Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Tesla $460, Bitcoin $107k, S&P 6080 - The Pump Continues! - 16th Dec 24
Stock Market Risk to the Upside! S&P 7000 Forecast 2025 - 15th Dec 24
Stock Market 2025 Mid Decade Year - 15th Dec 24
Sheffield Christmas Market 2024 Is a Building Site - 15th Dec 24
Got Copper or Gold Miners? Watch Out - 15th Dec 24
Republican vs Democrat Presidents and the Stock Market - 13th Dec 24
Stock Market Up 8 Out of First 9 months - 13th Dec 24
What Does a Strong Sept Mean for the Stock Market? - 13th Dec 24
Is Trump the Most Pro-Stock Market President Ever? - 13th Dec 24
Interest Rates, Unemployment and the SPX - 13th Dec 24
Fed Balance Sheet Continues To Decline - 13th Dec 24
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Raging Gold Bull and Disputed Propaganda

Commodities / Gold and Silver 2013 Mar 06, 2013 - 08:54 PM GMT

By: Jim_Willie_CB

Commodities

The propaganda has turned openly laughable. On the popular major financial news networks, the recent decline in the so-called Gold price has prompted quite the parade of clowns on the ship of fools to trumpet nonsense. The widely published and posted Gold price is dominated by futures contracts, and thus as corrupted as meaningless. The entire global financial structure is crumbling before our eyes. The gang of central bankers has applied their monetary policy for four and a half years since the implosion of Lehman, Fannie Mae, and AIG. The first is dead, while the second has transformed into a sanctioned subprime lender again, and the latter is a sinkhole. The deceptive messages are shrill, acute, and motivated from desperation.


The West cannot solve its problems, hardly properly described as a financial crisis anymore, under the current framework bound to the fiat paper currencies. The global monetary war is heating up notably. The heavy liquidity has caused unfixable distortions in every conceivable bond market niche. The new and better debt devices have been exposed for their shams. The leading central bankers lost their credibility long ago. The weakness is as broad as it is deep, a reliance upon paper wealth and paper structures and paper contracts, during a time of zero bound interest rates and unfettered hyper monetary inflation to cover the debts. Almost no foreign USTreasury Bond buyers exist anymore. The US has become Weimar Amerika, a fascist enclave.

More than a crisis, it is more accurately described as a collapse of a corrupt inequitable monetary system, and a desperate defense by the major Western bankers to preserve their power over nations and their governments, alongside a vile vicious violent attempt by the United States to maintain its privilege as owner of the vast USDollar counterfeit machinery, as controller of vast banking pillars of paper columns, and as commander of a vast military. Leave as a footnote the massive blossom of financial crime, well known to students of fascist business models. The list of US leaders with Vatican slush fund bank accounts is long. The list of big US banks under lawsuit or investigation is long. The prosecution cases against big US banks tossed under the rug for past multi-$billion frauds is long. The list of big US banks caught in narcotics money laundering is long, each punished by roughly 1/30-th of a penny per dollar involved. The list of regulator cases that run interminably against big US banks without any action for chronic commodity violations is long. The list of defense contractor fraud and appropriation violations is long, none even prosecuted. The United States has earned a reputation as a lawless land in the eyes of a great many nations and corporations with multi-national reach. The global shun has not just begun, it is well along. Case in point. In Tokyo, Ireland, and Toronto, the US$100 bill is routinely rejected by banks for deposits under the pretext of broad counterfeit. Also, Amazon checks are rejected in Italy and Germany for deposits.

