimate and only enduring currency.

He knows what GATA, and my readers know. Gold is traded on a
fractional basis which means real physical supply is much less than the amount
of paper Gold traded.

If he were to, or even threaten to, cash in his 52 baskets (5.2 million
shares) it would spark other large GLD investors to do the same.

That amount of gold redemption simply could not be handled. Prices
would shoot markedly higher in a nano-second and he would have effectively
busted the central bankers of the world along with gold depositories and Gold
futures exchanges.

It would be the stuff of legends and be told for many generations to
come. He would have left one of the more enviable marks in the books of
history. He is not getting any younger and I am sure he ponders what his
legacy will be.

Could this be his final sensational act?


The World Won't Flock to Paper
The National Inflation Association
On July 28th, NIA released an article entitled, "Gold and Silver Capitulation is Near". In this article NIA said, "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." It turns out that July 28th was the exact bottom for gold and silver prices. Since then, gold prices have risen 12 out of 15 days for a gain of 5.8% and silver prices have risen 11 out of 15 days for a gain of 5.2%.

It was just announced that China cut their long-term U.S. treasury holdings by $21.2 billion in June to $839.7 billion, their largest cut in U.S. treasury holdings in history. China's holdings of U.S. debt are now at their lowest level in a year. Meanwhile, China has more than doubled their holdings of South Korean debt. It speaks volumes that things have gotten so bad in the U.S. that China sees the need to diversify out of U.S. debt to buy the debt of a third-world nation.

China just surpassed Japan as the second biggest economy in the world and is now stepping up its efforts to internationalize the yuan by allowing foreign financial institutions to participate in their interbank bond market. This is being done as the Federal Reserve begins to once again monetize our debt with the purchasing of $2.551 billion in U.S. treasuries. At this time last year, mainstream economists thought that the Federal Reserve would be exiting its low interest rate policy by now. The truth is, it will be impossible for the Federal Reserve to ever raise interest rates to a level that is higher than the real rate of price inflation.

It is unbelievable to us that most mainstream economists believe that deflation is the biggest threat facing the U.S. economy. In order to believe that U.S. deflation is possible, you need to believe that the U.S. government will default on its national debt and Social Security obligations and that the U.S. dollar will rally in the process. In our opinion, there is zero chance of the U.S. government formally defaulting on its debts and Social Security obligations when it has a printing press. But for conversation's sake let's say the U.S. outright defaults and refuses to pay its debt. Why on earth would the U.S. dollar rally in the process? Why do deflationists believe the world will flock to the safety of paper? Look outside, unless you live in a desert, you will see plenty of trees.

During the Great Depression, the U.S. experienced deflation because the U.S. dollar was backed by gold. As the rest of the world defaulted on their debts, they flocked to the dollar as a safe haven because the dollar was gold, not paper. The deflationists like to point to the financial crisis of 2008 when the U.S. dollar rallied as asset prices collapsed, as an indication that the world believes paper is a safer asset than gold. Clearly in 2008, the markets acted irrationally. There is very little chance of the markets acting irrationally in this same way again, especially when the financial crisis of 2008 is still fresh in investors' minds and most people on Wall Street mistakenly believe the dollar will rally.

The markets usually act in the exact opposite of the way most people think. Just like we knew gold and silver were at or near a bottom on July 28th because everybody had become negative, we know that precious metals will be the safe haven during the upcoming fiscal crisis, because most people today feel that U.S. treasuries are the safest asset. The U.S. is currently experiencing the greatest bubble in world history, the U.S. bond/dollar bubble. When this bubble bursts, real unemployment will rise back to Great Depression levels of 35% because our nation's number one employer, the U.S. government, will no longer have the resources to pay its employees.


The Precious Metals continue to maintain a stealthy position of strength as the summer doldrums drag on. Friday appears to have been pure profit taking on the recent run-ups off the July lows. The failure of Israel to bomb Iran's nuclear power plant off the map also may have lead to a small lightening of Precious Metals positions ahead of the weekend. With options expiration just ahead, we can surely expect more volatility in already these already volatile Precious Metals markets. Continue to sit tight, and be right. Price weakness is a gift, and should be rewarded with physical purchases for your portfolio.

