GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Golden Nuggets
* Ruined Financial Markets
* USEconomy Reaches for Subprime
* Unending Housing Decline
* Gold Jockeys in Storm
* Long Gold Consolidation Ending



HAT TRICK LETTER
Issue #97
Jim Willie CB, 
“the Golden Jackass”
22 April 2012

EDITOR NEWS FLASH: a German banker contact informs that as a result of a high level meeting in Germany (not in the news), a decision has been made for France to exit the Euro currency first. They are ordered out. Regardless of whether Hollande displaces Sarkozy for the president post, the French have been instructed as to how business will be conducted. No other information, like whether France will revert to the Franc currency and not risk a severe Latin Euro devaluation after Germany and Netherlands depart. My impression is that Germany will launch a new currency very soon. Perhaps they wished for France to take some of the attention and to begin the chaotic process. The contact has consistently stated that France would not be included from the new Nordic Euro, an exlusive core group of Central European nations that qualify by having a current account surplus. French debt is too great, and likely to soon expand much worse. He said France would become a ward of the German state, with dictated policy and direction. Bear in mind that Germany owns of 90% of the French Govt debt. It remains to be seen whether France will assume the lead position among the PIGS, whose nations will all go adrift. Rumors of a Latin Euro Central Bank located in Marseilles were once spun.

"Ineptocracy: a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers." ~ on a T-shirt from EBay (appropriate rejoinder to the entitlement society)

"Our conclusion is that if small firms are not captured well in the advance GDP data, the economy may be growing less quickly than suggested by the recent official data." ~ Jan Hatzius (Goldman Sachs economist, in a remarkable admission of truth)

"Sometimes people do not want to hear the truth because they do not want their illusions destroyed." ~ Friedrich Nietzsche

"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident." ~ Arthur Schopenhauer

"We Germans are amused that many people expect that our nation will leave the Euro currency. In fact, we will take it away, create distance, and leave the broken South holding empty bags." ~ anonymous German observer

"Gold is not for everyone. It is only for those who wish to increase potential rate of return, reduce risk, hedge for inflation, and have peace of mind in these uncertain times." ~ Anonymous

"The two daily objectives for the cartel are always to quell excitement, and manage the retreat. The only way to defeat the Algorithm Traders is to take physical off the market. Algos love paper opponents, and loathe physical buyers. As long as the hedgies line up to make their scheduled sacrifices to the algorithm gods, the cartel computers work like a charm. Scarcity of the real stuff will always be the cartel's kryptonite. Last August showed what happens when they scramble to get their hands on the shiny [physical metal]." ~ James McShirley (friend of GATA and student of gold market capping exercises)

"The game ends when the last ounce of gold has left London, not COMEX. The big problem in London is that their derivatives on gold are about 50 to 100-to-1. That is the amount of derivatives. So if I take out that one ounce, the balloon around it (the derivative) is getting bigger and bigger until it is ready to totally implode. That is what you are seeing. Right now, people are going to say: how high can it go? And I am going to tell you: you are going to go to sleep on a Thursday night and gold may be $1670. Then you wake up the next day, it is going to be a banking holiday. Gold will be $3000 bid, no offer. No offer! It will be a banking holiday, because there will be a failure to deliver. You must have physical coins or bars. If all you have is a piece of paper, that is all it is! It will just blow up in smoke. Go buy your physical and be thankful that you are getting it at a cheaper price today." ~ Harvey Organ (for a good interview discussion, CLICK HERE)

"Gold goes as high as the debt hole goes low." ~ Jim Sinclair

"Asian economies are based on production and savings. Western economies are based on consumption and debt. The global market is simply reshuffling wealth, capital, and opportunity appropriately." ~ Simon Black (the Sovereign Man)

## GOLDEN NUGGETS

◄$$$ THE EYE OF THE HURRICANE IS IN FULL VIEW (EXCEPT FOR BANK OFFICIALS). THE FALSE CALM BELIES THE DIRE SITUATION. SEVERAL DEEPLY DANGEROUS AND EXTREME HIGH RISK FACTORS ARE LINING UP. NEVER SINCE THE LAUNCH OF THE HAT TRICK LETTER HAS THE JACKASS PERCEIVED SO MANY DIVERSE POWERFUL THREATS TO THE GLOBAL FINANCIAL SYSTEM AND GLOBAL ECONOMY. THE INSTABILITY OF THE CURRENCY MONETARY SYSTEM IS ON THE VERGE OF GRAND DISRUPTION FROM THE UNSTOPPABLEL EVENTS. $$$

The instigation pinprick might be some or all of the listed events and developments:

  • France rejecting austerity budget concept, a fire in Europe to imitate
  • Spain dropping the Euro, and rejecting the austerity budget concept also
  • Germany adopting a new trim Nordic Euro
  • China begins fully convertible Yuan currency trading activity
  • failure of a big financial firm despite best efforts in the wake of European events
  • initiation of potentially four new currencies (Mark, Yuan, Ruble, Dinar)
  • bank transfer SWIFT alternative arises to handle trade settlement in the East
  • higher gasoline and fuel costs slam the global economy
  • more bilateral trade settlement accords to avoid toxic Western bonds
  • China wresting control of USDollars outside the US
  • Saudis accepting non-US$ payment for oil
  • US housing market continues down, spoiling more bank portfolios.

◄$$$ OBAMA IN COLOMBIA WAS ISOLATED AT THE LATIN AMERICA SUMMIT MEETING. THE THREE CAMPS DELINEATED THEMSELVES AS USUAL. THE ISSUE OF CUBAN ISOLATION COULD RESULT IN ISOLATION OF THE UNITED STATES, AND REMOVAL OF INVITATION AT MEETING NEXT YEAR. THE PROSTITUTION SCANDAL SERVED AS A BIG DISTRACTION. $$$

Two important events came from the meeting in Colombia for the Organization of American States (OAS). Heated unprecedented Latin American opposition to US sanctions against Cuba left President Barack Obama isolated at the summit. The USGovt declining influence is palpable in a region being aggressively courted by China. In fact, the US is being isolated across the entire world, alienating friend and foe alike. Obama did not mix well, and took plenty of criticism from 30 heads of state. The US Secret Service detail dropped a load of controversy when 16 security personnel were caught with prostitutes before Obama arrived, which served as a gigantic distraction during the meeting. Obama was on the defensive over Cuba and calls to legalize drugs. Due to the hostile differences largely over Cuba, the heads of state failed to produce a final declaration of the summit. It fizzled out in a failure on mission. The only constructive element was a broad discussion among the Latino national leaders. Conservative US allies like Mexico and Colombia for the first time broke ranks and put their weight behind the traditional demand of leftist governments in demanding that Cuba be invited to the next Summit of the Americas. Some OAS nations plan to boycott the next summit unless Cuba is invited. The United States might find itself not invited. Regarding Cuba, Colombian President Santos said "The isolation, the embargo, the indifference, looking the other way, have been ineffective. I hope Cuba is at the next summit in three years." Although an ally, Santos has become vocal about Cuba's inclusion while at the same time advocating democratic reform by Castro. Solidarity was evident among the so-called leftist ALBA bloc of nations, including Venezuela, Ecuador, Bolivia, Nicaragua, and some Caribbean nations. They threaten not to attend future summits without Cuba present. After the summit Obama admitting being puzzled how nations that had themselves emerged from authoritarian rule would overlook it in Cuba. My view is that Latino blood is thicker than political airs and chords. Some observers doubt the next OAS summit will even convene.

The United States is losing influence, prestige, and leaderhip in the entire American Hemisphere. US brand of diplomacy with its heavy hand is losing ground. Brazil and other nations have bashed Obama over USDollar monetary policy. Regional economic powerhouse Brazil has led criticism at the summit of US and other rich nations, which have embarked on expansionist monetary policy that sends torrents of funds into developing nations. The result has been higher food and industrial input costs, as well as local currencies forced higher to undercut global competitiveness. Brazilian President Dilma Rousseff called it a monetary tsunami that Latin American nations had the right to defend themselves from. A new free trade agreement between the US and Colombia is near completion. Hailed a success story by Obama, if past is prologue, the positive effect will be to grow jobs in the rapidly growing stable nation of Colombia, not in the United States. Filling the vacuum for the the perceived US neglect of Latin America has allowed China to make strong inroads into the region and become the leading trade partner of Brazil and various other nations. See the Reuters article (CLICK HERE).

◄$$$ THE MURTHA AIRPORT IN SOMEWHAT REMOTE JOHNSTOWN PENNSYLVANIA SERVES AS A WONDERFUL EXAMPLE OF USGOVT WASTE. IT CONTINUES TO DRAIN FUNDS, EVEN ENJOYED SOME FEDERAL STIMULUS FUNDS. $$$

Murtha Airport in Johnstown PA is monument to stupidity, waste, influence, and greed. USMiliary veteran and former Congressman Representative John Murtha steered some $150 million of taxpayer funds to build the airport that bears his name in ignominy. What incredible pork! It is a small airport with a $7 million air traffic control tower, a $14 million hanger, and an $18 million runway large enough to accommodate any airplane in North America. For most of the day, it handles zero airplane traffic. In all, three flights arrive daily, all of them from WashingtonDC. Its passenger traffic is an average of 20 people per day. About half the cost of every $100 ticket is borne by American taxpayers. One would think with no traffic to speak of and a deceased Murtha gone to defend it, the airport would turn to private hands. Not even close, as a subsidy was voted by the USCongress to renew its cost grants this February. The air traffic controllers are bored witless, unable to steer the non-existent passengers. Only the best in equipment. The empty airport features a reinforced runway and sophisticated radar facility, as well as a shiny new terminal. The Murtha Airport has received $559,476 in stimulus funds from the USGovt to rehab a back-up runway, $82,551 for air guidance signs, $226,638 to improve the taxiway,  $19,412 wildlife hazard assessments, $95,950 and $62,325 to install weather reporting. High tech, top shelf, only the best for the birds and squirrels that occupy it. See the Yahoo News article (CLICK HERE) and watch the YouTube video to see its empty caverns (CLICK HERE). This is a prime example of both USGovt waste and ineffective stimulus. The money is for naught.

◄$$$ BOONE PICKENS SEES A $148 CRUDE OIL PRICE IN THE NEAR FUTURE, AS A RESULT OF THE IRAN SANCTION BACKFIRE. HE IS A SAVVY PROFESSIONAL. THE SANCTIONS WILL FURTHER ISOLATE AND DAMAGE THE UNITED STATES. AT THE SAME TIME, PICKENS BELIEVES THE SAUDIS WILL BE EXPOSED AS NOT HAVING THE SPARE CAPACITY THEY BOAST ABOUT. THE SAUDI RECOVERY RATES ARE TREMENDOUS, BUT THEY MANAGED TIRED WELLS. $$$

T.Boone Pickens has issued a warning, and given an assessment related to the impact fallout of the disastrous Iran sanctions. He sees the crude oil market as very tight. A few nations like Japan and China have promised to cut back on Iran crude oil purchases, with promises that the difference would be made up by Saudi Arabia. The only problem with the argument is that the Saudis have been lying about spare output capacity for years, and the Iran situation will make it obvious they lack the extra capability. The Saudis play into the American hands with empty boasts of plenty of extra oil that does not exist. They are near depletion as a nation, on a major downslope in output, which should leave their royal regime vulnerable to being toppled. Simply stated, if no more national wealth to commandeer from royalty rights (aka steal, pilfer), then they might move on to the Swiss mansions, Spanish mansions, and Los Angeles mansions.

Pickens openly stated that not even spare capacity from Saudi Arabia would be enough to make up the difference amid increasing sanctions against Iranian oil. He spoke on CNBC for the The Kudlow Report, where the arrogant half blind showman operates. Pickens said, "[The crude oil market] is tight now. That is why you have Brent North Sea at $126 and you have got WTI at $105 per barrel. Global supply is tight. No, I do not think the Saudis can cover here [with spare production capacity]. If they do, they will cover it out of storage. I dont know how much is up. I think you can very well see the old high at $148. I am not saying West Texas Intermediate, our price here in the United States, will go up to $148. It has been very stable around $100." See the CNBC article (CLICK HERE). By storage he refers to the Strategic Petroleum Reserve maintained by the USGovt, and other stockpiles. It is difficult for Pickens to point out the stupidity of policy, since he benefits directly in his crude oil investments.

The Oildrum is a wonderful source of technical information on petroleum engineering. The Jackass studied Peak Oil concepts back in 2006 and 2007, learning about Ghawar depletion and methods used to recover the last one third. Check out some of the fascinating newer technologies in the field. Note the comment on why the Saudis need $100 forever!! If the US supports the Saudi regime, then the US must maintain the $100 price not only to permit higher costs of pulling oil out of the deep ground locations, but also to enable the Big Bakken in the North Central United States to flourish. From a contributing engineer on details of Aramco producing the last drops of oil from their reserviors, who said "After the technique of sectioning the laterals with smart valves to keep oil flowing in those small areas that have some oil remaining, what is left to do? Aramco now claims it will get at least 50% recovery rate, some reserviors planning to get 75%, like IIRC. Seems to me like this technology will produce shark fin production plot on a per well basis and lower slope decline on a reservior basis. This last oil from Abqaiq is certainly not the $10 per barrel oil of the past. Maybe their production price for this last oil is closer to $60. Now I see why Aramco sees $100/barrel price as the new floor." Many years ago a 40% recovery from a deposit was outstanding. The Saudis are pushing the limits of technology very well, extending life for eight years beyond the chart shown. Note Abqaiq at 73% recovery several years ago. See the Oildrum article (CLICK HERE).

