Wednesday, August 31, 2011

Silver Is "Go For Launch"

I recently suggested that Silver would be the beneficiary of the recent CME margin increases in Gold on the CRIMEX.  We may find out very soon if this is to be true.

The September CRIMEX Silver contract goes into delivery tomorrow.  Our criminal Banking Cartel finds themselves with their backs up against the wall heading into delivery.  I will let Harvey Organ give you the details:

The total number of notices that wish to be served for silver metal stands tonight at 3194 or15,970,000 oz.
The total number of notices served on first day notice was only a tiny 173 for 865,000 oz.
The total number of notices to be served remains extremely high at 3021 or 15,105,000.

It seems that Blythe will have her hands full trying to satisfy all of our longs.

Thus the total number of silver standing this delivery month of September is

865,000 (oz served) + 15,105,000 (oz to be served) = 15,970,000.

Also remember that we have close to 4 million oz of silver from last month's option expiry.

Thus almost 20 million oz must be eventually served and settled upon.

Total registered (dealer) inventory is 32.146 million oz.  The Banking Cartel has this small pile of Silver to meet delivery demand with.  The month of September should be filled with volatility as the Banking Cartel seeks to meet delivery demands.  Recall that registered Silver is available for meeting delivery demands, but the banks being served delivery notices my not own a sufficient portion of the pie to meet demands on them.  This will result in a short squeeze unless contract holders can be convinced to settle for a cash premium instead of physical Silver bullion.

In the just completed  CRIMEX August Gold delivery, 12,124 contract holders representing 1.212 million ounces of Gold stood for delivery at First Notice.  By the end of August, ONLY 8220 contracts representing 822,000 ounces of Gold were actually given physical bullion.  3904 August Gold contract holders accepted cash premiums to fore go delivery of physical Gold in August.  The short squeeze in August, because of a lack of physical bullion to members of the Banking Cartel, was massive.  Gold rose $300 from August first to August 23.  Could a similar fate be awaiting the CRIMEX Banking Cartel this September Silver delivery month that began today?

From Zero Hedge
Gold has stolen the limelight from silver in recent weeks with gold reaching a series of new record nominal highs.

But silver has been quietly consolidating after the sharp falls seen at the end of April and in early May when many claimed the silver ‘bubble’ had burst.

Media coverage of silver remains nearly nonexistent which is bullish from a contrarian perspective.

Technically silver is looking better by the day and is now trading not far above its 50 and 100 day moving averages (see chart above).

Today the 50 day moving average is trading at $38.70/oz and the 100 day moving average is trading at $38.74/oz. The 50 DMA is rising after recent price gains and looks set to cross the 100 DMA in the coming days. This will be a bullish technical signal.

Silver’s sell off was very sharp but volatility and a correction was expected and warned of once silver reached the nominal inflation adjusted high of $50 per ounce.

There are many factors that strongly suggest that silver remains a prudent buy and diversification today.

But there are three key metrics which strongly suggest that silver remains far from a bubble if not undervalued.

The first is silver’s real price today adjusted for the inflation of the last 31 years. Silver’s real high in 1980 was $130 per ounce – more than double the price today.

The second is the gold silver ratio which has averaged 15 to 1 throughout history due to geology and the fact that there are 15 parts of silver to every 1 part of gold in the earth’s crust.

Silver, unlike gold, is an industrial metal and a very significant amount of all the silver that has even been mined has been consumed, like oil, since the dawn of the industrial revolution in the 19th century.

Most analysts with a long term view believe that the ratio is likely to revert to the mean of 15 to 1 in the coming years.

The third metric is comparing silver’s current bull market to that of the 1970’s.

Silver has risen by a factor of 10 in the last 9 years – from near $4 in 2001 to over $41 today.

In its bull market from 1971 to 1980, silver rose by over 3,199% or by a factor of more than 32 in just 9 years culminating in the blow off top in 1979.

Today, the physical supply of silver bullion is much less than in the 1970’s. Also there is the ‘Asian factor’ and 3 billion people with growing incomes, many of whom see silver as a store of value against currency depreciation.

Demand for silver in Asia has been increasing and in China alone silver demand is increasing from a near zero base. The demand was not present in the 1970’s.

Were silver to replicate the performance of the 1970’s it would have to rise 32 times or to $130/oz (32 X $4.05).

Interestingly, $130/oz is also silver’s real high from 1980.

The charts below show a Silver price consolidating following the May assault by the CME and the CRIMEX Banking Cartel.  In the future this will be looked back upon as the banking Cartel's "Last Hurrah" in the suppression of Silver and their defense of today's crumbling global fiat monetary system.

Silver has been marking time, and fueling up for a major thrust higher.  A large Ascending Triangle has formed below the $43.58 opening price of the May 1, 2011 drive by shooting of Silver.  This top on the Ascending Triangle is the launch trigger for Silver to lift off to new ALL-Time highs above $50.  The fuse on this Silver Rocket will be lit on a close above 42.

It is not too late to begin accumulating physical Silver bullion.  As each day now passes, it is becoming less likely that the opportunity to purchase Silver below $40 an ounce will present itself.  With the MACD on the weekly Silver chart now Bullish, it is highly recommended that all dips in the price of Silver be bought going forward into the Fall.

Tuesday, August 30, 2011

Physical Gold And The GLD: Just What Is Going On Here?

Friday afternoon Hurricane Irene hits.  Saturday morning power goes out.  Saturday evening power comes on.  Sunday clean up the mess.  Monday go back to work.  Monday evening Internet goes down.  Tuesday morning eye glasses break in half.

Life's A Beach!

Over the past week the mainstream financial news media has been all a twitter about the "Gold Bubble Bursting".  Unfortunately for the top callers, Gold has to be in a bubble before it can burst.  In my post on August 23rd, the morning of the Gold take down from it's recent ALL-Time high, I tried to make a clear case that Gold was nowhere near being in a bubble.

It's amusing how the mainstream media determines a market is "in a bubble".  It rises quickly to a new high, therefore it must be "in a bubble".  What simpletons.  Gold rose over $400 from it's July first low because of a massive short squeeze of the Banking Cartel.  Gold bubbles are not created on the back of a short squeeze.

Yes, Gold did fall dramatically from it's early morning August 23nd high above $1900, and why or what caused it to fall is irrelevant.  Gold is not in a bubble, and it's bubble did not burst.  On August 23rd, Gold fell $67 an ounce.  On August 24th, Gold fell $79 an ounce.  At one point on August 25th, gold had fallen ANOTHER $49 an ounce.  Over the course of two and a half trading days, Gold fell $195 an ounce..over 10%.  A minor, overdue correction.

What if I told you Gold's drop in price August 23-25 was designed by the banking cartel to get their hands on much needed physical gold to make deliveries on the August Gold contract before they were wiped out in the short squeeze that began July 5th, and accelerated on news of Hugo Chavez's demand that Venezuela's Gold be repatriated?  What if I told you that the 10% correction in Gold is a signal that Gold is about to rocket higher in the coming weeks towards yet ANOTHER new ALL-Time high?

Lance Lewis, a newsletter writer, has developed an indicator he calls "the GLD puke indicator".  This indicator tracks the fall in physical ounces of Gold held by this ETF.  Of particular interest are daily drops in the Gold holdings of GLD in excess of 1%.

One-day declines in the holdings of this ETF of over 1% have tended to be capitulatory in nature and have typically occurred near important lows in the Gold price during Gold’s secular bull market.

When one goes back and looks at where these 1% declines in bullion holdings have occurred, virtually all of them occurred “at” or were “clustered at” important lows in the gold price.

On August 23rd, GLD's Gold Bullion holdings dropped 1.93%.

On August 24th, GLD's Gold bullion holdings dropped 2.16%.

Note that the last significant "puke" of Gold bullion from the GLD was on January 25th, 2011.  The GLD coughed up 2.48% of it's bullion holdings.  Gold bottomed on January 27th, 2011 at $1318, and then went on a run three month rally that peaked on May 1st at $1577 an ounce.

