You're a mean one, Mr Grinch...

Excuse me for laughing, but this "rally" in the US Dollar is a joke. As a matter of fact, it is a stretch to even call it a rally. It is a short squeeze pure and simple. Nothing has changed fundamentally for the Dollar that would warrant it being bought outright.

"There is nothing that I see on the horizon with our current Administration, political leadership or Federal Reserve officials that inspires the least bit of confidence in their ability to do the right thing for the long term prosperity of the nation. That makes me quite comfortable with gold for if I had to choose between trusting the current crop of bozos and the yellow metal, right now there is no competition whatsoever."
-Dan Norcini, http://jsmineset.com/

So Greece has received another debt downgrade from a "ratings agency". Aren't these the same guys that rated sub prime mortgage derivatives AAA+? Sure Greece is a mess, the whole world knows that. A sovereign debt default by the Greeks could spell a lot of trouble for the Euro folks. But buy the Dollar for safety? The currency of the largest debtor nation in the history of the world? I'd have to think a debt default by the USA would be a bit more threatening to the "World" than seeing Greece go down the drain.

So the Euro goes in the toilet and the Dollar rises. Did anybody notice that the Yen went nowhere today?

Then there are these clowns, fringe speculators, that keep insisting the Fed is going to raise interest rates "sooner than later" because the USA is "on the road to recovery". How in the hell can ANYBODY suggest the US economy is recovering with a 10% unemployment rate. An unemployment rate that is vastly understated via government accounting gimmickry. Listen to the Fed, listen to the President, listen to the Treasury Secretary. None of them really believes the country is in, or even near, a "sustainable" recovery. THE FED IS NOT GOING TO RAISE INTEREST RATES ANYTIME SOON. It is unlikely they will even raise them at ANY point next year.

Do you think The President renominates Bumbling Ben as Fed Chairman if Ben does not agree to NOT raise interest rates until AFTER the 2010 mid-term elections at the earliest? THERE IS NO WAY INTEREST RATES WILL RISE BEFORE THAT ELECTION.

Has anybody considered that this whole sequence of events since Thanksgiving has been a covert effort to bring the price of Gold down so the Chinese can buy "at a price"? These guys were running around calling the Gold market a bubble a week before the Thanksgiving Top. Reports were rampant that there had been a sea change in the Dollar futures from short to long. in the week prior to Thanksgiving. This is a con job by the BIG BOYS to get your Gold. DO NOT GIVE IT TO THEM.

Reports that the "Dollar carry trade" is unwinding are grossly exaggerated. If anything, the pros are doubling down as the Dollar gets a little bid up here. The Fed has even encouraged the carry trade by AGAIN by keeping its overnight target at 0-0.25% and pledged to keep rates low for "an extended period".

Yeah Gold took it on the chin today. A small price to pay for telling the Truth. Don't be surprised to learn a week from now that China, or India again, scooped up the remainder of the IMF Gold at these Christmas Sale prices. Wasn't Russia making a large Gold bullion purchase this week inside their country? Perhaps Russia was behind this big "markdown" in price ahead of settling their purchase. The supply of physical Gold is dwindling fast. We have all read the stories. If Gold is so hard to get your hands on, should the price be falling? Absolutely not!

The fall in Gold price here is all over now but for the cover up. Take advantage of this extension of the Gold Christmas Sale. Buy some Gold.

An Unbelievable Opportunity in Gold
Yes, there is no typo in the headline of this article. Today there is still an unbelievable opportunity to invest in gold that will disappear over the next several years as this monetary crisis deepens. Despite the general widespread sentiment of Western financial advisers that they have missed the run-up in gold and now it is too late to buy, this is not true at all. In fact, to illustrate how little people understand about the reasons to buy gold, of all my friends that I urged to buy physical gold more than six years ago when gold was less than half of its current price, I only know of one that has bought any gold, and it still took five years of my prodding, four times a year, for this single person to purchase gold. This is how incredibly misunderstood an asset gold remains today despite its enormous run higher in the past 8 years. This brief anecdote aptly illustrates the bias against gold and the foolish belief that gold is a bubble that persists today due to the massive propaganda and disinformation campaigns waged by bankers against gold. It is ironic today that public mistrust of bankers can be at such a high level at the same time that the public is still enormously willing to follow all of the bankers’ propaganda about gold. This great twist of irony illustrates just how powerful the bankers’ century long misinformation campaign about money and gold has been. Few people even understand how money is created let alone why gold is a protector of people’s rights.

Ninety-five percent of what I’ve heard financial advisers state about gold is wrong.
Ninety-five percent of what I’ve read in the public domain about gold is wrong.
Ninety-five percent of what I’ve read from the Western media about the US dollar is wrong. And ninety-five percent of the arguments I’ve read against owning gold, even when filled with supposed “facts”, are wrong. Many of the arguments against gold sound convincing, even though they are deeply flawed because erroneous data are used to produce flawed conclusions. But this is the very definition of propaganda – arguments that use erroneous data presented as “facts” to draw convincing conclusions that are highly flawed, though to the undiscerning eye, they seem quite logical. The reason that bankers have always spread so much propaganda about gold is because gold is the kryptonite of bankers. Gold allows people to preserve their wealth against their fiat currency debasement schemes.

