Gold And Silver: BE RIGHT, AND SIT TIGHT

"I do know one thing though. Every single holder of the “Big Silver Short” has gone belly up! It started with Drexel Burnham in the 1980′s then got passed to AIG then Bear Sterns and it now presides at JP Morgan.

If no one takes the torch from JPM we will see the end of Silver market manipulation very soon."

 -Bix Weir, www.RoadtoRoota.com



It was the change in my own attitude toward the game that was of supreme importance to me. It taught me, little by little, the essential difference between betting on fluctuations and anticipating inevitable advances and declines, between gambling and speculating. I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, "Well, you know this is a bull market!" he really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend. And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance. – Jesse Livermore




Knowing the Game
Theodore Butler | May 9, 2012

So how is the price of silver and gold set on the COMEX? The price is set as a result of the continuous competition between what are called commercial traders and speculators (aka non-commercials). However, the term commercial trader is a misnomer for the most part as these traders are usually just speculating. The way US futures markets are supposed to work is that hedgers (real producers and consumers) transfer price risk to speculators. In reality, it hardly works that way at all. Very few silver miners hedge production. Additionally, real hedgers don’t trade excessively on a short term basis and such short term trading makes up over 90% of daily trading volume in silver and gold on the COMEX (and in other markets). Therefore, the trading is between two competing speculative groups, one being called commercials.

Perhaps the best way to view the commercials is as market makers who take the opposite side of any trade the speculators desire to buy or sell as a group. There must be a long for every short and vice versa and the commercials will take the opposite side of whatever side the speculators choose. The problem is that the speculators generally are influenced by technical price signals and even those speculators who aren’t purely technical also tend to buy as prices rise and sell as prices fall. Almost all of the speculators are fiercely independent traders with no affiliation with other speculators. Even though there is no reason to suspect collusion among the speculators, the fact is that these very independent traders generally buy and sell en masse; buying on the way up in price and selling on the way down. The speculators are not trading as a group intentionally; that’s just an unintended consequence of them all relying on price changes to buy or sell. The speculators take positions because they believe each trade has the potential to be profitable.

Very much unlike the speculators, the commercials have a completely different objective. Instead of focusing on the profit potential of any individual trade, the commercials’ mission is to master and manage the speculators as a group. It’s kind of like men are from Mars and women are from Venus; the speculators and the commercials have two completely different mindsets in their respective approach to the markets. The speculators are focused on the next trade and their positions; the commercials are focused on mastering the speculators. In my opinion, the speculators have no clue or may not care that they are the target of the commercials. This gives the commercials a big advantage.

Because the commercials have a leg up on the speculators in knowing how the game is played, the commercials have been able to develop a market approach very different from the speculators’ approach. Unfortunately, many of the techniques developed by the commercials would appear to be flat-out illegal. In fact, I believe a strong case can be made that because the commercials’ approach is of managing the speculators, the net result is market manipulation pure and simple. The first definition for manipulation I uncovered on Google says it all, “exerting shrewd or devious influence especially for one’s own advantage.”

The commercials, particularly in COMEX silver and gold, have perfected a number of techniques to aid themselves in manipulating the speculators, including the ability to set prices on a short term basis, particularly when the markets are thin (overnight) and by High Frequency Trading (HFT) at other times. These techniques have been discouraged by the regulators in many markets, but not in gold and silver. Having the ability to set prices at will gives the commercials a big leg up on controlling the speculators behavior. Think of it – one group of traders (the speculators) relies on price signals to buy or sell and the other group of traders (the commercials) has gained control of the price signals. It would not be an exaggeration to view the speculators as puppets and the commercials as the puppeteers. That this set up is anti-free market goes without saying.

Perhaps the simplest proof that what the commercials are doing is illegal lies in the fact that the commercials are collusive in their actions. In fact, collusion is required for the commercials to pull off their scheme. Let me define collusion as Merriman-Webster does, “a secret agreement or cooperation especially for an illegal or deceitful purpose.” What simple proof can I give to show that the commercials are collusive? I think government data should do the trick.

READ MORE

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Sprott Berates Berkshire's Buffoons And Says "All Markets Are Manipulated"

Submitted by Tyler Durden on 05/09/2012 15:35 -0400

From the moment we all got to peek behind the over-leveraged financial system reality thank to Lehman's collapse, the-powers-that-be have made every attempt to stop this whole thing unraveling. Eric Sprott humbly suggests, when the CNBC anchor in the following clip questions recent gold price action as evidence of something wrong in his thesis, that just as Jim Grant opines, "All markets are manipulated" and that Central Banks (who are desperately trying to revive the dying system in every extreme monetary scheme possible) simply do not want to see the price of gold rising. He then notes that Silver is likely to be the investment of the next decade (although offers no strong thesis other than levered gold). Shrugging off the obfuscation from Omaha, "People who sell paper gold and paper silver can rule the markets in the short-term but physical participants will win the day in the long-run". Detailing some fundamental drivers for gold's advance, as the investment of the last decade and so for those three gentlemen (Buffett, Gates, & Munger) who missed it, I don't know that I should respect their opinion at this point in time.

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From Dave In Denver, The Golden Truth

Perhaps the Truth about Buffet's hatred of gold is best expressed in graph which shows the long term performance of Berkshire Hathaway stock priced in terms of gold - this is the market expressing it's view:

(Click on chart to enlarge)

 

(source:  link)

Priced in terms of gold, Buffet's wealth as represented by the price of his Berkshire Hathaway stock has declined 30.5% in the last three years and a staggering 77% since late 1999.  Did Warren or Charlie happen to bring up this little factoid at their annual shareholder soiree this past weekend?  Buffet's cult-like mush-brained followers slavishly follow him around lapping up any crumbs he might drop for them like the pied-piper, thus it wouldn't have mattered anyway...

