Archive for the ‘Golden Jackass’ tag
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End of the U.S. Dollar Regime | Jim Willie – (Episode 1)
US Bonds Dumped, New Gold Backed Currency | Jim Willie – (Episode 2)
Wide Banking Failures, IRA/401k Confiscations | Jim Willie – (Episode 3)
Insolvency + Illiquidity = Bankruptcy | Jim Willie – ] (Episode 4)
IN THIS INTERVIEW:
- Germany Pivoting East and moving away from the U.S. Dollar fiat currency regime ►
- U.S. Dollar being defended by war and military ►
- BRICS nations to embrace new gold backed currency ►
- Why did Germany request data about investors’ precious metal holdings? ►
- Massive conversion of U.S. Treasury Bonds into gold bullion ►
- Wide banking failures ahead ►
- Expect confiscation of retirement accounts in America ►
- Land and property to be confiscated? ►
- Investing in precious metals vs property ►
- Confiscation of gold and silver ahead? ►
- What will be the fallout in the U.K. when the U.S. Dollar collapses? ►
- IMF to bailout America? ►
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By Jim Willie – GoldenJackass.com
- the Gold Standard will return out of the force of value and valid solution
- the Zero Percent Interest Rate Policy assures the continued Gold Bull Market
- the continued Quantitative Easing assures the shrinking profit margins, job cuts, reduced business
- the ZIRP & QE assure eventual USGovt debt default and systemic failure
- criminal activity is rising to keep the fiat paper currency system in place
- with the rise in official govt gold accounts demanded for repatriation
- THE ALLOCATED GOLD ACCOUNT SCANDAL is growing near
- the movement of large Gold volume from London to East brings with it a grand shift in geopolitical power
- the advent of Gold Wars comes after sovereign bond busts, allocated gold account demands
- a Wild Card comes with the imminent death of King Abdullah, as the House of Saud will fall
- with it goes the Petro-Dollar, a crippling blow to the USDollar itself
- the Gold Price will break out in all major currencies, having been led by the EuroGold price
Several immutable Gold Rules appear to be self-evident and powerfully manifested in the modern world of banker corruption, financial market intervention, currency debasement, phony accounting, and economic deterioration, all amidst powerful incessant media propaganda, against a backdrop of endless war. The global fascism movement has taken deepest root in what during the 1960 through 1980 decade was the capitalism regions steeped in democracy. Since the Lehman Brother scuttle and the Fannie Mae adoption and the AIG black hole admission, the financial crisis that began with the housing bubble and subprime mortgage bust has turned virulent. The global financial crisis is better described as a global monetary war to defend the toxic USDollar, whose sunset can be seen. In the last 12 to 18 months, the monetary war has again morphed, this time into a far more serious and financially violent global Gold War. Nations are fast realizing that their only true liquid assets of value are their gold reserves, and even they have been tampered with or stolen in a vast re-hypothecation scheme.
The Gold War is on, having moved to a higher gear, but nowhere near a climax gear. The true value of gold is being realized. The strength of gold during insolvency crisis is being observed. The resistance and rescue from the plague of insolvency is being made clear on a global stage. The new important part of the Gold War comes with the Allocated Gold Account scandal which will dwarf the LIBOR and MFGlobal scandals. The demands for repatriated gold accounts, primarily from the criminal bank sectors in London and New York, have amplified. Germany has finally joined with demands for gold repatriation. The demands will continue to grow even as tampered gold bars add to the motivation to repatriate. If only Chavez of Venezuela knew that he was to start a global trend to call gold home, in a Gran Aletazo de Mariposas. The grand butterfly flapping has caused a whirlwind that will turn into a tornado to wreck the central banks in a final death blow.
GOLD STANDARD RECALL
The law can be stated: The Gold Standard will return from a sheer standpoint of value, stability, and resistance to storms based in failed bond auctions, debt writedowns, and insolvency consequences. Only a hard asset backed new currency can replace a fiat paper currency reserve.
The law is self-evident and being manifested, with alarm if not deep trepidation by the financial leadership among the Western nations. While the central banks and the finance ministers stumble around seeking solutions, applying patches, making money free, redeeming toxic bonds, and otherwise bumbling in the midst of their own balance sheet and fiscal ruin, the emergence of Gold has become clear. It is the only asset rising of recognized value during the grand debasement of money committed by the central banks. It is the only asset whose value is being demonstrated as strong during the fiscal cliffs that so many major industrial nations have already gone over. They are not approaching fiscal cliffs. Four consecutive years of USGovt deficits over $1.3 trillion amply demonstrate to anyone with an uncorrupted view and unaltered pulse that the crash into the canyon floor is next, not the plunge over the cliff. Downward acceleration and speed have already been achieved.
As nations and continents come to realize their new debt compositions are nothing more than a series of shots of tequila for the patient suffering delirious tremens from alcohol poisoning, they are coming to the painful conclusion (for them) that a Gold Standard is the only solution. Applications of more paper mache accomplish nothing when the base of paper is rotten. The Gold Standard will be imposed upon them by the global rebellion against the USDollar, which will emanate from the trade sector. The Gold Standard will return, in the form of trade settlement as its payment core, as in the short-term trade notes. The bank cartel will be brought into the standard from which they broke away in 1971 with the abandoned Bretton Woods Accord. They will be brought in kicking and screaming, since only Gold can and will properly bring the nations out of the wilderness from the chaos. Once more, the banking systems will follow the trade system, rather than the corrupt banks dictating terms on reserves management in fiat paper currencies which disseminate toxic bonds. It has been backwards for 30 years.