◄$$$ A QUICK SHORT STORY. DO NOT TRUST THE MEDICAL COMMUNITY IN UNITED STATES. THEY DEAL WITH TREATMENT AND MANAGED DEATH, ABOUNDING IN PROFITS. CURES ARE SECRETIVELY OBSTRUCTED. $$$

A quick story on prostate cancer as guide to treatment taken. A Hat Trick Letter client comes from the NorthEast. He visited me twice in Central America. He had prostate cancer in 2008 diagnosed. He took the usual BS treatment from the hack US medical community. He was well treated, no cure, just expensive treatment. It made the pharmas happy, and his death would have been no big deal to them after logging extremely large profits, much covered by Medicare. Then he discovered ESSIAC TEA, a nice mix of natural herbs, magical stuff with a successful track record. His prostate reduced in time, and finally he enjoyed full remission of the cancer. The lady expert on Essiac Tea, in the NorthWest, he claimed Washington state, but actually might be from southern British Columbia, was constantly bothered by US and Canadian health authorities. The lady was the leading natural remedy specialist in Essiac Tea. She maintained a full library of natural remedies, with details on treatment, and background information, maybe some details on success stories. My client has full health, smaller prostate, and no hint of cancer or enlargement.

The lady in the NorthWest eventually died, as she was in her early 90's, most likely from natural causes. Her entire library was burned to the ground in a mysterious fire only a month after her death. The library was lost, never transcribed to strong data storage. THOSE WHO RELY ON THE US MEDICAL COMMUNITY WILL FEED PHARMA PROFITS AND DIE, BUT WITH GOOD GUIDANCE IN TREATMENT TO THE FUNERAL HOME. Their emphasis is profits, hardly ever cure, since long treatment is highly profitable, and your death is of no concern. Easy lesson, again, again, again. My father has a badly enlarged prostate, heard me speak of Essiac Tea, but has not even bothered to search for it in boutique stores. The Jackass has over a dozen similar stories, even one other story with a mysterious fire, again to conceal natural cancer cures, from a friend of a friend, a doctor from Atlanta. He was threatened by the American Medical Assn directly, to strip his medical license.

A reply came from an email circle on the story. Bill wrote, "The tea story is correct. My mother has been drinking it for 20 years. She is 84 years old and goes to the dance every Friday. She lives alone on a six acre lot in Canada. Every time she goes for  a checkup, the doctor wants to know what she does as she has body of 65 year old woman." Another reply came from Joel. He wrote, "Read the book Edward Griffin entitled 'World Without Cancer.' The whole treatment thing in the United States is a scam of major proportion. If Buffet is really going for radiation treatment, he has just signed his death warrant. In fact, the very process of doing a biopsy results in cancer being spread throughout the body, as they punch a hole through one's intestines and into the prostate cancer region. The cancer spreads like wildfire afterwards."

## RUINED FINANCIAL MARKETS

◄$$$ CORRUPTED FUTURES MARKET IS BECOMING OBVIOUS TO VETERANS IN THE PITS. THE MFGLOBAL CASE IS ONLY PART OF THE PROBLEM. DISTRUST AND UNFAIR METHODS ARE UNDERMINING THE MARKET. TRADERS STAGED A DEMONSTRATION OF REBUKE. $$$

Traders walked out of the CME EuroDollar pit on April 13th to protest a big block trade that was illicitly completed. The traders were obstructed from participating in a trade before their eyes, shunned by the illicit system that favors the Elite. Prices for the block trades for options on EuroDollar futures were higher than offers in the pit, a practice forbidden in open outcry trading. Block trades are privately negotiated transactions, conducted outside the normal pit or via automated trading systems used by exchanges. The system is unfair, and arranged for benefit to the privileged, the big banks. There were six block trades totaling 215,200 options traded at 8:11am Chicago time yesterday, according to CME Group data. The trade was rolling positions from April contracts, which expired into June contracts.

Michael Whore, a CME Group spokesman explained the longstanding rules. He tried to justify the tilted board by saying, "The block trade in question was managed by longstanding rules and processes of our exchanges. It was a legitimate, well-managed trade, which was executed within one tick of the market and in one trade." The EuroDollar was once the largest contract by volume, but no longer. Its rapid decline came since the Federal Reserve has kept its benchmark interest rate near zero since December 2008. EuroDollar options volume last month averaged 811,000 contracts per day, compared with 1.3 million on average in the same month in 2007. See the Bloomberg article (CLICK HERE). Sorry, that is Michael Shore, my error.

A veteran of the financial pits pitched in with a sassy comment. My colleague said, "These guys doing the boycott are foot soldiers at best, a bunch of drug and alcohol addicts who are perception distorted zombies. The staged event means they appear to be waking up only now. The train has gone over the cliff and these idiots are reaching for the emergency break handle. What a joke. The CME should be barricaded with all the corner offices locked, and then pull the pin."

◄$$$ NO FREE MARKETS IN AMERICA. COMMENTS FROM A VETERAN. THE GAME IS RIGGED FOR THE BIG HOUSES TO COLLECT STOCK ON THE CHEAP, AND TO SELL IT TO THE PUBLIC AT A HIGHER PRICE, DURING CONTROLLED BLACKOUTS. $$$

My colleague George is a veteran of the Chicago trading pits. He knows that which he speaks. He caught my attention with stories from his old friend who turned to a security career. The friend was in charge of the Fort Knox security contract detail. It is an empty facility except for the stored nerve gas, no longer containing any gold bars. They are all gone, all sold, all raided by the Clinton Ru bin gang.

George pitched in with some juicy comments about the boycott demonstration at the CME. "Some boys in what is left of the pits, essentially only option pits due to complexity, have decided to wake up and stand up. Very little volume in the EuroDollar options today. There has been essentially non-competitive trading through electronic trading for a long time, supposedly with the Chinese Wall. Let me laugh out loud. However, what is happening in the Euro options has really pushed the limits. They are placing huge block trades non-competitively. In other words, one bank or house calls up another and gets the price on a big block. However, there is a 20-minute blackout period where neither the price nor the quantity is made public, not even to professional traders. Also, there is no equivalent blackout for trading that information by the participants. So as a pit trader, let me tell you what happens. Some one like JPMorgan screws their clients and sets the price sufficiently below actual market prices. They can then achieve turnaround for the next 20 minutes and tear into the professionals making markets in the pit or electronically, laying off most if not all of what they just took on at a nice fat profit with little or no risk. A nice rigged game for the big firms setting the rules. Most people did not know, but it has been this way for at least ten years. Outside of a pit one party can privately solicit another to trade. No free markets in Amerika, zip." The CME Group officials simply cite the rules being followed, but they are inherently corrupted. The big firms have a mechanism whereby they close the market for a short period. When the lights are turned off, numerous participants are raped. When they object, they are told that a big guy in a limousine passed through and had his way.

◄$$$ CORRUPTED STOCK MARKET IS DYING A HORRIBLE SLOW DEATH FROM ABANDONMENT. THE DEPENDENCE UPON THE HIGH FREQUENCY TRADE ALGORITHMS HAS CREATED A GRAND RISK. THE ALGOS WERE NOT DESIGNED FOR A MARKET WITHOUT VICTIMS, NAMELY THE PUBLIC. THE PUBLIC VOLUME IS WAY DOWN, MOSTLY FROM GOING BUST OR LOSING TRUST. $$$

Independent analyst Bill Holter made some astute comments on the New York Stock Exchange. He wrote, "A few observations of several things that are really not adding up correctly. First, NYSE volume has cratered and is back to levels not seen since late 2007. Not only is volume way down, the public participation has evaporated and what is left is HFT (high frequency trading). Add to this lack of volume the fact that mutual fund cash flows have been nothing but outflows for several years, and one must scratch their head as to how stock prices have risen on balance since 2009. Never before in history have we watched a market go higher on lower volume and actual outflows by the public. What a wonder today is with the ability of the tail (derivatives) having the ability to wag the dog and set market prices."

The High Frequency Trading was designed for an entirely different structural stock market. The current dependence is extremely strained as a result. The algorithms are intended to exploit the public and their slowness, as well as their ignorance. The public has almost totally abandoned the stock market. Morgan Stanley's Quantitative & Derivative Strategies released a commentary that has made a splash with a three year delay. The firm effectively predicts the end of capital markets in a world where every declining retail participation is replaced by artificial high frequency trading churn. The source has never been and cannot in the future serve as a true liquidity provider on a long-term basis. Their research concluded, "In our mind, many of the approaches to algorithmic execution were developed in an environment that is substantially and structurally different from today's environment. In particular, the early part of the last decade saw households as significant natural liquidity providers as they sold their single stock positions over time to exchange them for institutionally managed products. While the time horizon over which liquidity is provided can range from micro-seconds to months, it is particularly shorter-term liquidity provisioning that has become more common." Witness an Orwellian manifestation in the stock market. One must wonder if a substantial stock position is sold, whether the buyer is the USGovt through indirect channels, and whether the money came from the printing press ultimately.

A translation was provided by Tyler Durden, an astute veteran with a leaning toward integrity. As retail investors retrench in heavy volume, due to secular themes as well as demographics, the High Frequency Trading apparatus becomes the evermore dominant force. The liquidity and investment horizons will become ever shorter, until eventually by simple limit expansion, they hit zero. Beware of some investing singularity, for the more curiously circumspect among us. Look for the stock market to finally hit the iceberg one final time. See the Zero Hedge article (CLICK HERE) and the Cafe Americain article (CLICK HERE). As a savvy colleague pointed out, "The Boyz are running a box, churning the markets to themselves, pushing up prices. They must have outside suckers, known as retail to sell in order to get off the churn paper. The suckers are gone, mostly dead." The HFT trademark is for Wall Street firms to sell to each other in a shrinking universe environment, showing profits and boasting a bull market to the public. But the public is both more aware and more broke. The Algo-driven stock market thus risks falling victim to air pockets bearing no mass and exerting no force. If the Plunge Protection Team takes a vacation for an entire month, a stock market crash could arrive. Be sure to know that Wall Street firms might engineer such a crash, exploit it for leveraged profit, and use the incident to gain more power granted from regulators and the USCongress.

◄$$$ GOLDMAN SACHS IS EMBROILED IN YET ANOTHER FRAUD CASE, THIS ONE TO STEAL MARVELL TECH STOCK SHARES. THEIR WEALTH MGMT GROUP IS ACCUSED. $$$

Similar to MFGlobal's alleged use of client funds, Goldman Sachs is the subject of another Congressional investigation. The criminal financial firm instructed a stock transfer agent to obtain title to client shares, changing to the GSax name alone without client permission. Just one more in a long list of fraud activities. For every case where GSax is caught, imagine half a dozen where they are not. For reaching a Vice President level, it is a GSax corporate requirement to demonstrate a successful fraud. Witness the fruit of this insidious company culture. The founders of Marvell Technology Group, Sehat Sutardja and Weili Dai, have filed a detailed fraud claim with the Financial Industry Regulatory Authority (FINRA) against Goldman Sachs and two account executives. The complaint alleges Goldman Sachs defrauded the two Silicon Valley executives of several hundred $millions in the midst of the 2008 financial crisis. They were investors in by Goldman's Private Wealth Management Group. Not anymore.

New evidence has emerged that Goldman Sachs engaged in secret re-titling into Goldman's name alone of over 20 million shares owned by two founders of Marvell. In a series of transactions strangely similar to MFGlobal, the amended FINRA claim will allege Goldman Sachs secretly instructed the stock transfer agent to obtain title to the Marvell shares in a basic alley way holdup theft. The case resembles the MFGlobal theft more than the Overstock case, but a stock fraud redux nonetheless. Just a month ago, GSax was caught in a naked short stock program to push down the Overstock shares. GSax was found guilty and worked on a resolution to stay out of prison, an easy task. It is intriguing how GSax controls many Congressional panel members via heavy campaign donations, yet decisions are made on GSax fraud by such panels. They should recuse themselves, like judges often do on the bench. One should never lose sight of the fact that since 1994, Goldman Sachs has been in charge of the USDept Treasury and the USDollar printing operations, as well as Fort Knox gold management. In 17 years they have conducted regular frequent and profound pilfering. Yet they continue in their lead role (of management). When Geithner was selected as Treasury Secretary, the argument was to hire experience and not to opt for on the job training.

◄$$$ GOLDMAN SACHS HAS BEEN IDENTIFIED AS GUILTY OF MORE INSIDER TRADING, BY SHARING INFORMATION TO EXCLUSIVE PARTNERS. THE EXTENT OF THEIR FRAUD HAS NO END. THEIR ADVANTAGE IS USGOVT POLICY. $$$

To confuse the public, they give it a fancy name of Asymmetric Information Initiative. It is known as Insider Trading, a felony. The venerable stronghold of financial syndicate criminal activity, Goldman Sachs has been found guilty of sharing information to their various trading desks. The USGovt finance ministry is run by GSax. The nation's currency management is run by GSax. The GSax own desks and favorite elite clients have an information edge, otherwise commonly called insider trading. Independent minded analyst Chris Whalen from Tangent Capital has been putting himself at risk with accusations against the top Wall Street firms. He blew away the argument of a Chinese Wall to protect from insider trading. He said, "There is no Chinese Wall. Please. Come on. This is Wall Street." Awkward silence fell on the CNBC panel, the high paid lapdogs for the financial community, whose pay checks are derived from the syndicate and its outreaches. The Asymmetric Information Initiative masks the simple illegality from the idiot regulators. Lies are promulgated every single day to the public, who are led to believe the stock market and financial markets in general are fair. They are not remotely fair. The Jackass closed his stock account in very early 2008 in disgust, with not a single regret on any single day yet.

## USECONOMY REACHES FOR SUBPRIME

◄$$$ THE TRADE GAP DECLINE HERALDS RECESSION WITHOUT THE PUBLIC  OR INVESTMENT COMMUNITY RECOGNITION. THIS CONTRARY INDICATOR REFLECTS THE DECLINING IMPORTS TO THE CONSUMERS OF AMERICA. IN PLAIN VIEW IS THE RISE IN CRUDE OIL PRICE, WITH LOWER ENERGY IMPORTS. THE DATA SCREAMS RECESSION. $$$

The US February trade gap of goods & services was reduced to $46.03 billion, down significantly from a revised January trade gap of $52.52 billion. Imports fell, declining 2.7% to $227.19 billion in total while exports grew 0.1% merely. Crude import volumes in February fell to the lowest level in over 15 years, to 225.7 million barrels from 270.7 million the previous month. Crude imports were as high as 302.5 million barrels last August, which makes for a 25.4% decline. That is clearly not from greater efficiency, but rather basic galloping recession. The 18-cent average price drop for oil was only partly responsible. The Chinese bilateral trade deficit came down by 25.6% to $19.36 billion, the lowest level in nearly a year. The smoking gun was a 18.2% decrease in imports to $28.13 billion. Basic consumption has fallen, indicative of recession. Economists were pleased that the lower trade deficit will push up the Gross Domestic Product figure, as they put it, thus reducing the drag on growth. They could not find their asses with both hands, while their pockets are filled with undeserved lofty paychecks. They miss the basic recession signal that has been evident in past recession cycles.

