Down The Drain: Pulling The Plug On A Failed Fiat Financial System

What I'd like to say about the blatant manipulation of the Precious Markets following the US Federal Reserve's announcement of their inept "Operation Twist" last Wednesday cannot be posted here.  It would be unprofessional, and quite frankly vulgar.  Suffice it to say:

If you had any doubt what-so-ever that the United States of America is about to go down the toilet, abandon those doubts immediately.  What we have witnessed over the past five trading days in the Precious Metals is all the proof you need that the complete destruction of life as we have known it in "the richest nation on earth" is about to forever end. 

When the price of REAL MONEY crumbles, as it has in a global environment of obvious fiat financial failure, the jig is finally up.  Or should I say, "the rig" is finally up.  Folks, the global financial system, with the US Dollar as it's reserve currency, is kaput! 

Globally, the price of REAL MONEY is rising with a vengeance...here in the USA, "fake" REAL MONEY, aka CRIMEX Gold and Silver paper derivatives, are falling like stones in the ocean consumed by imminent fiat financial failure.

As the pathetic banks in the USA and London sell their "claims on REAL MONEY", Asians are standing in line to buy their beloved Precious Metals at STEEP PREMIUM PRICES:

Vietnam gold today stood at a premium of $83.45 to world gold of $1,642.60 (Tuesday $95.96/$1,633.15).

Shanghai gold closed at a premium of $11.87 to world gold of $1,658.05 (Tuesday $9.17/$1,652.30).

Western investors are very distraught, especially if they cling to their charts.  This "fear factor" will no doubt lead to selling on strength – and the criminal CRIMEX shorts are well supplied with ammunition with which to press their current market advantage.  A great deal of physical Precious Metal is likely to change hands in the immediate future as the Eastern buyers take advantage of the pathetic and foolish West.

Ray Charles could see what is going on here as the wealth of the West is transferred to the East courtesy of the criminal CRIMEX bankers and their puppet masters at the Fed, desperate to defend their now quadriplegic fiat financial system.  Now completely paralyzed, the global fiat financial system is on life support, all that is left is for the plug to be mercifully pulled.

Bob Chapman, The International Forecaster
The takedown of gold and silver markets over the past two weeks signified a new milestone in corruption, brazenness, arrogance and it reveals the level of evil control behind our government. This past week, in just one week, saw gold fall almost $200 and silver about $10.00. We have been involved in gold and silver for 53 years and the only event that comes close to this was October 19, 1987, when we witnessed the Bank of England sell down gold $100.00 under the orders of the Fed and the US Treasury, which borrowed the gold from the IMF. That was illegal, but that means little to the Illuminists who do as they please. Today thanks to Ronald Reagan we have the “President’s Working Group on Financial Markets,” which has legitimatized corruption to conform to the Keynesian model of corporatist fascism. After the close on Friday we were informed, that the CME, which controls the Comex, had raised margin requirements on gold by 21%, silver 16% and in copper by 18%. In retrospect it is obvious that many banking insiders and traders knew early in the week that this momentous psychological warfare was going to be unleashed on these markets. Your government definitely rigged these markets. Today in America and many other places as well, crime pays. What has been done to investors over this past week is not only a crime, but also a disgrace to all Americans.

Let us now look at the flipside. All is not lost, because there is a limit to the damage that can be done. The paper attack on gold was concentrated and accomplished by using futures, options and derivatives. Thus far there is no evidence of any major sales of gold or silver. This in the past has generated very short terms of suppression. The fundamentals have not changed one bit and if anything they are stronger than ever. The world is in the midst of financial collapse. It could take a few months to fall or several years. We do not have a presence behind the scenes, but we do know history and we know what these criminals are up too and what the end game is and that is world government. We have to back into time sequence. That has thus far been enough to help us to make excellent calls. The call this time is we are approaching another bottom. A bottom that probably won’t be seen again. Major buyers of gold and silver have to be waiting with open arms for such a great opportunity to purchase both metals at bargain basement prices. There are sovereigns who are loaded with US dollars, who have been waiting for just such an opportunity to sell them into a strong dollar market to purchase inexpensive gold and silver. Today’s market is totally different than the gold and silver markets of just two years ago. Big players are big buyers. Prior to that the opposite was true as sovereigns were sellers year after year, and both were transferred from weak to stronger hands. The monetary and fiscal situations in Europe, the UK and US are in a shambles. The privately owned Federal Reserve, the Bank of England and the European central bank have all lost credibility. Just look at the reception “Operation Twist” received – bonds rose and the stock market was hit by a typhoon. The Fed has lost its credibility in the investment arena worldwide, because of forced compromise to existing problems. The fed simply didn’t have the guts to implement a QE 3. If the Fed is not quickly forthcoming with a new plan the Dow could fall thousands of points. The damage to gold and silver is already in the history books and the turn back up is already taking place. No matter what the powers that be do they cannot for any period of time control gold and silver prices. There are too many buyers who want to dump fiat currencies. Under the circumstances the Twist was the wrong choice at the wrong time. Financial professionals worldwide believe it is a joke. They see the lack of proper action, the activation for events for more damaging then those of 2008 and if something doesn’t happen this week markets and economies are doomed. The elitists knew this and that is why they attacked gold, silver and commodities. This was so investors would think it was a general overall retreat not a reflection of Fed incompetence. Their fall had nothing to do with reality and everything to do with smoke and mirrors. This should not surprise anyone. It has been used over and over again by the gold and silver suppression cartel.

Is it "just a coincidence" that the CFTC "delayed" their vote on position limits just days before this blantant criminal assault on the Precious Metals?