CENTRAL BANK EXTREMES
The law can be stated: The Gold Bull continues unbounded with the Zero Percent Interest Policy (ZIRP) as its primary cylinder, while the artificial 0% distorts all financial markets, all assets, and all value. The Gold Bull will continue until the USGovt debt default, and until the USDollar retirement.
The 0% official rate has been declared as permanent, if the words of USFed Chairman Bernanke are properly interpreted. A sliding forward promise, first told as end 2013, later revised to end 2014, later to be end 2015, is a clear signal to those with an active brain stem. It is permanent. The 0% rate, however maintained like with Interest Rate Swap contracts, renders all financial markets as grossly distorted, since most assets have a value that extends from the cost of money. But practically, the USGovt debt cannot manage a rate hike, or else the borrowing costs approach the size of major social programs, even approach the size of the USMilitary offense budget. A rate hike would break the entire debt structure and result in a quick default and wreckage of the entire USTreasury Bond complex. Worse, a rate hike would cause a sudden collapse of the support structures bound within the vast derivative complex. This complex has enabled the US financial structure from a collapse that should have occurred around the 1998 to 2001 timeframe. Also, a rate hike would bring ruin to the big US banks heavily committed to the USTBond carry trade, for easy risk-free profits. Recall the Jackass forecast of a USGovt debt default, the position stated in the last months of 2008. The event is coming true.
The Gold Bull is powered by the negative real rate of interest. Its calculation is made simple by the 0% official rate. But take the prevailing consumer price inflation rate of about 8% to 10%, subtract it from the rate earned, tied to long-term USTBonds. The result is a negative real rate at minus 6% or minus 7%, sufficient to power the Gold Bull Market. Given the permanent ZIRP policy, the Gold Bull is in permanent mode. All talk about the Gold Bull Market having run its course is based on vacant arguments and nonexistent logic. It is the propaganda of fools, even desperate people. Calls that the bull in gold has run its course since it hit the $1000 level were laughed at by the Jackass a few years ago. Calls from the same scummy deceptive corners that the bull in gold has run its course since it almost reached the $2000 level are also ridiculed. No solutions have been installed, and the grand debasement of money persists without end. Many doubters and critics of the Gold Bull Market will be humbled when it vaults past that level. The justification, numerous as they are, are gaining attention. The Jackass is glad to help the process along, and to silence the corrupt corners.
The law can be stated: The bond monetization known as Quantitative Easing (QE) powers the upward move in the cost structure for the global economy. The result is a shrinking profit margins imposed on the entire economies, felt in job cuts and reduced budgets for expansion, even maintenance.
The expanded bond monetization has been declared as permanent, if the words of USFed Chairman Bernanke are properly interpreted. A sequence of bond purchase commitments, including both USTBonds and Mortgage Bonds, to meet urgent calls to address the quagmire, is a clear signal to those with an active brain stem. It is permanent. In fact, the QE3 has some rather obvious motive to cover the multi-$trillion mortgage bond fraud, thus permitting a possible housing market recovery. Not gonna happen. The foreign bond creditors have vanished, with only a scattering of Japanese and Chinese investors serving as the bulk of foreign demand. In order to prevent the short-term USTBill yields from shooting up to 5% suddenly, in order to prevent the long-term USTBond yields from shooting up to 10% suddenly, the USFed has made a series of commitments to buy the USGovt debt. Nobody seems to want it, nobody seems to afford it (savings vanishing act), nobody seems to find it as holding value anymore. Besides, deep criminal banker fraud is becoming recognized in story after story. Without the vast QE, despite all its deception and chicanery like Operation Twist, and without the vast apparatus of interest rate derivatives to maintain the 0% artificial rate, the USTBond structure would collapse. If these words seems absurd, then the reader is probably ignorant, uneducated, or wearing red white & blue jockey shorts.
The law can be stated, as a profound consequence: The combination of ZIRP & QE lead to capital destruction and systemic breakdown. Observe the fast falling Money Velocity while money supply grows at a staggering pace.
The telltale signals are the capital destruction, the retirement of equipment, the shutdown of unprofitable businesses and business segments. The USEconomy is not in recovery, but rather in a grand deterioration process. The evidence is overwhelming, shown on a regular basis within the Hat Trick Letter reports. Whether reduced rail shipments, or fast rising Food Stamp participation, or significant declines in payroll tax withholdings, or still growing state budget deficits, or the stunning fall in Money Velocity, those among the aware crowd can see the pathogenesis. The principal cause is the Zero Percent Interest Rate matched by Quantitative Easing, which kill capital as they lift costs. This is the glaring shocking blind spot among hack US economists, most of whom are compromised by either Wall Street or university grants. Hardly any have my respect, since abject apologists for the failed system with few if any valued lucid perceptions. They are the corrupt harlots of Wall Street. They are the vapid academic talking heads. The path paved by fiat paper currency has led to insolvent systems.
The current monetary policy coordinated by the major central banks of the United States, Europe, United Kingdom, Switzerland, and Japan assure no deviation from the path driven by momentum of the grand sovereign debt defaults and ultimate systemic breakdown. In fact, no solution is even attempted, a consistent Jackass point, since the policies and actions are directed toward preservation of power and away from big bank liquidation. The commitment to the failed system increases every year, assuring the impact of the systemic breakdown to be greater as well.