Thursday, August 19, 2010

Raising Cheating To A Whole New Level

The bullshit in the Silver market at the CRIMEX is about to reach a crescendo. The blatant efforts to stifle Silver at 18.50 now reach beyond the absurd. That this completely ILLEGAL activity is allowed to persist only proves the importance of Silver in the dynamic of the fraud known as fiat currency, aka: The US Dollar. An explosion in the price of Silver will trigger an implosion in the US Dollar. There can be no doubt now. Gold may be the nuke that can overwhelm and silence the US Dollar, but Silver is the detonator.

This is why Bear Stearns was wed to JPMorgan with the backing of the US Federal Reserve. Had Bear Stearns gone down in flames short Silver at $21 an ounce in the Spring of 2008, the US Dollar would have been destroyed along with the entire world fiat money system as Silver scorched a path to over $100 an ounce. It is so obvious now... Who has the biggest ILLEGAL short position in Silver? JPMorgan. Who is the long arm of the US Federal Reserve? JPMorgan. Who has the largest derivatives position in the World? JPMorgan.

Launch Silver, destroy JPMorgan. Destroy JPMorgan, destroy the US Federal Reserve. Destroy the US Federal Reserve, save the USA.

September is the next delivery month in Silver, and there is no Silver to meet delivery demands from the previous three delivery months: March, May, and July. If there was Silver, $18.50 would be dim in our rear view mirrors. Because it remains a wall only confirms the corner the CRIMEX finds itself. And when Rat Bastids are cornered they raise cheating to a new level, but cheaters never prosper.

Buy Silver while you still can. It is about to disappear, along with several bullion banks. And ultimately, the US Federal Reserve.

The Failure of the Second London Gold Pool[MUST READ]
By Adrian Douglas
This article is a sequel to my article entitled “Gold Market is not “Fixed”, it’s Rigged” which is essential reading before reading this article. The previous article demonstrated that had a trader consistently bought gold on the London AM Fix and sold it the same day on the London PM Fix and repeated it every day from April 2001 through to today the cumulative loss would be $500 per ounce. Yet gold has been in a bull market during that time and a “buy and hold” strategy over the same time period would have returned a gain of $950 per ounce.

The London Gold Fix is conducted by the representatives of five bullion banks: HSBC, Deutsche Bank, Scotia Mocatta, Societe Generale, and Barclays. The “fix” is no longer conducted in an actual meeting but by conference call. The bullion banks’ representatives communicate with their trading floors and with each other during the conference call to find the clearing price at which all buying interest and all selling interest is balanced. When this price is determined the price is said to be “fixed”. This is exclusively a physical gold market activity. It is balancing the number of bars of gold for sale with the number of bars demanded for purchase at a particular price.

It follows that if buying and selling were matched at the AM Fix price but then the PM Fix price is lower, then significantly more gold is being offered for sale compared to demand at the time of the PM fixing. The trend of the cumulative intraday change in Figure 1 shows that the selling into the PM Fix is manipulative because it has consistently countered the primary trend of the market and has proportionately increased as the gold price has increased. The PM Fix is the target for manipulation (price suppression in this case) because it stands as the global bench mark price at which physical gold trading is done until the following AM Fix, -- that is, a period of 19 ½ hours each day.

Though the official London Gold Pool disbanded in 1968 when it suffered massive outflows of bullion trying to frustrate free market forces that were manifesting themselves as insatiable demand for the metal, someone is now operating, albeit covertly, a second London Gold Pool. However, what I will show unequivocally in this article is that this “Second London Gold Pool” is about to suffer the exact same fate as the first one did.

It looks like the demise of the gold price suppression scheme is very close at hand. Over the years GATA has uncovered a lot of anecdotal and circumstantial evidence that the Western central banks have been dishoarding gold at an unsustainable rate in order to suppress the price. This is the first concrete evidence that, just as GATA has long been predicting, the gold price is set to blow up because physical demand for gold is overwhelming the manipulators’ ability, or willingness, to provide it.

The result of the 1968 failure of the London Gold Pool to suppress gold was an appreciation of the gold price from $35 to $850 per ounce. A similar percentage today would carry gold to almost $30,000 per ounce. This is not a price forecast but an indication that when free market forces have been frustrated by market manipulation for a very long time, the equilibrium price can be many multiples of the suppressed price, and the rise is typically rapid when the suppression is overcome.

The opportunity to acquire bullion before prices go dramatically higher is disappearing fast.