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Gold's Setback 'Barely Registers' In Long View 

- King World News, May 10, 2012

Today Egon von Greyerz told King World News that “these are massive historic events we are witnessing.”  Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland.  Von Greyerz also said, “investors need to be positioned for more chaos in the future.”  But first, here is what Greyerz had to say about gold:  “A lot of investors are nervous today, you can see that in the markets.  But if you look at the gold market, for example, the fact that the gold price is down 17%, in terms of dollars, from the $1,920 level and down less than 10% in euro terms, we are still consolidating at a very high level.”

Egon von Greyerz continues:  

“The 2008 correction lasted about the same amount of time, seven or eight months, but that correction was 30%.  Stepping back and looking at this minor correction, in this massive uptrend, where gold has risen twelve consecutive years, this reaction barely registers on the longer-term chart.

It was very clear fifteen years ago that the credit bubbles and the derivative bubbles were going to create a situation with either a hyperinflationary depression or a deflationary implosion and collapse.  That was so clear and predictable.

Things sometimes take a bit longer than you expect.  You know we moved heavily into gold in 2002 and instructed our investors to do likewise at $300.  The timetable of destruction was difficult to predict, but the dominos have been falling and will continue to do so in a nightmarish manner....

So, there is no reason for investors to be concerned or nervous.  If you look at a monthly chart of gold, starting in 1999, the correction in gold can hardly be seen.  This is just a normal correction, in a political and economic situation where dominos are falling because of the bubbles created by central banks.

People have to remember these are massive historic events we are witnessing.  We all expect things to happen very quickly, but things take longer than we anticipate.  Take the gold stocks as an example.  The gold stocks are now at the same level they were back in 2006, when gold was around $700. 

These mining shares are so cheap, Eric.  I’m a great believer in holding physical precious metals, and mining shares are not the same in terms of wealth preservation.  Nevertheless, the opportunity is so great that investors should position part of their assets into gold stocks because the quality shares will go up many multiples from where they they are currently trading. 

For what it’s worth, this correction may not quite be finished yet.  It could last another couple of weeks or so, perhaps longer, but it’s totally irrelevant if it does.  It just appears, for now, that there is a little bit of technical pressure which may continue for a while.”

Von Greyerz also added: “The focus will eventually shift to the United States.  We know the US bonds will never, ever be repaid with today’s money.  So what we have seen in the bond market has not been a flight to safety at all because the bonds can’t be repaid.  And as the focus shifts to the US, that bond market will be tested.

In Europe, we have seen suffering, but we haven’t had true austerity yet.  True austerity would mean they take away social benefits, they cut pensions dramatically, and that’s not happening anywhere.  People have been unhappy with the reductions so far, but that’s nothing compared to the cuts they are yet to experience.

If we have a hot summer in Europe, I could see rioting starting very quickly and spreading from country to country.  It is worrisome, but sadly, that’s where we are and it’s going to get worse.  Quite frankly, investors need to be positioned for more chaos in the future. 

If investors have cash, they should buy physical gold and silver as well as the mining stocks because they will be a lot higher in the next few years.”

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Does anybody else find it a bit "odd" that Gold's recent "top and decline" have coincided with last Fall's rise in the US Debt ceiling?  Close observation of the chart below suggests that Gold's "price" has risen substantially with each increase in the nation's Debt Ceiling.  

Folk's, THE TRUTH IS OUT THERE.  Give it time, the price of Gold must and will continue to rise...as will the Debt Ceiling:

Boehner tees up next round of debt-ceiling fight, Geithner pleads for no 'drama'

Published May 15, 2012

FoxNews.com

House Speaker John Boehner on Tuesday plans to tee up another debt-ceiling brawl, announcing that Republicans will insist on the same kinds of demands that Democrats claim brought the country close to its first-ever default last summer.

The speaker, in an address in Washington Tuesday afternoon, plans to say that when it comes time to vote on a debt-ceiling increase, he'll once again call for "cuts and reforms" greater than the amount of that increase.

"It's the right thing to do," Boehner said in prepared remarks. "This is the only avenue I see right now to force the elected leadership of this country to solve our structural fiscal imbalance."

That fight could happen by early 2013, potentially during a frantic post-election lame-duck session of Congress.

Treasury Secretary Tim Geithner, preempting Boehner's remarks, made an appeal Tuesday morning to avert that battle and simply raise the debt ceiling without the chaos.

"Only Congress, of course, can act to raise the debt limit -- and we hope they do it this time without the drama and the pain and the damage they caused the country last July," Geithner said, speaking at the Peter G. Peterson Foundation's 2012 Fiscal Summit, which Boehner will address later Tuesday.

House Democratic Whip Steny Hoyer, on Capitol Hill, also said the debt ceiling "shouldn't be a political issue," claiming Boehner knows that.

The looming debt-ceiling debate will coincide with a slew of other debates over unresolved tax and spending issues -- including the potential expiration of the Bush tax cuts.

Last summer, Republicans insisted on spending cuts greater than the amount of the debt-ceiling increase. After weeks of tense negotiations on Capitol Hill, and market turmoil, Congress struck a deal -- though that deal has had mixed results. The "super committee" charged with finding more than $1 trillion in budget savings as a product of that deal failed to reach an agreement, triggering massive automatic cuts to defense and other areas of domestic spending which Congress is now trying to fiddle with.

A Boehner aide told Fox Business Network that the speaker's office still needs to discuss with members what the next debt-limit increase might look like -- in terms of how long it would last and what kind of cuts would be demanded in exchange.