The GLD also puked up 1.82% of its Gold bullion holdings on August 11, 2011.  COINCIDENTALLY the day of the first CME margin hike.  Gold prices bottomed on August 12th at $1725...the early morning of August 23rd saw Gold at $1917, up a full 11% in eleven days after the GLD puked.

Geezo-beezo, is it just another coincidence that the GLD pukes up 4.09% of it's Gold bullion holdings between August 23 and 24 just in time for the second CME margin increase in Gold on August 24th?

Just what is going on here?  Could the GLD puke indicator be telling us that physical Gold bullion is in far tighter supply than any of us has imagined?  Is the Banking Cartel so desperate for physical metal to meet delivery demands that they must force a sell-off in the Gold price so that they may then buy discounted shares of GLD and then redeem them for physical Gold from the GLD trustee?  Could the GLD puke indicator be signaling traders that the banking cartel are ripe for a short squeeze due to their lack of physical bullion to meet delivery demands?

On January 29, 2011, FOFOA posted on their blog site an essay Who is Draining GLD?  This is where I first learned of the "GLD puke indicator".  In this essay FOFOA considers that "buyers of size" may be behind the take downs in the price of Gold, and the subsequent puking of bullion by the GLD.

What was relevant then, relative to "buyers of size" in the market at a Gold price of $1318, is probably even more relevant today with a Gold price of $1900.  I'll let FOFOA explain:

What we appear to have here is a severely tight noose around the supply of Bullion Bank deliverable physical gold at a time when the Giants are chomping it up! Bullion Banks have many means at their disposal to shuffle around a globally limited quantity of gold reserves and get it to where it needs to go. Especially when "important clients," like those in the East or Middle East, come calling for physical delivery or allocation.

Upon getting requests from unallocated depositors for either outright withdrawal, or more simply for transfer into allocated accounts, any Bullion Bank has options. Yes, it can seek to acquire (through borrowing or purchase) the requisite ETF shares for redemption of a "basket" in its special capacity as an Authorized Participant of GLD

But what if those other options are disappearing faster than a sack of currency left on the COMEX trading floor? If gold (in size) on the open market is scarce, the unallocated pool is spoken for (in other words, undergoing allocation) and the fraternity brothers are all suffering the same noose, what do you think becomes the most efficient and cost-effective option? Raiding the GLD reservoir perhaps?

Did you even know that you could take physical delivery from GLD?

I highly recommend reading the entire essay.  It is very insightful.

A basket of GLD shares is 100,000 shares.  Each basket equals 10,000 ounces of Gold.  This is the minimum that can be redeemed for physical Gold.

A basket of GLD shares can ONLY be redeemed through an "Authorized Participant"...

Authorized Participants are: BMO Capital Markets Corp., CIBC World Markets Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., EWT, LLC, Goldman, Sachs & Co., Goldman Sachs Execution & Clearing, L.P., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. Incorporated, Newedge USA LLC, RBC Capital Markets Corporation, Scotia Capital (USA) Inc., and UBS Securities LLC

The bullion banks, aka the Banking Cartel. 

Is the GLD a front, a Gold reservoir for the CRIMEX?  Was the GLD created specifically for the purose of supporting the CRIMEX Gold price suppression...perhaps as a safety valve?

The GLD puke indicator would seem to suggest the GLD's existence is twofold.  One to give the impression that physical Gold supply is greater than that which actually exists in the hopes of suppressing price with "supply", and two, to give the Banking Cartel a reserve from which to meet demand that exceeds CRIMEX supply.  Is the markets management of the physical Gold supply nothing more than a shell game, with price being the victim?

More questions I struggle to answer, but find ever easier to ask.  Clearly however, the data shows that when the GLD pukes up physical gold bullion, a rise in the price of Gold is soon to follow.

Gold has since risen $132 from the August 25th low following the two-day GLD puke of 4.09% on August 23-24.  The GLD puke indicator's accuracy is proven once again.  It would pay to pay close attention to the GLD physical Gold holdings in the event of another CME margin hike as another major short squeeze of our banking Cartel appears to have been initiated.  At this time, $1705 would appear to be a major low in the ongoing secular Bull Market in Gold.

Gold Bubble blowers be damned...don't fight the Fed.

From Zero Hedge
The UBS daily note reports that “the mood among gold investors appears to be to buy the dip rather than chase the market, which is understandable given last week's volatility.” UBS conclude that the “violent sell-off hasn't done any lasting damage to gold, and the reasons investors bought gold in recent months remain valid. Our one-month forecast of $1950 remains in place.” UBS three month price view is $2,100 per ounce. Very significant demand being seen for bullion internationally and especially in Asia means that gold’s correction is likely to again be of short duration. Indeed, the scale of demand suggests that gold may not need a long period of consolidation and could again surprise to the upside.  Bank of America-Merrill Lynch said in a research note it was revising its 12-month gold target to $2,000 an ounce. JPMorgan said that gold could reach over $2,500 per ounce prior to year end. The recent sell off has not seen banks and analysts revise down their price forecasts.

A Dispirited Fed Chairman Emerges From Jackson Hole
From Zero hedge
A thoroughly chastened and discouraged Fed Chairman Ben Bernanke gave his annual speech last Friday at the Fed conference in Jackson Hole, Wyoming. After reading this year's speech, and then re-reading last year's speech, I found his tone gloomy and dispirited. This is a far cry from the younger, more confident Ben Bernanke who in 2002 told Milton Friedman at his 90th birthday party that Milton was right about the Fed causing the Great Depression and "we won't do it again." Of course Milton was right about the Fed but for the wrong reasons, which could be part of our problem.

If you have followed Bernanke's speeches over the years, at least since the Crash of '08, you will get a flavor of the man. Like all Chairman his tone has to be sober, reservedly confident, and in control. Unlike The Oracle, Chairman Alan Greenspan, who gave little clarity or direction at all, Dr. Bernanke has tried to be more "transparent" in communicating Fed policies. It is my impression that while he has tried to exude confidence, he is now clearly discouraged. As well he should, since none of the Fed's "suite of tools" have worked as intended and almost every forecast the Fed has given since the Crash has been wrong.

From Zero Hedge
Who would think that all it takes for gold to surge by $40 in under an hour is for the Fed to resume the old song and dance. Yet that is precisely what happened: ever since Chicago Fed president Evans sat down with Steve Liesman to discuss that he would be in favor of more easing, and saying he believes in "room for accommodation" and that we "still need to do more on monetary policy", gold soared from under $1790 to over $1830. And confirming that gold will go far higher is his statement that "Fed policy was not a driver of the commodity price surge." In other words, these buffoons have not learned anything, and the commodity price shock is coming. However, as usual, it will be blamed on speculators. Luckily the CME can hold them in their tracks with a relentless series of margin hikes. Or not. When will the CME finally hike margins on printer toner cartridges?

By Jeannine Aversa and Scott Lanman
A few Federal Reserve policy makers this month favored more aggressive action to stimulate the economy and lower unemployment, minutes of their meeting released today showed.

Those members, who weren’t identified, “felt that recent economic developments justified a more substantial move” beyond the pledge adopted at the Aug. 9 meeting of the Federal Open Market Committee to hold its key interest rate at a record low until mid-2013.

Fed officials discussed a range of tools, including buying more government bonds, to bolster the economy, without coming to an agreement on what they might do next should the economy weaken further. They will more fully debate their options when they gather next month for a two-day meeting that was originally scheduled to last one day.

At the August meeting, the Fed staff cut its estimate for gross domestic product in the second half of 2011. That was the fourth consecutive downward revision to its near-term outlook, the longest series of downward revisions since the recovery began two years ago. The staff also cut its 2012 outlook and lowered its appraisal of the economy’s potential growth rate.