Just as was the case with subprime mortgages when almost all of Wall Street got it wrong, the only reason anyone believes that gold is a bubble today is because people have forgotten how to think for themselves, foolishly believe that there are not hidden ulterior motives behind the beliefs spouted by Wall Street, and for some inexplicable reason, still internalize and accept all banker propaganda against gold while at they same time, they claim to distrust them. That’s why no matter how much further gold drops before this correction ends, if you don’t make the move to buy physical gold if you don’t own any, you will look back with regret five years from now and realize that you missed an unbelievable opportunity.
http://www.theundergroundinvestor.com/2009/12/an-unbelievable-opportunity-in-gold/#more-1314

The Debt Stockade

Two weeks ago our fiscally ill-equipped, and politically over-rated President suggested that our way out of and through this economic morass was to "spend our way out of this recession".

WASHINGTON (AP) - President Barack Obama outlined new multi billion-dollar stimulus and jobs proposals Tuesday, saying the nation must continue to "spend our way out of this recession" until more Americans are back at work.

Without giving a price tag, Obama proposed a package of new spending for highway, bridge and other infrastructure projects, deeper tax breaks for small businesses and tax incentives to encourage people to make their homes more energy efficient.

Last week our Presidential Prince of Perpetuating the Government's Ponzi Scheme invited banking leaders to the White House and begged them to loan more money to Americans.

WASHINGTON -- President Barack Obama challenged top bankers Monday to explore "every responsible way" to increase lending, saying they were obliged to help after being rescued by taxpayers. He asked them to "take a third and fourth look" at their small-business lending.

Would you lend money to somebody that you thought couldn't pay it back just because the President asked you too?

If it were possible to spend our way out of debt, America would be the richest nation in the universe. But, alas, it is impossible to spend ones way out of debt by accumulating more debt. Seriously, what a stupid concept.

Prepare For The Hyperinflationary Great Depression

If the $1.2 trillion in excess reserves were to actually hit circulating currency overnight, or even in a much more gradual fashion, then hyperinflation would surely be unavoidable, not so much as function of the consumer becoming a dominant force once again, which is the deflationists' key point, but as a result of the excess liquidity of the capital markets, which is the only reason why the S&P is where it is, into Main Street. As it stands, banks' unwillingness to recreate the cheap credit bubble by lending to anyone who has a pulse and can walk is the only thing that is so far preventing America's name change to the United States of Zimbabwe.
http://www.zerohedge.com/article/shadowstats-john-williams-prepare-hyperinflationary-great-depression

A must read essay.

Fed Keeps ‘Extended Period’ Pledge, Sees Improvement
Dec. 16 (Bloomberg) -- The Federal Reserve repeated its pledge to keep interest rates “exceptionally low” for “an extended period” and said the economy is strengthening.

“Deterioration in the labor market is abating,” the Federal Open Market Committee said in a statement today after meeting in Washington. “Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.”

Policy makers led by Chairman Ben S. Bernanke, who faces a confirmation vote for a second term by the Senate Banking Committee tomorrow, met after a week of reports suggesting growth is picking up. With inflation forecast to be “subdued for some time,” investors maintained bets the Fed won’t tighten policy until August to bring down a jobless rate near a 26-year high.

“The economy has stabilized, the recession is over,” said Mickey Levy, chief economist at Bank of America in New York. “The Fed is not at the point where it is willing to say the recovery is sustainable.”
http://www.bloomberg.com/apps/news?pid=20601068&sid=aVxCZ.bdBLLE

Bernanke Foes Seek to Curtail Fed
Ben Bernanke is widely expected to win Senate approval for a second term as Federal Reserve chairman, but opponents are hoping to use the debate on his nomination to curtail his autonomy at the central bank.

The Senate Banking Committee is poised to clear Mr. Bernanke's nomination on Thursday, sending it to the full Senate for a vote. Several lawmakers plan to use the proceedings to gain momentum for a bill that aims to subject the Fed's monetary-policy making to congressional audits.

The measure, crafted by Sen. Bernie Sanders (I., Vt.), mirrors one written by Rep. Ron Paul (R., Texas) that was included in the House's overhaul of financial-industry regulations passed last week.

Republican Sens. Jim DeMint of South Carolina and David Vitter of Louisiana have vowed to block Mr. Bernanke's confirmation until the full Senate considers the audit legislation, which has been co-sponsored by about a third of the Senate.

Mr. DeMint said Tuesday that he thinks the measure, which has steadily gained support among lawmakers, would pass if it came to a full Senate vote.

