Tuesday, July 10, 2012

With Regards To "Fed Hopes" Bernanke Says "F.U."

So...  Friday July 6 saw yet ANOTHER dismal Non-Farm Payrolls report by the US Government.  After initially rising on the report, Gold was swiftly beaten down by our ever vigilant Gold Cartel Bankers. Nothing new there, as our criminal bankers were pounding Gold ahead of the report all day Thursday from the NY open.

Silence the Golden Truth-sayer.

But was Gold really beaten down by the criminal bankers, or simply reacting to the rising Dollar as the US equity markets tanked on the news?

I would have thought the markets would have raced higher on the "Fed Hopes" this dismal NFP number should have elicited...alas, all Fed Hopes were tossed to the wind on Friday.

But the Fed Heads would have none of that, and they lined up on Monday to resurrect Fed Hopes yet again:

DJ Fed's Rosengren: Latest U.S. Jobs Data Indicate U.S. Needs Much More Growth

Mon Jul 09 00:00:17 2012 EDT

BANGKOK--The latest U.S. jobs data released on Friday were disappointing and indicated that the U.S. economy needs much more growth, a top Federal Reserve official said Monday.

It is possible that the U.S. authorities will come up with a fresh round of quantitative easing measures, Federal Reserve Bank of Boston President Eric Rosengren said at an economic forum in Bangkok.

When asked when a third round of quantitative easing should be implemented, he said it was data-dependent.

On the ongoing crisis in Europe, he said the European Union has the capacity to deal with its economic problems, but the road ahead remains bumpy and the bloc has a long way to go.

Mr. Rosengren isn't a voting member of the Fed's policy-setting committee this year.
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DJ Fed's Evans: More Accommodative Policy Needed to Improve Labor Market

Mon Jul 09 03:45:18 2012 EDT BANGKOK--More accommodative policy is needed to improve the U.S. labor market after the latest "discouraging" non-farm payrolls data released Friday, which suggested a "horrific downturn" in the U.S. economy, a top Federal Reserve official said Monday.

"We need more stimulus one way or another," Federal Reserve Bank of Chicago President Charles Evans told reporters at an economic forum in Bangkok.

Mr. Evans is a non-voting member of the monetary-policy-setting Federal Open Market Committee.
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DJ Williams: Fed Stands Ready To Do What's Needed To Aid Economy

Mon Jul 09 11:53:37 2012 EDT

NEW YORK--While he stopped short of calling for additional action, a key Federal Reserve official on Monday said the central bank should stand ready to provide new stimulus to the economy if conditions warrant it.

Calling for "extraordinary vigilance," Federal Reserve Bank of San Francisco President John Williams said "we stand ready to do what is necessary to attain our goals of maximum employment and price stability."

Noting that the Fed is "falling short" on both its inflation and employment mandates, Williams said the central bank is likely to make "only very limited progress toward these goals over the next year."

Because of that, "it is essential that we provide sufficient monetary accommodation to keep our economy moving towards our employment and price stability mandates," the official said. If the Fed does need to ramp up its stimulus activities, "the most effective tool would be additional purchases of longer-maturity securities, including agency mortgage-backed securities."…
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The Fed has been trying to talk the market higher for months now because as W.C. Fields once said: "If you can't dazzle them with your brilliance, baffle them with your bullshit!"

Fed Hopes is all the equity markets cling to now, but perhaps the equity markets have finally seen Bernanke's hidden agenda:

clip_image001

Is Bernanke giving us the finger?

Two can play at that game Ben, you Bubble Headed Booby.

Buy Gold and Buy Silver.  Pinning your hopes on some sugar from Papa Ben is a fools game.  

It's not how much you paid for either precious metal you hold in your possession, but how many ounces of either that you actually possess.  Because when the entire financial system inevitably collapses, you won't be able to buy much of anything with little pieces of paper with dead presidents on them.