Boehner, in his prepared remarks, said he wants "real" cuts and not "gimmicks."

"We shouldn't dread the debt limit. We should welcome it. It's an action-forcing event in a town that has become infamous for inaction," Boehner said. "When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt limit increase."

The national debt is now at $15.7 trillion.
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Embry - This is One of the Greatest Statements of All-Time

King World News, May 14, 2012

With global stock markets tumbling, along with gold and silver, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management.  Embry discussed gold and other major markets, but first, here is what Embry had to say regarding recent derivatives turmoil:  “This makes me very uncomfortable because I’ve always been very wary of the whole derivative situation.  I believe the notional value of the outstanding derivatives is comfortably north of one quadrillion dollars.  The Bank of International Settlements changed the definition, so they said there is only $700 trillion worth of them, rather than one quadrillion.”

But it doesn’t make any difference, these (derivatives) are many, many multiples of the world GDP.  If these things get in any trouble, and I think the JP Morgan thing may be the first sign of significant trouble again, it’s fantastically important to the whole financial situation.  In a rational market the gold price should have been up $100, not down $40 in the wake of this.

I would defer to Jim Sinclair, who I have the utmost respect for on this one.  He has said for a long time that the derivative situation ‘guarantees quantitative easing to infinity,’ which is one of the great statements of all-time....

“I think this JP Morgan revelation just confirms that everything Jim’s been saying for a long time on this subject is dead right.  The fact that we will have QE to infinity would suggest that an intelligent person would be buying every single ounce of gold and silver he can get his hands on at these prices.

They are trying to sell this idea that gold goes down on the ‘risk off’ trades that we are experiencing now.  And that the ‘risk off’ buyers all go running into the US dollar and the US bond market.  I think those are two of the riskiest things on the planet.  But somehow they are still getting this ‘Pavlovian response’ that when things are bad out there, you should sell your gold and buy US bonds.  It’s ridiculous.

It’s important, at this time, that people who have been around, and have a pretty good grasp of what’s unfolding, should express their views to the public just to counteract the propaganda they are receiving from mainstream media.  It’s tough enough out there without being lied to all of the time.”

Embry had this to say regarding gold:  “What they want to do is keep it (gold) in a range.  Right now that range is $1,550 to $1,900.  Can it go below $1,550?  Sure, in the short-run it could.  But the fact is the big move coming from these levels is going to be to the upside.

Trying to pick a bottom is always a difficult thing to do.  Put it this way, you’re a lot closer to a significant bottom than you are to a top.”

Embry also added: “North America was a great place to live in the post-war era and I think it was one of the greatest eras in history.  I think a lot of us took that for granted because that’s all we knew.  It’s coming to an end.

It’s a terrible development because if you destroy the entire middle class, you are going to turn into a third-world country.  And you run the risk, in the worst circumstance, of revolution.”

This is John Embry at his finest.  Embry discusses key markets, gold, the mining shares and what to look for next.  The KWN audio interview with John Embry is available now and you can listen to it by CLICKING HERE. 

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The Silver Door Is Closing

Published on May 4, 2012 by TruthNeverTold

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TFMR Podcast #19 - Jim Willie

Friday, May 11, 2012 at 2:07 pm

In this podcast, Jim takes today's seemingly unrelated headlines of European sovereign debt, JPM hedging losses and paper gold price drops and ties them all together into a tidy little package that clearly shows where we are headed in the not-too-distant future.

[I HIGHLY RECOMMEND THAT ALL OF YOU LISTEN TO THIS INTERVIEW WITH JIM WILLIE!]
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GLD ETF Raid Imminent as China Flushes JP Morgan of Physical

Posted by Dominique de Kevelioc de Bailleul on May 11, 2012

Sources close to newsletter writer Jim Willie of the Hat Trick Letter tell him the Chinese are finally putting an end to the Fed-sponsored JP Morgan’s gold manipulation scheme—but not until the Eastern juggernaut strips every ounce of physical gold in a brilliant Sun Tzu maneuver against the Comex gold cartel.

With the cartel levered as much as an estimated 100-to-one in the gold market, JP Morgan is trapped into a game it cannot win in the end. As normal market forces seek higher prices to quell demand, JP Morgan’s price suppression activities only serve to hasten the day when the gold price will be set free—but on China’s timetable and at a level of gold stock the Eastern giant feels comfortable stripping before crushing the hold of the G-8 and the menacing U.S. dollar standard from which China wishes to extricate itself.

“My firm belief is that a fair equitable gold price will come only after the price goes dark in the normal traditional paper dominated channels,” Willie began his update of the gold market in a piece posted on GoldSeek.com, suggesting that, at some point, the price quoted at the Comex will be revealed as merely a camouflaged official price-fixing mechanism to throw off traders into thinking rallies and plunges in the price of gold are part of a normal price discovery process.

In other words, instead of Treasury announcing on a periodic basis a new pegged price for gold under a broken Bretton Woods configuration, the U.S. can lever dollar against ridiculously low gold reserves to match the dismally low dollar reserves against assets held on the books of Fed member banks via JP Morgan’s gold manipulation scheme.

The customer(s) of JP Morgan that Blythe Masters had referred to in an interview with CNBC is, accounting for the lion’s share in terms of dollar volume, the Fed itself—which makes sense in that JP Morgan is one of the owners of the Fed (contrary to the obfuscation presented on the Fed’s Web site).

“We store significant amounts of commodities, for instance silver [gold for instance], on behalf of customers. We operate vaults in New York City, in Singapore and in London. Often when customers have that metal stored in our facilities they hedge it on a forward basis through JPMorgan, which in turn hedges in the commodities market,” Masters told CNBC on Apr. 5. Emphasis added to text.

