Tuesday, November 1, 2011

Gold and Silver Tell The Truth: There Are NO Safe Havens In Fiat Money

"Logically the "last domino" is where the Ponzi scheme all began, The United States."
 -Bill Holder, GATA

What goes around, comes around.

The US was the first to stumble in the Global Financial Crisis...and they will be the last to crumble.

After Gold and Silver roared to life last Tuesday on the "supposed" Greek bailout news, I suggested Thursday that a retest of the key breakouts in both Precious Metals could not be ruled out.  Low and behold, both Gold and Silver have returned to their launch points this morning.

This morning's low in Gold is $1680.  This morning's low in highly volatile Silver is $32.11.  Both Precious Metals have bounced sharply off these lows despite the US Dollar's "safe haven" bid in the face of the Japanese Yen intervention, the Greek bailout referendum news, and the MF Global bankruptcy.

ALL three of these news "events" are bullish for the Precious Metals.  There are no if, ands, or buts about it.  But in our wacky George Orwellian world in which we live today, Gold and Silver must be beat down to hide their TRUTH.

"Truth is like the sun. You can shut it out for a time, but it's not going to go away."
 - Elvis Aaron Presley

“The Bank of Japan stepped into the Forex markets overnight [Sunday night] in an attempt to punish the impertinent speculators who have dared to nullify their former intervention efforts undertaken back earlier this year when the nation suffered the onslaught of the earthquake/tsunami.

Note the previous intervention, which I might add was a VERY RARE example of COORDINATED CENTRAL BANK EFFORTS involving the BOJ, the ECB and the FED. If intervention is going to be effective, it will generally need to be coordinated, sustained and have an eventual fundamental backing. Without those factors, it always ends up being a gigantic waste of money.

Note that even this coordinated intervention failed to stem the advance of the Yen. Now are we to believe that the Lone Ranger effort by the Bank of Japan this time around is going to be successful? Hardly. They have bought a bit of time but all that will happen is that speculators will use the intervention to step in on the buy side of the Yen and get it at a lower level.

In the process of intervening however, the Bank of Japan is devaluing the Yen when measured against Gold. Gold still remains a store of value protecting those who own it against the depredations of their own monetary authorities.”
- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

The Japanese intervened in the currency markets Sunday night to FORCE the YEN down...they do this by selling Yen [that they print] and buying US Dollars. This creates a [phony] bid in the Dollar and that of course pressures the Euro lower.

This action is HIGHLY positive for Gold and Silver, but as we saw following the Swiss Franc intervention in September, the precious Metals were not allowed to reveal the TRUTH about currency interventions.  In the big picture, currency events like this will only make the Precious Metals go higher than we already believe they will...given time.

Doubts Cloud Tokyo's Yen Intervention
Japan's government hopes the third time is the charm for its efforts to weaken the yen.

But currency traders already are casting doubts over whether Japan's intervention in currency markets on Monday will successfully put the brakes on the currency.

Japanese officials have struggled this year to curb a rise in the yen that undermines the country's economy by making its export sector less competitive overseas.

After Japan's move Monday, the yen immediately dropped, but some investors were quickly buying, betting on Japan failing. They note that the yen bounced back from this year's two other interventions, as well as an attempt in September 2010.

Constantine Ponticos, managing director at Pareto, a firm that manages some $40 billion in currencies, said his firm's Absolute Return fund bought yen following Japan's intervention. Pareto is a unit of Bank of New York Mellon Corp. He views Japan's latest dollar-buying as a relatively modest ploy to help Japanese exporters trade their stash of dollars for yen at an attractive price before month-end.

Japan defends yen intervention
By Lindsay Whipp
The Japanese government has defended its unilateral intervention in the currency markets after criticism from Europe that its action could reignite global “currency wars”.

Jun Azumi, Japan’s recently appointed finance minister, said his decision to order the Bank of Japan to sell yen and buy dollars was “within the scope” of international currency policy and that he was engaged in “a battle of nerves” with the markets that are far from reflecting the economic fundamentals of his country.