Gold manipulation: Central banks are now in deep trouble
Alasdair Macleod, FinanceAndEconomics.Org
Central banks have routinely manipulated the gold market since the beginning of fractional reserve banking, but they have always eventually failed in their quest. This time there is circumstantial evidence that we could be on the verge of the most spectacular failure so far.

Physical bullion differs from other investment media because today there is no secondary market. Buyers of bullion are not speculators, or even investors: they take delivery, hoarding it from the market, and are not tempted to resupply it at any price. To some degree this loss from the market has been replaced by newly mined gold and scrap, but the size of the market is such that gold from these sources is now insufficient for hoarding demand. So when the bullion banks try to shake out the bulls, as they have recently, they may manage to reduce their short position in the paper markets; but the lower prices for bullion simply generates extra physical demand. The result is that the size of the paper market has become increasingly dangerous relative to the physical gold actually available.

A fascinating insight into this process is recorded in an interview of one of the leading American coin dealers, who described how the fall in the gold price in 2008 from $1,000 to $700 was the opportunity for hoarders to clean out the market. I quote:

“…all product worldwide disappeared. Within weeks the U.S. Mint was shut down. The Canadian, Austrian, and Australian Mints were all eight to 12 weeks back-ordered or shut down. The Australian Mint stopped taking any new orders in July or August for the rest of the year. The Rand Mint, for the first time ever, sold out of all its product. One wealthy Swiss businessman flew his own 747 there and cleaned them out.”

The interview, which is well worth reading in its entirety, can be found here. It is particularly apposite given the recent shake-out in the futures market, raising the question, how much physical disappeared in the process? Not surprisingly, the interviewee is also worried that rising prices will merely generate yet more demand; so the absence of a secondary market is crucial to understanding the problem facing central and bullion banks today.


Lies, Manipulation and Deception. – All for Naught.
Ian Gordon, longwavegroup.com
I’m just saying, there’s hanky panky going on in the stock market, which, I think, is being propped up by the people responsible for the American economy.

This is being done to reassure American investors, and there are lots of them, that at least, that measure of their wealth is not being eroded. But it’s not just the stock market that is being manipulated. Every official economic government statistic has been presented in the best light possible so as to convince the public that things are better than they actually are. I am convinced that the officials who run the US government, at least from a financial and economic perspective, Larry Summers, Robert Rubin, Ben Bernanke, Tim Geithner et al, are presenting dishonest data in an effort to revive the US economy, which is at least 70% dependent on the US consumer. These officials are trying to convince consumers that they will soon be able to live the life that they were living until 2007 brought them down to a dose of reality. That reality was debt doesn’t make you rich; in fact, eventually, it leads you to the poorhouse, which is the place, where many Americans are now, sadly, en route.

So, all the numbers, whether they are unemployment, GDP, housing starts and others are always presented in the most positive way. In many cases these numbers are adjusted more negatively in the period following their release, which just goes to show that the initial numbers
were bogus. Officially, US unemployment numbers currently stand at 9.6%. John Williams who tracks the US government numbers shows that total US unemployment, if you add in the short and long term discouraged workers is now 21.7%. (See shadowstats.com)

To some extent, we understand that governments must be the leading cheerleaders in economics and finance, because they have now become such big fishes in the economic pond. Every government, including the US government, now accounts for a significant portion of GDP, which means that their sole income to finance their economic participation must come via taxes. A strong and viable economy is necessary to finance this massive government involvement. Hence the perpetual “bullish government” speak on the economy, which maintains, “if you do well (the consumer), we’ll do well, because of the taxes you’ll pay us.”

When the last Depression hit after the 1929 stock market crash, government officials including President Hoover, were quick to acknowledge the dire straight of the US economy. In fact, in May 1930, President Hoover acknowledged economic depression, when he said to a delegation of US businessmen asking for government assistance, “Gentlemen you have come too late, the Depression ended 30 days ago.” Well of course the depression hadn’t ended, it had just begun, but at least the President was prepared to call it as it was.

