Tuesday, December 21, 2010


Gold and Silver were stonewalled for a second day today at downside resistance of their early December highs. The banking cartel aligned against the Precious Metals have thrown everything they've got that is made out of worthless paper at these harbingers of truth to prevent their technical breakouts amidst options expiration in their futures contracts today. Gold and Silver bulls refuse to succumb to these CRIMEX goons now typical monthly efforts to rob futures trades of their deserved profits at options expiration.

Gold and Silver both broke their intermediate downtrend lines yesterday. Gold at $1385 and Silver at $29.25. Today they were forced to retest those down trendlines, did so successfully, and our now poised to race higher into the close of 2010. Though it would be foolish to rule out a take down in the precious Metals from here, it appears unlikely that either metal will move lower from here before year end. Today's strong moves higher in Platinum and Palladium may be a signal of what is to come in the very near term for Gold and Silver...higher prices into the year end.

The fundamental case for owning Precious Metals grows stronger by the day. In case you missed Sunday evening's 60 Minutes expose on the festering Municipal Bond Crisis here in America you can catch up on it here:

State Budgets: The Day of Reckoning
By Steve Kroft
(CBS) By now, just about everyone in the country is aware of the federal deficit problem, but you should know that there is another financial crisis looming involving state and local governments.

It has gotten much less attention because each state has a slightly different story. But in the two years, since the "great recession" wrecked their economies and shriveled their income, the states have collectively spent nearly a half a trillion dollars more than they collected in taxes. There is also a trillion dollar hole iln their public pension funds.

The states have been getting by on billions of dollars in federal stimulus funds, but the day of reckoning is at hand. The debt crisis is already making Wall Street nervous, and some believe that it could derail the recovery, cost a million public employees their jobs and require another big bailout package that no one in Washington wants to talk about.

"The most alarming thing about the state issue is the level of complacency," Meredith Whitney, one of the most respected financial analysts on Wall Street and one of the most influential women in American business, told correspondent Steve Kroft

Whitney made her reputation by warning that the big banks were in big trouble long before the 2008 collapse. Now, she's warning about a financial meltdown in state and local governments.

"It has tentacles as wide as anything I've seen. I think next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy," she told Kroft.

Asked why people aren't paying attention, Whitney said, "'Cause they don't pay attention until they have to."

Whitney says it's time to start.


Of course the US Government would dispute MS. Whitney's claim. A mushrooming municipal bond crisis threatens the confidence of the American public that the US Government has stroked delicately and endlessly since the global financial crisis broke in 2007. If the government losses the confidence of the American public to "always fix things", then all bets are off, and financial catastrophe becomes a real possibility. Therefore, the US Government sent it's financial media lapdog CNBC out in it's defense immediately on Monday morning. "Municipal Bond Crisis? What Municipal Bond Crisis?"

Muni Bond Crisis Overblown?[CNBC VIDEO]
Benjamin Thompson of Samson Capital tells CNBC why he thinks Meredith Whitney is overstating the municipal bond crisis.

Well of course the muni-bond crisis is all just a figment of everybody's overactive imagination. How can there be a muni-bond crisis? We are in the middle of an economic recovery!


U.S. Faces Tough Future Without Build America Bonds
By Lisa Lambert
WASHINGTON (Reuters) - U.S. state and local governments face a surge in borrowing costs after lawmakers refused to renew the federally subsidized Build America Bonds program used to fund infrastructure projects and create jobs.

Lawmakers had considered the $858 billion deal on the so-called Bush tax cuts the best vehicle for extending BABs, which expire with the stimulus plan at year end. The U.S. House of Representatives killed the possibility of an extension when it approved the deal late Thursday. President Barack Obama signed it into law on Friday.

With the end of BABs, the $2.8 trillion municipal bond market could see depressed prices and greater volatility. The bonds made up more than a quarter of all new municipal debt sold this year and have been largely attributed with restarting stalled municipal credit markets.