Besides buying government bonds, the Fed could cut the 0.25 percent interest rate it pays bank on the $1.6 trillion in excess reserves parked at the Fed. It also could replace shorter-term securities with longer maturities, which may help lower interest rates on mortgages and other long-term debt. The Fed also could pledge to keep its balance sheet near a record $2.86 trillion for an “extended period” or for a specific time period.

In contrast, some Fed officials “judged that none of the tools available” to the Fed “would likely do much to promote a faster economic recovery,” the minutes said. These officials were concerned that providing additional stimulus would risk boosting inflation without providing a “significant benefit” to bolstering economic growth or lowering unemployment.

The mere discussion of more economic stimulus from the Federal Reserve was enough to send stocks higher Tuesday. The Dow Jones industrial average rose 20 points, and the Nasdaq added about 0.5%.

From Zero Hedge

The charts below demonstrate the 6 month change in the 6 month forward looking Consumer Confidence outlook: in other words, this chart measure just how deceived US consumers have been by hopium consumption 6 months ago compared to reality now. In short: 2011 has been the most disappointing year for Americans in history. Whether it is due to excess hopium consumption or not... well, it is not irrelevant.

Thursday, August 25, 2011

QE3: Place Your Bets

"Tomorrow [Friday] is going to be a humdinger of a day as the world awaits QEIII or no QE III. If QE III is announced, the stock market will rise, the dollar will tank and gold will head into the stratosphere.  If no QEIII then the Dow tanks by 1,000 points and gold heads into the stratosphere. I believe we win with either scenario."

That about sums it up. 

...and now we must prepare for the Hurricane scheduled for a visit Saturday.

Wednesday, August 24, 2011

CME Margin Increase Exposes Desperation Of the Naked Banking Cartel

Gold futures fell more than $100 on Wednesday, one of the steepest falls ever, as strong U.S. economic data and expectations of more Federal Reserve stimulus accelerated profit taking from the safe-haven record high of a day ago.

This is asinine! Strong economic data? What? More Fed stimulus is negative for Gold? Are you kidding me? And of course a headline with a 1980 reference to make "readers believe" that "the top is in" and Gold is going to collapse again. My sides hurt from laughing. The CME margin hike has EVERYTHING to do with Gold's "price drop" today. That, and tomorrow's September options expiration. NOTHING else!

At worst this "sell-off in Gold can be chalked up to [forced] "profit taking" by traders. No "real" Gold was sold today. As a matter of fact, I would suspect that quite a bit of real gold was bought today at a very nice sale price?

Does the Banking Cartel really believe that by knocking $100 off the price of Gold, the demand for it is going to wither and die? Good luck with that belief. Investors have been standing in line, waiting to buy "real" Gold at a lower price. Has the Banking Cartel just handed the Global Gold Investment Community a gift of lower prices on the eve of Gold's strongest buying season of the year?

Does the banking cartel really believe that a margin increases on the cost of a "paper" Gold contract is going to stem the Global demand for "real" Gold? Not a chance, it will only make it cheaper for those seeking to buy "real" Gold, increase demand, and ultimately make it harder to get delivery of, as available supply of the Precious Metal is sucked up even faster a lower prices. [Ditto for Silver]

Today's CME Gold margin increase might have been the worst kept secret in the history of CRIMEX shenanigans. This story was posted on The Street's web site at 8:24AM est this morning. A mere four minutes after the CRIMEX assault on Gold began in earnest.

NEW YORK (TheStreet ) -- High gold prices need to watch their backs because margin hikes could be right around the corner.

With gold prices seeing $20-$50 swings daily, the CME could be tempted to increase the amount of money it takes to buy an 100 ounce gold futures contract -- a technique often employed to stem volatility.

Silver was the latest victim of margin hikes and is still recovering. The CME raised margins five times between April 26th and May 9th a massive 68% which eventually resulted in silver losing almost 30% of its value in less than 3 weeks. If the same fate were to befall gold, prices could tank to $1,400 an ounce.

The CME has raised margin requirements for gold twice this year, once in January and once in early August, by 11% and 22% respectively. The moves did little to stem gold's rally. A week after the margin hikes in January gold was down just 2% and a week after the August hike gold was up 1.5%.

But this time may be different for gold. As shown in the chart above from MFGlobal, gold's average true range is 40, a level not seen since the end of 2008. The last time the CME underwent a series of margin hikes for gold was between December 2009 and February 2010 when it raised requirements 50% that was when gold's average range was in the mid to high 20s.

The Shanghai Gold Exchange beat the CME to the punch and raised margins Tuesday by 1%. The last time the exchange increased rates was August 8th, three days later the CME hiked requirements by 22%.

Following today's plunge in Gold prices, the CME decides the Gold market is too volatile, and raise margin rates further.  And just like with the May margin hikes in Silver, the CME waits until prices are falling to raise margin rates, and use "the volatility" as an excuse for doing so.  This is patently absurd.  Gold fell because of the threat of a margin hike by the CME following a margin hike by the Shanghai Gold Exchange.  The exchanges create a "volatility issue" and then react to it?  Where were the margin hikes when Gold was rising $50 a day?  This margin increase today, and those in Silver back in May, are obviously for the purpose of protecting the Banking Cartel's massive short positions in the Precious Metals, and have absolutely nothing to do with "volatility".

By Debarati Roy and Pham-Duy Nguyen
CME Group Inc. raised the margin requirements on gold trading at its Comex unit for the second time this month, after prices surged to a record above $1,900 an ounce and then plunged today by the most since March 2008.

The minimum cash deposit for borrowing from brokers to trade gold futures will rise 27 percent to $9,450 per 100-ounce contract in the speculative Tier 1 category at the close of trading tomorrow, Chicago-based CME said in a statement. On Aug. 11, the increase by the exchange was 22 percent to $7,425. The cost of one contract after today’s close was $175,730. The maintenance margin will rise to $7,000 from $5,500.

Comex is making it more expensive for speculators to trade the metal as open interest for gold options climbed to a record 1.263 million contracts on Aug. 18 and prices slumped more than 7 percent in two days, erasing the gain of the past two weeks that sent the metal to a record $1,917.90 yesterday.

“It will add selling pressure, even after today,” Frank McGhee, the head dealer at Integrated Brokerage Services said in a telephone interview from Chicago. “This is the exchange reacting to the volatility.”

The CME last raised margins on Aug. 11, when prices fell 1.8 percent, the biggest slump since June 23.

Today, gold futures for December delivery plunged $104, or 5.6 percent, to settle at $1,757.30, the biggest decline for a most-active contract since March 19, 2008.

“There will be a short-term impact on gold prices,” Savneet Singh, the chief executive officer of New-York based Gold Bullion International, said in a telephone interview. “The long-term fundamentals are intact.”

"...the biggest decline for a most-active contract since March 19, 2008."  That's odd, why did the headline above declare "Biggest Price Drop Since 1980"?  To scare you out of your Gold so that the desperate banks can get it!  This is all about the desperation of the banks to get Gold to cover their sorry asses.  Think about it...if every ounce of Gold has 100 claims on it, where are the banks going to get the Gold to cover their promises to deliver to those claims without driving the price to the outer reaches of the galaxy?  They are going to try and steal it!

Is it just a coincidence that today's threat of a margin hike, an $80 drop in the price of Gold during ONLY the New York CRIMEX trading session, and a post-market margin  ALL hike occur on the day BEFORE the expiration of September futures contracts on August 25, 2011?  HELL NO!  This is blatant theft in broad daylight as our CFTC regulators lie on their couches in their offices watching Looney Tunes.  It is nothing we haven't seen before prior to a monthly options expiration.  The timing of it, and the ferocity of the take down, only exposes further the desperation of the Banking Cartel's massive naked short position in Gold, AND the lack of physical supply available to the Banking Cartel to cover their asses as delivery demands on Gold that does not exist begin to rise exponentially.