Now, there’s no acknowledgement of the severity of the situation; there’s no word of ‘Depression’, only partial acknowledgement of the “Great Recession”, which has only been admitted to by the US press and never has been part of the parlance of present US government officials. These people would like to talk in more benign terms, using such euphemisms as “slowdown,” or “contraction,” which means that everything adverse in the economy is only temporary and we are all going to getrichagain in the not too distant future. Following a recent regularly scheduled meeting of the Federal Reserve’s Open Market Committee meeting, there was an admission that the recovery was laboring and its pace “likely to be more modest in the near term than had been anticipated.” This acknowledgement, “however weaselly the phrasing, that the recovery is losing traction, stoked immediate fears that, in truth, things are worse, maybe much worse, than the Fed perceives (to be kind) or is willing to admit (to be, well, realistic). Alan Abelson. Barrons, August 2010.


The Great American Disaster: How Much Gold Remains In Fort Knox?
by Chris Weber
Yesterday marked the 39th anniversary of the day when the US Government declared bankruptcy. Oh, they didn't call it that at the time. But what happened on August 15, 1971 was that the US defaulted on its promise to pay gold for dollars.

Before that day, gold was the legal linchpin of the world monetary system. Although every currency was defined in terms of the US dollar, the dollar itself was legally defined as 1/35th of a troy ounce of gold.

Since then, there really has been no center to the international monetary system. The "reserve currency" continues to be the US dollar. But there is no official definition of what a dollar is. Like every other currency, its value changes every ten seconds as it is traded on the global currency markets. It is a promise to pay nothing. Its value has been devalued for years. On top of that, enormous effort has since been put into the global currency markets: buying, selling, manipulating...none of which has caused anything productive to the world economy. Oh, sure, currency investing has made some of us rich, but is it really the same kind of wealth that, say, Steve Jobs has created with Apple?

After cutting that last tie to gold, there was no longer any discipline left to keep the value of the dollar steady. The US dollar of August, 1971 is as of 2009 worth just over 18 cents, according to the Inflation Calculator. Thus, in purchasing power, the dollar has lost over 80% in the past 39 years.

Only foreigners were legally able to turn in their US dollars and get gold from the US Government from 1934 to 1971. August 15 of that year closed off that last power of convertibility.

In 1934, gold was confiscated from US citizens, melted from coins into bars, and gathered over the next few years into a new storage facility at Ft Knox, Kentucky. After that, the official price of gold was raised from $20.67 to $35, a devaluation of the currency that was an attempt to inflate the economy out of depression. It didn't work, but what it did do was to attract more gold in one place than had ever been seen.

At a time when deflation was depressing prices for all assets, the drastic rise in the official gold price made people all over the world want to sell their gold to the US Treasury. For many years, $35 an ounce was higher than the market price, so foreign sellers got a bargain.

The peak amount of gold held in Fort Knox reached 701 million ounces of gold. This was in 1949. This amount equaled 69.9% of all the gold in the world; never before had so much gold been gathered in one place.

But soon after that, gold began to leave Ft Knox and was shipped to the foreign persons and institutions who ponied up their $35 in Federal Reserve Notes for each troy ounce of gold they wanted. At some point in the 1950s, $35 became too cheap a price for gold.

From then until 1972, at least 75% of official US gold left the nation in exchange for paper dollars which can be printed at will. However, I think the total amount of real gold which remains is even less. The exact amount that remains is now officially listed at 147.3 million ounces. From the peak, that is a decline of 79%.


China Greenlights Gold: The Secret and Not-So-Secret Plan
By Jim Trippon
What if you learned that China was about to push world gold prices much higher? Would you believe it? Would you act now?

I wrote last year that China had been secretly building its hoard of gold reserves. As a result it had suddenly become the world's fifth largest holder of bullion. This hush-hush process had been going on for six years.

Nobody was sure how China had managed to gather more than 1,000 metric tons of gold without alerting gold bugs worldwide. After all, any ordinary purchase through the IMF would become public almost immediately.

But that didn't happen.

Beijing said it had bought all that bullion quietly from Chinese mines. But gold-watchers at the Standard Bank said no. They believed that China had been buying gold through secret government channels from South Africa, Russia and South America. You will see why that matters today in just a moment.

Gold prices have ballooned by 34% since I first wrote about Beijing's secret gold hoard in April of last year. So what would happen in Chinese demand for gold rose even more dramatically?

Well, that's exactly what's about to happen. And it's not entirely a state secret this time.


Tuesday, August 17, 2010

Inflation Is Our Savior

Stock Futures Rise on Earnings, Economic Reports- AP
Stocks are set to rise after reports show a slight improvement in the weak housing market and wholesale prices rose for the first time in three months.

