GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Golden Potpourri
* Europe Pushed to End Line
* Japan Distress Spreads Globally
* Currencys Strain to Breakpoint
* Gold as Safe Haven
* Gold Price Breakout
* Silver Gains Serious Respect


HAT TRICK LETTER
Issue #85
Jim Willie CB, 
“the Golden Jackass”
17 April 2011

"Even though investment demand for Gold has traditionally been higher, investment demand for Silver is now outstripping the investment demand for Gold on a dollar by dollar basis, with much less available value to buy. So specifically there is a short-term Supply & Demand imbalance for Silver. There seems to be a substantial potential for continued near-term increases in the price of Silver. Interestingly, Gold is the only currency without a political constituency for devaluation." ~ Rick Rule (independent billionaire)

"We have gone from $27 to over $37, again about a 40% rise in the Silver price, and the backwardation is still there. It has not disappeared. What that suggests is that there is tremendous physical demand for Silver. This is a very very rare event and it is very bullish. I do not remember ever seeing anything like this before. This has real implications for the dollar. If Silver stays in a prolonged period of backwardation, then watch if Gold goes into backwardation. Because if Gold goes into backwardation, then it is all over for the Dollar. That would be a flight out of fiat currency and a flight into precious metals. The Silver price is at a record length in terms of backwardation, and even though the price has risen as much as it has, it is still in backwardation. It is really stunning." ~ James Turk (of GoldMoney)

"The price of Gold is totally intertwined with the Dollar and thus all Western currency. I have seen some lines drawn in the sand with Gold over the years, but this is one of the most concerted and coordinated I can remember. As demand continues to push the price up relentlessly, and the Boyz rally around to cap it, the hot money runs in Silver. Also, how can the Euro stay together? It is like having a dozen wives and one checkbook." ~ veteran COMEX trader

"We will be in a recession by the end of the year. Three reasons: QE2 will end, Republicans are running the House, and the price of gas is heading up." ~ John Taylor (from FX Concepts)

"In my mind the US Government will resolve its debt and deficit problems necessarily by undertaking the step of restoring the Dollar to convertibility into Gold." ~ Jim Grant

"The basic laws of economics are threatening to pull the EuroZone apart, just as politicians are trying to pull it together. As usual, the EuroCB is stuck in the middle of the mess, and it does not like it one bit."  ~ Stephanie Flanders (Economics editor, BBC News)

GOLDEN POTPOURRI

◄$$$ THE SAUDIS ARE MAKING INTERNAL PREPARATIONS FOR LIFE BEYOND THE AMERICAN SECURITY BLANKET. THE FLIP SIDE IMPLICATION IS THAT THE PETRO-DOLLAR DEFACTO STANDARD IS ABOUT TO LOSE ITS GLUE. A WEDGE IS GRADUALLY BEING DRIVEN BETWEEN THE UNITED STATES AND SAUDI ARABIA. THE USDOLLAR CANNOT SURVIVE WITHOUT GLOBAL CRUDE OIL SALES AS A COMMODITY STAPLE BEING SOLD IN EXCLUSIVE USDOLLAR TERMS. IT IS THAT SIMPLE. REMOVE IT, AND THE USDOLLAR HOUSE FALLS. $$$

Before a crowd in the United Arab Emirates, Saudi Prince Turki al-Faisal stressed that the Gulf states must look after their own security after recent events in the Middle East and North Africa. That expansive heavily Moslem territory is being called MENA. The prince carries weight since he is a former ambassador to WashingtonDC and has served a role as head of Saudi security. For almost 40 years (since the 1973 OPEC embargo), and more like 60 years (since the Saudi nation was carved with a British knife), the United States has been the sole security provider to the Persian Gulf region. Turki spoke of converting the Gulf Coop Council into a sort of European Union, even with a unified Gulf army. He focused comments on the adversary being Iran, even cited having a nuclear deterrent. Relations between the United States and the Saudi-led Gulf monarchies are as bad as they were after the fall of the Shah, which took place in 1979. The Saudis are increasingly protecting themselves, to be sure with US military hardware crossing causeways into Bahrain. A significant amount of oil money has gone to purchase US-made weapons, a standard cloudy sinister feature of bilateral relations with the US for half a century. The US and Saudis are going through a process of recalibration. That is a nice word for the negotiated end of the Petro-Dollar defacto standard.

The relationship between the US and Saudi Arabia has been filled with conflict for several decades. It survived oil shocks from the 1973 embargo. It survived the 9/11 false flag attack on New York and the Pentagon, blamed on the Islamics. It survived the US invasion of Iraq under the spurious pretense of weapons of mass destruction. The common thread of discord between the US and the Saudis is the steadfast American support of, if not control by, the little nation on the Mediterranean Sea that looks northwest to Italy. According to diplomats, geopolitical analysts, and former US officials, the two key nations are drifting apart faster than at any time in recent history. Yet the relationship has had a symbiotic purpose that managed to continue a function, if not with bumps. The Saudi royals have had a great protector while collecting for themselves a few $trillion of their national wealth, hoarded for themselves in foreign accounts, complete with embellished lifestyles of extreme opulence. The Americans have enjoyed the excesses from a credit lifestyle enabled by the key Petro-Dollar standard in force, since the global financial system requires all nations to store USTreasurys (or other US$ denominated instruments) in order to purchase essential crude oil. The United States has lived beyond its means for a few decades, on a global credit card shoved down the throats of foreign creditors. That is about to end. The entire remainder of the commodity basket, from copper to cotton to cocoa follows the lead item in crude oil, all priced in US$ terms in the settlement of global transactions. The other dual role commodity is gold, but it is money.

A new major rift has opened with the Saudis. The breach has had clear markings from the USGovt support, both direct and tacit, for major populist Arab upheavals from Egypt to Libya to Yemen. The Saudi monarchy has a long track record in strong opposition to democratic reforms. It is a basic dictatorship in white robes that gives it citizens zero rights while the royals take 95% of the natural wealth. The last straw, when Saudi royals turned from uneasy alarm to gross intolerance, was the Obama Admin insistent demand that the Saudi-backed monarchy of Bahrain negotiate with protesters representing the country's majority Shiite Muslim population. In the view of Saudi rulers, all rival Sunnis (the other distinct Moslem sect) are a proxy for Shiite Iran, its historic adversary. The Saudis will not budge, and will never accept a Shiite government in Bahrain. The US and Saudis have rumbled through a series of tense diplomatic incidents in recent months. Both Secretary State Hillary Clinton (dutiful squire from the Council on Foreign Relations) and Secretary Defense Robert Gates (leader of narcotic syndicate operations) were refused meetings when they requested to visit the kingdom this month.

When the Saudis led a military visit to Bahrain complete with troops, tanks, and armored vehicles, all coming equitably from the Gulf Cooperation Council (GCC) to halt pro-democracy protests, the rift turned into an open conflict with the White House. The formal USGovt statement enraged the Saudi and Bahraini leaders further. The USGovt talks about developing democracy in Arab nations, but the motive in my view is to keep the Arabs in constant conflict among themselves. The US and Saudis are the strangest of bedfellows, with no political constructs in common, only mutual interests in maintaining the USDollar's prime role as global transaction and reserve currency in order to preserve the vast confiscated wealth of a sand kingdom for the royal family. Other common ground is the opposition to Iran and other violent Islamic extremist groups like the fierce and highly dangerous Hezbollah. The Saudis are angry that in the new Iraq farce of a democracy, the Shiites have taken virtual control, with an uncertain amount of influence directed from Iran, all under the aegis of an incompetent corrupt US leadership in Baghdad.

Past efforts by the GCC countries (Saudi Arabia, Bahrain, Kuwait, Qatar, the United Arab Emirates, and Oman in the Persian Gulf) have failed, along with their attempts to form a unified non-Dollar currency. Of course, the USGovt threatened reprisals if the unified currency made any headway. Geopolitics seem always to push the US and Saudis together again. King Faisal has never harbored much respect or affection toward the Americans or British, a sharp distinction from his older mass passive deceased brother King Fahd. Neither king favored the usage of Prince Sultan Air Base inside the Saudi kingdom by the USMilitary, a point of constant aggravation. New small cracks in the Arab front have appeared. Saudi Arabia has moved on its own to protect its interests in neighboring Yemen. The United Arab Emirates once pledged military aircraft to support the No-Fly zone over Libya, but it has reconsidered. They now are offering only humanitarian assistance. The USGovt diplomats have never perceived the regional differences through a Sunni-Shiite lens the way the Saudis do, a factor that adds to great strain. See the Saudi Wave article (CLICK HERE).

One must consider the potential for highly disruptive and motivated hidden agendas on the part of the United States. The US might have an agenda for a higher oil price, which would bring higher Saudi and OPEC revenues from from which to purchase USTreasury Bonds during a time of massive unmanageable USGovt deficits. Also, the US might have an agenda for helping along unified Moslem democracies in order to form a bigger rival in new cold war. The stronger rival would assure consistent and growing military budgets for the Pentagon, always eager for a very cold war. Whatever the motive, whatever the conflict, the great risk is for the unraveling of the USGovt protective blanket given to the Saudi royal family. If it is removed, then the flip side is for the removal of the understood US$ pricing of OPEC crude oil. If crude oil and other commodities are no longer sold in US$ terms, then the USEconomy will be forced to adapt to a 30% to 50% lower USDollar valuation, and corresponding higher commodity prices. That consequence is not obvious to most economists, since they take the PetroDollar standard for granted. The Jackass does not, ever since the Russians and Chinese announced with Saudis and Japanese joined at the hip, that by year 2016 the crude oil would no longer be sold in USDollars. They made the announcement in May 2009, which did not capture global attention in my view because of the inherent seven-year plan, and because US news media is largely syndicate controlled.

The USDollar is held perilously on its perch, supported by a no longer strong Saudi security. Watch Russia and China offer the Saudis material support for their security, alongside a stream of commercial contracts that include energy field development and long-term energy sales. The Chinese are making vast inroads in the entire Persian Gulf to fill the shopping malls with Chinese products, especially in the UAE. The days of the Petro-Dollar are coming to an end. The USDollar devaluation in the FOREX market would be immediate. The implication to the USEconomy is hyper price inflation. The next destination is the Third World. Imagine the USDollar bidding for another currency in which to buy commodities, then finished products from China. Then imagine a USDollar worth 30% 50% less. Then consider the impact on the USEconomy that would assure an inflationary recession turned depression fast, like in a New York minute!!

◄$$$ THE USGOVT DEFICIT IN THE 1H2011 IS UP 15.7% OVER THE FIRST HALF OF LAST FISCAL YEAR. SEVERAL LEDGER ITEMS ARE UP IN COSTS. THE PATH IS TOTALLY UNUSTAINABLE AT A TIME WHEN THE USFED IS THE PRIMARY BUYER OF THE DEBT SECURITIES. THE ROAD TO PERDITION AND MORAL HAZARD. THE USDOLLAR CRISIS CENTERS UPON PERVASIVE INSOLVENCY ACROSS THE ENTIRE SPECTRUM OF THE USECONOMY. $$$

In the first six months of fiscal 2011, the USGovt budget deficit rose 15.7%, which highlights the near panic tone rising. Budget cut battles are symbolic, much conflict, but not much in cuts, as the deficit works its way toward $2 trillion annually. The battle will rage further as the debt ceiling limit invites heightened stubborn turf battles. The battle is over control and dominance, not solutions. The federal budget is projected to reach $1.5 trillion deficit this year, according to a Congressional Budget Office estimate released on January 26th. The previous record was $1.4 trillion reached in fiscal 2009. About two years ago, the official forecasts were for the deficit to fall from $1.3 trillion to under $1.0 trillion. The Jackass forecast was for a steady nasty rise instead, and head toward $2 trillion. That has happened. The USDept Treasury reported a deficit of $829 billion for the October to March period, compared with $717 billion a year ago, as revenue rose a token 6.9% from baseline inflation, not the USEconomic recovery so often mentioned deceptively. Bear in mind that higher spending on gasoline is not economic growth, but inflation.

Some distraction comes over the one-time TARP Fund item a year ago, a tidy $115 billion sum, except that the one-time items seem to happen every two to three months. See the Fannie Mae black hole contributions and the similar AIG payments, urgently needed to sustain the mammoth mortgage market and the creepy credit derivatives. So far 2011 has logged significant increases in spending on Defense, Social Security, health care, and debt service. One curious item is the individual incomes taxes, cited as up 20.6% without supporting evidence, in contradiction to most research and data in the March Hat Trick Letter. A monthly USGovt shortfall of $188.2 billion was recorded in March, wider than a year earlier, and without much fanfare as the financial markets and the world become accustomed to the fast fall into the abyss of insolvency. See the Google article (CLICK HERE) and the Bloomberg article (CLICK HERE). Such deficits on the path to perdition are a major factor for the USDollar deadly decline, the USFed monetization urgent necessity, the fast rising price inflation, and the imminent loss of the USDolalr as global currency reserve. The crisis builds around pervasive national insolvency.

◄$$$ CHINESE CONSUMER PRICE INFLATION IS TAKING OFF, JUST LIKE THE USECONOMY. THE CONNECTION IS THE SHARED CURRENCY PEG. THE DIFFERENCE IS THE PEOPLES BANK OF CHINA HAS RAISED RATES AND TIGHTENED  BANK POLICY NUMEROUS TIMES. THE CHINESE MANUFACTURING SECTOR CONTINUES TO MARCH ALONG, STRONG AND RESILIENT TO THE BANK TIGHTENING. $$$

China just surpassed another milestone, as their foreign reserves quietly rose to $3.04 trillion, the ongoing beneficiary of cheaper labor. The vast foreign investment was designed to exploit the cheaper labor. It has done so. Recall their supposed trade deficit a month ago. It should be met with deep suspicion as a fudged event with motive. Mark Williams is an economist at Capital Economics in London. He wrote, "Most striking at first sight is how fast the foreign  exchange reserves are rising. Chinese officials point to the first quarter trade deficit as evidence that there is less need for the Renminbi rise, but the scale of reserve growth shows that the Peoples Bank is still intervening very actively to keep the renminbi down." The Chinese price inflation is more accurately calculated than the rubbish statistic put forth by the USGovt. The CPI approaches 10% in China, while their manufacturing saw growth for the first time in four months. Concerns have eased that monetary tightening may lead to a sharp slowdown. Their Purchasing Manager Index rose to 53.4 in March from 52.2 in February. The Chinese Govt seeks to calm the fast rising prices for homes and consumer goods, but without limiting economic growth to create jobs required to maintain social stability. Bolstered by a shiny slew of factories and an overflowing savings account, the China fears are very much overblown. Their economy remains in decent shape. But the ghost towns are a problem.

The main concern should be over the US and England, not China. The Australian central bank governor believes the world economy's center of gravity is shifting rapidly to Asia. Glenn Stevens said that Asia will soon rival Wall Street as a source of indicators and signals. Then came an intriguing insightful comment. Stevens said that finding solutions to imbalances in the global economy has been obstructed by excessive focus on the US trade deficit with China. Australia has managed to escape recession during the global financial crisis, due largely to Chinese demand for Australian minerals. China hiked its lending and deposit rates by 25 basis points again this month. China continues the fight that many other nations have yet to begin, in attacking inflation pressures. The terms of the battle were well put by the deputy Governor of the Reserve Bank of India, who will raise rates again in May. He said, "Rising interest rates are making your projects a little less attractive, making you little less inclined to invest, but the alternative to that will be a meltdown. So, a little bit of pain now, a little bit of medicine now, with the prospect of less suffering in the future is the way to look at it." Such an approach is not an option for the trapped USFed, whose inflation machinery is stuck at full throttle. Some central bankers are acting preemptively while others are hoping with fingers crossed on one hand and inflation levers pulled hard on the other hand.

◄$$$ THE CHINESE ARE SEPARATING THEMSELVES FROM THE UNITED STATES. CHINESE DAGONG CREDIT AGENCY FORESEES NO END TO THE USFED MONETIZATION PROGRAMS. $$$

China's Dagong debt rating agency sees no remote chance of the USFed debt monetization ending. They conclude that QE2 does nothing to encourage economic growth, and cannot achieve its goal. The Jackass agrees completely. They believe the clear credit conflict is on the edge of a dangerous escalation. They wrote, "The continuous implementation of such unconventional monetary policy in the United States will lead to the escalation of world credit war and inflict greater losses for related parties in the world credit system." These are very harsh words in sharp criticism and disrespect. See the Zero Hedge article (CLICK HERE). In reaction, China continues to shed their USTBond holdings, at least in official data. They are in my view using these bonds in all kinds of large global commodity resources deals as collateral. The four largest holders of US debt continue to be China, Japan, the United Kingdom, and Oil Exporters, but China reduces where the other three increase. Much debt monetization done in the shadows and basements has UK involvement. See the Zero Hedge article (CLICK HERE).

◄$$$ MEXICAN DRUG MONEY HAS BEEN LAUNDERED THROUGH WACHOVIA. IT HAS HIT THE MAINSTREAM NEWS, BUT SUBDUED. IF TRUTH BE KNOWN, NARCOTICS MONEY FROM AFGHANISTAN HEROIN HAS KEPT THE WALL STREET BANKS FLOATING SINCE 2008. EVEN THE UNITED NATIONS MADE SUCH CONCLUSIONS. THE SINISTER SIDE OF WALL STREET IS SLOWLY BEING REVEALED. $$$

Many big US banks launder $billions from Mexican drug cartels. Wachovia was caught. Huge amounts of cartel funds have entered into the global financial system, much through Wall Street basement loading docks. A London whistleblower was ignored for his urgings. The USGovt slapped Wachovia's wrist, imposed a heavy fine hardly described as crippling for its money laundering, and talked tough on crime. A full year of deferred prosecution has expired, a neat trick among the brethren bankers, thus rendering Wachovia in the clear of legal prosecution. Imagine a fine for aiding and abetting narotics money laundering. Wachovia was gobbled up by Wells Fargo three years ago. The authorities uncovered $billions in wire transfers, travellers checks, and cash shipments through Mexican exchanges into Wachovia accounts. Jet aircraft were purchased with money in Wachovia accounts. The Hat Trick Letter mentioned this story over a year ago.

Wachovia paid out $110 million in forfeiture of account funds, and incurred a $50 million fine, related to offenses in the shipment of 22 tons of cocaine. The penalty sounds big until one considers the cash transfers involved a mammoth $378.4 billion. That comes to less than 1/20-th of 1% in total fines! Imagine a $4 fine on $10,000 in money laundering caught red-handed! Put the cash transfer volume into perspective, a sum equivalent to one third of the entire annual Mexican gross national product. Finally consider that other Wall Street banks do the same activity, only bigger. Bank of America is the #1 money laundering US bank. See the UK Guardian article (CLICK HERE).