The deficit data with major trading partners was mixed. The EuroZone chaos showed up as part of the gap reduction. The trade gap with nations using the Euro currency fell to $5.81 billion in February from $7.61 billion in January. The deficit with Canada contracted 42.0% to $2.82 billion, driven by energy sales. However, the shortfall with Japan rose 12.9% to $6.99 billion, and the gap with Mexico expanded 37.2% to $5.82 billion.

◄$$$ FOREIGN DEMAND FOR US$-BASED LONG-TERM ASSETS WAS DOWN SHARPLY IN FEBRUARY. THE WORLD IS SHUNNING AMERICAN ASSETS. EITHER THEY ARE BRINGING FUNDS HOME OR THEY SEE CONDITIONS AS VERY BAD IN THE UNITED STATES, PROBABLY BOTH. $$$

Foreign investors were buyers in February of a net $24.8 billion of long-term US securities, according to the USDept Treasury. It fell off the cliff, down from the revised $95.7 billion of net purchases in January. Overseas investors were net buyers of $15.4 billion of USTreasurys in February, down from net purchases of $84.0 billion in January. They bought a net $10.1 billion of government agency (Fannie Mae et al) bonds in February versus $9.6 billion in January. International demand for corporate bonds also continued weak, to complete the trifecta. Foreigners were net sellers of $8.2 billion of US Corporate bonds in February, following net sales of $1.3 billion in the previous month. According to the data, Chinese investors increased their holdings of USTreasurys for the second straight month, but only slightly. See the Market Watch article (CLICK HERE).

◄$$$ IMPORT PRICES JUMPED 1.3% IN MARCH, LED BY CRUDE OIL. FOR THE YEAR, IMPORT PRICES ROSE 3.4% THROUGH MARCH. $$$

The cost of goods imported into the United States jumped hard in March, posting the largest gain in nearly since April 2011. Petroleum prices were largely responsible, registering a reverse from February. In aggregate, US import prices climbed by 1.3% in March from the month before. Oil products drove the gains. Petroleum import costs rose by 4.3% in March, also the largest since last April. Petroleum prices were 9.6% higher than a year ago. Petroleum costs rose 0.4% in February, a sharp downward revision from the previously reported 1.8% jump. Notice the inconsistency from above, where an 18-cent price drop was recorded in February. As a result, overall import prices fell 0.1% in February revised. On an annual basis, import prices last month were 3.4% higher than March 2011, compared to the 5.0% annual gain recorded in February.

The US Federal Reserve last month warned that increasing oil and gasoline costs could temporarily push up inflation. Another dumb pronouncement. Instead, such costs will push up costs for consumers, shippers, and input costs to industry. The effect will be to reduce profit margins and household disposal income toward spending. It is not inflationary, but the opposite, like a giant wet blanket on the USEconomy. It is basic costs creeping upward. While steep in March, it was much milder than the runup in import prices seen a year ago. In March 2011, import prices grew 3.0% from the prior month as oil, grains and other commodities posted sharp increases. This year, metals commodities and foodstuffs are more stable in price.

◄$$$ OBAMA IMPEDES USECONOMY WITH SOCIALIST AND COLLECTIVIST THEMES. NOT A SINGLE PROGRAM HAS MADE ANY SENSE OR HAD ANY POSITIVE IMPACT. $$$

President Obama entered the White House following the 2008 financial crisis. The Lehman Brother scheduled kill, the nationalization of Fannie Mae & Freddie Mac, and the assumption of the black hole tied to AIG all marked the wreckage that Obama assumed. He has done little to turn the situation around positively. His Economic Stimulus Plan was vacant of stimulus, mere plugs to the deficit ridden states, which must fend for themselves after further relief funds have been cut off. His Green Energy Plan was all words, no action, laced with Solynda gifts in the form of loans. His nationalization of General Motors is hailed as a success, but only after constant channel stuffing. His Health Care Plan has imposed great hardship on small businesses, adding to their burden and obstructing their hiring. His Home Loan Programs are as vacant as his predecessor's from the Bush Jr Admin. The gaggle of regulation strangle netting continues. Obama has handed off responsibility for recovery to Wall Street fraud kings and the USFed, which relies on blunt instruments that have turned harmful. It seems Obama is repeating many mistakes made by Franklin Roosevelt in installing socialist measures and collectivist planks. He is ignorant of history, devoted to the dogma. See the Canada Free Press reprint article on Before It's News (CLICK HERE). Watch the presidential campaign be turned into a personality contest against a backdrop of egregious lies on the economic conditions.

◄$$$ USECONOMIC DIFFUSION INDEX IS TRENDING DOWN HARD. THE TURNS IN THE ROAD ARE GENERALLY HEADING IN THE WRONG DIRECTION. STATISTICS ON THE USECONOMY RACK UP NEGATIVELY. $$$

The USEconomy has entered quicksand since the QE programs were installed. Most news has been negative, except what lends itself well to distortions. The March Jobs report was worse than bad, most regional indexes are bad. The housing and construction news is bad. The retail news is pure fiction. Merrill Lynch maintains an excellent economic measure called the Economic Data Diffusion index which tracks macro data surprises, like downside misses versus expectations, such as the Philly Fed down hard to 8.5 in April, worse than expected. The index has been trending lower for over a month. It recently turned negative in an absolute manner, indicating a marginally negative bias overall. Higher gasoline prices will take a toll on the USEconomy, when the exaggerated effect of a mild winter wears off. The USGovt fiscal situation is ugly in a pure sense. The impact of the chronic 0% official rate is devastating in a way totally missed by the poorly schooled cast of economists, killing capital as costs rise. The recession is a constant.

◄$$$ DURABLES ROSE IN FEBRUARY. THE IMPORTANT BUSINESS CAPEX ROSE BY 1.2%, A GOOD SIGN BUT NOT ENOUGH TO OFFSET THE BIG JANUARY DECLINE. THE LIFT IS PROBABLY VERY TEMPORARY SINCE MARCH LOOKS HORRIBLE. $$$

Orders for long-lasting goods called durables climbed 1.2% in February, an indication that the manufacturing sector has some sign of life. Manufacturer orders for durable goods, products meant to last at least three years, rose by 2.2% to a seasonally adjusted $211.77 billion. The rise in new orders was broad based, with gains for the volatile commercial aircraft sector but also autos, computers and electronics, machinery, and metals. A 2.7% increase in new orders for computers and electronics was the biggest since December 2010. Durable goods orders dipped in January by a revised 3.6%, which means the February gain did not compensate for the big reverse the month before.

A key barometer of business capital spending by businesses rose in February, the first time in several months. Orders for non-defense capital goods excluding aircraft climbed by 1.2%, suggesting a sign of life, but hardly a recovery. Any recovery requires several consecutive positive months, not a singleton. Orders in the transportation sector expanded 3.9% last month, after a 5.3% drop in January. Outside transportation, orders for other durables increased 1.6% in February, following a 3.0% fall the previous month. In both categories, the February decline failed to compensate for the bigger Janauary decline. Curiously, unfilled orders, a sign of future demand, rose 1.3% last month, after rising 0.7% in January. Unfilled orders are up 22 of the last 23 months. Orders for defense capital goods surged by 12.4% last month, as war is good business, based in destruction and death, with no trickle down to the general USEconomy, none, absolutely none. War like hurricanes and tornados is not good for building the economic growth. Lastly, shipments of durable goods decreased by 0.4% in February, while inventories increased 0.4%. The entire durables data picture does not jibe well with the Chicago Purchase Mgmt Index, which for March fell to 62.2 from 64.0 in February. My suspicion is that the prices are rising, adjusted inadequately, and the error is called growth.

◄$$$ SUBPRIME LENDING, THE CRISIS CATALYST, IS MAKING A COMEBACK. LENDERS HAVE RETURNED TO THE SAME TAINTED RISKY WELLS. THE STORY READS LIKE 2006 ALL OVER AGAIN FOR CREDIT CARDS AND CAR LOANS, TOGETHER WITH THE BOND SECURITIES ISSUED AND SOLD TO THE PUBLIC. THOSE WHO BELIEVE THE RECOVERY STORY WILL BE THE LOSERS. EXPECT ANOTHER SUBPRIME RUPTURE IN YEARS 2013 AND 2014. $$$

Simply stated, the ruinous subprime lending is making a comeback, the crisis catalyst. To hell with imprudent risk! Fees rule! The devastating consequences of lax and reckless lending that caused the primary front to the financial crisis are being ignored. Subprime lending is on the rise again. Even the New York Times reported that several US lenders are trying to regain the subprime borrowers they lost in the crisis. They do not want to lose the business to competitors. Like a herd of cattle, they march over a cliff, having learned little or nothing. The higher risk loans typically come with higher interest rates and higher late payment fees. Moodys Analytics has cited notable increases in such subprime lending, identified by consumers deemed not to be creditworthy. Higher risk borrowers account for more than one-quarter of the outstanding balances, a return to dangerous ground.

Equifax cited growth in car finance, where subprime borrowers now account for almost half of the market. The lending institutions seem unable to grow their businesses among the more reliable solid sectors. They are attempting to expand too broadly. In Canada, the mortgage lender Counsel Corp openly announced two weeks ago that they are entering into the near prime segment of the market. Nice play on words to mean subprime without the stigma. Street Capital plans to sell the mortgages it originates through its Street Options Program to institutional investors. This is potential toxic bond dumping on the market, the identical practice done in 2002 through 2007 to unsuspecting investors. It removes the risk from the bond issuer, except for lawsuits and clawbacks that follow. They called it finding solutions for clients with unique circumstances. Right! Like being bad risks and from failed companies, possibly laced with fraud. See the Globe & Mail article (CLICK HERE).

Consider some actual aggregate data. Some recognized names among financial institutions seem eager to endure fresh new catastrophic losses. Capital One, GM Financial, HSBC, and JPMorgan Chase are among those tiptoeing back into subprime lending. Credit card lenders gave out 1.1 million new cards to borrowers with damaged credit in December, up 12.3% from the same month a year earlier, according to the Equifax credit trends report. These borrowers accounted for 23% of new car loans in 4Q2011, up from 17% in the same period of 2009, according to Experian. Credit card limits surged 55% to the highest level since 2008. The bankruptcy lawyers are worried among consumer advocate groups. Lenders prey on the most vulnerable and least sophisticated borrowers, desperate for credit. The banks seek to make up the $billions in fee income eliminated by regulations enacted after the financial crisis. Their expansion focuses on the high end and low end. Subprime borrowers often pay high interest rates, like 25% to 29%, and usually rack up late fees. So the banks are taking unwarranted risks.

A return to business as usual before 2007 is happening. The rationale, a likely heavy denial mechanism at work, is that the lending institutions attempt to distinguish between deadbeats and falling angels who simply were harmed by economic conditions. In doing so, the lenders accept the notion of an improving expanding USEconomy, a very false premise. They claim to carefully evaluate risks when they more likely are carefully calculating profits and fees. Regulators with the Office of the Comptroller of the Currency, which oversees the nation's largest banks, justifies the entire process. They claim no danger in extending credit to a wider band of people. They use ass-backward logic too, claiming the increase in lending is a sign that the USEconomy is improving. The logic is circular and faulty. The motives are based on profit and fees, not any ripened opportunity from any economic expansion. Political motive abounds during an election year, and banks will suffer the consequence of wrong perspectives laced with propaganda.

Capital One has returned to the tainted trough, again courting borrowers with damaged credit, even those who have just emerged from bankruptcy. Capital One has introduced a credit card that rewards borrowers with lower their interest rate after they make timely payments for a year. CEO David Nelms, of Discover Financial Services, the sixth-largest credit card lender in the United States, told investors recently that the firm planned to extend credit to a broader group of borrowers. Credit card lenders extended $12.5 billion in loans to subprime borrowers last year, up 54.7% from 2010, according to Equifax and Moody's, but still below the $41.6 billion in 2007. Lenders are ramping up their advertising, according to the market research firm Synovate.

Car loans are attractive for lenders since they were not affected by most new regulations. The market for bond securities made up of bundles of car loans is gathering momentum. Last year, investors scooped up $11.7 billion in car loan securities, up from $2.17 billion in 2008. The pace of bond securities creation for credit card debt is slower, with lenders selling roughly 30% of their card portfolios to investors. That is down from 60% before the financial crisis, according to Standard & Poors. The clowns at the never-do-well GM Financial are back to rack up stacks of new losses. Steve Bowman is chief credit and risk officer for the hapless firm. He argues that car loan lenders understand how to manage risk while still making loans to borrowers with poor credit. He must be new at the job. Moodys sounded the alarm in 2011 that too many risky borrowers were being approved auto loans. See the New York Times article (CLICK HERE). The stories above do not cover the student loans, perhaps the ultimate in subprime borrowers, without income, except for the hope of income, which quickly vanishes in the face of harsh economic reality. The student loan debt is over $1 trillion, having surpassed credit card debt for the first time in US history. College costs have risen a staggering 180% since 1981. The pack of financial dogs is returning to their toxic vomit, dried out but easily gobbled, as losses in 2013 and 2014 should be expected. Then will come the securitized bond investor lawsuits.