The criminal Banking Cartel was calling in more favors from the CME masters today, to bail out their sorry underwater asses because they have sold far, far, far more Gold than they own.  Their hope was to drive enough contract holders to the sidelines and lessen their chances of default because of overwhelming delivery demands.  This was clearly aimed at "speculators" that recently poured into Gold following Hugo Chavez'sunxpected demand that the Bank of England, Morgan, Barclays, Standard Chartered, and Scotia return Venezuela's sovereign Gold.  The realization that the Gold central banks have leased out over the past 15 years to suppress the price of Gold, may not be "available" [at any price] to be returned to them, sent Gold traders into a feeding frenzy upon the Banking Cartel's naked Gold shorts.

Since July 1st, the price of Gold has been rising, and accelerating higher as the shorts have been mercilessly squeezed.  This bogus margin hike by the CME has less to do with claims of "market volatility" and a whole lot do with bailing out these pathetic criminal bankers whose crimes in the Gold [and Silver] futures markets are finally coming into view under a very bright light.  Have the backs of the Banking Cartel finally been broken by the simple demand for the return of Gold leased to them by a small South American country?

Venezuela may be small, but they possess the worlds 15th largest horde of Gold, 401.1 tonnes, half of which has been leased by Morgan, Barclays, Standard Chartered, and Scotia...and sold into the market to suppress the price of Gold. 

The CME thinks the Banking Cartel on the CRIMEX has a delivery problem and needs to raise margin rates to protect themselves from default by these banks.  Global Gold investors think the Banking Cartel has a much bigger delivery problem than meeting futures contract demands.  Could Venezuela's "delivery demand" be the start of a "run on the Banking Cartel"?

The 21st Century Bank Run [exceptional reading]
from FOFOA
Today, the international need for long-term reliable money still exists. Only gold can play that role to satisfaction. Speculators aside, the paper gold trade (as largely explained in Aristotle's work) has functioned as a much needed currency of gold in a fashion very similar to that just described for the dollar during the Roaring Twenties...albeit with a floating dollar attachment rather than a fixed one. The paper gold is received and held as a contract that specifies a right to gold delivery, perhaps some as a lump sum, perhaps as installments. (Contracts can be written so many ways!) The key parallel, and purpose of this post is to show you that this works only as long as confidence is retained, and that excessive issues of claims has not jeopardized the real ability to get gold without being the one left holding the bag of paper gold when the bottom drops out.

You see, when a Bullion Bank issues new paper gold, what we like to call a "naked short", it is constraining itself by making sure it has at least 10% reserves, according to Mr. Christian, in case someone decides to take delivery. Now in the case of a commercial bank, 10% reserves of physical cash may not be such a problem during a modern bank run because new cash can be printed relatively quickly. But with gold this is not the case. So even at 10% reserves, any bank run on the Bullion Banks would be a disaster.

But the real problem comes from what these Bullion Banks consider reserves. You and I obviously realize that the only reserves that will suffice in a bank run are actual physical pieces of gold. But these banks are presently relying on certain "paper gold" items as their "physical reserves".

During the CFTC hearing Mr. Christian admitted that the CPM group uses the term "physical" in a very loose way. That "physical" actually means paper claims and physical combined. So these Bullion Banks are holding paper liabilities from other Bullion Banks and mining operations and calling them "physical reserves". Very circular, don't you think?

So under this loose definition of "physical gold", perhaps Mr. Christian was not lying. Perhaps the banks do constrain their naked shorting with at least 10% paper longs from "credible sources". And if so, I would guess that those credible sources also have 10% "reserves" behind their paper. And so on, and so forth.

Well, I hope you can clearly see the problem here. When the bank run finally begins people and entities will want real physical gold, not paper longs, or liabilities from credible sources.

It all comes down to gold, the actual physical stuff. That's what the people wanted during the bank runs of the 1930's. It is what brought down the London Gold Pool. It is what forced the closing of the Nixon gold window. And it will be what people want this time too. That's the real bank run... to actual physical gold in your own possession.

“There will be a short-term impact on gold prices,” Savneet Singh, the chief executive officer of New-York based Gold Bullion International, said in a telephone interview. “The long-term fundamentals are intact.”

Let's us then consider the modus operandi of today's Gold [and Silver] market take down.  A margin increase on Wednesday morning in Shanghai gets the ball rolling down hill.  The threat of another margin increase by the CME, hot on the heels of their August 11th increase, creates a profit taking panic in the Gold market.  The CME comes out with a margin increase following an $80 drop in the price of Gold during the CRIMEX hours of operation, and declares that "volatility" in the Gold market forced them to raise margin rates.  And all this took place within 72 hours of September options expiration at the CRIMEX on Thursday, August 25, 2011. 
If the "threat" [rumour] of a CME margin increase caused an $80 panic sell-off in Gold, and that sell-off was followed by and actual CME margin increase, would it be plausible to consider this a "buy the news" opportunity with "blood in the streets"? 

Considering the August 11 CME margin increase preceded a $190 run in the price of Gold, this panic move by the CME and the banking cartel should lead to an even bigger run-up in the price of Gold shortly.

My hunch is though, that Silver is going to be the biggest beneficiary of this recent increase in Gold futures margins, much as Gold was the beneficiary following similar margin increases piled on Silver to halt its rise to $50 back in early May.  September is an actual delivery month for Silver, and the Banking Cartel is in very serious trouble with supply in their Silver vaults.  Much more so than with Gold.  It might even be safe to say that today's Gold hit had more to do with shaking the longs from the Silver tree ahead of September delivery than it did in Gold.

Keep a very close eye on the Gold/Silver ratio.  Should it fall below 40, expect an accelerated rise in Silver to quickly follow. 

The banking Cartel is fast losing control of these two Precious Metals markets.  Their desperation is there for the entire world to see.  Their "shorts" are down around their ankles.  If only the CFTC would open their eyes.

Maybe gold isn't so safe after all. After months of setting record after record, the price of gold plunged $104, or 5.6 percent, Wednesday to finish at $1,757 per ounce. That was the biggest percentage drop in nearly 3 1/2 years and a blow to investors who thought the metal could go only one way -- up.

Yeah, right.  The mainstream financial media hasn't got a clue about what drives the Gold market.  As I told you in my post yesterday, THERE IS NO BUBBLE IN GOLD!

Tuesday, August 23, 2011

Going Down With The Ship: The Dumb Money Continues To Warn That Gold And Silver Are Bubbles

Stocks rose around the world on Tuesday as investors shrugged off signs of deteriorating economic sentiment in Europe and hoped the Federal Reserve would act to keep the U.S. from sliding back into recession.

If the US Federal Reserve has become the last hope to "save the US economy", then the US economy is officially hopeless.  What kind of economy do you have if it relies on handouts from it's central bank to keep it afloat?  A DEAD ECONOMY.  A stock market pumped up by funny money?  Why bother?

Only the dumb money is lining up for a Fed rescue that probably is not going to arrive, and is ignoring the fact that recent Fed "stimulus" has proven to be impotent.  While spending close to $900 BILLION  between Jan 1 and June 30, 2011 to resuscitate the US' lifeless economy, GDP "growth" struggled to stay above the flat line at 0.85%.  Stock markets today are lower than when the Fed began QE2 in Novemebr 2010.

Bernanke's much-awaited speech during the central bank's gathering at Jackson Hole, Wyo., later this week is setting up as a potential lose-lose situation: The chairman may not provide the market's desired signal for a third round of quantitative easing -or QE3-and even if he does it may not help.

That's the sentiment of a number of economists and strategists, despite a Monday market rally that appeared to be fueled by speculation that Bernanke will ride to the market's rescue at the same time and under similar circumstances in 2010.

"The market's sending a signal to Bernanke saying, 'We want QE3 and we want it this week, or we're going to hammer you and the market will get absolutely killed,' " said Keith Springer, president of Springer Financial Advisory in Sacramento, Calif. "The stock market is addicted to QE."

