Wednesday, December 8, 2010

Dead End Up Ahead

On Monday evening, December 6, The Washington post reported that Obama and congressional Republicans had reached an agreement for the extension of all tax breaks set to expire on Dec. 31, AND a 13 month extension of jobless benefits. This report confirmed the rumors that just such a deal was in the works the previous Thursday/Friday.

Upon catching wind of this rumor of a "deal" on an extension of the Bush Tax Cuts, Gold broke from the CRIMEX Gates Of Hell at the open Friday morning, December 3, rising from $1385 to close the week at $1414.

Gold continued to rise Monday as rumors that a deal had been reached between the Republicans and Obama. Gold closed in New York Monday afternoon at $1423.

Following the report by The Washington Post that a deal had been reached [the rumor was true], Gold immediately vaulted forward in the Asian and European markets over night. Gold reached $1430 by 8AM est on Tuesday, December 7. At 8:45AM, twenty minutes after the CRIMEX opened its Gates To Hell, the government sponsored bullion banks bombed the Precious Metals markets as if they were Pearl Harbor.

The Precious Metals knew the TRUTH about these "tax cuts", and were determined to report that truth to the public. The truth was that this deal was going to be expensive, and raise the deficit further. The government would have none of that "truth". These "tax cuts" were to be sold to the public as "economy saving" and "jobs creating". A rising Gold price would snuff that myth out quickly, so the bullion banks were given their marching orders to once again rob Americans of the TRUTH.

The truth is that these "tax cuts" were not tax cuts at all. The deal made by the Republicans with Obama was NOT to "cut taxes", it was to NOT "raise taxes". There is a HUGE difference between "cutting taxes" and not "raising taxes".

Tax cuts would have genuinely spurred the economy, but the deal here does not cut taxes, it simply keeps the tax rate where it has been for the past couple years, nothing has changed. [How shocking!] The deal that was made was to NOT "raise taxes". Raising taxes would have most certainly harpooned an economy that is presently lying on the beach like a beached whale gasping for air. So in effect, Obama and the Republicans agreed to keep things just as they are. How wonderful, two more years of increasing spending, increasing debt, and increasing unemployment. BRILLIANT! And they will sell it to Americans by bombing the price of Gold to convince them it is a great plan. "See, the price of Gold dived, this must be a great plan!"


Obama's tax cut compromise spurs Treasury sell-off
Bond traders fear proposal to extend tax cuts and unemployment benefits will deepen deficit

NEW YORK (AP) -- President Barack Obama's tax-cut proposal spurred a widespread sell-off in Treasurys on Tuesday as traders expected the plan to create deeper budget deficits.

Yields on Treasurys shot higher as their prices fell. The 10-year yield jumped to 3.13 percent from 2.93 percent, its highest level since June 22. The yield traded as high as 3.17 percent in the late afternoon.

In a compromise with Republicans, Obama agreed to extend Bush-era tax cuts for two years. The plan would also extend unemployment benefits and cut payroll taxes for a year. Estimates vary widely, but some put the cost in the range of $900 billion over the next two years.

Appetite was weak for the Treasury's midday auction of $32 billion in three-year notes. Investors bid for 2.9 times the amount offered, the lowest demand for the notes since February. The notes sold at the highest rate in five months.

The Treasury is scheduled to sell $21 billion in 10-year notes Wednesday.

TREASURIES-Prices plunge as tax plan stokes US debt worries
* U.S. tax break plan raises inflation, payment concerns
* Lower prices fail to attract aggressive buying of 3-yrs
* 10-year yield breaks 200-day moving average at 3.10 pct
* 10-year yields set for biggest daily gain since June '09
By Chris Reese
NEW YORK, Dec 7 (Reuters) - U.S. Treasuries prices plunged on Tuesday, with yields surging above key support levels, as a proposed extension of tax cuts raised concerns over inflation and the costs of the federal government's massive debt burden.

Some analysts saw yields gaining further after Tuesday's price weakness, which marked the biggest selloff since June 2009. The lower prices spurred only average interest in an auction of three-year Treasury notes, ahead of sales of reopened 10-year notes Wednesday and 30-year bonds Thursday.

Tax cut deal and surprise stimulus - the cost
By Jeanne Sahadi
NEW YORK ( -- The compromise on the Bush tax cuts announced Monday night between President Obama and Republicans could cost between $700 billion and $800 billion if ultimately signed into law as is -- no sure thing given opposition from many Democrats.

About half of the measures in the announced package might be considered new short-term stimulus, meaning they may add to the deficits for two more years, but could help maintain the economic recovery and help spur economic activity and job creation.

Of course, there is some disagreement over just how stimulative some of the measures will be.