◄$$$ A PARADIGM SHIFT TO THE EAST IS IN PROGRESS, WITH CHINA AND HONG KONG LEADING THE WAY IN THE FINANCE SECTOR. APART FROM FACTORIES, INVESTMENT FINANCE, SAVINGS, AND DEVELOPMENT. THE FINANCE DOMAIN HAS BEEN THE WESTERN STRONGHOLD FOR SEVERAL DECADES. CONDITIONS ARE CHANGING. BOND FRAUD AND BANK INSOLVENCY HAS SERIOUS EFFECTS, WORKING ON DISTRUST TO CHANGE BUSINESS PATTERNS. MAJOR PATTERN CHANGES ARE IN PROGRESS, A GRAND SHIFT OF CAPITAL, WEALTH, AND POWER. $$$

Since the 16th and 17th Centuries, over the span of a few hundred years, the tide shifted to the West from the East. The Ming Dynasty fell, and wealth was transferred westward to the Ottoman Empire and eventually to Europe. The continent awakened after crusades and inquisitions to emerge with progress in medical, technological, and scientific innovation. By the late 17th century, the Western civilization had asserted its dominance in commerce, finance, and engineering. The world is witnessing yet another important transition of power, this time from West to East, as the US/Anglo helm in Western hierarchy suffocates from its own insolvency after the broken systemic debt bubbles and Keynesian abuses, wrapped in a fiat currency system ripe for corruption if not counterfeit. With earmarks of denial, most Western leaders in politics and commerce refuse to believe it. They cannot envision an era in which the West does not command a position of primacy in all worldly matters. Yet, that time is already upon us as a great Paradigm Shift in well underway, mentioned several times in the Hat Trick Letter in the last few years. Perhaps nowhere is this more pronounced than in finance. Major sea changes are in progress. Still North America and Europe will continue, but in less powerful position of greater subservience. The old system is being reset, and the rules are being rewritten. History is full of shifts of power. The change can be anticipated, acted upon, and exploited. Those who ignore the shift subject themselves to lost wealth consequences, being left behind, eating dust, and going poor.

1) Hong Kong has originated the most public stock offerings in the world ever since overtaking New York in 2009. More than $57 billion was raised in Hong Kong IPOs in 2010, twice as much as New York. Big names have been attracted to Hong Kong for investment banking, including Italian luxury house Prada, the luggage maker Samsonite, Swiss metals house Glencore, and the US handbag maker Coach. Even the big Rovio (creator of the popular Angry Birds game) is expected to list in Hong Kong, as contracts are in the works. In past years, New York and London were the obvious choices. Hong Kong has become the best option for most businesses seeking public capital. Their integrity leads the world right here, right now.

2) Singapore leads every major financial center in the world in financial sector foreign investment, according to the Banker intelligence unit of the Financial Times. The top three are ranked as Singapore, Dubai, and Hong Kong. Money goes where it is treated best, stolen least, and encouraged to grow the most, with client interests held high. That no longer makes New York or London as qualified. In fact, Singapore receives more financial sector foreign investment than New York, London, Frankfurt, and Switzerland combined. That is astonishing.

3) China is dominating in the important areas of emerging market development finance, especially in Latin America. This is according to a new study from the Inter-American Dialogue. In the past, countries like Brazil, Ecuador, and Venezuela appealed to the World Bank and Intl Monetary Fund when they needed money. But now these artifact organizations of the old Western hierarchy are becoming a sideshow to Chinese financial muscle. Their study shows Chinese banks have extended more loans since 2005 and made more loan commitments to Latin America than the World Bank and Intl Development Bank combined. More embarrassing, the Western tool bank agencies offer a lower interest rate. So the emerging nations prefer Chinese lenders even at higher interest rates. The reason is simple. When they accept World Bank money, they must tolerate the US/London bankster gangsters telling them how to run both business and government. Chinese bank loans do not make requirements or make political strings attached.

4) Preparations are being made for a gigantic disruption to global finance. The most obvious sign of Asia's rise will be the arrival of the convertible Chinese Yuan currency. It will become a new global reserve option to compete with the USDollar and the Euro. Bear in mind that the USDollar might split, and the Euro currency might split. In a stepwise process, the Chinese Govt is relaxing strict currency controls. We have seen new central bank currency swaps in bilateral deals like with Brazil, Russia, and Japan. The futures contracts on Chinese exchanges in Renminbi terms have begun. The introduction of RMB accounts at non-Chinese banks have begun. The non-Chinese companies issuing bonds in RMB have begun. The day will come, mark the Jackass words, when the USGovt issued USTreasury Bonds denominated in Chinese Yuan currency. Some US corporations already issue Yuan-based bonds. That will bypass and alleviate the problems from trade surplus recycle, and will settle some very serious trade friction.

◄$$$ FAMILY DOLLAR STORES HAVE BECOME AN ECONOMIC INDICATOR THAT MIGHT SUPERCEDE WAL-MART. THEY DOMINANT ONE RUNG LOWER ON THE LADDER. THE ECONOMIC PAIN SHOWS IN THE BROAD PURSUIT OF DISCOUNT. $$$

The Wal-Mart stock has been no slouch, up 10% in the last twelve months. It has served as the traditional bellwether of citizen pain. However, in the last two years the Family Dollar Stores has zoomed, up 100% in share price. It indicates a new level of pursuit of discount. The bizarre crowd commonly seen in Wal-Mart, an unfair pointed finger, has been eclipsed as an indicator. In the several dozen times the Jackass has stepped into a Wal-Mart on US ground, not once was a freak spotted. The big three of Dollar General (DG), Dollar Tree (DLTR), and Family Dollar (FDO) are doing more than meeting the needs of cash-strapped consumers. Michael Panzner of Financial Armageddon summarized by writing, "The optimists better hope that is correct. Because if it is not, history suggests the continued strength in the group is a sign that Americans are becoming more economically worse off than they were, and that any talk of a recovery is sorely misguided." He uses the FDO chart as a proxy for the group. It has loosely tracked the inverse of year-over-year changes in US average hourly earnings over the past decade or more. Given the recent run-up in the stock, this would seem to indicate that wage growth is badly stalling out. The spending power is struggling.

◄$$$ REVOLVING CREDIT IS GRINDING TO A HALT. CREDIT CARD DEBT HAD BEEN ON THE RISE SINCE THE BEGINNING OF YEAR 2011. ABUSE OF CREDIT IS THE ENDEMIC CALLING CARD OF THE USECONOMY. IT HAS ITS LIMITS. THE CHRONIC USECONOMIC RECESSION IS SEEN IN THE STALL. $$$

◄$$$ THE NON-FARM PAYROLL DATA FOR MARCH WAS AGAIN DISAPPOINTING. THE USGOVT CAN NO LONGER RELY ON THE FLIMSY REASON OF GOOD WEATHER, WHOSE BACKSIDE HAS A WEAKER SPRING SEASON. MOST GAINS ON THE JOB COUNT CAME FROM THE NONSENSICAL BIRTH-DEATH MODEL. $$$

The Non-Farm Payroll figure for March was lackluster to miserable. The Bureau of Labor Statistics reported a improbable rise of 120,000 new jobs. The fudge factor was the Birth-Death Model adjustment of 90,000 estimated new jobs from the small business sector. So even the official count is 30k excluding the B-D Model fiction. The growing population requires 150k new jobs per month, a forgotten data point. Any quick glimpse at the National Federation of Independent Business reveals a low depressed sentiment measure and a similarly depressed hiring measure, in contradiction. Making arguments against this hack survey is useless and a fool's errand. See the Ritholtz article for more rebuttal (CLICK HERE).

The sequence of jobless claims is consistently elevated, adding fuel to claim of the phony story. Jobless claims were 380k cited on April 18th, 380k on April 11th, and 367k on April 4th, no apparent improvement in trend. The USEconomy is not on the mend. However, Paul Kasriel disputes that discouraged workers were the sole reason for the decline in the March unemployment rate. He cites a few surveys, like the drop in marginally employed, reduced part-time work, and the lower duration of unemployment. See the Market Oracle article (CLICK HERE).

◄$$$ RETAIL DECEPTION IS ENORMOUS. THE SECTOR IS CRATERING BADLY IN FULL VIEW, YET THE MAINSTREAM REPORTS AS RENEWED VIGOR INSTEAD. THE ORWELLIAN STENCH IS UNMISTAKABLE. THE CAR SECTOR IS IN DECLINE, NOT GAINING. THE INCOME DATA IS IN DECLINE, NOT GAINING. THE USGOVT AGENCIES RELY ON BAD METHODS RUN BY THIRD TIER ANALYSTS. $$$

In a coherent critique of the USGovt statistical quack and economists, especially investment barkers, the TrimTab CEO Charles Biderman knocks down the retail sales reports, and crushes the Census Bureau process validity. The mainstream media is a grand nuisance and guide for investors to the slaughterhouse. Let the Jackass be grouped with the Tin Foil Hat crowd that disputes the official data and press release propaganda. For reference, see the string of deceptions with Goldman Sachs client muppets, high frequency trading liquidity effects, re-hypothecation of client accounts, shadow banking de-leveraging, the LTRO stigma of central bank window toxic collateral, and real European sovereign balance sheet aside. Reality is tough and unforgiving, the way we like it, blessed with the facts and unadulterated numbers. Disregard the sell-side professionals who regard your hard earned savings as mere incoming paper to ambush.

Here is a nutshell of the message made by Biderman. The advance retail data is garbage for March, stated as 0.8% growth, based upon job gains. The Wall Street Journal went with the garbage story, and claimed new car sales helped push the data. The advance retail report is based on a subsample of a mere 5000 retailers delivered by snail mail, complete with guesses on month over month gains dominated by cash sales. The available credit card and debit card data is ignored by the USGovt agencies. Cash sales represent under 10% of overall retail sales. The USGovt agencies by name guilty of the propaganda and deceptions are the Bureau of Labor Statistics, the Bureau of Economic Analysis, and the Census Bureau. My experience, from knowing three professional statisticians in their employ over the years, has been that they hire the third tier on capability. My crowd was the first tier, and a wide gap existed between us, where the second tier lies. They are the many analysts who were competent followers in corporate groups that employed the Jackass.

The March car sales were actually down to an annual pace of 14 million units, down by 6% over February. No strength there. The USGovt claimed the car sales grew by 1.1% in March in direct contradiction but zero dispute within the Wall Street or investment community. A simple task of pulling Mastercard and VISA data is more reliable and easier than a dumb snail mail survey to the wrong segment of retailers, done by lousy statistical analysts. On income data, a simple usage of USDept Treasury payroll withholding tax data would answer questions on the direction of labor and USEconomy. The real-time world of finance should not depend upon the absurdity of stupid surveys carefully crafted by the clueless USGovt stat rats of third tier capability and qualification. Hats off to Biderman in a concise slam of less than five minutes duration. See the Zero Hedge video clip (CLICK HERE).

◄$$$ A VALUABLE RETAIL SPOT CHECK FROM LOS ANGELES. IT SCREAMS MISERABLE, GROWING WORSE, WITH MOMENTUM BUILDING. RETAIL SALES ARE DROPPING OFF THE CLIFF. SOME SPOT CHECKS ACROSS THE WORLD REVEALED THE SAME PHENOMENON IN EUROPE AND AUSTRALIA. $$$

David is a colleague with a retail chain in Los Angeles, and a good grip on what is happening in his world. He pitched in with a thorough snapshot in early April. He wrote the following, "Just finished reaching out to more of my contacts. Three important messages. 1) Spoke to all the sales people I know in department stores in Beverly Hills. That is Barneys and Neiman Marcus and Sacks. They said the last eight weeks have been very bad. The top salesgirl at Barneys told me they will have two good days like $70,000 in the shoe department where she works. Then a few days of negative business due to returns. 2) Spoke to my old manager from a Newport Beach store, who now works in Barneys Las Vegas. He told me February and March were cliff dives, and he is hearing the same from others in Vegas. He also told me the other Barneys sales people in other cities telling him the same. 3) Spoke to a friend who has worked at an Iconic store in LA for 35 years. It is on the other side of town. It helps a lot of celebrities, and bigtime industry people in movies and music. I have known him for 26 years. He told me the same exact thing as the others, that it is getting slower as well. They do about $80k to 100k per week in just his department now. The entire complex was doing about $50 million per week in 2008. He was doing (my guess) around $8 to 10 million in just that department in 2007 and 2008. So it is down way over 90%. This week as of this morning the department had not hit $10,000 even. So it seems that whatever is going on it started to really decelerate in mid-February!!"

David added another quick report a week later that addressed the retail market at large, not just Southern California. He wrote, "I speak with high end mostly. All are saying business is waaaay down. Best source are the bookkeepers from large companies such as YSL. That is under the umbrella of another group that also own Alexander McQueen as well as other brands. Also talking to Lanvin and another group that owns brands like Marc Jacobs Chloe and other lines under its corporation. All these bookkeepers have told me many accounts are running way past due!! I spoke to my neighbor in BH, a high end clothing store which has been there for 20 years. It sells a lot to Saudi Royals when in town. They have not come this year at all, for the first time ever. BH might have maybe a Zero Sales Day once every couple of months. In February they had 13 days of zero business. My partner went to Europe recently on a buying trip and was told by many accounts that Europeans are not paying bills at all. She spoke to the only high end independent boutique boutique in Australia, located in Melbourne. It has been there since 1970s, second generation. It sells to all the big people in all of Australia. Women from Perth all the way to Sydney shop with them. They have never seen it bad like this, that was her response. Not ever ever!! March was the single biggest dropoff percentage-wise year over year ever for my chain of stores. My manager in BH who has been with me for 13 years (who knows everyone in town) is telling me many are beginning to freak out about falling business. They are truly scared!! As for what April brings, so far the first four days have been atrocious."

◄$$$ THE GLOBAL ECONOMY SLOWDOWN IS VISIBLE IN EUROPE, GERMANY, AND CHINA. THE EUROZONE P.M.I. IS DOWN, AS IS GERMAN OUTPUT. $$$


Germany is the bellwether powerhouse of Europe. When they are huriting, Europe hurts.