Central banks: Running out of ideas, road By Detlev Schlichter On July 9, 2012 · 
On page two of today’s Wall Street Journal Europe you will find the result of a readers’ poll from last Friday: Question: Will the ECB’s rate cut help restore confidence in the bloc’s economy? Answer: 81 percent of readers say no, 19 percent yes.

Last week’s round of global monetary easing – another ECB rate cut, another round of debt monetization from the BoE, another rate cut from the People’s Printing Press of China – is, of course, more of the same old same old. It has a discernible touch of desperation about it and this is not lost on the public. Monetary policy is ineffective. Or, to be precise, it is only effective in delaying a bit further the much-needed liquidation of the massive imbalances that previous monetary policy helped create, and thereby is contributing, on the margin, towards making the inevitable endgame even more painful. It is counterproductive and destructive. It is certainly not restoring confidence…..

…We will see more rounds of QE, more rate cuts where this is still possible, and further expansions of central bank balance sheets. Pension funds and insurance companies will be forced by regulators to hold assets that the state wants them to hold (government bonds anyone?), and the reintroduction of capital controls appears a near certainty at this stage. Remember, a toxic mix of stubbornness and desperation rules policy making at present. It is best to be prepared for everything but the sensible solution.

Come to think of it, the title of this essay may be misleading. The central banks have reached the end of the conventional road but they will push their policies further.

This will end badly.

http://papermoneycollapse.com/2012/07/central-banks-running-out-of-ideas-road/
===============


Biderman Blasts The Bernanke Put And Questions QE-Hopers
Submitted by Tyler Durden on 07/10/2012 11:54 -0400

Scoffing at the smugness of a CNBC talking head suggesting he is long-term bullish because of the Bernanke Put, TrimTabs' CEO Charles Biderman empirically analyses the effects of QEs-past and just as we have noted again and again - highlights the fact that without at least a 15% drop in stocks, Bernanke will not ride to the rescue. Based on his analysis of wage and salary growth, he believes the US economy is now starting to contract in line with what is going on in Europe and the rest of the emerging world. Earlier this year in the US, portfolio managers hoped and prayed that what looked like rapid growth was real, "It Wasnt!" and, as we have noted, Charles adds that with earnings season starting we will see future guidance cut and this will kick the leg out from the bullish stool - leaving only the hope for another QE flush to save us. However, with the effects of Bernanke's beneficence diminishing with each round, he suspects that we will be lucky to see a 10% rally on NEW QE.


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Until all Fed Hopes are dashed there is no way forward.  Has the Fed solved or fixed a damn thing over the past four years?  Why then the belief that more Fed "interference" will be the solution to that which has no solution?

The 10-year US Treasury is at 1.49% today...is the economy growing?

The President of the United States wants you to "believe" it is...but then this man currently occupying the White House doesn't know his ass from a hole in the ground, and quite frankly couldn't lead a horse to water...let alone engineer a "real" economic recovery.

The Global Economy: It's All About Increasing Leverage (July 10, 2012)
 by Charles Hugh Smith from Of Two Minds


If the global State/finance Empire can't increase systemic leverage, it will implode.

If we look at the global economy with unclouded eyes, we reach this conclusion: "This whole thing is about leverage." If leverage doesn't increase, the system implodes. But since collateral is disappearing from the global economy like sand castles in a rising tide, and disposable income has stagnated, there is no foundation for more leverage.

As a result, the State/finance cartel has only one choice: increase leverage by whatever means are left. There are only two:

1. Allow banks to claim phantom assets as capital/reserves

2. Lower interest rates so stagnant income can leverage ever greater quantities of debt

The State/finance Empire and its army of academic toadies (economists) must cloak this reliance on leverage from the citizenry, lest they grasp the precariousness of the entire financial system. As the economic Establishment is discredited by reality (that their sputtering reflation policies have come at an unbearable cost is now undeniable), their attempts to discredit their critics become increasingly comic: only PhD economists in the employ of the Empire are qualified to comment on the Empire's policies, etc.