Bumbling Ben Bernanke has become the Pied Piper of global investors, throwing money out of helicopters as he leads them on a long walk off a short pier.  Has it not become clear to investors that the US Economy is "dead in the water" as they fall into the stillness of it?  Do they not yet realize that Captain Bernanke is only interested in keeping his floatilla of zombie banks afloat on a sea of printed money, while investors and American taxpayers slip below the surface and drown under the weight of their nation's bad debt?

The smart money is now lining up, in ever longer lines, for the few life rafts available as the US' Titantic economy begins to sink.  Gold and Silver, two of the World's smallest markets, offer more than the "hope" of survival in a sinking economy, they offer "life after death" of the economy.

Many Americans, desperate and not paying attention, are lining up, in ever longer lines, beneath the bright banner "We Buy Gold" to sell their Gold in the misguided belief that "Gold is in a bubble".  They might as well eat a three course meal and desert before they go swimming because they are going to go down with the ship. 

Gold is not in a bubble, neither is Silver.  A GoldCore blog post sums up the Gold Bubble fears:

The dumb money continues to warn that gold and silver are bubbles.

Their simplistic bubble thesis is based almost exclusively on the nominal US dollar price and recent price movements and on the assumption that (to paraphrase) ‘gold has gone up in price a lot - therefore it is a bubble’.

There is a continuing failure to look at the important supply and demand fundamentals of the gold and silver markets which leads to unsound reasoning and irrational conclusions. There is also a failure to adjust for inflation.

There is little knowledge of the very small size of the physical bullion markets vis-à-vis the stock, bond, currency and other markets.

There is also very little knowledge of financial, economic and monetary history and a continuing ignorance regarding ‘investment 101’ which is diversification.

Being prudent and having an allocation of 10% to gold will protect no matter what economic and monetary scenario develops in the coming months. If one is not leveraged and is prudently diversified and owns gold bullion (coins and bars in the safest way possible), it does not matter if gold is a bubble or not as you own a range of other quality assets.

From a purely investment point of view - an allocation of 5% to 10% makes sense.

From a financial insurance or store of wealth point of view – having a higher proportion of your overall net worth makes sense.

Especially given the risks posed to the dollar, euro, pound and fiat currencies and to deposits “guaranteed” by insolvent states.

Not putting 10% of your wealth in gold is extraordinarily imprudent today and a recipe for further financial destruction.

Gold is certainly due a correction after it's $300 run-up from the July 1st low.  After all, nothing goes straight up.  A 10% reaction/correction would be welcome, and actually make the Gold market even stronger by shaking out the weak handed "speculators".  It would NOT signal that a Gold Bubble had burst, far from it.  But a 10% move lower just doesn't seem likely amidst the uncertainty overwhelming financial markets at this moment in time.  [Barring a string of CME/CRIMEX margin hikes of course.]

By Frank Holmes
A more important driver that will keep gold prices elevated over a longer time period is the Love Trade. Marcus Grubb, managing director of investment at the World Gold Council (WGC), highlighted the significant aspects of this trend in his interview with Andrew Bell on the Business News Network (BNN). He says investors need to consider the issues outside of the euro zone, the debt-ridden countries and fiscal deficits.

More important to him is what he calls the “transfer of wealth from west to east” and the accumulation of wealth, particularly in China and India. This is what is driving the longer term strength in the gold price.

He states that the demand for gold is particularly strong in China: The country has a $3 trillion surplus, with some of it in gold, and he estimates that household wealth will most likely rise by five times. China and India also share a strong cultural affinity for gold as an investment and jewelry. For these reasons, Grubb believes this will drive gold demand.

September has traditionally been the beginning of the gift-giving season for gold. This is the time of year when gold jewelers are the busiest. The Muslim holy month of Ramadan begins in August and concludes with generous gift-giving in early September. Then it’s Diwali, known as “the festival of lights” in India, Christmas in the U.S., and Chinese New Year. The key to this seasonal strength over the past few years has been demand from China and India.

With approximately fifty percent of the world’s population controlling the Love Trade, we’re in for an exciting period.

If the economic ship is sinking, why are investors busy rearranging the chairs on the deck instead of seeking out a life raft?  If Gold and Silver represent the only life rafts available to investors fleeing a sinking ship, what happens when the life rafts are full, and there are still people left standing on the deck of the Titantic?  How can there be a bubble in Gold when the life rafts remain virtually empty.  So empty infact, that passengers are actually selling their seats in the hope that the party on the deck can go on forever...even as the ship sinks!

by Eric Sprott and Andrew Morris
As our analysis has revealed, gold is actually a surprisingly under-owned asset class - and one that has generated far more attention in the media than it probably deserves. While its exemplary performance since 2000 is certainly worthy of discussion, gold simply hasn't commanded enough investment to warrant the bubble fears it seems to have aroused among market pundits and business commentators. The truth about gold is that most people simply don't own it...yet.

To be clear, a speculative bubble forms when prices for an asset class rise above a level justified by its fundamentals. For this to happen, increasing amounts of capital must flow into the asset class, bidding it up to irrational levels. Gold may be trading at all-time nominal highs, but a look at investment flows proves that it isn't anywhere close to being overbought.

In their Gold Yearbook 2010, CPM Group noted that in 1968, gold held by individuals for investment purposes represented approximately 5% of global financial assets. By 1980 that amount had fallen to roughly 3%. By 1990 it had dropped significantly to 0.6%, and by the year 2000 represented a mere 0.2% of global assets. By the end of 2009, nine years into the gold bull market that began in 2000, they estimate that gold had increased to represent a mere 0.6% of global financial assets - hardly much of an increase. Gold ownership didn't change much last year either, as we estimate that this percentage increased to 0.7% of global financial assets in 2010.1 So despite gold reaching record nominal highs, the world holds about the same portion of its wealth in gold as it did over two decades ago. While this probably says more about the proliferation of financial assets over the past decade than it does about gold investment, it is surprising to note how trivial gold ownership is when compared to the size of global financial assets. The increase in gold ownership from 0.2% in 2000 to 0.7% in 2010 is also misleading. If you consider the approximate $227 billion that was invested in gold bullion in 2000, that level of investment would have grown to $1.18 trillion, or 0.6% of financial assets, by the end of 2010 - based purely on gold appreciation alone.2 In other words, the actual amount of new investment into gold since 2000 represents only 0.1% of current global financial assets, or about $250 billion. Although this number may seem large, consider that roughly $98 trillion of new capital flowed into global financial assets over the same period, so gold's approximate 0.3% share of global investment flows is essentially trivial.3

The 0.7% ownership data point also has interesting implications for global gold ownership going forward. Consider that to return to a meaningful level of gold investment, say to the 5% level of 1968, it would require over $9 trillion of gold investment today, or about 6.5 billion ounces of gold at the current gold price. This would represent well over 1.3 times the amount of gold ever produced throughout history and four times the amount of known gold reserves.4,5 So not only is the public relatively underinvested in gold, but at current prices it isn't even possible to increase our gold holdings back to a meaningful level.

Based on our findings, this notion of a gold bubble is patently false. The current investment interest in gold relative to other financial assets remains surprisingly low - about where it was two decades ago. Moreover, the modest valuations of gold equities highlight the absence of unbridled investor enthusiasm for gold investments. The fact is, despite all this talk about the gold bubble, the capital flows into gold vis-a-vis other financial assets have simply not been large enough to indicate any speculative mania. Investors can rest assured that they are not participating in any speculative bubble by owning gold. They are merely protecting their wealth.

If Gold investment "worldwide" accounts for only 0.7% of global asset allocations, how can Gold be in a bubble.  If Silver is a smaller market than Gold, how can Silver be in a bubble?

