GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES


* Intro Gold Nuggets
* Gold Trade Finance
* Gold War Takes Center Stage
* Gold Price Obfuscation
* USEconomy Accelerated Implosion
* European Economy Chaos



HAT TRICK LETTER
Issue #107
Jim Willie CB, 
“the Golden Jackass”
20 February 2013

EDITOR NOTE: Graphs of the Gold price and Silver price will not be shown in the report. No respect will be shown the corrupt nefarious establishment. The naked shorting and criminal behavior, like GLD inventory raids, is beyond reproach and description. The questions of importance are not how low the paper price can go, but what motive the banksters have. A price divergence is underway, separating the paper Gold price from the less visible metal Gold price during times of profound shortages. The Jackass belief is that the Boyz are petrified, and desperate to paint a strong face. Major networks cite Gold as the investment for fear. It is instead the investment for financial system breakdown, lost control of hyper monetary inflation, and failure in stimulus to revive economies. The Boyz see bad reaction in conventional camps with criticism of the QE to Infinity and ZIRP Forever, with no exit. They observe members of conventional thought serving up doubt that any solutions are coming. They watch the European banking system collapse. They notice the USEconomy accelerating in decline. The authorities in the banking world, where control rooms are active, are scared witless. So they double up on the naked Gold & Silver short contracts. They corrupt the system more. Some wonder if their purpose is to establish a lower paper price upon which the COMEX and LBMA can default. The Voice believes that when the collapse of the big European banks takes greater strides and the contagion beyond Europe begins, a panic will hit soon. At that time, Europe will spark a Gold rally which will take the Gold price through the roof, and trample the shorts, taking no prisoners.

"We are not going to resolve our long-run fiscal issues anytime soon, which is OK, not ideal, but nothing terrible will happen if we do not fix everything this year. Meanwhile, we face the imminent threat of severe economic damage from short-term spending cuts. So we should avoid that damage by kicking the can down the road. It is the responsible thing to do." ~ Paul Krugman (Nobel Prize winner in Economics, apologist for failed Keynesian policy, favorite son of Wall Street, and total flaming moron, yet another sign of corrupted system, which hit climax when Obama was handed a Nobel Peace Prize, to have a sequel when nazi movies win Oscars on fictional docu-dramas that shape public opinion)


"To fight this recession the Fed needs more than a snapback. It needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of PIMCO put it, Alan Greenspan needs to create a housing bubble to replace the NASDAQ bubble." ~ Paul Krugman (2002, proof of moron extraordinaire)

"It is the constant drop in the dollar's usage as a contract mechanism internationally. No one sees this but it is the Hammer of Thor on the head of the dollar." ~ Jim Sinclair

"If Gold is ignored by the corrupt bankers, then Gold will be the center of the new trade system and the solution in providing a globally accepted USDollar alternative. By exiling Gold formally from the currency and bond markets, they have left Gold as the potential solution for trade, which will then result in enormous impact upon the monetary system and banking reserves. Remember that banking systems naturally follow trade practices. The forced Paradigm Shift from the back door will turn the Western banking world upside down like a highly disruptive technology." ~ Jackass

"The paper gold market is larger than available, tradable physical Gold, by a factor of three. This market will continue to expand until we reach a massive gold derivatives failure. This will come about as those, who had no wish to gamble, but traded paper gold anyway, make a mad rush to dump paper and buy Gold. Very few of them will succeed. The largest bulk of the tradable physical Gold will never come back into the market, in terms of currency. It will return as a trade for another commodity, namely Oil. The present over-leveraged economic system [will result in] the complete and total destruction of the world gold trading system. Gold may find a price of $50/oz or $50,000/oz but the truth will not be known as an open market. Yet gold will find an increase of value of biblical proportions." ~ Another (anonymous famous contributor, 1998)

CORRECTION: The present tense was used in reference to Chalmers Johnson, the fearless warrior. It has come to my attention that he indeed died in 2010.

## INTRO GOLD NUGGETS

◄$$$ MESSAGE FROM THE VOICE, CONTAINING ENCOURAGEMENT, WARNING, AS RAPID CHANGES ARE COMING. THE ENTIRE GLOBAL LANDSCAPE WILL UNDERGO REVISION QUICKLY. $$$

The Voice is a sage old warrior (not old in years, younger than the Jackass by one year) with great experience and an impressive Rolodex. He has foretold many events as they have unfolded. His entire tone has changed in the last few months, as events are hurtling out of control for the diabolical bankers. They are surrounded and depleted, left only with weapons to destroy the system further, including themselves. He wrote recently, "There are things coming to surface now that will make people's heads spin. Today the top guy of the largest Italian company was arrested at defense contractor Finmeccanica. In Greece the top government statistics guy is about to go to jail. In Spain the entire government is about to be brought down on corruption charges. The new CEO of Deutsche Bank is under severe pressure to explain derivatives, and might be forced out. A number of top bankers are about to go down for serious bond fraud and other financial violations. Once some of those guys are taken to the chair in the basement, they will sing like canaries to save their hides, taking many their buddies down with them. With the Pope's resignation, all is possible now. The psychological effect is like a nuclear bomb with far reaching impact. The days are over when you can squeeze people's Gold from them by decree. The power Boyz are on their last leg. Some of them remain unaware. Know this yet. It is like two tires blowing on your Porsche Carrera at 350 km/hr (220mph)."

Days later, he resumed his line of encouraging discourse. He mentioned how many crucial developments are unfolding on a global scale simultaneously. Many have pressed him for a timetable of a major event. He makes clear that a time window is impossible to define. It could happen next month or the month after, maybe even next week, since major structures are breaking down in important ways right here right now. A great acceleration is evident, not present a year ago. He expects with certainty that it will happen quickly, hitting the markets with full force. The impact will not just be to financial markets suddenly and unexpectedly. The impact will be shocking for almost all of humanity, as tremendous shifts take place in the wide assortment of marketplaces of the world. The end of the Dollar Age is coming, and with it a more balanced barter system which will cut out the deadbeat nations of the world. Gold will make a return but in an alternative manner. Sadly, due to a generation of betrayals, errors, and warmongering, the US is a deadbeat nation that cannot pay its bills, nor demand a continued high standard of living. Most of these developments and most of the desperate measures by the USGovt are beneficial since they bring the system down from the inside. People will resort to other systems like barter (or hawala) to totally avoid the current systems and erected obstacles, a process to begin in the East and Middle East. Ironically, governments as we know them will have to be reshaped, just as they pushed the Iran trade out of the banking system.

He advises on watching Gold prices. The ordinary investors should just ignore and disregard all what is written and posted about where Gold & Silver prices will be heading in the near future, since 99% of these scribes are braindead, verifiable harlots, and incompetent clowns. He closed saying, "We shall soon fondly remember the times when it was easy to buy Gold on the cheap due to the Boyz manipulating the price down. There has never been a better time than in recent months and the last few years, never. Gold & Silver are money, all else is IOU paper laced in conman toxic investments that will go up in smoke. Put me on the same page with James Turk [of Gold Money] and a few others who predict Gold & Silver will go through the roof in today's US$ terms." All in time, but sooner than later.

◄$$$ EGYPT MIGHT SUFFER A FINANCIAL COLLAPSE. A MAD SCRAMBLE IS IN PROGRESS TO EXIT THE EGYPTIAN POUND AND TO FIND USDOLLARS. A BIG CURRENCY DEVALUATION IS COMING, JUST LIKE IN VENEZUELA. EXCEPT A WHIPLASH IN EGYPT WILL FOLLOW, SINCE ALL ITS RESERVES ARE LOCKED IN USTREASURY BONDS THAT NOBODY WANTS. THEIR RESERVES ARE DANGEROUSLY LOW, WITH WHICH TO MANAGE TRADE FLOW. NASTY SHORTAGES ARE COMING TO EGYPT. $$$

When Venezuela ordered a harsh currency devaluation, it set off a chain reaction among the secondary sovereigns in the world. They are not directly involved in the major control rooms, but they are affected. The battle to push down currency, to rescue industry, and to alter living standards is a game that affects the entire world. In the Competing Currency War, the last player to take action inevitably loses. The focus is quickly turning to the historically friendly North African friend in Egypt, the custodian of the Suez Canal and thus a strategic partner. The fact that their currency is called the Pound should hint at old links with London. Apart from the politics, the nation is in turmoil. A counter-revolution is underway against the US-backed regime, led by the Muslim Brotherhood. The citizens of Cairo and elsewhere in the nation are scurrying to preserve their wealth. They are busily converting it into USDollars. However, the USFed is on steroids debasing its value. Meanwhile, Egypt has a gigantic problem since it has run out of USDollars. A run on the Egyptian Pound (EGP) has left foreign currency in short supply. A new black market has spawned in foreign currency. Their Pound has officially lost 8% of its value since December 30th. Like in Caracas Venezuela, the black market rates are even weaker, a sign that true value is much lower. Egyptians are nervous about holding their own currency.

Conditions will grow much worse, as the run continues on the Pound. The official FOREX reserves held by Egypt have plunged to just $13.6 billion, around 60% less than the $36 billion held at the bank before the uprising that deposed Mubarak. Bear in mind that $15 billion is required in order to cover three months worth of imports, a standard measure for economic activity. The risk is immediate for a halt to foreign trade. The stern step might come in following Argentina's footsteps. Cairo officials might soon order a price freeze, or else risk a run on the supermarket shelves for food supplies. Either way, shortages are coming. Senior executives at Egyptian companies expect much tighter currency conditions, a dried up supply of USDollars from the political uncertainty as the black market expands. They expect very soon for products to disappear from supermarket shelves. The social disorder will turn tumultuous. Expect the Egyptian Govt to devalue the EGP overnight by some 20% to 40% suddently, an act to vaporize the citizen wealth. Chaves in Caracas set the precedent for others to follow. The economy centered in Cairo will be destabilized further, as devaluation means instant price inflation shock. The domino effect will be seen in numerous other nations. The entire world is suffering from badly over-valued currencies, all of them, all nations, all currencies, the world over. See the Zero Hedge article (CLICK HERE).

As the Jackass wrote for three years, the first nations to take action against the broken USDollar-based system will be the leaders in the next chapter. The same applies to the currency war, except that jockeying within paper currencies merely resembles choosing a better chaisse lounge chair on the Titanic. If Egypt falls and it will fall, the impact will be on the USDollar prestige. A grand whiplash comes for Cairo and Egypt. All the reserves it holds are in US$ terms, which nobody wants. It will be a massive blow to the United States. Watch as Egypt will lean toward the new axis of China, Iran, Russia, and India, thus abandoning the West.

◄$$$ THE WEALTHY ELITE ARE MAKING BIG BETS AGAINST THE USECONOMY BY SELLING VERY LARGE STOCK POSITIONS. IN ADDITION, TWO OUTSIZED BETS WERE PLACED IN EARLY FEBRUARY. THEY INDICATE AN EXPECTED BIG DECLINE IN US-STOCKS, POSSIBLY LED BY THE FINANCIALS. $$$

Large investors and corporate executives are dumping US stocks en masse. Warren Buffett has been selling shares at an alarming rate, having complained of disappointing performance in marquee companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods. His Berkshire Hathaway sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in consumer product stocks by 21%. Berkshire Hathaway also sold its entire stake in the prestigious computer supplier Intel. Fellow billionaire John Paulson is selling out of US stocks too. The Paulson hedge fund recently sold 14 million shares of JPMorgan Chase. Buffett, Paulson, and George Soros are exiting stocks. Google Executive Chairman Eric Schmidt is selling roughly 42% of his stake in the company, worth $2.51 billion, according to a recent SEC filing. Through early February over a 10-day period, high level JPMorgan executives have dumped over $6 million in shares steeped in unusual activity. They must not only smell something ugly coming on the October 12th earnings report, but know it. See the Market Watch article (CLICK HERE) and Investment Watch article (CLICK HERE).

In early February, two ominous contemporary warnings were noted in the options arena for the US stocks. They are so large as to conjure up memories of the 2001 put options against airline stocks right before 911 in year 2001. The positions are large and constitute bets against the entire USEconomy. This week, an anonymous trader bought 100,000 put options on the exchange traded fund believed to be the XLF, the SPDR financial sector vehicle. If the XLF, it would be a bet that the financial stocks will go down hard. Certain professionals took notice of the order, since it is 200 times the usual high trade volume of 500. The trader is betting that the US stock market will take a significant hit by the end of April, led possibly by financials.

