Deception By Design

Feeling raped, robbed, ripped off? Join the club. Don't blame your broker, don't blame yourself, don't blame your trading plan. My sympathies to one and all "forced" to take a hit Friday. We're all in the same boat. The ship is still afloat, but man what a broadside. If you've received a margin call, SELL down to cover as much of your call as possible, and still maintain a position. Live to fight another day. You can't fight back if you leave the ring. I've been down this lonely road myself. It is one of the bitterest of pills to swallow. Recovery is possible...one trade at a time.

Many of us here have experienced this all before. One year ago this month, a dramatic whoosh in the Precious Metals similar to Friday's, pushed us to the edge of the ring. Had we walked away at that time, we would have missed one of the most magnificent up legs in this secular Bull Market to date. This is why you must salvage a position, any position, from this carnage so that you may get back that which has been stolen from you.

The Financial System is in much more perilous disarray today than it was in August 2007. If Friday's "nonsense" proved anything beyond a doubt, it is that the economic slowdown that has a firm grip on the US has now spread across the globe. It seems absurd that the currency markets would dump all in favor of the Dollar...and it is. Particularly in light of the fact that it is the Dollar that is the cause of the global economic meltdown.

Fundamentally the Dollar is in exponentially worse shape today than it was just one month ago, yet alone one year ago. It is an undeniable fact that the US Dollar is fundamentally dead in the water, a Baby Ruth in the swimming pool. Nothing miraculously changed fundamentally Friday to raise the Dollar from the dead. If anything, economic data out Friday, not to mention the Fannie Mae earnings miss by a factor of four, left the Dollar fundamentally worse off than it was just one day earlier. Unfortunately economic data out of Euroland the past week has been overwhelmingly weak and has put severe pressure on the Euro. This, strange as it may seem, has lead forex traders to seek refuge in the Dollar. How the Dollar continues to be deemed a "safe haven" over Gold escapes me too, but it is what it is because, for now, the Dollar is still rgarded as the World's reserve currency.

The US Dollar a safe haven? You have got to be joking. Of course I'm joking, but recent subtle events have given the "perception" to forex traders that the Dollar is the place to run and hide. Now that makes about as much sense as running into an ammo dump during an air raid, but unless the building is immediately hit by a bomb, you're going to feel safe in there until you think of a better place to go. In other words, it's unlikely forex traders are going to stay under cover of the Dollar for very long. It's a dangerous place to stay.

As we noted last week, the dollar had run up against its falling 200 day moving average. In most technical instances, this would have been quite a wall for the market to overcome. But on Thursday, ECB President Mr. Trichet backed off his recent hawkish stance supporting higher interest rates for the Euro, and took a seat on the proverbial fence by telegraphing that interest rates in Euroland were going to remain steady for the time being. He recognizes now the same peril that Bumbling Ben at the Fed faces: rising interest rates can kill economies. Of course this was instantly interpreted by forex traders that the "next" move by the ECB would be to cut interest rates. Now Mr. Trichet never said he was going to cut interest rates, the forex traders just figure that eventually he will. It remains to be seen if and/or when just such a rate cut would occur, but given the ECB mandate to control inflation, and the fact that they just raised interest rates one month ago, it seems unlikely a rate cut in Euroland is imminent.

But, perceptions being what they are, forex traders decided to dump the Euro. I find it a bit confounding that the Europeans did not turn to Gold as their currency tanked, and instead ran to the Baby Ruth floating in the swimming pool. But to the pool they dashed. This mad dash to the Dollar catapulted it over the 200 day moving average and a major short squeeze in the Dollar ensued. As the Dollar rose, Oil fell further in complete ignorance of the threat to the Turkish pipeline carrying Oil out of the Caspian region where the Russians are engaged militarily with their Georgian neighbors. As Oil fell, Gold continued it's unjustified decent in the naive belief that falling Oil prices will rid the world of Inflation. As Oil and Gold fell, Silver was not only kicked to the curb, but down the street and into the sewer. Collapsing Silver prices set off a cascade of margin calls that only exacerbated the decline.