John Hathaway, manager of the Tocqueville Gold Fund, has estimated that in 1935 the market value of above ground gold reached 15% of US financial assets, while in 1980 – the year the Gold Price hit its inflation-adjusted all time high – it hit as high as 29%.  Today, Gold is not even close to being in a bubble.  Gold could not be further away from a bubble than it is today.

In 1980, one ounce of Gold was 7.6 times greater than the S&P 500, according to Gold Stock Analyst.  Currently, gold’s value is roughly 1.6 times greater than the S&P 500.  In order for gold’s relative value to return to 1979-1980 peak levels of 7.6 times the S&P 500, Gold Stock Analyst’s John Doody says gold prices would have to hit the $10,000 mark.  And Gold is called a bubble at $1900 by the mainstream media at every opportunity...

By KB Gold
The effect of suddenly moving a substantial amount of investment money into precious metals… would be like shoving an elephant into a mailbox. All the gold in the world—all the jewelry, coins, bars, molars, and church art—is worth an estimated $6.5 trillion but the vast majority of global gold is not freely traded. In fact, perhaps only 5 percent of all physical gold actually trades each year, which would make the investment gold market around $320 billion. The mining industry produced around 2,500 metric tons of gold in 2009, worth around $80 billion at the average price for the year. A little over half of every year’s gold production is used for jewelry and industry, so less than $40 billion was available to the global investment community… With these numbers, a large shift of funds into gold would cause it to rise sharply and fast. If it rose from the minuscule part it represents in the world’s largest portfolios today to just 1 or 2 percent of global assets under management, the price increase would be substantial. A rise to $10,000 an ounce is not out of the question. It wouldn’t be the first time gold has risen in such a way: The price of gold jumped 23-fold in the nine years ending in 1980 – and at that time there was no question about the solvency of the U.S. government nor about the health of the banking system.Many times throughout history, governments across the world have driven their countries to the brink of ruin in the name of “saving the economy” by printing money to cover climbing public expenditures. In times like these, decisions regarding what percentage of wealth to hold in stocks versus bonds should be considered alongside the questions “How much money do I want to have in the financial system itself?” and “Am I adequately protected from government errors that could harm my wealth?” Today’s situation is singularly dire, but it won’t last.

Investors Should Seriously Consider Owning Gold
Gold will never outperform stocks and bonds over the long run, because it does not grow or produce a cash flow but in light of the challenges facing most other investment classes at present, investors should think carefully about gold. There are no reliable models to determine if it is “overvalued.” What if the world’s investors decided to transfer 3 to 5 percent of wealth out of cash and into hard money? Considering that only 0.6 percent of global financial assets is currently held in the metal, such a movement could push gold prices into the tens of thousands of dollars per ounce. If we reached that point, [however,] would it finally mean that gold had become insanely expensive—or simply that the world had less faith in the printed paper debentures of profligate governments?

The life rafts representing the "great escape" from America's sinking economy remain virtually empty.  If you haven't purchased a seat to safety before our Titantic economy goes completely underwater, taking the US Dollar with it, your chance of survival will be greatly diminshed.  The window of opportunity for investors, for individuals, to control their chances for survival in a complete economic collapse is closing quickly.

In early June, Gold sage Jim Sinclair gave a final warning as to what lied ahead for the US equity markets and Gold.  The man's accuracy ceases to amaze me:

Eric King,
“Quantitive easing is the only tool that the Fed has had available to them. The Fed has pumped in trillions of dollars and the result of that pump-priming in the monetary sense has been only at best a modest recovery, and certainly making trillionaires out of some bankers, billionaires out of many of them.

We’ve come to a point now where if QE were to be stopped, you would see an implosion in the general equity markets...And yes gold would go down, the market would go down hard. The dollar would go up slightly to begin, but then fall back down again as the management of the economy was seen to have been ineffective and inefficient.

Gold would then start moving back up again and I think if QE was to cease, the recovery on gold from a modest reaction would be multiples upon multiples of that reaction and would lead the way to Harry’s $2,400, to Alf’s $3,000 to $6,000.

You can’t stop quantitive easing. If you stop quantitive easing the stock market will return to its recent low or lower. That alone by its impact on decision making will cause an economic implosion. We’re tied into this monetary stimulation, there is no way out of monetary stimulation. If there was any attempt to get out of monetary stimulation it would cause an economic accident which would require central banks to go right back where they were. That would be again, loss of control...

So because loss of control could be this summer’s event, the potential is gold could have a very serious run to the upside this summer.

If QE is continued then the basic uptrend in gold now so solidly intact, will continue in its power uptrend, and you could expect a stronger gold market this summer. I’d be very careful about seasonality in gold...There’s every possibility that gold could put on a summer rally of distinction.

...A cessation of quantitive easing could open up the black hole of Calcutta for the general equities markets in a way that very few really understand. You could see thousands of points taken off that market in a very short period of time.
The only way to overcome that would be by whatever name you called it to start the QE again. That would be indicative of a total loss of control. So the question is what would the price of gold be if it became publicly undeniable that control of the economic functions for the believers no longer resided in Federal Reserves and central banks?

The answer is gold would do what it historically attempts to do and that is to balance the balance sheet of the United States of America’s external foreign debt...and when we do the calculations we come up with a figure that is in excess of $12,500.”

And so, with summer nearing an end, the markets tread water waiting on QE3 from the Fed...exhausted.

And Gold is in a bubble?

Do you need just a little more proof that Gold in nowhere near to being in  bubble?  I've got some.  The following video presentation by Mike Maloney of, is not only proof that Gold is NOT in a bubble, but that by simply continuing to rearrange the deck chairs on the deck of our sinking economic ship, those without seats in the life rafts Gold and Silver face financial catastrophe in the not to distant future.


Monday, August 22, 2011

Gold And Silver: The TRUTH Is Winning

Stock index futures were higher on Monday following four weeks of equity losses as stocks rebounded globally, led by defensive shares.

Why?  Nothing has changed.  Could stock index futures be up because the Plunge Protection Team are buying them?  Oh wait, maybe stock futures are up because the US Dollar is down...

And weakness in the US Dollar must be the reason Gold and Silver got sold off overnight in London after they surged at the open in Asia Sunday night.  Gold hit a new ALL-TIME high, reaching $1894 just before the London Markets opened for business this morning at 3AM est.  Silver peaked at $44.01 just ahead of the London AM fix. 

The Gold and Silver sell-off, off of the overnight highs in Asia, continued as the CRIMEX opened in New Yok at 8:20AM est.  Shocking!  Silver dropped 1.9% in the first 12 minutes of CRIMEX trading this morning.  It's low of the day at $42.50, $1.51 below the over night high.  Gold lost $10 in the first 12 minutes of CRIMEX trading.  It's low of the day at $1858, $36 below the over night high.

NOTHING can account for the drop in either of the two Precious Metals, accept for the obvious.  Banking Cartel intervention, as the flow of wealth from the West to the East began to escalate, is the ONLY reason Gold and Silver were "hit" in an effort to slow the inevitable capitulation of the western fiat currencies to REAL MONEY.  The Western banks have the most to lose if the Precious Metals pin the Ultimate Loser ribbon on the US Dollar, and the Western banks are quickly losing control of their currencies.

Gold and Silver are rising at a rapid clip now because confidence in the Euro, the US Dollar, the Western banks, and their respective governments is falling faster by the day.

The Truth Is Winning.

By John Browne
The basic unwillingness of politicians to face economic and financial realities has caused the United States and European Union to face currency collapse. The politicians are content literally to paper over the problem with massive amounts of newly printed currency. This means that savvy investors, facing major real losses, are turning increasingly to gold. In essence, even though currencies are no longer on a gold standard, they are increasingly being "redeemed" for gold in the marketplace.

Precious metals now poised for next move up: John Embry[MUST READ]
"Granted, no market ever moves in a straight line. But the violence and depth of the corrections in the face of strong positive fundamentals, are nothing but paper manipulations, pure and simple."