◄$$$ THE US CORN PRODUCTION IS NOT EXPECTED TO BE ADEQUATE. THE ETHANOL DIVERSION IS A MAJOR FACTOR FOR THE SHORTAGE. THE CORN PRICE HAS RISEN MUCH MORE THAN UNLEADED GASOLINE. IT HAS BEEN NOTICED. IMPLICATIONS SPREAD LIKE VINES ACROSS THE FOOD COMPLEX LIKE TO MEAT COMPLEX. $$$

Corn futures prices on the Chicago Board of Trade have climbed 88% in the past 12 months, an increase greater than gasoline. The US corn planting is expected to be near a record, the second highest acreage since World War II. Yet corn output will fall short of demand for livestock feed and ethanol, claims Doug Jackson. He is from Intl FCStone in Iowa. The 2011 planted acreage will total over 91.7 million acres (37.1 million hectares), up 4% from 2010 and the highest since 2007, according to a Bloomberg News survey. Animal feed usage has risen notably, an effect of higher cattle and hog prices. Biofuel demand is set to rise 8%, according to the USDept Agriculture. Jackson anticipates a food shortage in global pockets unless the US realizes near perfect weather. That just aint happening in the last couple years, as strange events like flooded plains, occasional drought, and scattered infestation has occurred in diverse areas. Demand is outpacing the normal production expansion, made more strained by biofuel policy. In the year ending August 31st, roughly 40% of the corn crop will be devoted to produce ethanol, the USDept Agriculture predicts. The refiners receive a tax credit of 45 cents for every gallon of ethanol blended into gasoline. Food prices are a function of many items. But corn has gathered the most attention, due to the biofuel factor and the national tax policy.

◄$$$ INDIVIDUALS HAD BETTER BEGIN TO PREPARE FOR A MASSIVE STORM ASSAULT ON PERSONAL WEALTH. ALL THE DECEPTION ABOUT AN ECONOMIC RECOVERY IS PHONY, ANOTHER LINK IN THE CHAIN OF DECEPTION. THE ASSURANCE IMPLIED BY A RISING STOCK MARKET IS DECEPTIVE, A CLOAK OVER THE LOST WEALTH FROM ERODING PURCHASE POWER. THE FINANCIAL MARKETS THAT HOLD AMERICAN WEALTH ARE MEDDLED WITH SO THOROUGHLY THAT VALUE MEANS NOTHING. THEIR HOME EQUITY HAS VANISHED LIKE FLATULLENCE IN THE WINTER WIND. THE PUBLIC IS NOT GUIDED TO PROTECT ITSELF WITH GOLD & SILVER, BUT RATHER WITH STOCKS AND BANK CERTIFICATES. A NATIONAL RUIN COMES TO INDIVIDUALS. $$$

There were contained subprime mortgages, green shoots, then an exit strategy, then a jobless recovery, then containment of Greek sovereign debt defaults, now no price inflation effects from QE, all intentional deceptions. The primary currency of the USGovt is deep lies. The National Inflation Association has issued a clear warning, that in my opinion deserves to be heard and acted upon with urgency. Better to have prepared two to four years ago, as the Jackass warned repeatedly. The NIA wrote, "The majority of the warning signs that hyper-inflation is imminent are already here today, but most Americans are failing to properly recognize them. NIA believes that there is a serious risk of hyper-inflation breaking out as soon as the second half of this calendar year and that hyper-inflation is almost guaranteed to occur by the end of this decade. In our estimation, the most likely time frame for a full-fledged outbreak of hyper-inflation is between the years 2013 and 2015. Americans who wait until 2013 to prepare will most likely see the majority of their purchasing power wiped out. It is essential that all Americans begin preparing for hyper-inflation immediately." Also, life savings will erode in magnificent if not tragic manner. The typical inflation hedges of stocks and home equity have failed, since tied to debt. The rising stock market is not keeping up with the combination of price inflation and USDollar debasement. The US home equity has been destroyed. Gold & Silver bullion and coins are a fine solution.

◄$$$ MERKEL HAS BEEN HUMILIATED BY MASSIVE DEFEATS IN A FEW GERMAN PROVINCES. IMPLICATIONS ARE HUGE. THE GERMAN PEOPLE ARE SICK & TIRED OF SUPPORTING THE BROKEN SOUTH WITH THEIR AMPLE SAVINGS. THE EASTERN ALLIANCE IS QUIETLY ASSUMING A VANTAGE POINT IN GEOPOLITICAL POSITION, ALTHOUGH HIDDEN TO DATE. BIG CHANGES ARE COMING TO EUROPE, THE FUSE LIT. $$$

The seasoned experienced brilliant European contact with vast contacts on four continents pitched in with a valuable perspective. He is German and knows his nation well. Being trilingual (Russian language too), he is well versed with numerous global contacts. He responded to the humiliating Merkel defeats, which he predicted months ago. He wrote, "Germany is fleeced to the tune of 400 billion Euros per annum by the Club Med and other losers in Europe. The entitlement jockeys of Southern Europe are in for rude awakening. The Berlin, Moscow, and Beijing leaders are going to set the tone for regaining stability. The Anglo-American Axis has driven the entire financial and political system over the cliff. They will next attempt to stiff the rest of the world with their incredibly vacant proposals like the carbon tax and IMF currency, in order to retain their power and privilege. It is soon game over for the Boyz. Angela Merkel is the East German lackey, not stupid, a top notch scientist. People need to learn to produce again, even to produce a little bit more than they consume. It is called wealth creation. If someone has nightmares it should be Sarkozy, Cameron, and Obama, the three stooges. The upcoming blowback from the mounting ongoing financial crisis will be horrific. Things will never work out the way the US and British bankers plan in the coming months and years." The key is change, shift of power & control to the East, and unexpected turns in the ongoing crisis. It is called Paradigm Shift, a topic mentioned frequently in the Hat Trick Letter.

My response is finally to bring it on, bring justice, bring equitable power, to weaken the syndicate in power. My dream, unsure of its inevitable outcome, is to push the Anglo bankster off their perch. In the last year, the US & UK bankers are much more on the defensive, but hardly anywhere near losing their posts and privileges. Several potential important events could signal a significant change in their hold on power. It could be a significant move in Gold toward $1600, or silver past $60. It could be the Saudis openly discussing an end to the standard for crude oil sales in US$ terms. A blockbuster event in the COMEX could reveal they have no silver, and their gold supply is a queer Just-In-Time inventory from BIS swap midnight express shipments. One big US bank like Bank of America could go under, despite steady narcotics fund input. A G-20 Meeting could take place with open calls for a new non-IMF, non-US$ global reserve, and shock the Western bankers who are attempting to steer the direction toward an IMF basket of major currencies. It could be some nasty exposure of USMilitary involvement in popular uprisings, even the military assistance to natural disasters from the infamous HAARP weapon usage. In my opinion, the next highly disruptive events will come from Europe, like a huge bailout request by Spain that is refused. The Euro Central Bank rate hike will have ripple effects, continued hikes to follow, and a deep impact on Southern European banks. The stage for change has been set, the fuse lit.

EUROPE PUSHED TO END LINE

◄$$$ THE EURO CENTRAL BANK HIKED RATES TO 1.25% UPON GERMAN DIRECTION. THE SOUTHERN EUROPE BANKS WILL BE PRESSURED IN A VISE. GERMANY WANTS THE CRISIS TO BUILD, IN ORDER TO SPARK A SIGNIFICANT ENOUGH CRISIS TO SEPARATE FROM THE UNION AND ITS DEADLY OBLIGATIONS FOR CLUB MED WELFARE. CERTAIN BANKERS IN CONTROL WANT TO FORCE THE SITUATION IN EUROPE. EUROZONE PRICE INFLATION HAS INCREASED. IN REALITY THEIR C.P.I. IS AT LEAST TWICE THE OFFICIAL NUMBER. MY BELIEF IS THAT THE PRICE INFLATION CARD IS BEING USED BY THE EUROCB AND GERMAN BANKERS TO SEPARATE FROM THE RECKLESS USFED. $$$

Simply stated, Germany is sick & tired of forfeiting $300 to $400 billion annually to support the Southern European nations, complete with broken banking systems, lethargic economies, and a culture that is not consistent with that of the Germany powerhouse. They wish to halt the waste of money, like having a truant deviant lazy son. The monetary decision of a rate hike begins the process to cut off the PIGS nations by forcing bank stress. In mid-2008 the Jackass had an important disagreement with a well placed German banker who thought the Euro Central Bank would never lower interest rates to absurdly low levels like the Americans. My view was that the EuroCB would indeed follow the USFed, but in delayed fashion, after the Euro currency started to rise and threaten their export trade. It did precisely on cue, and the ECB hiked in quick time. They do not want to continue the insanity of ultra-low interest rates, since it is so destructive. Savers earn less. Commodities cost more. The Euro currency has responded to tighter monetary conditions by moving from 130 at the start of year 2011 to 145 this week. Central bank president Jean-Claude Trichet attached the rate decision to the risk of accelerating inflation, and added that rates were still very low. The Europeans want any credible reason to separate from the reckless American monetary stance stuck in the 0% corner. Notice the reference to Germans who wanted the hike long ago, not even in the first place. Trichet said unapologetically, "The hike is unwelcome for peripheral countries, but arguably the core member states were in need of this move already some time ago. In that sense, the timing of the increase is a balancing act, which is part and parcel of the one-size-fits-all monetary policy. We did not decide today that it was the first in a series of interest rate increases." He understands the impact to the Southern European nations, especially their banks, which are expected to be stressed by the decision. Basically, Germany has had enough, and wishes to force the situation, to topple Southern banks, and to proceed with the delayed climax. They want a restructure, and one will come.

The European Monetary Union for which the common Euro is used has been broken, without yet a public fracture. The Euro currency rise signals its demise, much like the USDollar rise in early 2009 signaled its demise. The one size fits all approach for the EuroZone Economy is utterly insane and makes no sense. Germany has enjoyed a strong rebound in economic growth, led by a very diverse and deep export trade business that is booming. They export to China. In contrast, the economies of Greece, Ireland, Portugal and Spain remain trapped by large debts, high unemployment, weak consumer spending, and uncompetitiveness. Trichet confirmed that the ECB had encouraged the Portuguese leaders to ask for support. Their prime minister finally made a public appeal for financial assistance from the European Union, after the yields on their 10-yr bond rose above 9%. The consensus interpretation is that the EuroCB is more concerned about inflation than slow growth. Trichet is well aware that 1.5% is still 5% to 7% too low for interest rates, and very aware that the type of price inflation encountered is deadly, on the cost side. Expect the Euro currency to continue rising. The true price inflation is obviously closer to 10% than 5%, surely not below 5% to any rational observer. Almost never does a single rate hike occur. The key point also that the Europeans are making distance from the Americans, often called insane on monetary management. The Europeans must follow the American lead often. The nasty rub, the Euro will rise until it causes pain in quick feedback felt by German exporters. See the British Broadcast Corp article (CLICK HERE). Notice in the mainstream press that nobody mentions the Germans wishing to force the situation into a crisis, to enable change finally. They want debt restructure and to topple dead banks. The ripple effects will surely stress the dead US & UK banks.

The European price inflation figures are mild but moving up. The true EuroZone CPI is surely at least double the official data cited. Inflation in the 17-nation EuroZone rose to 2.6% from 2.4% in February, the fastest since October 2008. Trichet has called for strong vigilance on price increases, and made good with a small symbolic but important rate hike. The German Economy has powered the region's expansion as companies increased hiring and saw greater output, which has so far offset the impact of surging energy costs and tougher austerity measures in countries such as Spain. The higher Euro exchange rate has mitigated the higher commodity prices marked in US$ terms. So the Euro has given a discount while the USEconomy faces a powerful cost escalation without respite. Expect a string of small rate hikes possibly to ensure a continued commodity discount. In the process the Germans, which control the EuroCB, will show defiance toward the USFed. They can legitimately and credibly use the price inflation card to separate from the USFed in monetary policy. The USFed will be stuck near 0% forever, directed by the Wall Street crime syndicate that is playing the USTreasury carry trade, speculating feverishly, and working to ruin the US financial system. A high stakes brinksmanship game has begun that is in no way being covered or hinted in the news media. See the Bloomberg article (CLICK HERE).

◄$$$ A RATE HIKE COULD DOOM THE EURO CURRENCY, EVENTUALLY NOT IMMEDIATELY. THE NEXT PHASE COULD BE A FINAL BURST BEFORE A FULL SPUTTER. THE COMMODITY (FOOD & ENERGY) PRICE DISCOUNTS FROM A HIGHER EURO EXCHANGE RATE WOULD OFFER SUPPORT, BUT THE HIGHER EURO WILL CAUSE A SERIOUS EXPORT CRAMP. A VERY STRANGE MIX COMES TO THE EUROZONE ECONOMY. $$$

The smart money knows that a rate hike could render great economic damage to the EuroZone. They know that just like two years ago, the feedback loop to the export trade is felt suddenly. The damage will be different in the extreme locations. A sequence of rate hikes, even if only 25 basis points each, will hit the Southern European banks that must administer tighter screws to adjustable rate mortgages. The Spanish Zombie banks are ripe for a topple and crash, and the EuroCB rate hike puts pressure on their banks directly. Regard the rate hike as a preliminary warning that the insolvency game has gone on long enough, and the lights will be turned off in the near future, not tomorrow, but soon. My focus is on the Spanish banks and the Portuguese sovereign bonds. The former are badly insolvent, banks floated along with fully permitted vast holes on their balance sheets, an exhibition of pride. The latter are wrecked and costly to continue the float, unsustainable from the 9% extreme borrowing cost, which has always preceded a breakdown. The ratcheting upward of EuroCB interest rates in my view has a hidden agenda, to break the logjam, to force the issue, to remove the impediments in the Southern Europe bank and bond systems. As an aside, the Bank of England kept their official interest rate fixed at 0.1%, where it has been stuck since March 2009. Expect the USFed and its overlord the BOE to perfectly coordinate their ruinous 0% rate that accommodates bankers and destroys capital. The UKEconomy faces worrisome times. Manufacturers are under pressure to raise prices, as they must contend with rising costs. Growth will turn negative, be called zero, and confidence generally is on the wane as business cash flow has been constrained.

The higher Euro currency is the bizarre byproduct of the ECB rate hike. The bond arbitrageurs are leveraging off the rate differential with the USTreasury Bills in order to gain some hefty futures profits. But such open windows will last only a short while. The higher Euro will cause new problems, in particular a damper on German exports, which will cost more to foreign importers. However, another angle must be considered. Germany might be attempting to cause a mini-bull rally in PIGS sovereign debt so that the big German institutions can dump massive amounts of government bonds finally. The higher Euro exchange rate offsets the lower principal bond value linked to higher bond yields. Also, one must always bear in mind that the Chinese have not likely halted their discounted purchase of PIGS bonds, as they dump USTBonds en masse. So the German motive could be to direct EuroBonds dumps with the bad markings, but the Chinese motive is indirectly to dump USTBonds in favor of those marked EuroBonds. The Chinese will demand conversion later to Gold bullion from the associated stressed broken central banks. A very complicated chess game is underway. The Chinese might be demanding a higher Euro exchange rate to be sustained during a massive USTBond dumping exercise. The German motives are the key. They want to discharge the PIGS nations pronto. They want to unplug the PIGS nation banks. They want to bring about a climax moth event for the Euro currency light fixture.

A reliable connected German banker with internal sources sent an email in reply about the actual events behind the EuroCB scenes. He was confident in being aware of events, since he is part of a team called The Group which has had numerous dealings with the EuroCB advisors and serves as the architect of support mechanisms to the new Nordic Euro currency. He wrote, "The European nations are all being pushed to the Finish line. They all are aware that the system is defacto coming apart in a grand breakdown. The only ones refusing to accept this are the Anglos & Americans. This is a giant Goat Rodeo. The bulls are already dead and processed in the food chain. We shall eventually see a revival of a real market economy with certainty. However, before that happens, there needs to be a cleansing process, a very cruel one. All the measures we see being taken are like Intensive Care Unit measures on a terminal patient. There are a thousand ways to expire. We need to look at the very big picture to really comprehend. The universe strives for equilibrium. This means with all the negativity there is equally strong positivity. It seeks to arrive." A couple days later, the banker continued with more comments. The situation in Portugal was fully orchestrated, more trigger events desired to further the process. He wrote, "They are fighting for survival and it is all sinking. The revised and realigned Euro currency will happen by default. The Portugal trigger was pulled in order to stage the other events so it appears to be a logical step. DeutscheBank and the other banks will not be saved. They already received that clear message from Berlin. There are not enough resources for the DBank bottomless pit to be filled. Creditors will not get a haircut, but rather their heads will be cut off." Bear in mind that DeutscheBank is the connection to US & UK bankers.

A savvy colleague provided his own interpretations that add a geopolitical flavor to the events. He and the Jackass are in contact with the German banker source infrequently. He said "The EuroCB moves to strengthen the Euro currency are part of a plan to force the PIIGS and periphery countries out of the Euro in preparation for the introduction of the new partially gold-backed Nordic Euro. As the PIIGS and periphery nations sink, the losses to the German, Austrian, French, Swiss banks will escalate. DeutschBank and many other big EU banks will not be bailed out. The hidden losses are so enormous that both the shareholders as well as the senior creditors will be wiped out. The German government will save the depositors, as DBank will likely be nationalized." The Nordic Euro currency is scheduled for introduction in June. My belief, just mine as Jackass, not from the source, is that its time schedule could easily slide out beyond the targeted June date based on the facts and circumstances at that time. Implementation of a major currency, especially one with a gold component, is extremely difficult, complicated, and must be achieved in the face of huge banker driven political forces with potential military and terrorist threats. History is replete with precedents for the naive doubters.

◄$$$ SPANISH AND IRISH BANKS ARE THE MOST VULNERABLE TO THE EURO CENTRAL BANK 25 BASIS POINT RATE HIKE. SPANISH HOME LOANS HAVE A HEAVY TILT TO ADJUSTABLE RATES. JOBLESS BENEFITS ARE COMING TO AN END. A CRISIS IN SPAIN IS OVERDUE. IT WILL HIT LIKE A HURRICANE IN EUROPE AS BANKS TOPPLE. $$$

Spanish and Irish banks dependent upon the Euro Central Bank for liquidity could see their profits squeezed as rising interests rates hike borrowing costs. To the point, Spain and Ireland have high proportion of floating rate mortgages. A series of ECB hikes would surely increase non-performing loans in Spain and Ireland. Their borrowers are already stretched due to high unemployment and weak economies. Along with Greek banks, these two nations have lost access to interbank funding because of the sovereign debt crisis, an important hidden consequence. A strange deposit battle turned hostile among Spanish banks has competed for funds from depositor savings. This has squeezed profit margins for the banks, at a time when the EuroCB has hiked rates and hints of further hikes. Spain saw a 237% increase in the number of outstanding mortgages between December 2002 and December 2008, when the property boom hit the wall and national unemployment soared to 20%. Here is the kicker! Almost 90% of these mortgages are tied to the 12-month Euribor money market rate. The Spanish Govt has offered many goodies. Ultra-low interest rates and the extension of subsidies to the jobless have aided Spanish households cope with mortgage payments and the rotten economic impact. The extensions are about to end. Interest rates are about to resume an upward path. Spain is on a collision course with crisis, which will stir up the PIIGS stew immensely due to its much larger population size. See the FOREX Yard article (CLICK HERE).