CFTC Provided Temporary "Reporting Relief" for Commodities 4 Days Prior to Beginning of Cartel Silver Raid
From Silver Doctors
4 trading days prior to the beginning of the massive silver raid that took silver down 43% in 3 days for what appears to be the purpose of "solving" JP Morgan's 120 Million ounce naked short silver problem, the CFTC issued a public statement providing temporary relief from reporting requirements on physical commodities for large swaps traders.



Just why exactly did these large commodities traders urgently need to be provided temporary relief from reporting requirements?

CFTC’s Division of Market Oversight Provides Temporary Relief from Large Swaps Trader Reporting for Physical Commodities
Washington, DC – The Commodity Futures Trading Commission’s (Commission’s) Division of Market Oversight (Division) today issued a letter providing temporary relief from the requirements of the Commission’s regulations regarding large trader reporting of physical commodity swaps (§§20.3 and 20.4). Because this is the first time that swaps data is being collected, this temporary relief is intended to provide sufficient time to enable both the industry and the Commission to develop and refine systems and processes that will be able to report these complex transactions.

On July 22, 2011, the Commission published large trader reporting rules for physical commodity swaps and swaptions. The rules require daily reports from clearing organizations, clearing members and swap dealers, and become effective on September 20, 2011. The letter issued today provides temporary relief from reporting, as long as parties are making a good faith attempt to comply with the reporting requirements, until November 21, 2011, for cleared swaps, and January 20, 2012, for uncleared swaps. Upon the conclusion of applicable relief periods, such reporting parties must become fully compliant.

This would appear, on the surface, to be the CFTC giving cover to the criminal CRIMEX bankers to assault the Precious Metals markets in any manner they saw fit, and the CFTC would turn a blind eye to their "activity".

Is JP Morgan Attempting to Extricate Themselves From Short Silver Position Prior to Oct 4th CFTC Meeting?
From Silver Doctors
IF the CFTC are in fact preparing to finally adhere to Frank-Dodd legislation, and enforce strict position limits in silver, JP Morgan would be in a world of hurt (we're talking chapter 7 bankruptcy) had they had to cover their naked short positions at silver prices anywhere near where silver had been trading for all of 2011.

I guess JP Morgan needs two more weeks to work out that problem:

CFTC Pushes Back Position Limits Meeting from Oct 4th to Oct 18th
By JAMILA TRINDLE
WASHINGTON—The Commodity Futures Trading Commission has postponed for a second time a vote on new limits to speculation in commodity markets.

The vote, which now won't take place until at least the CFTC's next scheduled meeting on Oct. 18, comes amid much debate about what constitutes excessive speculation and whether speculation is to blame for the high prices in commodity markets.

Congress gave the CFTC expanded powers in last year's Dodd-Frank financial-regulatory law to impose limits on traders' speculative positions in commodity markets with a deadline of January.

The CFTC put forward a proposal in January for position limits on 28 commodities and received 13,000 comments.

The commission also canceled a meeting on position limits scheduled for Sept. 22. CFTC Chairman Gary Gensler has said in the past that he wanted to the five-member commission to vote on the new rule in late September or early October.

The meeting delays along with staff complaints to the CFTC's inspector general about personnel issues suggest the agency is still divided over the measures.

Commissioner Bart Chilton, a supporter of position limits, said he was troubled by the slow pace of implementation. "These limits were supposed to be in place earlier this year," he said in a statement.

I seriously doubt we see a vote on position limits by the CFTC until JP Morgan clears their book, and gives the CFTC the "OK" to proceed with a vote.

From James McShirley on the GATA page at http://www.lemetropolecafe.com/ :

Well, here you have it. Yesterday, on the big rally, the gold open interest fell a hefty 16,675 contracts to 464,514, which represents shortcovering by The Gold Cartel forces after they wiped out so many unsuspecting specs, many of whom couldn’t take it anymore. This is nothing more than orchestrated fraud.

The silver market open interest went down just as much in a relative sense. It fell a whopping 4560 contracts to 102,014, which is an open interest of collapsing proportions, more reminiscent of silver around $5 per ounce, not at these levels. The silver open interest high in 2008 was around 178,000 contracts, with a price of silver $10 lower than it is at present.

Surely JP Morgan was in there below $30 buying up all they could, laughing all the way to the bank. Love our fair and free markets!

Yep, it sure looks to me like the CFTC provided cover for JP Morgan and their den of CRIMEX thieves to run roughshod over the Precious Metals markets in an effort to extricate themselves from their plethora of naked, and illegal short positions.

There is no hope for America when this is what is occurring "behind the scenes" as the US Dollar reserve currency fiat financial system collapses...

Ranting Andy: Math 101
September 28, 2011
RANTING ANDY – And the charade goes on….but for how long?

Just a week ago, stock markets were plummeting and Precious Metals soaring due to expectations of plunging economic activity and imminent sovereign debt defaults. The Fed had just revealed that the Emperor truly has no clothes, and hope for a positive Euro debt solution (as if there is one) was rapidly dying.

Then something incredible happened.

The Cartel initiated OPERATION PM ANNIHILATION, making a mockery of whatever shred of reality still remained in the gold and silver markets, and stock markets rocketed upwards. Actually, only the WESTERN stock markets surged, quite ironic given that their balance sheets are dramatically worse than their counterparts in the EAST. Even more ironic is the fact that leading the charge were the very EUROPEAN BANKS closest to extinction. Can you say “dead cat bounce?”