Headlines Confirming Troubled Times Are Here
By Greg Hunter’s USAWatchdog.com
Some people see the Internet as an electronic world of wires and computers run at speeds measured in nanoseconds. I tend to see the Internet as an electronic extension of human biology. Sample enough of the Internet in the right places and you can get a snapshot of what people are generally feeling. One of my own readers, Alyce, commented recently, “It’s easy for people to become lulled into a false sense of security. The term normalcy bias keeps popping up in articles I read lately. It is when people interpret warnings in the most optimistic way possible. Happens all the time…human nature to believe that since a disaster has never occurred in one’s lifetime, that it just never will. Trust your instincts.”

U.S. Fed balance sheet swells on bond purchase

Position limits proposal under private scrutiny

Are U.S. metal-shorting banks moving to hide their positions outside the country?
Dear Friend of GATA and Gold (and Silver):
GATA Director Adrian Douglas, publisher of the Market Force Analysis letter, today published a letter he has sent to U.S. Commodity Futures Trading Commission member Bart Chilton, disclosing that even as the gold and silver short positions of U.S. banks have been declining over the last year, gold and silver short positions lately have been increasing dramatically among banks headquartered outside the United States. The strong implication is that the major shorting banks are moving their activities behind foreign fronts, as your secretary/treasurer speculated a week ago well could happen:

Douglas' letter to Chilton is headlined "Letter to CFTC Commissioner Chilton on Trends in Bullion Bank Gold and Silver Short Positions" and has been posted at the Market Force Analysis Internet site here:

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

Copper hits record high; gold ends with gains

Food stamp use spikes: One in seven rely on them

Fed Authorizes Extension Of US Dollar Swaps With Foreign Banks
By Jeff Bater
WASHINGTON (Dow Jones)--The Federal Reserve authorized an extension of dollar swap lines with major foreign central banks, reviving a rescue program set up to ease strains from the European debt crisis.

The Fed on Tuesday announced an extension into next summer of its temporary U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank.

A Fed press release Tuesday said the Federal Open Market Committee has authorized an extension through Aug. 1, 2011.

The swap arrangements were established in May 2010 and had been authorized through January 2011. The program was set up as fears rose that Greece's debt crisis could sweep through other European countries. European banks need dollars to lend to companies across Europe.

The swap facilities announced in May followed re-emergence of strains in short-term funding markets in Europe. The Fed said the tool is designed to improve liquidity conditions in global money markets and to minimize the risk that strains abroad could spread to U.S. markets.

Under swap lines, the Fed makes loans to foreign central banks, which in turn use the funds to make U.S. dollar loans to financial institutions in their home markets.


The global financial crisis must not be getting better as widely advertised by the US authorities. Could these "swaps" be being extended to put newly printed US Dollars into the hands of foreign central banks to buy US Treasuries as the Fed's efforts to buy them and keep interest rates low appears to be failing?

Let's look at what happened in the currency and bond markets following the introduction of these "emergency swap agreements" back in mid-May of this year.

Now this is interesting:

Following the announcement by the US Federal Reserve that "emergency dollar swap arrangements" with foreign central banks was announced May 11, 2010, interest rates on the 10 year US Treasury note began to fall, and fall precipitously through the summer, to reach new all-time lows in October at 2.40.

You can see a chart of 10-year treasury yields here: http://finance.yahoo.com/echarts?s=%5ETNX+Interactive#chart1:symbol=^tnx;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

It is noteworthy that the yield on the 10-year US Treasury bottomed as the US Fed announced their QE2 plans to buy US Debt the day after the November mid-term elections.

It is also noteworthy that following the Fed's "emergency swap arrangements" announcement in mid-May 2010, that the Greek Debt inspired rally in the US Dollar soon peaked and rolled over at the beginning of June 2010. The US Dollar fell over the summer and bottomed with the Fed's QE2 announcement following the November mid-term elections.

You can see a chart of the US Dollar here: http://stockcharts.com/h-sc/ui?s=%24usd

With this announcement that these "temporary" emergency swap agreements that were due to expire in January 2011 have been extended into August 2011, has the Fed indicated a desperation in their efforts to control interest rates? Is the recent Irish Debt crisis induced rally in the US Dollar really just a dead cat bounce in a secular bear market descent in the US Dollar?

Are interest rates on US Debt about to be forced lower through stealth buying by foreign central banks with money freshly printed by the Fed? Is the US Dollar about to be forced lower by the printing presses at the Fed? Are the prices of the Precious Metals about to explode?

It would appear that the answer to all these questions is YES!

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