With the US stock rally in full force with USFed tail winds at work, the volatility index (VIX, aka the fear index) is near historic lows. But according to UBS's Art Cashin, some options trader has made an enormous $11.25 million bet that the VIX will explode higher very soon. And a rally in the VIX is usually accompanied by a drop in the broader stock market. Usually such oversized bets are placed against the S&P stock indexes. In early February a big bet was spotted, a call spread on the VIX (long the April 20, short the April 25). The 150,000 contracts were bought for a net of $75 per contract. That is an $11.25 million bet that the VIX will move over 20 during the next 60 days. The speculator would have to be very confident in the outlook to take risk on a directional position with the VIX at five year lows and the markets trying to break out to new highs. The position erodes in value on the premium side a lot each day, with a limited time window. We mortals have around 60 days to watch events unfold. The list of scheduled events and deadlines and possible radical situations unfolding is long, a reason to stay alert. See the Business Insider article (CLICK HERE). Thanks to RobH for sharing the story.

◄$$$ GREENSPAN BEGS FOR A SUSTAINED US-STOCK RALLY, A PATHETIC DISPLAY OF THE LAST DAYS OF THE USDOLLAR AND ITS UNSPEAKABLY CORRUPT FINANCIAL MARKETS. WEALTH IS ON THE VERGE OF VAPORIZING. $$$

Former USFed Chairman Alan Greenspan, revered before the wreckage he laid upon the nation, knighted by his true chiefs in London, has revealed the principal epithets of the US propaganda machine steeped in financial center controls, levers, if not deep criminality. Recall he praised the wonders of off-loaded risk in bond derivatives before they collapsed. His appearance as a veritable Mr Magoo is giving way to utter nonsense coming from his mouth, in a quasi-defense of his record. The result is a laughable display. As a Valentine's Day present, he laid an egg, perhaps subliminally believing it was Easter. He argued initially that the USGovt sequestered budget will unfold, where the automatic budget cuts will be imposed. The Jackass view is auto-cuts are wonderful, as anything to cut the monster down in size is great, especially the war machine that kills all in its wake at home and overseas.

The shocker came with his justification for the US Stock market. Greenspan actually said, "The stock market is the key player in the game of economic growth. [Later] the fiscal problem is so severe at this stage, that unless we come to terms with it in a large way, we are running into very serious trouble." Ok, so wisdom follows alchemy. He attempted awkwardly to explain that the stock market is a leading indicator of economic activity. He went further to claim the stock market growth is a major cause of economic activity. Nothing could be further from the truth. In fact, it should lead business expansion, but no longer in the controlled US financial arenas. He carefully avoided all discussion of the Working Group for Financial Markets and their heroic task to save the nation's bacon by lifting stocks with newly printed money (stock market monetization). He also avoided discussion of the worst and most pernicious economic recession since the Great Depression that he ushered into existence. The funnels from the USFed monetary printing machinery to the stock market are direct lines connected in the national interest. Denying a depression is also in the national interest. It is obvious, Sir Alan. He has converted into a combination bizarre buffoon and wiley uncle flirting with dementia. See the Zero Hedge article (CLICK HERE).

Nothing but disgust and contempt for Greenspasm on my end. He drew a secret paycheck from the Swiss bankers through his entire USFed chairman tenure. He was the principal architect of ruin. His other objective was to give the American speculative fools what they demanded, permit them to build asset bubbles, and then allow the housing & mortgage bubbles to destroy the USEconomy. My other wonder is whether Greenspasm brokered the Most Favored Nation status for China in 1999, which promised China shiny new factories, in return for USTBond purchase from trade surpluses, with a kicker that Wall Street borrowed Mao Tse-Tung era gold. His overarching mission has been to pave the way for a one-world government run by the ancient castles with brutal fascism and totalitarian rule by the bankers who have stolen the majority of market assets with clear impunity. People confused his obfuscation for wisdom, and confused his destruction for guidance. Not the Jackass, not after 1996 or so.

◄$$$ KITCO RELEASED JON NADLER, THE IDIOT GOLD PERMA-BEAR. $$$

After seven years of harsh criticism from precious metals investors and the Gold Anti-Trust Action organization, Kitco has finally released Jon Nadler from his uncertain services. He has been the fool posing as bullion bank apologist and perma-bear for the Gold & Silver market. The consecutive years of predicting harsh declines in the face of the most powerful bull market in a generation has taken a toll on Kitco's credibility. The market finally caught up to Nadler, as Kitco reiterated its dedication to having the best expert analysis on Kitco.com. See the Silver Doctor article (CLICK HERE). The Jackass has not published on Kitco for two years, since they imposed a stupid policy of a 3-page limit on public articles. They not only embraced quacks, but mismanaged their journal. Back in 2009, one particular Jackass article was posted, then removed, concerning hitmen coming to the COMEX. When engaged with the Kitco editors, the Jackass inquired openly about why total fools and disreputable clowns like Nadler were permitted to post their oafish work. The editor replied, "because Nadler has friends on the Kitco Board." My response included a modicum of profanity.

◄$$$ MARK ZUCKERBERG IS REVEALED BY THE TAP BLOG. HIS TWO GRANDFATHERS ARE DAVID ROCKEFELLER AND MAURICE (HANK) GREENBERG OF A.I.G. FAME. HE HAS AN AGENDA, IN SERVICE TO THE CABAL. CAMELOT HAS MANY BRANCHES IN AMERICAN ROYALTY. $$$

It has been revealed that Mark Zuckerberg is the grandson of David Rockefeller. His true name is Jacob Greenberg, also grandson to Hank Greenberg. He is royalty. Some police records show a Jacob Greenberg was arrested for possession of marijuana when a much younger man. His mugshot was taken, which looks like a younger FaceBook icon with 99% reliability. It was later revealed that this could indeed be the man the world knows as Mark Zuckerberg. Also, the Rothschilds own 8% of FaceBook shares. The hidden agenda for the FaceBook social network is to aid the growth of the police state and one world government movement. According to the TAP Blog, the venture Facebook was funded with $500 million from a CIA owned bank. One can only wonder if the other giant Google has similar disguised progeny. The adopted name Zuckerberg means sugar mountain in German.

The fast rising social network is indeed a mountain of information from which they can extract $billions. In recent weeks, the face of FaceBook has been revealed, as numerous members making comments about their support for gun ownership have had their FB accounts frozen, Big Brother at work. The Tap Blog is a collective of motivated researchers and writers who join forces to distribute information and voice opinions avoided by the world's media. Unless you wish to provide the nefarious leadership crew a constant trail for your life, complete with various control gates, close your FaceBook account. See the YouTube video that sheds more light on Big Brother (CLICK HERE). For years the Jackass has refused all invitations, since many of them are actually generated from the FB kitchen in false manner, verified numerous times. FaceBook attempts to expand from computer derived invitations, not human ones, like an electronic cancer. Refusals for LinkedIn and other social media networks are also routinely done.

The Jackass would like to add some other famous family lines. Jimmy Carter was fathered by Joe Kennedy Sr. Thus he is half brother to John, Robert, and Edward from Camelot. It seems that Miss Lillian the mother was Joe's secretary, with more than dictation being taken by the woman when under the elder's employ. That explains why Jimmy never had a father revealed during his presidency. Not to be outdone, William Jefferson Clinton is great grandson to John D Rockefeller the oil magnate. Bill Clinton was selected, due to his penchant for bond fraud and keen interest in cocaine binges. After his election and residence at the Arkansas governor mansion, the AirForce base nearby to Little Rock had its runway lengthened three-fold by the CIA. It was then suitable to accommodate the larger aircraft that transported narcotics to Panama. The hidden Camelot US Royalty of elite scum goes on.

◄$$$ INTERNAL WARNINGS HAVE COME THAT THE SAUDI KING SOON WILL SUFFER A DOWNFALL. OTHER IMPORTANT SHAKE-UPS ARE IN PROGRESS, SUCH AS WITH THE SAUDI NATIONAL COMMERCIAL BANK. $$$

An advisor to President Obama has warned about the imminent downfall of the ruling monarchy in Saudi Arabia. The House of Saud has very little time remaining, a Jackass forecast since last summer. Bruce Riedel serves as adviser on foreign policy and director for Near East & North African Affairs in the US National Security Council. He recently penned a memorandum which included dire warning of impending change, likening King Abdullah and his complete authority to Louis XIV of France. He called Saudi Arabia the world's last absolute monarchy, but warned about the ongoing wave of Arab awakening. He raised the possibilty of a revolution in the Arab kingdom most probably during the Obama II Admin. Riedel wrote, "Revolutionary change in the kingdom would be a disaster for American interests across the board." Although not reported in the US press, protests are a regular feature constantly inside Saudi Arabia since February 2011. Mainly held in Qatif and Awamiyah in the Eastern Province, the demonstrations call for the release of all political prisoners, freedom of expression and assembly, and end to widespread discrimination. The entire internal tone changed radically after November 2011, when Saudi security forces killed five protesters and injured many others. The focus then changed, as a movement has emerged against the repressive Al Saud regime. See the PressTV article (CLICK HERE).

Further financial disruption has taken place in Saudi Arabia. The CEO of the National Commercial Bank (NCB) has resigned amidst a big shake-up and controversy over performance. It is a Saudi bank, and one of the Arab world's largest lenders by assets. Abdulkareem Abu Alnasr has served as head of NCB since 2006. Other departed officials at the bank include the head of services, the head of audit functions, and the head of human resources. Also known as Al Ahli Bank, NCB is majority owned by the Saudi Govt and the first lender to have been awarded a license in the kingdom. See the Zawya article (CLICK HERE). Expect far more big shifts in the Saudi sand as the scirocco storms hit with force.

Consider the Petro-Dollar black swan. If and when the Saudi royals scatter, taking their multi-$billions with them to the hills of Switzerland, the coast of Spain, the posh flats of London, and elsewhere, the USDollar will be the big secondary victim. The global reserve currency is largely kept in its catbird seat by virtue of the defacto Petro-Dollar standard. It requires nations to pay for OPEC crude oil in US$ terms. Therefore, most major nations of the world maintain a banking system based in USTreasury Bonds held in reserve. That will all coming crashing down in a matter of months or a few years. The Paradigm Shift will dictate a new global financial structure that accommodates a new global trade settlement system. The fall of the House of Saud will bring the rejection of the USDollar internationally in a final sealed fate. The United States will find itself isolated, unable to easily supply its economy, while its central bankers are exposed masturbating with hands on the monetary press attached to their nether working parts. Their reaction to the new USDollar role will result in a mountain of excrement poured upon the US system as it fails.

◄$$$ ARGENTINA HAS FROZEN SUPERMARKET PRICES IN A FUTILE ATTEMPT TO HALT SOARING INFLATION. CHAOS IS SURE TO FOLLOW. THE RECKLESS ECONOMIC CUSTODIANS FOLLOWED WITH STUPIDITY, IN ADVERTISING BANS FOR RETAILERS IN THE NEWSPAPERS. NEXT COMES EMPTY FOOD MARKET SHELVES AND HIGHER PRICES, BOTH. THE ONCE PROSPEROUS NATION IS LED BY TOTAL IDIOTS BATHED IN SOCIALISM DOCTRINE AND ENGRAINED DESTRUCTIVE THINKING. $$$

Argentina is caught in a strong descent to arrive at hyper-inflation and economic ruin. Their Peso currency is crashing. The government has been restricting USDollar usage. The destruction will accelerate very soon. In a futile attempt to halt price inflation, the Kirchner Admin announced a two-month price freeze on supermarket products. The price freeze affects all of the large national supermarkets. No violations will be tolerated, in the nation led by an incredibly stupid cast. Next comes the scramble to buy up the entire contents of the food stores, bound by fixed prices. So absent economics wisdom can be spotted in Argentina. Local stores will suffer a deadly fate, as their profit margins implode. Prudent owners will simply shut down. More nationalization is expected to take place, thus sharing the unprofitable business lines, assuring further descent into economic hell.

Economist Soledad Perez Duhalde predicted that the price freeze will have only a very short term effect, noting that similar moves in the past for Argentina had failed to control fast rising prices. Consumers should expect diminished supplies on shelves, slow restocking practices, and fewer products for sale. Polls show Argentines worry most about inflation, which private economists estimate could reach 30% this year alone. The government is working to hold the union wage hikes. Starvation will be thus legislated by the morons in office. See the Zero Hedge article (CLICK HERE).