TWIN TOWERS BUILT OF BUBBLES

The asset bubbles that require better focus are the US stock market and the USTreasury Bond market. Each has run close to its limit on bubble power, no longer operating as buoyant or of reliable viscosity. The stock and bond markets suffer from a Weimar dependence, as Reich Finance has quietly woven into the entire US bond and monetary fabric. In numerous previous articles bearing the Hat Trick Letter brand, discussions and evidence have been produced that demonstrate a heavy dependence upon the Interest Rate Swap derivative contract for keeping the long-term USTBond yields low. There is no conceivable flight to safety, a fascist battle cry ripe with propaganda and disinformation, intended to support the US$-based financial structures. With new supply from USGovt debt pouring onto the table, with rollover of matured USGovt debt pouring on the table, with absent foreign buyers of USTBonds exiting the same table, with unresolved $1 trillion debt festering without political solution sitting on the table, the long-term USTBond yields should be over 7% and truly near 10%, since the United States is Greece times one hundred. So naturally the Interest Rate Swap derivative must be relied upon to keep US interest rates low. The USTBond asset bubble is the final bubble before the USGovt debt default and the global rejection of the USDollar itself. Gold serves as a strong viable reliable protection against the USTBond asset bubble. Hence the propaganda directed against Gold by the official media. The powers that be are scared, since the system is collapsing beneath their feet. Or as my great gold trader source likes to say, they are shoveling feces from under their feet.

The US stock market is more an open sore with pus, since the USEconomy is plagued by a powerful recession better described as a deepening depression in its middle stages. The Dow and S&P500 stock indexes are pushing record highs at a time when the many sectors of the USEconomy all uniformly in reverse, all suffering, all cutting jobs, all experiencing distress to profit margins. No better evidence exists of Weimar dependence than an economy in depression while major stock indexes register record highs. Roll out the electronic wheel barrows. The dissonance is loud and clear. Even the public is displaying signs of cognitive dissonance, a remarkable and new phenomenon. They smell a rotten market held up by false pillars. The Working Group for Financial Markets operates under the cover of the Exchange Stabilization Fund, run by the vast expanse of the USDept Treasury. The primary activities of a department named with treasury in the title are to manage multi-$trillion debt and to rig the financial markets. Witness Reich Finance. In 2010 and 2011, the big factor exposed was flash trading, the hyper-active algorithms that comprised over 80% of NYSE stock volume in trades. The private retail investor has largely vanished. In 2012 and 2013, the big factor to be exposed has been USGovt secretive support for stocks, with direct lines from the US Federal Reserve. If and when, unless and until the US stock market falters badly, the US population will be stirred and motivated for action, as the people object to lost wealth, phony wealth, and newfound poverty. They will pursue Gold & Silver in new regiments and armies.

REICH CLAIM OF GOLD BULL MARKET END

A few years ago, the personal response was often anger at deceptive stories promulgated on the mainstream financial news networks. They are less news nowadays, more Wall Street and USGovt promotional platforms with a public address speaker system. No longer is the reaction laced with anger and outbursts at the television set. Instead, the personal response has turned into laughter and amusement. This week, after profound declines in the corrupted paper Gold & Silver prices, the Bloomberg and CNBC paid shills have actually stated that the gold market has suffered a tarnish, that the gold bull is likely dead. They state their three well researched reasons, which deepened the laughter and heightened the amusement. They repeated their segments with shill message. Their harlots spoke without breaking a smile or revealing their obvious compromise in integrity.

The Reich Finance motivated media maven talking heads stated that 1) other asset classes are better performing than Gold. What plain rubbish! This might be true for COMEX gold and for mining stocks. Obviously, if the USDept Treasury with the ESFund and the USFed with its channels through JPMorgan offices support the stocks and bonds, then all other asset classes not Reich sanctioned will appear to be worth less. However, the truly worthless assets are those stocks and bonds supported by the printing press with Weimar nameplate. Remove the props for stocks and bonds, and remove the suppression for Gold & Silver, and the major stocks would drop 30% in 30 days, and major bond yields would rise to 5% in 30 days, and the Gold price would rise 30% in 30 days, and the Silver price would rise 50% in 30 days. Reich Finance sponsors major Dow stocks and USTreasury Bonds with corrupted money and unending propaganda messages. Both are at nosebleed levels, far in excess of true value.

