Friday, November 19, 2010

Bullion Banks Self-destructing

Last week it was "fears of a Chinese interest rate increase", then it was "China halts construction loans", and today "news" out of China that they have "once again" hiked bank's cash reserves. All considered by our seers in the financial news media to be signs of doom for the global economy. These US Government sponsored dupes have been wrong before about China's economy, and they are wrong again. Beating up on China's "responsible" stewardship of her economy is NOT going to save the US Dollar, OR the US Economy. China is in the driver's seat now, and Americans had better get used to it.

China policy tightening weighs on world markets
Pan Pylas, AP Business Writer
Weighing on sentiment was the news that China's monetary authorities have ordered its banks to hold back more money as reserves in a new move to curb lending and cool inflation.

That was the second reserve increase in two weeks and came as Beijing tries to restore normal financial conditions and curb inflation, which rose to a 25-month high of 4.4 percent last month.

The central bank ordered lenders to set aside an additional 0.5 percent of their deposits, with effect from November 29.

The worry in stock markets is that tighter Chinese monetary policy will dent growth prospects. That's important because China is now the world's second largest economy.

China's rising inflation seems hard to believe given that inflation in the US is "contained". [Well, the government says it is anyways 8-)] China's rising inflation is a DIRECT result of US Federal Reserve money printing. America's number one export right now is inflation. As the guardian of the World's Reserve Currency, America can force feed inflation to the world at the press of a button.

By flooding the globe with US Dollars, the Fed can force inflationary pressures around the globe, and use them to force foreign trade partners to strengthen their currencies versus the US Dollar to combat the inflation. In other words, if China will not revalue their currency on their own, the US Federal Reserve will force them to. This action by the Fed will force the currency markets to push the US Dollar lower, and "in theory" make US exports cheaper and more desirable to our trade partners.

This "gimmick" is how the Fed can run around the World telling anybody who will listen that they are not spending $600 BILLION buying up US Treasury debt to devalue the US Dollar.

"We didn't crash the Dollar, the markets did."

Or that's what that clown Bernanke running the Fed would like everybody to believe. China, Germany, South Korea, and Japan ain't buying it. Neither are Russia, Brazil, or India. Witness the rise in interest rates following the Fed's announcement of their intent to "save the economy" by spending another $600 BILLION they don't have. It's absurd! Debt is not a path to prosperity.

Ben Bernanke is full of sh*t!

Bernanke hits back at critics of bond-buying plan
Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke has sought to defuse criticism of the Fed's $600 billion bond-purchase plan by arguing that it's needed to boost the economy and reduce unemployment. But he warned that the Fed's program can't succeed on its own.

In his first speech since the Fed announced the program Nov. 3, Bernanke on Friday made his most forceful case to date that Congress also must provide more stimulus aid.

The Fed chief also issued a stern warning to China, saying that it and other emerging nations are putting the global economy at risk by keeping their currencies artificially low. He made the remarks during his speech to a banking conference in Frankfurt, Germany.

Without more stimulus, high unemployment could persist for years, he said. But in making that argument, Bernanke risks heightening complaints that he's plunging the Fed into partisan politics.

The Fed's Treasury bond-buying program is intended to invigorate the economy in part by lowering interest rates, lifting stock prices and encouraging more spending. Lower interest rates on loans would prompt companies to borrow and expand.

And higher stock prices would boost the wealth and confidence of individuals and businesses, Bernanke has suggested. The additional spending would lift incomes, profits and growth.

But the Fed's program has triggered a barrage of criticism both within the United States and abroad.

Critics at home, including Republican leaders in Congress and some Fed officials, say they doubt the program will help the economy. They also worry it could do harm -- unleashing inflation and leading to speculative buying on Wall Street.

And at a summit of world leaders in South Korea last week, China, Germany, Brazil and other countries complained that the Fed's plan would give U.S. exporters a competitive price edge by flooding world markets with dollars. A weaker dollar makes U.S. goods more attractive to foreign buyers.

Emerging economies like Thailand and Indonesia also fear that falling Treasury yields will send money flooding their way in search of higher returns. Such emerging markets could be left vulnerable to a crash if investors later decide to pull out and move their money elsewhere.

Still, European Central Bank President Jean-Claude Trichet insisted during a panel discussion after Bernanke's speech that he and the Fed chairman "strongly share the view that a solid strong dollar ... is very important."

How does forcing the US Dollar lower by exporting inflation to our trade partners result in a "stronger Dollar" guys?

The Fed's Treasury bond-buying program is little more than a cover for debasing the US Dollar.

The definition of insanity is doing the same thing over and over and expecting a different result each time. Bernanke's bond buying program is fiscally insane. The Fed printed and spent almost $2 TRILLION in their first trip down the Quantitative Easing highway. Combined with criminal changes in accounting laws by the FASB, QEI successfully slowed the collapse of the World Economy...give Bumbling Ben a medal. To suggest for even a minute that his plan to double down with QEII is going to result in a growing economy and a stronger US Dollar is pure fantasy.

Destruction of the US Economy is now all but certain, the global economy almost certainly crippled as a result.

This brings us to our theme this week that the present "correction" in Precious Metals prices is merely a head fake, and a colossal Bear Trap has been set for those buying into the Fed's claptrap, nonsense, and blatant lies. With Bernanke forced to defend his bond buying program, we can only discern that the end is near for the global fiat money system. The US Dollar is toast.