The comedy act came next, as the Kirchner Admin ordered a ban on most retail price advertising in Argentina. They will resort to using laws in order to benefit the state and silence critics. Supermarkets and electronics retailers have been ordered to stop advertising in the country's top newspapers, as part of lunatic price control laws. Some retail executives have admitted the law is not sustainable and will be hard to comply with. Others business folks probably could not respond effectively due to non-stop laughter. The nation of Argentina has become an economic laughing stock and harbor of total ruin from socialist morons. See the Economic Policy Journal article (CLICK HERE).

◄$$$ MEXICO HAS TAKEN STEPS TO TAX MINING FIRMS. BIG CHANGES ARE COMING. THE NATION HAS SURPASSED PERU AS THE #1 SILVER PRODUCER, BUT DISRUPTIONS LIE AHEAD. $$$

Mexico surpassed Peru in 2012 as the world's largest silver producing country in the world. However, under distress of its own, the Mexican Govt has decided to impose taxes on mining companies by mid-2014. Sure to cause great disruptions, more friction between corporate executives and government officials, and reduced mining output, Mexico will start charging royalties for mining companies already operating or planning to start projects in the country. The proceeds are aimed at benefiting local communities, according to reports from local newspaper Vanguardia (in Spanish). The new rules will ban the use of vertical shafts in coal mining in order to avoid further tragedies. See the Mining article (CLICK HERE). The Mexican mining properties are very important to a multitude of Canadian junior mining stocks. One more argument against their merit as investments. Profits and output will go into decline.

## GOLD TRADE FINANCE

◄$$$ THE RESERVE BANK OF INDIA TO PERMIT BANKS TO BUY GOLD. FURTHERMORE, INDIA WILL PERMIT CORPORATE FIRMS INTO THE BANKING SECTOR. THE POLICY COULD PRE-SAGE THE MOBILIZATION OF GOLD TO CUT OUT THE GLOBAL BANKS. VERY BIG IMPLICATIONS EXTEND FROM THE ACTIONS. $$$

Review the official changes in India. The implications are very complex with many extensions that are subject to inference and some conjecture. A pattern is emerging. The Indian Govt wishes to reform the bank sector, loaded down by clumsy sluggish state banks. The path is set for corporate houses to soon open new business lines with banking licenses. Corporations in India will soon open banks. The nation desires fresh impetus for an economy that has struggled to keep pace with emerging market star China. A vote of approval has come from the biggest conglomerate, the Tata Group, which has indicated firm interested. Final rules are expected soon, but have been delayed over disputes pertaining to the property sector and brokerage sector. The Reserve Bank of India (RBI) opposes the granting of licenses to either sector. The opponents worry that the reform could backfire as the cook eats his own food in the kitchen, the self-dealing hard to regulate. See the Economic Times article (CLICK HERE).

◄$$$ VERY BIG IMPLICATIONS CAN BE DETECTED, INFERRED, AND EXPECTED WHEN COMBINED WITH ACTIVITY INVOLVING IRAN AND CHINA. A PARADIGM SHIFT COULD BE IN PROGRESS, WITH HIDDEN GOLD TRADE SETTLEMENT IMPLICATIONS. INDIA MIGHT BE QUIETLY STEPPING INTO THE GOLD TRADE ARENA IN WAYS THAT CHINA HAS YET TO ADOPT. THE IRAN SANCTIONS HAVE CAUSED FAR MORE DEVELOPMENT THAN EVEN THE JACKASS ANTICIPATED. INDIA HAS JOINED TURKEY AS THE EXPERIMENTAL NEAR-EAST TEST SITE FOR GOLD FINANCE. $$$

Some important Paradigm Shift implications can be identified. Much appreciation to a client with family and financial experience in India and Turkey for the following information, and some solid past experience with Goldman Sachs in London, complete with some shared analytic points. Call him Euro-Raj. The family-run Indian corporates are not fools. They are expert mercantilists and have been for centuries. They will not stand by to be exploited by Western bankers by means of their volatile and manipulated FOREX market. The customs in India are unique. The public holds gold not for a trade, not as an investment. The public holds gold as a vehicle for wealth preservation against corrupt politicians who routinely devalue the currency. They also hold gold as an insurance against famines, wars, and personal medical needs. The nation's practices are unique across the world, much like a personal social security fund. It is actually far superior to anything promised in the developed world. Most of the gold is held in jewelry form and hence has not been inventoried, nor subject to certification, nor part of bank data records. The local jeweler acts typically like a bullion merchant as well as a pawn broker, often with hefty 30% markups. It is a tremendously lucrative business, aided by the lack of transparency. This is also one of the secondary reasons why Indians do not buy and sell gold. They simply hoard gold over generations as family treasures, like tens of thousands of disconnected but effective tiny banks. Two key points to take from this. 1) Gold is hoarded, and 2) It is done in jewelry form and not certified or in hallmark or investment form.

The usage of non-standard gold is soon to enter the financial sector, beginning in India and possibly fanning out to Asia. Gold might soon be permitted as a means of exchange. The advent of gold-backed loans could be near, with interest in the sub-5% range rather than the over 10% range. The tectonic tremors would undermine the banking system and pressure the politicians to be fiscally responsible. The inference that can be made is that the Reserve Bank of India might permit banks to buy back gold for two reasons. The micro reason is that the infrastructure to buy and sell hallmarked & certified gold has been in place, soon to accelerate. This greatly facilitates the internal movement of gold on an intra-bank basis. But a much more important macro reason, TRADE FINANCE.

Almost one year ago, the USGovt cut off Iran from the SWIFT payment system in bank transactions. The response was quick and clever. India and Iran decided to pay for crude oil shipments by 50% in US$ terms and 50% in Indian Rupee (INR). This was a ruse for official reporting. The Iranians did not hold the INR, since too risky. It was just a ploy to conceal that 50% of Iranian oil sales would be paid in Gold. The Iranians were selling their supply of USD and INR on a net profit basis, converting their reserves directly into Gold. An expansion to other products in trade is now ready for prime time. Iran and India have signed a major pharmaceutical agreement. India will start exporting pharmaceuticals to Iran in high volume, reducing the net trade deficit. The infrastructure for gold-based trade finance was set up and has been tested for oil payments. It will next be extended. The role of Gold in trade settlement is being expanded to include other countries and to include other commodities, finally to finished products. INDIA HAS EVOLVED IN TRADE FINANCE, as a result of evolution from the Iran sanctions. Do not expect the USGovt to limit gold trade in India, since it has no leverage over India, like it does with Turkey. Maybe Islamic terrorists can be located in India, conveniently.

The gold-based trade finance which became a necessity due to US sanctions directed against Iran will become a more urgent necessity, since the Currency Wars are in the process of important escalation. The result is that trade finance is turning very volatile. Recall that trade finance requires a stable means of exchange. Soon Gold will be the only choice left very soon. The banks are bonds are a mess. Currency Wars mean chaos. The reason is simple, but it escapes the prestigious economists. The war will lead to decline in global trade and a worse recession in the West, which confuses and mystifies the bankers and economists since they read incorrectly the central bank actions as stimulative. In fact, competitive currency devaluations harm all parties and reduce trade from undercuts and shock disturbances. Also, the monetary policy destroys capital at a time when trade finance through appropritate reliable settlement is in a state of severe flux and uncertainty. Such is the consequence of a rapidly eroding USDollar Standard in trade settlement.

Conclusions are not difficult, once the above is digested and absorbed into thought. The Reserve Bank of India is being forced to join the gold trade finance system as it evolves, or be cut out. It has significant unorthodox gold to channel into the system. Their corporations wish to advance the gold backed trade finance system in a much bigger way, frustrated with Western bankers and their FOREX games and broken bond foundation to the major currencies. The Indians want to use the great gold leverage tool to go global with their products and services, thus expanding their emerging economies. The Indian middle class is bigger than the entire US population. Over the centuries, gold trade finance was the standard, and it is on the verge of returning. The USDollar and its vehicle USTreasury Bond (formerly paid a yield) will be seen as a blip on the radar when seen through the history of time as a means for trade finance. Western corporates will be forced to buy Gold as a reserve asset to participate in global trade.

The contact Euro-Raj finished with a conclusion. "I think the Indians are out-maneuvering and out-playing the Chinese in the great Gold game. But the Indian Economy is 10 to 15 years behind China in infrastructure and manufacturing. To me the biggest message is that Indian power players do not want to do trade finance in USDollars, Euros, or Chinese Yuan. They will do it with anyone and everyone in Gold. Such would be fair to everyone in a mercantilist system with no currency privilege granted. But those who have the Gold, the infrastructure, manufacturing capacity, and technology will start off with a big advantage. Gold in trade finance might actually foster faster growth in the Indian Economy itself. Watch the foreign direct investment inside India, which for China took off in 2001 to 2003." Agreed.

◄$$$ THE US-CORPORATE CASH RESERVES HELD IN FOREIGN LOCATIONS IS ENORMOUS, A COMMON TOPIC OF DISCUSSION. IT IS IN THE PROCESS OF CONVERSION, BUT VERY EARLY. SOME CONJECTURE IS WARRANTED, SINCE THE INTENTIONS AND MOTIVES ARE SKETCHY, BUT THE DYNAMICS ARE BEING SORTED OUT. THE $TRILLIONS IN CASH SUBSIDIARY RESERVES MIGHT SOON START CONVERTING TO GOLD & SILVER, WITH DEEP DISTRUST FOR SOVEREIGN BONDS THAT PAY NOTHING. CORPORATE CASH WILL NOT WAIT FOR THE DAY WHEN USDOLLARS ARE REJECTED. MULTI-NATIONAL CORPORATIONS ARE PREPARING FOR GOLD TRADE FINANCE. $$$

If even 1% of the Apple Computer cash reserve pile of $137 billion were to move into Gold, it will cause an explosion in price. Ditto for the giant pile of Microsoft cash, except Bill Gates has joined the malevolent team of elite, complete with virus projects under the cover of global AIDS vaccines. The US corporates hold close to $1.2 trillion in cash reserves. Imagine the deeply stoked fear that circulates around Board rooms and CFO finance executive meetings when they sense the USDollar is heading toward a trapped global corner with broad rejection by a consortium of nations. They will not stand idly by to see their cash reserves go worthless or be downgraded, during international shuns. They will not purchase USTBonds which yield nothing, and whose integrity is ruined by USFed monetization on steroids. They are not stupid.

Much rumor has come that Apple Computer requested silver supply from China. They were refused, which caused a supply line hiccup. Silver is a key ingredient to many hand-held devices in vogue. The product delays are probably due to both this factor and to some degree logistics and reliability short cuts that backfired. Furthermore, some conjecture that an important rift has formed. Indications point to China having requested exchange of Gold for Silver as intermediary. The Americans at JPMorgan and Goldman Sachs refused China and Apple the requested gold. The connected people in the market already know the ultimate Gold-Silver ratio will move significantly lower than the 50:1 range.

◄$$$ SOME VERY GREAT DISRUPTIONS COME FOR THE FADING PETRO-DOLLAR, THE USTBOND UNDERMINED BY THE USFED, AND THE FAST DEBASED FOREX CURRENCIES. THE CURRENT PLATFORMS FOR TRADE SETTLEMENT ARE BEING SHATTERED BY DEBT SATURATION, MONETARY HYPER INFLATION, AND NON-STOP INTERVENTIONS. ALL ROADS POINT TO GOLD USED IN TRADE. $$$

The chatter has been loud concerning the faltering Saudi monarchy, and key holes in the Saudi royal team. The impact is a natural discarding of the Petro-Dollar, a certain event within an unknown time frame. The many important players see the writing on the wall, the painted billboards, the loud messages on street horns. India and China will make their strategic moves without waiting for the final passage of the House of Saud into history. They are already making their moves. That the Germans required their gold in return from official accounts in New York, London, and Paris is of great importance. It fits like a glove into the gold trade finance question. They sounded the alarm for those intelligent enough to hear it. The Japanese Yen and British Pound are already being disposed off by trade creditors, in favor of more reliable currency. The USTreasury Bills will continue to be used as collateral, but only for financial trades within the Western financial system. The upcoming downgrade is likely to shake the foundation of the financial system which rests on shaky weakened USTBond beams laced with bubbles in the metallurgy. As forecasted by the Jackass in recent months, the USDollar will be the legal tender for trade by the United States, Canada, Britain, and most of Western Europe, but not much else. The isolation of the US Axis of Fascism is being delineated. Fiat currencies will continue to exist and remain a means of exchange but primarily within the borders of each sovereign or trading bloc. Gold will settle soon the majority international flows, especially in the East and Near East.