◄$$$ UKECONOMIC RECOVERY LOOKS MORE LIKE THE GREAT DEPRESSION, OR WORSE. FEW SIGNS OF IMPROVEMENT ARE EVIDENT. PAIN FROM HIGHER POSTAGE COSTS WILL AGGRAVATE NERVES. WITNESS BRITISH STRAIN IN THE ECONOMY, THE RESULT OF FOLLOWING THE UNITED STATES DOWN THE PRIMROSE PATH MARRED BY A PREDICTABLE HOUSING BUST. $$$

The UKEconomy is stuck in quicksand. Since the downturn in 2008, no traction is visible. The path looks worse than that during the Depression. Economist quack Adam Posen gave a speech on the conditions, aided by rose colored glasses. He serves as an external member of the Monetary Policy Committee from the Bank of England. That does not make him qualified, only privileged and biased. In lunatic fashion, he compared Britain's recovery to the disappointing recovery in the United States, but still strong by comparison. Both economies are in chronic deadly recession without much recognition.

The postage stamp price rise will be significant for the British. It is causing a mild panic to obtain a stack of old stamps before they vanish and must be replaced by the more expensive type. The move will raise the cost of sending a letter first class by a huge 30% to 60 pence (=US$0.96), and the slower second class by 39% to 50 pence. The decision has sparked alarm across the country where consumers are facing slow wage growth and high inflation. Clearly the beginnings of high inflation, and soon possibly hyper-inflation are starting in the United Kingdom. The nation repeated most major errors made by the United States, from dispatching its industry to Asia, to embracing the lunatic housing & mortgage finance bubble then bust, to signing on the phony war on terrorism with hefty military budgets and all their attendant drain. See the UK Reuters article (CLICK HERE) and the YouTube video (CLICK HERE). The end result has been the US & UK have joined forces to lead as the Axis of Fascism. My expectation is for both nations to enter a bizarre land resembling the Third World.

## UNENDING HOUSING DECLINE

◄$$$ US-HOUSING MAKES NEW LOWS. THE CASE-SHILLER INDEX IS CONSERVATIVE, AS ACTUAL PRICES ARE LOWER. THE PRACTICE OF BANK SALES OF HOMES DRIVES PRICES LOWER CONSTANTLY, OFF THE RECORD. HOME PRICES HAVE FALLEN TO 2002 LEVELS, AS HOMES SOLD IN JANUARY LOST 0.8% ON AVERAGE. $$$

Those analysts, bankers, investment managers, or politicians who proclaim the housing market on the mend in recovery are lunatics, liars, and thieves. The exact opposite is the case, a market struggling with potentially permanent ruin. The housing market started the new year where it left off in 2011, with a thud. In January home prices declined for the fifth consecutive month, hitting the lowest point since the end of 2002. The average home price is down 3.8% from 12 months earlier, according to the S&P/Case-Shiller home price index of 20 major markets. Home prices have fallen a mindboggling 34.4% from the peak in July 2006. The bank sales are even lower in price, not generally recorded since embarrassing to the bank sector. So the Case-Shiller index is conservative. They do not wish to publicize the potential for buyers to select among dozens of foreclosed properties, some without damage, others with damage, all at heavy discount. More publicity of bank sales would freeze the mainstream sales process entirely. A new bottom in home price lows was reached by 8 cities: Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle, and Tampa. My forecast is for lower lows to come. Some gains were seen, as usual, in a trickle of cities, very minor. Phoenix home prices climbed by 0.9% month over month, WashingtonDC up 0.7%, and Miami 0.6% higher. These cities have been crushed on prices, so the bounce occurs earlier and means nothing.

The entire foreclosure phenomenon has received tremendous publicity in a national tragedy. Unfortunately for sellers and banks that hold REO homes, the majority of potential buyers can see the mountain of home supply while many well informed people read about the enormous bank owned supply. Hence buyers are waiting, and they see no respite in the decline. They expect a steady cascade of delinquencies to convert into foreclosures, only to be made available at yet lower prices later. So they wait and wait. Michael Feder of Radar Logic, an analytics company that produces real estate price quotes, said "People see that there are millions of homes underwater, and at elevated risk of foreclosure, and conclude that housing values are unlikely to appreciate in any meaningful way for many years." Think ruined market, and principal cause for a systemic failure in the United States. It is in progress.

Several more rounds of home price declines are coming from the simple factor of additional foreclosure waves. The Jackass forecast used to be another two years of decline, repeated each year. My current forecast is permanent decline to 20% or 30% below construction costs. But those costs are rising. My assessment is that the US housing market is permanently wrecked and ruined, the dynamics as broken as the titles are fraudulent. No resolution will come for years, unless and until the major US banks are all liquidated. They are guilty of $trillion bond fraud, title games, mortgage contract forgery, bond counterfeit, and more. A vicious cycle has begun, one that has reached a high gear. The USEconomy does not provide secure income in order to sustain a stability act in home prices, since it lacks a critical mass of industry. Demand will remain down or absent for years. The pentup demand argument by analysts is as empty as an abandoned home, the keys turned into the bank long ago. The death sentence is justified over what the banking sector did to the nation, encouraging housing & mortgage finance to replace industry for the USEconomy, committing multi-$trillion fraud on mortgage bonds, and leading the nation to systemic failure. That failure is guaranteed in my view, due to the reluctance to expose the criminality that will make the history books. See the KSat article (CLICK HERE).

◄$$$ INVESTORS ARE LOOKING TO PURCHASE HOMES IN BANK POSSESSION BY THE THOUSANDS. THIS IS A WRECKED MARKET, AS DEEP DISCOUNTS ARE THE NORM, PUSHING DOWN THE PRICE STRUCTURE. THE MARKET IS MULTI-LAYERED. FORECLOSURES ARE STUCK IN PARALYZED CONDITION, SINCE THE BANKS VIGOROUSLY AVOID CLEARANCE OF THE HOUSING MARKET, WHICH CANNOT BE PERMITTED. THE VENTURE ACTIVITY WILL HARM THE PRICE SYSTEM IF SALES ARE REQUIRED, TO WIN A RETURN ON CAPITAL OF SIZE. THE RENTAL MARKET WILL BUZZ WITH HIGH ENERGY LIFE, ALREADY STRONG, BUT TO LOWER RENTS PAID. A BOOST TO TRADES OF BLUE COLLAR WORKERS WILL BE FELT IN A BIG WAY ON RENOVATIONS. THE MANAGEMENT WILL BE CHALLENGING. $$$

It is like the entire banking sector has become agents for Fannie Mae. The bargains abound, available properties to grab if only the bankers permit sale at a loss, whether small or large. Rumors continue of enormous privileged dumping of Fannie Mae homes to Wall Street equity firms at deep discount, not offered to the public or garden variety venture firms. The inventory of homes on the bank books reads like a big city telephone book directory. Consider Alan Hladik, an inspector for the Waypoint Real Estate Group in California, the land of fruits, nuts, high tech, and perhaps close to one million foreclosed homes. He is a new breed, of which the nation has hundreds, called either entrepreneurs or carpetbaggers. Over 20 times per day, Hladik trots through a home in need, trying to place a value on it, to determine if it is worth buying. Waypoint has purchased 1200 houses since 2008. Their current pace is to buy five to seven houses per day. Many wealthy business venture firms are set to enter the market. The opportunity seems limitless. They will be suprised at the absent demand if they wish to flip the properties and sell once improved. They will actually push down the home prices, by means of low-ball bids and by adding to the supply of homes for sale. The venture firms will not wish to repair and renovate only to stick the home in some shelf inventory like the banks. The firms that want sale and return on investment fast will render harm to the market. Imagine the marginal effect on low demand price paid and adequate sale price desired, both to be disruptive. The main feasible path seems to be rentals, which has fetched strong price in recent months. In several months, the rental market will be saturated. Either the sales market or the rental market will be hit by heavy supply. The United States might in a few years have a corporate landlord caste system, with far fewer personal private homeowners. Fannie Mae rentals fits into that scenario, with USGovt as landlord. The image of a United Soviet States of America comes to mind, marred by diminishing individual ownership.

With home prices down hard, more than 30% from peak, and the market swamped with foreclosures, large investors are salivating at the opportunity to buy perhaps thousands of homes at deep discounts and fill them with tenants. No precedent exists for a nationwide venture on such scale. But then again, this is a wrecked housing market. Some analysts are concerned that new investor ventures could encounter formidable challenges when attempting to manage gigantic portfolios of rental houses over widely dispersed areas. While true, that sizeable returns could come from successful rentals, bigger than USTBond meager yields or puny stock dividends, the benefits of clearing inventory and fixing and patching the blight of countless neighborhoods will be certain. Also, local trades will benefit from carpenters to plumbers to electricians to masons to landscapers. However, the entire enterprise could have an unintended impact on house prices, down more. If hordes are pursuing nice bargain rentals, they are not making purchases. Demand will wane for home buying, since the buyers can rent a great spacious home for a bargain, and watch the prices drop more. This entire venture concept for purchase & rent is NOT a formula for stabilizing home prices!! Watch for the unintended consequence of knocking down home prices more.

What Waypoint is doing, other firms wish to do also. Waypoint is so enthused that they committed to a $400 million deal with GI Partners, a private equity firm in Silicon Valley. The company plans to buy 10,000 to 15,000 more homes by the end of next year. Other large private equity investors have also begun the process with large investment outlays. They include Colony Capital, GTIS Partners, and Oaktree Capital Mgmt, in partnership with the Carrington Holding Company. See the Yahoo Finance article (CLICK HERE).

◄$$$ HOUSING STARTS GRAPH READS LIKE A COMATOSE MAN IN THE INTENSIVE CARE UNIT, LAID OUT FOR SEVERAL MONTHS, WHOSE LEGS ARE WITHERING, STILL SHOWING ONLY A FAINT PULSE. $$$

US housing starts fell 5.8% in March to an annual rate of 654,000 units, seasonally adjusted, according to the USDept Commerce. But the reliable future indicator in building permits, rose 4.5% to a rate of 747,000 units in March. Given the enormous housing inventory overhang, including that hidden in banks, the new home business has been stuck in quicksand. Contrary to the popular misguided notions, a pickup in this sector does not signal any revival in the housing sector generally. Building new homes when ten million homes lie in inventory makes no sense, and adds to supply. However, many people prefer the pristine nature of a new home.

◄$$$ CONSTRUCTION SPENDING REMAINS DEPRESSED, THE FLIP SIDE TO HOUSING STARTS. THEY CONFIRM EACH OTHER. $$$

The Fed may have juiced the stock market with cheap money and ultra-low interest rates, but the housing market is dead, and has been for two years. At least a couple years must pass before supply is cleared of homes and demand picks up. But for demand to gain strength, the USEconomy must revive, and that is not possible with an official 0% rate, not with unchecked Wall Street bond fraud, not with absent industry (dispatched to Asia). Unfortunately, more foreclosures are coming like night follows day, bringing fresh new bank inventory. With home prices down to where they were over a decade ago, the construction business is in the dumps. The construction pulse resembles that of a comatose man, much like housing starts. John Williams of Shadow Govt Statistics summarized, "The construction industry remains distressed in the extreme, clobbered by collapsing broad economic activity from 2006 into 2009 and by three subsequent years (and counting) of no recovery, just economic stagnation." The construction payroll spending is sickly, an ugly picture.

◄$$$ HOME EQUITY LINE OF CREDIT ICEBERGS DEAD AHEAD. BANK OF AMERICA EXPOSES BAD HOME EQUITY LOANS. THE HOME LOAN FINANCE DISASTER HAS NO END, AND HAS MULTIPLE SIDES. EXPECT ANOTHER $100 BILLION IN H.E.L.O.C. LOAN WRITEOFFS AS JUNIOR LOSSES. $$$

Bank of America has $2 billion of junior loans deemed bad assets. They are not alone among the big banks choking on housing credit portfolios. Decisions were recently made by JPMorgan Chase, Wells Fargo, and Citigroup to reclassify $4.1 billion of junior liens as non-performing. Bank of America distinguishes itself as having the biggest home equity portfolio in the United States. Falling home prices have wiped out collateral on many second mortgages, leaving them as unsecured debt, with only the final accounting on the bank books to remain. Consultancy CoreLogic estimates 20% of the nationwide $845 billion of home equity loans (HELOC) exceed the value of the properties when combined with primary mortgages. About 36% of Bank of America's HELOC were partly underwater at the end of last year. No longer can BOA conceal the deep hole. The term stands for Home Equity Line of Credit.

Fully 25% of homes in the United States are worth less than the mortgages against them, the definition of negative equity, claims CoreLogic. About 4.4 million homes have home equity mortgages. Therefore at least 25% of second liens are uncollateralized and have to be classified as impaired and likely total loss. The destruction has resulted in almost $7 trillion from property values in the nation. Typically, the second lien holder suffers a total loss. Bank of America is certainly the most worrisome of the big banks. BOA has identified $4.7 billion of home equity loans that stand behind a delinquent first. An estimated 22% of its home equity loans were actually senior liens at the end of last year, compared to about 28% at JPMorgan and 20% at Wells Fargo. The data from these three crippled giant banks excludes impaired loans picked up in acquisitions.

The three financial firms collectively hold 40% of the nation's home equity loans, according to Fitch Ratings. The agency estimates that 20 of the largest US banks, including foreign subsidiaries, might be dealt another $110 billion in junior loan losses under a stressed scenario which seems unfolding. Yet the bank stock shares are rising, a travesty and trap. Bank of America leads the group with $29.1 billion in potential such losses. Curiously, despite their unsecured nature, only 4.08% of home equity loans were missing payments, according to the American Bankers Assn, compared to 7.58% for first lien mortgages. Treatment is different also. Non-performing HELOC loans typically are written off in six months, compared to an average two year period from delinquency to a foreclosure sale on a primary mortgage. To be sure, the HELOC payments are smaller and easier to manage. See the Bloomberg article (CLICK HERE).