Producer-Price Increases Eases Deflation Concerns -Wall Street Journal
WASHINGTON—US producer prices rose for the first time in four months in July as the cost of raw materials increased, easing concerns that the economy could become so weak that it leads to deflation.

After inflaming fears of a deflationary death spiral for the economy, the financial news media has now taken to cheering a rise in inflation. Can it get any better than this? Core producer prices rose 0.3% vs the general concensus of 0.1%. Tiny numbers, but a substantial miss to the upside. Year over year core producer prices rose 1.5% vs the general concensus of 0.2%. This is a huge miss. Remember, "core" numbers are touted by the government and their fawning financial news hounds because they strip out the "volatile food and energy prices".

As I have noted recently, the "deflation scare" is all part of a public relations ploy by the government to justify and excuse rising inflation as we move forward in this economic crisis. The government and the financial news media have gone to great lengths to encourage consumers to "welcome" inflation as the savior of our economy...after all, inflation is what makes our economy grow, and if we want our economy to grow faster and avoid the deflationary death spiral, we must expect and yearn for more and bigger inflation. This is insanity!

A Precious Metals investor can only lick his chops at news like this. Inflation is what the Fed has denied for years and publicly fought against while stoking it behind the scenes. Now inflation will be cheered as the savior of our economy as it destroys it. How grandly American.

No wait, it appears that inflation has reared its ugly head to less cheerful response in other parts of the world.

India inflation eases to 10 percent on good rain
India's headline inflation eased to 10 percent in July as ample rainfall cooled food prices and the nation's breakneck industrial expansion returned to more normal levels, government figures showed Monday.

The better than expected inflation data -- coupled with June industrial production which came in at a 13 month low -- takes some pressure off the central bank, which has hiked key interest rates four times this year in an effort to tame spiraling prices.

June inflation was 10.6 percent. The government revised May inflation to 11.1 percent, up from a prior estimate of 10.2 percent.

The Indians don't sound so happy about inflation and are actually cheering a slowdown in industrial production. No wonder Gold demand is so high this year in India.

Bank of England Governor warns that Britons face higher inflation for longer
Figures from the Office for National Statistics showed a 3.4pc increase in the cost of food over the last year, with fruit being 10pc more expensive. The last year also saw a sharp rise in the cost of travel, which climbed an average 7.8pc.

Mervyn King, the Bank's Governor, voiced surprise that prices are higher than he had expected in a letter of explanation to the Chancellor George Osborne. While the overall consumer prices edged down to 3.1pc from 3.2pc in June, it remains above the Bank's own 2pc target, and the small decline will do little to ease the fear of some economists that a high cost of living will undermine Britain's fragile recovery.

There is no joy in England with regard to inflation it would seem. In England a high cost-of-living will undermine the economy, not save it. I wonder if that is because in England they don't rig the inflation numbers like the do here in the States. Clearly there is no rigging of the inflation numbers in India, they are flying high. But then if the government were honest about inflation here in the US, we would see it clearly above 8%. How much longer can America go on living this lie before the World Community turns it's collective backs on it?

Doubtless that after rising overnight again, the Precious Metals will be held in check by the not for profit sells on the CRIMEX in their never ending effort to mislead the public about our economy.

"Rising inflation? How can that be true, look at the price of Gold today, it doesn't tell us that inflation is rising..."

It laughable, and so predictable. The absurdity of it is appalling, and only goes to prove how small the Precious Metals Markets are in the entire in investment world. That a fraud like this can continue for has long as it has can only be attributed to the fact that there are just not enough eyes focused on it...YET...but that is quickly changing.

Harvey Organ's - The Daily Gold & Silver Report shines an ever brighter light on the fraud at the London LMBA and the NY CRIMEX:

There has been a big development with respect to the LBMA turnover figures.

Gold transfers dropped a huge 12.9% from the previous month and silver dropped an astronomical 32.7%

Here are the announcements and a commentary from Adrian Douglas and then I will explain what it means:

First the gold announcement from Reuters:

Fri, 13th Aug 2010 17:15

LONDON, Aug 13 (Reuters) - Gold ounces transferred between accounts held by bullion clearers fell 15.3 percent to a daily average of 17.6 million ounces in July from a month earlier, the London Bullion Market Association (LBMA) said on Friday.