Two dynamics dominate the financial markets regarding USTBonds, which are often not discussed since so dire. 1) A USGovt debt rating downgrade implies that more USTreasury collateral must be posted, and 2) Upcoming big US bank downgrades will require even more posted collateral. The USCongress did something must worse than to raise the USGovt debt ceiling. They passed legislation to suspend the debt ceiling two weeks ago. The global financial community sees the decision as a gigantic red flag, very seriously considered. Debt will be issued like crazy to meet added collateral requirements. The Bernanke Fed will very likely be forced to do QE5 and QE6 in rapid succession, as the Weimar press enters a new phase of desperate operation not only to cover the USGovt debt issuance and rollover, but also to meet the collateral requirements of the big US banks, all while no debt limit exists. The term used within the Hat Trick Letter of QE to Infinity (both volume and time) is being etched in stone. The Weimar nameplate is exact opposite from a capstone of stability once offered by the Gold Standard. The new direction in finance is being dictated by trade, as it should be. If nations do not have physical Gold in possession, they will have to adopt a new directive: find it, mine it, secure it. The trade flows will dictate that USTreasury Bond and Bills will become toilet paper, no longer the prized reserve asset held within Western banking systems. A great Paradigm Shift is occurring.

## GOLD WAR TAKES CENTER STAGE

◄$$$ RUSSIA CHALLENGES THE PETRO-DOLLAR BY WORKING TOWARD A PETRO-GOLD ANGLE. PUTIN HAS BEEN CONVERTING CRUDE OIL SURPLUS CASH INTO HARD GOLD BULLION FOR YEARS. HE DISTRUSTS THE UNITED STATES FOR ITS DEEP MONETARY ABUSE WHICH HAS REACHED NEW HEIGHTS SINCE THE USFED BEGAN THE Q.E. PROGRAMS. THE KREMLIN IS READY FOR THE CATACLYSM THAT COMES IN FULL ANTICIPATION. RUSSIA IS THE PREMIER EXAMPLE OF GOLD AT THE CENTER OF RESOURCE NATIONALISM. $$$

Some quick history. Putin remembers well the attack against the Soviet Union in 1998 when the West drove down the crude oil price to the extreme. The low point of $11 per barrel oil price wrecked the Kremlin finances, by design. The story is not told that way in the US and UK, but crashing the oil price was a major project and key reason why the Soviet Union was ruined. It could not pay to service its $40 billion debt. Younger Putin, a veteran at the time from his KGB days, was a quick study. He learned very fast. The lesson was that oil revenue was the Russian income source, and gold was the Achilles Heel of the West. So his plan was simple, to convert oil surplus into gold reserves. He would turn the tables, and delivery harsh blows to the vulnerable US-UK tagteam that brought down the Soviet Empire. Next will come the fall of the Anglo-American Empire.

Vladimir Putin has been executing his gold conversion plan for a decade. He firmly believes that with gold comes power and stability, to which the the enlightened concur totally. One must wonder if the Kremlin has been slowly and quietly converting much of their $170 billion in USTBonds into gold bullion also, and falsely reporting official reserves data. My great source The Voice tells me that the Russian gold reserves are multiples higher than officially reported, and can be found in a vast network of tunnels underneath the Kremlin. The Voice has visited the gold vaults located underground there. He is fluent in Russian (tri-lingual), having worked for almost ten years in Russia during the Yeltsin cleanup era.

The main point is that Russia is buying a lot of gold, converting surplus oil revenue, and preparing to be a leader in the next chapter in global finance. They will join forces with China to the East and Germany to the West. The Hat Trick Letter has reported on a few occasions the extensive heavy rail network between Russia and Germany, and the extensive liquified natural gas network from Russia to Germany as well as from Northern Germany to points in Europe. The next chapter will have three axis points, Moscow, Beijing, and Berlin. Putin will be ready, precisely when London and WashingtonDC falter, and in all likelihood slide into the Industrialized Third World.

Put aside the well publicized stories of China adding to its gold reserves in the last several years. They surely did, and far more than reported in the Western press. They too are accumulating vast gold reserves for the next chapter. The Putin plan is to defend against the USDollar monopoly and Weimar monetary abuse. Every month, he places more bets on the gold roulette wheel, a guaranteed winner when gold is pitted against paper in monetary roulette slots. Few realize that Russia is the #1 oil producer, having overtaken the Saudis a few years ago. In the last decade, the official IMF braindead story is that Russia added 570 metric tons of gold to their reserves. Try triple that, at least, so claims The Voice. China has also added far more than they claim. The Voice should know since he is one their agents for the bullion purchases. Evgeny Fedorov is from the Russian Parliament, a member of Putin's United Russia party in the lower house. He said, "The more gold a country has, the more sovereignty it will have if there is a cataclysm with the Dollar, the Euro, the Pound, or any other reserve currency." The cataclysm is in progress, having moved into high gear with the QE to Infinity and perennial assurances of its continuation.

Some quick data on the relationship between crude oil and gold. In 1998, the significant year Russia defaulted on its debt, 28 barrels of crude oil were required to purchase one ounce of gold. That ratio tumbled to 11.5 by the time Putin first came to power in 1999. By 2005, it descended to a 6.5 ratio. At that critical point, as president Putin ordered the central bank to buy gold aggressively. Putin told Bank Rossii not to shy away from the yellow metal, to keep buying the gold bars. He strived to rebuild Russian gold and currency reserves, according to a Kremlin transcript. Public data indicates Russian FOREX reserves total $472 billion, of which $157 billion is in USTBond form. Their cumulative reserves are $538 billion in total reserve assets. The market currently dictates that 17 barrels of crude oil are needed to buy a single ounce of gold. The savvy Putin Russia still buys Gold, much more than they admit.

The Russian Central Bank is on orders to keep buying until the bears (not cows) come home, Russian bears that is. The Putin gold strategy fits like a glove. His resource nationalism and statist agenda are a strong defensive play against the hyperbolic insanity behind the USFed, the Euro Central Bank, the Bank of England, and the Swiss National Bank. The Russian gold plan will prevail, as the next chapter unfolds and the USDollar is rejected, kicked to the curb, and withers. Putin is putting into practice a plan based on a belief, as he stated "The US is endangering the global economy by abusing its dollar monopoly," Russia turns black gold into hard assets in the form of gold bricks. With more than five years left in Putin's term, Russia plans to keep on buying. First Deputy Chairman of the central bank Alexei Ulyukayev promised, "The pace will be determined by the market. Whether to speed that up or slow it down is a market decision, and I am not going to discuss it." Putin is not lucky, but rather a smart chess player. It is not luck, but rather seeing the destructive direction of monetary management in the West against a backdrop of debt saturation. See the Zero Hedge article (CLICK HERE) and the Bloomberg article (CLICK HERE).

◄$$$ INDUSTRIAL SILVER HOARDING IS A COMMON PRACTICE BY A GERMAN CARMAKER. THE SILVER SUPPLY IS EXTREMELY TIGHT. NO SUCH THING AS JUST-IN-TIME INVENTORY ANYMORE IN THE SILVER MARKET. SOME BIG CORPORATIONS ARE SOON TO EXPERIENCE INTERRUPTION IN THEIR PRODUCTION LINES FROM SEVERE SILVER SHORTAGE. THE COMBINED INDUSTRY DEMAND WITH RECORD BREAKING COIN DEMAND IS CREATING AN ACUTE SHORTAGE. $$$

New signs of an extremely tight wholesale physical silver market have emerged. Some direct information is available from a large well-known German carmaker. The company permitted a personal tour by financial writer Byron King. The carmaker is storing massive amounts of physical silver in bagged pellet form inside secure vaults in Zurich, Switzerland. They have the silver available when demanded for their production lines. The concept of Just-in-Time inventory no longer exists in the silver market anymore. The German manufacturer purchases the silver when it is available, buying as much as it can acquire for its stored stockpiles in Swiss vaults. That is how important silver is to industry. Companies that do not deploy this practice will soon find themselves with interruptions in their production line, and halted output.

King was recently given a tour of one of the largest private vaults in Zurich, the same vault that houses the Vatican gold hoard. Last summer, he visited a storage vault dug deep into solid rock and buried in a massive high security complex in the hills north of Zurich. Visits are permitted only by prior appointment, following a background check by Swiss customs. King provided details on steel beams, reinforced concrete walls, armed guards, sloping sets of corridors, descent by elevator to deep levels, much like a secure military command bunker. It is world class. Adjacent to the vault storing Vatican gold bars is another vault packed with physical stockpiles of silver hoarded by a German automaker. My guess is the identity is either Mercedes or BMW. Given the quality control gaffes committed by Mercedes, it is probably BMW. Huge amounts of silver are stored in bagged pellet form, each weighing 10 kg. Check out the photo.

Major industrial users of Silver the world over would be wise to begin hoarding the metal since serious wholesale Silver supply constraints will emerge. A purchasing manager explained later to King in his travels, "For some metals, like silver, there is no such thing as Just-in-Time delivery anymore." Large industrial users have been using the Silver price weakness and bracketed trading action to acquire and hoard massive physical supplies of the metal. Price suppression creates opportunity for the crafty executives in industry. Combine the potential for an industrial silver supply panic with record breaking investment silver retail coin sales, and the conditions are in place for a historically unprecedented, upside explosion in Silver. The time is soon coming for purchase of silver at any price, as shortage turns far worse than acute. See the Silver Doctor article (CLICK HERE).

◄$$$ JAPAN IS PUSHING GOLD AT RETAIL LEVEL, A NEW DIRECTION. $$$

A subscriber in Tokushima Japan sent word of a something new not seen before in many years. Japan has gone retail in buying Gold. A gold dealer plies his trade in a jewelry shop in Jon's city in Japan. A few years ago, they had one desk which was never occupied. Last week when Jon stopped by, all three desks were occupied doing a brisk business. The regular Japanese on the street have started buying Gold. Even his wife said that a reputable show on television was urging people to buy Gold. The Japanese are very active in retail, once motivated, with really nutty retail television. The Competing Currency War has a major front in Tokyo that has sprung up.

◄$$$ THE CHINESE GOLD IMPORTS FROM HONG KONG CONTINUE IN A STORM SURGE FLOW WITHOUT INTERRUPTION. THE ANNUAL DATA IS IMPRESSIVE, AS IMPORTS TO CHINA ALMOST DOUBLED IN THE LAST YEAR. THE CONSTANT CONTROLLED PRICE BY THE WESTERN SHAMANS COMBINES WITH RISING DOMESTIC INCOME TO ENABLE A BRISK GOLD BUSINESS IN BARS, COINS, AND SCRAP. $$$

It seems every month the story is the same, as huge gold imports flow to China from Hong Kong on a consistent basis. The annual data is out for 2012. It showed a surge of 94% in increased import of gold bars, coins, and scrap. The 2012 total was 834,502 kilograms, versus a total of 431,215 kilograms in 2011. The imports for December alone were an impressive 114,405 kilograms (=114.4 metric tons), according to the Hong Kong Census & Statistics Dept. The jump even for a single month was solid, as imports were 90,764 kilograms in November, over double the 38,650 kilograms total for November a year ago. That comes to a 12.6% monthly gain for the final month of the year. Income growth within China is significant enough to enable China to displace India as the world's biggest gold consumer. Their demand has grown markedly for copper, energy, and farm commodities also. The nation is the world's largest base metals user, the biggest importer of soybeans, and the leading crude oil consumer after the United States. It should be noted that China sends some gold to Hong Kong in the other direction. Net imports, after deducting flows from China to Hong Kong, were 84,687 kilograms in December from 61,787 kilograms a month earlier. Still impressive at a 37% rise on a net basis.

China is considered the driving factor. From Shanghai analyst Jiang Shu of the Industrial Bank said, "[The increase] was largely a result of income growth. The Chinese are becoming more wealthy." Some data on income. China's urban per capita disposable income rose 12.6% in nominal terms in 2012 to 24,565 Yuan. Per capital rural net income increased 13.5% in nominal terms, and 10.7% in real terms, to 7917 Yuan. While real interest rates remain low, the central banks continue to accumulate. Conditions will remain bullish for Gold. See the Bloomberg article (CLICK HERE). For more on the Chinese & Indian income effect on the Gold price, see the Business Insider article (CLICK HERE).