The law can be stated: The anti-Gold system continues to attempt to reinforce itself until its final implosion. Criminal means and false accounting backed by media propaganda are their tools that reinforce the current power structure. It will yield to foreign designed trade settlement systems, to the forced Gold Standard return, and to vast liquidation.
For the US and UK and Europe and Japan, the 0% official rate will continue until the debt defaults occur, which are in progress. The government deficits will not come down. They will instead escalate, as the economies produce fewer tax receipts and the calls for socialist relief programs expand. The political apparatus is being recognized as broken, a travesty in full view. The economies are experiencing a permanence in the shock from the ZIRP & QE in tandem. Households feel the higher cost of food, energy, utilities, town services, and even property taxes. Businesses feel the higher costs of everything from energy to materials to shipping. Lately they will react to the Obama Care as the health care tax is imposed, against their will. The financial firms have been guilty of doctored gimmicked financial statements ever since April 2009, when the USCongress blessed the decision by the Financial Accounting Standards Board. The FASB decided to permit the financial firms to declare any value they wish for rotten assets, the collection of impaired assets not to face the grim reaper of reality. The parade of Zombie Banks has reeked havoc ever since upon the economies.
Criminal deeds have become the norm. The established norm has been for outsized naked short positions for the Big Four US Banks. They are an everyday fixture. No laws are enforced for selling enormous supply without metal. Why on November 15th, my colleague Turd Ferguson reported the following gold ambush. In the TFMetals Report, he summarized the ambush as he wrote, “Over the course of about 5 minutes, one single order was filled. This massive dump of about 25,000 gold contracts managed to move the price of gold down by nearly $20. To give you an appreciation of the size and scale of this deliberately criminal act, 25,000 contracts is the paper equivalent of 2.5 million ounces of gold, or roughly 77 metric tonnes, the paper equivalent to the alleged physical holdings of Australia or Indonesia.” No end to the naked shorting. The financial press reported not a peep on order by the Syndicate, who act as advertisers on the network channels.
On November 2nd, the Silver Doctor reported a similar silver ambush. NetDania provides a service, to estimate volume from five separate market sources. It is not an exact indicator of volume data, but does shed much accurate light on the deeply corrupted market. According to NetDania, a total volume of 38,400 contracts, equal to 191.99 million ounces of paper silver were dumped on the market in only ten minutes between 8:30am and 8:40am EST. The Boyz chose to execute the raid precisely on the day of the gimmicked Non-Farm Payroll data release. They smelled a potential for a precious metals price uprising, and snuffed it. The volume for those ten minutes corresponds to nearly one quarter of annual global silver production! Not the US output, but global output. No response by market regulators, business as usual.
Criminal deeds have become the norm. Money laundering has kept the entire major US banks afloat, the money laced with narcotics. Overnight satisfaction of loans is sometimes done with heroin paper packets the size of bricks. For the last 20 years, the New York and London bankers have illicitly (nicer word than illegally) leased official gold accounts. Those nations are one by one demanding their gold repatriation. Hot war has been justified in order to win the release of official gold held in accounts. Plenty of Arab despots sit in power, but the Libyan seat was targeted as special for its 144 tons of gold. The London bankers pilfered the Libyan gold account in the Qaddafi name, offering flimsy requirements for its return to their people, demands which will never be met. The stolen private accounts at MFGlobal waiting for silver delivery served as another criminal deed. The crime scene was protected by the US regulators and the courts. Apparently, the wrong interpretation of bankruptcy law matters little. MFGlobal was a brokerage firm, not a financial firm. Therefore, the private accounts should have been held first in line for redemption, not last.
The criminal appellate court upheld the wrong decision. The newest criminal streak involves tungsten lacing in fake gold bars. The story was cited here in early 2010, with Rob Kirby taking the lead. My source informs that two important characteristics are noteworthy. The Hong Kong banks are the biggest among the victims. The distribution routes run through a crucial Central American nation, just like the narcotics. Fort Knox was systematically gutted as its content bars were swapped, whose extent has yet to be determined. Expect some deep consequences for the counterfeit in Tungsten bars. Refer to TRIAD for old fashioned justice, and the Intl Court of the Hague for justice with more procedure involved. Perhaps the unusual story of bankers simply vanishing will be the case.
ALLOCATED GOLD ACCOUNT SCANDAL
The most prominent criminal practice has been challenged, the illicit usage for leasing of official gold accounts in the name of sovereign governments. The challenge will make for the grandest banker scandal in modern history. My source estimates that over 40 thousand metric tons have been vacated from the official accounts over the last two decades. Clearly, the volume indicates a lot of unofficial unaccounted gold, which nonetheless exists. The pressure has finally come to the London bankers largely responsible for the happy fingers. The New York and Swiss banks have been working overtime, often in midnight emergency shipments, to avoid a direct default. That would be both embarrassing and an invitation for prosecution which would be difficult to prevent, given the public outcry. As the London bankers struggle to meet the repatriation demands, the pressure will not relent. They must replace the leased gold or see their crime scene exposed.
Only when the vast Swiss repository is denied to the London banksters, the drain will erupt into a major gold default event with glaring publicity. It is when they are exposed, when the urgent need to replace the improperly leased (stolen) gold is realized, when the public and financial community is made aware of the altered Supply & Demand dynamics, that the Gold Price will shoot upward fast hard and without stopping. Far less gold is held in supply than recognized, while tremendous gold demand occurs. The Allocated Gold Account scandal will force the Gold price to $5000 per ounce, at a minimum. The agreed upon trade settlement gold core will probably permit the gold price to be fixed on a temporary basis. Gold is in increasingly short supply, given the labor problems in both South Africa and South America. Expect important gaping shortages and deficits. So the $5000/oz price is only a target, easily surpassed.