◄$$$ GERMAN FINANCE MINISTER HAS URGED NO BAILOUTS OF THE BIG GERMAN BANKS. THE BATTLE IS ON TO CUT OFF THE BANKER WELFARE TO THE SOUTH, AND TO CUT IT OFF DOMESTICALLY. SOME SMALLER TEST CASES ARE ON THE DOCKET IMMINENTLY. DAMAGE WILL BE FELT ON BOTH ENDS, DEBTOR AND CREDITOR. A BIG NAME GERMAN BANK IS GOING TO FALL, AND SOON. $$$

German Finance Minister Wolfgang Schaeuble has recommended that no German banks on the verge of collapse should expect bailout money from the German Govt. According to Reuters, two mainstream German lenders, Helaba and NordLB, could fail during the next round of more stringent European bank Stress Test. Some real stress could be actually put to the exercise, unlike the charade last time both in the US and Europe. The results are due in June. Schaeuble is resolute in his position. He said, "If the results of the tests show a need for fresh capital, the bank owners are there to cover these needs. It is not the case that one can appeal to the state. The funds of Soffin (German's bank rescue fund) are not available for any new requests. It is no longer like in 2008 that there are no alternatives. We have an insolvency law." Schaeuble wants to require German savings banks and regional states with major stakes of ownership in the two lenders to prop up the banks, and therefore not turn to the German Govt fund for rescue. One can infer from a domestic bank aid policy so tight, that further German participation in more bailouts of the PIIGS sovereign debt is not to be tolerated. Both  Helaba and NordLB are small banks. The real test is for larger and more influential banks need money, like DBank. The stage is set for some banks in Germany to falter, fail, and fall. See the Economic Policy Journal article (CLICK HERE).

◄$$$ PORTUGAL ASKED FOR A BAILOUT. THEY WERE COERCED BY TRICHET AND HIS GERMAN HANDLERS. A CRISIS IS DESIRED, AN EASY OUTCOME WHEN PUSHED. PORTUGAL WAS FORCED TO SELL GOVT BONDS AT VERY HIGH YIELDS. THEIR SOCIAL SECURITY FUND SUCKED UP THE DEMAND. A TIME BOMB IS BACK IN LISBON, THE FUSE SET. ANOTHER BAILOUT IS ASSURED. NOTHING FIXED. RISING YIELDS HAVE ADDED GREAT STRAIN TO THE NATION'S BANKS, AS LENDING WILL BE CURTAILED. $$$

The Portuguese executive branch is in disarray. Its caretaker Prime Minister Jose Socrates finally submitted to central bank pressures after the toxic bond pillars in the nation became intolerable for the central bank to permit continuance. He has formally asked the European Union for financial assistance. The prospect of a bridge loan urged by their domestic banks was an idea that has been shot down. Socrates said, "We have reached the moment where the country is at too much risk. The country is at too much risk that it should not be exposed to. I always said asking for foreign aid would be the final way to go, but we have reached the moment. Above all, it is in the national interest." Until last week, the Lisbon leaders have stubbornly insisted they needed no aid, resisting pressures. They wanted to extend indefinitely, but were arm-twisted to force the situation. Finance Minister Fernando Teixeira dos Santos confirmed it was necessary to resort to financial aid. Portugal follows Greece and Ireland in seeking a bailout. The amount requested by them or required of them is expected to be in the range of 80 billion Euros (=US$115 billion). After missing the 2010 budget deficit target badly, and seeing a jump in the bond yield from a market rejection, they succumbed to external pressure. The nation is in disarray. Their one billion Euro in sovereign bond offering was accepted by the market, but at 9% yield, regarded widely as an insult and failure mark, a trigger for either extreme reaction or panic since unsustainable in debt service costs. Portugal's borrowing costs have risen sharply since the minority Socialist coalition resigned in March after the loud rejection of its proposed austerity measures in Parliament. Since then several rating agencies have downgraded the country's debt, and their bond yield has risen past the alarm level. See the British Broadcast Corp article (CLICK HERE). Keep in mind that past solutions like the IMF poison pill and EuroCB bridge loans have failed to remedy anything, period. See the Greek Govt bond at 13.8%, a shocking level that screams complete failure in restructure and rescue policy.

Portugal is in big trouble. They sold Govt Bonds at 5.117% for 6-month Bills, and at 5.902% for 12-month Bills. Worse, the auction barely averted a failure with insufficient bids. The national Social Security Fund was stuck with the load of bonds to purchase, probably with great reluctance, but equally great pressure. Expect no further auctions, as a failure would be assured. A formal bailout will be formed. The Portuguese Govt bonds have been in focus. The yield on the 6-month Bill has risen from 2.984% three weeks ago to over 5%, while the 12-month Bill has surged from 4.311% to almost 6%, both very damaging to debt service. These are short-term rates. The implication to their banking system is not mentioned, but dire. The banks cannot turn a profit in borrowing short and lending long unless the long rate marches over 10% soon. The same banks have been buyers of the government debt all during the bond yield rise, meaning they hold losing positions that eat up bank capital. Lending will be reduced. Bank analysts expect Portugal can slide along through April, but probably cannot move past June without a bailout. Two business newspapers said the public social security fund has been selling overseas financial asets to enable financing the sovereign debt at auctions. Since these bonds will eventually default, the citizens of Portugal who expect to receive pensions will soon be outraged to learn that a sizeable portion of their retirement capital will be wiped out. These EuroCB and IMF bankers learn nothing. It seems ruin is their objective goal. Witness a repeat of what happened in Greece last year. Furthermore, the longer it takes Portugal to admit defeat to the debt monster, the greater the cost for the restructure involved. See the Zero Hedge article (CLICK HERE).

◄$$$ GREEK GOVT DEBT REMAINS IN CRISIS, CHRONICALLY SO DESPITE THE CHARADE OF AID LAST YEAR. NOTHING WAS FIXED, JUST PATCHWORK THAT PROVIDED BIG BANK WELFARE BAILOUTS. THE GREEK DEBT WAREHOUSE WILL BE REVISITED AS THE CRISIS RETURNS. $$$

Europe has fixed nothing. The Euro Central Bank are accomplice the IMF has succeeded in aiding to a great extent the big European banks with considerable Greek debt exposure. But they fixed nothing. The IMF poison pill makes conditions much worse in the intermediate term, from which the nation taking the pill (austerity measures) cannot emerge. They sink into oblivion, the vast sea of unrecoverable debt. The Greek Govt debt situation has been ringing the alarm bell again. Even Gold & Silver respond in part to the morass. Clearly, the PIGS nations are in dire straits with no actual aid coming, only backhanded duplicitous banker welfare packages. Greece, Portugal, and probably Spain will soon have to leave the Euro currency community as stress reaches the limit. That is the German objective in my view. The EuroCB rate hike was in my view intended to speed up the process. Recall that Greece was supposedly resolved via bailout last May, and yet its 10-year bond has gone stubbornly higher, reaching 13.83% last Friday. Look for a renewed Euro sovereign debt panic. The safe haven is no longer the USDollar or USTBonds, neither benefiting at all from the chronic Euro debt distress. The new safe havens are Gold & Silver, and to some extent crude oil. As the sovereign debt continues to rupture in full view, the USTreasurys are more frequently regarded as a more elite but still broken equivalent to Greek Govt Bonds. One is left to ponder whether someday the USTreasury 10-year yield will shoot toward the justified 10% level. As long as the USFed has a firm grip of the Printing Pre$$, that is not likely. However, expect the USDollar to plumb new deep depths since it cannot be supported by the same monetary press. See the Silver Doctors article (CLICK HERE).

◄$$$ NO IRISH EYES ARE SMILING AS THE IRISH POLITICIANS CAVED IN TO THE PRESSURE FROM ANGLO BANKERS. ONE MUST WONDER IF VIOLENT THREATS WERE MADE ON THE ONCE FLOURISHING EMERALD ISLE. IT WILL CONTINUE TO DESCEND INTO THE ABYSS SLOWLY, EMERGING AS A DEBT SLAVE STATE. THE BANKERS WANT TO IMPOSE AN EXTRA PROPERTY TAX ON THE IRISH CITIZENRY. IT WILL NOT GO OVER WELL. $$$

Leaders of Ireland caved in to the Euro Central Bank, and will attempt a recovery with reforms on the backs of Irish taxpayers. The backs of citizens will be broken. The solution is bank owner bailouts with no losses to the elite. Costs to bail out bondholders of Irish banks has leaped to $142 billion. Bank bondholders will be protected, often from foreign lands. Ireland agreed to inject as much as 24 billion Euros into four banks, while forcing no bondholders writedown losses, more of the same coerced elite welfare. The stage was set to confront the bankers with solidarity. It did not happen. During an election campaign in March, the current Prime Minister Eamon Gilmore dismissed ECB President Jean-Claude Trichet as a civil servant who would answer to politicians. It seems Gilmore is the pawn. In late March, Agriculture Minister Simon Coveney promised to impose losses on senior bondholders in the banks, and thus to reduce the costs of its bailout. It seems Coveney is the other pawn. Citizens are outraged again. Gerry Adams is leader of nationalist party Sinn Fein. He said, "Rather than go after over 20 billion Euros in unguaranteed bonds, the government is making ordinary citizens bear the burden of this debt. Rather than act in the interests of the Irish people they are acting in the interest of the banks." Ireland proceeds down the path to become a debt slave state. See the Global Economic Analysis article (CLICK HERE).

The story of putting a knife in the backs of Irish citizens grows worse. The Irish Govt was ordered by the EU/IMF to impose a property tax on all homeowners within one year. The tax imposition and the precise timeline for its introduction are key requirements for Ireland to receive the 85 billion Euro rescue package from the EU/IMF. The Dept of the Environment confirmed that the tax will rise after its first full year. The so-called Site Valuation Tax, according to the Irish Independent newspaper, must be adopted by the end of December 2011, and must be increased by the end of 2012. The Fine Gael/Labour Programme for Government said only that such a tax would be considered. The battle is on. See the Irish Independent article (CLICK HERE).

◄$$$ ICELAND REMAINS FIRM AND RESISTANT TO ELITE BANKER PRESSURES. THE PEOPLE REJECTED A PROPOSAL TO REPAY THE BRITISH AND DUTCH BANKS. THE BATTLE IN ICELAND SEEMS NEVER TO END. $$$

Voters in Iceland rejected a government approved accord to repay $5 billion to Great Britain and the Netherlands. Defiance reigns supreme. Almost three years ago, these foreign accounts failed at the online bank Icesave. The referendum resulted in 59% rejecting, and 41% accepting. The vote reflects the Icelander anger at having to pay for the excesses of their bankers, and complicates the actual ongoing recovery from its 2008 economic collapse. It seems many Icelanders believe they should not have to pay for the mistakes of their free-wheeling banking elite. The ruling coalition has refused the call for new elections. See the Macon article (CLICK HERE).

JAPAN DISTRESS SPREADS GLOBALLY

◄$$$ THE BANK OF JAPAN IS RESPONDING TO A MOUNTAIN OF FUNDING REQUESTS AFTER THE EARTHQUAKE AND TSUNAMI DAMAGE. DUE TO CLEANUP COSTS, BOTH FROM GROUND DAMAGE AND CASH NEEDS FOR BUSINESSES, AN AVALANCHE OF COSTS TO COVER WILL COME FROM RECONSTRUCTION, FINANCIAL MARKET PROPS, AND INSURANCE AID. THIS STORY WILL LINGER FOR A FEW YEARS. THE IMPACT ON THE MAJOR ASIAN CURRENCY WILL AFFECT THE GLOBAL MONETARY SYSTEM. $$$

The Bank of Japan will soon offer temporary bank loans to aid companies with cash flow shortages. The plan has not been finally approved or made public. It should be complete by end April. A wide array of companies face funding challenges as they repair damage and continue wage payments while production is suspended due to power cuts and worksite (including manufacturing plant) damage. Companies are often running out of cash, and also concerned about the challenge of selling products due to the breakdown in shipping systems. They have difficulty in collecting debt and paying salaries. In general, sales are plunging, companies are running out of cash on hand, and great needs must be met for them to remain in business. Japan's three leading commercial lenders said corporations asked for loans totaling 2.6 trillion Yen (=US$31 billion) in the first two weeks after the quake. The first business day after the natural disaster, the BOJ injected a record 15 trillion Yen (=US$178 billion) into money markets. Prime Minister Naoto Kan has reacted to the monstrous destructive earthquake and tsunami in northeas tern Japan left more than 27 thousand people dead or missing. Another minor earthquake rattled the nation a week ago.

The official estimates have measured the direct damage to the Japanese Economy to reach 25 trillion Yen (US$300B), almost 5% of gross domestic product and double the 1995 Kobe earthquake. Estimates will surely rise. Numerous manufacturers large and small have suspended plant activities after the quake. In response, the BOJ has reacted with several programs, like funds into the financial system to settle uneasy markets, increased monetary stimulus by doubling the asset buying programs, and extended loans to major firms. The World Bank commented that it could take five years for Japan to rebuild, but they added a lunatic comment. It said their economy will return to normal very soon once reconstruction work starts. That is fantasy. Economists at Goldman Sachs Group foresee an expansion rate of 0.7% for the year starting April 1st, compared with a previous estimate of 1.3% for the year. Capital Economics projects a gross domestic product near zero growth for 2011. Sure not to lose face or show pessimism, the corporate chieftains in the manufacturing sector expressed baseless confidence. The quarterly Tankan index of sentiment among big manufacturers rose to 6 in March from 5 in December, with 72% of responses coming in by March 11th, the day of the quake. The Bank of Tokyo-Mitsubishi UFJ, Mizuho Corporate Bank Ltd, Sumitomo Mitsui Banking Corp each have been bombarded with lending requests, that might resemble bridge loans.

◄$$$ A JAPANESE ECONOMIC QUICK PLUNGE WAS RECORDED IN AN OFFICIAL STATISTIC. THE DAMAGE HAS RIPPLED ACROSS THEIR DIVERSE INDUSTRIES, WHICH HAVE SUFFERED POWER OUTAGES, SUPPLY CHAIN INTERRUPTION, LOGISTICS DISRUPTION, WORKER DISPLACEMENT, AND MORE. ALSO, NEW VEHICLE SALES SUFFERED A BIG DECLINE IN JAPAN. THE FALLOUT IS FAR & WIDE, CERTAIN TO CONTINUE. $$$

The Japanese Economic collapse was confirmed by the PMI measure. It plunged from 52.9 to 46.4, the largest drop in their recorded history. Their manufacturing activity slumped to a two year low in March and posted its deepest monthly decline on record. The supply chain disruptions and production curtailment has been confirmed. An economist at Nomura Securities expects March industrial output due at end April to show a monthly descent of at least 10%. The PMI index is closely correlated to industrial output. Furthermore, adding pain to the sudden collapse, price inflation has arrived. The nationwide input price index increased to 65.2, the highest since September 2008, due to higher costs of raw materials. Next on schedule is the worst stagflationary episode in the nation's history ever. The Japanese Economy has been devastated. The second phase will contain many nasty surprises, as outlined last month in the Hat Trick Letter. They will feature rising prices, still rising Yen exchange rate, trade deficits, and major struggles for their supply chain and export trades to remain profitable. They will spread the pain across the globe with interrupted supply at all levels. See the Zero Hedge article (CLICK HERE).

Japan's new vehicle sales also plunged in the aftermath of the historic earthquake. Sales of new vehicles in Japan have plunged, with car sales in March falling by 37% compared with the same month a year ago. Japan's auto sector has been hit hard in prominent noticeable manner with great publicity, since production at their biggest auto manufacturers was halted due to a shortage of parts and power cuts. The disruption of supply chain and shortfall of parts will render great harm to Japanese carmakers profits, and disrupt the global economy.

◄$$$ THE JAPANESE FALLOUT EFFECTS ON THE USECONOMY WILL CONTINUE TO BE PROFOUND. TOYOTA WILL SHUT DOWN ITS ENTIRE NORTH AMERICAN PLANTS DUE TO PARTS SHORTAGES FROM CERTIFIED JAPANESE SOURCES. THE JAPANESE SUPPLY CHAIN IMPACT HAS BEGUN TO BE FELT. THE PROCESS OF CERTIFICATION WILL BECOME AN IMPORTANT ISSUE, SINCE HIGH VOLUME IN SUPPLY IS PERMITTED ONLY AFTER CERTIFICATION IS WON. THIS IS JUST THE START OF THE IMPACT FROM THE FINANCIAL & INDUSTRIAL FALLOUT FROM THE EARTHQUAKE & TSUNAMI. NEXT COME THE TRADE DEFICITS. $$$

The earthquake, tsunami, and nuclear meltdown in Japan will have global consequences. My focus has been on the financial and economic fallout. Great strains on commodity supplies are assured from reconstruction demand, once the cleanup is completed and the situation has stabilized. It has not settled yet. The G-7 emergency meeting to support a Yen Selling Pact was the first indication of mild panic two weeks ago. Their actions have assured an ongoing increase to global monetization, the relentless ruin of money, and the further stress to the global monetary system. That means all major currencies will continue to be badly debased, valued less, purchase less, and earn less in yield to savers. The current global financial situation is not stable. Focus on the larger economic issues to see that for a brief period, a great dampening effect on the global economy is assured. The huge commodity price pressures will come from abundant USDollars and scarce commodities, once the reconstruction begins. It should be in full swing by summertime. Even the dull blades at the USFed have noticed a heavy dampening effect on the USEconomy from the Japanese economic fallout. They admit it is having a bigger impact than previously believed, according to their Beige Book survey. A majority of the 12 regional Fed districts reported "actual or expected disruptions to sales and production" as a result of the Japan earthquake. The report found that more businesses were trying to pass along higher costs to consumers but were having mixed success.

Toyota announced it will shut down all of its North American factories due to shortages of parts from Japan. Bear in mind that parts supply must be certified, as no half baked quick substitutes are permitted. This is a temporary shutdown to affect about 25 thousand US workers. The length of the shutdown is indefinite, depending upon the time required by Japanese parts factories to restore operations. Their US-based spokesman reported that Toyota in North America sources 15% of its parts from Japan. Supply disruption is not new, even for non-Japanese carmakers. In March, the General Motors Shreveport plant was shutdown temporarily due to troubles in Japan.