◄$$$ ADVENTURE INTO MALI TIMED IN PERFECT SYNCH WITH THE GERMAN REQUEST OF GOLD FROM NEW YORK. THE SEQUENCE OF EVENTS IS BEING BETTER UNDERSTOOD, BUT SLOWLY. CONFIRMATION COMES FROM A VERY UNLIKELY DIRECT SOURCE, A CREATIVE GERMAN WRITER FOR GOVERNMENT PSYCHOLOGICAL OPERATIONS. $$$

The decision for a hasty motivated military intervention in Mali by the US and France came about immediately after Germany requested a return of their gold in official account from London and France. The USMilitary is providing heavy support for the Mali operation, in transport of material and communications. The supposed battle is to push back the Islamist extremists from the North. The conflict is a mission in a stretch of lawless desert in weakly governed country. While the participants in exploitative war claim growing support for their precious campaign, the sequence of events is becoming better known. Germany suddenly asked for their Gold return on January 16th, 2013. It was a shock the world's Gold markets. France's military operation in Mali began a mere five days later on January 21, 2013. Only morons would not attribute a connection. Perhaps 70% of the West is populated by morons though, just an idle guess. Given the logistics in moving troops and war materiel, advanced word was clearly in place. The movement of equipment and ordinance actually happened in the previous weeks, as the New York, London, and Paris banksters had full warning in advance.

A quick final footnote on a curious story from a Florida subscriber. He actually went to Costa Rica for a canopy tour, which is a zipline (tightly drawn metal cable, like a clothes line with body harness) among elevated platforms connecting dozens of trees separated by between 50 meters and 500 meters. It is breathtaking fun, but not for the faint or weak. Anyway, Daniel the subscriber informed me that on his group of ten was a German fellow. They picked up a conversation. The German admitted to working as a government psy-ops writer to put out press reports, which surprised Daniel. His current project is putting out fabricated stories on the Mali war on behalf of the German press, picked up in syndicated form by the European press. He talked openly and unashamedly about the creative story telling in pure fiction, describing the Islamic bad guys all over Mali while almost non-existent. When Daniel asked him what the French plans were really all about in Mali, he said "Simple, they want Mali's gold. They need it quickly to satisfy the Gold demands from Germany." When Daniel pressed him on why they would lie so blatantly, the man shrugged it off, mumbling something about understanding how the world worked. There you have it.

◄$$$ CREDIT SUISSE CLAIMS IT IS ADJUSTING PRECIOUS METALS ACCOUNT CHARGES, IN A BOLD MOVE TO GARNER MORE ALLOCATED GOLD ACCOUNT BUSINESS. A ROTTEN SIGNAL IS GIVEN. PERHAPS IT IS A REACTION TO GERMANS TAKING USFED GOLD BACK. PERHAPS IT IS A REACTION TO MAJOR CLASS ACTION LAWSUITS AGAINST THE BULLION BANKS FOR IMPROPER LEASING OF ALLOCATED ACCOUNTS. $$$

Credit Suisse has joined UBS as a Swiss bank giving off distress signals. The Credit Suisse bank has decided to adjust for precious metals charges on financial institutions. The Financial Times had reported earlier that Credit Suisse and UBS, the biggest Swiss banks, are attempting to attract large Gold accounts, to be held through so-called Allocated Accounts. The banks act as custodian, and thus would not need to increase capital reserves. An allocated account is the property of another party. The bookkeeping is different for unallocated accounts, like a vast pool, which show up on balance sheets. Friend and colleague Mark O'Byrne of Gold Core in London and Dublin said, "There is a move internationally towards allocated storage and away from more risky unallocated storage. With unallocated storage, one is an unsecured creditor of the provider or bank, whereas with allocated, the client directly owns the gold and the gold cannot become encumbered." That is the rule anyway, but violations are vast in Switzerland, and so are the class action lawuits. So far they have been kept quiet, but my source claims that they total in the $billions. Non-disclosure agreements are probably standard when embarking on a lawsuit.

Other financial firms that conduct gold storage services include Julius Baer, which is not planning to raise charges on gold holdings. Also, Barclays opened its first precious metals vault in London last year. Security firm Malca-Amit Global from Singapore and giant Deutsche Bank are also planning to open or increase storage facilities. The expansion by Malca Amit into Singapore and Hong Kong since 2010 added more than 1000 metric tons of capacity to the market. The company's Shanghai vault will open in the third quarter of this year. Competition should increase for non-Swiss bullion banks and vault service providers as the criminal activity in Zurich is better known. Some impressive suppression of the lawsuits has been done.

◄$$$ RIO TINTO IS CONSIDERING A HALT AT THE GIGANTIC MONGOLIAN MINE AMIDST DISPUTE OVER ROYALTY. PERHAPS CHINA IS STARTING TO PULL THE STRINGS TO THE NORTH, SENSING NEW SUPPLY FROM THEIR RESOURCE RICH NEIGHBOR. MONGOLIA IS TRYING TO FORCE A RENEGOTIATED CONTRACT, A BULL-HEADED MANEUVER. THE RESOURCE NATIONALISM MOVEMENT HAS A NEW INSTIGATOR. $$$

Rio Tinto Group is the second largest mining company in the world. It might order a temporary halt to construction work at its $6.2 billion Oyu Tolgoi copper and gold project in Mongolia. The local government has demanded a greater share of profit from the mine. The giant firm could suspend altogether operations in order to protest the central Asian nation's demands for a bigger stake in the project, complete with higher mining royalty rates. The halt is an option that managers are discussing in London, the company headquarters. The dispute comes as the Mongolian Govt under Prime Minister Norovyn Altankhuyag reacts to growing nationalism and wealth disparity. This has been a major Jackass theme for several months, sure to hamper gold supply from mining projects. The locals are poor. The resource nationalism is a movement to preserve domestic wealth, certain to gather great momentum. In October, Rio Tinto rejected a second move by Mongolia to renegotiate a 2009 investment agreement for the development of Oyu Tolgoi. It is currently the world's biggest copper project under construction. Incredibly the project is so vast that at full capacity, the mine will account for almost 33% of the entire Mongolian economic output. It is on schedule to start commercial production at some time before July. The pilot project at the mine has begun for processing ore.

If the supply chain is interrupted from the expected flow, a price is impact is highly likely. Morgan Stanley anticipates a 7.6% copper price rise in response to current deficit, after factoring in rising demand from China, the United States, and Europe. Global copper demand will exceed supply by 17,000 metric tons in 2013, the fourth straight annual deficit. Foreign investment in Mongolia has slowed, since a law last year restricted state-owned companies from controlling strategic assets. The nation of 2.8 million people relies on minerals for more than 90% of its exports, having exerted its independence from the Soviet Union in 1990. At issue is the new demand. In 2011, the government expressed a new requirement to boost its stake in Oyu Tolgoi to 50% from 34%, plus an increase in royalty payments. Witness the latest highlight in resource nationalism risks which global mining companies face in the developing world. One is left to wonder if China has urged the aggressive maneuver, perhaps offering Mongolia a higher price for its copper and gold, perhaps something more strategic than money, like protection, or inclusion in the new trade system.

The issue of confiscation and encroachment (even reworked contract) is a top concern for mining companies, along with skill shortages, infrastructure access, and costs, according to a report from Ernst & Young. The Congo, Poland, Peru, and the United States are among other countries that have either proposed or imposed tax or royalty gains on mineral projects in 2011 or the first half of 2012. The issue is ripe across Latin America in the mineral rich Andes region. The escalating dispute with Mongolia comes at a time of upheaval at the company, after it fired Tom Albanese as CEO, replaced by Sam Walsh in January. The complaint, a certain blemish on the mining conglomerate, was a disputed $14 billion writedown  taken on aluminum and coal assets. Rio has a 66% stake in Oyu Tolgoi through its 51% interest in Turquoise Hill Resources, based in Vancouver. It was formerly known as Ivanhoe Mines, which spent more than six years negotiating with Mongolia before reaching the deal on development in 2009. The Jackass recalls an elaborate exhibition about the project at a Canadian mining conference a few years ago. It was truly vast and very impressive. Rio Tinto is on hold, even as it has a grand expansion planned, which would involve building an underground mine, a power station, and enlarging the concentrator. The work may cost $5.1 billion, according to a report by Turquoise Hill in March.

◄$$$ TURKEY IS RATTLING THE CURRENCY & TRADE CAGES, BUT USGOVT SANCTIONS ATTEMPT TO SUBDUE THE GOLD TRADE BACK DOOR USAGE. IRAN MUST FIND ANOTHER ROUTE, LIKE INDIA. THE LOGICAL STEP WOULD BE USAGE OF THE SHANGHAI GOLD EXCHANGE IN CHINA. THE RECENT OLIVE BRANCH TO IRAN ON NUCLEAR TRUCE REPRESENTS A LARGE CONCESSION, AN ADMISSION OF FAILURE IN THE SANCTIONS. $$$


The Jackass had reported that Turkey was not yet targeted by USGovt sanctions for its backdoor assistance to neighboring Iran. Well, no more. Last week, new rules halt the activity by state-owned Halkbank from processing energy payments made to the OPEC oil producer. Nothing can or will stop the non-standard payment flows to Iran, especially in Gold. The US officials seek to prevent Turkish gold exports, which indirectly pay Iran for its natural gas. The process has provided a financial lifeline to Tehran, frozen out of the global banking system. The sanctions in the news are far more motivated over non-US$ energy sales than over any nuclear program. Iraq was involved in similar non-US$ energy sales, branded a rogue state. Turkey is Iran's biggest natural gas customer. The nation has been paying Iran for its imports with Turkish Lira, because sanctions prevent it from paying in USDollars or Euros. The indirect route has those Lira, held in Halkbank accounts, directed for use to buy Gold in Turkey. It is then sent by couriers in hand luggage to Dubai, where it can be shipped to Iran or exchanged for foreign currency. Also, Halkbank had been processing a portion of India's payments for Iranian oil. In the future, to comply with the new American Empire dictum, Halkbank can only accept payments for Turkish oil and gas purchases. In turn, Iran will be permitted to buy food, medicine, and industrial products with the energy revenue.

Trade in Turkish gold bars to Iran via Dubai was already drying up. The Dubai-based banks and dealers increasingly have declined to buy the bullion to avoid consequences like fines or being shut down. Turkey will continue buying Iranian oil and gas. Cash is expected to accumulate in Halkbank accounts with Iran as owner. The Tehran officials will struggle to find an alternate route to receive Gold as a payment method. It is not expected that Russian banks would step in as intermediary to Iran, but China might. Look for India possibly to undertake the Gold supply intermediary role, but more secretively. The Gold trade will be in a state of flux for Turkey for a while. Their Gold exports to Iran rose to $6.5 billion in 2012, more than ten times the level of 2011. Gold exports to the United Arab Emirates rose to $4.6 billion from $280 million, as a weigh station en route to Iran or as a window to convert to hard currency. See the Reuters article (CLICK HERE) and Haberler article (CLICK HERE) from Turkish source.

With Turkey being hobbled by the United States in the gold for energy trade, look for the trade to shift to China. Trading Iranian oil for a mix of Yuan currency and Gold is a logical next step, especially since last autumn China announced its willingness to act as intermediary for any global crude oil sales, with payment to clear in Yuan currency. China desires a more brisk global flow in Yuan. The rise of the Shanghai Gold Exchange would seem to fit nicely into this scenario, with perhaps Iranian bullion (recast bars in China for secrecy) being an active ingredient. Nice point, thanks to Craig McC in California. The Voice added a reality-based comment in a short quip, that "Nobody takes the US seriously any longer, except the Americans themselves." Outright defiance by Halkbank in Turkey, where they ignore the sanctions, would be very significant. As the list grows for sanctions or limitations ordered by the American Empire, the US officials might inadvertently define their own Industrialized Third World in isolation. Within the boundaries of the fascist axis, the USDollar would be accepted, but nowhere else in the world. Just thinking aloud.