Read More

Why You Should Brave the Gold Market Selloff
By Eric Fry
In the September 19 issue of Barron’s, an interviewer asked James Grant, editor of Grant’s Interest Rate Observer, whether the gold market was in a bubble. Grant replied:


“A bubble is a bull market in which the user of the word ‘bubble’ has not fully participated. You can think of gold as a stock that went from 2 5/8 to 18 in a dozen years. I’m not sure that’s a bubble… What I do think is gold is simply the reciprocal of the world’s faith in the institution of managed currencies. It is one divided by T, where T stands for trust. And trust is a shrinking number and will continue to shrink. Therefore, I am bullish on gold.”

ME TOO!

After the Fall: How Far Can Gold and Silver Climb?
By Jeff
The current correction may not be over, and we can count on further pullbacks along the way. But the data here suggest the upside in gold and silver is much bigger than any short-term gyration — or any worry that may accompany it.

I don't know about ya'll, but the past week has been exhausting.  Until the dust settles in this Precious Metals conflagration of TRUTH AND REAL MONEY vs FAKE Real Money and DECEIT, I intend to rest.  See you here next week.  Accept this gift of cheaper REAL MONEY from the fools on Wall Street with an open check book.

Gold And Silver: Free Markets?

The price manipulations fail when the public goes on a buying spree like they did on Thursday and Friday...and with a vengence Monday.

[MUST READING]
Ranting Andy Alert: The Greatest Precious Metals Buying Opportunity of All Time

So be comforted, readers, that the gold and silver action we saw the last three days was a DESPERATE, ORCHESTRATED PAPER ATTACK by the Cartel to deflect safe haven buying away from Precious Metals while global stock, credit, and commodity markets collapsed.



And if THAT comforts you, get ready for what the AFTERMATH of this PAPER SMASH took the form of, a textbook example of the physical truth “EVERY ACTION HAS A REACTION.”


As I noted yesterday, not only have OFFICIAL RESPONSES to the global equity and credit collapses been brazenly manipulative, they also SLOPPY and UNAUTHORITATIVE. Their slip is clearly showing, as observed by the HASTE and AMBIGUITY of their actions, such as the vague G-7 and G-20 communiques, the blatant Swiss Franc and Japanese Yen devaluations, the shocking Slovenian government collapse, the $500 billion joint U.S. dollar bank credit line, the lack of clarity from the Bundesbank and ECB regarding the all-important proposed changes to the EFSF stability fund, and of course the ghastly FOMC Fed statement following its vaunted two-day meeting. Yes, this all happened in the past two WEEKS!


Anyhow, the situation is clearly becoming so dire, and the OFFICIAL FEAR of a Precious Metals mania so acute, that the ALL-OUT PAPER ATTACK was orchestrated just as gold and silver were about to EXPLODE. By the way, does anyone remember August, i.e. LAST MONTH, when gold and silver SOARED for the exact same reasons the media is portraying for why it is PLUMETTING now?


Unfortunately for the bad guys, they miscalculated what the public’s RESPONSE would be. During past PAPER gold and silver attacks, individuals and institutions alike would curl up in the fetal position, waiting for the storm to pass and upward PM momentum to return before wading back into the market. However, in today’s environment of PENDING GLOBAL ECONOMIC COLLAPSE, massive buying is emerging from all corners of the earth, including INDIVIDUALS, INSTITUTIONS, and SOVEREIGNS!


Between my Friday evening bike ride and Saturday morning soccer game, I was BESEIGED with information depicting ASTOUNDING PHYSICAL BUYING of GOLD and, particularly, SILVER. This information is so powerful, it could serve to ignite the final Cartel-busting pushes above $2,000/oz and $50/oz, respectively, in my opinion.


Here are some examples, both empirical and anecdotal:

READ MORE:

Gold Rebounds After Biggest 3-day Drop Since 1983- Bloomberg

Gold gained for the first time in five days in New York as the biggest three-day drop in 28 years spurred some investors to buy the metal on concern about economic growth and debt crises.

I don't write the headlines...I just laugh at them.

Gold & Silver Bubbles, Panics and Stink Bids
By Jeff Berwick The Dollar Vigilante
If/when we do reach the end of this gold bull market there is one thing that is certain: it will not be called by the mainstream media. In fact, the nightly newscast will likely lead off with the "news" readers telling you to rush out and buy gold.



For now, gold and silver haven't even entered into a bubble yet. They are still catching up to the price of everything else... and lag dramatically the one true bubble. The bubble in government debt.

Is Gold No Longer A Safe Haven? Not According To Capital Economics: "Gold Will Surge When Euro Crisis Escalates"

Financial Warfare

by Mike Krieger
What has ensued since the Swiss intervention has been nothing short of total currency chaos throughout the emerging markets world. 

Gold is not falling, emerging market currencies have just been devalued. This is what might be expected within the current macro environment of general fiat currency death as the globe enters a recession within a depression. Things are going to be very, very choppy and I would be extremely cautious in all markets but physical precious metals should absolutely be accumulated on weakness. The system has already blown up and while that makes thing extra volatile and confusing, as JP Morgan said in 1912 “gold is money, everything else is credit.” It shall be seen to be true again.

Quit Crying, And Send Your Broken Bullion Banker A Thank You Card

Absent the [un]timely margin hikes in London, New York, and Shanghai...has anything [but the price] changed fundamentally for the Precious Metals with regards to their standing within the financial global financial system? 

The quick response to that simple question is a loud, "NO!"

But everything has changed fundamentally for the Precious Metals.  The World's financial system is worse off this Monday morning than it was a week ago.  The fundamental reasons to OWN the Precious Metals is stronger today than it has ever been...and that is why the prices of the Precious Metals have been savaged over the past 72 hours.