“If you see only the hedges and our activity in the futures market but you aren’t aware of the underlying client position that we’re hedging, then it would suggest inaccurately that we’re running a large directional position,” she added. “In fact that’s not the case at all. We have offsetting positions. We have no stake in whether prices rise or decline.”

At a ratio of approximately 100-to-one of paper “hedges” against physical gold, the only customer who would be large enough to cover such a bet for JP Morgan would be a printing press—the Fed.

Back to Willie. He goes on to say in his article that the “Eastern coalition” has been stripping JP Morgan of physical gold at intervals of $10 in a “reverse pyramid,” or higher amounts of buy orders as the price drops. As the Chinese lay a net of buy orders of physical during the massive de-leveraging process conducted by the European banks, the gold sold by the EU in an effort to remain liquid shifts from the West to East at fire sale prices made possible by JP Morgan’s paper shorts throughout the gold bull market.

“The gold price will not rise until the Eastern Coalition has had their fill in a Western diet rich in gold,” Willie stated. “ . . . In the process of de-leveraging, the cartel is losing their gold bullion. They are vulnerable, made worse by their insolvency, aggravated by their lack of liquidity. The paper gold price is imploding, but not the physical price.”

Willie’s intelligence of renewed aggressive Eastern alliance gold buying—as well as the just-released news flash from Reuters of Vladimir Putin’s decision to skip the G-8 summit—appear to dovetail at this time with geopolitical events concerning Iran. Though Russia is a member of the G-8, China is not. Escalating aggression by the U.S. against Iran has pushed Iranian allies China and Russia into a formidable alliance against America and may explain Russia’s abstention from the meeting in a show of allegiance with China against their mutual enemy in battle for another gold—black gold—oil.

If the U.S. can secure Iranian oil, China loses its leverage in the currency war and its timetable for the renminbi to be elevated as a world’s reserve currency—which the Russians would benefit as well, as the ruble would be elevated (and included in the proposed SDR with the renminbi) as dollars leave the oil market through bilateral trade agreements forged by anti-American forces, globally.

Gold market insiders sense that, as Willie reports, China and its Eastern partners have a window of opportunity before the U.S. presidential election and/or a Fed announcement of more QE to accumulate as much gold as possible before the gold price moves higher to relieve the massive physical buying at the hands of the Chinese.

But it appears the U.S. could buy more time in the event of a gold raid by the Chinese (akin to Europe’s raid on U.S. gold during the late 1960s) as a force majeure in the gold market would collapse the dollar and the means of funding U.S. military operations against Iran and countless other operations hostile to China and Russia. That physical gold, not available to JP Morgan, would need to come from the confiscation of private gold assets, such as those held for the Barclay GLD ETF.

“Unfortunately, the Eastern gold raids waged against the Western gold cartel might be satisfied with gold bullion pulled from the back door of the GLD exchange traded fund. As the Eastern Coalition observes the de-leverage process and swoops to exploit the insolvent condition compounded by lack of liquidity, the demands made on cartel member gold reserves might come from the GLD fund itself,” Willie speculated.

He added, “The cartel simply shorts the GLD stock, entitling themselves to vast truckloads of GLD gold bars in illicit grabs. The tracks are covered by altered bar lists, whose track record is so abysmal and faulty that new covered tracks are easily made. The GLD fund is destined for a day like Madoff and Corzine before the Congress, but with far more lawsuits. Given the vast conduits between Europe and the United States, any event triggered on the continent will extend quickly to the U.S. and UK.”

Gold traders should realize that Willie’s analysis strikes at the heart of the U.S. dollar, taking Jim Rickard’s thesis to a much deeper and poignant level—a level that Rickards will not dare to go.

In fact, Rickards told TruNews radio that investors of gold will be disappointed by a probably confiscatory tax of “90 percent” on gold held by American citizens, leaving that Rickards comment to beg the question: then where do Americans go to flee the dollar?

The answer is still—GOLD!—and the corollary? Store it outside the jurisdiction of the U.S. and away from a criminal Washington hell bent to sacrifice every American in its effort to achieve its objectives. But Rickards, the DoD consultant, won’t tell you that, which suggests to anyone who listens to him that it is futile to protect yourself from a fascist U.S. government intent on sacrificing a nation’s privately-held treasure for its globalist agenda.

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Gold Cover Clause Guidance
By: Jim Willie CB, GoldenJackass.com Posted Wednesday, 9 May 2012 

If today's landscape was a war setting, it would feature collapsed buildings, rubble on the streets, empty warehouses, smoke spewing upward from numerous city heaps, and fire hoses sending water in every conceivable direction throughout the entire city. And sadly, also dead bodies littered everywhere. They serve as the economic damage. The city ruins are marred by additional water damage, rubber boots a necessity. The buildings can be seen as the crumbled sovereign bonds. The street rubble is the home equity destroyed, some still underwater. The shattered warehouses are businesses either wrecked or in fast retreat. The smoke is the painful emotions based in despair, loss, and absent opportunity. In stark display, the fire houses are the central banks printing and dispensing money from tainted sources, not from factory income but rather the vacuous Weimar press. Of key significance is the compounded damage inflicted by the water itself. ZIRP and QE are tandem weapons of mass destruction that have been at work toward business destruction and capital ruin of the USEconomy for three full years. The zero interest rate policy assures the wrong pricing of money, the capital fuel, thus distorting all markets. The quantitative easing is based in extreme desperation, as the USGovt has lost the majority (80%) of its foreign creditor support.