"It would surprise me if very many people would be willing, in public, to vote against the audit," Mr. DeMint said. "Americans don't trust the Federal Reserve," he said. It has expanded its "mission well beyond anything that was ever discussed."
http://online.wsj.com/article/SB126091294891892399.html

UNMASK THE FED
Where's Our Money?

Chairman of the Federal Reserve Ben Bernanke is up for confirmation to his second term, but he has still refused to disclose where he sent $2 trillion in taxpayers' money. Send a message to your senators and ask them to make Bernanke come clean before his confirmation moves forward!
http://salsa.mydccc.org/o/30019/t/7/content.jsp?content_KEY=3&tag=121609_email

Person of the Year, My Foot! Bernanke "Failed Miserably," Chris Whalen Says
Ben Bernanke has been named Time's "Person of the Year," for his aggressive actions to stem the global financial crisis.

But does Bernanke deserve to be "Person of the Year"?

"Absolutely not," says Christopher Whalen, managing director of Institutional Risk Analytics. "On a personal level I have great sympathy for Chairman Bernanke but he's made such a pig's breakfast of this whole situation."

Unlike those who praise Bernanke for bringing the economy back from the brink of the abyss, Whalen says all he's done is "saved the dealer community" from themselves by overseeing a massive taxpayer-funded bailout of the financial community.

Bernanke "hasn't done anything for the real economy," the analyst says. "The only thing I see is inflation. For the average American the message they should take away from this year is this: Bernanke's policy has insured we'll see the purchasing power of Americans' savings dwindle."
http://finance.yahoo.com/tech-ticker/person-of-the-year-my-foot!-bernanke-%22failed-miserably%22-chris-whalen-says-391846.html?tickers=%5EDJI,%5EGSPC,SPY,DIA,TLT,TWX,GLD

The Audacity of Debt
At least someone in America isn't feeling a credit squeeze: Uncle Sam. This week Congress will vote to raise the national debt ceiling by nearly $2 trillion, to a total of $14 trillion. In this economy, everyone de-leverages except government.

It's a sign of how deep the fiscal pathologies run in this Congress that $2 trillion will buy the federal government only one year before it has to seek another debt hike—conveniently timed to come after the midterm elections. Since Democrats began running Congress again in 2007, the federal debt limit has climbed by 39%. The new hike will lift the borrowing cap by another 15%.

There is surely bipartisan blame for this government debt boom. George W. Bush approved gigantic spending increases for Medicare and bailouts. He also sponsored the first ineffective "stimulus" in February 2008—consisting of $168 billion in tax rebates and spending that depleted federal revenues in return for no economic lift.

Democrats ridiculed Mr. Bush as "the most fiscally irresponsible President in history," but then they saw him and raised. They took an $800 billion deficit and made it $1.4 trillion in 2009 and perhaps that high again in 2010. In 10 months they have approved more than $1 trillion in spending that has saved union public jobs but has done little to assist private job creation. Still to come is the multitrillion-dollar health bill and another $100 billion to $200 billion "jobs" bill.
http://online.wsj.com/article/SB10001424052748704398304574598392286210188.html

House Narrowly Passes $290 Billion Increase in Debt Limit
By COREY BOLES
The House on Wednesday approved a short-term $290 billion extension in the nation's debt ceiling, delaying a decision until February about a larger increase in the borrowing cap.

The vote comes less than a week after House Majority Leader Steny Hoyer (D., Md.) said he intended to seek a $1.8 trillion increase in the ceiling to support federal government borrowing through 2010.

A decision was made to seek the more modest increase after it became clear the larger increase may have failed to win support in the Senate.

The Senate must still take up the two-month increase, which it is expected to do next week.

House lawmakers voted by a razor-thin margin of 218-214 to pass the borrowing increase. On most major pieces of legislation, 218 votes are required for approval in the House.

Not a single Republican lawmaker voted to support the increase. They argued that increasing the debt ceiling was giving the Democratic majority and the Obama administration a license to spend more money.

The increase in the debt limit raises the total debt the federal government can hold to $12.394 billion from $12.104 billion.

Treasury officials have warned the current cap will shortly be hit, requiring the ceiling to be increased.

Increasing the debt ceiling is largely symbolic as the public debt is the accumulation of past deficits, or money already spent.

But were the U.S. to breach its debt limit, it would default on its obligations, potentially lose its prized top-shelf credit rating and have to pay significantly higher interest to its creditors

Such a scenario, albeit an extremely unlikely one, would have tremendous ramifications for the wider financial markets.

The federal budget deficit reached historic levels of $1.4 trillion in fiscal 2009. Through the first two months of fiscal 2010, the government is on pace to surpass that level.
http://online.wsj.com/article/SB126099939736594429.html

Regulators Resist Volcker Wandering Warning of Too-Big-to-Fail
Dec. 15 (Bloomberg) -- Paul A. Volcker visited nine cities in five countries in the past eight weeks to warn that bankers and regulators “have not come anywhere close to responding with necessary vigor” to the worst economic crisis in 70 years.