The Gold and Silver markets had to be "flushed" ahead of the recognition by the global banking system that the system is broken and insolvent.  A recapitalization of the banks is now being set in motion to prop them up ahead of their ultimate implosion.

From GATA alum Dave in Denver:
Here We Go - This Is Why They Wanted To Annihilate The Metals This Week
G20 sources: all efforts behind the scenes (by G20 members) are now going into recapitalising banks, preparing economies for default.

Zerohedge posted this. Here's the LINK

So it sounds like Greece will be allowed to default and the bigger news regarding gold/silver is that the ECB is prepared to print plenty of money of keep the banking system from collapsing. Sort of like what happened here in 2008. That's why the LBMA raised margins on OTC gold forwards by substantial margin. They wanted to "flush" the market ahead of this. Ultimately this is uber-bullish for the metals. Don't let them shake you out of your positions. An even better move would be to man-up and buy even more Monday and save room to add more if they take it lower. The European banks can ONLY be recapitalized in the same way they were "propped up" here in the US in 2008...by PRINTING MONEY.

CLEARLY, the harder the Precious Metal's prices are hit, the more bullish their prospects become going forward.

Gold Slides More Than Comex Margins as Investors Cover Losses
By Nicholas Larkin and Glenys Sim

“Gold is one of the few assets that remain in positive territory this year, in a sense it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed,” Edel Tully, a London- based analyst at UBS AG, wrote today in a report. “While gold’s retracement was not really a surprise, the depth of its plunge certainly was.”

“A rising fear factor coupled with sinking confidence levels should be helping gold, but this isn’t happening because of overriding concerns about liquidity, European bank funding and margin calls amid a stronger U.S. dollar,” UBS’s Tully said. Physical demand and investor buying after recent declines may “point to a floor being nearby,” she said.

The decline in speculative positions “may mean that short- term longs are being cleaned out of the market,” said HSBC’s Steel. “This could leave bullion well-placed to trade higher when the current selling cycle winds down.”

If you think, or have been lead to believe, that Gold and Silver's plunge the last three trading days is because of a surge in the US Dollar, you need to get your facts straight.  The US Dollar has been trading in a very tight range of less than a point since 12AM est Thursday September 22:

This entire blame for this recent "episode" in the Precious Metals lies at the feet our illustrious, and blatantly bankrupt, global bankers.  Contrived margin hikes that scatter Precious Metals speculators because of margin calls on their positions can be pointed to as the cause of much of the recent crash in prices of the Precious Metals.  However, the trigger that began the fall in prices that lead to the global metals exchanges raising margin requirements may lie at the feet of sovereign states desperate to raise cash:

What You Must Know about Gold & Silver Selloff
Eric King, KingWorldNews.com
With turbulence in the gold and silver markets, Michael Pento, of Pento Portfolio Strategies, explains for King World News readers globally why the metals plunged and what investors must know about the selloff, “There are two reasons why the gold market, and indeed the entire commodity sector, got stuffed last week. First off, the Counterfeiter in Chief, Ben Bernanke, managed to disappoint the gold market by deciding to sterilize the bond purchases made on the long end of the yield curve."

Michael Pento continues:

“By offsetting the purchases of short-term Treasuries with sales of shorter duration notes, Bernanke will not increase the supply of money or dilute the currency to a greater extent than he already has in performing ‘Operation Twist.’

But make no mistake, the global economy is faltering and QE III isn’t far off. However, the gold market was expecting the Fed to do more in the way of easing during this two-day meeting—like ceasing to pay interest on excess reserves....

“Therefore, in the short-term, there will be selling pressure on all commodities. Number two, and this is conjecture on my part at this juncture, but I believe sovereign states in Europe that are flirting with insolvency have resorted to dumping gold in the open market.

When under duress, these countries are forced to dump what they can, and there just isn’t any asset that has performed better in the last dozen years than gold and commodities.

But the good news here is that gold is moving from a very few, weak hands, to a diffused group of strong ownership. Ultimately, this will be beneficial for gold prices in the long-run and this recent selloff should be a welcomed opportunity for investors to accumulate a more substantial position.”

If central banks are selling their Gold to raise cash, can the state of the Global Financial System be more dire?

Hinde's Ben Davies tells King World News of central bank intervention against gold

Central banks are intervening in currency markets all over the place

Avoid counterparty risk as financial system topples, Turk tells King World News

Now the question must be asked?  Will the margin increases of the global metals exchanges stop the slide in prices as even more metal moves from weak hands to strong hands, and those banks short the Precious Metals rush to cover at these aberrant prices?

Marc Faber: "Gold Is Quite Oversold. I Will Consider Buying Gold Over The Next Two Days"

From Zero Hedge
Anyone trading gold and silver most likely had a heartattack this morning. Of that subset, anyone who survived and traded with conviction made a killing, following an impressive surge in both metals, which saw silver soar from $26 all the way back to $30, after it was made clear that there was no behind the scenes liquidation of the metal but merely more piggybacked margin hikes this time out of China as was first reported by Zero Hedge. Another factor that helped was Marc Faber's appearance on CNBC earlier, who said that gold is now "quite oversold" and that he would be adding to the yellow metal in the "next two days." In retrospect, he should have been adding today to his existing holdings. However, since he already has 25% in gold, he is forgiven. Mutual funds which, however, have about 1% in gold, are not.