Yen intervention raises fear of currency wars
By Chris Giles, Lindsay Whipp and Hugh Carnegy
Japan intervened in the currency markets to weaken the yen on Monday, exposing the dearth of global economic policy co-ordination just days before Friday’s summit of the Group of 20 leading economies in Cannes.

The move was greeted with dismay in Paris where officials warned of the difficulty of achieving agreement on currency issues at Cannes but said they were determined G20 members would not resort to mutually destructive currency wars.

In Berlin, officials stressed the need for co-ordinated currency intervention, such as the efforts of the Group of Seven advanced economies to stop the yen appreciating after the Japanese earthquake and tsunami in March. Monday’s move by Tokyo “looks uncoordinated”, one official said.

Currency markets have been in turmoil this year as investors pour money into perceived havens such as Japan and Switzerland. The Swiss Central Bank in September successfully imposed a “ceiling” on the swiss franc above which it would not let the currency rise. As a member of the G7, Tokyo is more restricted in the extent to which it can intervene, forcing the finance ministry to sell yen in short and sharp bursts.

Jun Azumi, Japanese finance minister, argued that the continued rise in the yen had been “speculative” and did not reflect the “fundamentals of the economy”. Tokyo sold billions of yen early on Monday in its third intervention this year.

Switzerland and Japan were BOTH considered "currency safe havens", yet the governments of both have decided otherwise, and intervened in their markets to weaken their local currency in the name of "defending their export markets".  Both interventions forced a bid into the US Dollar causing it to rise artificially.  How long until the government of the united state decides to "intervene" on the side of the US Dollar to protect it's export market?

Well that's a stupid question...the US Government doesn't need to intervene in the currency markets to lower the value of the US Dollar, they just allow the Fed to print more of them to take care of that problem.

Seriously, for how much longer are the paper currency markets going to be looked to for safety in this financial crisis if the central banks remain hell bent on weakening their currencies in the name of self defense?  Could the on-going race to the bottom of the currency barrel be any more clear?  The lack of "safety" in the paper currencies is becoming more obvious as each week passes now.  Gold and Silver are sure to rise above the burning ashes of these currency corpses to win the day...and reveal the TRUTH about "sound money".

We can not ignore the fact that the Japanese Yen intervention's effect on the markets was compounded by the "failure" of the Greek Debt Bailout to gain any traction following it's announcement last week.

Greece Sends Global Markets Into Tailspin Again: European CDS Spreads Demand Another Bailout

Greece Shocks Markets With Referendum on Austerity- AP

Stocks fell sharply early Tuesday on worries that a planned Greek referendum could scuttle a plan reached last week to resolve Europe's debt crisis.

More bad news on the Euro zone debt problem has forced the Euro to give up ALL of it's gains last week, and then some, forcing a bid into the US Dollar as a result. 

The Yen and Euro are being sold hard, and of course that leads to buying of the Dollar...the least ugly horse in the glue factory. How much longer can this foolish behavior last before the currency markets forsake this house of cards for the bedrocks of sound money, Gold and Silver?

Someone Is Going To Jail For This: MF Global Caught Stealing Hundreds Of Millions From Customers?

A little reported fact about MF Global is that it is one of the 22 Primary Dealers in US Treasuries.

Did Primary Dealer MF Global Dump Its TSY Inventory And Exaggerate Thursday's Equity Rally?

New York Fed Statement On MF Global, Or How 22 Primary Dealers Became 21 Primary Dealers

MF Global is the 8th largest bankruptcy filing in US history.  This story is not going to go away quickly, and it's implication as to the financial system remains to be seen...or covered up.

Gold is continuing to move up off it's lows this morning despite efforts to halt the bounce.  $1712 is near-term resistance.  Judging by the volume off of this morning's low, a buying opportunity was at hand as Gold retested the breakout at $1677.

Silver is following Gold's lead this morning.  Big volume has followed Silver's bounce off this morning's low near 32.  Near-term resistance lies near $33.50.

Closes in Gold above $1712, and Silver above 33.50 today should lead to a resumption of the current uptrend move off our recent market lows seen October 20th.

The current bid in the US Dollar can only be tolerated by our market riggers for so long as persistent strength in the Dollar puts maximum pressure on the equity markets...sad as that may be.