The Reich Finance motivated media maven talking heads stated that 2) improved economic data divert investments away from Gold. What plain rubbish! The national Gross Domestic Product flirted with 0% in Q4, even after lifted by the typical routine 5% to 6% adjustment lie. The USEconomy has been stuck in a powerful recession of at least 4% to 5% decline each year since 2008, with no sign of escape. Each 1% lie on price inflation translates to a 1% lie on growth. Americans have been so bombarded by economic mumbo jumbo garbage, that they no longer know what inflation is anymore. Numerous measures reflect distress and backsliding in the national economy, from the broad ISM indexes (manufacturing, service) to the numerous Fed business indexes (like Philly Fed, Empire Fed, Richmond Fed, etc) to the sector indexes (like retail, banking, home sales, etc). For several years the aggregate data pushed out by the USGovt office elves has been in conflict with the components that comprise the aggregate. In other words, the majority of retailers publish distress signals, while the USGovt stat rat clowns post national retail growth figures. The whole does not equate to the sum of the parts. Even the supply chain shows direct signs of interruption, long a Jackass forecast which has finally begun to show itself. See the Wal-Mart shelves, and the Apple inventory. It could be China at work.

The Reich Finance motivated media maven talking heads stated that 3) lower consumer price inflation has undercut the Gold demand as a hedge. What plain rubbish! My focus has been directed to Shadow Govt Statistics to note the very consistent CPI rate between 8% and 11% for each of the last several years. They produce defensible reliable factual estimates on a variety of economic statistics, free from bias, which for a trained statistical analyst is very easy to identify. With the nonsensical CPI claimed at 2% to 3% in managed style by the USGovt clowns, the inflation lie has been a steady 5% to 6%, in conservative terms. Ironically, of the many people contacted over the years who invest in the acceptable US stock sectors like technology or media or retail or banking, they tell me that they do not believe the USGovt published statistics on CPI (inflation) or GDP (economic growth). When pressed on their justification for stock investments therefore, they all say the same thing. These statistics are all they have to work with, everybody reacts to the same statistics, and it is all ok. When informed about Shadow Govt Statistics, many enlightened have heard of them but do not act on their information.

MOTIVE FOR GOLD INVESTMENT

The motives for buying Gold are growing with each turn of the season, and each crumbling platform. The reasons are many and should be listed in outline form for emphasis. The most important motives are:

  1. The major central banks are printing new money with utter abandon. The USFed admits to expanding the USDollar supply for USTBond and USAgency Mortgage purchases at the tune of $80 per month. In January alone, the USFed poured $1.2 trillion into the big European banks, through the Euro Central Bank channels. The USDollar debasement initiatives do not lift Gold price so much as they undermine the major currencies in unison relative to Gold. The effect is to shine a bright light on Gold for its legitimacy.
  2. The major central banks are engaged in Competing Currency War in open style, with major nations participating. They are justifying their actions, as to preserve their export trades. They are rendering damage to other nations which attempt to hedge their outsized reserves. The victim is global trade, in a steady relentless decline. The competitive devaluations are deeply damaging to both trade and the trust behind the fiat paper currencies themselves. The war debases all major currencies, and lifts the integrity of Gold.
  3. The major banks in the United States, England, and Western Europe are insolvent, almost without exception. Since April 2009, the United States blessed the corrupt accounting via a Congressional bill that endorsed a plan by the gutless Financial Accounting Standards Board. They declared any big US bank can dictate the value of their assets on balance sheets, even using original date valuations before market impact, even if no market exists anymore for the asset. The London banks are busted from property loans and Southern Europe sovereign debt gone bad, with the LIBOR scandal adding to their bankrupt image. The European banks are busted, with heavy reliance upon the property market. The PIIGS nations have actually suffered added damage from the goony loony Euro Central Bank LTRO bonds which acted like large grenades. With major banks no longer serving as a strong physical foundation for the Western monetary system, the flight to Gold continues in a brisk pace. The big banks will soon buy Gold by the truck load.
  4. The sovereign bonds of Southern Europe have recently been joined by UKGilts and USTBonds as impaired bonds with little or no global demand. The Anglo-American bond game has seen its jig up. The PIIGS bonds are supported by extreme Euro Central Bank efforts. The USTBonds are supported by extreme USFed efforts. The Japanese are openly selling their own JapGovtBonds, the opposite. All sovereign bonds are in effect supported by the Weimar engines of phony money and burned oil, complete with hissing sounds from the great strain. The collection of sovereign bonds serves as Nemesis to Gold. With the lost prestige and lost squeaky clean AAA ratings, as the debt downgrade parade continues, the effect is to lift Gold demand. The race is on whether the USTBond or UKGilt will be downgraded next. Maybe both at same time!
  5. The negative real rate of interest continues to serve as the primary cylinder to the Gold Bull Express Locomotive. Interest rate paid to savers is abysmal and low. The standard 2% certificate of deposit is an embarrassment to attract savers and their capital. The official USTreasury Bonds offer roughly 2% and 3% on the 10-year and 30-year vehicle in commitment. This is woefully inadequate. The CPI is over 7% in conservative terms, resulting in a loss of at least 4% per year to savers. The real rate has been negative since 2003 and will continue to be negative for years to come, at least until the USGovt debt default. Gold demand is in lockstep with negative real interest rates.
  6. All paper wealth is crumbling and eroding in value. The global financial crisis, better described as a global monetary war to preserve the fiat paper currencies led by the USDollar, has resulted in colossal damage to home equity, commercial property, mortgage bonds, junk bonds, secondary stocks, shipping vessels, even some collectible art. Stocks and bonds are turning worthless, despite their bubbly prices posted, since they are supported by artificial corrupted means. The proof is absent legitimate buyers. Mining stocks have been in deep trouble for four to five years, due to share dilution, rising costs, difficult deposits, resource nationalism, and labor strikes. Add to their troubles the shortage of engineers, and Wall Street mining stock index suppression, alongside spread trades to support the largest miners (old guard of forward sellers and corrupt players). As paper wealth continues to crumble and vanish, the tangible assets like crude oil, farmland, and Gold rise in demand.
  7. Absence of reliable inventory in the COMEX. The shuffling games have reached extreme levels. Silver supply is shuttled daily from the old vaults in Basel, London, and the Roman Catacombs. The raids done on the handy Exchange Traded Funds have been regular and frequent, as GLD vaults and SLV vaults are the object of the grabs. They act like Wall Street and London bullion central banks for the privileged corrupted big banks to draw upon, and thus show the price discount to the spot Gold price (signal of widespread corrupt shorting practices). The COMEX will someday shut down, from lack of inventory and lack of clients. The true Gold price will be revealed when the giant crime scene is shut down.
  8. Neither Russia nor China sells any of its gold output on the global market. They are each a leader in gold mining output. The largest mining firms in South Africa, which as global leaders supplied a tremendous volume for decades, are the victims of marxist nitwits who have systematically been destroying the national cash cow with higher taxation and wrecked electricity grid. The gold shortage grows acute, as a result.
  9. The large New York and London banks are being gradually drained of their gold bullion. From March to August, an astonishing 6000 metric tons were removed from London alone by large powerful Eastern entities. Many of the transactions were conducted off-market, with extreme force applied and duress felt amidst leverage. The players received no press attention, but the activity was reported to the Jackass by a broker participating in the process. The shortage of Gold within the power centers will result eventually in a Gold default among the banks. The Gold price will be jettisoned higher by an order of magnitude.
  10. The gold accounting practices are steeped with fraud. The central banks lease out gold, but the party leasing the gold reports it in accounting, and the central banks report it in accounting. The JPMorgan gold vaults reside alongside the New York Fed gold vaults, where perhaps the double counting is doubled once more in overlap, making for quadruple counting. The gold held in inventory is much lower than reported. The Russian and Chinese gold reserves are at least three times higher than reported, possibly five times higher. Then the Congo gold trade, as in smuggling, accounts for 1000 metric tons on no ledger sheet. The Gold supply is far lower than reported in the West, and much higher in the East. The price mechanisms are controlled in the West. The true Gold price will reflect the true gold inventory. The East will force it.
  11. The Allocated Gold Account scandal is fast gaining attention. It will see a climax in the German official account demand for repatriation. Numerous class action lawsuits totaling in the $billions are underway in Switzerland for massive abuse. The plaintiffs in my view are forced to sign non-disclosure agreements in order to proceed. The pillage of private Gold accounts is gaining attention at the lower levels. The abuse of official national Gold accounts like from Germany, Austria, Netherlands, Venezuela, Ecuador, and Ghana have come into view. Again, the true Gold price will reflect the true gold inventory. Libya was liberated last year (of its 144 tons in London, that is) to compensate for London bank shortages in gold.
  12. The new Gold Trade Finance system is coming into view. The Iran sanctions galvanized the development of alternative methods for non-USDollar trade settlement among Eastern nations. Iran has many trade partners, a situation that has remained firm for a few thousand years. As Turkey and India continue to step forward as gold intermediary agents, with banks and commercial entities providing the service, watch the Gold Trade flourish. Their channels could very likely converge with the numerous Chinese Yuan Swap facilities in place, which started the non-US$ trade practice years ago. Gold will sit at the core (along with Silver and Platinum) in the gold trade notes and settlement system.