Remember the baseless nitwit reactive forecasts by the financial news media. In the following days after the earthquake, the CNBC clownish anchors and certain guests went on record predicting a massive surge to world GDP, courtesy of the Japanese disaster. They cited the reconstruction, an easy observation, but they overlook the initial damage and disruptions with the factory shutdowns, the cleanup, and restored stability. Later on, like in a few months, the reconstruction will begin but damage will linger. Commodity demand will surge, and activity will bustle. But the shock impact is not fully finished. The major news media is constantly spews mediocrity, in a consistent and often intentionally deceptive manner. Most analysis from a Wall Street firm goes directly opposite to what the firm is investing in, in conflict with their clients and their statements. See the Business Insider article (CLICK HERE).

Colleague Craig McC from California made a great observation. He said, "The impact of the disaster in Japan is starting to impact the global JIT (Just in Time) inventory systems around the world." In plain language, the entire world about 10 to 15 years ago reduced their inventory held within the supply chain for a wide array of industries. Warehouse activity was streamlined and inventory held cut down, with cycle time reduced. Instead of holding three or five months worth of parts, industries hold typically perhaps one to two months supply, maybe less. They cut their costs down by managing a tighter supply chain with greater efficiency. BUT ALSO LESS ROOM FOR ERROR, especially disruptions. Another colleague GeorgeL in Texas made a great observation also. He said, "Only in non-critical parts can the missing Japanese parts be easily replaced. All this stuff is certified by suppliers and tested for these cars in high volume. Anything with emissions, brakes, safety, drive by wire, ignition, you name it, will have nasty fall out. It takes many months to re-certify anything in these areas. Six months would be common. Now multiply that by how many parts systems and how many different models will be impacted. Eventually time to gear up maybe, but at higher prices. And besides, some production might be replaced by companies that produce the parts in China. Then come battles of patriotism and pro-American production. In the meantime, the USEconomy suffer substantially. In the vacuum, expect more QE and thus more price inflation in the cost structure." Expect amplified crisis.

My viewpoint is simple. Watch the factories to struggle as they scramble to replace their Japanese suppliers. They will try with only limited success to win supplies from non-Japanese corporations. Suppliers could be Siemens, Volkswagen, Delco, and others. The certification process is an obstacle. Let's see if some requirements are lifted temporarily in order to retain jobs and to keep workers busy. In several months, the suppliers located in Japan could take over control again, but different questions arise. The Japanese Yen might have risen to the point that profitability is not achievable by the same supply firms in Japan. The Japanese electronics and mechanical parts industry will suffer some major permanent damage that is not anticipated by the lazy devoted hack economists that fill our airwaves and newsprint.

◄$$$ YEN CARRY TRADE FALLOUT. IN TIME WHEN THE CENTRAL BANKS GO FOR LUNCH OR TO SLEEP, THE YEN CURRENCY WILL CONTINUE RISING. THE JAPANESE ECONOMY WILL SUFFER A DAMAGING RECESSION AND LINGERING TRADE DEFICIT THAT WILL NOT GO AWAY. THE PARADOX WILL BE THE RISING YEN, NOT DESPITE THE TRADE DEFICIT, BUT BECAUSE OF THE STUBBORN DEFICIT. WHAT ONCE KEPT THE YEN DOWN WILL DISAPPEAR, THE TRADE SURPLUS. SOME NEW WRINKLES COULD COME, LIKE SUBSIDIES TO JAPANESE SUPPLIERS WHO ARE DEEMED TOO VALUABLE TO GO AWAY FOR BASIC UNPROFITABILITY. $$$

Japan lost its trade deficit to China two years ago. They even invested in China like any capitalist enterprise, but in doing so they enabled their own lost trade surplus. Japan will not return to a surplus, my forecast since the Yen currency is in reversal of the last two decades of abuse. The Yen will keep rising. The profitable businesses in Japan along the supply chain will soon struggle mightily, as they will operate on the edge of unprofitable. Many might simply close down. The rising Yen will not go away, and will continue to aggravate the trade deficit. The disruption from the earthquake will not be rectified quickly. The entire reconstruction initiative, a national project, will actually require some imported items for the ongoing rebuilding of Japan. One must remember that Japan is not the US, which is ten times worse, with a staggering trade deficit and majority foreign debt ownership and inadequate industry and no savings. The Japanese own their own debt, mainly because no global financial firms care to invest in 1% bonds. The Japanese have an advantage that their pathetic JGBonds are priced out of the market. So few foreign entities own much of any of the Japanese Govt Bonds. But they do own almost $800 billion in USTreasury Bonds, at risk of liquidation in part.

The paradox upcoming is that the Yen currency will continue to rise, and form a new vicious cycle. Each trade deficit quarter will aggravate the Yen to rise more. Companies and the Japanese Govt will struggle to sell off foreign assets in a desperate fight to avert local domestic price inflation. The objective will be toward PAYGO, to pay for the reconstruction as much as possible, especially after prices start to rise. The example on the clear erosion from a rising currency is Canada after the Canadian Dollar went above 90 cents (in US$ terms), its export industry started to pull back. The Japanese electronics, audio visual, camera, car, construction equipment, machine tools, and chip industries will soon feel the pinch of the higher Yen, a double slam on top of the earthquake disruptions of factory flow. Everyone assumes things about Japan, but many are just wrong. Japan is changing, and the third wave of unwind Japan Carry Trade is here in force, loud, nasty, powerful. The central bankers will meet again, and they will focus once more on the rising Yen as an agenda item. Watch the trade deficit announced for Q1 grow much worse in Q2, and not come down in Q3. Watch the Yen push upward.

Usually when a trade gap widens, the domestic currency is pulled down. Not with Japan, never with Japan. To correctly analyze the Japan trade factor, one must comprehend the last 20 years. Japan used to run a trade surplus annually, yet their currency remained down for two decades or more. To understand why reveals the essence of what comes next. The answer is that they rode herd and supported the Yen Carry Trade, with great abuse, a free lunch, and a huge imbalance to show for it. That built up excess will next work to completely unwind. They purchased US$-based assets, mostly USTBonds, with trade surplus money. They knew the Bank of Japan, and even more so the Japanese commercial banks, were doing the same thing. The motive for the YCTrade was not just profit, but support of the export trade business with a cheaper export item. That business will get slammed next, as the reversal takes hold. Look at any long-term Yen chart and you see the exchange rate suppression. The nation of Japan has been home to a loyal lackey central bank, a provider of staggering consumer supply chains, and more. They recycled their trade surpluses into USTreasurys dutifully. They willingly served the US cause and bought the US debt. Back then, the US blithely and stupidly believed the national interests were served by a strong USDollar. It served mainly the financial markets, while it killed US industries in the tangible sectors. China followed the same recipe, accumulating massive USTBonds. However, China has turned adversary recently during an escalating trade war and a power struggle for global dominance. In the process it has been dumping USTBonds, earning the US anger and retribution. So everything China does is viewed with suspicion, anger, and bias.

The Bank of Japan will no longer be able to do what they had been doing to push down the Yen exchange rate. Worse, it will go into reverse. The BOJ was a heavy YCTrade investor, so they will want to avoid losses in the big positions from a rising Yen (the short side) and falling USDollar (the long side). The same paradox of a trade surplus but weak currency will reverse, TOTALLY, and with a degree of notable symmetry. They are stuck with huge domestic government debt, and are ripe for a hyper-inflation event. So Japan will sell foreign currencies everywhere, from all pockets of their embattled economy. They will keep the pressure enormous on the USFed to buy everything that Japan sells. The Global Quantitative Easing will escalate and become a global monetary policy, part of the fabric. The earthquake served as the trigger to turn the dial into REVERSE, and with gusto. Urgently, Japan will unwind the Yen Carry Trade without any direct plan to do so, just plain expedience to avoid losses and not be squeezed.

Each financial entity (commercial bank, insurance company, pension fund, hedge fund, mutual fund) will act independently with basic prudence, deciding to take action to avoid new debt, since all Japanese debt will be very challenged soon. Many of the same firms will dump the US$-based bonds before the other guy, since they will face realized losses. Many good analysts will get this wrong. Many will use standard finance textbook formulas, and apply them in error. They have not appreciated that past Japanese trade surpluses were precisely what fed the investments to suppress the Japanese Yen currency, and now those surpluses are gone. Next, their export trade business must deal with vanished profit margins from a much higher Yen still near 120. The Yen started the year 2010 at 107 or so. It spent all year 2009 between 100 and 115. The current pressure on profit margins has been a new detriminental factor for two years. The new wrinkle could be Japanese electronic suppliers being subsidized by the JapGovt. Even more unorthodox, watch for foreign nations offering to subsidize the Japanese suppliers, since they are so competent, so high quality, so necessary, and not replaceable.

◄$$$ JAPAN HAS SERVED AS A DILIGENT LACKEY IN SUPPORTING THE USDOLLAR DOMINANT GAME FOR 30 YEARS. NEVER ACCUSED AS THE CURRENCY MANIPULATOR, JAPAN HAS KEPT ITS YEN LOW JUST LIKE CHINA, SO AS TO PROTECT ITS EXPORT INDUSTRY. NEXT THE PROCESS GOES INTO REVERSE, AS US$-BASED ASSETS ARE SOLD IN TOKYO FROM SEVERAL CORNERS. PRESSURE FOR THE YEN TO RISE WILL BE  UNSTOPPABLE. $$$

Japan has been already severely weakened by a chronic economic crisis that has lasted for twenty years, aggravated by government debt as one of the largest in the world. It faces the task to finance a large scale reconstruction on the one hand, to manage under limited energy plants in operation on a second hand, and to overcome the disruption of commercial and industrial supply chains on a third hand. This global financial crisis requires all hands on deck! The nuclear impact will not be discussed. Clearly dead radiated bodies cannot work to push their national economic engine, and people displaced from their homes cannot work effectively. Japan and Tokyo serve as extremely important legs on a global stool. Tokyo is one of the world's major financial centers, and one of the three management hubs of the foreign exchange markets. The Japanese Economy supplies a significant quantity of electronic components vital to the global economy. Japan has an impressive $5.4 trillion GDP, at 9% of the global economy, for a nation of 127 million people. It supplies 44% of audio visual equipment, 40% of electronics equipment, and 19% of semiconductor output. And now it is badly wounded, a third leg on the stool weakened. The world is soon going to find out how important Japan has been for the United States (with United Kingdom overlords) to manage global economic, monetary, and financial affairs for over fifty years. The Bank of Japan has been an obedient servant, rumored to be kept under US control by hefty contracts paid to the Yakuza (Japanese Mafia) by the CIA for four decades. Thanks to the Global European Anticipation Bulletin.

Watch the Japanese Yen currency, which has enjoyed a positive bounce. It is caught between the important 20-week moving average and the 50-week MA, awaiting a direction. My forecast is the Yen will move upward past 120 and test the 125 level again, causing renewed alarm to the major central bankers who coordinated their Yen Sale Pact. The Japanese financial firms will busily sell their US$-based bonds to support their financial markets, to revamp their damaged businesses, to clean up the flotsam & jetsam, and to rebuild their ravaged infrastructure. Japan own a mountain of USTBonds and US corporate bonds, much to be liquidated, all in the national interest. As they liquidate, they will be joined in earnest by the Yen Carry Trade crowd, whose 20 years of speculation has entered its third and final phase in unwind. The previous sizeable national trade surplus is gone, to be replaced by a trade deficit, to linger in stubborn fashion. Thus, their war chest to keep down the Japanese Yen has vanished. The Yen will rise and cause profound problems that will kill off important global supply chain firms. The whiplash will cause more global economic slowdown, a very unwanted development. All the while, pressures will come to the surface for Japan to lift the yields on the Japanese Govt Bonds in order to attract more funds. A vicious cycle will result.

CURRENCYS STRAIN TO BREAKPOINT

◄$$$ A NEW I.M.F. CURRENCY BASKET REPRESENTS THE FINAL DESPERATE ATTEMPT TO HOLD ONTO THE FIAT CURRENCY SYSTEM. IT IS PRICE FIXING, NOTHING MORE. THE MAJOR FIAT CURRENCYS WILL BE TIED TOGETHER, THUS ELIMINATING THEIR RELATIVE EXCHANGE RATES. THE END RESULT WILL BE EQUITABLE HYPER-INFLATION AS THE ENTIRE COST STRUCTURE WILL RISE UNIFORMLY VERSUS ALL THE DOMINANT GLOBAL CURRENCYS. ITS ONLY SUCCESS WILL BE A HALT TO THE USDOLLAR DECLINE VERSUS ITS COMPETITOR CURRENCYS. WITNESS THE ACTIVE AVOIDANCE OF A GOLD STANDARD. $$$


The global financial players are desperate. They see the USDollar dying a gradual inexorable horrible death, unleashing price inflation. So instead of price fixing of end products or commodity supplies, they will attempt to fix the exchange rates of the major currencies within a pathetic concoction of an IMF basket. They might give it a snappy name or a spiffy package, but it is still a group of broken fiat currencies in their last gasp before heading to the trash heap. The sovereign debt backing for each currency is strained to the debt limits, broken one and all. Debt kills all when in excess, and most major currencies are tightly linked to huge growing debt obligations. So a currency exchange rate fixing will be attempted, with an IMF blessing. My conclusion is that they will tied together in order to die together, bound like four men in an ocean, arms and legs intertwined and therefore inflexibly useless. None of the four can swim, therefore they will drown together as a bound unit. The wonderful part of the floating currency system used to be that the punished nations responded. No longer. They are all devious turned diabolical. Witness a desperate attempt to rescue the fiat currencies, as they observe the horror unfold with the USDollar. If it falls much more, a certainty, the commodity basket will rise in price sequentially, add great strain to the entire cost structures, and perpetuate the economic recession the Western world is mired in.

My belief is that such a rigid IMF basket regime cannot survive more than 6 to 10 months. Despite an impressive name the Special Drawing Rights, it will not survive long. The name New Reich Marks might be more fitting, since the same Weimar spirit has been revived in them. The grotesque expedited monetary expansion will continue, since government debt will continue. More accurately, the expansion will continue because the buyers of sovereign debt are saturated in their reserve holding accounts, and have lost their appetite for further purchases. Thus the many printing presses will go to work endlessly, until the global monetary system breaks. It will break from lost confidence, aggravated by rabid price inflation. The process has begun. The bankers in charge will make a grand error by preventing wage growth. That will cause the profit margins to vanish and vaporize, due to the rising cost structure unmet by the ability to cover the costs. The IMF will effectively halt the USDollar decline versus the other major currencys, and in that respect the hack bankers and economists will proclaim a victory. They wil lie about price inflation, in order to protect their sovereign bonds. As a result, the cost structure will rise uniformly versus all major currencies, all of them. That is no solution!! The central bankers working in collusion will achieve a uniform equitable hyper-inflation as their reward.

Gold mining enthusiast, statesman, and cheerleader Jim Sinclair pitched in with some details. He wrote, "The new reserve currency will be a virtual currency (an average of the major currencies). It will be (remotely) tied to Gold via a worldwide M3 type liquidity. It will not be convertible (will be used between central banks, not us). Today's existing currencies will continue to be used but valued one to the other. A measure will be created similar to the old M3 (which reveals government pumping) but to reflect their entire past money creation. Upon initiation, the M3 level and the level of Gold will be considered as 100 on the virtual index. Contributions of Gold to BIS or IMF (agent of the virtual reserve currency) to participating currencies in the index will have to rise to meet rising liquidity. All situations, like now, will resolve themselves via a commodity currency. That is the entire story." This is a formula for uniformly applied inflation, nothing more, laden with elaborate inflationary levers and valve meters. The gold contributions will have to be enormous, unwieldy, and impossible. Nothing can be tied to Gold in this manner, since the monetary expansion will continue almost without limit. The Gold price will explode upward beyond the official bounds if they attempt to control. Their attempts might actually force a breakdown in the monetary system from heavy handed controls. This is a farce, a desperate attempt to avoid the obvious requirement, a Gold Standard.

◄$$$ EXPECT A NEW GLOBAL CURRENCY CHARADE. THE INTL MONETARY FUND PLAN IS JUST A REPACKAGED VERSION OF FIAT CURRENCIES. IT INVOLVED AN ATTEMPT TO FIX EXCHANGE RATES, AND THUS TO PREVENT A USDOLLAR COLLAPSE. INSTEAD THEY WILL EARN A COLLAPSE OF ALL MAJOR CURRENCIES IN UNISON, AS GOLD & SILVER RISE LIKE A PHOENIX. $$$

The following thoughts and conceps taken in excerpt from a chapter by Ellen Brown from the new book entitled "The Global Economic Crisis: The Great Depression of the XXI Century." The goal is to act together to fulfill pledges to bring the world economy out of recession and to prevent a crisis from a recurrence later. Commitment to restoring credit flow is paramount, consistent with the G-20 framework toward the repair of the financial sector. The adoption of the IMF basket, called formally the Special Drawing Rights, comes with a promised injection of $250 billion into the world economy. That sum is a lure for acceptance of a flawed plan. It will increase global liquidity at a time when liquidity is not the problem. The challenge is clearing out the forests of insolvency, from dead banks to wrecked sovereign debt structures. Too many giant banks remain sacred. One must wonder if the Group of Twenty nations (G-20) contemplates the creation of a global central bank.

A while back in the midst of deep acute crisis, when the global central bankers met in WashingtonDC in September 2008 at the height of the financial meltdown, they discussed what body might be in a position to serve in that awesome and fearful role. A former governor of the Bank of England stated, "The answer might already be staring us in the face, in the form of the Bank for International Settlements (BIS). The IMF tends to couch its warnings about economic problems in very diplomatic language, but the BIS is more independent and much better placed to deal with this if it is given the power to do so." The IMF is a US-UK banker tool of financial violence. The BIS is the century old center of the financial syndicate, whose track record is ensconced in secrecy. Check its history, not my job, too dangerous. Its nazi roots are well known, well studied, and ominous. They might prefer to work in the shadows, where they are powerful and dominant among the central banks, quick to offer a Gold Swap, and eager to write a deceptive story like in August 2010 about the Portuguese central bank deflecting attention away from a BIS gold provision made directly to the COMEX to prevent a default. See the Market Oracle article (CLICK HERE).

◄$$$ THE I.M.F. OFFERED DETAILS OF THEIR AMERICAN VERSION OF POISON PILL. WHILE MAKING BASIC SENSE, IT WOULD RESULT IN QUICKER COLLAPSE, LIKE IN ALL NATIONS WHERE THE PILL HAS BEEN SWALLOWED. NO MENTION IS MADE OF ENDING THE WARS THAT COST $1 BILLION PER DAY FOR MAMMOTH SYNDICATE PROFITS IN NARCOTICS AND MILITARY SERVICES. $$$

One must decide alone after long thought if it was an April Fool joke. The Intl Monetary Fund actually offered its version of a USGovt spending reform plan. They specialize in poison pills without a pharmacist license, while delivering similar solutions as Dr Kevorkian. Their objective is to contain future yawning budget deficits. Obviously the answer to any question of how the USGovt deficits will be financed is the USFed, by means of a USDept Treasury sponsorship of USDollar creation off a Printing Pre$$. The IMF recommends an immediate slashing of all US entitlement benefits by a whopping 35% combined with a hike in all tax rates across the spectrum. Gee! That worked for Greece, as they snapped right out of the big black hole. NOT!! The IMF wrote, "This paper applies the methodology of generational accounting to establish how the burden of adjustment required to attain fiscal sustainability is shared across generations. We find that the US fiscal and generational imbalances are large under plausible parametric assumptions, and while not much affected by the financial crisis, they have not improved much by the passing of the Final Healthcare Legislation. We find that, under our baseline scenario, a full elimination of the fiscal and generational imbalances would require all taxes to go up and all transfers to be cut immediately and permanently by 35%. A delay in the adjustment makes it more costly."