Many economists, for instance, don't consider an extension of the Bush tax cuts stimulus, because it merely keeps current rates in place. But letting taxes go higher, they say, could impede growth.

Several other measures announced Monday do count as stimulus, including a break on how much is deducted from workers' paychecks for Social Security and tax incentives that could encourage businesses to step up their investment.

Deficit hawks have been saying that a short-term run-up in debt is acceptable if it is paired with a serious long-term deficit-reduction plan.

The proposed deal skips that last part, though the president has said he and his budget team will closely review the recommendations for debt reduction made last week by his debt panel.

The administration has not provided a complete accounting of the package yet, but many of the provisions' costs may be gleaned from cost estimates of similar measures that have been proposed in the past.

Bush tax cuts: $458 billion.

Unemployment benefits: $56 billion.

Social Security tax break: $120 billion.

Individual tax credits: $40 billion.

Business tax breaks: Cost unclear.

Estate tax: $88 billion.


Of course, costs could be reduced if lawmakers choose to follow their own rules to pay for any new tax cuts or spending increases by finding additional revenue or cutting spending elsewhere in the budget.

But what are the odds of that?

Dave Kranzler of The Golden Truth said it best Monday evening.

"I believe now that those who qualify for jobless bennies can now get them for 3 years and 7 months. What the heck is the difference between welfare and unemployment insurance? Seriously. And how do our policy-makers propose to pay for this? Oh wait, Bernanke was on 60 Minutes last night explaining how our Government's excessive spending will be funded: MORE MONEY PRINTING."

Isn't it a bit odd that all the Euro nations are under the gun to cut spending and raise taxes because their "debt load" is too high, and yet here in America [the world's largest debtor nation by the way], news of a "tax cut" and more spending on unemployment insurance is met with cheers? Do you know what this is? It's easy... Greece and Ireland cannot print money to pay for their debts and spending...but the USA can. And the WORLD is quickly growing tired of this Dollar hegemony scam...and the plummeting value of that US Dollar.

Tax cut deal: Why it isn't enough
By Paul R. La Monica
NEW YORK ( -- Taxpayers can breathe a sigh of relief. It's still not a sure thing, but after Monday night's compromise between President Obama and prominent Republicans in Congress, it appears that all the Bush era tax cuts will be extended.

But can that bolster the still stagnant economy? That breath you exhaled? Let's just say you shouldn't hold it.

Several economists said extending the tax cuts -- or, to split semantic hairs, not allowing tax rates to go up -- won't do much to help the economy.

Sure, it could provide a short-term boost. Businesses and consumers may be willing to spend just a bit more now that uncertainty about taxes has been lifted somewhat.

But don't count on a major hiring binge.

"The tax cuts are more about preventing a derailing of the recovery as opposed to accelerating it. This does not change my outlook," said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida in Orlando.

James Angel, associate professor of finance at the McDonough School of Business at Georgetown University, in Washington, D.C., said another problem with the tax cut compromise is that it's not a permanent fix.

"It would be nice to have certainty on taxes for the long-run. You still have a game of tax code roulette in Washington," Angel said. "As long as you don't have stability, people are going to be jittery."

Then there's the big old elephant in the room. Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University in Arlington, Va., argues that the biggest shortfall of the tax cut compromise is that there was nothing done to address the nation's mammoth budget deficit.

"All the focus on taxes expiring was misplaced. The real economic problem is not taxes. It's spending," she said. "The government is proposing to spend $42 trillion over the next 10 years. Hopefully, politicians can now exclusively focus on dramatically slashing the deficit."

Terry Clower, director of the Center for Economic Development and Research at the University of North Texas in Denton, Tx., agreed. He said lawmakers have to take a hard look at the nation's debt load instead of kicking that can down the road indefinitely.

"The extension won't have a sustainable impact on the economy. This is just putting things off until the next lame duck Congress," he said. "I never want to see taxes go up. But we have to eventually tackle the deficit."

Kicking the can down the road is the US Government's answer to all it's fiscal woes, but the biggest problem with that policy is they are quickly running out of road.

Dead End Up Ahead.

Clearly yesterday's Precious Metals bombardment was instituted to hide the TRUTH about the deal Obama made with the Republicans. Ed Steer, in his Gold and Silver Daily report, summed up the attack directly and concisely.

December 7, 2010 -- A Day Which Will Live in Infamy
The gold price didn't do much of anything during Far East trading on Tuesday... but, an hour after London opened, the gold price began to move higher... with the rally lasting until about 8:45 p.m. in New York when the selling began. A dollar rally began in earnest about fifteen minutes later at 9:00 a.m. Eastern time. It was, as they say, all down hill from there... with an extra shot coming to the downside in electronic trading well after Comex trading was done for the day. Gold closed above $1,400 spot... but just barely.