## GOLD JOCKEYS IN STORM

◄$$$ CHINA DOUBLES THE YUAN TRADING BAND IN FIRST WIDENING EVENT SINCE 2007. IT IS PREPARING FOR THE EVENTUALY (POSSIBLY IMMINENT) RELEASE OF THE YUAN FOR FULL CONVERTIBILITY. A MORE LIBERAL CAPITAL ACCOUNT IS COMING. THE CHINESE LEADERS ARE PREPARING FOR A MORE DIVERSE FLEXIBLE SOPHISTICATED YET STABLE SYSTEM THAT IS PART OF A MATURITY PROCESS. $$$

The Chinese Govt has attempted to stem criticism on its currency regime. Since July 2005, a narrow band has been enforced in order to maintain a loose peg to the USDollar. In doing so, it has become for economic purposes a state in the US union. This month China widened the Yuan currency trading band for the first time since 2007. The increase to 1% from 0.5% took effect on April 16th, according to the Peoples Bank of China. The last such move was from 0.3% in May 2007. The shift comes days before the Intl Monetary Fund and Group of 20 hold a conference in WashingtonDC. The finance chiefs will convene, but each global affiliation has been dominated by China in recent months. So do not expect any bullying of China to take place, in an attempt to permit gains in the Yuan exchange rate. Several global phenomena such as the European next stage to sovereign bond bust (hurt exports from China), the severely struggling US housing bust (hurt exports from China), and rising commodity & energy prices (hurt Chinese export trade) have slowed the Chinese juggernaut. But not until after the Chinese trade deficit in February expanded to the biggest since at least 1989. The Beijing leaders threw the USGovt a bone, nothing more, during an election year. The dumkopf US leaders continually rely on bashing on the currency front, when the gross labor wage differential is the primary factor, which will remain for another century. The Chinese also have the commercial cost advantage of not having strict environment rules in place. Their factories can pollute the air and water with freedom, to the point of causing deformities, illnesss, and death among the indigenous population. No worries, mate.

The foreign currencies have gained ground in recent years against the once vaunted USDollar. Consider 2005 as point of reference. The Chinese Yuan has risen 31% since then, proof that the American nitwits at the helm will never be satisfied, preferring to lay blame elsewhere than to examine their own insane economic position, corrupt fraudridden bank practices, reckless monetary policy, excessive corporate tax rate, and restrictive regulatory wet blankets. The Brazilian Real has risen 28% since 2005. The Indian Rupee has declined 16%. The Russian Ruble has come down 3.3%. A consensus is growing that the slowdown in China's growth has resulted in the currency approaching an equilibrium, as growth expectations are dampened. A convertible Yuan currency would change that. Most analysts expect it would lift the exchange rate, but money trapped inside China seeks to move. Imagine a slight Yuan decline that stimulates the Chinese Economy. The outcome could be a lower Yuan, and really stick a pole through the White House window, leading to a storm of protest and deep frustration. The USGovt would achieve what it wanted, but the reverse outcome would occur. Wow!

Nobel laureate economist Joseph Stiglitz believes the Yuan might see a lower exchange rate soon, as China takes steps to remove the obstacles for its investors to invest abroad. He is one of very few worth respecting as competent, surely not the pedestrian idiot Paul Krugman. He said, "Opening up the band in conjunction with other actions they have taken may lead to a fall in the exchange rate rather than appreciation. To the extent they do open up, money may leave, and that will weaken their currency. A free market exchange rate may not go in the way the US thinks it should." Stiglitz points out how the real world greatly favors China and frustrates the US leadership. The Chinese could conceivably put a floor on the wrecked housing market in the US, but with accusations of carpetbagging exploits. The big unspoken issue is their vast population and huge labor market, thus ultra-low competitive wage. The Peoples Bank of China said the widening of the band is intended to meet market demands, to promote price discovery, and to enhance the Yuan's two-way flexibility. They actually stated that a change improves a managed floating exchange rate regime based upon Supply & Demand and operates in reference to a basket of currencies. Consider it a billboard warning of a convertible Yuan currency coming soon. An objective will be to keep the currency basically stable at an adaptive and equilibrium level, to preserve the stability of the Chinese Economy and its own financial markets. See the Bloomberg article (CLICK HERE).

Li Wei from Standard Chartered points out the changing environment, coupled with IMF donor benefits, thus producing reduced pressure on Beijing leaders. He wrote, "The move is expected and there should be less Yuan appreciation, but more volatility going forward. The macroeconomic case for new Yuan gains has weakened, given the narrowing of China's external surpluses, subdued inflationary pressures, and clouds over Chinese export prospects. It also seems likely that the Yuan valuation issue has slipped down the international policy agenda, given China's status as a potential provider of new financing for the Intl Monetary Fund and Europe. Chinese officials have signaled that they see the Yuan's current valuation as approaching equilibrium and plan to give market forces a bigger role."

Reaction has been as diverse as it has been in high volume. Tim Condon from ING Financial Markets praises the move. He wrote, "The move represents a concrete follow-up to the recent rhetorical change in the official line that the RMB exchange rate is close to an equilibrium level. By reducing the RMB attractiveness to hot money, greater two-way exchange rate risk makes possible capital account opening, which would be a logical next step. If so, we are in the early stage of what will be as momentous for China as WTO accession in 2001." He hinted that next comes a capital account, meaning wider convertibility.

Liu Li-Gang from Australia & New Zealand Banking Group regards the move as an event that will lead to more stabilizing forces. He wrote, "This move is consistent with its recent measures to fast open China's capital account. As China experiences two-way capital flows, the renminbi's volatility will naturally increase. Allowing a flexible exchange rate will enhance the PBOC monetary policy independence and make its policy more effective. Now Chinese residents, firms, and foreign investors will have to live with a more volatile renminbi exchange rate and start to use hedging instruments. As such, Chinese commercial banks will have a new source of revenue. Indeed, this move is an important step to help improve the onshore renminbi market efficiency." This is a maturity process.

Michael Ganske from Commerzbank in London expects some Yuan appreciation after the widening process takes place. He wrote, "China is targeting to liberalize the capital account sooner rather than later. All initiatives, the Yuan, the latest increase of the quota, indicate that. They understand that the export based growth model is not sustainable and that they have to strengthen domestic demand. The currency should appreciate. When you have a managed currency and you have a goal to move to a flexible regime, you widen the managed band. As their economic growth slowed down, market participants expect a decreased speed of liberalization. I doubt that is not the case. The Chinese Economy is still growing with a solid pace, we are not in the hard landing camp. As the widening of the band is not significant, the short-term implication for companies should not be significant. When a currency appreciates, exports tend to become less competitive, but Chinese exports have a high import content and just 10% of the workforce are employed directly in export related sectors. So the growth and social impact of a controlled appreciating currency should be limited." The Yuan should appreciate from foreigners seeking security and safe haven, but the Chinese wish to invest overseas.

◄$$$ RUSSIA MIGHT BE PREPARING FOR NEW CURRENCY, WHICH COULD COINCIDE WITH THE NEW EUROPEAN MARK RUN BY GERMANS. SOME IMPORTANT MANEUVERING IS TAKING PLACE IN THE GOLD ARENA. THE SWISS ARE OFTEN INVOLVED, THIS TIME NO DIFFERENT. SOME DEAL MIGHT BE IN THE WORKS BETWEEN RUSSIA AND SWITZERLAND. THE SITUATION IS RIPE FOR SPECULATION. PUTIN IS ALWAYS UP TO SOMETHING STRATEGICALLY OF SIGNIFICANCE. $$$

Independent analyst Bill Holter has broken a story about Russia and Gold. Mother Russia has been rumored to be depositing Gold bullion into Switzerland at Basel which may be used as reserves for a new currency bloc. The gold world is in a grand swirl of confusion, disruption, and rethinking on gold as money. Germany might contemplate the assignment of Gold bullion in a new currency to be launched, as they take the Euro away from its abusive neighbors to the South. The emerging giant China does not permit a single ounce of mined metal to be exported from their borders. They have been stockpiling Gold as monetary reserves in secrecy, as has Russia. Coincidentally, China, Russia, Brazil, India and South Africa (BRICS) have been busy making trade deals that no longer require USDollars in settlement. They have many bilateral deals, some involving gold in payment. Germany and Switzerland have made efforts to repatriate their Gold from the criminal corners of New York managed and raided routinely by the US Federal Reserve, replaced by gold paper certificates.

Time for ripe speculation. The Jackass smells a strange deal made with the devil, to earn a favor that Putin will call for at a later date. The Russians might be supplying a vast hoard for backing the New Nordic Euro (aka Euro Mark) currency, in an historical accord with Germany. Think a Swiss double cross against Americans and the British, who find themselves very isolated on the global table. The Eastern Alliance has Germany as its brain trust, engineering corps, and director on strategy. It has China as its deep funded pockets, new industrial capacity, and motivator to unseat the Anglos who brandish the USDollar weapon of mass destruction. It has Russia as its vast commodity and energy resource land, with vast treasures stored under the Kremlin that rivals the Vatican. It has the Persian Gulf, always willing to side with the next winner, who can protect them from their own rogue extreme element. Then consider the Swiss, who watch from outside the Euro currency fence. They observe developments. They witness the crumbling Euro sovereign bonds and the diverse European banking system in meltdown.

The Swiss bankers have the Basel Bunch in their corner, although an independent gang wielding power of a higher order. The nation of Switzerland has already curried favor to the European currency merchant crowd by pushing down their Swiss Franc currency last summer, in a cooperative practical maneuver. The Swiss have lost their prestige during the United States raids of the lost ark, in foreign hidden accounts. They bent over hard and permitting deep probes in gold leasing with the Rubin gang. The Swiss have a history to always side with the next winner. Just a guess. But be on the lookout for a deal cut between Switzerland and Russia, as it pertains to the ring leader strategist Germany, which is organizating the global revolt against the USDollar. The Eastern Alliance must contend with the Swiss, who will not be left out. The Swiss might be doing the Russians a favor, with a wink to Germany, their old friend, but flipping the bird to the US/UK bond fraud kings.

So many potential curves in this picture. Maybe the Russians are storing their salted tungsten gold bars in Switzerland, in some kind of redemption and reclamation. In return they shut up and earn credits. My guess is that Russia is playing Switzerland in the middle in order to gain some advantage. Yet the Swiss in the past few years have ransacked the Allocated Gold accounts for its depositors. Several huge lawsuits in the $billions are in progress in Switzerland, kept out of the news by the subservient press. The Swiss would not dare betray Putin, who would deliver a swift retribution in some form or another, like cutting off their natural gas supply. The gold arena is a big battle zone with five different sides, not just a couple. The simplest explanation might be that Russia is planning to launch a simultaneous gold/oil backed currency, the New Ruble, alongside the New Euro Mark from Germany. The Russians might wish to gain some legitimacy with a Swiss stamp of approval in certification, in markets that the Swiss are major players in Europe.

Back to reality and a quick input from a unique European man with consultancy experience in the Russian Yeltsin era. He has had many intrigue filled projects over the years, is fluent in Russian, and offers information from time to time. He wrote, "There has been a Russian depository in Switzerland since the days of the Czar. Whatever the Russians might hold at that depository (500 metric tons or 100 MT) is petty cash for them. Like you asking me for a $100 loan. I have been working with Russia, even inside Russia since 1990. The Russian precious metal reserves pale all and everything you can imagine. Their mining output and their vaulted quantities are kept under very tight wraps. Their depository Gochran is the best and most professionally that I have ever seen." In the past, he has described vast underground networks in Moscow of old vintage art works, extensive gold artifacts, dating back centuries, and vast bullion storage several times what the official government reserves admit in public statements. He said the chambers extend for several kilometers. He has also mentioned Gochran as soon to emerge as a bonafide gold vault location for the global investment crowd to rival Zurich, London, and Hong Kong.

◄$$$ THE G.A.T.A. MESSAGE IS MAKING THE GLOBAL ROUNDS, GAINING PUBLICITY. THE GROUP IS RISING IN CREDIBILITY, AS THE SYSTEM BREAKS DOWN. ALMOST ALL THEIR WARNINGS HAVE COME TO PASS, AS THE WESTERN SYSTEM CONTINUES TO HURTLE TOWARD BREAKDOWN. $$$

Nicholas in Nigeria offered a fine summary of the Gold Anti-Trust Action Committee accomplishments. In the last few months, the GATA story has gone viral on the internet. It receives incrementally more mainstream coverage. The cover has been blown off the charade story promulgated by the criminals, charlatans, and clowns running the United States finance ministry and the USFed syndicate. GATA deserves a Congressional Medal for their service to the nation, in opposition to those who routinely commit financial treason. In support of the GATA messages, consider the following facts.

  • The US gold reserves of 8.1 thousand tonnes are in reality little more than some melt gold sweepings, unsighted and unaudited for some 50 years. The US has nothing.
  • The IMF official gold reserves of 2.8 thousand tonnes have never existed and are merely pledged quota allocations from the IMF founding members. The gold bullion has been double counted for 60 years in respect of official gold holdings.
  • The GLD SPDR physical gold reserves are unknown and almost certainly primarily paper gold investments (reference to the fraud strewn exchange traded fund).
  • The unallocated gold bullion accounts in LBMA custody accounts are fractionally reserved by 100 to 1. Nobody really knows exactly the ratio.
  • The USFed and Bank of England have almost certainly swapped leased loaned custodial gold held on behalf of other central banks. Nobody knows the exact figures and the BIS accounting rules enable the co-mingling of vault gold and gold receivables as one reported line item in order to ensure the practice. Information is never available or discussed. A growing awakening among concerned citizens prevails that many national heritages of gold reserves no longer exist as such, while significant calls for repatriation of gold reserves continue, like with Venezuela.
  • New gold backed exchanges are starting to emerge as a rival to the dominance of COMEX in the paper markets. After the evening London gold fix, there is no guarantee that any physical gold ever changes hands in the coming hours up to the next morning fix, despite the gold price moving every nano second on world markets (indicative of a paper charade shell game).