METALS PULLED APART
The law can be stated: Gold Bullion diverges into official voided supply, matched by huge syndicate supply. The visible vault storage with public accounting will eventually show nothing present, while the private syndicate vault storage will be hidden from view.
One private important location is the Carlyle Group, which holds significant counter-party positions to the vast short positions that Wall Street banks are responsible for. The biggest hidden gold hoards, truly magnificent in size, are located in Basel Switzerland, the Roman Catacombs, under the Kremlin, and by the ancient Chinese families, along with Wilbur & Mack who buried a hoard in their Arkansas backyard ready with buddies Smith & Wesson. The divergence will continue until the official gold supply is demonstrated, with shock & awe, to be near zero.
Another important divergence will occur. The official price discovery markets such as the COMEX and LBMA will be exposed as having near zero Gold & Silver in inventory. The prices posted for Gold & Silver will remain artificially low, held down by corrupt methods such as widespread naked shorting (permitted by the US regulators and USDept Justice). The physical price paid for Gold & Silver will continue to rise without bound. Already, no more large gold purchases can be satisfied, since supply is for the most part gone. Premiums for coins are on the fast rise, if coin supply exists at all. The unfortunate aspect of Supply & Demand dynamics is that when price is forced down by intervention and other illegal pressures, the result is vanished supply. That is precisely what is happening. Expect a tremendous divergence to occur, as the COMEX and LBMA tagteam of corruption experience a total depletion, but report some asinine moderate price. Nobody will be able to purchase at their posted price, since they will not have any Gold or Silver metal in inventory. It will be gone. Extraordinary methods are being used right here, right now, to prevent the default. See vast exports of gold from the US to London. See the vast shipments of silver from the US to London. See the rapid decline in the GLD & SLV inventory, which the Wall Street firms have access to. See the MFGlobal and PFG-Best private account thefts.
Coins exhibit the inflation in a highly visible manner. The coins in the Untied States & Canada are going away for 1-cent and 5-cent pieces. A friend in Toronto reports that recent modifications to the looney and tooney (C$1 and C$2 coins) have not only altered their appearance, but have altered their perception. They seem like play money to the public, which has shown derision. The US merchants will soon be permitted to round the transaction costs to the nearest 10 cents. The visible inflation has resulted in the cost of making small denomination coins too expensive, and thus impractical. ZIRP & QE will do that. The cost to make a 1-cent US penny is now 4.8 cents and the cost to make a 5-cent US nickel is now 16.2 cents. How embarrassing, even adding to the USGovt deficit. Due to high zinc and other cheap contents, the 10-cent US dime and 25-cent US quarter are still inexpensive to make. Why not use wooden nickels? Unless subjected to another fabricated hurricane, they will hold a stable appearance, if not value. A quick review of the National Atmospheric Release Advisory Center website will demonstrate easily the evidence of South Atlantic heavy microwave activity during the entire month of September. Angels don’t play this haarp.
The law can be stated: With Gold goes the geopolitical power. As huge amounts of Gold are shipped Eastward, with huge tonnage leaving London for points East like China, so goes the important shift in geopolitical power. A Paradigm Shift is in progress, at work.
Since March 2012, a whopping 6000 metric tons of gold bullion has been shipped from London to the East, primarily China. The circumstances behind the shipments are murky, but they indicate private off-market transactions that are intended to avoid publicity. My suspicion is that old wealthy Chinese families had their Allocated Gold Accounts improperly used in leasing practices by London bankers, associated with posted margin on a gaggle of leveraged contracts spanning from sovereign debt to currencies. The trades went sour. Margin calls were enforced with lost gold in a grand forfeit, the London bankers feet put to the fire reportedly. Publicity was avoided, but in the process a tremendous amount of gold was forfeited. With the gold went a transfer of power, to the East. They will dictate terms of the new trade settlement system. They will become the world’s more prominent lenders. They will control the next geopolitical chapter.
ADVENT OF THE GOLD WARS
Since the Lehman bust in September 2008, the global financial crisis has been a fixture, without solution. My preference is to call it the Global Monetary War, whose unspoken main objective by the powers in control is to maintain power, to preserve the big banks as fortresses of power, and to protect the USTBond & USDollar in their primary perches. Two important events have altered the crisis. The first was the breakdown of the Southern European sovereign debt structure. The Greek Govt Bond went into crisis mode in late 2009, which spread to Ireland, Portugal, and lately to Spain, Italy, and France. It will consume the Euro currency, despite all their best efforts NOT to fix anything, despite their best efforts to alter the bond subordination in new bond issuance. The Europeans are guilty of kicking the debt can down the road, just like the Americans. The victims that topple the system will be the big national banks in the affected nations of Europe, even the German banks. Their flagship Deutsche Bank has been dead for years, full of hollowed corridors.
The second important event was the widening demands for repatriation of official gold accounts. It might have begun with Chavez in Venezuela, but it has continued. The Ghana Govt made their gold account repatriation demand, but a mysterious death of their leader halted the process. The Germans are spearheading this revolt. The Dutch will follow. The Austrians are next. Even little Ecuador wants one third of their gold account returned. Others will join.