A quick note on the recent news of the US-UK offer to ease Iranian sanctions that bar trade in Gold and other precious metals, in return for Iran acting to shut down the newly expanded Fordow uranium enrichment plant. All other nuclear facilities can continue in operation, by default. This offer is a face saving gambit. The story was reported by Reuters, citing unidentified Western officials. The offer is to be presented to Iran at February 26th talks in Kazakhstan. The headline story is totally opposite in actual meaning. The West could not curtail nuclear enrichment, nor could they curtail the Gold-Oil swap that Iran has made prevalent. The West has turned to begging Iran to stop the Gold-Oil swap. They talk nice now. This is the West bending over to Iran, a key event on the yellow brick road out of Iran. The marker implies that we are getting close to the breakdown of the Petro-Dollar itself. The Turkish block will mean little.

◄$$$ GOLD RETRIEVAL FIRMS WILL COME TO THE DENTIST OFFICE. $$$

Gold Bay is the newest dental gold buyer. Like Enterprise car rental, they pick yours up at the office or home. Gold Bay advertises as offering perhaps twice the scrap price rate than their competitors. Their website boasts, "We discovered in dealing with local dentists that a majority of them have been using National Gold buyers who drop off containers and then pick them up every few months. We also found out that of the current major buyers like Au-Ric, Doral, Star, Almanon, Landis, and others that the local dentists have been using, we pay at least twice as much. If you have been using any company other than us, you owe it to yourself to give us a chance to price your Gold. We will come to your office, separate, test, and weigh the dental scrap and make you an offer. We process the material at your office and give you an exact weight, not an estimated weight. Our commitment is that you are fully confident in who you are dealing with, and are completely satisfied and delighted with our service and pricing." Sounds good to me, but the Jackass is curious for one what their separation process is for metallurgy gold. See the Gold Bay website offer (CLICK HERE). They service the Northwest US area for Spokane Washington, Tri-Cities, North Idaho, and Boise Basin. Maybe soon the government will require fingerprints and dental x-rays for sales.

◄$$$ PRECIOUS METALS DEALERS AND DISTRIBUTORS ARE INCREASINGLY BEING TREATED AS ENEMIES OF THE STATE. THEY ARE ENEMIES OF THE SYNDICATE WHICH CONTROLS PHONY MONEY, WHEN PEOPLE ATTEMPT TO PROTECT THEMSELVES. THE POLICE CLAIM THE TIGHTER RULES ARE TO PREVENT THEFTS AND COMBAT JEWELRY THEFTS. NONSENSE. $$$

The City Council in Houston is enforcing strict new rules and regulations for those selling gold, silver, and all other precious metals. Wow! It is like precious metals is akin to narcotics. The council says they are taking such measures in order to prevent criminal activity. It is a lie. They wish to track people who attempt to protect their wealth by monitoring the entire precious metals market on the cash side. The ordinance is meant to help track down criminals who try to resell stolen valuables. Gold buying businesses will now be required to photograph and fingerprint sellers as well as photograph the items that are being sold to the dealer. So the authorities wish to combat a lot of the high-end jewelry thefts that is occurring in the city, the official word. Gold holders, investors, and hedgers, both distributors and buyers are targets of growing government interest. The system has moved up the ladder from a similar ordinance already in place for scrap metal sellers and dealers. The implications are far reaching in trend, especially after dozens of other cities follow suit. Gold is a terrorist device, it seems. Sales might go underground. Recall the Occupy Wall Street movement was treated as a terrorist organization also.

The government is not simply obstructing criminal activity. The USGovt and state officials are exerting control over monetary policy at the ground level. People who have purchased Gold as an investment in the past decade have given a message to the USGovt and the USFed that they are no longer confident in the enduring power of the USDollar, nor that monetary policies are judged to be sustainable. It is like forcing registration and photos of plywood and sand bag purchases in storm centers. The popular movement toward protecting against price inflation and monetary debasement with precious metals has prompted a government reaction. It will soon be of equal and opposite strength. The obstacles to owning Gold & Silver by the public are being erected. It starts with a few new laws and regulations, then a lot of red tape, then useless documentation, wasted time, and a headache in the process. Central bankers and their puppet government officials increasingly view individual gold hoarders as enemies of the state. See the Daily Paul article (CLICK HERE).

Anyone wondering why the Jackass has suggested storing precious metals in accounts in foreign vaults, should wonder no more. The Jackass always wonders what person would act as a police officer to slam citizens for owning gold, or owning a pistol, or owning a website, or being in possession of evidence against corruption by the state. But then again, it is human nature to pull wings off flies, to steal lunch money by bullies, to mock ugly girls, to roll drunks for their cash, to kill for sport, to maim in gangs. The fascist movement appeals to the dark side of human nature.

## GOLD PRICE OBFUSCATION

◄$$$ SPROTT REPORTS THAT GOLD SCRAP IS DOWN 50% IN SUPPLY THIS YEAR, AS 850 TONS IS REMOVED THIS YEAR FROM THE SUPPLY LINE. HE DESCRIBES A PANORAMA OF CRISES, WITH NO POSITIVE ECONOMIC RESPONSE TO MASSIVE MONETARY EXPANSION. THE ABSENT PRICE MOVE UP IN PRECIOUS METALS IS DIRECTLY DUE TO CENTRAL BANKS PROVIDING THE SUPPLY. HE FULLY EXPECTS A DEFAULT AT C.O.M.E.X. OR BY SOME INDUSTRIAL PLAYER, FROM LACK OF SUPPLY. AT THAT TIME, THE PRICE WILL MAKE UP FOR THE LAST TWO YEARS OF FLAT PRICE ACTION. $$$

Eric Sprott reports that the massive plunge in gold scrap recycling might be removing as much as a staggering 850 tons of gold from world supplies each year. Sprott also anticipates in the not too distant future, a default will come to the COMEX, since it has almost no Gold and Silver in inventory. It is constantly shuffling supply, even raiding the GLD & SLV inventory. Information from refiners indicates that the secondary market (scrap) business is down almost 50% year over year, with the previous year in decline also. The only precious metal supply comes from the miners, and they increasingly avoid COMEX as destination for sale. Data on recycled gold is woefully lacking. In general, the supply has essentially dried up. So recycling is down 50%, which normally adds about 1700 tons to the gold supply above mining output. Hence, it would imply a reduction of a substantial 850 tons of gold supply. Conclude that people are holding their heirlooms, or else already sold them a few years ago (with regret).  The big picture indicates fast growing Gold demand on a sustainable basis. The Chinese imports in December at 114 tons was again huge. The world only produces 200 tons per month of gold excluding China, which buys all its own output. Given extremely strong coin sales, it is hard to see where the Gold supply is to come from. Lastly, Kyle Bass, Ray Dalio, and Bill Gross at PIMCO all suggest they should be investing in Gold.

Sprott commented on the official German request for a portion of their Gold account. He regards the eight year plan for its return a bit of a joke. The Gold market is therefore extremely tight, with investment demand, coin demand, and official accounts to be returned. The central banks are dealing with chaos at all times, solutions not working, new money being printed in huge volume, and big banks going bust. The monetary inflation remedy and heavy doses of inflation have caused nasty threats. Clearly the Gold & Silver prices are being controlled with force and corrupt actions. With growing demand, yet no price movement, the signature is obvious that prices are under control and Western central banks are supplying the physical quantities in demand. The staggering monetary expansion by the central banks in unison, against a background of bond crisis, bank crisis, and political stalemate, has not resulted in any typical economic response. The system is out of control. Sprott firmly believes that someday a default will occur. It could be a default on the COMEX, or some industrial user announces a production shutdown, like because of no Silver in supply. A time of euphoria is near for the precious metals. It is hard to predict when a default event would occur, but it could be the next 12 to 24 months in his view. When it happens, a substantial move in the price of Gold & Silver will arrive, making up for these last two years in no time. See the King World News article (CLICK HERE).

Sprott believes the USFed campaign to print money with abandon, to grow its balance sheet, to redeem toxic bonds, to manage the switcharoo on long-term versus short-term bonds, to jar the door open for big banks in USTBond carry trade, and to maintain the zero bound on interest rates, HAS ACCOMPLISHED NOTHING. USGovt liabilities continue to explode. The labor market is deteriorating, hardly the slow recovery we are told. Food Stamp usage is at record levels. Income inequality for wealthy versus poor is widening. He regards the amplified USFed activity to be nothing more than subtle USGovt financing of deficits, with absent USTBond buyers. While Sprott notices the surplus in the labor force, which cuts down on risk of wage inflation, he does not appear to give adequate stress to the rising cost structure that has resulted from the USFed monetary inflation and zero bound rate offering. He concludes no inflation risk, when the bigger factor is a cost structure that threatens all working capital in the USEconomy. He implies the reduced inflation risk permits the USFed a green light to continue its destruction. See the Zero Hedge article (CLICK HERE).

◄$$$ CHINESE REGULATIONS ARE MOVING VERY SLOWLY ON THE GOLD EXCHANGE TRADED FUND. GOLD INVESTORS HAVE A WATCHFUL EYE, TO SEE IF THE E.T.FUND WILL BE LINKED TO THE GOLD CONTRACT AT THE SHANGHAI GOLD EXCHANGE. THE SLOW MOVEMENT PERMITS CAREFUL PLANNING. DOMESTIC GOLD DEMAND IS EXPECTED TO SURPASS 1000 TONS BY 2015. $$$

The China Securities Regulatory Commission (CSRC) has published provisional rules for the operation of gold Exchange Traded Funds, which pave the way for introduction of gold ETFs into Chinese financial markets. The prospect leaves Western gold investors with mouth-watering reactions, since the Shanghai Gold Exchange is up and running, and retail demand in China is a fast moving train. The CSRC stated that no specific timetable for the listing of gold ETFs in China has been decided. The Beijing officials understand very well that Gold is the Achilles Heel of the United States and Britain. They wish to promote the development of China's gold and capital market. China is the world's largest gold producer of Gold and the world's largest consumer of Gold. In January, their Ministry of Industry & Information Technology (MIIT) forecasted domestic Gold consumption would run at more than double the national Gold production by yearend 2015. Domestic Gold demand is set to surpass 1000 tons by the end of 2015, by their estimates, thus creating a significant market shortage. The Gold ETF combined with the Shanghai market could work to lift the Gold price substantially, in order to attract greater supply. The CSRC official told the China Daily that the commission must thoroughly study how to regulate gold ETFs.

◄$$$ DUBAI GOLD TRADING IN PHYSICAL GOLD CONTRACTS IS COMING LATER IN 2013. DUBAI IS A MAJOR GOLD CENTER IN THE GULF REGION. THE NEW SPOT PRICE MARKET WOULD GIVE CHINA A POTENTIALLY IMPORTANT SUPPLY ROUTE FOR GOLD BULLION. A CURRENT GOLD PRICE DIFFERENTIAL IN DUBAI IS EVIDENT, LIKE IN SHANGHAI. THEY JOIN SHANGHAI CHINA IN REVEALING A HIGHER PRICE TO USE IN ARBITRAGE. BEAR IN MIND THAT IRAN MIGHT BE A PARTICIPANT IN A FULLY ACTIVE GOLD MARKET IN THE UNITED ARAB EMIRATES. BUT THE U.A.E. MUST REMAIN POLITICALLY STABLE. $$$

The Dubai Gold & Commodities Exchange (DGCX) will launch a spot Gold contract later this year, allowing UAE traders to buy and sell physical gold on a local exchange for the first time. Gold traders based in the Dubai are ecstatic. The launch could occur sooner than the cautious timetable announced. To date, the DGCX only offers contracts based on the future price of gold, not the current or spot price. So it is dependent upon the London and New York games and obstacles. The move to a Spot market would eliminate the need for offshore credit and collateral to trade in Gold, an important distinction. The Dubai market has always focused on physical Gold trade, showing historically no interest in the futures contract with all its machinations for price suppression. Contracts linked to the Spot Gold price satisfy the need. Much preparation must be done to pave the way. To launch the market, the contract must first have the support of local and international banks, as well as the gold refiners. Exchange CEO Garry Anderson said, "We are still very much a cash settlement exchange. In terms of the deliverability of the Gold, we want to have the right infrastructure in place to enable us to do that."

The strong demand from the Chinese and endless global central bank money printing augurs well for Gold prices. With the Shanghai Gold Exchange now in operation, and a Dubai Exchange in operation soon, pressure on the Gold price will be significant from the East and Near East. The Dubai pattern is efficiency, which points to a conclusion of procedure issues. The DGCX might be up and running well before the end of year. It could grab some of the briskly growing business for Gold. One can only wonder what the Iran factor might be with Dubai acting as intermediary in their vast energy trade settlement in Gold. It is the wild card, as the UAE passes one third of its trade through to Iran, to the anger of the US-UK tyrants. See the Peter Cooper article on Gold Seek (CLICK HERE).