◄$$$ MALAYSIA HAS EXPANDED ITS USAGE OF GOLD & SILVER COINS IN COMMERCE. THE EASTERN WORLD IS RECOGNIZING REAL MONEY AND SHUNNING THE WESTERN PAPER SUBSTITUTES. THE ENTIRE EASTERN PACIFIC RIM IS USING PRECIOUS METALS COINS IN COMMERCE TO A MINOR EXTENT. THE MONEY IS INTERCHANGEABLE ACROSS BORDERS IN RECOGNITION.$$$

Dean Arif is the program director of Dinihari Dinar (The Dawn of the Dinar) in Malaysia. He is a physical precious metals stacker and avid student of precious metals. Dean offered a report in update. The usage of physical Gold & Silver in the form of Gold Dinars and Silver Dirhams has spread from Malaysia to Indonesia and has now gone viral in Singapore, Brunei, and Philippines. The entire East Asian Rim has adopted the practice in commerce, in an interchangeable manner. Dean wrote, "The silver Dirham coins will unite the people of this region (Southeast Asia) as the Dirhams from Indonesia can be used in Malaysia and the ones from Malaysia can be used in Singapore without the need for the money changer's fiat! And the coins follow World Islamic Mint standards (for consistent weight, purity, and size). So they are fully interchangeable anywhere in the world, making it a true global mode of payment." Dean reports that exchanging physical silver for everyday goods is simple. One ounce of silver, while still representing a ridiculous 50 to 1 silver to gold ratio, goes far. There are 31.1 grams of silver in one troy ounce. Therefore one-tenth of an ounce, around US$3.10 in silver value, will buy five loaves of organic wholewheat bread. See the SGT Report (CLICK HERE). Commerce is changing in Asia, maybe someday in the West.

◄$$$ JPMORGAN LODGED A COPPER EXCHANGE TRADED FUND FILING WITH THE N.Y.S.E. IN ORDER TO CORRUPT IT. THE SYNDICATE BANK HAS PLANS TO FOLLOW THROUGH TO EXPLOIT THEIR OUTSIZED COPPER METAL PLATE INVENTORY ACCUMULATION. THEY MIGHT LINK SILVER TO COPPER IN ARBITRAGE. PREPARE FOR RUIN OF ANOTHER MARKET. LOOK FOR RISING COPPER PRICE, AS AN ENORMOUS DEFICIT IS EXPECTED THIS YEAR. $$$

Collossus (posing as a bank) JPMorgan Chase has lodged a filing dated April 2nd to list a copper-backed Exchange Traded Fund with NYSE Euronext. After accumulating 60,000 tonnes of the metal, JPMorgan is ready to proceed, submissions made to the SEC. Many analysts with a sharp eye believe the bank is hedging their silver losses with copper. The strategy will work to distort the copper market, just like the precious metals. Upon completion of a 45-day review process, the ETFfund could come to market as early as June of this year, and begin ruing the market thereafter. After the evaporated enthusiasm following the late 2010 filing for copper funds by JPMorgan and BlackRock, copper prices lifted to over $10,000 per tonne by February 2011. Hype was the accusation. The demand crunch did not materialize, and copper prices have retreated. LME benchmark copper futures fell below $8000 per tonne recently. The concern is over a Chinese slowdown, dampening demand.

Metals analyst Stephen Briggs of BNP Paribas believes technical issues surrounding the structure of physical funds in general may deter investors. Any investment product that locks metal away from the market could end up raising prices for consumers. For instance, millions of tonnes of aluminum are locked in storage on financing deals. He said, "There are two technical reasons why it may be less effective. The storage costs and also a backwardation which means that other things being equal, you missed out on the roll yield that other forms of investment give you. If I am wrong about that, there is no question in my mind that it will have an impact on the market, because the copper market is quite tight physically. A physically backed ETF in that sense is no different from financing deals. The financing deals have raised costs for consumers. This arguably could do the same thing." The copper market is seen in a 180,000 tonne deficit this year, according to a median estimate conducted by Reuters of 37 analysts. See the Reuters article (CLICK HERE).

◄$$$ SALTED GOLD BARS HAVE SEEPED TO THE SURFACE IN LONDON, AFTER RAIDS IN ALGERIA, RELATED TO THE LIBYAN LIBERATION. THE REMOVAL OF QADDAFI MIGHT HAVE BEEN AS MUCH ABOUT GOLD THEFT AS FREEDOM. THE 144 TONNES OF GOLD THAT THE DICTATOR POSSESSED IN LONDON ACCOUNTS HAS BEEN CONFISCATED (SEIZED) BY THE BANKS INVOLVED IN THE CITY. THE STORIES CLAIM TO BE UNIQUE ONE-OFF EVENTS, BUT MY SOURCE TELLS THAT HUNDREDS OF THOUSANDS OF BARS WERE DISTRIBUTED FROM THE UNITED STATES IN THE 1990 DECADE. THEY HAVE BEEN IDENTIFIED IN HONG KONG AND GERMANY. $$$

ABC Bullion did the usual disclaimers, stating no participation on purchase or ownership. They have helped to bring attention to the Salted Gold bar problem. In a March 19, 2012 revelation, detailed photos were provided. Check out a legitimate Metalor 1-kg gold bar that has been drilled out and filled with Tungsten. "This bar was purchased by staff of a scrap dealer in xxxxx, UK yesterday. The bar appeared to be perfect other than the fact that it was 2 grams underweight. It was checked by a hand-held XRF and showed 99.98% Gold. Being Tungsten, it would not be ferro-magnetic. The bar was supplied with the original certificate. The owner of the business that purchased the bar only became suspicious when he realized the weight discrepancy and had the bar cropped. He estimates between 30 and 40% of the weight of the bar to be Tungsten." So tungsten passes the primitive quality tests for gold vertification. The best test uses spectography. See the AUSBullion article (CLICK HERE).

 

Screwtape Files has come into possession of a new set of photographs of a different gold bar which has been salted. The pictures appear entirely genuine, having come to them from a highly respected and well-placed source. The 1-kg bar was seized by Algerian police in an interception of a flight of gold from Libya after the NATO intervention last year. It was sent to Paris for expert analysis. The extent of the Salted Gold bars is huge and shocking, a massive scale. Bigger bars have also been salted. In the Algerian batch alone, several hundred similar bars were similarly seized and identified. The photographs show both halves of the bar after a clean incision was made with an industrial saw. One can clearly see that four 4-mm tungsten rods have been inserted along the length of the whole bar. Check out the whole bar before and after the cut was made, which reveals no missing material. The bar is clearly genuine, and has been stamped with what the approval of the Bullion Refining Industry Examination. See the Screwtape Files article (CLICK HERE).

 

My excellent gold trader source once cited the Salted Gold bar problem in January 2010 in a special holiday phone call over the long Christmas break, with instructions to leave the story alone, too hot, too dangerous. The connection with the US agency narcotics distribution routes was being investigated by Interpol. The route connection was verified. A Canadian refiner had been purchased, and used on a dedicated basis to produce phony bars for over two years reportedly. Rob Kirby bravely ran with the story, and the Jackass followed later. The gold trader pitched in with a comment last week, saying "It is always only a question of time before the truth is dragged in to the sunlight to be seen by everybody. There are 8000 metric tonnes of these bars out there. I have held some in my own hands and seen the Tungsten. All were manufactured in the USofA under GHW Bush's orders when he occupied the White House. The entire transaction was consummated by a CIA front company whose staff have all perished. This is the tip of an iceberg that lies 100 miles below the surface but is slowly and surely coming to the surface." Note the reference to killing off the entire team, probably the refiners and shippers outside the agency umbrella, along with USDept Treasury employees who saw the removal from Fort Knox.

◄$$$ GOLDMONEY HAS BEGUN MIGRATION TO HONG KONG, IN SEARCH OF ITS MORE SECURE VAULT LOCATION. $$$

Hat Trick Letter clients have been urged for several months to secure their GoldMoney precious metals accounts in Hong Kong vaults. The urge has been more strident in the last couple months, given the expected USGovt attempts to freeze US citizen accounts held in foreign countries. They use the guise of investigating for tax evasion and money laundering. The London and Swiss locations are not secure from US official meddling. But also, Swiss vault locations has hit the wall at maximum capacity. A private source has informed me that James Turk has migrated (or plans soon) all ViaMat vault storage for GM client accounts to Hong Kong. Either Turk is on my same wavelength or he follows my work. This is very good news. Maybe he is freeing up Zurich vault space, nothing more. The world is reacting to the USGovt activity to freeze and/or confiscate. Hong Kong has no cooperation, patience, or tolerance for meddling, tomfoolery, and heavyhanded shenanigans. Those who distrust Hong Kong for banking will learn in the next couple years what an intense fortified stronghold it is.

◄$$$ GOLD PHYSICAL DEMAND RISING FAST. FROM 2004, GOLD INVESTMENTS HAVE RISEN WORLDWIDE FROM $6 BILLION ANNUALLY TO $83 BILLION. THE SHIFT IN GOLD DEMAND HAS TURNED FROM 72% TO 94% PHYSICAL GOLD, IN PREFERENCE TO SECURITIES BACKED BY GOLD (CERTIFICATES). THE INVESTMENT COMMUNITY HAS AWAKENED TO RAIDS ON ALLOCATED ACCOUNTS AND DOUBLE COUNTING. $$$

◄$$$ GOLD RETAIL STORES ARE SPRINGING UP ALL OVER GREECE. THE CRISIS HAS BROUGHT FEAR OF DESTROYED SAVINGS. WORSE, THE FEAR OF LOST FUNDS IN BANKS HAS TURNED VIRAL. GOLD OFFERS SANCTUARY SINCE IT IS NOT SPECULATION IN A PAPER MILL WITH FANCY MARBLE OFFICES, ACIDIC VATS FOR LOAN PORTFOLIOS, AND WRECKING BALLS FOR LIFE SAVINGS. AT ISSUE IN GREECE IS LICENSING, REGULATION, AND SUPERVISION. IT IS LARGELY ABSENT. TAX FROM SALES IS BYPASSING THE GREEK GOVT. A BLACK MARKET IS GROWING FAST, COMPLETE WITH CRIME. $$$

The Greek laws on regulating the wild gold retail market are not being enforced. The demand from the public is too great. The diversity of the gold merchant stores is too great. The sense of unease and desperation is too great. Hundreds of gold traders and pawn shops have sprung up across Greece over the past three or four years. The police crime bulletins are taking notice. The authorities in Greece find themselves unable to keep pace with the massive trade in gold, or even to monitor the number of participating stores. The Bank of Greece, which is responsible only for gold traded for investment purposes (in the form of coins, slabs and ingots), has been surprised by the surge in the domestic gold market. The street trade in gold is beyond its jurisdiction. What is under its jurisdiction is the protection of credit as it applies to pawn shops.

The gold retailers have used an elusive law that distinguishes between merchants and pawn brokers, who typically hold items for up to six months. They operate under police license. The phenomenon is best described as an explosion. In Attica Greece alone there are currently more than 4500 shops trading in gold. Merchants merely declare their business with the tax authority. The police, overwhelmed, appear to conduct spot checks only on the establishments it has on its list.

The new pawnbrokers do not follow the rules, choosing instead to make a profit. They are required to keep items for the agreed period in its original condition, informing the customer prior to a sale. Quality cannot be assured. Standards are not being adhered to. Challenges persist on metal purity, like with melted metal and certification issued. Violations occur by the hundreds. In 2011, Financial Crimes Squad (SDOE) conducted 1700 spot checks, in which it recorded 1200 violations. The trend continues into 2012. The Greek Govt wants its tax share of the transactions. A emergent black market has developed under the police nose. Furthermore, police reports increasingly feature cases of large shipments of gold and silver being intercepted as they leave Greece for other countries without bearing the proper documentation. A crime spree has begun in Greece, linked to the gold market. They involve thefts and even kidnapping. See the Ekathimerini article (CLICK HERE).

◄$$$ THE PAPER SILVER MARKET IS GROSSLY OVERSIZED WHEN COMPARED TO ITS PHYSICAL UNDERLYING MARKET. THE INDUSTRIAL METALS HAVE MUCH SMALLER PRICE DISCOVERY FEATURES. CRUDE OIL HAS A PRICE DISCOVERY MECHANISM AN ORDER OF MAGNITUDE YET SMALLER. INTERPRET THE IMBALANCE AS GRAND FEAR OF SILVER METAL, THE UNIQUE INDUSTRIAL SOLUTION WITH JUNIOR MONETARY USAGE. $$$

Some facts about the paper silver market are truly incredible, and out of whack to the extreme. The paper market is intended to serve as a price discovery mechanism, whereby commitment can be made in contract, with future settlement upon delivery, in delayed payment. That mechanism has been abused and distorted to the extreme by the New York and London merchant thieves. An analysis was compiled on the daily paper market futures volume of various commodities against their estimated daily physical production. Silver stands in unique manner from a paper market standpoint. Silver is disproportionately traded 143 times higher in the paper markets versus what its mine supply from production. The next highest paper market commodity is copper, which is traded at roughly half that of silver on a paper market volume basis. One is left to deep suspicions. Silver has a much smaller market than copper, gold, or crude oil. Its paper market participants exploit the fact that silver can be pushed around more easily with less capital to achieve a desired result. The abuse of paper trading in the silver market has brought drastic price declines by permitting non-physical holders to sell massive size into a relatively small market. They often do so on a naked short basis, immune from rules to post proper collateral if a big US or London or Swiss bank. In no way did real owners of 160 million ounces of physical silver dump it on the market on February 29th, yet the futures market allows the silver spot price to respond as if they had.

The Gold market is half as lopsided as Silver. It too suffers from the same paper selling abuse. To the point, on February 29th one large seller of gold single handedly pushed down the spot gold price by $40 per ounce in roughly ten minutes. It was JPMorgan. The transaction was on 1.8 million gold ounces, representing $3 billion worth of the metal. No rational financial entity or investor would sell in such a manner, an imprudent action. The motive was to suppress price clearly, done without posted metal as collateral. The event has occurred in this violent vulgar global display three times in the last year. Even the most strident critics of gold in the past have awakened to the price intervention, suppression, and illegal activity. The Gold market is no free market seeking equilibrium. My best gold trader source assures that over 40 thousand tons of gold have been sold short that cannot be covered, coming from central bank vaults around the Western world, bearing gold certificates in the vault locations. The day of reckoning will come, and physical owners without margin or leverage will be the big winners.

