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The OMEN for a powerful shift in
the gold market in my playful mind was the very real earthquake on November
18 here in Costa Rica, a clear signal from the financial gods, no
minor tremor, measured at 6.0 on the Richter scale. The tremor confirmed the
tectonic shifts to come to the gold market without question. This was the
biggest earthquake in my life, no damage at all though, roof and toys intact.
Numerous stories testify in aggregate to a severe tightening of the physical
market, certain to put pressure on the corrupt paper market managed by the
COMEX and its parent NYMEX.
Be sure not to miss the
spectacular conjunction of planets and the moon in the southwest sky, over
the next few days. The opportunity is for those in the Northern Hemisphere,
sorry Australians and New Zealanders. Venus will converge with Jupiter, seen
in nearly equal magnitude of brightness. When they are close in a few more
days, the moon will enter the picture as a crescent in a spectacular display.
For the description of the highly unusual event, check the NASA website
(CLICK HERE). One could regard this event as another omen for a
COMEX gold default, a stretch, but a legitimate one.
THE GLOBAL SHAME OF
CENTRAL BANKS
On October 29, the US Federal
Reserve cut by 50 basis points the official Fed Funds rate down to 1.0% flat.
Do not expect the USFed to be done cutting rates. One week later, the entire
globe of beleaguered central banks also cut their official interest rates in
a parade of ignominy. They coordinated rate cuts on October 8, and again
followed the USFed in early November. The important Euro CB cut by 50 basis
points to the 3.25% level, surely in reluctant fashion given their firm
defiant stance. The most desperate CBs are clearly England and Switzerland
among the majors, and Australia and New Zealand in the second tier. The Bank of England (BOE) cut by 150 basis points unexpectedly, now at
a 3.0% low level. The Swiss National Bank cut by 50 bpts with the pack, but
on November 20 surprised all by cutting another full 100 bpts down to the
ultra-low 0.5% level. The Reserve Bank of Australia cut by 100 bpts in October and plans to cut
again this month. The Reserve Bank of New Zealand cut by 100 bpts in October and also plans
further cuts. The Bank of Canada cut by 25 bpts in October and plans another
25 bpt cut in December. The Riksbank of Sweden cut by 50 bpts to 3.75% in
October and plans another 25 bpt cut in December or soon afterwards. With
global monetary inflation raging, and official interest rates converging to
zero, the global central bankers must hang their heads in shame. THIS IS THE
MOST VISIBLE, OBVIOUS, PREVALENT SIGNAL OF THEIR FAILURE.
The contained messages are
four-fold:
1) ABSOLUTE CONTAGION:
the global economy is suffering from broadly felt toxic shock due to US
bonds, a process that has a few more quarters of severe crisis pathogenesis
2) POLICY EXTORTION: the
major and secondary CB heads want to cut so that the US$ does not fall, coerced with a monetary gun at their
heads
3) INFLATION EXPLOSION:
global monetary growth has gone ballistic, no longer a priority to control,
with all talk about limiting price inflation relegated to mumbling in the
corner
4) ENDLESS RESCUES &
BAILOUTS: the government sponsored bailouts are nowhere near finished, sure
to be an endless parade of patchwork and stimulus with eventual climax of
mortgage aid.
Just think of it. The USGovt,
after a coup d’etat pulled off by Wall Street and fraudulent climax
diversion of TARP funds, has yet to address the mortgage problem at
all. Mortgage aid in meaningful and necessary terms is actively avoided,
since it must come with a price tag up to $2000 billion in the United State s alone. The nationalization of the US banking, if not financial system, is highly likely to
be followed by an eventual virtual nationalization of the entire
mortgage system. Such a decision and desperate socialist action will be
the death knell for the USDollar, if it survives to the point when such a
program is enacted.
The unbridled monetary inflation
is a powerful bull market signal for gold, once asset prices stabilize. Monetary
explosion always pushes gold upward in price, but this time much money is
directed into a multi-channeled black hole. Today, yet another program
was announced, finally to enable more lending capital to banks. They have
been starved to date, drained in order to supply the corrupt Wall Street
conmen in charge. The coordinated interest rate cuts reveal the strong
impact of Competing Currency Devaluation. Foreigners wish to avoid further
aggravation to their economies from even lower domestic currency exchange rates.
They inflict higher prices upon their economies. Later, foreign governments
will order their reserves and sovereign wealth funds to dump USTBonds in
order to bolster their domestic currencies, the great counter-attack. The
USEconomy has a worse problem to fix by an order of magnitude. My view is
that the powerful US ailments are not fixable, since the financial
engineering is too deeply rooted and the manufacturing industrial base has
been removed in several stages over a 25-year period. Besides, the credit
derivatives loom like a series of hidden bombs whose fuses intersect in the
dark.