An extreme wild card has surfaced. It began to be in play when Saudi Prince Bandar was assassinated a couple months ago, at the hands of HezBollah. Of course, the event was kept secret, but the Saudi Minister of Security was killed as revenge for the Saudi role in the high level Syrian assassinations. Phony photographs and other doctored official accounts have been produced by the Riyadh crowd to conceal the damage. The House of Saud, so the Jackass has claimed for two months, is in danger of falling, along with the Petro-Dollar. Well this week, reports have come out that King Abdullah faces death. He underwent a mid-November back surgery but has not recovered, or even come into consciousness. His entire set of organs has shut down, no longer functioning. The risk to the Petro-Dollar was high with the Bandar killing. The risk just went double acute with a succession to the throne imminent. Domestic challenges by an increasingly aware population, beset by higher cost of living, will come. The great Saudi oil surplus is slowly dwindling, what with higher domestic usage in a higher standard of living. The foreign challenge will remain from HezBollah, with roots from the radical and very powerful Shiite sect. Expect the Petro-Dollar defacto standard to fall in the coming months, as only weak successors remain in the line of surviving brothers. Think bottom of the family barrel (of oil). The teetering USTBond and confronted USDollar make for a poor foundation on which to keep the Petro-Dollar in place. Imagine the impact if the Saudis announce that Euros, Pounds, Swiss Francs, and Yen, even Gold are accepted for crude oil transactions. The Petro-Dollar is walking dead.
GOLD BREAKOUT IN ALL CURRENCIES
The process began with a Gold Price breakout in Euro terms. The continent is the site of the most visible systemic bust that has engulfed the sovereign bonds, the big banks, and the economies, even public trust. Soon to follow suit will be the Gold Price breakout in US$ terms, in British Pound terms, and in Japanese Yen terms, an event to occur simultaneously. The central banks from Europe, the US, the UK, and Japan are coordinated and aligned. They are all putting into practice the monetary lethal policies of unlimited hyper monetary inflation with a 0% rate attached. Witness Weimar gone global in a grand currency debasement. The Gold price will surpass the US$2000 mark easily. When it does, the Gold Price breakout will be recognized in all major currencies.
The central bank franchise system is broken. The global monetary system is broken. The big Western banks are broken. The financial markets are broken. The safe savings vehicles are broken. The all-important confidence factor to support fiat paper currencies is fast vanishing. The arrival of the Gold Standard as the solution is being slowly manifested in the form of a gold-core trade settlement system, which will drive a global Gold Standard. The new system will dictate bank reserves practices, and render the USTBond as a rejected toxic paper relic. It should arrive early in 2013. In the process, the Western nations will become impoverished, as they desperately cling to the failed system. Anger will rise. Disorder will prevail. The USDollars inside the United States will be trapped, then devalued as the public watches in shock. The power will shift East inevitably, with the shipment of Gold. A new era will begin.
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.
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(The Voice, a European gold trader source.
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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
by Jim Willie CB
December 21, 2011
Divergence between paper gold and physical gold price is happening, the process begun. Actual physical shortages have kept the price up. The naked shorting of futures has kept the paper price down. The fraud cases and lawsuits, with no hint of prosecution, provide the levered force to create much wider divergence, as traders and entire firms depart the tainted crime scene that is the COMEX. Trust has vanished along with private accounts. At the center of the backdrop for the divergence, apart from the criminal events, is the economic deterioration and asset market downdraft. It leads to margin calls, loan payment obligations, fading investor confidence, negative sentiment, and a desire to avoid loss. Hence the huge liquidity concerns, selling of good assets that command a strong price, and central bank encouragement of gold sales even with lease. These forces conspire to push down the gold futures price from the discovery process, called the paper gold price. These forces, although real, are exaggerated by the Syndicate to explain all. On the other side is the desperation among central bankers to cover debt securities up for sale or rollover funding. They resort to utter hyper inflation by monetizing the many types of government bonds. They are obligated to aid their banker cohorts, and thus purchase truckloads of badly impaired sovereign bonds and other collateralized bonds. Over time these sovereign bonds have proved toxic. The compelling need to stimulate economies, to redeem toxic bonds, and to recapitalize and nationalize the big banks adds to the monetary inflation outcome. Therefore, two sides are in opposition in a battle to the death of one or the other. No middle ground can be achieved, not any longer. It is the quintessential battle between monetary hyper inflation and restoring bank system integrity to avert collapse. The insolvency has recently met illiquidity. The battle features strong forces on each side. The divergence between physical and paper gold price is widening.
The incurable speculator junkies committed to the addictive leveraged game rigged by the Forces of Evil seem stuck at the casino tables, where fingers are lost, finally entire hands and arms. If their practice was to purchase physical, they could benefit from the paper price swoon, and join the Forces of Good team, rather than fighting the evil side on their dominated turf. To be sure, many aware analysts in the news maintain a small gold position in COMEX that is rolled over constantly. Many have physical positions but keep with the paper trades as a hobby, better described as an addition to the juice. Leverage cuts both ways. Their continued activity has left them exposed to theft, while knowing the criminality was widespread within the arena. So many players and firms are departing the arena altogether like Ann Barnhardt of BCM Capital. The divergence between physical and paper gold price is widening.
The desperation of the bad team is growing. The gold cartel has benefited significantly from the fresh Libyan gold supply (144 metric tons) and Greek gold supply (111 metric tons), not to mention the ample Dollar Swap Facility. It is the bankers New Gold, as reported by intrepid Jeff Neilson. In a fresh sign of bankster desperation, the lease rates for gold have been pushed down to net negative levels. The fresh supply from the two broken nations has greatly aided the COMEX, providing new cannon fodder. Perhaps more wars to liberate the oppressed can be conjured up, to release more tyrant wealth. It is not a coincidence that negative gold lease rates came when Libyan gold was made available (heisted) and when Italian sovereign bonds went into critical DEFCON mode. The gold supply helped to aid the lack of bond demand. The gold lease story is analyzed more fully in the December Hat Trick Letter.