The IMF actually stated the financial crisis have not affected the fiscal deficits. What nonsense drivel! The urged tax hikes would result in less tax revenue, evidence the last generation. Their sage prudent timely counsel is not desired, offered more as comic relief during an American Tragedy. For icing on the cake of fools, the IMF thanked Larry Kotlikoff for his unique inspiration in a consulting role. It was the same Kotlikoff who has made it all too clear the USGovt is bankrupt. Notice the under-statement of the Obamacare reference, which has added to costs for both the USGovt and businesses, certain to reduce actual health care administered. See the Zero Hedge article (CLICK HERE). The funny part is that vast cuts to entitlements are due, but so are vast cuts to defense spending, an end to the wars that cost $1 billion per day. The newly forged agreement, made under severe defense lobby pressure, will contain $700 billion in defense spending, a $40 billion boost over last year. The decision came after a long struggle between lawmakers and the Pentagon, which obviously cited the need for preserved national security. My forecast for the last few months has been for zero cuts to defense, the sacred cow that eats the nation's capital and dominates the debt parade. The IMF did not touch the sacred wars. A full revamp of corporate taxation is urgently needed, to encourage business formation and job creation. The USEconomy needs to be recapitalized, and the national leaders do not realize this basic prerequisite. Oppressive USGovt regulations obstruct the business sector in the USEconomy, a concept not understood by meddlesome myopic leaders. The main beneficiaries of war at the narcotics syndicate within the USGovt security agencies and the USMilitary contractors led by Halliburton. Some extremely dark forces operate in both respective wings.

◄$$$ USDOLLAR DECLINE WILL CONTINUE AND EVEN ACCELERATE. FACTORS RELATE TO THE MIDDLE EAST AND NORTH AFRICAN NATIONS, WHO FIND FAVOR IN THE EURO CURRENCY AS A TEMPORARY PORT FOR STUFFING RESERVES. THE EFFECT ON THE USDOLLAR IS BREAKDOWN BELOW SUPPORT FROM THE LAST TWO AND THREE YEARS. THE B.R.I.C. NATIONS HAVE THEIR OWN MOTIVE TO MOVE AWAY FROM THE USDOLLAR ON GLOBAL TRANSACTIONS. LED BY ASIA, CREDIT FACILITIES IN RESERVE ACCOUNTS WILL BE YUAN-BASED. THE DEVELOPING ECONOMIES ARE SHOCKED AT THE USDOLLAR DEBASEMENT. $$$

Faros Trading provided a solid brief cogent piece of analysis on the USDollar's extreme vulnerability. Its decline will continue, even accelerate. Some important points are worth noting in the details offered. They said, "For the past nine months Asian reserve managers have controlled the direction and to an extent the pace of USD weakness, whether valued in terms of the USD/Index or the EUR/USD. Three months ago they were joined by Latin American central banks, as they sold the USDollars that they were buying each day to keep their own currencies relatively weak on an export competitiveness basis. The Latin American and Asian central banks have been happy to work bids in the market, passively adding liquidity rather than taking it.  They have done this by working bids below the market, relying on the market to come to them as peripheral fears, and interest rate differential changes result in bouts of USD strength. This passive strategy of USD selling has worked for some time, and the players have been content with the pace of the move and the liquidity they have been absorbing. The game has changed.

The Middle East has changed the game because they are forcing Asian reserve managers to question their passive strategy. If Asian central banks are passive, they miss buying the EUR/USD at 1.4040, because the Middle East is front-running their orders. This has caused a number of Asian reserve managers to raise their bids in the EUR/USD as the market rises. In effect, through frustration, Asian reserve managers are moving from set bids to rolling bids,.i.e. set a bid 50 pips below today's high. This strategy could see faster moves to the topside in the EUR/USD in the months ahead. It could certainly steepen the slope.

We find it especially interesting that Brazil allowed the BRL [Brazilian Real currency] to strengthen to 1.6280 today, just as Brazilian and Chinese relations have recently warmed, specifically regarding the issue of the Yuan, but also given that President Rousseff's first state visit will be to China on April 11th. We believe the only reason Brazil is allowing the BRL to strengthen is because they expect China will do the same going into the G-20 meeting on April 14th. Further CNY [Chinese Yuan currency] strength equates to further USD weakness. We continue to call for 1.5000 in the EUR/USD over the next 3 months. The game has changed."

The flight out of the USDollar is accelerating even as it broadens. For a period of time, the Euro currency despite all its shortcomings appears the favored temporary port in the FOREX stormy waters. Export nations like Brazil, South Korea, India, and China had been accumulating USTBonds in order to prevent their domestic currencies from rising enough to damage the export trade. No longer. When they say "working with bids" passively, they mean accepting them, selling into the visible bids in the FOREX market. The change is that passive has turned active. They have increased the liquidity in USDollar sales by encouraging more sales, at lower levels, sending the USD down. One must factor in a new dynamic. The Middle East and North Africa situation has caused a further push out of the USTBonds held in reserve by the array of oil producing nations. They react to the US actions in the military front and the USFed monetary front with greater sentiment, even high emotions. They are exiting US$-based holdings, when they observe American made weapons killing Moslems. The choose the Euro for an alternative with liquidity, not for its strengths. See the King World article (CLICK HERE).

Jim Sinclair commented about the BRIC movement on what used to be the global fringe, but in recent years has become the alternative core. Asia will develop its reserve currency credit facility. More trade settlement will be conducted in non-US$ terms. A general shock, anger, and disgust has come to the developing nations over the continued systematic debasement of the USDollar. An important meeting took place in Asia among developing nations. Sinclair wrote, "The BRICS (Brazil, Russia, India, China, & South Africa) came out with a statement calling for a revamped global monetary system that relies less on the US dollar. Meeting on the Chinese island of Hainan, the group agreed to establish mutual credit lines denominated in their local currencies, NOT in US dollars. They also stated that the current financial crisis had exposed the inadequacies of the current monetary order (code word for dollar). The BRICS are very concerned right now about the inevitable dollar devaluation due to out of control spending and deficits in Washington. They also were frustrated with the advantages and privileges that the United States has controlling the reserve currency, calling for a new broad-based international reserve currency system providing stability and certainty in an official statement. These statements all come out just after Congress and the President agreed to spend and borrow more for fiscal year 2011 then they did in 2010. The USGovt will need to borrow at least another $trillion in order to get to October." Notice that the BRIC nations have already begun to conduct transactions in their own currencies, pushing for a new reserve currency. They are supporting the flawed IMF basket reserve currency plan, simply because it removes the USDollar from the helm control. My belief is they regard the SDR basket as a stepping stone to both the USDollar removal from dominance and the creation of a new legitimate global currency later. The IMF SDR is thus a bridge tool from their perspective. They are importing record amounts of Gold & Silver either as a hedge against the USDollar decline or in preparation of a new global currency. Meanwhile, the entire world seems to avoid recognition of what Sinclair calls the mother of all bubbles, the USDollar bubble. Actually it is the very same USTreasury bubble.

◄$$$ THE USDOLLAR CANNOT SURVIVE THE CRISIS. BUYING TIME SOLVES NOTHING, AS IT ONLY EXACERBATES THE PRICE INFLATION SCOURGE. PRESERVING THE BIG USBANKS REQUIRES HUGE CONTINUOUS PAYMENTS FROM THE NEW MONEY SPIGOT. THE WORLD IS PREPARING FOR THE DAY WHEN THE USDOLLAR DOES NOT DICTATE THEIR FATE. SINCE CHINA PROVIDES MOST FINISHED PRODUCTS, A YUAN CURRENCY HELD IN RESERVE MAKES SENSE. THE BIRTH OF CHINESE YUAN IN BANKING RESERVE SYSTEMS IS SOON TO EMERGE. $$$

The catalyst for major currency crisis in progress is clearly the Quantitative Easing program by the USFed, printing new money to cover the unwanted USTreasury Bonds. In effect, the reckless USCongress from runaway deficits, the unchecked Wall Street bond fraud, and the ruined US housing market have driven away foreign creditors. The USFed with each passing month is more isolated as the only USTBond buyer. Ending QE2 ending would cause a certain rise (maybe a spike) in interest rates, trigger a renewed banking crisis, and inevitably unleash a debt crisis that would lead to a global run on the USDollar. Unfortunately, the extension of more QE, like a QE3, will serve only to delay the inevitable and make conditions much worse in the end. Each new QE round guarantees a higher cost structure for the USEconomy and most of the world. My forecast is for global QE as the USFed conceals the QE within routine policy, going so far as to lie and claim it has ended and fulfilled its purpose. A formal new QE3 launch announcement, still a highly likely event, will probably be blamed on the Japanese natural disasters, as well as on China for its withdrawal of USTBond purchases. Even with a QE3 program, the coordinated central bank strategy will incorporate a hidden QE element to gobble up the discarded USTBonds like from Japan. The sphere of confidence is being entered, a highly sensitive and risk filled environment. A formal QE3 would signal to the world that no hope should be held for the USGovt to ever manage its debt. It would signal an admission that the USEconomy is propped up by fiat phony money. It would signal that price inflation will ramp up to wreck the businesses and households within the United States. It would signal that foreign nations must quickly defend themselves against the USFed, which exports higher costs from its extremely high volume of USDollar spew. That defense must be to replace the global reserve currency. A spike in the crude oil price could literally be the final nail in the coffin of the USDollar and its road car USTBond. The result would be a quantum jump in costs, supply shortages for a raft of commodities, and a renewed debt crisis. The next stage could very likely see widespread consumer defaults on both home mortgages and credit cards in order to buy food & fuel and other household needs. We are talking about survival tactics.

The United States leadership faces critical junctures. USGovt spending must make significant reductions, not likely. The haggle over a mere $40 billion was symbolic of political resistance, but more importantly evidence of futility. It amounts to only 1.05% of the projected 2011 budget. The sacred wars in Afghanistan and Iraq cost $1 billion per day. The benefits are rarely argued, since patriotism attacks are frequent at the ready. The USEconomy desperately needs a return of its industrial base, a recapitalization after its abandonment to China from 2002 to 2005. The nation seems unaware of where legitimate income comes from and its value to a national economy in the fight against debt propagation. The world is not standing still. The world is departing the USDollar, planning on a future without its omnipresent intrusion, and forging new alliances.

The Chinese Yuan has emerged as a viable competitor to share the global reserve function. The Yuan is a natural to supplant the USDollar since so much trade is conducted with China. If nations wish to be ready to make payments for Chinese finished products, then the natural denomination to store large blocks on funds within a national financial framework is the Yuan itself. They will no longer bother with the infected bloated and fraud-ridden USDollar, tarnished by war stains. Then comes the painful effect. When the world no longer need USDollars in gigantic systemic foundation blocks, the world will demands higher interest rates for USGovt debt. If the USFed and USDept Treasury react by installing QE machinery in hidden basement locations, laced with deception, the effect will be seen as higher domestic price inflation in the USEconomy. As wages will not keep pace, the damage will come in the form of business cutbacks and shutdowns, and nasty rounds of job loss later in 2011. The retail spending machines, a reflection of the grotesque imbalance, will work in reverse. For a good essay with many fine points and a good broad perspective, see the Future Money article (CLICK HERE).

◄$$$ THE DECLINING USDOLLAR IS THE SINGLEMOST CRITICAL METRIC OUT THERE IN MY VIEW. WHEN NATIONAL ECONOMIES FRACTURE FROM A BROKEN FINANCIAL SYSTEM, THE CURRENCY IS THE MAIN FOCUS. A RUINED CURRENCY IS LIKE A TOXIC BLOOD IN CIRCULATION. RESULTANT INFLATION IGNITES PRICE INFLATION. NO EXPORT ADVANTAGE WILL COME, SINCE HIGHER COSTS NULLIFY THE CURRENCY DISCOUNT. $$$

Significant deception has already started on the USDollar descent below critical support. It will not result in much of any export trade stimulus, no benefit. Instead it will unleash price inflation in vast capital destruction. The wreckage will be from the inside of business sectors, and from inside housholds. As the USDollar sinks, now under 75 again on the DX index, the nonsense is that it will spur the export trade and lead to new jobs. Aint gonna happen. The export gains from a cheaper US$ will be minimal. The US industrial base lacks the critical mass. Instead, it is a signal of the death of the USEconomy from the powerful price inflation burning platform. Business capital will strain to turn a profit amidst rising costs. Capital will exit the economy, or retire, may be liquidated. Notice how the DX index recovered with a bounce in November, only to be halted when it reached the moving averages as resistance. Its situation is more vulnerable under 75. The next critical support is 72. The halted bounce in January removed the oversold condition, which tends to linger for a long time, given the extremely horrendous fundamentals that cannot improve. If the US leaders wish to see a bonafide currency advantage for exporters, then a 30% decline in the USDollar would provide the incentive. A few percent means very little. The rising cost of raw materials for inputs to industry will offset much of the currency discount gains. The end result is the US will remain uncompetitive. It is continually amazing that economists do not see how the USEconomy is suffering the worst in cost shock among all industrialized nations, because the USDollar currency is the weakest. Its advantage is nullified by the rising costs. Export industries have higher input costs!

◄$$$ USTBOND DEBT HOLDERS MUST FACE THE POSSIBILITY OF A DEBT DEFAULT BY THE USGOVT. EXPECT IT TO BE PRESENTED AS A DEBT RESTRUCTURE. BEFOREHAND, THE USFED WILL CONTINUE IN ISOLATION AS USTBOND BUYER OF LAST RESORT. THE USECONOMY IS SET TO ENDURE SOME MASSIVE SHOCKS IN THE 2H2011. $$$

A key unexpected consequence of the Japanese natural disasters has been the weakening of the already shaky USTreasury Bond market. Anticipate the sudden shock experienced by the Japanese Economy that will lead to the halt in USTBond purchases by Japan, followed by outright sales of the same beleaguered securities in the midst of a massive bubble episode. Another nasty theme is how the sequence of Arab revolutions could endanger the all-important Petro-Dollar. It has served since the 1973 oil embargo as the corset that holds the American chest of state together in a profound financial sense. It trades Saudi and Emirate royal protection of their vast pillage of natural wealth in return for the American credit card shoved down the world's throat. Neither end is worth preserving. The key indicator is any curtailment in the usually massive purchases of USTreasury Bonds by the Gulf States. Consider that Japan and the Gulf States alone accounting for 25% of the total $4.4 trillion of US federal debt, as of December 2010. Seed are being sown for USTBond collapse, in the view of the LEAP/E2020 folks in Paris, a solid prestigious analytic house. Adding to the caustic mix in the cauldron is China, which has shown an increasing reluctance to continue to invest in USGovt debt.

The end result is USFed isolation as the primary and soon the only buyer of USTreasury debt. Therefore Quantitative Easing will continue with or without a label. The Paris outfit believes the seeds are sown for the possible collapse of the USTreasury Bond market in the second half of 2011. A chorus of wrecked sovereign bonds surrounds the USTBonds like hand maidens. Observe the European government debt, especially along the Southern periphery where PIGS roam, even the United Kingdom. Like wilted flowers tossed by the hand maidens in wait, the local US authorities struggle to keep their municipal and state bonds from default or ruin. Never lose sight of the fact that PIMCO, the world's largest bond fund, ditched and sold all the USTreasury Bonds in the fund managed by Bill Gross. As of February 2011, Gross abandoned all, and decided to liquidate its USTreasury Bond holdings. Then came the disaster in Japan afterwards. The rumor nowadays is that PIMCO has taken a substantial short position against the USTBonds. Check out the USGovt creditors. They will make up the receivership committee upon debt default. The USGovt will try to exert pressures to prevent it, but the outcome is inevitable. Fast rising price inflation will give way to rabid hyper-inflation, which will render the USTBond as toilet paper that show brown stains in the proper light.

Internal to the United States, the threat of US federal debt market implosion in the second half of 2011 is growing gradually. Under the threat, four factors seem evident to LEAP/E2020, each extremely important:

  • Introduction of austerity in the USGovt budget, whose fallout will be municipal bond starvation and perpetual crisis
  • Impossible for the USFed to introduce QE3 openly, forcing it into hidden integration
  • The inevitable rise in interest rates against a backdrop of global inflation in the middle maturities, between one year (controlled by the USFed) and ten year (controlled by JPMorgan)
  • The end of safe haven status for the US currency in decline and USTBonds that yield nothing.

These factors, presented in excellent summary form, are inter-related within events in a powerful manner. So much intervention has taken place in the last 20 years that all markets and economies are tightly woven together by long prop wires. During a major crisis, a mutual strengthening of their effects will occur, as action resembles the fall of dominos. Look for a possible climax in the form of sudden shock in the second half of 2011. Their GEABulletin actually expects the shock to begin in 2Q2011. The GEAB folks point out that the USCongress and Executive increasingly display the absence of leadership, the look of fools tossed about by events, lacking any cohesive strategy, incapable of action to bring about change in a positive direction, stuck in partisan politics, obviously not acting in the public interest. Watch for reactions to any heaving and moaning that might emerge from the USTreasury Bond complex. The US ship of state shows a paralysis in decision making capability.