LISTEN UP PEOPLE!  If you have often wished you, or know people that have wished they could,  go back and buy Gold and Silver when they were cheap, NOW IS YOUR CHANCE!  The fundamental reasons for owning the Precious Metals to protect your wealth from the coming TOTAL global financial meltdown have only improved in the last three trading days.  You have been given a gift from our criminal bankers in the form of discount prices in the Precious Metals only dreamed about this year.

I myself purchased more metal on Friday afternoon fearful that there might not be any available to purchase by Monday morning as global Precious Metals investors rushed to take advantage of the shocking sale prices being offered on the REAL THING.

Sprott Money Temporarily Runs Out of Physical Silver
Eric King, KingWorldNews.com
Larisa Sprott, President of Sprott Money told KWN, “It’s been pretty wild, especially the last three or four days because of the price drop. People are trading in their paper money for gold and silver, but we are seeing more purchases of silver net. In fact the buying has been really skewed in favor of silver, there is tremendous demand.”

“We have completely run out of physical silver, so we are temporarily out of stock. You have to remember, Eric, that like Dubai, we only sell product that is on our shelves, that we have in stock. We do expect a shipment later today, which will allow us to restock and give us more product to sell.

Our clients are very savvy, sophisticated and when a price drop of this magnitude occurs, they step in and buy very aggressively. Right now there is dramatically increased volume and what we are seeing is buying across all spectrums in terms of the size of the orders.

To clarify, we may have some client buying a single tube of silver maples, while at the same time, another client is buying $5 million of 100 ounce silver bars or gold maple leafs. The bottom line here is the drawdown in price is creating a tremendous amount of demand.”

Once again, a contrived fall in prices does not encourage investors to dump their Precious Metals holdings.  It only offers them an opportunity to buy more at lower prices, and further pressure the supply side of the Precious Metals markets.  The crash in prices we are witnessing is all about getting the banks out from under their crushing naked short positions in these markets.  If the banks really believe that actual physical metal is going to flood the markets on this price crash they will be sadly mistaken.  If anything, their pathetic and desperate attempt to save themselves, and dissuade investors of the benefits of physical Precious Metals ownership, will only make their situation worse in the long run.

The global banking system is broken beyond repair.  Stuffing the prices of Precious Metals is hardly the answer to their problems:

Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure; Is Morgan Stanley Sitting On An FX Derivative Time Bomb?
From Zero Hedge
The latest quarterly report from the Office Of the Currency Comptroller is out and as usual it presents in a crisp, clear and very much glaring format the fact that the top 4 banks in the US now account for a massively disproportionate amount of the derivative risk in the financial system. Specifically, of the $250 trillion in gross notional amount of derivative contracts outstanding (consisting of Interest Rate, FX, Equity Contracts, Commodity and CDS) among the Top 25 commercial banks (a number that swells to $333 trillion when looking at the Top 25 Bank Holding Companies), a mere 5 banks (and really 4) account for 95.9% of all derivative exposure (HSBC replaced Wells as the Top 5th bank, which at $3.9 trillion in derivative exposure is a distant place from #4 Goldman with $47.7 trillion). The top 4 banks: JPM with $78.1 trillion in exposure, Citi with $56 trillion, Bank of America with $53 trillion and Goldman with $48 trillion, account for 94.4% of total exposure. As historically has been the case, the bulk of consolidated exposure is in Interest Rate swaps ($204.6 trillion), followed by FX ($26.5TR), CDS ($15.2 trillion), and Equity and Commodity with $1.6 and $1.4 trillion, respectively. And that's your definition of Too Big To Fail right there: the biggest banks are not only getting bigger, but their risk exposure is now at a new all time high and up $5.3 trillion from Q1 as they have to risk ever more in the derivatives market to generate that incremental penny of return.

These US banks derivative exposure in Precious Metals is peanuts compared to the nuclear device they sit upon in outstanding US derivative exposure.  There isn't close to $250 TRILLION of US Dollars in the entire global money supply...the mess the global banking system finds itself in can ONLY be resolved by default...the global banks could not print $250 TRILLION if they tried...and it would appear that they are intent on trying...if so, the only direction for Precious Metals prices is skyward.  The banks seem to believe that if the Precious Metals launch from a lower platform, they won't go as high as if they launched from their recent highs.  That is ridiculous.  The further down the precious Metals are pushed...the higher they ultimately will go.  We should be standing in line thanking the knucklehead bankers for this "shocking" discount in Precious Metals prices today.

The US Dollar: an IOU Nothing
From Bullion Vault 
Why the Dollar Gold Price "should probably be a lot higher than it is"...

THE WORLD will hit catastrophe when everybody realizes that the Dollar is an "IOU nothing", according to Casey Research Chairman Doug Casey.

The Gold Report: You've been talking about two ticking time bombs. One is the trillions of Dollars owned outside the US that investors could dump if they lose confidence. And the other is the trillions of Dollars within the US that were created to paper over the crisis that started in 2007. Are these really explosive circumstances that will bring catastrophic results? Or will it just result in a huge, but manageable, hangover?

Doug Casey: Both, but in sequence. One thing that's for sure is that although the epicenter of this crisis will be the US, it's going to have truly worldwide effects. The US Dollar is the de jure national currency of at least three other countries, and the de facto national currency of about 50 others. The main US export for many years has been paper Dollars; in exchange, the nice foreigners send us Mercedes cars, Sony electronics, cocaine, coffee — and about everything you see on Walmart shelves. It has been a one-way street for several decades, a free ride — but the party's over.