THE FRANCHISE OF CENTRAL BANKING
HAS FAILED, AND GRAND RATE CUTS CONFIRM THIS NOTION EMPHATICALLY!!! THE
COLLECTION OF CONCLUSIONS ADDS UP TO ONE POWERFUL FORECAST: GOLD & SILVER
PRICES WILL RISE 10-FOLD IN THE NEXT FEW YEARS. SOON THE CLUTCH WILL BE
RELEASED AND THE 10000 RPMS ENGAGE THE ECONOMIC TRANSMISSION TO PRODUCE PRICE
SKIDMARKS. Ignore for now the paper price heavy-handed influence, which
in my view will suddenly disappear in a volcano of controversy and tumult! The
US paper system has falsified the entire global pricing
structure. Instead of price discovery, we have been subjected to price
controls and tyranny. Next comes the counter-attack.
Lost faith in USFed has finally
come. Chairman Bernanke has learned the hard way that usage of the printing
press is not the boasted solution. He is sending good money after bad,
redeeming criminal fraud, endorsing checks for a broken system, and creating
numerous delivery channels into a vast black hole. The US Federal Reserve has
accomplished a bizarre feat. They have made short-term lending virtually
free, but offer a yield over 3% on long-term bonds. So US banks are
deeply engaged in a queer carry trade. US banks borrow short and lend to the USGovt
long, and thus exploit the steep USTreasury yield curve. The US banks are trying to liquefy from this perverse
mechanism, using incredibly large volumes of money. In the process, the USFed
balance sheet is testing whether it can grow a tree to the sky. The USGovt
has contributed to the ugly mountain of rancid paper with bad precedent after
bad precedent, from poorly written deals. No private investor in right mind
would step forward to help an ailing industrial or financial firm on the
absurd blockheaded terms established by the USGovt. A record setting 25% of
high-powered money, as in bank assets, that the USFed has provided, actually
sit idle as excess reserves. Hence, money velocity has sharply dropped,
typical of a recession. Failure has many symptoms. The USEconomy aggregates
are falling off a cliff in unison.
Europe has entered a recession,
but the US has entered disintegration, while England is close behind with a galloping leap off the Dover Cliffs. Kenneth Clark is a highly respected former conservative
Chancellor of the Exchequer (finance minister) from 1993 to 1997 in England. He delivered an urgent warning for a “catastrophic
crisis [that will be] far worse than anything that has occurred in my
lifetime” for Great Britai n. Clarke even slammed Gordon Brown as
having received undue credit for his role in attempting to shore up the
global economy. He warned policymakers should beware of a “full-blown
depression will have on public finances” for its effect. A major
error has been committed by both the US & UK. Neither nation has succeeded in passing on lower
interest rates to home loans, and repayment plans are not happening in
volume. The elite in both the US & UK are protecting their bankers, but killing the system in
the process. Housing prices are careening downward, while job losses mount in
large numbers, in both nations. The death of the AngloSphere is nigh, as
status of debtor nations comes soon with all its penalties. A simple move to
cut rates does nothing to address insolvency of both banks and households. This
basic truism is totally lost on clownish inept US & UK economists and bankers. They both built an economy atop
a housing bubble, blessed it, and encouraged the debt orgy process, only to
see the entire system melt down. This was fully forecasted during the last
two years by the Hat Trick Letter.
A VERY QUEER ANOMALY
We are working toward a nasty
climax of historic proportions. Notice that the USTreasury Bill has an
artificially high price, with staggering huge volume, which is backwards.
This condition defies Mother Economic Nature. Notice that gold has an
artificially low price on the paper contracts, with staggering huge demand
for physical metal, which is also backwards. This condition defies
Mother Economic Nature.
The USTreasurys, given the
staggering high volume, should be valued lower. The gold bullion, with its
staggering high demand, should be valued higher. Something must break, and
break soon. Regard these two anomalies as temporary distress symptoms of
ass-backward price mechanisms. The natural tendencies of man, full of human
emotions like vengeance and retribution, will soon be unleashed to correct
the PHONY HIGH USTBILL PRICE AND PHONY LOW GOLD PRICE. All kinds of key evidence
points to a COMEX default in December, discussed in the November Gold &
Currency Report. The keys are in the Open Interest, which for gold is
collapsing. But the December OI is holding up at relatively high levels. The
interpretation from Mr Market, who is a distant cousin of Mother Economic
Nature, is “The paper gold market is flawed, and people want no part
of it. What physical gold becomes available is being grabbed immediately.”