## LONG GOLD CONSOLIDATION ENDING

◄$$$ CURRENCY DEBASEMENT AND RUIN IS DUE TO MOUNTAINS OF PHONY MONEY DEDICATED IN USE FOR FUTILE PURPOSES. IT IS TO RESCUE A FAILING MONETARY AND BANKING SYSTEM. WITNESS HYPER MONETARY INFLATION BUT DURING A TIME WITH FALLING MONEY VELOCITY. THIS IS THE ESSENCE OF THE INFLATIONARY DEPRESSION FORECASTED BY THE HAT TRICK LETTER FOR THE LAST FEW YEARS. $$$

Money of Zero Maturity (MZM) is the most comprehensive accounting of money tracked by the USFed. The similar M3 series was abandoned a few years ago. Notice the clear trajectory of an exponential chart in money supply in the last 20 years since Greenspan plied his trade at the USFed and Rubin began to gold raids and the USEconomy relied upon the housing & mortgage finance bubbles. The expansion of tainted money to cover the tracks, enable the thefts, to patch up gaping holes, and to impose non-solutions is clear. Conditions are in a grand imbalance. Money is out of whack, not the devotion of earth resources that should be in synch. The USFed and USDept Treasury must continue the expansion, even acceleration, or else the system collapses. It is collapsing of its own weight and fraud. The arrows drawn in the chart show the exponential stages clearly, as the pace makes quantum jumps. Even as employment is weak, income growth is stagnant, the economy is struggling, and price inflation is allegedly quite low, the United States is indeed a site of factories, but in the manufacture of money. The brisk nominal pace in the series indicates a Weimar flavor. The Jackass complaint made for a few years is that the new fresh funds are kept within the financial system to cover derivatives, to redeem toxic bonds, to bail out banks, to build reserves in offset to impaired balance sheets, and to supply executive banker bonuses. The financial walls have been firm to date.

 

The Main Street benefit has been nil, since kept out of the elite game. The big banks are lending less within the USEconomy, which is stagnant, stuck in a recession when accurate measure is made. Note the falling Money Velocity, inferred and derived by dividing the stock of money into GDP. Money is not being efficiently used in production, since it has been used to cover up inflation bust failure and diverse bond fraud. The higher the resulting velocity, the faster each unit of money is racing around in the economy trying to do something. In fact, the velocity of money is at an all-time low and seems to be headed lower. When this money finally decides to go out and spend itself, the game changes. The financial firewalls must be dismantled first. A certain potential energy is being stored, unable to be released since businesses are in retreat, costs are rising, capital is being destroyed, and Chinese competition is everpresent. Lenders find fewer qualified borrowers. Lenders themselves are insolvent. On the banking side, the funds pile up, but in the tangible side, the capital is accumulating in China and the emerging economies where the factories are bustling. Witness the indisputable characteristics of an inflationary depression. See the Martenson article (CLICK HERE).

◄$$$ GOLD CONSOLIDATION & CORRECTION FOR THE LAST 12 MONTHS APPEARS TO BE NEAR AN END. THE GARTMAN CONTRARY INDICATOR IS HEARD LOUD & CLEAR. BUT THE PAUSE PATTERN OF CONSOLIDATION APPEARS SIMILAR TO 2006 AND 2009. THE MORAL HAZARD IS AGAIN BEING EMBRACED. PREPARE FOR THE NEXT GOLD BULL LEG. $$$

Dave in Denver brings great analysis and charts to the table. Gold has corrected and consolidated into a seriously bullish technical formation, seen in a chart over a ten year period. Conditions today are far more promising on a fundamental basis than in 2006 and 2009, the last two gold breakouts from similar consolidation formations. The next move up should be impressive and powerful from the current pennant pause pattern. In addition to the Gartman contrary indicator, another arises. The Hulbert Gold Newsletter Sentiment Index shows a minus 15 reading. Historically, as Hulbert points out, extreme negative indicators for this index have signaled a big move higher in gold. He said, "Analysis of gold market sentiment over the last three decades has shown that, at the 95% confidence level that statisticians often use to assess whether a pattern is most likely genuine, gold tends to do better in the wake of low levels of bullish sentiment (like now)."

Dave in Denver went on to point out a resumption in the creation of the subprime bubble. Mortgage brokers in Denver such as First Option Lending are again promoting 0% down payment mortgages. Without doubt the program originates from the FHA in yet another USGovt subsidized program. AIG is back to investing in real estate. The old line AIG insiders, Goldman Sachs and JPMorgan in particular, profited heavily in the last Ponzi Scheme runup. They are back for more in round two. Reinflating of subprime signals another big leg in the gold bull market. Gold will rise from the expansion of the bubble, and rise again in the repair from the bust that follows. The epitome of the moral hazard is embedded in the system. Notice the similar patterns from the last decade. The current situation in 2012 appears not only similar, but even more powerful.

◄$$$ GARTMAN IS AN IDIOT, A SHAM, A HIRED SYNDICATE HACK PUMP. HIS GOLD CALLS ARE CONSISTENTLY WRONG. AND WORSE, THEY ARE MOST EMPHATIC RIGHT AT THE TURNING POINTS. HE MUST BE PAID OFF BY THE CARTEL. $$$

Dennis Gartman serves without doubt as the singular best contrarian indicators of the gold market. He has been close to 100% consistent over the last seven years. His newsletter is the province of investment losers and fools. In early April he once more declared the end of the gold bull market, a surefire bull signal. Gold is up 5% in the brief time since he advised his readers to dump gold. He began his errant mission from hell in late 2005, when gold had a very difficult time breaking through $500. Gartman sold his entire gold position. Gold then proceeded to make a huge run up to $1000 before the next nasty correction. Gartman missed almost the entire major bull move. His sage advice was repeated between $1000 and the $1900 on the next legs of the powerful gold bull. He is probably proud of his wrong calls, the arrogant man that he is. The Jackass met him in 2007, totally unimpressed by his vacant mind and his stupid commentary. He has value though, as an accurate contrary indicator.

Gartman explains, saying "I do not like being long of gold. I do not like the gold bugs. I am not a believer that the world is coming to an end. Nonetheless the trend in gold in all sorts of currencies, whether in dollar terms, euro terms, yen terms, has been from the lower left to the upper right." His admission contradicted all his previous assessment that gold's chart pattern indicates a bear market. Of course the world is not coming to an end. However, and to gold's benefit, the central banks are stuck at 0% on official rates, and have flooded several $trillion to rescue sovereign bonds and banks. So real rates are stuck negative, and monetary inflation is the norm. There is no foreseeable end in sight, and thus the engine for the gold market is stuck in a bull gear. One must wonder how much the big US banks give Gartman for being such a gold idiot, whose calls have big value but on a contrary basis. His fund has miserable performance also, yet he is a regular on CNBC and elsewhere for interviews to share his wisdom. As the Lumberjack futures trader noted, his regular appearances are a sign of a corrupt market.

◄$$$ SILVER COMEX WAREHOUSE INVENTORY IS DROPPING DANGEROUSLY. THE GLOBAL SILVER DEFICIT HAS BEEN IN FORCE FOR A FEW YEARS. THE EFFECT PUTS STRAIN ON THE SILVER MARKET. INVESTMENT DEMAND REMAINS STRONG. EXPECT MUCH HIGHER SILVER PRICE IN THE COMING YEAR OR TWO. $$$

COMEX warehouses registered Silver inventory has dropped about 7 million ounces since March 26th and currently stands at 29.3 million ounces. It stood at 90 million ounces in mid-2008. That is almost a 70% decline. The drainage must give great concern to JPMorgan and the wicked witch Blythe Masters, who staged a near comical television appearance two weeks ago. She claimed that JPMorgan does not manipulate the price of silver, which in itself serves as confirmation. The claim of hedging client positions is ludicrous, a practice never done in financial brokerage.

◄$$$ THE GOLD WARS HAVE CHANGED. THE PAPER AMBUSHES ARE FOLLOWED BY FIRM PUNISHMENT OF GOLD CARTEL MEMBER BANKS. THE PHYSICAL PRESSURE RESULTS IN ANOTHER DEAD CARTEL MEMBER WITH EACH AMBUSH. $$$

As the paper price of gold goes down in each naked short ambush sequence,  another gold cartel member bank is killed. It is pushed down at first by the gold cartel. But later, the gold price is continued in the pushdown by the Good Guys. Their motive is to kill off another cartel member bank. Last summer, they killed off Union Bank of Switzerland, which has zero gold and is no longer a player in the gold game. The cartel is being steadily stripped of their physical gold, forced by bad PIIGS sovereign debt positions, and wrong currency positions. To relieve the margin calls, the cartel member banks are forced into relinquishing their gold at low prices. In addition, traps are being laid for the gold cartel member banks. To the novice, it appears that gold is being punished. When in fact, for those who gobble up the mainstream news like dogs eating vomit, they miss the actual story. The reality is that another gold cartel member is killed every few weeks. In several months, there will be only a few of them left. In 12 to 18 months, according to my source, the entire gold cartel could conceivably be killed off, drained of their gold, out of the game. At that time, they will be unable to defend against a move in gold past $2000 and past $3000.

◄$$$ IN EARLY APRIL, A VERY LARGE GOLD TRADE HAD TO WORK THROUGH, PROBABLY TO KILL ANOTHER CARTEL BANK, OR TO WEAKEN IT INTO A LIFELESS CONDITION. THE CONSEQUENCE OF THE AMBUSH WILL BE ANOTHER EVIL BANK KILL. BUT IT TAKES TIME TO COMPLETE THE EXECUTED GOLD PHYSICAL SALE. THE PRESSURE ON THE TARGET BANK IS AS GREAT AS ITS VULNERABILITY FROM POSITIONS GONE BAD. THE MARGIN CALL MAKES THE OUTCOME CERTAIN BUT NOT THE TIMING. $$$

In response to a query within my inner circle to a savvy experienced unflappable gold trader, a message came back in reply. We wondered the story behind the gold takedown. He said, "This has to do with a mega off-market gold transaction where the seller is being forced into a corner. That can only be done successfully if the official price is being driven through the floorboard. To trigger such visible price drops takes a lot less then you might think. I cannot say more, but rest assured the gold price will eventually explode on the upside."

◄$$$ ON APRIL 4TH, AFTER USFED MINUTES WERE RELEASED, A MONSTER 637.5 MILLION OUNCES OF PAPER SILVER WERE DUMPED ON THE FUTURES MARKET IN ONE HOUR. THE CARTEL IS DESPERATE. THEY REALIZE THAT EVERY TIME USFED CHAIRMAN BERNANKE SPEAKS, THE GOLD & SILVER MARKETS ARE VULNERABLE SINCE THE MESSAGE OF A BROKEN MONETARY SYSTEM, AN INSOLVENT BANKING SYSTEM, AND CONTINUED HYPER MONETARY INFLATION IS CONSTANT. $$$

Last year and in 2010, whenver Bernanke spoke, the Gold & Silver prices zoomed up. The gold investors relished the next speech. As counter-measure, the cartel ambushes the precious metals market whenever either the FOMC minutes are released or the good myopic chairman speaks on the ruinous landscape they preside over. This story is of the second paper dump on the precious metals market in this young calendar year. The monetary printing to cover bonds without end has gained too much publicity. The crumbling sovereign bond story in Europe and the extreme chronic USGovt deficits make for a powerful bull argument in the gold market. The $2.1 trillion infused into Europe from the Dollar Swap Facility reeks of hyper monetary inflation, which matches the similar excess perpetrated on the US side of the ocean. So the US banking authorities organize ambushes based upon naked short raids. They have not been successful in stopping the biggest decade in gains for gold in history. They will not here either. The trend remains up still.

On April 4th, a staggering monster of 637.5 milion ounces of paper silver were dumped in a single hour after USFed Minutes were released. The total CME estimating futures market volume in silver on April 3rd was 53,978 contracts. The CME silver volume on April 4th was 127,000 contracts, but just between 2pm and 3pm. That is pure desperation, corruption, and boldly done. The previous similar event was February 29th, when a dumping session of 225 million ounces was documented in only 30 minutes. The gambit pushed the silver price down $4/oz, from $37.62 to $33.68 in a bold push. In a sign of the diminishing returns of paper market manipulation, as prologue to the USFed Minutes regularly disappointing message, beginning at 2pm EST on April 4th over 127,000 contracts dumped on the market in only one hour. The fingerprints showed JPMorgan's hand. The payback was paltry, as it resulted in a meager 65-cent silver decline of. That is no misprint. Nearly 80% of entire annual world mining supply was dumped on the market during the thinly traded Globex session over a single hour, and all the cartel could muster was a lousy 0.65 decline in the paper price of silver! Expect much higher silver prices in the next year or two. See the Silver Doctor article (CLICK HERE).

◄$$$ GOLD & SILVER ARE EACH IN A LONG-TERM CONSOLIDATION. THE GOLD PENNANT PATTERN IS MORE INTERMEDIATE. THE SILVER PENNANT PATTERN IS MORE LONG-TERM. GREAT METAL SHORTAGE, HUGE INVESTMENT DEMAND, AND PURSUIT OF SAFE HAVEN WILL DRIVE PRICES MUCH HIGHER. $$$

 

◄$$$ THE USDOLLAR APPEARS TO BE TOPPED OUT. AS IT FALLS, THE GLOBAL COST STRUCTURE WILL BE LIFTED AGAIN. MOST COMMODITIES ARE PRICED IN USDOLLARS. BIG CHALLENGES ARE IN FORCE AGAINST THE GLOBAL RESERVE CURRENCY. AGGRAVATING THE EFFECT IS THE CHRONIC HIGH OIL PRICE. THE IRAN EFFECT IS FELT, NOT GOING AWAY. $$$

 

## THANKS

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.