Most discussions of leverage focus on the role of capital or reserves as the basis for leverage. This is the basis of the fractional reserve banking system: $1 in capital (cash, reserves) can be leveraged into $15 of debt.

The easiest way to "grow" is to increase leverage so more money/debt can be created.If a bank was constrained to only loaning the cash it held in deposits, that would severely limit the amount of money available in the system for purchasing villas in Spain, BMW autos manufactured in Germany, etc.

If we magically enable 25-to-1 leverage, then every euro supports 25 euros in debt (mortgages, auto loans, etc.)

The danger is obvious: if 1 of the 25 euros of debt goes bad, the lender has zero reserve. If 2 euros of debt go bad, the lender is insolvent.

The only way to "save" an over-leveraged system is to increase leverage and lower interest rates. If we claim phantom assets as real and increase leverage from 25-to-1 to 50-to-1, we have enabled a doubling of loans. All that wonderful new money will flow into the economy as spending, fueling "growth."

This explains why the State/finance Empire in Europe keeps lowering reserve requirements for its insolvent banks. If the reserve requirement is 10%, then you need 100 million euros on deposit in cash to support 1 billion euros in loans. If you lower the reserve requirement to 1 euro, then the contents of a child's piggy bank supports 1 billion euros in debt.

The other game is to claim phantom assets have market values that justify their substitution of cash. Let's say a bank owns a villa in Spain since the mortgage went bust. The market value of the villa is 100,000 euros and the bank's mortgage was 300,000 euros. If the bank sold the villa, it would have to absorb a 200,000 euro loss.

Yikes. Absorbing losses that exceed the net increase in reserves from profits would lead to the lender's insolvency being recognized. The "work-around" is to keep the villa on the books at 500,000 euros. Not only does the 200,000 euro loss go away, the bank now has 200,000 in capital to leverage into more debt. (500,000 in assets minus 300,000 in mortgage leaves 200,000 in phantom assets/capital.)

Any loan is fundamentally a claim on future income. Interest and principal will be paid out of future income.

The key to keeping the leverage-based system afloat is to lower interest rates.Let's say a household has $10,000 in disposable income to spend on housing. If mortgage interest rates are 15% (as they were in 1981), the household can only leverage that income into a $50,000 mortgage. That's all the debt that can be prudently leveraged from the $10,000 in income.

That inhibits "growth," so let's drop the rate to 1%. Presto-magico, the household now "qualifies" for a $500,000 mortgage. Wasn't that easy?

You see the problem here: once rates fall to near-zero, the leverage-income-into-more-debt machine runs off the cliff. Just in case you missed this chart from yesterday's entryElection Year 2012: two Landslides in the Making?, notice that the incomes of 90% of American households has gone nowhere for the past 40 years.



Unsurprisingly, the bottom 90% leveraged their stagnant incomes into mountains of debt to compensate for their declining purchasing power. The Federal Reserve (a key player in the global State/finance Empire) has been publicly fretting over the dreaded "debt divide," which is Orwellian econo-speak for the bottom 90% running out of leverage. Like Wiley E. Coyote, the bottom 90% has run off the cliff and is now in looking down at the air beneath them. (This chart shows the bottom 95% is in trouble.)



The same reliance on leverage has occurred in China, Japan, Europe and the U.S.The entire global economy's "growth" was based on increasing leverage. That machine has soared off the cliff, and now the Empire's global army of toadies is desperately attempting to mask this reality by substituting phantom assets for actual capital.

They can't do anything about lowering interest rates, though; that mechanism has already been maxed out as rates approach zero.

Longtime correspondent Harun I. recently described the leverage endgame in this deeply insightful commentary:


Much has been made over the Fed's efforts to "stimulate", however, IMHO the Fed's efforts are more concerned with preventing the sudden death of the monetary and banking systems. With private sector balance sheets hobbled, some entity must step in and create enough debt so that debts can be paid and, therefore, maintain the illusion that there is money (debt) in the system. At first this must seem contradictory. Remember there is no collateral, there is no asset. Therefore, the debt, which people will claim as an asset (at par (to what?)), is in reality an illusion.