The celebrated bond monetization assures the steady rise in cost structure which forces a vanishing of business profitability. The nation was taught improperly in pure heresy from USFed high priests that the free flowing liquidity was good, as the housing market expanded (bubble #1) alongside mortgage finance (bubble #2). The public was told incorrectly in 2007 that the damage would be limited. The Jackass forecasted absolute bond contagion and destruction, which has come to pass in shocking style. The sovereign bond collapse in Europe, where the USDollar printing must be conducted through the swap facility conduit, is evidence of the absolute destruction. Witness the collapse of the global fiat monetary system. The supposed solution from evermore central bank monetary creation has compounded the problem by adding to capital ruin. No solution within the current monetary framework is possible, thus the demand for gold. Impairment has moved from the margin to the core from water damage. Central banks, big corporate bankers, and finance ministry heads have no clue what to do and have begun to display their panic. They are out of options.

Conditions for gold investment and price rise could not be more perfect in the current environment. The infusion of fresh money without basis has led to historically unprecedented monetary debasement. The ruin of money is well along, certain to continue in greater amplified manner. The solutions based in debt gauze and debt ointment cannot cure the indebted patient suffering from debt breakdown and bankruptcy. Central bankers, looked to for leadership, have no clue what to do. They turn repeatedly to a broken first aid kit. The United States has seen over $3 trillion in new money shoved into the system in the last couple years. The European landscape has been overwhelmed by over $3 trillion just in the last several months. Yet no remedy is remotely visible, the new consensus. France has taken on the popular virus, calling for socialism in stronger dosage, to help the people. Spain is emboldened on the socialist theme, having given clear signals in rejecting austerity also. Italy could soon be worse infected, as unelected castle appointee Mario Monti must worry about being tossed off a balcony. The Greece showcase of failed solutions is visible to all, hardly the path other larger nations wish to follow. But the Greeks had no legs, no courage, and no guts to resist. Their leaders bent over at every request. Iceland stands as the workable model, whose solution rested on nationalizing the banks and repudiating debt held by banks.

The smell of monetary ruin is everywhere, as investment houses and private investments struggle to determine what money is anymore. It surely is not the fiat paper coerced as legal tender that is backed by debt and not output. However, in this perfect situation for gold investment, the main thrust powerpack is negative real rates. The prevailing ultra-low official interest rate is far below the reality-based prevailing price inflation rate. Even the 2% yield on the 10-year USTreasury is far below the true price inflation, whose annual rate is measured between 9% and 11% for several months by the unerring Shadow Govt Statistics craftsmen.

PROPAGANDA PUSH

The mainstream has chosen to trot out some supposed experts among the elite business class. The banker class has been discredited. The Wall Street lieutenants appear more like mafia dons, smirking with Cheshire grins over unprosecuted $trillion fraud committed in serial fashion. So from Berkshire Hathaway came Charlie Munger to denigrate gold. He does not look like he misses any meals, nor has Warren Buffet's portly son. Neither have any gold credentials whatsoever, unable to recite even the basics of the market or its chief driving factors. Munger stated (as though an authority) that gold was not an investment for the civilized. Oracle Warren Buffet sold silver early, so he claims, back in 2003. What a grand lie! He followed Hank Greenberg's lead and created an income stream in selling option calls. The practice made Warren a liar, since he constantly proclaimed precious metals offered no income. When Warren's 129 million silver ounce hoard was called away in an option settlement, the Barclays gang took it and started the corrupt SLV exchange traded fund. Later it was sold to JPMorgan, where it has been corruptly managed ever since, to keep America strong. Their stock & trade is naked shorting of the metal, selling paper futures contracts with no posted collateral. Heck, on February 29th, they sold more paper silver in one hour than was produced by mining firms globally in a full year. The wonders of financial engineering by the New York & London crowd are glaring, the pus for which is visible from MFGlobal account thefts.

In the same manner, Bill Gates of Microsoft fame was trotted out. He had fewer words of wisdom to share on gold, except that it was speculative. Neither Munger nor Gates seems aware that the flow of financial crisis events and their aftermath reflect not in any way shape or form on civilized nations. Neither Munger nor Gates seems aware that investment in protection is highly prudent and justified against inflated asset breakdown, against debt saturation implications, against secretive elite cornering of official aid, against bailouts with new debt to cover old debt, against sovereign bond crumbling, against absent economic stimulus with meaning, against systemic capital ruin, against chronic job loss. But the Jackass digresses, certain to be called extreme and wild until the next dire forecast comes to pass in a long sequence of correct calls. To be honest, my forecast record has taken a nice turn toward the rosy and charmed ever since taking Rob Kirby's advice not to forecast long-term US interest rates anymore. He called the USTreasury Bond market the most corrupted interfered controlled and mangled of any market in the world. That was back in 2009. How true! See the Interest Rate Swap for long-term rate management. See the USFed for its chief buyer of USTreasury Bonds in a balance sheet wrecked as badly as the European Central Bank, both badly and irreparably toxic. They preside over monetary wreckage and banking system ruin.

The gold cartel has used a favorite piece of propaganda since 2003 when the bull market began in earnest. The claim has been regularly made that the gold bull is tired and exhausted since jewelry demand has fallen off. Any student of gold can tell you that tapered jewelry demand is solid confirmation of the gold bull market. It serves as an extremely reliable gold contrary indicator. It is easy to explain. People buy fewer necklaces, bracelets, and other valued objects, since they cost more in a noticeable manner. Some turn to selling old unwanted jewelry, especially if a reminder of a lost love interest. In its place comes a torrent of investment demand, where not $300 is spent on a piece for a lovely neck, but rather $30 thousand or $3 million in gold or silver bars. Investment volume is at least an order of magnitude greater than for jewelry. The motive for jewelry is often discretionary in the West, but a method for the lower and middle class to save in the East. The gold cartel trots out the idiotic vacant propaganda about sagging jewelry demand every four to six months, in order to fool the stupid masses. It works for some, especially those with lazy herd mentality research and with inadequate brain stems. To be sure, sluggish jewelry demand is a very reliable contrary signal to confirm a gold bull market, always has been, always will.