Nobody knows the numbers for sure, but foreign central banks, and individuals outside the US, own US Dollars to the tune of something like $6 or $7 trillion. Especially during the recent crisis, the Fed created trillions more Dollars to bail out the big financial institutions. At some point, foreign Dollar holders will start dumping them; they are starting to realize this is like a game of Old Maid, with the Dollar being the Old Maid card. I don't know what will set it off, but the markets are already very nervous about it. This nervousness is demonstrated in gold having hit $1,900 an ounce, copper at all-time highs, oil at $100 a barrel — the boom in commodity prices.

Some countries are already trying to get out of Dollars, but it could become a panic if the selling goes from a trickle to a flood. So, yes, it's a time bomb waiting to go off, or maybe a landmine waiting to be stepped on. If a theatre catches fire and one person runs out, soon everybody rushes toward the door and they all get trampled. It's a very serious situation.

And what will it take to set the collapse of the US Dollar in motion?  Why a collapse in the US Treasury market, of course.  And upon the detonation in US Treasuries, you are going to look back on today's outrageous sale prices in Gold and Silver and be ecstatic that you came forward in a market crash and lifted some Precious Metals from the hands of the weak into your bone crushing paws:

Precious Metals vs. U.S. Treasuries [MUST READ] 
Written by Jeff Nielson
Today, thanks to the banksters flooding our markets (and economies) with more of their worthless paper than at any time in history, and thanks to the banksters rendering all of our governments insolvent with their scam-financing, both gold and silver are more undervalued today than they were ten years ago. While the fundamentals for gold and silver are (much) stronger today than ever before, the same cannot be said for their current “competition”: U.S. Treasuries.

U.S. Treasuries are worthless. U.S. Treasuries are the largest Ponzi-scheme (and “bubble”) in the history of humanity. We now have the Federal Reserve openly admitting to “buying” $100’s of billions per year of this worthless paper with their other worthless paper (U.S. dollars) merely to keep this bubble inflated. No one (outside of the Fed) knows how many $100’s of billions they have secretly bought (with their counterfeited money). As the infamous Jeffrey Christian of the CPM Group (and formerly of Goldman Sachs) observed during “The Great Gold Debate”, manipulation works best if the market doesn’t “see you coming.”

Manipulation of the Treasuries market only implies that Treasuries are grossly overvalued. It is the “fundamentals” for U.S. Treasuries which make it obvious that their actual value is near-zero. To begin with, the U.S. is a hopelessly insolvent debtor. The current banner-carrier for this argument is Professor Lawrence Kotlikoff. He calculates “total indebtedness” of the United States government at $211 trillion, or roughly fifteen times the $14 trillion fantasy-number which the government calls “the national debt”.

He calculates that the U.S. is significantly more insolvent than Greece (by roughly 20%) despite the fact that Greece’s government is currently being forced to pay more than ten times the interest rate on its debt as the U.S. pays on its own debts. As I’ve pointed out in my own previous work, Greece’s interest rates have been fraudulently manipulated to these usurious rates through the “economic terrorism” perpetrated by Wall Street in the credit default swap market.

That same “market” (i.e. Wall Street) has been recently asserting that the probability of Greece defaulting on its own debts is already at 98%. This puts the risk of a U.S. default at somewhere above 100%.

It is common knowledge, however, that the preferred approach of the U.S. government to avoid repaying its creditors is a “stealth default” – to “default” on its debts by repaying those debts with currency only worth a tiny fraction of its original value. In other words, if the U.S. government drives down the value of the U.S. dollar by 90% and then repays its creditors it will have cheated them out of 90% of the obligation owed to them, in “real dollars”.

By now, everyone should be able to connect the dots: “competitive devaluation” is “stealth default”. Our (insolvent) governments have now explicitly decided to cheat all of their creditors by repaying all of them with grossly diluted paper. Put another way, they have taken the “stealth” out of stealth default.

However, at least with the other governments who are in the process of cheating their bond-holders they are currently paying interest on these mountains of debt. The chumps holding U.S. Treasuries are not getting any interest, and are paying the highest prices in history for this worthless paper.

Buying Treasuries at the highest prices in history at a time when the explicit economic policy of the U.S. government is to drive down the actual value of those Treasuries is a form of behavior which would seem to provide conclusive proof that the buyers are not “of sound mind”. But that is not the whole “message” which the propaganda machine was sending during the latest ambush of gold and silver.

Media talking-heads were telling us that (supposedly) investors were “fleeing” gold and silver, and “rushing toward the safe haven of U.S. Treasuries”. They are rushing out of a “hard asset” which (as I just recounted) is grossly undervalued, and at a time when the official policy of all of our governments is to drive up the value of all such hard assets. They are (supposedly) rushing to buy the debts of the world’s biggest deadbeat-debtor, whose “total indebtedness” exceeds all the other debts of every other nation on Earth – combined. They are doing this at a time when the explicit economic policy of the U.S. government is to drive down the actual value of its own bonds.

Selling gold and silver and buying U.S. Treasuries at the highest prices in history? The legendary “Jack” (of “Jack and the Beanstalk” fame) got much better value when he traded the family cow for “magic beans”.

Recapitalizing the US banks in 2008 only put off their inevitable demise.  As the insolvency of the global banking system has been been now recognized in Europe, it will come full circle and destroy the banks here in the USA once and for all.  Is it any wonder then, that the prices of the Precious Metals had to be shattered ahead of this "event".  The only unknown now, is "when" the banks will finally collapse globally, and stop the current fiat money system in it's tracks.  The global banks and their henchmen at the global Precious Metals Exchanges in London, New York, and Shanghai have given everyone "one last opportunity" to protect themselves from the inevitable global default of money and debt.

Protect yourself now!  The beginning of the end is now upon us.