A preface is warranted. The paper Gold market is very different in its internal dynamics from the physical. The paper Gold market shows signs of inelasticity that borders on comical. Witness the low demand in 2001 and 2002 when Gold had a paper price tag at $300 or less per ounce. Witness nowadays the amplified selling when the paper price declines. The leverage from the corrupted paper mechanisms forces margin pressures and sales. The leveraged game goes opposite to the real world of price mechanisms. On the upside, global demand rises with a rising physical price, called the gold fever. The inelasticity on the supply side is prevalent in the paper market, while the inelasticity on the demand side is prevalent on the physical market. To confuse the mix, mining firms realize some inelasticity as price falls, they are stuck with a liquidity crunch on their forward sales ruin. A huge amount of money is required to cover their losses, urged on by Wall Street advisors. Their mining operations suffer from lack of funds, and projects are curtailed. The paradoxical differences in dynamics help to push the gap between the paper and physical Gold price. The incompatible forces work to rip apart the COMEX. The divergence between physical and paper gold price is widening.
ILLICIT USAGE OF CLIENT FUNDS AS COLLATERAL
The hypothecation battle will bring sufficient publicity to help the divergence along. As more assets are seen as committed, involved, and tainted in the process of grabbing, snatching, and securing collateral, even by illegal means, the physical assets will be removed from the system. Parties will remove accounts and metal from the COMEX in response from basic self-preservation. On the investment and speculation side, harm has been rendered to managed risk. The client funds have begun to flee. The protection and security of money in private accounts has been under siege in recent weeks since the MF Global crime scene was established and the yellow tape cordon has been put in place. Investors are pulling money out of hedge funds at a rapid rate. The COMEX will be increasingly isolated. Clients funds were redeemed to the tune of $9 billion in October, almost four times as much as they pulled in September, according to Barclay Hedge and TrimTabs Investment Research. Investors in October yanked more from hedge funds, setting a single month high over the last two years.
The redemptions are the largest for the hedge fund industry since July 2009, when $17.8 billion was returned. The Barclay Hedge office put lipstick on the corrupt pig by commenting on how investors have lost patience with lackluster investor returns. To be sure, the average hedge fund is down by about 4% this year. The global hedge fund industry size has been reduced to $1.66 trillion, still sizeable. It is always interesting, if not amusing, to read the spin from the isolated corners. Hedge funds are seeing capital depart for the simple reason of moving away from crime centers. In the process the COMEX is being isolated. With increased isolation comes the easily recognized fraud. Look for some major stories soon about the raids to the GLD and SLV inventories by their custodians engaged in naked shorting. The Exchange Traded Fund fraud story is analyzed more fully in the December Hat Trick Letter. The divergence between physical and paper gold price is widening.
DYNAMICS OF PAPER VERSUS PHYSICAL BASIS
Grand divergence dynamics are becoming clear. Ann Barnhardt explained in detail how the COMEX will go away. It will not default, but rather fall into irrelevance. She laid it out in credible detailed form with numerous factors coming to play. The COMEX might still suffer the shame and spotlight of criminal prosecution. It will more certainly suffer from being ignored and shunned. The physical basis market will not respond to the declines in the paper futures market. The current dominant market will go away due to lost integrity and eroded trust. The consequences and implications of the recent major scandal and coverup are enormous, staggering, and sweeping. The changes from the MF Global failure and theft of private segregated accounts will come in time, perhaps accelerated by another similar event to slam the message home. The Syndicate has turned desperate, resorting to theft in the open daylight, which has resulted in direct consequences. Hundreds of COMEX clients waited in line for delivery of gold, and had their wallets stolen by JPMorgan. Their Gold & Silver set for delivery found its way into JPMorgan accounts at the COMEX. The details of the missing silver then reappearing silver is discussed in the December Hat Trick Letter. The slow mentally overlook this fact. The alert who point to fraud consider it a smoking gun. On its face, evidence mounts that JPMorgan simply converted 614k ounces of MF Global client silver into JPM licensed vaults. Big hats off to the Silver Doctors for excellent financial fraud forensic analysis. Do not expect prosecution over the crime, for MF Global, for JPMorgan, or for the accomplices in London, not even Jon Corzine. The Fascist Business Model in the Untied States does not permit prosecution. The bigger the crime, the more likely the perpetrator is in control of the government high offices, the financial ministry, the printing press, or the regulators.
Ann Barnhardt explained how the COMEX will fade away into oblivion. Its final chapter will be marred by a grand price divergence, where the futures market price declines from shunned avoidance, while the cash physical market price holds steady then rises. Many including the Jackass had thought that a slew of delivery demands would force a drain in their gold & silver inventory, eventually leading to a slew of lawsuits, together to shut them down as a corrupt enterprise arena. The MF Global theft reveals the alternative route that seems more clear. The gold cartel led by JPMorgan and secretly by the USFed will not go quietly. They have resorted to theft of private accounts on the open stage. The money is not missing. That is the lie. It is held in JPMorgan accounts in London, where fraud laws are more relaxed. We have seen this Madoff movie before, but it will be shown on the silver screen again. The divergence between physical and paper gold price is widening.