Further hints are offered by the
Chinese, who announced a stimulus plan worth over $500 billion. They will use
their USTBonds before they are trashed. The next phase is feeding off the
USTreasury much like a dead elephant. However, the signature event must come
first. THE COMEX GOLD MUST BE VANQUISHED. This is the Achilles Heel to the
USDollar.
ATTACK OF COMEX GOLD
& SILVER
Powerful foreign entities are
preparing a massive major assault on the US financial corruption, at key spots. All signs seem to
point to the gold futures contracts traded at the COMEX and NYMEX, whose prices
are routinely suppressed by a high volume of uneconomic short contracts by
two to four banks. The COMEX is a division of the New York Mercantile
Exchange. A highly leveraged sequence is soon to be unleashed, one that
should bring back thoughts of asymmetric attack. Think small cost of a
weapon, heavy damage to costly equipment. Something big comes to the gold
market, with big angry players! If successful, severe damage will be done to
the USDollar. Their goal is to kill the COMEX gold market, the key location
for gold price suppression. Major Russian, Chinese, Arab, and European
bankers and billionaires are angry beyond words. The giant portion of gold
vaulted resides in Central Europe. A plan
is in place. The key here and now is COMEX gold futures contracts, where
many big players are demanding delivery for their December contracts. North
American investment houses have also targeting them for delivery demands. With
newly energized Russia
& China building their gold treasures, with Arabs turning
from distrusted Western paper and more toward gold & silver, look for the
new players to offer support to the primary thrust attacks. If successful, it
will be a defining moment in US financial history. The first delivery notice for the
December gold contract is given on November 28.
Recall that Russians and Arabs
each have severe damage done to the crude oil price and petro revenues. The
futures contract games conducted by US price systems and Wall Street tactics used against
hedge funds are largely responsible. Russians and Arabs are angry. Their
financial markets are in turmoil, their economies are disrupted, their
property markets are in disarray. Furthermore, Russians and Arabs own a large
amount of acquired gold, whose value is also pushed down by corrupt US paper mechanisms. The Persian Gulf lusts to put in place a gold trading center of world repute. A
brutal powerful trap has been set, to be executed upon the paper engineers
without mercy. If you have noticed the facial expression on some Wall
Street heads, like Paulson, change in the last few weeks, this is one reason
why. They have no shame in confiscation of Congressional funds. But they
dread presiding over a failed pricing system for gold, and dread the prospect
of being unmasked, not to mention bankrupted. Keep the focus on the JPMorgan
garbage can, where the illegal futures contracts are stored, the very same
contracts that are never marked to market on their balance sheet. A COMEX
blowup reveals their grotesque distortion of market forces, underpinned by
gold and USTreasurys. More details are provided in the November Hat Trick
Letter report, like the movement by the Chinese and Iranians to vastly
increase their gold reserves.
Veteran warhorse Max Keiser, has
a video worth watching. See his video (CLICK HERE). He discusses the
upcoming COMEX default for the December gold futures contract. He believes
that in its wake, the gold price will rise suddenly to $2000 per ounce,
perhaps in a single day. The main impetus in his view for the breakdown is
pressure exerted by Russia, in his view. He describes their motive. Russia is very angry over the oil price, down 60% from its peak, driven largely by
liquidations from Wall Street targeting of hedge funds. Russia regards the paper game to be out of control. Russia has suffered from both reduced
energy revenues from export sales, and notable currency decline in their
ruble exchange rate. Financial markets, banks, and corporations have suffered
in Russia as a result, prompting a severe reaction by Putin and Medvedev. These
are not guys known to take ambushes and sucker punches well without a
response.
AWAKENED GOLD PRICE
The USDollar DX index has
topped. Conversely, the gold price has bottomed. Each has experienced a clear
vivid pronounced reversal off the extreme. Signs point to December as being a
battleground month. The moving averages have begun to reverse, a more stable
signal. A MACD crossover is near, which would give a billboard notice to
technical traders. Beware that this is the phony paper gold price. Actual
large physical gold transactions are conducted at prices in excess of $1000
per ounce. The undue influence of paper price discovery is soon to end. As
the Gladiator said in the 1999 movie by the same name, to the phony emperor
who usurped power, “The time will soon come to an end for you to
honor yourself.” Expect severe discontinuity in the gold price
in the next few months, maybe sooner. If Keiser and others are correct, and
the assault on the COMEX gold succeeds to liberate its price, a gap up is
assured, a big gap up, like a few hundred dollars per ounce. Now is the time
to hold firm your gold and silver metal. Sell the children, but do not sell
the precious metal.
Jim Willie CB
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Jackass website
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Jim Willie CB is the editor of
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