A sidebar note on Microsoft. When Gates was faced with anti-trust violations and potential breakup in 2004 and 2005, which would have been justice meted, he argued that the firm was a colossus to be sure, but was successful in innovation and needed to remain intact. Ever since reading the unauthorized biography entitled "Hard Drive" back in 1992, my trails have followed the Microsoft path closely. Their marketing innovation was sequential date rape, inviting the next generation for product development, hiding the systems software guys with swapped business cards, offering up a few $million to ambitious fools, then pulling the plug after the fools showed their trade secrets and copyrighted software (lifted their skirts, in the trade parlance). Months later, Microsoft would produce a competitor product, with the advantage of making the hooks efficiently tied to the operating system, but with broken hooks for the competitor products. So much for product innovation, Mr Gates. Their innovation was evident in the crappy products released for database management, like MS Access which is denigrated by every database expert the Jackass ever talked to. Oracle DB is for professionals, and MS Access for amateurs lacking standards of excellence who are required to use it.

The list of such violated companies is as long as a page, led by Ashton Tate, Micrografx, and Stac Electronics. In fact, the Jackass had a nice investment in Stac (CLICK HERE for background). Note the complete lie about talks for licensing, as intimidating requests for donation and zero compensation does not constitute as talks for licensing at all. Stac Electronics produced a software product that virtually doubled the disk drive capacity in the 1990 decade, long before 40gb was a standard hard drive, and compression was made obsolete. Recalled well were the words of my stock broker, who urged me never to bet against Microsoft, or Big Mo as he called it. He said any investor betting on the first successful infringement lawsuit against Microsoft was a surefire loser. Not!!! What the Jackass bought in Stac stock at $1.50 per share was sold at $4 to $5 per share about one year later after Stac won a lawsuit for theft of product, the first against Big Mo. To be sure, the Jackass did not have any great string of investment wins, but some.

Later, the MS Windows product development was unveiled further in ugly public glory. What a travesty in poor software development, totally lacking innovation, a glaring display of shabby software! They stomped on Netscape after severe intimidation, after they refused to donate to the MS Monopoly Kingdom. As it turned out, Microsoft bought the also-ran anti-virus software McAfee after Norton told them to get lost. They essentially appealed to the third best in an assortment of system software utilities, requesting them to donate their software for free, join immortality, and live on. The best and second best obviously refused. The third best were flattered and accepted, having no viable option in a tough marketplace. MS Windows continues to have substandard virus protection. Their defragmentation software is also substandard. Their breakdown recovery software is also substandard. So as for claims to excellence, Mr Gates is a laughing stock. His comments on gold were as deep as a 12-year old child's. Digress no more.

GOLD COVER CLAUSE

A gold cover clause for new viable strong currencies is an idea whose time has urgently come. Consider another often used piece of propaganda that actually exposes the desperation of the gold cartel, and the assumed ignorance of the public once more. The concept goes like this: The gold supply is so limited, so that it could not possibly qualify as a hard asset backing for the money within the global monetary system. How totally wrong! How incredibly shallow! What they do is expose their own greatest vulnerability. Back in 1971, when the Bretton Woods Accord was broken, the gold price was officially set by force at absurd level, like under $40 per ounce. It quickly zoomed in the next decade to $800 in a relief exercise much like a jailbreak of a bunch of anxious men bent on seeking fun after restricted times.

Over the last 30 years, the growth in the money supply has been unspeakable in its huge volume. It could be several tens of $trillions just in official data for only the major nations. It could be well in excess of $100 trillion over the years, after excluding the derivative volumes. The monetary growth is like umpteen multiples over the timespan. Normally, the gradual growth in monetary aggregate would be accompanied by gradual new gold output to match it. The fiat currency system has permitted the expansion of social system networks. It has permitted the series of asset bubbles and busts, a cyclical phenomenon blessed as good by the clownish central bankers. It has permitted unchecked war aggression, complete with private profiteer motive. It has permitted magnificent bond fraud and counterfeit of both bonds and cash, the chief $100 bill violations coming from Langley and Tehran. Just last 2007, the USDept Treasury complained about missing $100 bill templates, a firm finger pointed at Langley, where independent income sources have long been desired and achieved. See the narcotics monopoly they command, with major platforms in Cambodia, Yugoslavia, and Afghanistan over the decades. So the false argument of adequate gold supply is trumpeted, but in ignorance as they reveal the very reason why gold should be priced at multiples higher. If the expanded monetary aggregate (money supply) were to be properly reflected in the price of gold, its price per ounce would be somewhere between $10,000 and $15,000 easily. So the hack argument is put forth on occasion. The rebuttal is that the torrid growth of new money without basis would justify a gold price almost ten times higher, at which point the shortage of gold would not be so acute.

In fact, the gold cover clause would then enter the equation. Note first a quick reference to the fractional concept. The gold cartel enjoys its fractional reserve policy that extends to bank lending and even the illicit gold bullion management. The central banks, sometimes with Congressional input, choose to dictate lending reserves within the entire banking system. In general, 10 to 20 times as much money is lent to borrowers as is held in bank reserves. It is called the fractional banking system. Pain comes only when economies go into reverse, as banks fail like flies caught in window sills during summer heat spells. The gold cartel illicitly extended the fractional practice to their gold management scheme. Investors typically place their gold bullion in the custody of the big banks, which assign Allocated accounts (metal bars identified with specific owners) or Unallocated accounts (cumulative metal pooled with owners of redeemable certificates). Unbeknownst to many supposed allocated account holders, their gold bullion metal is gone, treated to pooling improperly. This is precisely the basis of several multi-$billion lawsuits in Switzerland. The financial press prefers to genuflect and not mention the story to the public, for fear of alarming the investment community into a veritable stampede. The Swiss violations were tipped off to the Jackass in the summer 2010, having escalated into a national crisis but of hidden proportions.