The backlash has begun and will gain strength. Barnhardt offered many cogent arguments with detail on how the COMEX will be ignored from distrust and suspicion of further thefts, as clients remove funds and close accounts. Here are her main points. They apply to Gold & Silver. She has the Barnhardt weblog: http://barnhardt.biz
- Arbitrage is set to kick in. Players will buy at the cheaper corrupt paper market in COMEX and sell in the higher honest physical market, wherever brokers can match to make deals. (It is the same phenomenon that ripped the Euro sovereign bond market apart, as the German Govt Bond yields remained much lower than the Spanish and Greek.) They will take advantage of a strong basis, buy at the discount offered by COMEX, and sell into the cash spot physical market.
- A linchpin holds the market together. Keeping the futures markets tied to the underlying cash physical market is the fact that the futures contracts permit taking delivery. That delivery mechanism just broke as linchpin in full view. The futures market has lost viability and trustworthiness because of the MFG collapse and theft.
- The entire delivery mechanism has been corrupted and undermined. Taking delivery has meant a holding of physical metal bars is stored in a certified vault with your name attached. No longer are such holdings considered safe. Thefts occurred, and lawsuits have occurred to decided upon ownership of bars in dispute.
- The de-coupling process comes when arbitrageurs finally lose all confidence in market interaction dynamics, as the cash market will lose connection on price from the futures market. Players will not be willing to take the risk of having their money, positions, and physical metals stolen or confiscated.
- As players flee the futures market, the paper futures prices will decline. The cash physical market will hold steady. The divergence will come and be noticed, then be widely publicized. The players will realize that the physical market is the only remaining game to be played with honest rules in effect. The cash dealers will ignore the futures prices, no longer a valid price discovery, seeing that market demand for their physical inventory is robust, and maintain their prices steady. Later, they will even raise the physical prices. Then later still, the parabolic spike comes for physical Gold & Silver.
THE GREAT SHUN BY MINERS
Asset management funds are appealing to mining firms for direct metal supply. They are bypassing the COMEX in a new trend. It is a natural development, as miners seek a fair price and the funds seek a reliable supply. The COMEX is cut out of the process. The Sprott Funds have revealed how they sourced their precious metal from mining firms last year. The official exchanges are being cut off, a form of isolation as a result. The divergence between physical and paper gold price is widening.
See the Ashanti story as typical. The COMEX is seeing reduced supply lines, reduced operations, more criminal implications, horrible publicity, and fewer clients. Criminal fraud does that, as lawsuits will follow like cold rain. The trend shapes up well for higher gold & silver prices. Mark Cutifani is CEO of AngloGold Ashanti, a $16 billion mining firm. He said, “Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding its hard to get physical gold.” The clear message is that the COMEX has no spare available metal at all. Cutifani has good insights into the commodities and precious metals markets, and describes a fascination new trend regarding the global picture. He pointed out that major gold buyers are emerging from the Middle East and Asia. See the Bull Market Thinking article (CLICK HERE).
NEW MARKETS FLOWERING
New gold centers are forming, where the safety is most assured. Hong kong and Dubai have emerged as reliable honest brokers, and will continue to provide valid safe haven. Switzerland, London, and other locations are fading fast. They are the corrupt centers where fascism has become prevalent, laced through the financial system. Takahiro Morita, the Japan director of the World Gold Council, reported that Japan’s gold exports in the 10 months ended October totaled 95.6 metric tonnes, their highest level since 2008, when it registered at 95.5 metric tonnes. People who bought gold and jewelry in the 1980 and 1990 decades are selling back what they purchased, according to precious metals traders. Japan has turned into a big exporter. Contrast to the official side. Central bank purchases have risen by 114% over the previous quarter. Purchases by central banks could hit 450 metric tonnes this year, concludes the investment research at the council. The volume represents the highest level of central bank buying since at least 1970, perhaps the greatest in recent history. A veteran gold trader with actual experience in these locations pitched in to explain. He said, “These are not sales in Japan. They are exports, an important distinction. Many investors are busily relocating their precious metal bullion to Hong Kong and Dubai UAE. Look for Dubai to be the HK of the Middle East. The Chinese have made that decision, and it is being implemented with lightning speed.” Most of the relocation from Japan shows up as exports, which require payments.
October imports into China from Hong Kong rose 50% over September, and up 40-fold from last year. The more attractive fair price paid in Shanghai reached $50 above the corrupt controlled London price. The arbitrage has been very active. Chinese gold imports from Hong Kong hit a record. The Financial Times reported Chinese gold imports from Hong Kong hit a record high in October and astoundingly, they accounted for more than one quarter of the entire global demand. Data showed that China imported 85.7 tonnes of gold from Hong Kong in October, up 50% from the previous month and up more than 40 times from October of last year. It marks the fourth consecutive month that China’s gold flows from Hong Kong have hit new highs. The article noted that the price arbitrage between London and Shanghai was favorable for Chinese imports during late September and early October, giving astute clever traders an edge. Gold on the Shanghai Exchange traded up to $50 per ounce above the main global market based in London, a record price difference. Purchases from China have fallen since October, as the recent strength in the USDollar has made gold more expensive. Also, considerable new strain has been felt inside China in recent weeks. Conclude that price arbitrage has begun to show itself across international boundaries. The divergence between physical and paper gold price is widening.