From its high of the day [$1,432.50 spot]... to its low of $1,395.10 at 4:15 p.m. Eastern time... the gold price got clocked for $37.40.

But, the big hit was saved for silver... which, by now, should be no surprise to anyone. After doing nothing in Far East trading, silver began to rise steadily right from the London open at 8:00 a.m. GMT... hitting its high of the day [$30.73 spot] at the same second that gold did... about 8:45 a.m. in New York. By mid-lunchtime, silver was down a dollar... and then got absolutely slaughtered in electronic trading, about an hour after the Comex closed. The silver price dropped over a dollar in just over an hour... with its low of the day at $28.46 spot. During a seven and a half hour period, silver got taken down $2.27 cents!

Except for the take down the Friday afternoon after the U.S. Thanksgiving holiday, this had to be the most egregious example of silver price management I have ever seen... especially the dollar plus take down in electronic trading, where there was virtually no volume at all.

Ted Butler is not entirely sure who the culprit was yesterday. He didn't get the impression that it was all the bullion banks doing. He suggested that it might be high frequency traders unwinding a position... as silver volume's have been enormous lately, with very few changes in open interest. As I mentioned in this column yesterday, silver was 'in play'.

The other thing that Ted mentioned was the possibility that, with huge margin calls going out at the close of Comex trading, the price was taken down below Monday's opening price to prevent that from happening. But that doesn't explain who butchered the price between 3:20 p.m. and 4:20 p.m. yesterday afternoon.

But, regardless of all of the above, what happened yesterday was, as Ted put it, the most rigged commodity in the world, being aided and abetted by the crooks at the CME. The exchange and the CFTC should be all over this type of blatantly illegal market activity... but, knowing them, they won't do a thing. And neither will your silver companies.

The world's reserve currency fell about 40 basis points up until 8:45 a.m. Eastern time Tuesday morning. All of gold and silver's big gains of yesterday came between 3:00 a.m. and 8:45 a.m. Eastern time, as the dollar fell 18 basis points during that period. From that 8:45 a.m. time, the dollar began to work higher... and reached its absolute high at the close of electronic trading at 5:15 p.m. late Tuesday afternoon... up 77 basis points.

During the New York trading session, both gold and silver had their big losses between 8:45 a.m. and 12:30 p.m. During that time, the dollar had risen less than 30 basis points. The big smack-down in both metals in electronic trading occurred in an 80 minutes period between 3:00 p.m. and 4:20 p.m. During that time period, the dollar fell 10 basis points.

Was yesterday's dollar move in any way related in severity to the drop in price in both metals? Absolutely not. The only thing that is for sure, is that the precious metals sell off... and the dollar rally... began at the same instant... and there wasn't a damn thing in the real world of supply and demand to warrant the price action. It's amazing to watch JPMorgan et al [if it was all them] pull this stunt with all the lawsuits they have pending against them.

We had an 80 point rally in the dollar on Monday and virtually nothing happened, so why would Tuesday's 77 point rally be any different? Well, maybe 'da boyz' were celebrating the 69th anniversary of Pearl Harbor at the expense of the precious metals.

Nice summation Ed! That's nailing it...

With the PM London Gold fix in at 10AM est, the CRIMEX goons have again bombed the Precious Metals. It should be noted that yields on Treasuries are rising as bonds get sold off in reaction to the "tax deal". We have discussed many times on here that rising interest rates ARE NOT a negative to Gold prices. I suspect that a lot of the follow through selling in the Precious Metals today is related to the FALSE assumption that rising interest rates are bad for Gold. THEY ARE NOT in today's economic environment of currency debasing and mountainous debt.

Stay focused! Be right and sit tight. Falling Precious Metals "prices" only attract buyers in mass as they seek to obtain physical bullion at discount "prices." Falling prices will only exacerbate the short positions of the CRIMEX goons as delivery demands accelerate and overwhelm these SOBs.

Obama struggles to keep Dems from killing tax cuts- AP
Consumer credit jumps by most in more than 2 years- AP
Stocks end flat as rally over tax cuts fades- AP

1 comment:

  1. Raising the top rate on the highest earners has far less impact than anyone imagines (on either side of the aisle). The reason is that no one in that bracket with a whit of sense is paying anywhere near the top rate on anything near their actual income. I'm in the 28% bracket and my effective rate is about 11% - without any business exemptions. Since they extended gains and kept all the loopholes in place, those folks weren't gonna get really smacked either way.

    There isn't a big difference between "not raising" and "cutting," especially when you see the new rate already in place. The fact that they are no different is demonstrated by the fact that, if you just reference the actual numeric rates and refer to "setting" rates, there is no difference or impact whatsoever. The distinction is purely semantic and emotive, not tangible.