It must be understood that leverage is such that even if there were no defaults, just normal everyday retirement of debt occurring at a rate faster than debt creation would cause the complete monetary base to disappear in short order. With $600 trillion or more in derivatives alone, that must be settled in the reserve currency with a monetary base of $2 trillion, there is 300,000 to 1 leverage. The fact is, leverage must continue to increase exponentially to avoid sudden death. Phase and jitter cannot be tolerated.

The idea of stimulating the economy at this point poses certain problems. One of my neighbors, a family of six, noted that their food bill had increased 50%. This presents the choices of consume less or save less. Cutting back on food is usually not the first thing people will resort to. So, as costs rise, they are consuming less, which is the opposite of stimulative.

Further, this creates trends that will likely be insurmountable in the future. The amount saved by this generation and the returns they must achieve to reach the goal of an independent retirement become more negatively skewed with each passing month of currency/labor debasement (notice I did not use the term "stagflation"). If there was no price inflation there would be no problem but prices are rising relative to wages, meaning dollars/labor is losing value, which, regardless of definitions, has the same effect as inflation.

Since time can not be manipulated, people must save more (which the Fed is fighting) or they must receive higher returns, which usually means assuming greater risk. Frankly, the situation works out that this generation would need the performance of the top money managers today to achieve a non-subsidized retirement.

Having allowed themselves to be misled about the true nature of housing as an investment, and with most throwing their money in some vehicle resembling a 401K while hoping for something good to happen, Boomers will have their challenges but the next generation, saddled with significant student loan debt and the debts of the previous generation, also facing, "The End of Work" will be even more challenged to retire with any semblance of simple dignity.

Of course, I don't think it gets this far. As I have stated, the system is now terminal. It is only a matter of time before, even without any defaults, the two factors of amplitude and frequency overwhelm system capacity in terms of money printing. I differentiate because productive capacity, which is the only reason for an exchange medium (the existence of money), has already been overwhelmed by the exponential phenomenon. Money now exists for the sake of itself, which is to say that it is worthless. As Einstein pointed out, "reality is merely an illusion, albeit a very persistent one."

Thank you, Harun. After four long years of protecting vested interests at the expense of everyone else and playing "stimulus and backstop" games, the State/finance Empire's Wily E. Coyote moment is finally approaching. Maybe they manage a few more extend-and-pretend mind-tricks (because we all want to believe the magic trick is real) and push the reckoning into 2013; we'll just have to see how long Wiley E. Coyote can run in mid-air.
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Big Banks Are Rotten to the Core

Among other things, the Libor scandal is the largest insider trading scandal of all time.
It also shows that the big banks are literally rotten to the core. And see this.
UC Berkeley economics professor and former Secretary of Labor – Robert Reich – explains today:

What’s the most basic service banks provide? Borrow money and lend it out. You put your savings in a bank to hold in trust, and the bank agrees to pay you interest on it. Or you borrow money from the bank and you agree to pay the bank interest.

How is this interest rate determined? We trust that the banking system is setting today’s rate based on its best guess about the future worth of the money. And we assume that guess is based, in turn, on the cumulative market predictions of countless lenders and borrowers all over the world about the future supply and demand for the dough.
But suppose our assumption is wrong. Suppose the bankers are manipulating the interest rate so they can place bets with the money you lend or repay them – bets that will pay off big for them because they have inside information on what the market is really predicting, which they’re not sharing with you.
That would be a mammoth violation of public trust. And it would amount to a rip-off of almost cosmic proportion – trillions of dollars that you and I and other average people would otherwise have received or saved on our lending and borrowing that have been going instead to the bankers. It would make the other abuses of trust we’ve witnessed look like child’s play by comparison.
Sad to say, there’s reason to believe this has been going on, or something very much like it. This is what the emerging scandal over "Libor" (short for "London interbank offered rate") is all about.
***
This is insider trading on a gigantic scale. It makes the bankers winners and the rest of us – whose money they’ve used for to make their bets – losers and chumps.
The fact that the big banks have committed insider trading on their core function – setting rates based upon market demand for loans – is particularly damning given that traditional deposits and loans have become such a small part of their business. As we noted last week:

And Libor isn’t the only way in which the banks trade on inside information. As Robert D. Auerbach – an economist with the U.S. House of Representatives Financial Services Committee for eleven years, assisting with oversight of the Federal Reserve, and nowy Professor of Public Affairs at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin – points out:

Billions of dollars can be made from inside information leaks from the Fed’s monetary policy operations. One necessary step to stop leaks is to severely limit inside information on future Fed policy to a few Fed employees.
This has not happened. Congress received information in 1997 that non-Federal Reserve employees attended Federal Reserve meetings where inside information was discussed. Banking Committee Chairman/Ranking Member Henry B. Gonzalez (D, Texas) and Congressmen Maurice Hinchey (D, New York) asked Fed Chairman Alan Greenspan about the apparent leak of discount rate information. Greenspan admitted that non-Fed people including "central bankers from Bulgaria, China, the Czech Republic, Hungary, Poland, Romania and Russia" had attended Federal Reserve meetings where the Fed’s future interest rate policy was discussed. Greenspan’s letter (4/25/1997) contained a 23-page enclosure listing hundreds of employees at the Board of Governors in Washington, D.C. and in the Federal Reserve Banks around the country who have access to at least some inside Fed policy information.
Senator Sanders also noted last October:
A new audit of the Federal Reserve released today detailed widespread conflicts of interest involving directors of its regional banks.
"The most powerful entity in the United States is riddled with conflicts of interest," Sen. Bernie Sanders (I-Vt.) said after reviewing the Government Accountability Office report. The study required by a Sanders Amendment to last year’s Wall Street reform law examined Fed practices never before subjected to such independent, expert scrutiny.
The GAO detailed instance after instance of top executives of corporations and financial institutions using their influence as Federal Reserve directors to financially benefit their firms, and, in at least one instance, themselves. "Clearly it is unacceptable for so few people to wield so much unchecked power," Sanders said. "Not only do they run the banks, they run the institutions that regulate the banks."
***
The corporate affiliations of Fed directors from such banking and industry giants as General Electric, JP Morgan Chase, and Lehman Brothers pose "reputational risks" to the Federal Reserve System, the report said. Giving the banking industry the power to both elect and serve as Fed directors creates "an appearance of a conflict of interest," the report added.
The 108-page report found that at least 18 specific current and former Fed board members were affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis.
[T]here are no restrictions in Fed rules on directors communicating concerns about their respective banks to the staff of the Federal Reserve. It also said many directors own stock or work directly for banks that are supervised and regulated by the Federal Reserve. The rules, which the Fed has kept secret, let directors tied to banks participate in decisions involving how much interest to charge financial institutions and how much credit to provide healthy banks and institutions in "hazardous" condition. Even when situations arise that run afoul of Fed’s conflict rules and waivers are granted, the GAO said the waivers are kept hidden from the public.
Whether you want to call it crony capitalism, socialism or fascism, one thing is for sure … this ain’t capitalism.
Postscript: Reich says that the only solution is to break up the big banks and reinstate the laws which separate traditional banking from speculation.
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Was Gold Manipulated Like Libor Rates?