The global monetary system could be backed by gold, but in a cover clause whereby each participating nation would declare a given percentage of gold for redemption upon demand. For instance, the entire world could do very well to create a stable financial platform and foundation for the monetary system with a 5% gold cover clause. If someone holds $100,000 in cash in whatever country, then the holder could demand $5000 in gold bars. A financial firm with $100 million in cash could demand $5 million in gold bars. The stability of the system would be made strong. The argument of inadequate gold supply would be alleviated during a rendered 20-fold increase in the money stock. Consider the workable 5% cover clause. Furthermore, in times of crisis replete with extensions to the scourge of steady USGovt $1.5 trillion deficits, and multi-$trillion Wall Street fraud, and endless $trillion Western Europe bond bailouts, the gold cover clause could be increased to 10%. In more stable times, the gold cover clause could be reduced back to 5% and even lowered to 3%.

COMPETING NEW CURRENCYS

The flexibility of a gold cover clause device could enable a few competing currencies. They would float, but the linkage to gold would prevent much fluctuation beyond recognized bands. If the Russian Ruble were backed by a 2% cover clause, then that currency could float but drift lower in value. If a Chinese Yuan were backed by an 8% cover clause, then it could float with a higher drifted bias. If a new Euro Mark currency were backed by a 5% cover clause, then it could float with an even keel. The kicker could be the Gulf Dinar, which might be required for purchasing crude oil. The varying cover clause could act in the future monetary system backed by gold as a flexible system where the major nations could alter their percentage in gold cover redemption in much the same way they do nowadays with official interest rates. The many major central banks could actually manage the gold supply in a responsible manner, resorting to mundane duties like counting money and acquiring more gold, rather than the present function where they oversee reckless monetary expansion, control currency debasement, coordinate bond fraud, dispense gigantic grants to the elite caste of banks, and conceal narcotics money laundering.

See the March and April Hat Trick Letter reports for a continued discussion of a potential four currency system, all backed to some extent by gold. An extremely important point on new currency offerings. The opportunity for a second nation to launch a new hard asset currency is ripe when the first is announced. There is strength in numbers when it comes to new currencies, seeking the greatest critical mass. The odd men out would be the USDollar and the British Pound, possibly the Swiss Franc. No doubt in my mind that Japan would sign on with China to create a powerful and solid foundation for Asia. The US and UK would be forced to compete with at least three new strong kids on the FOREX block. The argument sometimes heard is that the Euro cannot break up, the Germans cannot start a viable new Nordic Euro currency, since the new currency entry would be a sudden victim of its own success. As it showed its strong foundation underpinnings, its exchange rate would rise and rise, enough to put the German export industry at great risk. True! But true only if the new Nordic Euro (or Euro Mark) is the odd man out.

Supposing four new currencies were launched, all hard asset currencies, in which the majority of global trade was settled, then the argument has big holes since the existing system would suddenly find itself outside looking in. That is precisely what is in progress of occurring in a system overhaul outside the US-UK sphere, after mammoth planning and execution in the background, with Finnish assistance and big commitments from Russia and China, the lead coordinator being Germany. The key is to produce a new system quickly and responsibly, in a manner with strength and vitality, that does not depend upon faith so much as substance. The Western leaders, principally US, UK, and Switzerland, have amply demonstrated that they prefer fraud and theft to leadership and integrity.

EUROPEAN LIGHTNING HITS

Prepare for a simultaneous currency launch that will shake the Western power structure to the core and cause financial tsunamis from the grand tremors. The trigger could very likely be the sudden collapse of key nations like France, Spain, and Italy together as they reject austerity and push the bond market past the limits. In my view the fuse has been lit. Their banking systems and bond structures cannot withstand any more shock. The popular votes cast against austerity and the present course could instead be regarded as a clear toilet plunger pull, much like a popular uprising. The consensus want no more elite banker bailouts and harsh neglect of the people. The upcoming Eastern SWIFT bank transaction system is almost ready for prime time, its development in progress. The Chinese will take the lead position, taking the flack, pushing the process, which will not resemble the current SWIFT system in the flow vehicle. The transition of political power in Beijing makes the timing perfect. The Iran sanctions served to galvanize the anti-USDollar movement. One source involved in the barter system design, at the fringe of the new SWIFT system, reported that the Iran sanctions did them a great favor, by bringing several newer nations to the planning room for integration in the new global trade transaction system. DO NOT BE SURPRISED TO HEAR IT HAS A GOLD FEATURE TO HANDLE THE TRADE. Rumors to the effect that the Chinese want to implement a gold backed trade settlement system outside the USDollar, have been confirmed by my great reliable indefatigable source.