The clearing statistics measure how much gold and silver are transferred on a net basis between the accounts held at the bullion clearers.

Based on an average fixing of $1,193 an ounce, 3.2 percent below the June average, value fell to a daily average of $21 billion. The number of transfers declined 3.2 percent to a daily average of 1,684.

Measured year-on-year, gold statistics were mixed. Ounces transferred fell 0.3 percent, but value jumped 27.3 percent and the number of transfers rose by 27.8 percent.

Ounces transferred in silver fell 32.7 percent to a daily average of 57.2 million. 'The substantial fall in silver ounces transferred, for the second month in a row, brought this measure to the lowest level since these statistics were first produced in 1996,' the LBMA said.

Based on a 2.7 percent drop in the average fixing price, the value of transfers fell to a daily average of $1.03 billion.

The number of transfers fell 12.9 percent to a daily average of 290. Measured year-on-year, ounces transferred fell 36.8 percent and value decreased 15.1 percent. The number of transfers fell 6.5 percent.


And now the commentary from Adrian Douglas:

Ounces transferred in silver fell 32.7 percent to a daily average of 57.2 million. 'The substantial fall in silver ounces transferred, for the second month in a row, brought this measure to the lowest level since these statistics were first produced in 1996,' the LBMA said.

With all the smoke billowing out of the physical silver market and a drain of silver inventory on-going at the Comex and JPM & HSBC reducing their shorts as shown by the Bank Participation report I can only interpret that this massive drop off in silver paper trading has moved to the physical market. Could it be that we have exposed the LBMA unallocated bullion fraud to the extent that investors are ceasing their business there on a massive scale? How otherwise could the trade suddenly decline to the lowest level since 1996? There is also a big drop off in paper gold trading. Could it be that the GATA exposure of the LBMA fraud has hit the bull’s eye? Only time will tell but if this is true that will not be very much time!


We have been following data from the LBMA for the past 8 years and generally volume is always increasing. The only explanation to such a huge dropoff in volume is the switch by

many players to obtain physical and not waste time with the paper gold or paper silver market. Thus the unallocated gold and silver is being converted into allocated gold/silver

and the 100:1 paper to physical is starting to put massive pressure on the cartel members.

That is why we are seeing massive amounts of silver and gold leave the comex. I can see two reasons for this:

1. customers are seeing the writing on the wall and do not wish to see their metal co-mingled with dealer inventory.

2. dealers are trying to provide some physical to their London brethren who are witnessing massive conversions of their customers from unallocated gold/silver to allocated metal.

Ladies and Gentlemen: this is very explosive and it can and will place both the LBMA and the comex with huge possibilities of default.(bank run)

There is nothing in this world like a bank run---there is nothing in the world like a gold rush. These two major events have never occurred together on any global stage.

However, when they do, it will make this current economic malaise tame in comparison!!.


"Protecting" the Precious Metals prices from the ravages of inflation may be job number one at the CRIMEX and LMBA, and when one considers where prices would be were it not for the "heroes of the zeros" it is clearly understood why they aid and abet the fraud of fiat currencies worldwide. John Williams at shadowstats.com notes the inflation adjusted prices of Gold and Silver below using the government's rigged numbers compared to honest inflation numbers:

Gold and Silver Highs Adjusted for CPI-U/SGS Inflation. Despite the June 28th historic high gold price of $1,261.00 per troy ounce, gold and silver prices have yet to approach their historic high levels, adjusted for inflation. The London afternoon fix, per Kitco.com of January 21, 1980 would be $2,382 per troy ounce based on July 2010 CPI-U-adjusted dollars... and would be $7,727 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars [all series not seasonally adjusted].

In like manner, the all-time high price for silver in January 1980 of $49.45 per troy ounce [London afternoon fix, per silverinstitute.org] has not been hit since, including in terms of inflation-adjusted dollars. Based on July 2010 CPI-U inflation, the 1980 silver price peak would be $139 per troy ounce and would be $450 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars [again, all series not seasonally adjusted].

Clearly, the barometers of inflation have been kept in ice water to cover up the 100 year fraud global central banks, lead by the US Federal Reserve, have perpetrated on the public via their fiat currencies. True Gold and Silver prices would expose this fraud for the entire world to witness and shudder at. The world economy folks, with the US Dollar as it's reserve currency, is ABSOLUTELY WORTHLESS.