By CNBC

Gold may have been manipulated like the London interbank rate or Libor over a long time frame, Ned Naylor-Leyland, investment director at Cheviot, told CNBC.
The scandal surrounding the fixing of the Libor has opened markets up to "more scrutiny and more investigation," Naylor-Leyland said.
He expects to see revelations over the next few months that the price of gold (Exchange:XAU=) was also manipulated because "gold and silver reflect the true value of money the same way interest rates do."
"It is effectively an intervention in two ways; one would be the fact that for central banks, gold and silver going up doesn't make their currency look any good, and secondly a number of the big commercial banks have very large short positions which they like to manage and make easy money from," he said.
A formal investigation into the manipulation of silver has been going on for two years in the U.S. "Although there is a lot of evidence that it is taking place, nothing has come out of the investigation yet," Naylor-Leyland said.
Chris Powell, Secretary and Treasurer of the Gold Anti-Trust Action Committee told CNBC in June that "as central banks are interested in supporting government bonds and the dollar and keeping interest rates low, they continue to manipulate the gold market".


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China Imports More Gold From Hong Kong In Five Months Than All Of UK's Combined Gold Holdings

Submitted by Tyler Durden on 07/10/2012 14:30 -0400

There are those who say gold may go to $10,000 or to $0, or somewhere in between; in a different universe, they would be the people furiously staring at the trees. For a quick look at the forest, we suggest readers have a glance at the chart below. It shows that just in the first five months of 2012 alone, China has imported more gold, a total of 315 tons, than all the official gold holdings of the UK, at 310.3 according to the WGC/IMF (a country which infamously sold 400 tons of gold by Gordon Brown at ~$275/ounce).



As for the UK (from the WGC):



From Bloomberg:

In May, imports by China from Hong Kong jumped sixfold to 75,635.7 kilograms (75.6 metric tons) from a year earlier, Hong Kong government data showed. The nation “remains the most important player on the global gold market,” Commerzbank AG said in a report. The dollar fell from a five-week high against a basket of currencies, boosting the appeal of the metal as an alternative investment.

“Higher physical demand in China is good news for the market,” Sterling Smith, a commodity analyst at Citigroup Inc.’s institutional client group in Chicago, said in a telephone interview. “The mildly weak dollar is also positive.”

The World Gold Council has forecast that China will top India this year as the world’s largest consumer because rising incomes will bolster demand.

And those looking at the trees will still intone "but, but, gold is under $1,600" - yes it is. And count your lucky stars. Because while all of the above is happening, Iran and Turkey have quietly started unwinding the petrodollar hegemony. From the FT:


According to data released by the Turkish Statistical Institute (TurkStat), Turkey’s trade with Iran in May rose a whopping 513.2 per cent to hit $1.7bn. Of this, gold exports to its eastern neighbour accounted for the bulk of the increase. Nearly $1.4bn worth of gold was exported to Iran, accounting for 84 per cent of Turkey’s trade with the country.

So what’s going on?

In a nutshell – sanctions and oil.

With Tehran struggling to repatriate the hard currency it earns from crude oil exports – its main foreign currency earner and the economic lifeblood of the country - Iran has began accepting alternative means of payments – including gold, renminbi and rupees, for oil in an attempt to skirt international sanctions and pay for its soaring food costs.

“Iran is very keen to increase the share of gold in its total reserves,” says Gokhan Aksu, vice chairman of Istanbul Gold Refinery, one of Turkey’s biggest gold firms. “You can always transfer gold into cash without losing value.”

Turkey’s gold exports to Iran are part of the picture. As TurkStat itself noted, the gold exports were for “non-monetary purpose exportation”. Translation: they were sent in place of dollars for oil.

Iran furnishes about 40 percent of Turkey’s oil, making it the largest single supplier, according to Turkey’s energy ministry. While Turkey has sharply reduced its oil imports from Iran as a result of pressure from the US and the EU, it is unlikely to cut this to zero. The country pays about $6 a barrel less for Iranian oil than Brent crude, according to a recent Goldman Sachs report.

According to Ugur Gurses, an economic and financial columnist for the Turkish daily Radikal, Turkey exported 58 tonnes of gold to Iran between March and May this year alone.

And here is the punchline: if Iran is getting gold in exchange for products, that means that someone else is demanding Iran's gold in exchange for other products. But we won't read about it until those "others" decide to issue a press release.