RAMPANT GLD FUND INVENTORY RAIDS

The GLD exchange traded fund is undergoing big changes, with sudden reduction in its gold inventory. Giant raids are being executed by the big US banks. They struggle mightily to meet demand and to prevent a price spike that would result from a default. The news story is simple, but the meaning is enormously significant. The story is perfect for distortion by the propaganda trumpets on the mainstream financial media, which have no motive to report correctly on the details. The Gold holdings in the SPDR Gold Trust, with trading symbol GLD, remain the biggest Exchange Traded Fund backed by bullion in the world. It is also the most corrupt, whose custodians designed it for easy gold bar inventory raids by the big US banks. The GLD gold bar inventory decreased 3.02 metric tons to 1323 tons as of February 14th, the lowest level since early October. The mainstream news story stops short of asking the natural follow-up question of where the physical gold bars went, where the delivery was directed, and who is the buyer might be. The simple fact is stark and ugly: no buyer is involved. It is a basic high volume raid. The big US banks short the GLD shares and arrive to pick up the three tons of physical gold bars in armored trucks. The dimwitted sheeple who invest in the GLD fund have their gold leased and borrowed like stock certificates right under their sleepy noses. Someday the ETFund will be drained dry of gold bars, its investors left dumbfounded. The GLD share price discount to the spot Gold price is the hint of abuse via rampant shorting. My hope is soon a GLD discount to spot Gold price becomes much bigger and is posted publicly, even debated. The big raid of gold bars, easily enabled, makes possible the defense of the Gold price. The massive rise in investment demand is met by massive raids of the corrupted GLD gold fund, in balance. In the process, the gold price looks tame, calm, and unaltered.

The financial news talking heads and very attractive strumpets and supposed expert guests talk about Gold being the trade on fear. What utter nonsense! Gold is the trade against monetary inflation gone out of control, the plethora of toxic sovereign AAA bonds, the broken insolvent banks, and the economies subjected to fierce attack on capital from a rising cost structure.

GLOBAL DEMAND

The Chinese gold imports from Hong Kong continue in a storm surge flow without interruption. The annual data is impressive, as imports to China almost doubled in the last year. The constant controlled price by the Western shamans combines with rising Chinese domestic income to enable a brisk Gold business in bars, coins, and scrap. Every month, huge gold imports flow to China from Hong Kong on a consistent basis. The annual data is out for 2012. It showed a surge of 94% in increased import of gold bars, coins, and scrap. The 2012 total was 834,502 kilograms, versus a total of 431,215 kilograms in 2011. The imports for December alone were an impressive 114,405 kilograms (=114.4 metric tons), according to the Hong Kong Census & Statistics Dept. The jump even for a single month was solid, as imports were 90,764 kilograms in November. That comes to a 12.6% monthly sequential gain for the final month of the year (not annualized). Income growth within China is significant enough to enable China to displace India as the world's biggest gold consumer. Their demand has grown markedly for copper, energy, and farm commodities also.