Gold market isn't 'fixed'; it's rigged

Dear Friend of GATA and Gold:

Following research done by GATA consultant Dmitri Speck, GATA board member Adrian Douglas has studied the morning and afternoon "fixing" of the gold price by the major London trading houses and concludes that it is just as much a price-suppression mechanism as the London Gold Pool of the 1960s admittedly was.

"The more gold rises overnight in essentially Asian markets," Douglas writes, "the more it is sold down into the PM fix. This was exactly the modus operandum of the London Gold Pool but now it is being done covertly."

Douglas, publisher of the Market Force Analysis letter, continues: "Such a consistent manipulative effort would necessarily involve entities with access to large amounts of gold; this implicates central banks, as they are the only entities with large hoards of gold, and furthermore they have a motive for suppressing the price of gold, which is to hide their mismanagement and debasement of their national currencies. Further, the five bullion banks that conduct the fix would have to be complicit because by definition they are responsible for determining the clearing price on the fix, so they must be aware of the impact on price of the selling activities of the entity or entities offering gold in such large quantities that it causes such price aberrations. As the central banks do not trade themselves, it is more than likely that some or all of the banks involved in the fix also act on behalf of central banks. What is irrefutable from this analysis is that the gold market is not 'fixed'; it is rigged."

Douglas' analysis is titled "Gold Market Is Not 'Fixed,' It's Rigged" and you can find it at GATA's Internet site here:


And at the Market Force Analysis Internet site here:


CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

The Ecstasy of Empire[MUST READ]
Paul Craig Roberts, Infowars.com
Let’s get real. Here is what the government is likely to do. Once Washington realize that the dollar is at risk and that they can no longer finance their wars by borrowing abroad, the government will either levy a tax on private pensions on the grounds that the pensions have accumulated tax-deferred, or the government will require pension fund managers to purchase Treasury debt with our pensions. This will buy the government a bit more time while pension accounts are loaded up with worthless paper.

The last Bush budget deficit (2008) was in the $400-500 billion range, about the size of the Chinese, Japanese, and OPEC trade surpluses with the US. Traditionally, these trade surpluses have been recycled to the US and finance the federal budget deficit. In 2009 and 2010 the federal deficit jumped to $1,400 billion, a back-to-back trillion dollar increase. There are not sufficient trade surpluses to finance a deficit this large. From where comes the money?

The answer is from individuals fleeing the stock market into “safe” Treasury bonds and from the bankster bailout, not so much the TARP money as the Federal Reserve’s exchange of bank reserves for questionable financial paper such as subprime derivatives. The banks used their excess reserves to purchase Treasury debt.

These financing maneuvers are one-time tricks. Once people have fled stocks, that movement into Treasuries is over. The opposition to the bankster bailout likely precludes another. So where does the money come from the next time?

The Treasury was able to unload a lot of debt thanks to “the Greek crisis,” which the New York banksters and hedge funds multiplied into “the euro crisis.” The financial press served as a financing arm for the US Treasury by creating panic about European debt and the euro. Central banks and individuals who had taken refuge from the dollar in euros were panicked out of their euros, and they rushed into dollars by purchasing US Treasury debt.

This movement from euros to dollars weakened the alternative reserve currency to the dollar, halted the dollar’s decline, and financed the US budget deficit a while longer.

Possibly the game can be replayed with Spanish debt, Irish debt, and whatever unlucky country is eswept in by the thoughtless expansion of the European Union.

But when no countries remain that can be destabilized by Wall Street investment banksters and hedge funds, what then finances the US budget deficit?

The only remaining financier is the Federal Reserve. When Treasury bonds brought to auction do not sell, the Federal Reserve must purchase them. The Federal Reserve purchases the bonds by creating new demand deposits, or checking accounts, for the Treasury. As the Treasury spends the proceeds of the new debt sales, the US money supply expands by the amount of the Federal Reserve’s purchase of Treasury debt.

Do goods and services expand by the same amount? Imports will increase as US jobs have been offshored and given to foreigners, thus worsening the trade deficit. When the Federal Reserve purchases the Treasury’s new debt issues, the money supply will increase by more than the supply of domestically produced goods and services. Prices are likely to rise.

How high will they rise? The longer money is created in order that government can pay its bills, the more likely hyperinflation will be the result.