“There is a lot of evidence that financial weaknesses brought us to the brink of a great depression,” Volcker, 82, said Dec. 8. at a conference in West Sussex, England. He told executives there that the changes they’ve proposed are “like a dimple.”

Two years after the start of the deepest recession since the 1930s, no U.S. or European authority has put in force a single measure that would transform the financial system, based on data compiled by Bloomberg. No rule- or law-making body is actively considering the automatic dismantling of banks that Volcker told Congress are sheltered by access to an implicit safety net.

There’s little evidence that policy makers are heeding Volcker, the former chairman of the U.S. Federal Reserve. More than 50 regulatory overhaul proposals have been submitted in the U.S. and Europe, the data compiled by Bloomberg show. Lawmakers and regulators have debated new rules for capitalization and leverage, central clearing for derivatives trading, oversight of hedge funds and ways to monitor systemic risk.

While the U.S. House of Representatives has approved a financial regulation bill, authorities in the U.S. and Europe have sidelined measures that would automatically force changes in the structure of financial companies that Bank of England Governor Mervyn King called “too important to fail.” Volcker is leading a chorus arguing for restricting the size or primary functions of financial institutions.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aDbxsIHM30H8&pos=11

Gold again today thumbed it's nose at the US Dollar, and got angry. The U.S. dollar index reversed notable early losses and ended only slightly lower while treasuries reversed early gains and ended with minor losses after the fed’s semi-positive remarks about the job market increased speculation that they may indeed be starting to move towards raising interest rates around the middle of next year.

Has the Fed been right about anything yet since this global financial crisis began? So the Fed said pressure on the jobs market was abating. Yeah, and the subprime mortgage blow up would not affect the "whole" of the economy. And the Fed claims that consumer spending is "picking up". Hardly, the cost of consumer spending is the only thing picking up. Consumers are NOT buying more, they're spending more and getting less. That's the TRUTH that Gold exposes for anyone that cares to see it.

Gold is pissed, and it's intentions are clear. Gold is going to break the back of the US Federal Reserve. Gold, ultimately, is going to destroy the US Federal Reserve.

Christmas 2009 Gold Sale Continues. While Supplies Last.

Despite the Dollars unexpected strength today, Gold, and in particular Silver, proved most resilient. Rising Inflation is not the friend of any fiat currency. Today's Dollar strength was quite simply chicken little Dollar shorts exiting their trades.

Market psychology regarding the US Dollar has been turned on it's head lately because of the the sudden "strength" in the US jobs market reported two weeks ago. There is this rediculous notion that the Fed is going to suddenly raise interest rates. NOTHING could be further from the truth. The very last thing the Fed wants is for interest rates to rise. If they wanted interest rates to rise, why do they continue to buy Fannie Mae and Freddie Mac garbage from the banks? After all, they are buying this crap in an effort to keep interst rates on home mortgages low.

As we noted here a few days ago, the U.S. Treasury has $2 trillion in short term Treasury debt which has to be refinanced in the next 12 months. This does not include the net Treasury borrowing that will be required to fund the 2010 spending deficit. The U.S. has to borrow at least an additional $3 trillion next year to fund everything. Raising interest rates will increase the costs of borrowing money. I doubt the Fed, or the Treasury, wants to see interest rates rise anytime soon, or next year for that matter.

November's jobs numbers were hardly encouraging, no net new jobs were added to the economy. Retail sales for November were "overstated" by 50% as they were greatly influenced by the increase in the cost of gasoline. This rise in gasoline costs was confirmed by today's Producer Price Index numbers. Today's PPI numbers were a sharp increase month to month and year to year. THEY ARE INFLATIONARY any way you slice them. But they will NOT encourage the Fed to raise interest rates. This string of data has got Dollar Bears skittish, and fearing an increase in interest rates. Ain't gonna happen. The Fed will once again reiterate their 0 - 0.25 interest rate policy "for and extended time" mantra as they exit their Fed meeting tomorrow. Recall that Bumbling Ben Bernanke was quick to shoot down the thought of raising interest rates following the speculation sparked by the "unexpected" November Jobs number.

People! If the economy was so rosy, would Little Timmy Geithner have extended the TARP program until October 2010? If the economy was so rosy would the government have extended the home buyer credit, and expanded it, until April 2010?

And honestly, who gives a damn if they did raise interest rates? Are we gonna get our shorts in a bunch because the Fed raises interest rates to "gasp" 1%? Were not interest rates of one percent the cause of our financial crisis? Please, give this Fed raising rates nonsense a rest. Pure and simple, they can NOT raise them today, or next year. Higher interest rates would raise borrowing costs and squeeze corporate profits. They could send stock prices falling. And they risk derailing the economic recovery. The Great Christmas 2009 Gold Sale Continues. While Supplies Last.

"Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment."
-Alan Greenspan, 9 Sep 2009

U.S. producer prices soar 1.8% in November
Core PPI increases 0.5%; both rates come in higher than expected
http://www.marketwatch.com/story/us-producer-prices-soar-18-in-november-2009-12-15

Rise in wholesale inflation unlikely to last
WASHINGTON (AP) -- Evidence that the economic rebound could eventually raise inflationary pressures emerged in a report Tuesday that wholesale prices surged last month.

Most economists aren't worried, though. They think the economy remains too weak for the price increases to last.

Much of the overall increase reflected a jump in energy prices. Yet that increase will likely reverse itself. Analysts noted that oil prices have fallen about 10 percent since the start of the month.
http://finance.yahoo.com/news/Rise-in-wholesale-inflation-apf-571550090.html?x=0&sec=topStories&pos=1&asset=&ccode

Core Inflation may be held at bay going forward because of the floundering economy. But the jump in energy prices, particularly year over year, are unlikely to "reverse itself". Even with a recent 10% drop in the price of Oil, prices are 70% higher today than they were in December 2008. Oil prices bottomed in December 2008 at $35 a barrel. They then rose steadily over the course of this past year, peaking recently at $82 a barrel. It will be dificult for the next several months to "explain away" the year over year rise in the cost of energy because of this fact. Unless, of course Oil prices suddenly collapse over the next several weeks. That would seem unlikely, but in these rigged commodity markets, nothing can be ruled out.

Foreign demand for long-term US assets slows
WASHINGTON (AP) -- Foreign demand for long-term U.S. financial assets slowed in October and China's holdings of U.S. Treasury securities were unchanged.

Continued strong demand for U.S. debt is critical to financing America's soaring budget deficits and keeping domestic interest rates low enough to support a broad economic recovery.

Foreigners purchased $20.7 billion more in assets than they sold in October, down from a $40.7 billion increase in September, the Treasury Department said Tuesday.

Japan, the second largest holder of Treasury securities, had a total of $746.5 billion in October, down slightly from September's $751.5 billion.

The Treasury securities held by the United Kingdom dropped to $230.7 billion, from $249.3 billion, while the holdings of Hong Kong rose to $142 billion, from $132.2 billion.

Treasury securities held by oil exporting countries totaled $188.4 billion, up slightly from $185.3 billion in September. Russia's holdings totaled $122.5 billion, little changed from September's $121.8 billion.
http://finance.yahoo.com/news/Foreign-demand-for-longterm-apf-702078377.html?x=0&sec=topStories&pos=6&asset=&ccode

Homebuilder sentiment index dips in December
LOS ANGELES (AP) -- Even a holiday gift from Uncle Sam couldn't brighten the homebuilders' outlook in December.

The National Association of Home Builders said Tuesday its housing market index fell by one point to 16 this month, reflecting concern that job losses and a slow economic recovery will continue to stifle demand for new homes despite the extension of a federal tax credit for buyers.

The latest reading is the lowest since June, when it fell to 15. This was also the first monthly decline since October.

The worsening outlook was something of a surprise because it came one month after the industry received a major boost from Congress and the Obama administration.

New home sales got a lift this year from low mortgage interest rates and an $8,000 federal tax credit for first-time homebuyers. The incentive was set to expire on Nov. 30, but Congress extended it through April and expanded it to include $6,500 for existing homeowners.

In the latest survey of builder confidence, the reading for current sales conditions slipped one point to 16. Traffic by prospective buyers stood at 13. And builders' outlook for sales over the next six months fell by two points to 26.

The index reflects a survey of 514 residential developers nationwide. Index readings below 50 indicate negative sentiment about the market. The last time it was above 50 was in April 2006.
http://finance.yahoo.com/news/Homebuilder-sentiment-index-apf-287163691.html?x=0&sec=topStories&pos=main&asset=&ccode

Purchases of US debt slow, and homebuilder confidence revisits the bottom. This sure raises my confidence in the US Economy. The Fed better get a hoppin on raising those interest rates!

Mission Not Accomplished
By: Peter Schiff, Euro Pacific Capital, Inc.
Although Barack Obama has refrained, at least for now, from delivering triumphant speeches in a naval flight suit, there is nevertheless a strong tone of accomplishment emanating from the President and his deputies. Over the weekend, top White House economic adviser Lawrence Summers even pronounced that the recession is now over. Without hedging his bets, Summers declared that thanks to the Obama Administration's wise stewardship, economic stimuli, and emergency bailouts, another Great Depression, set up by the prior Administration, had been narrowly averted. Summers saw no impediments to the return of sustainable growth. He may as well have delivered these remarks from the deck of an aircraft carrier.

I hate to shoot down these high-flying expectations, but the economy is not improving. All that has changed is that we are now more indebted to foreign creditors, with even less to show for it. Washington's current policies have once again deferred the fundamental, market-driven reforms needed to redirect us onto a sustainable path. Instead, through aggressive monetary and fiscal stimuli, we are trying to re-inflate a balloon that is full of holes. This was the Bush Administration's exact response to the 2002 recession. It's shocking how few observers note the repeating pattern, especially the fact that each crash is worse than the last.