◄$$$ THE BRIDGE FROM COST INFLATION TO SYSTEMIC PRICE INFLATION IS MURKY. IT FINDS A WAY AS IMPLOSION IS AVERTED. THE KEY IS LABOR WAGES. THE GREAT FOUNTAIN OF FUNDS FOR SPILLOVER IS LOCATED IN THE USTREASURY BOND BUBBLE. PRESSURES RISE FOR HIGHER WAGES. GOLD WILL RISE FROM SYSTEMIC BREAKDOWN WITHOUT WAGE GROWTH. GOLD WILL RISE FROM SYSTEMIC INFLATION WITH WAGE GROWTH. $$$

The most confusing element to this hyper-inflation threat is the labor component. The Deflationists constantly mention that all will implode since nobody will have enough money on the margin, and all commodity prices will crash. They are correct about the squeeze, as the cost squeeze continues to remove profit margins for businesses and discretionary funds for households. They have consistently been dead wrong on asset prices, led by crude oil wrong forecasts and gold wrong forecasts without apology or explanation. The storm has two sides, and they are blind to the high pressure zones where central banks add to the monetary supply. The primary destination of inflation pressures has been on the cost side of the equation. The people no longer have their home equity ATM at the ready. My forecast is for more job cuts as the squeeze harms businesses which reduce investment, and households which reduce spending. In the vicious cycle, the USFed and USGovt will increase the flow of phony money. Federal deficits will rise toward $2 trillion to shock the world, recognized later this year. The key to watch is wages. The mountainous supply of money can come from the USTreasury Bond bubble as the ultimate source to prevent systemic implosion. More USGovt handouts are coming, but they will feel like coins to a homeless man panhandling for a meal. If a national living wage hike is ordered by the USGovt, then all hell will break loose from mandatory wage increases. The entire US system desperately needs the USTBond funds to be unlocked and released. It is unclear where else the money for wages can come from to trigger the hyper price inflation. Businesses will not have the cash flow for higher wages, which will soon be demanded in labor demonstrations. So far all rising prices are on the cost side. Either way, Gold will rise, from systemic breakdown or systemic inflation that hits wages. That is precisely why life savings must find Gold, or better yet Silver, if bigger gains are desired.

GOLD AS SAFE HAVEN

◄$$$ A CASE FOR GOLD, BASED UPON STRONG CAPITAL FLOW OUT OF DAMAGED SOVEREIGN BONDS. THE SUPPLY OF GOVERNMENT BONDS HAS GONE OUT OF CONTROL. YIELD SPREADS INDICATE THE DISTRESS, OFTEN RESULTING IN BREAKDOWN. GOLD RISES FROM THE FLIGHT OUT OF SUPPOSED SAFE HAVEN SOVEREIGN DEBT SECURITIES. DEBT IN THE CHRONIC CRISIS ENVIRONMENT HAS PROVED A LOSER GAME. $$$

Neil Charnock of the Gold Oz website (CLICK HERE) does some fine work. He made a case for Gold that was excellent, not broad but some excellent points. Charnock makes a cavalier statement in introduction, that Gold rallies are predominantly driven by fear. That is not correct. Initially a Gold rally is motivated by interest rates offered as yield for savers being less than the prevailing inflation rate, the negative real rate of interest trigger. He warns astutely that a grand capital wave is coming, directed at Gold, Silver, precious metals, and related mining stocks. Charnock expects a monumental event as the capital wave arrives in search of safe haven and security from loss. He makes the case, selling his investment book (fair to do so) by promoting Australian mining firms, serving as the quarry at the base of Asia, a clever term. He reminds that Gold price advances have forced the mining firms to close out almost all of their forward hedging, so that they stand to benefit from the full upside to the Gold price rises. Sure, except for Barrick Gold, whose hedge book will never be covered.

Charnock focuses on a primary avenue for capital flow toward Gold. He wrote, "Gold is looking ready to break out and run strongly yet again, as debt markets gear up for another round of trouble. A banking crisis could break out at any time, which is why I am keeping at least one foot in this market at all times. One needs a core position in case we wake up one morning and Gold has jumped $40 over night at the launch point of a mega-run. Massive amounts of debt have to be rolled over in the next three months. Portugal and Spain have come back into the limelight for all the wrong reasons lately." He correctly calls Europe a time bomb ticking as nations lack both time to stabilize and growth to cover debt. He incorrectly expects Quantitative Easing by the USFed to end in June. Maybe he only states the plan to remove QE2. He mentions the great challenge to prevent a recurrence of the global financial crisis, as central banks face chronic structural imbalances due to the largest debt bubble in history.

Charnock points out the dilemma for banks and large financial firms, seeking to comply with directives from the castle but caught in the middle. He wrote, "Mismatch of policy, for insurers and the banks, between Basel 3 and European Solvency 2 regulations, are also creating issues. Solvency 2 policies make longer maturity bonds more expensive to hold for the insurers (as investors) and yet banks need to issue longer term debt to comply with Basel 3 regulations. Thanks to the withdrawal of mega-Funds like PIMCO and other large players, liquidity is reduced in the debt markets. Talk of haircuts and default equates to devastating losses for bond investors that have put up real money. This is a deleveraging cycle as the debt bubble slowly (we hope) deflates. Old debt has to be rolled over and new debt still add s to the load. That is a serious structural disequilibrium. A delicate balance is required, not a free for all which would result in a crisis very quickly."

Charnock concludes that central banks are losing control. The more accurate factoring of risk is pushing up sovereign bond yields. The bankers face massive competition for capital and a rising cost of capital. The central banks do not control the interest rate rise from sovereign debt securities floating in the bond market. They have only control of short-term rates and overnight rates. Rising bond yields means rising credit spreads between the central bank rates and what investors demand in order to take on the investment risk. As the spreads rise to historically high levels, crisis builds and bailouts ensue. In the wake, more monetary damage, more currency debasement, more popular anger against banker welfare, and more lost prestige to the central bankers as their franchise system is weakened.

◄$$$ THE PUBLICLY MADE GOLD SLAMS HAS BECOME AS COMMON AS THE ESTABLISHED NEW HIGHS. MOST CRITIQUES ARE VACANT IN THEIR BASIS AS USUAL. THE LABEL OF BUBBLE ON GOLD IS HUMOROUS, EXPOSING IGNORANCE THAT THE FIAT CURRENCIES ARE NOT SOUND MONEY, RATHER DENOMINATED DEBT PASSED AS LEGAL TENDER BY LEGAL DECREE. ACADEMIA IS STUPID WITH GOLD AND IGNORANT OF MANY CURRENCY DYNAMICS. $$$

The stories about Gold being in a bubble persist. If so, then Silver would be in a triple sized bubble. It is all nonsense and exposed ignorance. Capital is fleeing phony money. Funds are trying to escape the collapsing global monetary system. Investors are trying to preserve money as they exit once secure sovereign bonds. The government guarantees no longer carry the protection against profound loss. Simply stated, Gold & Silver are money. Of course in the future, like in three to five years, the exodus might grow excessive away from fraudulent money, but most Western societies do not have much public participation. The United States populace has only 1% involvement in gold, maybe 2%. Let's expose a clown posing as an Finance professor, this one Lew Altfest of Pace University. He believes Gold is not a real investment like stocks, bonds, real estate, or private businesses. It would be beneficial to own Gold only if the world were falling apart, he contends. But he falls down, sharing his position that Gold has no use other than being pretty.

Altfest argues, "Whether you are negotiating with an uneducated thug guarding a border that must be crossed in the middle of nowhere, or sitting across the table from the most sophisticated investor in the world, Gold is the universal language and has been for eons. Economies are generally improving world-wide, and inflation, while of some difficulty in a few countries, is not currently a problem in the biggest one, the United States, nor should it become a really serious problem in the future. No need to call in the Gold troops here. I do not believe any major nations will seriously pursue a consistent decline of their currencies over an extended period of time." He is correct, Gold is not like stocks or bonds, since it is real money. Never is money an investment, even though Wall Street likes in rare occasion to advise going to cash, or declaring Cash is King. This professor is an economic moron. Economies are not improving, but rather responding to a cost shock delivered by the USFed in response to sponsored bank fraud. Price inflation is ravaging the global economy, thus the food riots in the most sensitive regions. The USEconomy has seen massive increases in food & energy costs, sure to hinder spending and investment, later jobs. What a fool! His biggest blind spot is in bold above. Japan has been keeping down its currency for 30 years. Japan has been protecting its superb stellar export industry. For the last 18 months, until February, Brazil had been keeping down its currency, worried about overpricing its exports from a rising Real currency. This clownish fop actually manages money for a living in greater New York City, and teaches impressionable students about finance. Altfest is a hack. Sadly, several hundred Economics and Finance professors in US colleges and universities are dummies on Gold just like him. Some have the integrity to admit it.

◄$$$ GOLD BULLION METAL IS FAR SUPERIOR AN INVESTMENT THAN GOLD EXCHANGE TRADED FUNDS. BEN DAVIES EXPLAINS WHY. THE COUNTER-PARTY RISK AND CUSTODIAL MANAGEMENT PRESENT POTENTIAL FOR LOSS ON THE PAPER SECURITIES SIDE, ALONG WITH FRAUD. $$$

Hinde Capital CEO Ben Davies has been trumpeting his metal fund as a superior gold investment. Gold is very much under-owned, with a still small public participation. Given the phony nature of the monetary system, whose foundation is built upon debt, the major governments wage war against Gold. They have built their major currencies on the unstable foundation without collateral. Davies points out that exchange traded funds are not the most efficient and reliable way of investing in gold. They are loaded with inherent risk of many types, including custodial theft and basic fraud. See the CNBC interview (CLICK HERE).

◄$$$ HEDGE FUNDS SHORT THE GOLD MINERS ARE GOING TO BE RUINED. THE BREAKOUT IN GOLD & SILVER PRICES IS APPROACHING A MIDDLE STAGE, STILL VERY EARLY. THE LAZY STRATEGIES USED BY HEDGE FUNDS ARE SET TO BACKFIRE. THE ARE UNAWARE ALLIES TO THE GOLDMAN SACHS CORRUPT USAGE OF POPULAR EXCHANGE TRADED FUNDS. A SOURCE OF FUNDS HAS BEEN PROVIDED BY BARRICK GOLD TO THE HEDGE FUNDS TO SHORT SMALL MINING STOCKS. $$$

John Hathaway of Tocqueville Asset Mgmt anticipates a brutal episode where hedge funds are going to be roasted, in his words. Too many of them are short the mining stocks. During the strong moves up in precious metals, little publicity or competent explanation is offered on the demand motive. On given days with big advances, no news typically is reported. Oftentimes silly factors are offered, like Gold rose from the Japan earthquake concerns. Or Gold rose in Libyan supply fears. Or Gold rose on worries over Portuguese debt. Hathaway said, "I said to myself this is a really big day because to me it was decisive action. I looked around for some headlines and did not see much. To me it is always best when you do not have a knee jerk reaction to some news headline that would explain Gold's move. I think a lot of people are still mystified and basically out of the game." Exactly, after two decades of deceptive indoctrination by the US press & media, the public is confused. Just last week, the Jackass contacted a good friend to wish a happy birthday. Despite holding an Economics degree, he was unaware that Gold has broken out to new highs, and was surprised to hear that Silver had tripled in price in a 12-month period. The American public is under a hynotic spell of ignorance laced with challenges to survive at the household level. They are working harder, earning less, and under siege, my friend included. See the King World News interview (CLICK HERE). Also John Embry, the chief investment strategist of Sprott Asset Mgmt remains highly optimistic that the breakout in Gold & Silver prices underway will continue for quite some time. He too is amazed that the reckless hedge funds are short the mining shares. See the King World News interview (CLICK HERE).

Hedge fund ratio spread trades continue to distort the value of mining shares. Most mining shares are greatly undervalued, relative to the underlying metal. Hedge funds hold the responsibility, but they use corrupt vehicles devised by Goldman Sachs. The Exchange Traded Funds enable easy investment clicks by the lazy, even with leveraged exposure. But they play into GSax hands, which created the GDX fund of mining stocks. With a single stroke, GSax can exert significant control over the entire sector. The GDX share price lags the underlying metal prices, designed as a suppression tool! No longer does a commodity bull market assure huge money flows into either commodity futures contracts or mining stocks. The ETFunds usurped much in the flow of funds. The control went to GSax. The popularity of the most corrupt of all ETFunds, the SPDR Gold Trust (symbol: GLD) has succeeded for a time in attracting the attention of naive investors. Instead of pursuing legitimate mining stocks, they are duped into buying what they believe is Gold bullion. They are buying a fund that actually shorts gold and leases their inventory to Wall Street. The GLD fund has neutralized much physical gold demand.

The hedge funds have diverted huge sums of money into commodity related ETFs of all stripes, some of which might have otherwise pushed up the mining stocks. Hedge funds are reported to be using spread strategies that invest in big mining firms, short the smaller mining firms, and use slush funds as credit source from Barrick Gold. This is not baseless rumor, but reported activity from numerous corners. The motive is for large mining firms to acquire the smaller mining explorers at cheap prices later when capital runs dry, before mines go into production, or when mills must be secured. The hedge funds exploit a strategy designed to take advantage of the weaker sister which suffers somewhat from the smaller money flows. During mining sector price corrections, the strategy works well, since the less liquid smaller stocks sink quickly. Basic naked shorting aids the process, since SEC oversight is nowhere. A rising Gold & Silver price eventually will lift all mining stocks that are associated with true bountiful deposits, whose prospects cannot be shunted. After a few years of the investment disfavor and targeted shorting activity, a distortion has been built between the price of the mining shares in relation to the underlying metal. The strongest small mining firms will turn profits from the rising precious metals prices and expanding profit margins, although rising costs accompany rising precious metal prices. The cost factor is the only legitimate reason to short small mining firms, since they do not yet benefit from economies of scale, and since they are still engaged in capital intensive activity, building their structures (mills, roadways, electrical access). When profits flow, the shorts will rush to cover their trades. The hedge funds plying this trade will soon realize that they have gone too far and will begin to exit. Then they will get roasted, as Hathaway anticipates. The fact that this sage expects an eventual hedge fund bloodbath means he is not overly concerned about the cost factor. He is as close to the game as possible.

◄$$$ GOLD & SILVER COINS ARE OFFICIALLY LEGAL TENDER IN UTAH. THE MOVEMENT AMONG US-STATES IS GROWING. UNCLEAR IS THE OUTCOME. IF IT GROWS MUCH MORE, THE FEDERAL GOVERNMENT MIGHT ENTER THE FRAY AND DOLE OUT THEIR SPECIALTY, FINANCIAL TERRORISM. THE LACK OF SUFFICIENT GOLD FOR CIRCULATION COINAGE IS NOT THE ISSUE. THE MOTIVE BY STATES IS TO REMIND THE FEDERAL GOVERNMENT THAT THE USDOLLAR IS NOT CONSTUTIONALLY VALID. FOCUS HERE ON UTAH. $$$

Utah has made waves, big waves! In late March, Utah Governor Gary Herbert signed into law the formal recognition of federally issued Gold & Silver coins as legal tender. No fanfare, not to incite syndicate anger from the federal castle. No public statement about the Utah Legal Tender Act was made. As of April, the Utah state tax code considers USMint Gold & Silver coins as currency, which means no capital gains or other state taxes will be levied when the coins are exchanged (sold). Implications extend to coin dealers, numismatic sales, and more. For official purposes, the coins carry only face value, a big damper. However, the impact is vast. It is a state endorsement of Gold & Silver as coin of the realm, as stipulated in the US Constitution. The intention was not to promote silver coin purchases for candy bars, or mortgage payments in gold coins. The intention was to make a state declaration that the federal ministries have wandered from the Founding Fathers framework and their concept of money, the result of which has been profound fraud and systemic insolvency. The states want a return to sound money in Gold & Silver. The gesture by Utah is symbolic and loudly heard. Utah is not alone. Several other states like Virginia are considering similar bills. The USGovt and its Wall Street overlords are trying to ignore the state defiance and initiatives. Larry Hilton is an attorney in the insurance industry, who authored the legislation before Utah. He said, "Conservatives fret that the central bank has permanently damaged the value of the dollar by pumping trillions into the economy, drawing down the greenback's buying power. And Utah, where the Tea Party has a powerful presence, is leading the charge against Fed Chairman Ben Bernanke." The Utah Sound Money Act has been promoted by the American Principles in Action, which is backing the Gold Standard 2012 program. The Tenth Amendment movement has fizzled somewhat. The Gold as legal tender movement might revive it. See the Mining Web article (CLICK HERE).

◄$$$ UNIVERSITY OF TEXAS DOUBLED DOWN ON ITS GOLD HOLDINGS WITHIN ITS ENDOWMENT FUND. THEY HOLD A COOL $1 BILLION. SMART MOVE, WRONG BANK THOUGH. THEY WILL BE PROUD OWNERS OF PAPER CERTIFICATES SOON. $$$

The University of Texas Board of Directors decided to double their holdings of Gold bullion within their endowment. The fund is used to gain interest, helping to fund operations, to finance research, and to enable expansion with projects like new buildings. Their smart move is accompanied by a naive (if not stupid) decision to leave it under custodial trust of HSBC. Someday in the near future, they might learn that they own paper certificates without beneficial interest in the rising Gold price. The university's $19.9 billion endowment fund ranks it second behind Harvard University. The Austin management added $500 million in Gold investments to an existing stake last year. The decision to invest into Gold bullion was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment board. Bass said, "Central banks are printing more money than they ever have, so what is the value of money in terms of purchases of goods and services. I look at gold as just another currency that they cannot print." The fund has an account in a COMEX registered vault in New York owned by HSBC Holdings. Smart move, dumb decision on the bank. The Gold bullion has likely already been leased out to various entities in exchange for paper certificates. If not already, then soon. Let's hope the case is given huge publicity, to expose the cartel for the illicit leasing and pilferage. See the Silver Gold Silver article (CLICK HERE).

◄$$$ VIETNAM IS SENDING TONS OF GOLD JEWELRY TO SWITZERLAND TO BE SMELTED AND CONVERTED INTO GOLD BULLION. A TREMENDOUS FLOW GROWS, WHICH INCLUDES SMUGGLING ROUTES THROUGH NEIGHBORING COUNTRIES. THE WORLD IS WORKING FEVERISHLY TO PROTECT FROM THE COLLAPSING USDOLLAR. $$$

Vietnamese gold traders have sent $billions worth of high grade gold jewelry to be smelted in Switzerland over the past two years, in a big rampup, to circumvent government restrictions on bullion exports. Switzerland dominates the global gold smelting industry, turning items into standard bullion bars. In recent months, Vietnam has become Switzerland's biggest single source of imported gold products, often steered to the furnaces of leading refiners Argor-Heraeus, Metalor, MKS Finance, and Valcambi. This is pure legal side stepping in clever style. The Vietnam banks have been banned from exporting gold bullion. So they fashion primitive jewelry from gold bars in a temporary expedient form and then export it. In 2010, Vietnam exported 61 tonnes of precious metals valued at $2.8 billion, mostly Swiss refiners. The data does not include gold bullion that did slip through, treated as monetary gold. Anxious consumers and businesses inside Vietnam have hoarded USDollars and Gold to protect against high inflation and devaluations of the domestic Dong currency. Economists believe Vietnam suffers from significant unrecorded capital flight. Their government attempts to control the gold market have been counter-productive, even adding to the publicity. The smuggling routes have been revived Thailand, Laos, and Cambodia, as well as strong flows through China. The IMF estimated 2010 outflows of between $12 billion and $13 billion, equal to 12% of the entire Vietnam GDP. A big discrepancy exists. The flow is huge. See the Financial Times article (CLICK HERE). The entire world is attempting with urgency to avoid the collapsing USDollar and crumbling global monetary system. This is a perfect example, smelting and smuggling.