In other words, the anti-dollar trade is now alive and well, and Iran has been happily transacting in a dollar-free vacuum since the March SWIFT embargo. Most likely "buyers" of Iran's gold? The usual suspects of course: China, Russia, (both of whom recently established bilateral trade relations with the country just for that purpose, here and here) and India.

So: is gold fairly valued at $1,000, at $1,600 or at $10,000... Or is that question even relevant any more as the part of the world that is not broke is quietly shifting to its as its default currency?
===============

Exposure of Banker Corruption
By: Jim Willie CB, GoldenJackass.com



LIBOR CONNECTED TO INTEREST RATE SWAPS
The annual now chronic $1.5 trillion USGovt deficits must be financed. They should be financed at a Spain-like 7% yield. The two nations have equally wrecked finances and an equal unemployment rate. But doing so would be far too disruptive. But doing so would be far too costly. But doing so would take away the wellspring of cheap money for the speculation. The big banks enjoy a brisk carry trade off the USTreasury curve that makes easy profits. No other industry is granted such risk free profits. So enter the IRSwap to generate an artificial USTBond rally from a phony engineered flight to safety. The thought of a flight to the safety of massive uncontrollable USGovt toxic debt pit is laughable on its face. The LIBOR price rig has enabled virtually free funds for the IRSwap that supports the vast 0% USTBond tower.

The next connection will soon be revealed. The IRSwaps are fed by the deep source fountain of LIBOR, at virtually free cost. It bears repeating. Too much attention is given to the adjustable rate mortgage feeder process. Not enough is given to the derivatives that are abused by the financial sector in unregulated shadow systems. The big banks have sold too many multiples of Credit Default Swap insurance, to the point that both counter-parties are dead. No net neutrality is a reflection of reality. Too legless swimmers do not rescue each other in the deep waters. They both drown, just like the bank parties involved. However, the big story is the Interest Rate Swap contracts, those arbitraged long-term bond swaps versus short-term bond swaps that enable free money to finance the levers that control the long maturity for the USTBonds. Anyone who believes the TNX fell from 3.6% in 2011 to under 1.8% was from a flight to quality is either drinking Wall Street kool-aid or duped by their marketing flyers or captivated by media propaganda or just plain stupid. The vested interest in watching the 10-year USTBond yield go into ultra-low territory is all very understandable. Many financial asset prices depend upon a low benchmark bond yield.

But the reality is that foreign creditors abandoned the USGovt debt auctions. The reality is that primary dealers to those auctions found themselves stuck with inventory. The reality is that an avalanche of USGovt debt supply could not be handled with absent demand. The reality is that the USGovt borrowing costs required, if not demanded, ultra-low yields to prevent a worse explosion in deficits. The only true aspect of the flight into USTreasurys is that the European sovereign bonds have turned toxic. But the Europeans are far more likely to purchase German Bunds, and they have, driving their yields lower than the USTBonds. Some arbitrage has pulled the two to almost equal, evidence that IRSwaps are at work in the Bund backyard. The story will come out soon enough, how the LIBOR rate was rigged extremely low in order to facilitate management of the ultra-low 0% Fed Funds rate, and to enable the IRSwaps to do their magic in keeping down the long-term USTBond yield. The LIBOR has been and continues to be the feeder system for the IRSwaps that enforce the 0% and 1.5% yields on FedFunds and TNX. The factor is mentioned on financial networks with quick passing and no emphasis. They still sell the flight to safety rubbish story.

READ MORE

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So one asks, "Why is Gold $35 off it's morning high today?"

The answer is simple:  The Criminal Gold Bank Cartel wants it down $35 off it's high of the day.  

There is NO OTHER reason that would support Gold's weakness in the face of overwhelming fundamental support in today's over leveraged financial markets...not to mention that with the fall in the yield of the 10-year US Treasury, real interest rates just went further into negative territory...and negative real interest rates are Gold's best friend!

Got Gold You Can Hold?

Got Silver You Can Squeeze?

It's NOT Too Late To Accumulate!!!
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