ONE GOLD EVENT, THE BIG SQUEEZE
No gold chart will be shown in this article, out of disrespect deserved for the COMEX criminal activity. A story was recounted in recent days from my best source of solid reliable gold information. The aware gold community has overlooked a phenomenon that might be more profound in action here and now. A major squeeze is on that capitalizes on the artificially low COMEX price and the higher honest physical price. The Barnhardt effect can be seen, or at least recounted. A gold trader informed that some multi-$billion purchase Gold orders have been in the process of filling at or near the $1600 price per ounce. The price must remain near $1600 to complete the orders and permit them to clear. Call it Agent2000 who seeks the massive amount of Gold, one of the Good Guyz. The name fits since their goal is to force the Gold price back over $2000/oz after the sale transaction clears. Since so large, the orders take time to fill completely. The low-ball buy orders have been filling for over two weeks. At the same time, the Agent2000 buyer has enlisted the aid of numerous assistants to push down the paper Gold price by putting extreme pressure on some bad players, some nasty types from the usual list of suspects in the Western banking sector. These bankers are being squeezed out of their gold, as they contend with deep insolvency, reserves requirements, falling sovereign bond values, depositors exiting, and more. They are players in what has been widely called the Gold Cartel. The Jackass term has been applied in a wider sense, as they have been part of the Syndicate that reaches into the Wall Street banks, the defense contractors, news media, and big pharma.
The other side of Agent2000 is where additional intrigue lies. He (they) have buyers lined up on the physical side some deals ready to close at $1900 per ounce. Later the price will push over the $2000 mark. The buyers are ready. One must infer that the buyers have a great deal of money ready to devote to the battle. Maybe some is piled up to escape the clutches of the cartel, removed from the system. Maybe some is piled up at a major new slush fund to do battle with the cartel at their own game. Maybe some is piled up and kept out of sight from greedy hands in government officials, like off-shore in the Caribbean or sequestered in the Persian Gulf. This story might be perplexing to many in the gold community since the Good Guyz are pushing down the Gold price in order to facilitate a gigantic order that will work toward crushing the cartel by draining their gold. Their gold cannot be drained without the completion of a great many orders. It is only natural to attempt to achieve the lowest possible price. If the gold cartel insists on pushing the price down, then they open the door for major volume sales at the artificially low and very much bargain price. It is happening, but the gold community does not enjoy the symptoms of the process.
So a huge huge huge buyer of gold is busy, and a multi-$billion order is working through. The buyer demands a $1600 price, while on the other side of the table Agent2000 has a sale lined up for the same metal at a $1900 price on physical. The trade will take gold bullion from the Bad Boyz hands and put it into the Good Guyz hands. In the process, the COMEX supply lines will be drained more. This is consistent with mining firms removing supply lines to the COMEX. The Agent2000 buyer is pushing price down, squeezing some evil parties hard, crushing testicalia along the way. He (they) describe to the distressed seller at $1600 that pressures will continue until the deal is closed. The seller is in tremendous pain with open distress showing. So many assume the Bad Powerz are pushing down the Gold price. Not so!! This event and transaction displays how some pain comes in many isolated cases of Good Guyz pushing the Gold price down to empty the Bad Powerz vaults. My source would not reveal the identity of Agent2000 or the location of the squeeze. It seemed like London. The money is not exclusively coming from China. Word has it that Russia is also applying the pressure, with some Chinese teamwork. The Competing Currency War has a new major flank. The divergence between physical and paper gold price is widening.
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I had the chance to speak with the “Golden Jackass” this afternoon out of Costa Rica, namely, Jim Willie, publisher of the Hat Trick Letter. It was a riveting interview, as Jim’s global information and news sources paint a blackening financial future for participants in the Western financial system.
According to Jim, US & European investors are at incredible risk. “The entire financial system of the Western world is imploding,” said Jim. “There is exponentially rising risks for individuals and their money…the risk right now–is people losing their entire life savings. I cannot seem to get people to understand this”
As we began discussing the MF Global collapse, Jim articulated his belief in a financial slight-of hand originating from “notice to deliver” requests for gold and silver submitted through MF before the collapse, which had the potential to cause a Comex delivery default. “Comex was ready to default on gold and silver in November, and rather than honor the notices for delivery, JP Morgan stole the funds in the accounts that were calling for delivery…notices for delivery were replaced by stolen accounts.” The evidence of this according to Jim is that, “JPM increased the amount of silver in their registered vaults by precisely the amount that was suppose to be delivered . . . JPM effectively averted both a Comex default and a European Sovereign Debt implosion.”
Before closing Jim provided a stark warning, saying, “Several million private accounts may vanish–Brokerage accounts, Pension funds, Mutual funds, they’re all at risk. We are getting into the middle stages of implosion, where I believe the public will not wake up until at least one million private accounts are stolen, and completely vanish.“
This was a truly sobering interview, and given the real losses borne by MF Global account holders in the past month, Jim’s comments cannot be taken lightly.
August 25th, 2011
Tekoa speaks with Golden Jackass/Hat Trick Letter newsletter publisher Jim Willie on the roots of national illness & economic toxicity, fear, panic, & perceived ruin moving into the system. According to the Golden Jackass, “THIS IS 2008 ALL OVER AGAIN, BUT TWICE AS BAD.”
Insolvency Plaguing US Economy & Europe, USFed Running Out of Monetary Options, Gold to Move Much Higher
Tekoa speaks with the Golden Jackass publisher Jim Willie on the debt ceiling theater, USGov losing AAA rating (as forecasted by the Jackass in 2009), and systemic insolvency sweeping through Europe & the U.S.