Obama's claim of success largely derives from the slowing tally of job losses, the seemingly renewed strength in the financial system, the pickup in home sales and home prices, and the positive GDP figures. But these 'achievements' fall apart under close examination.
http://news.goldseek.com/EuroCapital/1260824580.php

Some Key Numbers To Watch in Gold
By: Rick Ackerman, Rick's Picks
This has been a great year for gold, but investors can’t seem to shake the jitters they acquired in 2008, when prices plunged 35% between March and October after poking briefly above $1000 for the first time. Is last week’s 10% selloff the beginning of another murderous correction? We don’t think so, although it could take a few more weeks for prices to consolidate for the next strong push. But more immediately, we expect the Comex February contract to ease to a minimum $1090 in the days ahead. That would represent a $38 decline from yesterday’s settlement price and bring the total correction to slightly more than 11 percent.

Technical considerations aside, there is nothing in the news to suggest that any of the factors driving gold’s spectacular rise have changed. Mostly, it’s a case of large dollar reserves weighing on foreign holders who would rather be holding something else. They will continue to exchange those dollars for gold in particular, notwithstanding occasional news stories that would have us believe that the dollar and U.S. Treasury debt represent a safe haven in a crisis. What they represent is a carry-trade speculation that sometimes unwinds precipitously to the detriment of those who have borrowed dollars. The resulting short-squeeze effect has the ability to keep an otherwise leaden dollar buoyant, at least for short stretches, but the resulting surges in the dollar should not be confused with signs of strength.

This dynamic seems to be what is troubling gold bulls the most. Although they can rattle off a dozen good reasons why the price of gold is absolutely likely to continue higher, the dollar side of the equation can seem relatively mysterious. There are some pretty good technicians out there who are bullish on the dollar, and we ourselves have made the case that short-squeeze forces could cause the dollar to turn unnaturally strong. For what it’s worth, however, we see more bluster than strength in the Dollar Index’s rally from early December’s lows. Actually, Friday’s sharp thrust showed a trace of chicken-heartedness in failing to take out early November’s peak at 76.82 (see chart above). Serious rallies do not shy from such challenges, and that’s why we think this rally, even though it left the launching pad a week ago in a shower of sparks, is not destined for greatness.
http://news.goldseek.com/RickAckerman/1260887217.php

Gold retested Friday's lows this morning and vaulted off them on news of the unexpectedly high PPI numbers. This, again, in the face of a rising Dollar. I continue to believe that the 38% retracement level in Gold at 1104 is key support in this current reaction. The Fed is most likely to ignore yesterdays PPI report [and Wed. mornings CPI report] and once again reaffirm their intent to hold interest rates near zero for "an extended period". This reaffirmation should put a little pep back in Gold's step heading into the close of 2009.

Somebody Call The Cops!

“THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED.”
-Ludwig von Mises, Austrian Economist (1881- 1973)

Gold and Silver have both endured a constructive consolidating reaction over the past week. Both have retraced almost 38% of their most recent up legs. They now appear poised to resume their respective marches higher. Silver took the lead today, and I suspect that in the very near-term Silver may be the leader as these two Precious Metals resume their up trends. Watch the Gold to Silver Ratio [GSR] closely. Should the GSR fall below its 50Day moving average, expect a quick acceleration in the price of Silver.

With respect to seasonality, Gold and Silver have historically been strong in the second half of December. Also, Triple Witching options expiration this week should open the door to new advances in the Precious Metals. Dip buyers, now is the time to act. Traders with short positions should tighten their stops here, and be thankful for the bone they were tossed.

Senate passes $1.1-trillion spending bill
Washington - The Senate on Sunday passed a $1.1-trillion spending bill with increased budgets for major sections of the federal government, including health, education, law enforcement and veterans programs.

The spending bill passed Sunday consists of $447 billion for departments' operating budgets and about $650 billion in mandatory payments for federal benefit programs such as Medicare and Medicaid. Those programs under immediate control of Congress would see increases of about 10%.

The FBI gets $7.9 billion, a $680-million increase over 2009; the Veterans Health Administration budget becomes $45.1 billion, from $41 billion; and the National Institutes of Health receives $31 billion, a $692-million increase.

All but three Democrats voted for the bill. All but three Republicans opposed it.

The bill also approves a 2% pay increase for federal workers.
http://www.latimes.com/news/nation-and-world/la-na-spending14-2009dec14,0,3675856.story

A $1.1 TRILLION spending bill is passed by The Senate of a bankrupt nation. Wonderful! And with a 2% pay raise for federal workers, but NO cost of living raise for the nations senior citizens. What an insult. Where is the outrage?

Harry Reid demands that China fix its economic policies
The U.S.-China relationship is a carefully calibrated dance, especially in this the first year of the Obama administration. That’s why one has to wonder what prompted Senate Majority Leader Harry Reid to write a scathing letter to Chinese President Hu Jintao calling on China to move faster to reform its economic policies.