The alert Euro-Raj provided more information, on his way from London to Bombay via Dubai. He noticed the price differentials. At one point in early February, he noted the Gold physical price in Dubai duty free at $1921 per ounce, fully 15% higher than the screen price. He concluded that the Western bankers are giving us a gift in New York and London. The intelligent will grab it while the greedy and foolish will chase equities.

The Voice has done business with Dubai for years, often referred to as DXB. He commented, "The world is changing fast. DXB has a good infrastructure to deal with physical metal. The Free Zone is one of the best and all the big logistics [e.g. Brinks] firms are already in place there. All this will only work if the system and current ruler stay in the saddle. If they are consumed by the Arab Spring, we shall see winter in the UAE for a long time to come. The Chinese will turn Dubai into the Hong Kong of the Middle East." Intrepid observers might deduce the motive for the US & UK security agencies to spark some instability with their local subversive element in employ. A launched new Chinese weigh station for Gold that provides a device to move price would harm Anglo-American interests. The effect from either brisk Dubai gold sales OR promoted political instability could lead to more Saudi Royal problems, with Petro-Dollar stress gone beserk. The US is cornered in Dubai, and China will emerge the winner. Unlike many big Arab cities, the majority of Dubai residents are not UAE citizens. The city has a gigantic foreign population of both professionals and service class.

◄$$$ THE G.L.D. EXCHANGE TRADED FUND IS UNDERGOING BIG CHANGES, WITH SUDDEN REDUCTION IN ITS GOLD INVENTORY. GIANT RAIDS ARE BEING EXECUTED BY THE BIG US-BANKS, TO MEET DEMAND AND TO PREVENT A PRICE SPIKE. $$$

The news story is simple, but the meaning is enormously significant. The Gold holdings in the SPDR Gold Trust, with trading symbol GLD, remains the biggest Exchange Traded Fund backed by bullion in the world. It is also the most corrupt, whose custodians designed it for easy gold bar inventory raids by the big US banks. The GLD gold bar inventory decreased 3.02 metric tons to 1323 tons as of February 14th, the lowest level since early October. The mainstream news story stops short of asking the natural follow-up question of where the physical gold bars are going, and who is the buyer might be. No buyer is involved. It is a basic high volume raid. The big US banks short the GLD shares and arrive to pick up the three tons of physical gold bars in armored trucks. The dopey sheep nitwits who invest in the GLD fund have their gold leased and borrowed like stock certificates right under their ignorant noses. Someday the ETFund will be drained dry of gold, its investors dumbfounded. My hope is soon a GLD discount to spot Gold price is posted. The big raid of gold bars, easily enabled, makes possible the defense of the Gold price. The massive rise in investment demand is met by massive raids of the corrupted GLD gold fund, in balance. In the process, the gold price looks tame, calm, and unaltered. The financial news talking heads and supposed expert guests talk about Gold being the trade on fear. What utter nonsense! Gold is the trade against monetary inflation gone out of control, the plethora of toxic sovereign AAA bonds, the broken insolvent banks, and the economies subjected to fierce attack on capital.

◄$$$ GOLD HAS GONE BACKWARDIZED, BUT EVEN WORSE. THE PHENOMENON HAS EXTENDED THE DISTORTION WITH POTENTIAL FOR ARBITRAGE IN THE APRIL CONTRACT. THE DISTANT CONTRACT IS NOT YET READY TO ROLL OVER. EXPECT THE GOLD PRICE TO REMAIN STUCK IN BACKWARDIZED FORM FROM HERE ONWARD. THE GOLD SHORTAGE IS BECOMING WELL KNOWN, AND EVIDENT IN THE GOLD FUTURES PRICE STRUCTURE. $$$

Since late January, the February gold contract has been in backwardation. Translate to mean that a speculator with a futures brokerage account could make a profit by simultaneously selling a gold bar now and buying a February contract, or other contract in the future. That is standard backwardization. Most Gold & Silver contracts go into backwardation as they come near to expiration. Normal events take their course. When the February contract first entered into backwardation, it was well within the contract roll period, when the naked long contract holders tend to sell the expiring contract and buy a contract for a more distant month. They roll forward, with position intact, but with fees. This heavy selling of the expiring contract tends to push down its price. Simplify the terminology and call CO-BASIS the difference, the Spot price minus the Future price. The co-basis rises due to the mechanics of this selling at rollover, very typical. But on February 15th, a highly unusual event occurred. The April contract, nowhere near ready to be rolled, fell into backwardation. The red line went positive. The February contract has expired, or will expire, by the time of this report posting.

The key point is that over a 1% vig is available for arbitrage between April and February Gold contracts. The market is offering a free profit for players in the arbitrage. Not much action is reportedly seen on the trade, but that could change quickly. Some analysts conclude that the inactive arb trade on the backwardized contracts indicates the market for physical Gold metal is drying up at the COMEX. A vacant lot at COMEX could be near. Perhaps investors fear their accounts might be stolen, like with the 140 thousand MFGlobal account holders. Owners of real metal are increasingly reluctant to part with it at the current price. See the Zero Hedge article (CLICK HERE).

◄$$$ USTBONDS VERSUS GOLD IS ON THE VERGE OF A MAJOR BREAKDOWN. THE NEMESES ARE LOCKED IN A PITCHED BATTLE FOR THE LAST 20 MONTHS. RESOLUTION COMES. THE INTEREST RATE SWAP MACHINERY MIGHT HAVE STALLED FOR THE DERIVATIVE OPERATORS. THE MOTIVE WILL BE TO SLAM GOLD WITH A BARRAGE OF NAKED SHORTS. $$$

The long-term USTreasury Bond has been undergoing some sell pressure in the last couple months. The July 2012 low point for the 10-year yield at 1.4% was significant. The current TNX is at 2.0% and straining the Interest Rate Swap machinery to keep it below that watermark. The confidence in the USFed solutions is waning, even as their QE to Infinity undercuts the faithful. The July 2012 low point for the 30-year yield was 2.5%, which has given way to a fast rise to 3.2%, enough to cause worries. The USTBond and Gold have been nemeses for decades, in particular since the 2001 bottom in the Gold price. The chart is two weeks old, my apologies, but hard to obtain. The indications still hold.

On an historical basis, the long-term chart shows a major turning point in progress. The battle royal is on. The central banks struggle to keep the TNX (10-yr) under 2.0% and the TYX (30-yr) under 3.0%. Given the hyper monetary inflation, the USGovt securities should have bond yields in the 6% to 10% range. But enter the handy Interest Rate Swap contracts, which produce artificial demand. The above chart displays the wedge, where a resolution is demanded. Given the rise in the TNX and TYX yields (lost faith), and fast fading faith in the central bankers generally, the motive has been to smother the Gold price. The usual method is to hit the market with tonnage of naked shorts, and to drain the GLD fund of inventory by shorted shares. Only the privileged big US banks need apply. The test is underway. Some more wiggling is to come, but the important resolution by March seems possible.

◄$$$ H.S.B.C. HAS BOUGHT THE ENTIRE SILVER OUTPUT OF A MAJOR EUROPEAN MINING FIRM OUT OF POLAND (K.G.H.M.) WHICH IN 2011 PRODUCED 41 MILLION OZ SILVER. THE SUPPLY LINES FOR SILVER TO LONDON ARE SURELY STRAINED. THE BANKERS ARE URGENT TO AVOID A DEFAULT. OR ELSE THE BANK HAS GONE TURNCOAT AND IS LONG SILVER, WITH A LOCKED SOURCE AHEAD. $$$

The standard thought would be that by securing Polish silver mine output, HSBC has locked in a supply line. The London bankers could rest easier for a while to avoid a Silver market default. Fresh supply is good. The news release offered some details of the purchase of the KGHM silver output. After the dust clears on currency conversion, it appears that the HSBC bank has secured almost 17 million oz silver for $539 million in the deal. In 2011, KGHM produced about 41 million oz silver. Conclude that HSBC has locked in almost all of their silver output. The company claims to be the world's largest silver producer. Now on second thought, it appears HSBC could have covered its silver paper shorts and has switched sides to go long. They would be in a position to benefit from a sizeable upward move in the Silver price. The fact that HSBC is buying actual production might signal its distrust of the LBMA & COMEX paper markets. See the KGHM website news release (CLICK HERE).

◄$$$ RECORD SILVER EAGLE COINS WERE SOLD IN JANUARY. A RATIONING PROGRAM HAS BEGUN IN RESPONSE TO METAL SHORTAGE. A MUCH HIGHER SILVER PRICE WOULD SOLVE THE SHORTAGE, NOT PERMITTED. MEANWHILE, THE USMINT RAISED PRICES ON SILVER FOR COINS WITH A  PREMIUM OVER THE SPOT SILVER PRICE. THE IMPLICATION IS AN ADMITTED HIGHER SILVER PRICE. $$$

Despite two production shutdowns in January, the USMint sold a record breaking 7.13 million Silver Eagles in only ten business days in January, shattering the previous monthly record set in 2011. As a result, the USMint has resumed rationed Silver Eagle sales. The prized coins can be obtained from allocation and rationing. In the following few days, the mint sold another 300 thousand coins, to make a 7.42 million count for the partial January month. The public has bought almost half a $billion in Gold & Silver coins in January. Their distrust of money is patently clear. See the Silver Doctor article (CLICK HERE and HERE).

Proof that the true Silver price is higher than the posted paper price on COMEX comes straight from the USMint itself. They raised the premium over spot for the 2013 American Silver Eagle. One week ago, the coin cost was $39.95 (for 1 to 4 coins) and $38.45 (for over 20 coins) with a limit of 40 coins. Availability is not until February 5th. The clear implication is that the actual Silver price is much higher. In nasty sarcasm, conclude that the USMint must be the most profitable branch of USGovt except for the USFed, which just prints profits willy nilly but is a private syndicate firm anyway. Witness a huge spread over the spot price. It would be interesting to see a Profit-Loss statement from the mint operations, if it were available. See the Gov Mint news release (CLICK HERE).

## USECONOMY ACCELERATED IMPLOSION

◄$$$ US-TRADE GAP NARROWED BY 20.7% IN DECEMBER TO $38.5 BILLION, BUT A SURPRISING $1.2 BILLION WAS FROM EXPORTED GOLD (NON-MONETARY). THE USECONOMY MIGHT BE SETTLING TRADE IN GOLD IN HIDDEN MANNER. ANOTHER EXPLANATION COULD BE THAT USTREASURY BONDS ARE BEING USED INCREASINGLY IN BIG BANK LOANS, HIDDEN BY SWAP DEALS ON COLLATERAL. $$$

The headline news on the trade gap narrowing seems like good news, easy to sell to the sheeple public. But two sinister signposts line the path to the Third World. The USEconomy is in rugged recession when the trade gap is reduced, since it imports much less. Worse, the details in line items indicate a very disturbing new trend. The US-based exports increased $8.6 billion in December, which sounds great unless one bothers to read further. A murky line item was caught in view, as sales of industrial supplies rose hard, led by a $1.2 billion rise of non-monetary gold. That means gold sold by non-bankers. It might mean gold dust or non-standard forms. The sequence sticks out in obvious ways, as the industrial supplies exports for December were net +$2.594 billion, for November net +$1.028 billion, for October net -$2.091 billion, and for September net +$1.584 billion. A closer look shows exports to Hong Kong went from $3.382B to $4.414B, a rise of $1.032B in a single month. The net to HK rose +$0.984B, almost equal. So a rush of gold went to Hong Kong from the US, my guess from refineries. No other country exhibits such a large month-on-month increase in percentage terms for exports, which is quite unusual. Under Pacific Rim, a category called Newly Industrial has appeared as a ledger item, which stinks like a fudge factor to disguise the accounting. My main curiosity is that a lot of gold was sold via refineries, thus classified as non-monetary in order to conceal the activity. See the Reuters article (CLICK HERE).