Silver Market Raped As Police Stand By Eating Donuts

You could lead a life a crime, and risk getting caught...or you could go to work for JP Morgan and steal risk free.

Ain't America Beautiful?

May a space rock fall from the heavens and vaporize this den of thieves.

Gentleman, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.

When you won, you divided the profits amongst you, and when you lost, you charged it to the bank.

You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!

You are a den of vipers and thieves.

 -Andrew Jackson, (7th US President, when forcing the closure of the Second Bank of the US in 1836 by revoking its charter)
http://thehardrightedge.com/currency/

Operation Twist A Real Hokey Pokey

You put your ten year in, you take your two year out
And you shake it all about
You hope for something different, but you haven't changed a thing
And the markets are left with doubt

The key element in the FOMC statement yesterday is "significant downside risk to the economic outlook".  This side note, coupled with the monetary sterility of Operation Twist, has sent global financial markets into a tailspin.  The knee jerk response higher in the US Dollar should not come as a surprise to those that have watched global financial markets collapse in unison in the recent past.  When global investors and traders sell, the first stop is always cash, and the US Dollar is "still" the global reserve currency.  This cash stop is always temporary.  The Fed's Operation Twist hardly makes the US Dollar a profitable home.  At best, the US Dollar is a Roach Motel for the cash of global traders and investors.

Don't Expect The Dollar To Tank After Bernanke & Co Hit The Dance Floor To Swing
By Agustino Fontevecchia, 

9/21/2011 @ 2:24PM
The greenback tanked during QE1 and QE2 because real interest rates had room to fall and the global banking sector found itself strong enough to fuel further U.S. dollar-credit creation. With European banks on the brink of collapse and real rates near 0%, more help from Ben Bernanke won’t result in further USD weakness.

Both previous rounds of QE helped to materially weaken the dollar because they had substantial and direct effects on key macroeconomic variables (i.e. interest rates) and on cross-border capital flows.

While real rates on 10-year Treasuries stood at 3.1% when QE1 was unveiled and at 1% at the time of QE2, they now stand at 0.0% as TIPS indicate, Nomura’s research indicates. “Market-implied real rates suggest that there is limited potential for monetary easing to generate a material shift,” explain the analysts. This time around, the Bernanke will have a much harder time “affecting expectations in a way that will provide a stimulatory impact.”

In other words, Operation Twist is sterile, there will be no flood of Dollars coming into the markets as a result of this latest Fed "operation".  The Fed is simply rearranging the deck chairs on the Titantic, and doing nothing to fix the hole that is sinking the ship.

With the global economy already gasping for "cheap Dollars" to bailout defaulting sovereign nations, Operation Twist just made Dollars harder and more expensive to get, despite the recently announced global US Dollar swap between the Fed, the Bank of England, Bank of Japan, European Central Bank and the Swiss National Bank  [In recent weeks, the deteriorating euro-zone sovereign debt crisis has spread into concerns about the region's banks, sparking a shortage in dollars and inflating short-term borrowing costs.] Operation Twist not only does not make US Dollars more freely available, but it will increase short term borrowing costs as short rates rise and long rates fall as a result of the operation.

Money and markets Mike Larson sums up the Fed's Operation Twist:

Meanwhile, in this afternoon’s Fed announcement, Bernanke may as well have just said, “America, we’re out of bullets. You’re on your own!”

The announcement turned out to be pretty much a non-event: The Fed announced that it will sell short-term treasuries valued at $400 billion — and then buy longer-term treasuries valued at $400 billion.

Net effect: Short-term yields may rise somewhat. Longer term yields may decline a bit. Nothing in this announcement has a snowball’s chance of stimulating the economy or reducing unemployment.This is nothing more than the Fed’s attempt to look like it’s fighting for the economy while it’s actually surrendering to forces beyond its control.

It’s tantamount to re-arranging the deck chairs on the Titanic. Total impact on the U.S. economy: Virtually nil!

Dollar Stronger After Fed's Operation Twist
With the more dollar-diluting of the Fed's options off the table for now, the greenback surged against the euro, yen and U.K. pound.

"It's what the market has been expecting, but I'm not convinced it's what the economy needs," said Ron Florance, managing director of investment strategy for Wells Fargo Private Bank. "But something is still better than nothing."

Why Traders Booed the Fed's "Operation Twist' – And You Should, Too
By Kerri Shannon, Associate Editor, Money Morning
With "Operation Twist," U.S. Federal Reserve policymakers are attempting to use an old strategy to launch a new attack on the wheezing U.S. economy.

But the assault, announced after the central bank's Federal Open Market Committee (FOMC) meeting concluded yesterday (Wednesday) afternoon, isn't expected to have much long-term success.

"The way [Fed policymakers] handled this proves that the Fed doesn't have much power left," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "It tried to use big sweeping statements, and careful language ... and it still didn't work - the market sold off ... and traders [on the trading floor in New York] actually booed. They don't want this ... they know it's bad."

With "Operation Twist," the objective is to get corporations to spend some of their cash hoards, and push investors out of safe-haven U.S. Treasuries and into stocks.

"They're literally trying to force scared consumers and scared investors into the market," said Money Morning's Fitz-Gerald. "They're trying at the same time to free up that logjam of funds that corporations are, in fact, sitting on."

The Fed also announced plans to reinvest maturing mortgage debt into mortgage-backed securities (MBS) instead of Treasuries, and reiterated its policy to keep the target range for the federal funds rate near zero.

But Fitz-Gerald said such stimulus measures have never helped the economy in the long-term.