GOLD PRICE BREAKOUT

◄$$$ BUBBLE IN THE GOLD MARKET IS ACCUSED BY THE IGNORANT. GOLD IS REAL MONEY. MONEY IS FLEEING PHONY MONETARY STRUCTURES. COMPARE TWO PAST VIVIDLY CLEAR ASSET BUBBLES, AGAINST WHICH THE CURRENT GOLD MARKET BEARS NO RESEMBLANCE. MAYBE WHEN GOLD REACHES $3000 OR $5000, THE ARGUMENTS WILL RING VACANT AND HOLLOW. $$$

◄$$$ AS LONG AS QUANTITATIVE EASING PROGRAMS ARE IN PLACE AND ACTIVELY PURSUED, GOLD & SILVER PRICES WILL SOAR. THE PROGRAMS ARE URGED BY EXPLODING BUDGET DEFICITS AND ABSENT BOND DEMAND. THAT TRANSLATES TO A RUINED USDOLLAR CURRENCY. GOLD & SILVER RESPOND TO THE DEBASEMENT AND RUIN. EFFORTS WILL BECOME RIDICULOUSLY STRETCHED TO SAVE THE USDOLLAR, BUT WILL FAIL. QE WILL GO GLOBAL AND SECRETIVE, ASSURING TREMENDOUS ADDITIONAL GAINS IN THE GOLD & SILVER PRICE. NO EFFORT TO LIQUIDATE THE BIG USBANKS WILL OCCUR, THUS ASSURING THE PROCESS WILL CONTINUE UNTIL SYSTEMIC FAILURE. $$$

The more extraordinary the measures to save the embattled insolvent fraudulent USDollar, the more the Gold & Silver price will soar. It is that simple. No plan whatsoever is in place, proposed, or expected to come forth for the grand liquidation of the insolvent banks that serve as pillars to the Land of the Broken Toy currencies. Gold & Silver will soar as long as central banks continue to expand their liquidity programs QE1 and QE2, and enlist the cooperation of other major central banks in providing artificial but coordinated USTreasury Bond demand. In the process their efforts will push the cost structure up further. In my view, since the Japan natural disaster hit with financial fallout, the Global QE is very much in effect, but not recognized as a global phenomenon. The USFed continues to draw fire as the QE control tower. Hans Goetti is Chief Investment Officer Asia of the Finaport Group out of Singapore. He believes QE3 will arrive when QE2 expires by the middle of the year. He attributes the rising S&P500 stock market to the QE2 program, as well as the rising prices of the large basket of commodities, with food & gasoline most visible. He wonders what will prop the stock market if QE2 ends. He expects a USEconomic quick recession if QE2 ends.

Better yet, and not mentioned by Goetti, is the issue of absent USTBond buyers. If QE2 ends, their absence would result in higher bond yields for USTreasurys, something not to be tolerated. No way in hell!! The QE2 will hand off to QE3, blamed on Japanese fallout, or else packaged in secrecy. My expectation is for two main directions with QE. First, it will become hidden since it has attracted so much harsh criticism in the USCongress and outrage from creditor nations whose reserves have lost value in a unilaterally decided upon writedown. In other words, those nations were not part of any QE decisions, but their USTBond holdings lost value. Second, QE will become a fixture among major central banks around the world, like the Bank of England, the Euro Central Bank, and the Bank of Japan. Hence, Quantitative Easing will go universal, turn secretive, and become entrenched in global monetary policy. The USFed will therefore share the target for criticism, and resort to lies more. Gold & Silver will reach breath-taking heights in price as nothing is fixed and everything is stretched. If the USDollar and USTBond were retired via default, the Gold & Silver price would rise five-fold overnight. So a gradual rise is tolerated by the broken central bank franchise operators. See the Gold Basics article (CLICK HERE).

Keep in mind that the Gold price in Euros is holding on, despite big currency gains. Any consolidation for the Euro currency will send its Gold price into breakout mode. Also, the Gold price in Yen is also in breakout mode as a direct result of the coordinated central bank clampdown on the Yen currency. Soon the Gold bull will run in all major currencies.

 

◄$$$ GRIFFITHS EXPECTS $8000 GOLD. HIS BASIS IS HISTORICAL RESPECT BY CHINA & INDIA FOR REAL MONEY IN GOLD, HIGH STEROID MONETARY PRINTING BY THE USFED, AND THE ADVERSE REACTION TO THE DEBASEMENT PROCESS WELL UNDERWAY. $$$

Robin Griffiths is a fund manager and strategist from Cazenove Capital Mgmt in London. Griffiths commented on Gold. He said, "Most Western economies cannot get what Lord Keynes said about Gold out of their head, that it was a barbarous relic. And in our Western culture it still is a barbarous relic. But we are moving into a world where the cultures of China and India are going to be more dominant, as they are the engine of the world's growth. In their culture, Gold is real money, has been for thousands of years, and will be in the future. So what China & India are saying is they do not want to own any more paper money which can be printed by some guy with a printing press and [dropped from] a helicopter. They do not want any more of that. They want more real money, which is Gold. The price of Gold & Silver is going up not because they are commodities, but because they are money. If Gold simply goes to its old all-time high adjusted for inflation the reasonable target, that would be about $3000 an ounce, more than double today's level. If you then factor in the Fed printing presses are still whirring away (they are printing the dollar like it is going out of style), the estimates of up to around $8000 an ounce, believe it or not, are not unreasonable."

◄$$$ THE FINAL PUSHDOWN ON GOLD PRICE IS THREATENED, BUT IT HAS NO TEETH. IT CANNOT AND WILL NOT HAPPEN. THE GOLD CARTEL HAS BECOME IMPOTENT. THE USDOLLAR IS BROKEN, AND THE WORLD RECOGNIZES THAT FACT, EVEN IF THE AMERICAN PUBLIC DOES NOT. THE SWISS DELAYS IN GOLD BULLION DELIVERY FROM ALLOCATED ACCOUNTS HAVE REACHED THE LAWSUIT STAGE. BEWARE OF ALLOCATED ACCOUNTS HELD IN SWITZERLAND, WHICH MIGHT SOON VANISH. $$$

The gold cartel is still feared, despite having most of its teeth removed in the last 12 to 18 months, despite having significant bullion drainage from the COMEX, despite the cash settlement for silver as a routine ploy, despite the wreckage in sovereign debt adding huge stress to the currency system, despite the insolvency of their big banks. The cartel cannot stop the tide of sovereign debt ruin that underpins the major currencies in hurried breakdown. In a the latest article by Deepcaster, a major cartel takedown of Gold & Silver is anticipated along with the general stock market in the next six months. More likely is an impending COMEX default in precious metals with full sordid publicity. The takedown concept is an interesting alternate theory. Some prominent groups foresee one final major takedown in Gold & Silver before the final exponential move higher, well past $2000 and $80 respectively. Sounds good in theory, but the Boyz lost control to China a full year ago.

In order for the Elite to initiate a final crescendo takedown attempt of precious metals prior to worldwide currency devaluation, they need greater control of the PM market, which they clearly do not have. China and the independents have wrested that control in full view in several fronts in clear terms. The Elite surely wish to convert as much of their worthless paper wealth into real assets as possible. They are loaded to the gills with toxic paper in the form of USTBonds, other sovereign bonds, USAgency Mortgage Bonds, even US corporate bonds and big US bank stocks. The markets have somewhat vanished in each. The Silver Doctors believe that once the banking Elite have obtained all the remaining physical Gold & Silver available, they will announce coordinated devaluation across the Western world, and attempt to establish a new unified worldwide monetary system, which they would control. This is a nice evil plot, but the global reality does not permit such a financial coup since for the last year or more, the Western bankers in power have lost traction to implement any plan except the ongoing stategy with higher volume. It is doubtful that the Elite can even hold things together enough to keep the USDollar from a disorderly collapse before they deem the time right for the final solution to be trotted out.

An experienced gold trader who has been spot on with numerous developments in the last three years pitched in. He does not believe the Western Elite have the power, resources, tools, partners, or capability to impose their final solution. He wrote, "In all modesty, the Boyz  would have to get past our desk and I cannot see that happen without those people getting thrown into the meat grinder. That does not mean that they will not try. They will get nowhere and they know it. They are facing multi-$billion law suits right now in Switzerland, where clients want to take delivery and are being given the run-around. They use all kind of legal and compliance tactics to stall, knowing well that in the end they will die a sudden death." This reference to the Swiss bullion bankers is a continuation of the story reported by the Hat Trick Letter last summer 2010. The Swiss have sold much of the gold bullion in Allocated segregated accounts illegally. Their delay tactics are intended to enable them time to secure Gold bullion quickly from whatever source. The Swiss are planning a nasty Force Majeure seizure of Allocated gold accounts, to replace them with depository receipts, to drag the process out, and to refuse entrance of clients into Switzerland. The Swiss banking system is almost ready to implode. A multi-$billion heist is planned. The motive is greed. The action is in response to having grossly inadequate Gold on deposit, even from Allocated accounts, supposedly protected, secure, and sacred. The US & London bankers had partners in Switzerland, as they all conducted a party during the last 20 years that was first hosted by the Clinton-Rubin Administration in 1992.

◄$$$ JIM ROGERS EXPECTS A STAGGERING GLOBAL CRISIS TO FUEL THE GOLD BULL MARKET FOR SEVERAL YEARS, AND TO ACHIEVE EXTREME PRICES. NO CONVICTION TO REMEDY OR RESTRUCTURE THE DEBT FOUNDATION TO THE GLOBAL MONETARY SYSTEM EXISTS. CONTINUED PATCHWORK AND DEBT-BASED SOLUTIONS WILL AGGRAVATE THE SYSTEM. THE I.M.F. PRICE FIX SOLUTION WILL BE HARSHLY GREETED BY THE GOLD & SILVER PRICE. $$$

Jim Rogers expects what he calls staggering problems to spark a monster Gold price rise, but worse, to trigger social unrest in the United States. He urges a wake-up call. He sees an urgent need for big European banks to accept major losses, possibly even sovereign debt writedowns. This is sacred ground. Rogers said, "I think we are getting closer and closer to the point where someone in Europe is going to have to take some losses, whether it is the banks or the countries [i.e. sovereign debt], but somebody has to acknowledge that they are bankrupt. The world needs for somebody to acknowledge reality and start taking haircuts. The United States does seem to understand, at least on paper, that there are staggering problems. We still have not seen much action. I have not seen anybody cut any spending in a serious way. We are still bankrupt and the situation is getting worse, not better. Now, when you have this kind of situation, it usually leads to social unrest and more political backlash, I suspect it will this time too." As a rejoinder, of investment interest, Rogers pointed out a fresh water shortage in certain pockets of the world. Check west of the Red Sea area in Northern Africa, in northern India, and northern China, and in the Southwest United States. The Wall Street Journal reported that national water managers warned Lake Mead, the largest and most important reservoir in the West, remains dangerously near the 1075 foot alarm level.

◄$$$ THE SPROTT FUND ANNOUNCED IT WILL SEEK ANOTHER $340 MILLION IN GOLD BULLION FOR ITS FUND BACKED BY REAL METAL, AN HONEST LEGITIMATE FUND. IT HAS BECOME A MAJOR THORN IN THE USDOLLAR SIDE. THE FUND CHIPS AWAY AT THE GOLD CARTEL WALLS BY DRAINING THEIR INVENTORY. THE GOLD BULL IS ENTERING A MIDDLE GEAR. $$$

The Sprott Physical Gold Trust has announced a second major acquisition, a follow-up placement. Sprott will fan out to seek sources for another $340 million in physical gold bullion. One should anticipate that their Silver Trust will do the same, except its broad shortage might present a bigger sourcing challenge. The Sprott pursuit of more Gold might contribute to a push well past the $1500 price, and might help to force the backwardation of the Gold market. Maybe not, as the world is a big place. Factors are being aligned to push the Gold price to $2000. The offering is expected to include a hefty $115 million in purchases from the Sprott Asset Mgmt, the parent fund. The news that Sprott is about to mop up another $340 million in physical gold from the market will likely send gold quite higher, encourage more parties to pile on, and compel some speculators to cover their short positions. The market clearly expects a follow-up offering in PSLV as well imminently, the Sprott physical silver fund. These Sprott precious metals funds are honest, using trusts created to invest and hold substantially all their assets in physical Gold & Silver bullion, with full custodial management by Sprott Asset Mgmt. The Trust will use the net proceeds of this Offering to acquire physical Gold bullion in accordance with the Trust's objective, subject to the Trust's investment and operating restrictions described in the prospectus related to this Offering. See the Yahoo Finance article (CLICK HERE).

SILVER GAINS SERIOUS RESPECT

◄$$$ THE SUPPLY & DEMAND STORY FOR SILVER LOOKS EXTRAORDINARY AND EXTREME TO THE POSITIVE. IT WILL BE THE INVESTMENT OF THE DECADE. THE INDUSTRIAL SILVER DEMAND IS HUGE AND EXPECTED TO ENJOY TREMENDOUS GROWTH IN THE FUTURE. THE MIDDLE CLASS OF THE ENTIRE DEVELOPING WORLD IS BUYING GOLD & SILVER AS PROTECTION AGAINST INFLATION. $$$

Investor need to be exposed to an occasional overview of Supply & Demand for silver, especially the developments extending in the coming years. The future for silver looks outstanding (in under-statement) with industrial silver demand rising from 15,160 tonnes (=487.4 million ounces] in 2010 to 20,712 tonnes [665.9 moz] in 2015. That is huge growth during a global stagnation economically. Much of the growth in the global total of industrial silver consumption will be driven by established uses. New uses arrive on silver's antibacterial qualities, in addition to solid state lighting and Radio Frequency Identification (RFID) tags. The photo-voltaic industry is on a rampage growth path. The demand for silver has transformed from a fringe luxury to a mainline necessity. Check the list of the demand volume for silver used in different applications.

  • Cell phones used 404.35 tonnes [13 million ounces] of silver last year
  • Computers consumed 684.29 tonnes [22 moz] in 2010
  • Thick film photo-voltaics consumed 1461.90 tonnes [47 moz] in 2010
  • Automobiles used 1119.75 tonnes [36 moz] in 2010
  • Electrical & electronics demand reached an all-time high of 7555.21 tonnes [243 moz]
  • RFID tags in 2010 reached around 45 to 50 tonnes, a long way from full potential
  • Water purification used 62 tonnes [2 moz], set to grow much more
  • Solar Power is expected to reach 2177.29 tonnes [70 moz] in 2011, a 40% increase
  • Medical applications are expected to reach 93.3 tonnes [3 moz] by 2015
  • The use of nano-silver in goods packaging and hygiene could consume 124.4 tonnes [4 moz] of silver by 2015.

Silver is often consumed. Usages like photography permit recycling of liquid solutions, where reclamation of the silver can be done. However, most of the above uses are difficult to nearly impossible for silver recovery. It is not cost effective to reclaim the tiny amounts of silver contained in millions of discarded computers, cellphones, and televisions, and other domestic electronic devices. Burn treatments cannot recycle cream. The middle class of China & India & Brazil is growing in a torrent. Almost half the world population is in development. Their economic growth is 5% to 10%, while the US, England, and Europe is negative, stuck in recession except for Germany. Reclamation and recyling efforts are certain to increase, given the potential profit in recovery, like with meltdown of family silverware. But the added input to supply is minimal compared to the growth in demand, especially investment demand.

Investment demand is growing leaps & bounds in Asia. The major bank HSBC is the world's largest bullion dealer in both Gold & Silver. They confirm that silver's role as a monetary metal is gathering great momentum, with emphasis in emerging economies. They believe the macro economic trends from emerging markets are positive for both precious metals in both savings and industrial usage. HSBC estimates the growing Chinese middle classe, at over 400 million people of the 1.3 billion Chinese citizens, as fueling an explosive growth in demand for silver. They are directly hedging against a brisk and not concealed rising inflation scourge. The nation has turned ravenous in new demand for silver as a store of value in inflationary times. That demand is growing exponentially. This is illustrated by the fact that silver imports last year increased four-fold over 2009. The Industrial & Commercial Bank of China, the world's largest bank by market value, sold 13 tonnes (418k ounces) of physical silver to Chinese citizens in January, alone, compared with 33.0 tons in the entire 2010 year. In the last three years, China has converted from an exporter of silver to a huge importer. The Middle Kingdom was a net importer of over 3110.42 tonnes (100 moz) of silver last year. In past years, accommodating the duplicitous, treacherous, dishonest Americans and British, the nation was selling official holdings of silver held in stockpile. NO MORE!!!

Global silver output in 2010 has risen modestly, at 10% growth over 2009 levels. The silver supply story is one of growth, but very modest growth. Strangely, silver is not often the object in a mining operation. Over 70% of silver is mined as a by-product of base metal, like tin or lead or zinc. The present sources of by-product silver are operating at peak capacity, no slack to pick up for greater production. A great risk looms for silver demand to outstrip supply. Scrap sales and meltdowns of jewelry will occur, but this is a small factor. It is already happening, as the deficit each year in silver output is alarming, shown in the March Gold Report. Burgeoning demand on both the investment and industrial sides mean that supply will chronically fail to meet demand. The response is much higher price. Individuals often feel powerless to fight the government ruin of money and the toxic trends in sovereign bonds. They can take action by purchasing Gold & Silver. Much more in the developing world, common people are buying Gold & Silver in defensive measures. In the United States and Canada, the participation is growing but it is still between tiny and infinitesimal. Too much indoctrination, false information, pure propaganda, and addiction to paper investments must be overcome. See the Silver Forecaster for excellent information on a regular basis (CLICK HERE).

◄$$$ SILVER INDUSTRIAL USAGE IS SET TO JUMP MARKEDLY. THE NEW APPLICATIONS JUST KEEP COMING. SILVER POSSESSES NUMEROUS UNIQUE CHARACTERISTICS AND CANNOT EASILY BE SUBSTITUTED. ITS INELASTICITY MAKES ITS DEMAND PRICE INSENSITIVE. THEY GOTTA HAVE IT. A MOON SHOT IS COMING ON THE SILVER PRICE. $$$

A truly remarkable forecast has hit the metals news wires. The amount of silver used for industrial purposes is forecast to rise to 665.9 million troy ounces by 2015, which would be a 36% increase from the 487 million ounces used in 2010. A fresh report entitled "The Future of Silver Industrial Demand" was produced on behalf of the Silver Institute by the precious metals consultancy Gold Fields Mineral Services (GFMS). The firm is not without controversy, but occasionally they act like a scientific research outfit. Standard industrial usage of silver accounts the largest share of annual fabrication demand. Michael DiRienzo is executive director of the Silver Institute. He said, "The report demonstrates how buoyant silver industrial demand is, not only because of the lack of substitution, but also because of the wide range of established and growing new uses that make up industrial demand. This report maintains that we expect to see robust gains in industrial silver demand over the next five years, further emphasizing silver's essential role in industry." Silver is unique. It cannot be replaced. Its uses are expanding. It is the silver bullet!! And it is true money backed by history dating back to the Greek Empire.