In the letter, sent to Chinese and U.S. officials Wednesday, Reid lashes out at China on two issues, its still-inflexible currency and its failure to do more to protect intellectual property rights.

"There is widespread agreement that China’s currency policy is a major source of imbalance in our relationship– indeed, in the global economy. The de facto peg is set at a level that for many years has not reflected economic reality," Reid wrote. "Your currency policy is not in the long-term interest of China: it creates inflationary pressure, promotes over-investment, and feeds asset bubbles within China. In short, it is one of the most serious economic problems in the world today."
http://thecable.foreignpolicy.com/posts/2009/12/11/harry_reid_demands_that_china_fix_its_economic_policies
Harry, the US Dollar is "one of the most serious economic problems in the world today." I don't believe Harry understands that IF China allows it's currency to rise...it will force our Dollar to fall further, faster. The only thing holding the Dollar above water right now is the Chinese
unwillingness to let it fall by allowing their currency, the Juan, to rise.

Goldman Fueled AIG Gambles
Goldman originated or bought protection from AIG on about $33 billion of the $80 billion of U.S. mortgage assets that AIG insured during the housing boom. That is roughly twice as much as Société Générale and Merrill Lynch, the banks with the biggest exposure to AIG after Goldman, according an analysis of ratings-firm reports and an internal AIG document that details several financial firms' roles in the transactions.

In Goldman's biggest deal, it acted as a middleman between AIG and banks, taking on the risk of as much as $14 billion of mortgage-related investments. Then Goldman insured that risk with one trading partner—AIG, according to the Journal's analysis and people familiar with the trades.

The trades yielded Goldman less than $50 million in profits, which were mostly booked from 2004 to 2006, according to a person familiar with the matter. But they piled risks onto AIG's books, which later came to haunt the insurer and Goldman. The trades also gave Goldman a unique window into AIG's exposure to losses on securities linked to mortgages.

When the federal government bailed out the insurer, Goldman avoided losses on its trades with AIG covering a total of $22 billion in assets.

A Goldman spokesman says that up until AIG was rescued by the government, the insurer "was viewed as one of the most sophisticated financial counterparties in the world. It wasn't until the government intervened in September 2008 that the full extent of AIG's problems became apparent."

"What is lost in the discussion is that AIG assumed billions of dollars in risk it was unable to manage," the Goldman spokesman added.
http://online.wsj.com/article/SB10001424052748704201404574590453176996032.html?mod=rss_whats_news_us_business

In light of this "revelation", it is hard to believe Goldman Sachs was not aware of the potential risks AIG had taken on, and the threat these risks posed to the financial system. Somebody, please, where are the prosecutors? This is a crime scene that needs to be revisited.

Paul Introduces Legislation Requiring Congressional Approval of Treasury Gold Dealings
Washington, DC: Congressman Ron Paul of Texas this week introduced legislation designed to curb the ability of the President or the Treasury Secretary to manipulate worldwide gold prices. The "Monetary Freedom and Accountability Act" restores proper congressional authority over gold policy by requiring that body to vote its approval before the President or Secretary buys or sells gold.

"The Constitution grants authority over monetary policy specifically to Congress alone, not to the executive or the administration," Paul stated. "Yet Congress has neglected its duty for decades, and now our foolish fiat money system is run without challenge exclusively by unelected Treasury and Fed bureaucrats. As a result, the Treasury has been able to engage in the buying and selling of gold to manipulate the worldwide market price. Gold is very important to markets and investors in America and across the globe, and Congress should not allow the administration to interfere in the gold market behind closed doors."

"The Fed wants all of us to think the stock market is not overvalued, and that credit and monetary expansion can create lasting prosperity," Paul concluded. "My bill will make it harder for the Fed and the Treasury to manipulate gold prices, which should always serve as an unbiased indicator of the true health of world markets."
http://www.house.gov/paul/press/press2002/pr021402.htm

It's high time Congress started doing its job again, why is legislation necessary to put Congress back to work if the job is given to them, and ONLY them, by the US Constitution. Don't all these knuckleheads up on Capitol Hill swear to uphold The Constitution when they take their oath of office? I wonder when last any of them has read The Constitution? Thank you Congressman Paul.

Obama's Big Sellout [MUST READ!]
By MATT TAIBBI, Rolling Stone
The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway.

Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers "at the expense of hardworking Americans." Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it's not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.

Then he got elected.

What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.
http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout

If after reading this expose you are not shaking with rage, then YOU are a Zombie. Matt Taibbi has out done himself with this revelatory essay. PLEASE take the time to read it in its entirety, and then pass it along to friends and family. Barack Obama, ...the man who sold his country down the river.

Rising Gas Prices Ignite Euphoria

ONLY IN AMERICA could a 9.7% increase in the cost of a gallon of gasoline create euphoria in the financial news media. Absent gasoline sales, November's retail sales figure would be CUT IN HALF.