Furthermore, a very odd red herring appeared in the Q4 trade deficit report issued by the USGovt. It appeared as a bulging line item, with industrial supplies as the heading, which showed a big jump. It is led by non-monetary gold being exported, mostly to Hong Kong. The Hat Trick Letter reveals more information on the odd story, within the Gold & Currency Report. On its face, it looks like the Chinese might be demanding gold bullion to finance the US trade gap, and the USGovt is concealing this fact. Some gold refiners might be involved, which would account for the non-monetary gold label.

Lastly, the fast rise in minted Gold & Silver coin demand has become a major global story. Somehow the mainstream harlots like Bloomberg and CNBC neglect to mention the record setting demand for coins by the USMint, the Canadian Royal Mint, and elsewhere like for the Austrian Philharmonics and the Chinese Pandas. Details on coin sales also are provided with analysis in the February Gold report for the Hat Trick Letter subscribers. One should know that large investors are pursuing large supplies of Gold bars and Silver bars. The market in volume in several parts of the world is extremely tight with low inventory supply. My best source reports that in certain world market centers, for authenticated large volume sales in the multi-$millions, the Gold price is near $2000 per oz and the Silver price is near $40 per oz. The divergence between real physical markets and the COMEX corrupted market is growing. A point of proof is the fast rising price premium on Silver Eagle 1-oz coins. So the USGovt itself, through the USMint, reveals how the true Silver price is much higher. Another story not reported by the compromised lapdog servile financial press.

ZERO BOUND RATES & LETHAL SOLUTIONS

It bears repeating, that the US Federal Reserve is stuck in the zero bound corner. Raising interest rates would cause severe problems, if not systemic breakdown, and rapidly. The USFed under Chairman Bernanke is bluffing with an empty hand, in almost a laughable pathetic way. They are out of options, out of alternatives, and out of weapons. They have lost all credibility and have forfeited their prestige. Worse, by guaranteeing ultra-low interest rates until the labor market improves through yearend 2015, the hapless USFed assures a systemic failure for the United States. They assure the breakdown because low rates near 0% raise the cost structure, reduce profit margins, shut down business segments, and actually result in widespread job cuts. The Zero Bound kills capital, in a land that has forgotten what capitalism is.

The consequences of rate hike in any exit strategy would be felt in the following ways:

  1. Raise borrowing costs to finance the USGovt deficit, and possibly force those costs to rival the bulging endless war costs. A $700 to $800 billion borrowing cost line item might be considered low. Rate hikes are totally out of the question.
  2. The USFed would torpedo their best clients that accepted low-cost loans according to the Dollar Swap Facility. The total bestowed upon European banks alone is well over $3 trillion from the ample supply in 2011, plus the recent huge round. The biggest Western banks would be ruined in a matter of a couple months. Rate hikes are absurd on their face.
  3. The USEconomy would be forced to contend with higher consumer borrowing costs for cars, homes, boats, and more, while businesses would be dealing with higher borrowing costs for trucks, communications equipment, and machinery. Rate hikes are not even remotely likely.
  4. The US Housing market would be forced to enter a recognized depression, instead of the false recovery. This market cannot recover effectively with sub-4% mortgage rates and subprime lending, courtesy of the USGovt agencies like the FHA. Rate hikes are not going to happen, period.
  5. The big US banks would see their USTBond carry trade ruined. It is their primary source of profit, certainly not commercial lending or investment banking. The big US banks borrow at near 0% and invest in 2% or 3% long-dated USTBonds. Higher rates would force them to sell the long-term USTreasury Bonds, and thus exacerbate any exit strategy by the cornered USFed. Rate hikes would be blocked before they happen.
  6. The interest rate derivatives would cause a nuclear event. The JPMorgan interest rate derivative collection is over $72 trillion in notional value. If Interest Rate Swap contracts have been keeping the long-term rates under 3% for two years in steroid driven activity in hidden rooms, then their unwind would cause the long-term USTBond yields to rise toward Greek levels, and far past Spanish and Italian levels. Thus the label of a nuclear event. Rate hikes would cause a decade of darkness.