"The good news is that the correction has sent both the nervous Nellies and Johnny-come-latelies packing, while creating remarkably negative sentiment."

"Both results are preconditions for the next move up...something I believe will not only be imminent, but powerful to boot."

Gold and Silver are rebounding strongly off of their Banking Cartel induced lows as I go to post here at 10:30AM est.  I am expecting the "rally" in the equity markets to fade here, as again, NOTHING HAS CHANGED.

4PM est updated

The rally in stocks faded into todays close.  The Banking Cartel induced reaction in Silver off it's overnight high of $44 has potentialy set Silver up for another explosive move higher:

Thursday, August 18, 2011

ZERO Fed Funds Rate Equals Undercover QE3

Economists see growing risk of global recession- AP

NO WAY!  Shocking revelation, that.

A funny thing happened in the stock market slaughter today.  Silver went up!

Recall during last weeks equity market carnage, Silver was savaged along with all the other "industrial commodities".  Today was different.  Has Silver begun to assert it's monetary status, following in Gold's footsteps?  Perhaps...

By Gene Arensberg, Got Gold Report
Combined COMEX commercial traders and Swap Dealer net buying in part responsible for $37 silver support.

HOUSTON – The CFTC commitments of traders (COT) report for last week showed that commercial traders covered or offset a considerable amount of their net short positioning in gold futures as we reported in these pages yesterday. The report also showed a similarly large ‘get-out’ by the commercial traders in silver, but that’s not the only thing analysts find interesting in the government reports covering the positioning of the largest metals futures traders.

As silver fell $3.25 or 8% Tuesday to Tuesday (the cutoff for COT data released each Friday), to close at $37.52 on the Cash Market, the collective net short positioning of the traders the CFTC classes as ‘commercial’ (LCNS) dropped by a very large 9,247 contracts or 20.7% from 44,588 to 35,341 contracts net short.

It is interesting to note that in the five reporting weeks from June 28 to August 2, as silver traveled from $33.91 to $40.77 (+$6.86 or 20.2%) the combined commercials, which include the Producer/Merchants and Swap Dealers, increased their net short bets on silver futures by 15,422 contracts, each covering the action of 5,000 ounces of silver metal. Thus, in the five weeks prior to this latest report, as silver rose just under $7, the Big Sellers of silver futures added about 77.1 million ounces worth of bets that would benefit if silver fell in price.

As we noted above, in the past reporting week, as silver gave back $3.25 or roughly half of the 5-week price advance, the combined commercials covered or offset contracts representing 46.2 million ounces or roughly 60% of what they put on net short for the period. For each $1.00 drop in the price of silver, the combined commercial traders covered or offset about 14.2 million ounces worth of futures contract net short exposure.

Swap Dealers were adding to their net long positioning in silver as they were covering their net shorts in gold.

Bottom line: The COMEX combined commercial futures traders strongly reduced their net short positioning for silver futures on that $3.25 drop in the price of silver and the Swap Dealers increased their long position significantly. Since then the price of silver has crawled its way back to almost where it was the prior Tuesday, so the commercials apparently had good instincts when they decided to get smaller on the short side with silver in the $37s. We can say that their short covering and the Swap Dealers long position taking helped to put the floor under silver in the $37s instead of a lower mark, can we not?

And can’t we then say that it looks like the largest, best funded and presumably the best informed traders of silver futures were positioning more for higher prices than lower prices as silver only dipped to the $37s? We certainly cannot say that the Big Sellers were even net sellers over the past week. They were net buyers instead.

Is the hand writing on the wall?  Has the enemy sought asylum in the Silver Bull's camp?  Time will tell...

...and what more could be said about Gold...  Blue Sky Baby!

As each day now passes, Gold asserts itself not only as the "currency of choice", but The Currency Of Last Resort!  Fiat = Debt, Gold = Freedom.

At 8PM est, Gold hits yet another new ALL-TIME high of $1836.

Another down day on Wall Street, and the cries for QE3 again grow louder, but fall on deaf ears.  There will be no "announced" Fed monetary support mechanism.  Everybody wants one...expects one to be announced at any time...and that is why there will not be one.  That side of the boat is too full:

From Zero Hedge, via Phoenix Capital Research
The primary reason the markets have held up since QE 2 ended was because the bulls believe QE 3 is coming soon. I myself believe this is true (that QE 3 is coming) but it’s going to take a lot more for it to arrive than most expect.

Why are so many pining away for QE3, when QE2 was such a dismal failure?  Other than propping up the banks, AND the stock markets, QE2 did little to "boost the economy", but it did a lot to boost stock and commodity prices.  And everybody should know by now that a rising stock market is hardly indicative of a strong and growing economy.  The Fed spent $900 Billion dollars on QE2 between November 2010 and June 2011 and got less than 1% GDP growth out of the economy in the first half of 2011.

Americans are brainwashed into believing that a strong stock market equals a strong economy...pure bullshit.  QE2, QE3, 4, 5, or doesn't matter, they are not intended to "boost the economy".  Quantitative Easing is intended solely to prop up the banks, increase asset prices, AND fund the ever growing debt of the USA.

What if I told you QE3 is here now, and in full swing as I type this, and you read it?  These Fed guys may seem dumb, but they ain't stupid.  In fact, they are down right sinister.  Bumbling Ben Bernanke's decision to keep the Federal Funds rate at 0% for the next two years is QE3 in disguise.

Many have wondered who the US Treasury would sell their new debt to, following the raising of the debt ceiling. 

"Why the Fed, of course.  They have bought 70% of the debt the USA has issued in the past year already."

That looks good on paper, but, one, it is politically unacceptable today, and two, their is reluctance among the Fed governors for the Fed to add to their billowing balance sheet by purchasing more US Treasury debt.  There will be no "announced" QE3, but there will be a backdoor purchase of the US Debt by the Fed...indirectly, QE3 "undercover".  It won't do much for the stock market, but it will go a long ways towards financing the USA's debt appetite...and inflating asset prices [except for real estate].

Sadly, the Undercover QE3 will be as ineffectual at boosting the economy as QE2 was.  Undercover QE3 will actually do more harm to the economy, than it will do any good.  With Undercover QE3, the Fed will print money, give it to the banks for free, they will increase their borrowed amount with leverage, and use the money to buy US Treasury debt that nobody else wants.  The potential for hyperinflation is exponential within Undercover QE3, AND the Fed further becomes the facilitator of a choking debt sure to bury America alive.

By: Peter Schiff
Moving past the previously uncertain pronouncements that they would “keep interest rates low for an extended period,” the Fed now tells us that rates will not budge from rock bottom for at least two years. Although the markets rallied on the news (at least for a few minutes) in reality the policy will inflict untold harm on the U.S. economy. The move was so dangerous and misguided that three members of the Fed’s Open Market Committee actually voted against it. This level of dissent within the Fed hasn’t been seen for years.

Many economists have short-sightedly concluded that ultra low interest rates are a sure fire way to spur economic growth. The easier and cheaper it is to borrow, they argue, the more likely business and consumers are to spend. And because spending spurs growth, in their calculation, low rates are always good. But, as is typical, they have it backwards.

It was bad enough that the Fed held rates far too low, but at least a fig leaf of uncertainty kept the most brazen speculators in partial paralysis. But by specifically telegraphing policy, the Fed has now given cover to the most parasitic elements of the financial sector to undertake transactions that offer no economic benefit to the nation. Specifically, it will simply encourage banks to borrow money at zero percent from the Fed, and then use significant leverage to buy low yielding treasuries at 2 to 4 percent. The result is a banker’s dream: guaranteed low risk profit. In other words it will encourage banks to lend to the government, which already borrows too much, and not lend to private borrowers, whose activity could actually benefit the economy.This reckless policy, designed to facilitate government spending and appease Wall Street financiers, will continue to starve Main Street of the capital it needs to make real productivity-enhancing investments. American investment capital will continue to flow abroad, denying local business the means to expand and hire. It also destroys interest rates paid to holders of bank savings deposits which traditionally had been a financial pillar of retirees. In addition, such an inflationary policy drives real wages lower, robbing Americans of their purchasing power. The consequence is a dollar in free-fall, dragging down with it the standard of living of average Americans.