The report identifies 11 additional applications for Silver in future usage and thus future demand, ranging from food packaging to radio identification tags to auto catalysts. For these new frontiers, the forecasted cumulative demand could exceed 40 million ounces of industrial demand by 2015, said the Silver Institute. The developing nations of China & India will be cites for strong silver industrial demand through 2015. The bulk core demand will continue to come from the mainstay applications such as electrical contacts and in the photo-voltaic market. But the kicker is the practical effect of silver's uniqueness. The Technical Proficiency of Silver obstructs substitution to other lower-cost alternative metals, thus rendering the metal extremely price inelastic. In other words, industry will pay almost any price. Ten years ago, when digital cameras became the vogue, many dull blade analysts predicted a downturn in silver demand from the leading application, photography. They failed to properly account for the rising middle class of China & India, which continued to enjoy the standard camera with film. In 1990, silver demand stood at 273 million ounces, meaning it has already grown by 78% to 2010. In the next five years, the demand growth will almost equal the last 20 years. Fortunately, those lousy analysts have shut up, shamed by reality.

The established usages persist in powerful manner. The new usages add to the burgeoning demand. Scientific laboratories and research outfits the world over attempt to substitute silver in the many common applications. Its great traits cannot be replaced, for light sensitivity, microbe deterrence, conductivity, and others. The green revolution has pushed silver into the center lane of industrial traffic. From increasingly mechanized cars to GPS systems to the photo-voltaic industry (solar energy), the demand grows leaps & bounds. The dramatic environmental factor has powered solar usages. Silver offtake from the photo-voltaic sector expanded radically from around 3 million ounces in 2004 to around 50 million ounces in 2010. Robust growth is forecast for the solar industry, in which silver demand in 2015 expected to at least double the current total seen in 2010. Bear in mind that an extreme shortage exists today, and a deficit has been the norm for many years recently. The silver price must rise to attract and deliver new supply. The $100 price level will be easy by 2015, actually well then, like before late 2013.

◄$$$ COMEX FRAUD CONTINUES AMIDST SHORTAGES, NOTHING NEW. $$$

This month, the Jackass will leave alone the COMEX data, the shortages of silver, and more. Focus on the mainstream dynamics. The COMEX has no silver, and has had none for months. They are coercing silver futures contract holders to accept a cash settlement, often with a 25% vig as bribe, complete with a non-disclosure contract. Word is out. The globe is slowly discovering that the metals exchanges are bone dry of silver, and struggling to meet gold demands. The silver has been robbed illegally from the SLV exchange traded fund in high volume, permitted by its custodian JPMorgan. The gold is provided in regular and frequent large volume swaps by the Bank For Intl Settlements in Basel Switzerland, often in emergency shipments. The gold has been robbed illegally from the GLD exchange traded fund in high volume, permitted by its custodian HSBC. Recently, HSBC moved out of its London headquarters, confirmed by my source over disputes in China accessing (raiding) gold bullion from the GLD inventory. Standard Chartered Bank is also doing gold raids. For many months, the COMEX has been grabbing Gold & Silver bullion from these totally corrupt exchange traded funds in order to satisfy short futures contracts held by the big US & London banks.

◄$$$ A MASS OF SILVER FUTURES OPTION CALLS STANDS AT THE $46 STRIKE PRICE FOR NEXT JANUARY. THIS IS SMART MONEY. SOME BIG PROFITS WILL BE ON THESE WINNING BETS, WHOSE POSITIONS HAVE ALREADY BEEN ENHANCED BY OVER A $4 MOVE LAST WEEK. $$$

The strike price for the huge position is $46 per oz Silver. The expiration date is January 2012. The volume is a staggering gigantic 7766 Silver futures contracts, which controls a 38.83 million ounces. When the contracts were put on and locked in, the Silver price had a 38 handle (number excluding the decimal fraction). Already, in just one week the big leveraged option positions have benefited from over a $4 upward move. Some smart money is on the table. They must know something, like the COMEX has no more silver in inventory. Like JPMorgan is covering their disastrous short position. Like several large nations are running out of silver for coin mintage. Like industrial demand is rising fast. Like China will not stop buying silver until the Anglo bankers are off their exalted privileged perch.

◄$$$ A $1 MILLION BET USING THE CORRUPT S.L.V. SILVER FUND WAS GIVEN THE BLAME FOR THE SILVER PRICE SLUMP LAST MONDAY. THIS IS DUMB MONEY, OR A SYNDICATE PLOY TO INFLUENCE THE MARKET SENTIMENT. IT WILL EXPIRE WORTHLESS. IN THE LAST WEEK, IT LOST VALUE ON PRICE AND A LITTLE ON TIME PREMIUM. THE AMBUSHES WORK AGAINST THE GOLD CARTEL, ADDING TO UPSWING MOMENTUM FOR QUICK RECOVERIES AND SETTING OF NEW HIGH PRICES. SOME EXTREME SCENARIOS MIGHT BE NEAR TO REALITY. $$$

The gold cartel continues to shoot itself in the foot. Almost every single paper weapon ambush to the Silver price has resulted in new highs being established within days. The discounts have built slingshots of momentum to carry the price upward into new high territory. The examples are too numerous. The ambush after the move from 38 to 42, taken down quickly to 40, resulted in yet new highs as the price has pushed toward 43 with more stability achieved. The cartel is actually working to remove the oversold condition on a regular basis, thus permitting more price advances with greater stability. We appreciate their self-destruction cooperation.  The mini-correction last week saw a psychological round number of 40 serve as short-term support. The lowered price worked to enable Asians to buy at discount again, and repeat their bids, buying with both hands. Each price correction for Silver has resulted in a strong move to new highs, like a slingshot with renewed momentum.

Last Monday April 11th, the Silve price dropped suddenly from 42 to 40 after a nice runup to set a new high. Here is what happened. The air pocket was attributed to a $1 million downside bet that silver would decline by 37% on the SLV fund. At a time when rumors and games are utilized to influence the Silver streak upward, for the gold cartel to stall the white metal juggernaut, an outlier event took place. The sandstone tossed into the campfire was not the umpteenth margin increase, but a big bearish bet. It was an outsized option bet that SLV silver exchange traded fund will fall 37% by July. A trader placed almost $1 million in a bet that an ETFund tracking silver will plunge to $25/oz by July. The fool bought 100,000 options to buy 100 shares each of the iShares Silver Trust (SLV) at $25 by July. The price paid was about 10 cents per contract, or $10 on each contract block. The key aspect of the single trade placed was how the position exceeded the Open Interest of 6054 outstanding contracts before that day. If the trader acted nimbly, without greed, and sold out within 24 hours, a profit might have been logged, but doubtful. The option spread usually is costly to enter and exit in such deep out of the money options. See the Zero Hedge article (CLICK HERE) or the Bloomberg article (CLICK HERE).

The bet has possible shadowy overtones. Clearly somebody or some firm might actually believe the Silver market is grossly overbought, ignorant of the dynamics of inelastic demand, of COMEX shortages, of coin shortages, of growing industrial demand, of growing investment demand. Fine, let them be roadkill. But a major loss is going to be swallowed on that egg laid on the option board. Obviously, the gold cartel might have decided to invest a mere $1 million to try to wreck sentiment and send the weak hands scurrying. They misjudged the buyers and their strong hands, which includes the Chinese billionaires acting with sharpened motive. Let's take the situation to two different extremes. Maybe the trader planned on holding the option put contracts for a longer stretch of time. Suppose some internal development is afoot that will expose the SLV fund as a gigantic fraud, whose silver bullion in inventory has been leased and even sold, leaving paper certificates in the vault. That is precisely what the Jackass and other smarter more savvy observers believe. If so, then as mentioned here before, the SLV share price would fall below the the spot silver price. A penalty to the corrupted fund would be imposed. Option contracts would still be linked to the underlying SLV share price. Suppose some global initiative development instead is afoot that will make Gold & Silver in an exalted position within a new global monetary system to be announced in early summer. The gold cartel might wish to hit the Gold & Silver price really hard beforehand, driving both down significantly. My belief is that neither extreme scenarios will unfold and blossom by July. The first scenario of exposure that SLV fund is an ugly fraud perpetrated on the investment public, that is a certainly in my view, but it will take more time. Just some speculative thinking on these two extreme scenarios.

◄$$$ THE SILVER PRICE SMELLS 50, WANTS 50, AND MUST REACH 50 IN ORDER TO ACHIEVE A PSYCHOLOGICAL TARGET. THE DEMAND IS OUTSTANDING & STRONG, WHILE THE SUPPLY IS IN DIRE SHORTAGE. A MAGNIFICENT BREAKOUT IS IN PROGRESS FOR SILVER THAT WILL TAKE IT PAST THE 100 MARK AND GRAB GLOBAL ATTENTION. EVEN CAUTIOUS BULLS WILL BE OVERRUN. SILVER IS GAINING RESPECT, BUT NOT YET ATTENTION. HISTORY IS BEING MADE. $$$

◄$$$ THE GOLD VS SILVER RATIO HAS DESCENDED TO THE MID-30's, ALMOST CUT IN HALF THE LAST SIX MONTHS ALONE. IT WILL LIKELY FALL TOWARD 20 EASILY, AS THE PRICE GAINS IN SILVER CONTINUE TO BE TRIPLE THAT OF GOLD. THE TREND SHOULD CONTINUE AS SILVER HEADS TO 100 AND GOLD 2000. $$$

The Gold/Silver Ratio has set a 28-year low. The ratio will continue to fall, toward the 20:1 mark and maybe to the historically important 16:1 mark that was installed as the Bimetallic Standard in the United States during the Civil War era during the 19th century. The gains in Gold are tough to grab, but are small in the scheme of things. A move from 1400 to 1460 over a few weeks is seen as huge to make new highs, but the gain is 4.28% only. Just in the last week, Silver moved from 38 to 42, which is a 10.5% gain. Sorry, it touched 43, a juggernaut. The Jackass firmly believes that Silver will be coronated and recognized in the next year or two as the primary #1 investment vehicle on the planet. The Gold/Silver ratio will continue to decline during the vast impressive explosive move up in Silver. Notice the past peaks, a G/S Ratio over 80:1 in 2003, and over 84:1 in 2009. The G/S Ratio was in the 60:1 range last summer 2010. It has plunged to 35:1 with sheer power and force. That means it takes 35 ounces of Silver to buy an ounce of Gold metal. When Gold reaches 2000/oz, expect Silver to be near 100/oz, achieving a 20:1 ratio. Still the Silver price advance has received minimal little press coverage. We like it that way, for now, since it means very great potential. As more attention comes, much higher price will come from wider public participation. Then much later, like 3 or 4 or 5 years from now, WE WILL SELL TO THE PUBLIC AT 200/OZ OR 250/OZ OR 300/OZ, and leave our positions as winners.

◄$$$ THE LENGTH OF TIME SILVER HAS BEEN IN BACKWARDATION HIT A RECORD, WHICH SPELLS GREAT DANGER FOR THE USDOLLAR. THE PRICE CONDITION LAYOUT MEANS SIGNIFICANT SPOT SHORTAGES FOR SILVER. IT IS AN UNMISTABLE BULLISH SIGNAL TO THE EXTREME. IF GOLD JOINS THE BACKWARDATION PRICE LAYOUT, THEN THE SIGNAL WOULD BE FOR A USDOLLAR COLLAPSE. THE PRESSURE IS BUILDING FOR MAGNIFICENT DISRUPTIVE EVENTS AS THE GLOBAL MONETARY SYSTEM CONTINUES TO FRACTURE AND CRUMBLE. $$$

Define backwardation. When the spot price (current day) is higher than the future months, with distant months even cheaper than nearby months, then the item is in backwardation. The normal situation is for a contango, as it is called. Normally, the storage, shipping, and insurance costs mean the more time into the future, the higher the associated carry costs. Thus a higher price as time goes out. When backwardized, the current shortage drives the spot price higher than future months, all future months. Usually a backwardized price layout will have the price gradually rise on the current month price, with a downward slope shown over the successive months.

James Turk made comments on the Silver price layout. Turk said, "We are now at a record backwardation in Silver in terms of length of time. What we need to do is compare what is happening now to 2009 when Silver was in backwardation the last time. Over a period of just about two months Silver rose 40% from approximately $10 to $14 per ounce, and that rise in price eliminated the backwardation. But here is the really stunning thing this time. We have gone from $27 to over $37, again about a 40% rise in price and the backwardation is still there. It has not disappeared. That suggests there is tremendous physical demand for Silver. This is a very, very rare event and it is very bullish. I do not remember ever seeing anything like this before. This has real implications for the dollar. Because if Silver stays in a prolonged period of backwardation, we must watch to see if Gold goes into backwardation. If Gold goes into backwardation, then it is all over for the dollar. [It would lead to] a flight out of fiat currency and a flight into precious metals. And the fact that we have Silver at a record length in terms of backwardation, even though the price has risen as much as it has, we are still in backwardation. It is really stunning. Maybe the backwardation will disappear at 40 bucks, but who knows? Maybe the backwardation is still going to be there at $45 or $50, which is the target that I have been looking for this year. If that happens, it is impossible to predict, but if that happens that is going to be an earthshaking event." The world is witnessing the collapse of the USDollar. The backwardized Silver market means much higher prices still are to come!!

◄$$$ THE BOLIVIAN GOVT PLANS TO SETTLE A NATIONAL WAGE DISPUTE BY NATIONALIZING SEVERAL LARGE MINES. THEY PRODUCE HUGE SILVER. THE INCIDENT HIGHLIGHTS THE JURISDICTIONAL RISK ASSOCIATED WITH MINING STOCKS. AS PRECIOUS METALS BECOME MORE VALUABLE, LUNATIC TYRANTS WILL MORE OFTEN CONFISCATE MINE DEPOSITS IN AN EFFORT TO OFFSET RISING DEFICITS. THEY LUST FOR CONTROL OF WEALTH.  THE IMPACT OF THE BOLIVIAN TAKEOVER IS REDUCED SILVER OUTPUT. $$$

Whack to Coeur d'Alene (CDE) and Pan American Silver (PAA). Their stocks values plunged after socialist Bolivian President Evo Morales announced plans to expropriate mines. He reacted to worker protests for wage increases. The strike has extended for two weeks. The state mining company Corp Minera de Bolivia (Comibol) will likely rescind contracts with these companies, as well as with Glencore International. PanAm owns 30% of a large project. Self-styled (aka semi-dictator) Morales has seized gas fields, oil refineries, pension funds, telecommunications companies, and the Glencore tin smelter in his quest toward state control over Bolivia's industrial sector. His reward will be greater inefficiency, corruption, lower profits, poverty, and higher metal prices, but with more potential for private gain to his henchmen and friends. Private investment in Bolivian industry plunged 69% to $271 million in 2009 from $865 million a decade earlier. Witness capital flight. Accompanying it is technology flight.

Huge mineral resources and oil & gas bless this nation. Bolivia is the world's sixth largest silver producer. Historians claim that Bolivia built the Spanish empire with its silver. Bolivia produced 430,879 metric tons of zinc, 84,537 tons of lead, 19,581 tons of tin, and 1.33 million kilograms of silver in 2009, according to the US Geological Survey. The confiscation event is bullish for Silver but it is negative for mining firms doing business in either Bolivia or another semi-Banana Republic quick to steal property and impose an iron fist of control. A review of Venezuela and their near total wreckage of resource wealth and rising corruption and spreading poverty and abandoning capital is a very good example. Time will tell if Bolivia and Morales are just twins of Venezuela and Chavez. They are good friends. See the Bermuda Radical article (CLICK HERE) and the Vancouver Sun article (CLICK HERE).

◄$$$ RISK TO OWNING MINING SHARES IS ACUTE IN THE CURRENT CORRUPT ENVIRONMENT. THE RISK EXTENDS TO THE CANADIAN FINANCIAL MARKETS, WHERE NAKED SHORTING IS PREVALENT. THE EVIDENCE BUILDS. $$$

A personal comment. Since February 2008, my advice has been to subscribers to go long in SILVER metal, either bullion accounts like GoldMoney or coins held privately. Those who followed the advice have been rewarded to the extreme. The Portfolio webpage is meant to satisfy people who insist on investing in stocks. The Jackass used to favor mining stocks, but no longer. The companies on the Portfolio are all good ones, active ones, with solid prospects, but no updates have been offered recently. Independent analyst Dan Norcini points out that gold & silver mining shares lag the metal price badly. They are priced as if the metals were still trading at their 2009 prices. In late 2007, total disgust overcame the once bright optimism held by the Jackass when the naked shorting of Canadian Junior mining stocks was revealed more openly. It is a routine practice by Canaccord in Canada, and by numerous other scummy Canadian houses. Several mining firms at the Cambridge House Conferences used to complain to me that Canaccord was naked shorting their stocks, driving down the share price, after working together on raised capital funding deals, with full impunity. They participate in secondary stock issuances, but sell more shares than they purchased, not noticed until too late and the stock price is down hard. The shorting can even be done by large venture capitalists in collusion with the dirty brokerage house outfits.

The Canadian paper factories are not much different from the Wall Street crooks. My preference is silver metal and gold metal, even platinum. The mining stocks are so vulnerable to dilution from newly issued shares, corrupt naked shorting, higher costs, jurisdiction seizures, labor disputes, and basic  high capital costs like to build mills, to build access roads, to bring in electricity. Diesel is a big rising cost to mining firms. In the last two months, details have surfaced about naked shorting by Canadian financial firms. The main firm implicated is Alpha Group. The evidence is that when mining firm shares are bought, often they do not add to the traded official volume. They therefore offset previous naked shorts for mythical shares. The risk is not only of the price impact from illegal naked shorting. The risk extends to owning counterfeit shares that result from closing out an illegal position in the first place. The industry calls them phantom shares, since so widely spotted. See the weblog by Mexico Mike, an intrepid soldier (CLICK HERE).

Alpha Group was established in 2007 by nine of leading Canadian financial institutions with the aim of increasing the equity trading efficiencies and making Canada more globally competitive. Maybe so, but it also opened the door to naked shorting and deep corruption with no prosecution. The Alpha Group partners are all major players in the Canadian securities industry. The nine partners are: BMO Nesbitt Burns, Canaccord Capital, CIBC World Markets, Canada Pension Plan Investment Board, Desjardins Securities, National Bank Financial, RBC Dominion Securities, Scotia Capital, and TD Securities. Among the list, the only prevalent complaints heard by the Jackass and fellow colleagues has been Canaccord, in my view the most corrupt brokerage house in Canada, with naked shorting offices in Toronto and Vancouver. They are the biggest and most corrupt. See the description of who Alpha Group is (CLICK HERE).

Thanks to the following for charts StockCharts,  Financial Times,  UK Independent,  Wall Street Journal,  Zero Hedge,  Business Insider,  Calculated Risk,  Shadow Govt Statistics,  Market Watch.