"Long-term implications haven't changed ... we still have lots of problems here," said Fitz-Gerald. "The economic system is very different from the market system, and that's the underlying issue here. The Fed has been wrong about this all along. And what it's doing now proves that it's still wrong."

"We expect the Fed's actions to have very little visible effect on the economy, because the level of interest rates and the shape of the curve are not the key constraints on growth," wrote Ian Shepherdson from High Frequency Economics. "Mr. Bernanke wants to be seen to be doing something, but his hand is not on the fiscal policy lever."

Operation Twist Set To Fail As Bernanke Insists On Flattening The Yield Curve
By Agustino Fontevecchia
Will this work?

What the Fed is doing is flattening the yield curve in order to ease financial conditions and credit creation and shift capital “from investors and lenders to consumers,” explains Richard Bove of Rochdale Research. The Fed has also pledged to provide additional support for mortgage markets by reinvesting agency debt and MBS directly into more agency MBS in the secondary markets, as opposed to putting it into Treasuries. (Read Risky Business: Fed Should Buy More MBS).

The idea is that in a consumer economy, shifting money into risky assets and from investors and lenders to consumers will spark consumption. A portfolio balancing effect should spark a wealth effect by which investment in productive, albeit risky assets, spurs job creation, rising wages, and aggregate (consumer) demand which in turn feeds the whole cycle.

But the theoretical approach is fundamentally flawed, according to Bove. “By flattening the yield curve,” explains Bove, “Operation Twist reduces the incentive of the holders of funds to provide funds for production and real growth” by putting incentives in place for money to go short, not long.

A flatter yield curve reduces the availability of long-term capital and gives back the incentive to relocate those funds into short-term endeavors to maximize profits. It fuels the hyperbolic rise of gold and pushed firms to continue to build up their cash position, explains Bove, and investors and consumers to look outside of the U.S. for yield. (Read The Failure Of QE2: A Look At Gold, Oil, Equities, Treasuries, Emerging Markets, And The Dollar).

Fed’s Operation Twist Isn’t Much to Shout About
By Daniel Gross
The Federal Reserve has announced its latest effort to jolt the economy back to life. In the widely anticipated move, dubbed Operation Twist, it is pledging, over the next nine months, to sell some $400 billion in short-term government bonds it owns and use the proceeds to buy government bonds that mature in 6-30 years. The theory: This market intervention will help further lower long-term interest rates. The Fed also said that when mortgage-backed securities it owns pay off, it will roll the money back into similar securities. That could help push mortgage rates down.

There are some reasons why we shouldn't have great expectations for this move.

First, the Federal Reserve moves with all the surprise and guile of a lumbering elephant. It talks about moving, says what direction it might go in and at what speed, and provides a specific date on which it will act. It does so because it wants to avoid spooking the market. But it also means that the market tends to react well ahead of the actual event. Look at the path of the 10-year bond over the last several weeks. The interest rate on the 10-year bond has fallen from 3.2 percent on July 1 to about 1.9 percent today. The mere anticipation of the Fed's move has caused the market to do much of the Fed's work.

Second, given how low long-term interest rates already are -- they've fallen by 40 percent in the past three months -- this action is like pushing on a string, or adding another drop of water to a full pitcher. Pick your metaphor. Long-term borrowing costs for creditworthy borrowers are already at Crazy Eddie levels -- they're so low, they're insane. In August, according to Freddie Mac, the average commitment rate on 30-year mortgages it backed was 4.27 percent. Disney in August sold 30-year bonds that yielded 4.375 percent. Google in May sold three-year notes that pay a paltry 1.25 percent in annual interest. The government borrows for 10 years at less than 2 percent. That's all to the good. These lower rates help free up more cash for some people to spend, help corporations pay their bottom line, and lessen the fiscal bite of high deficits. But when you get close to zero, it becomes harder to make a bigger percentage difference. Money simply can't get much cheaper.

In conclusion then, lower interest rates have done little to improve the economy, why should we, or the Fed for that matter, believe that even lower interest rates is going to boost the economy?  We live with a monetary system based PURELY on debt.  If the Fed cannot encourage consumers and customers to take on more debt by making the debt cheap, the economy will collapse.  Never forget, the creation of debt is what ultimately fuels the money supply, short of actual money printing.

But Operation Twist has made money so cheap, nobody can afford to save it.  Despite Fed claims of "no inflation", real interest rates are grossly negative.  Negative interest rates are the best friend Gold could have.

Negative Real Interest Rates Continue to Provide Gold With a Perfect Environment
by Ronald Stoeferle
Inflation has never been the primary driver of the gold sector on its own. Given that gold, as is well known, does not pay interest, the real interest rates equal the opportunity costs. During the 20 years of the gold bear market in the 1980s and 1990s, real interest rates were about 4%. They were negative in only 6.7% of the months. The situation was completely different in the 1970s. Real interest rates were negative in 54% of the months. Since 2000 real interest rates have been negative in 47% of the months, which constitutes an optimal environment for gold.

TODAY YOU HAVE BEEN GIVEN THE ULTIMATE SALE PRICE IN PRECIOUS METALS CARE OF THE DESPERATE US FEDERAL RESERVE.  POUNCE!  BUY, BUY, BUY, AND BUY SOME MORE NOW...WHILE THERE IS STILL PHYSICAL METAL TO BUY.

DO YOU REALLY BELIEVE LOWER PRECIOUS METALS PRICES ARE GOING TO CURB DEMAND FOR THEM IN THE GLOBAL FINANCIAL CATASTROPHE?

BUUUUUUUUUUUUUUUY!!!!!