The other solutions like the numerous liquidity facilities by the USFed, the Dollar Swap Facility for the benefit of European banks, the vacant Long-Term Refinance Operation bonds by the Draghi Euro Central Bank, the toxic bond redemptions, the deliveries of toxic paper onto the Fannie Mae doorstep, these are all pathetic central bank exercises that solve nothing. They fail to address the grotesque insolvency of the big Western banks, the rampant deficits of the Western governments, and the internal insolvencies within the many Western economies.

NEW GOLD TRADE SYSTEM

A new trade settlement system is coming, which works around the toxic USDollar. While the United States slips inexorably into the Third World, with several key traits already showing in glaring style, the rest of the world will follow the Eastern lead. The Chinese and Russians will show the way, with a hidden German hand, as the trade settlement is to be conducted with Gold Trade Notes based upon a core of gold, silver, and platinum. If nations wish to be benefit from supply routes, they must acquire the Gold Trade Notes. The entire system is ready for implementation, sure to shock the New York and London paper traders in the empty temples. The paper IOU rubbish will no longer be accepted. Great changes cometh, in a grand Paradigm Shift.

For over two decades, trade has been dominated by the USDollar in settlement, led by the crude oil sales by OPEC. It defined the Petro-Dollar and the Grand Surplus Recycle. Those ways are being gradually pushed aside. As trade is settled increasingly outside the USDollar, led by Eastern nations, the entire global banking structures will shed their USTreasury Bonds no longer required. Once again, in a more natural order, the trade will dictate the banking reserve practices. The banks will accumulate Gold bullion, diversify out of USTBonds (even USAgency Mortgage Bonds), and begin to act like real banks again instead of toxic paper factories and obscene derivative casinos. The Jackass does not discuss the corrupted COMEX paper gold price any longer. It does not deserve the attention, nor the respect, nor a capital "G" in the name. Shocking events are coming, like earthquakes and tsunamis to foster change. The United States will be largely left behind as valid physical Gold takes center stage in the global financial system, the trade settlement system, and the banking system. The next important new bankers will be those in physical possession of Gold bullion without encumbrance of counter-party, like the Sprott Fund, like bullion banks that do not cooperate with the diabolical New York and London banks.

THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

"I have been a Hat Trick subscriber since 2005. I consider your publication beyond excellent. It is indispensable to understanding the mega-trends of the past such as the housing bust, bank insolvency, monstrous US Government $trillion debt, the Fed's QE to infinity with no feasible exit strategy, and more. Essentially, your analysis exposes and documents the massive corruption ruining the future of young and old alike in America. A simple thank you is really not sufficient to express my deep appreciation of the time and effort you put into the Hat Trick Letters."

   (ElaineW in California)

"A Paradigm change is occurring for sure. Your reports and analysis are historic documents, allowing future generations to have an accurate account of what and why things went wrong so badly. There is no other written account that strings things along on the timeline, as your writings do. I share them with a handful of incredibly influential people whose decisions are greatly impacted by having the information in the Jackass format. The system is coming apart on such a mega scale that it is difficult to wrap one's head around where all this will end. But then, the universe strives for equilibrium and all will eventually balance out."

   (The Voice, a European gold trader source)

"It has been my hope that the financial collapse would occur within a slower time frame, like a year from now. I have followed your articles on various sites for a while, and have to say that you are very perceptive and accurate as well as analytical. You have been more accurate, detailed and thorough than others, and your Big Picture analysis is usually spot on. I have noticed that it often becomes public news 3 to 6 months later. It is not easy connecting all the dots and understanding the implications one event has on everything else, then interweaving all the threads to grasp that big picture. I don't usually spend the money for a subscription,

but I feel your information is vital to know."

   (KathyN from Arizona)

by Jim Willie CB
Editor of the “HAT TRICK LETTER”
Home: Golden Jackass website
Subscribe: Hat Trick Letter

Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com . For personal questions about subscriptions, contact him at JimWillieCB@aol.com

Jim Willie CB Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in