France will trigger the disruption process. Higher deficits are coming, also to Spain. Both nations reject the austerity built into budgets that clearly does not work. The next major challenge is to finance government debt. Watch for higher bond yields on sovereign debt, the signal for breakdown. The big new wrinkle is widespread rejection of austerity budgets. The major victims will be the big banks, which in my opinion will begin to topple quickly, and require bailouts, even a full recapitalization overhaul, more fuel for the gold bull. Already talk is loud in France over the potential failure of Credit Agricole. The big bank could imminently fail. Its failure seems an easier foreseen event than Lehman Brothers. The bond markets will resist with fierce stubbornness any easy financing of expanding government deficits. The bond traders are typically smart. They expect much larger deficits immediately. They can see that the economies in recession will make for a nearly impossible payback in debt, with certain larger deficits to follow. Expect even grander central bank bond monetization as the process accelerates. The truly stupid debate over QE3 is mind numbing in its empty thought. The Quantitative Easing never stopped. What fools to debate! Like arguing over a possible nasty rain session during an actual thunderstorm. The QE will become a widely publicly recognized phenomenon. The impact will be felt in gold demand, during an orchestra of monetary devaluations. Once again, another major wild card is the bank system recapitalization, whose needs would be several $trillion. It will made more urgent by the new wave of socialists in power, namely in France and Spain. During all this, the stifling MFGlobal effect has removed many legitimate players from the COMEX. It will become an irrelevance, an empty stadium. Perhaps the new Asian exchanges will thwart the Western influence (Rock & Roth gangsters) and take up the slack to produce an honest risk hedge market with price discovery brokering. The disintegration of COMEX, and deterioration of USEconomy will be events for the ages. They already are.

GOLD READIES FOR STORM

My firm belief is that a fair equitable gold price will come only after the price goes dark in the normal traditional paper dominated channels. For over a month, the gold market has been operating like within the eye of a hurricane. At work is a new promising dynamic that most in the gold community seem totally unaware of, without solid sourced information. Repeatedly, my gold trader source, who has numerous billionaire clients on three continents, informs that truly gigantic buy orders are sitting between 1600 and 1680, spaced by 10 dollars apart, having greater volume with each lower notched price in an inverted pyramid. The Eastern Coalition is angry and motivated, fitted with well over $50 billion in a war chest, determined to wreck the New York and London bankers and remove them from their corrupt perch. Gigantic buy orders are being filled, the victims being gold cartel member banks themselves. They are highly vulnerable. They are strapped for cash, confirmed by a separate source. They face margin calls on sovereign bonds of Europe, compounded by some bad FOREX positions. To extract themselves from the pinch of the margin calls, the cartel banks are being forced to sell out their precious metals bullion held in reserve, in order to obtain desperately needed cash. This is a new phenomenon, not seen a year ago, in a total reversal used against them, since in the past, the cartel used the same methods against client hedge funds.

THE GOLD PRICE WILL RISE ONLY WHEN THE EASTERN DEEP POCKETS DECIDE THEY ARE CONTENT WITH THE MASSIVE GOLD RAIDS ON CARTEL GOLD RESERVES, ONLY WHEN ENORMOUS VOLUMES OF ORDERS ARE FILLED AT LOW PRICES, THUS DRAINING CARTEL MEMBER BANKS. The gold price will not rise until the Eastern Coalition has had their fill in a Western diet rich in gold on this round of the Groundhog Day cycle. The last cycle ended in mid-January. This round lasted longer, and involved much more gold taken from the cartel banks. They are badly and soon mortally wounded. Witness the unraveling of abused leverage by the cartel banks. In the process of de-leveraging, the cartel is losing their gold bullion. They are vulnerable, made worse by their insolvency, aggravated by their lack of liquidity. The paper gold price is imploding, but not the physical price. The divergence between paper and physical gold markets is proceeding exactly as previewed a few months ago. It is hard to see, because the great majority of gold investors do not have access to details on $billion gold orders being filled, who is supplying the gold, who is demanding the gold, and the conditions relating to margin calls, complete with motivated vengeance to deliver death blows in a global power struggle. Most people cannot contact their favorite friendly gold trader with a Rolodex of ten-figure clientele and request the latest battle won against a targeted bank. History is being made, but behind big broad curtains.

Unfortunately, the Eastern gold raids waged against the Western gold cartel might be satisfied with gold bullion pulled from the back door of the GLD exchange traded fund. As the Eastern Coalition observes the de-leverage process and swoops to exploit the insolvent condition compounded by lack of liquidity, the demands made on cartel member gold reserves might come from the GLD fund itself. The cartel simply shorts the GLD stock, entitling themselves to vast truckloads of GLD gold bars in illicit grabs. The tracks are covered by altered bar lists, whose track record is so abysmal and faulty that new covered tracks are easily made. The GLD fund is destined for a day like Madoff and Corzine before the Congress, but with far more lawsuits. Given the vast conduits between Europe and the United States, any event triggered on the continent will extend quickly to the US and UK.

The first victim was UBS, stripped of their gold last summer. A hint was given that the next victim might be Deutsche Bank. My other guess is a London player like Barclays is being stripped of its gold, or a big US bank turned timid after the MFGlobal attention. Major players are falling victim to the global financial crisis, better described as the global monetary war in which the USDollar and its USTreasury trading vehicle are the weapons of mass destruction. The race is on to replace them. The Chinese and their allies are the Team East in charge of overturning the current power structure dominated by gold story propaganda, mortgage bond fraud, hidden USTBond monetization, diverse market interference, private account theft, chronic naked futures shorting, controlled regulator puppets, rifled allocated gold accounts, salted gold bars, expansive derivative schemes, abuse of leverage, and numerous $trillion role programs conducted by the USDept Treasury and the Bank of England.

The new monetary platform will have many aspects, such as a vertically structured barter system, a handful of hard asset currencies, and potentially an element of gold in trade settlement. The role of gold in trade settlement is taking shape, a movement which will turn the USDollar into a widely discarded toxic paper, a ticket to the Third World. These are exciting times, if one can avoid the traps and pitfalls, including hooligans bearing USGovt badges offered bounty working against enemies of the state (without definition).

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