Amazing, one guy opens his mouth and a major short squeeze develops in the Dollar putting heavy pressure on Oil, which is felt by Gold, and leaves Silver investors on life support. And NOTHING fundamental with regards to the on going systemic failure of the World's Financial System has changed for the better, only gotten worse. Surprising? Not really. Just one step closer to financial Armageddon imo.

As always, the International Forcaster Bob Chapman can sum things up best. I give the last words this evening to him.

US MARKETS
In what can only be described as the most obnoxious market manipulations of all time, the elitists have pulled out all the stops to give the stock markets their final "hurrah", while simultaneously producing the greatest precious metals and resource share bargains you could have possibly hoped for. Let 8/8/08 stand as a testament to the unmitigated gall and flagrant manipulation of markets by the President's Working Group on Financial Markets, known as the PPT, whose existence and 24/7 illegal intervention in every market on the planet, though unacknowledged by the Fed and our government, has now been confirmed beyond any reasonable doubt. Let history show that the blatant cheating and insider trading made possible by Reagan's Executive Order 12631, issued 3/18/88, which has now been pushed to the outer limits of market tolerance, stand as a testimony against the current Administration when the testimony from the trials and recriminations is adduced during the Very Large Depression to come, as an outraged America seeks vengeance for the financial thievery, devastation and deceitfulness wrought by the Illuminati's perpetration of the greatest financial criminality in the history of mankind.

How else can you describe a 1.285 rise in the USDX leading contract in one day from 74.725 to 76.010? How else do you describe gold and silver lease rates which have gone from already ridiculous levels that were a little above or below zero percent to massively negative rates of minus 2.3% to minus 3% in one day for all gold and silver lease rates regardless of the length of term? How do you describe an almost $5 per barrel decrease in the price of oil on the same day as all these other manipulations occurred, while the Dow climbs over 300 points in the face of losses from both Fannie and Freddie, which account for more than 50% of all residential mortgages in the US, that are triple the market's expectations? And was not gold $120 an ounce higher, and silver almost $4 an ounce higher, only 3 weeks ago? What has changed all of a sudden? Are we to believe that the price of oil is the be all and end all to financial markets? Is not oil still way north of $100 per barrel? Is there not a worsening credit crunch? Is there not a rapidly declining real estate market transpiring as we write this article, evidencing a decline, which shows no end in sight? Is not unemployment, even officially, at extremely high levels? Is not M3 still in the 16% to 18% range, thus continuing to lock in hyperinflation for years to come? Is not inflation running rampant worldwide? Is not US consumer spending experiencing negative growth when inflation is factored in? Are not corporate earnings abysmal? Are we not in a recession? Are losses from financial institutions in the trillions of dollars still not being hidden from sight by use of bogus "creative accounting" methods blessed by our corrupt regulators? Is there not a war in progress in the Georgian province of South Ossetia that could break out into World War IV, while the potential for hostilities around the world remain extremely high? We recoil in disgust at the heavy-handed manipulations being wrought by the Illuminist cartel to save the traitorous incumbents in Congress from getting a firm boot applied to their derrieres in November.

Why should gold go down if the dollar goes up? If the dollar goes up substantially, that means the euro is going down substantially, so gold should be exploding in the Euro Zone. If anything, a weaker euro should be more supportive of gold than a weaker dollar as there are just as many euros out there as there are dollars now, and because the people of Europe are far more attuned to the uses and purposes of precious metals than are their US counterparts. We sure hope the people in the Euro Zone loaded up on precious metals, which are now skyrocketing in their currency as the euro has gone from 1.60 dollars to 1.50 dollars in rather rapid succession. All fiat currencies will continue to lose against gold, including the dollar, so it is time to load up on the bargains you have been so graciously gifted with by your evil government and the Wall Street fraudsters!!! The Euro Zone is now in recession, and the ECB has just joined the Fed in a state of sublime irrelevancy and impotency as they now occupy the same box that the Fed is in and cannot get out of.
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