The recent take down in the prices of Precious Metals has been a boon for investors looking to purchase physical bullion. Ironically, lower Precious Metals prices have only contributed to the bullion banks eventual demise as lower prices have greatly increased demand for Gold and Silver. Investors have finally come to view weakness in the Precious Metals as a buying opportunity. This behavior flies directly in the face of the bullion banks 20 year price suppression formula as increased demand on falling prices makes it impossible for these CRIMEX Crooks to cover their shorts and stay ahead of the investment crowd and bullish traders. What goes around, comes around. In the end, the criminals at the bullion banks will be the cause of their own destruction.

James Turk - Delta-Hedging to Cause Gold Price to Explode
Eric King,
With gold and silver taking off to the upside, King World News interviewed James Turk today out of Spain. Turk commented, “What we are seeing right now is the breaking apart of the gold cartel. They are losing control of the market just like they did back in the late 1960’s when gold began trading above $35 in the cash market in London, even though the price was still officially fixed at $35. The market was simply saying, we just don’t believe this $35 price anymore.”

Turk continues:

“The same principle applies today. The same group that is trying to hold the price down is being overrun just like they were in the late 1960’s. Normally you would expect the gold market to fade into next week’s options expiry. The fact that we are so strong today is an indication that the shorts are being overwhelmed and I am looking for higher prices as a result.

This could be explosive over the next few days if the shorts have to start buying because of delta-hedging on the calls that they have written. In other words, the more the price of gold rises, the more they have to buy. This can be a vicious cycle that feeds upon itself causing prices to explode.

I like Pierre Lassonde’s observation in his new audio interview on King World News that gold is going significantly higher because of all of the money printing around the globe. Eric, Pierre is laying out the big picture as to why gold is going much higher in the years ahead.

Silver is up a dollar from yesterday which is a good indication that this market is different from what we have seen all decade long. It’s like we discussed the other day, lower prices just increase the demand for physical silver. The amazing thing is that we are seeing this even in the paper market. Open interest on the Comex is growing, so if any longs were shaken out, new buyers came in to replace them. What that does is put the silver shorts in an impossible position because now they are trapped short.”

What Turk is saying is the the gold cartel is on the verge of suffering a major defeat in the gold war. With regards to silver, let’s just say they have been defeated and are now in the process of a full retreat.

Jim Sinclair - This is Late 1979, Gold Will Rise Violently
Eric King,
With gold heading higher today, King World News interviewed legendary trader Jim Sinclair. When asked about the action in gold Sinclair stated, “We have to be right in front of a major move in gold. Today the gold market had all of the indications of what would be considered by the old-time traders (Bert Seligman & Jesse Livermore) as a major turn. This would be a sign to them that the bulls are gaining strength in the market, and given any excuse it will rise violently.”

Sinclair continues:

“The strategy now would not be to run after spikes and strength, but to begin to take in those periods which will certainly come, of weakness that exist during the day. This is really the first time since we came off of the high, that it’s starting to show a character of wanting to make a new high.

The chorus of complaints about the Fed and their adoption of QE, I call that the backfire of MOPE. You have so many of the new guys convinced that yes, the economy is recovering but not really that fast, and there is no inflation anywhere. Then why in the world is Bernanke going to a $600 billion project which is a rescue plan that comes up during a period of crisis? They can’t understand it.

The other thing is the belief that the financial institutions balance sheets have made such great progress. The bottom line is he (Bernanke) sees what they don’t see. The stumped recovery we’ve had is in fact an economy headed down.

Getting back to gold, this is late 1979. It’s got all of the characteristics of late 1979. If people will go back and look at the long chart they’ll see that there was one violent flip right before it took off and never looked back. And it’s getting very close to that point now. I think what you have seen is a major shake of the tree right before gold takes off.”

Silver closed up yesterday $1.34. That was the first time in 30 years that Silver was up over one dollar in a 24 hour period.

Ed Steer shares a note he received from Ted Butler on Tuesday:

In a note to clients yesterday, silver analyst Ted Butler had the following to say about Monday's Commitment of Traders report... and the subsequent price action in silver... "This manipulated take down, as criminal as it was, makes the COT structure great. In fact, I just can't believe how good. Extrapolating for the current reporting week, we may have the best COT structure in silver in six months. Remarkably, we likely have as low, or lower, of a total commercial net short position in the next COT than we had back on July 27th. Please think about that for a moment. Back then, not only was silver at $18, we were below all the important moving averages, including the 50,100 and 200-day moving averages. Now, we're $7 higher... and still well above most major moving averages. I'm getting a feeling in my bones that as soon as this current manipulated take down is complete [which should be close], we will soon witness some real excitement to the upside in silver. These feelings are similar to what I felt back in July and August, when I speculated we could see a $5 to $10 pop in silver from the then-price of $18. This time, I'm thinking that the pop could be larger and quicker."

Once again, these markets clearly look to be set up in Bear Traps that are, or have been sprung. Today's weakness in the Precious Metals is certainly suspect as it began with the opening of the London markets and progressed into the CRIMEX open as more blather about China and Ireland filled the vortex of financial media hoopla. Gold is being capped near $1365, and Silver at $27. Options expiration is next Wednesday, and as we warned, the ride into those expirations will be bumpy. The CRIMEX goons are in a world of hurt as their little price suppression scam melts before their eyes. The more they do to fight the rise in the price of the Precious Metals, the more they do to slit their own throats. This is entertainment folks, enjoy it and profit by it.

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