Think about this for a moment.  The banks profit... at no risk ...borrowing FREE money from the Fed,  and purchasing US Treasury debt that nobody wants.  And all the while the Fed says they are keeping interest rates at ZERO in the hopes that this will "promote growth" in the economy? 

How dumb are Americans?  Guess who pays the 4% interest to the banks for their risk free profits by buying US Debt with FREE money?  American Tax Payers!  Outraged yet?  A 4% return on $1.5 TRILLION is $60 BILLION right out of the American taxpayers pocket.  Thanks Ben!

I wonder what goes through Ben Bernanke’s mind as he sits in his gold plated boardroom in the majestic Marriner Eccles building in Washington DC and decides to screw grandmothers in order to further enrich Wall Street bankers. He just pledged to keep interest rates at zero percent for two more years. Ben is a supposedly book smart man. Does he have no guilt or shame for what he has wrought? How does he sleep at night knowing he has created bloody revolutions around the globe due to his inflationary zero interest policy? People are dying because he has decided that an elite group of Wall Street bankers who recklessly brought down the worldwide financial system in 2008 deserve to be kept alive and enriched at the expense of the many.

He uses words like transitory to describe inflation. Even as the price of gold reveals his lies he continues to promote policies that will lead to the demise of the USD and our economic system. There is only one way to counter his lies – truth. With a corporate fascist government run by the few for the benefit of the few, telling the truth is treason as stated by Ron Paul:

“Truth is treason in the empire of lies.”

The storyline being sold to you by Bernanke, his Wall Street masters, and their captured puppets in Washington DC is that deflation is the great bogeyman they must slay. They make these statements from their ivory jewel encrusted towers as the real people in the real world deal with reality. The reality since Ben Bernanke announced his QE2 policyhis Wall Street masters, and their captured puppets in Washington DC is that deflation is the great bogeyman they must slay. They make these statements from their ivory jewel encrusted towers as the real people in the real world deal with reality. The reality since Ben Bernanke announced his QE2 policy in August 2010 is:

•Unleaded gas prices are up 45%.
•Heating oil prices are up 46%.
•Corn prices are up 71%.
•Soybean prices are up 26%.
•Rice prices are up 13%.
•Pork prices are up 31%.
•Beef prices are up 25%.
•Coffee prices are up 38%.
•Sugar prices are up 48%.
•Cotton prices are up 13%.
•Gold prices are up 42%.
•Silver prices are up 115%.
•Copper prices are up 23%.

These are the facts and they fly in the face of the lies being spouted by Bernanke and his Federal Reserve cronies. Words like transitory, quantitative easing, extended period, and liquidity are used by Professor Bernanke to obscure what he is doing to the average American.

"The official inflation rate is 3.6%, but anybody with an IQ above 70 knows that’s a statistical lie."  - Greg Hunter, USAWatchdog

According to economist John Williams of, the true annual inflation rate is around 11% (if calculated the way Bureau of Labor Statistics did it in 1980).   If you are a "saver", an interest rate of 2% [if you are lucky] will not protect your savings in an environment with 11% inflation.  In fact, your real return on your savings would be negative 9%.  You would lose $9 of purchasing power, for every $100 you had in savings.  I would consider that theft, wouldn't you?

The Precious Metals thrive in a negative interest rate environment:

By Andy Hoffman
RANTING ANDY – In all the hype around the early August Fed meeting, yet again the entire investment world (and clueless media, of course) completely misunderstood the RAMIFICATIONS of the policy statement. Let’s not get into the fact that the Fed prints VASTLY more money than it purports, sending trillions to insolvent banks and market manipulation activities each year, on a 24/7 basis, as well as to fraudulent offshore entities such as the “Caribbean banking centers” that mysteriously emerged in recent years as enormous U.S. Treasury bond buyers. Heck, we’re no longer in the “Sunday Night Special” phase of collapse, but frankly an “EVERY DAY AND NIGHT SPECIAL” phase, not just in the States but all of Europe, Japan, and nearly the entire FIAT-DISEASED WORLD.

Aside from the COVERT money-printing noted above, the Fed has an OVERT money-printing policy, which at this moment “the Street” erroneously believes engenders ONLY the reinvesting of interest payments into the Treasury market. However, what the Street does not understand is that maintaining the Fed Funds rate at 0% entails MASSIVE, DAILY PURCHASES OF TREASURY SECURITIES WITH FRESHLY PRINTED MONEY. This is “daily QE”, not to be confused with the “supplemental QE” involved with a $600 billion Treasury/MBS repurchase program, the latter of which was referred to as “QE2.”

But this “daily QE” is the essence of “QE to Infinity”, and thanks to the Fed’s INCREDIBLY MORONIC statement last week, is now GUARANTEED to occur for at least two more years (if the dollar lasts that long).

Stockman, who has long been a critic of the Fed's low interest rate policy, says it is "totally wrong." Stockman says "exceptionally low" interest rates have resulted in excessive speculation on Wall Street "that is utterly destroying our capital markets" and adding to the already unsustainable debt crisis. He goes on to say, "The fact is the Fed is the number one problem holding back this economy, punishing savers, savaging low income people trying to buy food, energy or fuel."

By Daniel Indiviglio
Its latest policy to keep interest rates near zero through mid-2013 could backfire and prevent home sales instead of encouraging them.

Basic economic theory says that when mortgage interest rates are low, consumers should feel more encouraged to buy a home. But right now, that intuitive theory might not hold. Kathleen Madigan at Real Time Economics proposes that the Federal Reserve's latest proclamation -- that short-term interest rates would be kept near zero through mid-2013 - might discourage home buying. Could this be possible?

This might seem like a backwards idea. To be sure, the last thing that the Fed would aim for is to make the housing market worse off. So why would it allow one of its policies to keep home sales artificially low? This might be an unfortunate and unintended consequence of its desire to calm the broader market.

The logic works here because home prices are declining. Nobody is sure how far they might fall or when they'll finally hit bottom. But we can feel fairly confident that prices aren't there yet. But what do we now know? Interest rates will be low for another two years. So why hurry to buy a home now?

Savvy potential home buyers who can wait the market out now have a good reason to do so. They don't have to worry about interest rates rising before the market bottoms. Instead, they can wait for the market to continue to decline. If it appears to bottom out in the next two years, then they can step in and finally buy at that time. But if prices keep declining over this period, then they'll be smart to buy in the first half of 2013, just before interest rates might begin rising. In the near-term, you might be better off waiting.

This actually makes a lot of sense. Prior to the Fed's August revelation, one of the best arguments for why it might make sense to buy a home in the near future was that interest rates will rise. As long as the Fed is holding them down, then this argument begins to disintegrate.

By Prashant Gopal
U.S. mortgage rates fell to the lowest in more than half a century as concern that the global economic recovery is faltering spurred demand for bonds that guide home loans, according to Freddie Mac.

The average rate for a 30-year fixed loan dropped to 4.15 percent in the week ended today from 4.32 percent, the McLean, Virginia-based mortgage financier said in a statement today. That was the lowest in more than 50 years, Freddie Mac said. The average 15-year rate fell to 3.36 percent from 3.5 percent.

“The low rates are doing absolutely nothing to stimulate the market for existing homes,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “It’s a combination of tight credit and weak demand coming from uncertainty and housing prices falling.”

The Fed's ZERO interest rate policy is destined to do more to hurt the US economy than to save it.  Yet the mainstream financial media are determined to sell the policy to us as "just what the doctor ordered" for the economy.  The economy would be in better hands if they were the hands Dr. Kevorkian.

Would you expect anything less from a financial media convinced that "Gold is in a bubble"?