The US Dollar has upside to 77.87 on the US Dollar Index here, and support at 77.28.  It's move through it's 50 day moving average today at 76.71 has emboldened the Dollar Bulls, but they may have hit the wall here near 77.50 as the fuel from the present short squeeze in the Dollar is drying up.  Unless Japan remains vigilant in their Yen Intervention it is unlikely many "real buyers" materialize in the Dollar here.  In fact, many currency market participants are likely using this short term strength in the Dollar to unload more positions, and pick up more Preciouos Metals at renewed discount prices.

Buy PHYSICAL Gold and Silver while it is still available!

MF Global? France? ...OUNCES!
From Bill Holder for GATA at: http://www.lemetropolecafe.com/
To all; the news this morning is that MF global has been suspended as 1 of the 22 primary dealers in Treasury securities by The NY Fed. CME group has limited them to "liquidation only", this is a death sentence. Are they another Lehman Brothers? How big and what type of counterparty risk do they have? Who do they have it with? Should they fail, what sort of "ring fence" is or can be set up around them. Lots of questions and I guess we will find out the answers in due (short?) time.

Across the pond, it looks like Portugal and Spain have been leapfrogged by the speculators spotlight and Italy has now come into the crosshairs. Their yields on sovereign debt paper have jumped to new highs and thus new lows on their bonds (their stock market is down 3.5%). Italian CDS rates have blown out but we all know this is a mugs game because as we have seen, the 50% haircut in Greek bonds is not a "default event". The "cashier's window" is permanently closed so why even enter this casino? Italy is multiple times the size of Greece and truly a blasting cap for the the nuclear banking system. Why? Because the French banks have such huge exposure there! I don't believe we even need to see Italy get as far down fantasy lane as Greece before the French banking system and thus the ENTIRE Western banking system begins to cascade.

As in WWI, I believe France is the "maginot line" that if crossed is the end. The French banks, (sovereign French paper) CANNOT become the primary target of speculators. Once the speculative sights are set on Paris "too big to save" will become the operative words. In reality it is now only a matter of time! ...And market reactions to MF Golbal and Italy? Dollar up...Gold down. Again, how can no one see "it" and do the math and logic? Actually I am sure they are, Mother Nature is being masked by "unofficial, official trading". The math and logic? Where it all ends? All you need to do is follow the dominoes. Logically the "last domino" is where the Ponzi scheme all began, The United States.

As I have maintained since forever it seems, the cascading collapse will occur very rapidly and I believe terminate in a global financial holiday. Today's computerization will make the "end" happen overnite. Of course the Dollar is now (as always) catching bids in "safe haven fashion". How stupid! The U.S. is now at 100% debt to GDP (with on books obligations), Lord knows what it is when all obligations are included, 6, 7, 8, to one or more? The U.S. is in no way a safe haven, Gold and Gold alone is. Gold IS money and IS/WILL BE liquid when the roof comes down. Gold will be the "last man standing" and will attract so much demand that sellers will evaporate afraid that they are selling something real for something that is worth nothing. The move so far from $250 to the current level is absolutely NOTHING compared to where it will be when untold $ Trillions upon $ Trillions flee paper into REAL SAFETY!

We are truly cursed and blessed at the same time, we must live through what is mathematically coming. We will suffer the consequences yet be able to be witness to what surely will be remembered in history books as we remember the Roman Empire today. Fortunes will be lost and gained. These fortunes depend entirely upon how you are positioned into the "holiday". Yes, you can try to trade and gain Dollars in the short run, or you can be fully invested in precious metal investments and come out "the other end" of the holiday with maximum OUNCES! Ounces will be what are counted, not Dollars, Euros, Yen or Pounds. Ounces will be liquid,... acres, barrels, bushels etc. will be less liquid. No matter what occurs "from here to there", DO NOT get scared out of your positions, THIS is exactly what "they" are trying to do. DO NOT TRADE! Maximum "ounces" in hand and in the ground are what will matter! Be smart and do not let volatility make you re enter the casino, you have already been to and paid at the cashiers window...DON'T go back inside! Regards, Bill H.

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