From the U.S. Department of Commerce:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $352.1 billion, an increase of 1.3 percent (±0.5%) from the previous month and 1.9 percent (±0.5%) above November 2008. Total sales for the September through November 2009 period were down 2.1 percent (±0.3%) from the same period a year ago. The September to October 2009 percent change was revised from +1.4 percent (±0.5%) to +1.1 percent (±0.2%).

Retail trade sales were up 1.4 percent (±0.5%) from October 2009 and 2.2 percent (±0.5%) above last year. Building material and garden equipment and supplies dealers were down 9.3 percent (±1.8%) from November 2008, but gasoline stations sales were up 8.9% (±1.3%) from last year.
http://www.census.gov/retail/marts/www/marts_current.html

Using data from the U.S. Census Bureau news release linked above, and data from gasbuddy.com http://gasbuddy.com/gb_retail_price_chart.aspx I have deciphered that ONE HALF of the "unexpected rise" in November Retail Sales is directly attributable to a 9.7% increase in the cost of gasoline from October 1, 2009 to November 1, 2009.

If you subtract the increase in gasoline station sales from October '09 to November '09 from the total retail sales number for the month of November '09, retail sales for the month of November '09 ONLY grew 0.7% month to month as opposed to the headline number of +1.3% reported widely today by the financial news media.

Pathetic!

Economic reports raise hopes for global recovery
http://finance.yahoo.com/news/Economic-reports-raise-hopes-apf-1543887522.html?x=0&sec=topStories&pos=4&asset=&ccode=
WASHINGTON (AP) -- Just in time for Christmas, the fragile economic recovery is showing signs of strengthening: Consumers are spending, companies are rebuilding stockpiles and Chinese exports are mounting a comeback.

Data released Friday eased some worries about Americans' willingness to spend this holiday season. But stores remain worried that they may have to offer deeper discounts than planned, perhaps as early as this weekend, because of mediocre sales so far.

That's because the only thing consumers spent a great deal more on last month was gasoline. I fail to see how spending more on gasoline shows Americans are eager to spend this holiday season.

Shoppers crowded malls for deep discounts over Thanksgiving weekend, but many consumers have been slow to return. Some analysts say the industry could suffer its second straight year of holiday-season sales declines.

The two weeks since Thanksgiving have been especially tepid. According to ShopperTrak, a research firm that tracks sales and traffic, sales slipped 0.3 percent for the week that ended Dec. 5 compared with the year-ago period. And they plummeted 18 percent compared with the previous week.

Officials at ShopperTrak estimated Friday that business did not improve much this week.

Oh..., I guess that Americans are not so eager to spend after all. Unless of course you count spending on gasoline. They spent 6% more on that in November than they did in October.

Also sparking optimism was a report Friday that U.S. businesses unexpectedly increased their inventories in October, halting a slide of 13 consecutive declines. The small gain raised hopes that businesses will restock their depleted shelves, boost factory production and help bolster the recovery.

Correct me if I'm wrong, but don't U.S. businesses increase their inventories ANNUALLY in October in expectation of "increased sales activity" in advance of Christmas? 50% of American retail's annual profits come from sales between Thanksgiving and Christmas...or so it is hoped.

China's trade figures for November were the best in a year, with exports falling just 1.2 percent from the same month of 2008. Retail sales, factory output and investment also saw robust growth last month.

Asian markets rallied as investors were heartened by the signs of rising global demand that could lift other economies in the region as consumers in the U.S. and elsewhere begin spending more after months of holding back.

"...the best in a year, with exports falling just 1.2 percent from the same month of 2008." Since when is falling exports good news? I guess when they fell less than the month before, LOL! I bet somewhere in the financial media this statistic is being reported as "growth" in Chinese exports.

World markets climb as China's exports improve
The Associated Press - Louise Watt - ‎13 hours ago‎
LONDON — European markets followed Asian stocks higher Friday as a big improvement in China's exports pointed to rising global demand that could lift other ...

That didn't take google long to find. Are financial news headlines meant to deceive? China's exports dropped 13.8% in October, yet we are led to believe they improved. "...a big improvement..." They DROPPED 13.8%!!!

Pathetic!

Retail sales, at best, are bouncing along the bottom, and going nowhere fast. Government statistics are reported by the financial news media as purposely misleading in an effort to stoke confidence and encourage the hopes of a floundering nation.

Nowhere in the AP story above from Yahoo Finance was there mention that Total sales for the September through November 2009 period were down 2.1 percent (±0.3%) from the same period a year ago. Nor was there any mention that Octobers retail sales numbers were revised down 0.3% fro +1.4% down to +1.1%. Of course not, why rain on a retail sales parade?

And lost in today's financial news media frenzy over these magnificent retail sales figures for the month of November is the fact that the price of gasoline rose 9.7% just in the month of October alone. Who said there is no inflation?

I bet you never knew rising gas prices could be so exciting...

Gold - 10% off - While Supplies Last