Two interpretations come from the detailed data, where the devil lives. Continue with the Gold export concept. The United States has been  running a negative trade deficit as a privilege for decades, accorded by the rest of the world with the USDollar used as reserve currency. It is a credit card for abuse, one that spawned a massive bloated consumer society, complete with matching obesity. Harken to Roman times, to see a parallel in the implicit seigniorage, much like extracting gold from coins a small bit at a time. In more plain terms, the mounting deficit serves as a premium paid into a protection racket, operated by the USMilitary which has turned very aggressive and hardly the police sentry stationed across the world. When the USEconomy deficit shrinks, it has been a clear sign of recession. Lately, it might be more a sign that the US creditors are not accepting the USDollars as a means for conducting trade. The Nation is being forced to pay with something else like Gold, or else it must curtail imports.

In December, imports were largely driven by cars even as crude oil imports dropped by 2.7% in total. The reduced oil imports are another recession signal along with reduced railway traffic and reduced gasoline consumption. Exports were largely driven by oil shipment, whereas the 2.1% rise in gold shipments served up a massive curve ball. Some big parties are demanding payment in crude oil (tankers) and gold, with likely refusals in USDollars (USTBond form). That seems the message in the changing details. Either China or some other non-friendly oil producer is demanding Gold, like Venezuela or Nigeria. My pocket guess is that refiners are acting as intermediaries with Hong Kong in hidden contracts to satisfy the very angry and hostile Chinese. Recall the HK banks were the biggest victims in tungsten fake gold bars sent from the Clinton Admin years. The gold export could be hiding the restitution by US bankers toward the aggrieved HK banks to avoid publicity, which would be harmful to BOTH parties. Just conjecture here.

Not so fast! Another factor might be important also, a purely financial effect. The Voice pitched in, not so convinced that Gold is settling US trade deficit bills. But in the past, he verified the HK banks were fake gold bar victims. He pointed out the indirect exchange that is practiced increasingly by some very powerful people, a new game in town. The players apply for project funding from US banks. The banks play their usual collateralization game for the loans. See the bond swap story in the Money War Report this month, which verifies the large new flow in swapped bonds, lower quality for the pristine USTBonds. In the end after movement of paper (a US specialty), the applicant offers a 100% loan collateralization in form of USTBonds. The banks have no choice but to accept this AAA rated security, the loan approved in full amount, and the applicant walks out the door with cash in hand. The bank loses out on the quality side, since it granted a loan 100% secured by AAA junk bonds indirectly, sitting behind the swap curtain. So the bank responds by leaning harder on the project's hard assets. The Voice concluded, "Instead, the USTreasury Bonds have been off-loaded by giving the US bank a financial enema in kind of a forced fed exercise. This is an indirect exchange by turning the tables on the United States bankers big time. What we have today is a fake capitalism, as everything is fake."

Be sure that both factors might be at work vigorously. The US could be slowly drained of its gold in trade settlement, the destination as yet not verified, probably Hong Kong. They could be acting as Chinese intermediary, a perfect role. Far deeper than basic economic slowdown would be hidden gold payments for trade settlement to China, but through Hong Kong, masked as industrial supplies. Think gold bars for ballast on financial ships in the floating currency seas.

◄$$$ THE EXPANSIONIST (CANCEROUS) USGOVT IS THE DOMINANT FACTOR IN THE USECONOMY. THE STATE IS OVER-GROWN AND STRANGLING THE NATION. THE LEAST TALENTED SEEK GOVERNMENT JOBS FOR THE SECURITY, WHILE THE MOST DANGEROUS SEEK GOVERNMENT JOBS WITHIN THE SECURITY AGENCIES FOR THE PRIVILEGE TO ABUSE. THE TREND IS NOT SUSTAINABLE. THE DISABLED ARE TAKING OVER THE NATION. THE GAINFUL EARNERS ARE BEING OVERWHELMED. $$$

Central planning and expansion predictably leads to excessive state spending, far beyond the rate of the real growth of the real economy. The USGovt has been expanding faster than GDP since the 1950 decade with little exception. The halt of the expansionist state beast historically arrives when debt reaches the critical point of debt saturation. The USA is there. At that point the government borrowing is so pervasive that it forces total debt to grow just to cover debt service. The leverage is abused as it acts upon the ever smaller growth levels of an economy, which itself is captured by a debt stranglehold brought on by the expansionist central state. The vicious cycle causes systemic overload and failure. The USA is there. The structural imbalance of state expenditures and revenue leads to crippling deficits, while pension obligations impose a nasty added burden, complete with health care benefits. The big states are in tatters. This is the situation the United States presently finds itself in.

The USGovt spending versus GDP reduced in the 1990 decade, not from progress, but rather from the Clinton Admin rape and pillage of Fort Knox gold led by the Goldman Sachs bandits. It was converted into free flowing money into the system by means of leveraged USTreasury Bond activity, a gigantic rally. The internet boom was simultaneous. The central state has been permitted to assume a larger expansionist role, in accelerated pace since the hidden 911 coup d'etat by the nazis, who adopted the visible Fascist Business Model. Like a cancer it will insidiously and relentlessly expand. Dead ahead is systemic failure and debt default, far too late for any remedy. No legitimate solutions will be permitted, since the power platforms are laced with the debt overload and deep corruption. Notice how the growth of debt lifted the nation from the 2001 critical events that shaped its destiny. The chart is from OfTwoMinds and Charles Hugh Smith, the site of excellent work.

The debt cancer grows and the quack doctors suggest more spending and more debt, unaware that their monetary policies worsen the situation, slow the USEconomy, and bring about evermore debt. Gordon Long compares the process to medieval bloodletting. The diagnosis is flawed and will only accelerate the demise of the naive and dependent patient. In the US case, the power structure has gone awry, steeped in corruption, with impunity granted to criminal bank conglomerate organizations, while war has added enormously to the debt burden with forced salutes and intolerable propaganda. Long provides his own interpretation for the systemic failure in a political light, with a bias toward chaos. My interpretation is directed to war devotion, the harsh backlash against US labor unions, the dependence upon asset bubbles, and the dispatch of industry to Asia along with its legitimate income basis, which combined to bankrupt the nation. The middle class of America has been decimated in the process. See the Market Oracle article (CLICK HERE).

◄$$$ BROKEN MONETARY POLICY, BROKEN FINANCIAL STRUCTURES, BROKEN USECONOMY, BROKEN GOVERNMENT SPENDING CONTROLS, BROKEN USDOLLAR STEWARDSHIP, BROKEN HOUSEHOLDS, BROKEN ALLIANCES. THE ULTRA-LOW OFFICIAL RATE COINCIDES WITH A GARGANTUAN TOXIC USFED BALANCE SHEET. THE SIGN OF SYSTEMIC FAILURE IS EVIDENT FOR ALL TO SEE. $$$

The central bank franchise system has been turned on its head. A permanent zero bound rate (ZIRP) and endless bond monetization (QE) is not part of any standard fiat paper treatise or tome taught in Economics graduate programs, such as in Money & Banking lecture halls. The Jackass dropped such an Economics college course when it appeared to be lunatic, money laundering, shell games, a rat's maze, and a farce. An added statistics course was my decision at the time. The timing was 1972, one year after the Bretton Woods Accord was shattered and trampled, long before any systemic failure event could be foreseen. At the annual meeting of the American Economic Association in San Diego held in January, Harvard professor of economics Benjamin Friedman had a fit of professional sincerity when he said, "The standard models we teach simply have no room in them for what most of the world's central banks have done in response to the crisis." He probably preferred to admit that the financial system died in September 2009 and has been going through the contortions of a dead man in the morgue, given intravenous blood and shock treatment without satisfactory response.

The finance professors realize that four full years of 0% official rate, followed by a series of QE bond buying programs is very far afield from anything pretending to be normal monetary policy. They cannot justify what they see as Weimar operations posing as monetary policy. The central bankers have destroyed the global financial structure. The USFed disguises its bond purchases. It quietly provides $trillions for Europe. The European Central Bank has issued goofy bonds with games on subordination, which even the debt rating agencies have downgraded. The conclusion is simple, that the fiat currency system with its central bank franchise system has failed, and a massive catastrophe is in progress. No minced words!

The quarterly promises of continued Fed Fund target rates between 0% and 0.25% have accomplished nothing. The endless series of bond monetizations redeem most broken bonds in existence, and cover the USGovt debt, which almost no nations want anymore. That aint progress, but rather failure. The bankers cannot see the unintended consequence of gradually rising cost structure, and accompanying gradual destruction of capital. No stimulus is present, except for the big privileged banks to participate in USTBond carry trade, borrowing short-term and investing long-term. Of course the other stimulus is for speculation, whose object is the stock market, largely abandoned by the public. The banks are not expanding their commercial loan portfolios. Instead, the USFed has been transformed into a gigantic garbage collector, and big banks into arbitrage outfits. The USFed balance sheet has climbed from $0.86 trillion in January 2007 to $2.9 trillion in January 2013. Professors who give assent to the extraordinary monetary approach employed since the 20082009 economic crisis struck are challenged to explain this new world of central banking to their students. They are slowly concluding a systemic failure has occurred, but they are not permitted to admit it or to discuss it. They might lose their research funds, or their posts on faculties. The traditional models on monetary policy no longer work. The breakdown is evident.

According to traditional school of monetary thought, a lowering of interest rates stimulates the overall demand for goods & services. Then through the wondrous and famous Keynesian multiplier, stimulus produces general economic activity. Furthermore, according to traditional thinking, massive monetary pumping should also lead to a higher rate of inflation. Yet despite the massive monetary pumping, economic activity has been crippled, and inflation has struck the cost structure. Few economists bother to mention the dispatch of US industry to Asia, and European industry to Asia, which has removed the traction potential from supposed stimulus. The only part stimulated is costs. The speculation and debt abuse serves as the financial equivalent of Jack Daniels whisky or standard lines of cocaine.

The prolonged reckless monetary policies have severely damaged the ability of the system either to put capital in place or to generate real wealth. Contrary to the revered Quantity Theory, evidence builds that money does matter indeed. However, contrary to mainstream thinking, an increase in money supply destroys the economy instead of fertilizing it toward growth. Money has turned toxic, since not based in Gold. The perennial monetary pumping (hyper monetary inflation), coupled with an ongoing ruination of the interest rate structure (cost of money), has caused a severe misallocation of real capital. A perverse structure of production has been created and reinforced. With the diminishing ability to generate real wealth, it is not possible to support or sustain strong economic activity. The system is failing, and few seem willing to admit it.

Frank Shostak of the von Mises camp believes that  economic activity remains subdued and thus raises the likelihood that the United States is not far from sinking into a black hole, despite four years of steroids. Recall that improper and excessive usage of steroids can cause heart attacks and ravaging cancer. The aggressive pumping policies by the USFed highlight the destructive nature of loose money. The contaminated money has infected all sectors of the USEconomy. Popular mainstream theories are patently incorrect, thoroughly contradicted, but repeated like a din. The track record has proven conclusively that monetary pumping cannot grow an economy. It can only set in motion a process of destruction. Look to the retirement of capital and equipment, which leads the process of business segment shutdown. Worse still, the next chapter will involve nearly full management of finance, since failure will not be permitted, in central planning with a renamed Politburo. In the process, a grander global failure will occur with widespread pockets of seizures. The convulsions will usher in the new trade settlement system based in gold, which is tantamount to a USDollar rejection and death. The reinstated Gold Standard follows, which will not see the United States participation, not at first. See the Shostak article (CLICK HERE).

◄$$$ MONEY VELOCITY IS DOING A CRASH OVER A TEN-YEAR STRETCH WITH UNSTOPPABLE MOMENTUM. A FATEFUL DECISION WAS MADE BY GREENSPAN, A TURNING POINT INTO THE ABYSS. $$$

M3 velocity hit its near-term peak in 1Q2005, bottomed in 2Q2009 and has been rather flat through 2012. It turned lower in 4Q2012, reflecting a pattern of accelerating M3 growth and decelerating GDP growth. Focus on the broader money supply measure M3 for a more accurate picture. The big conclusion is that the USEconomy began to falter and go into an important decline after 1994. Then USFed Chairman Greenspan criticized the financial markets for embracing irrational exuberance. He had a major role however, since he changed the monetary spigot strategy. The USFed decided in 1994 not to match monetary growth with economic growth. Instead it began to pump the monetary channels unless and until any harmful signals were seen in the Consumer Price Index. It was a disastrous policy change, since the US exported inflation to Asia, and imported lower priced Asian products. The series of asset bubbles followed, the climax being the housing & mortgage wrecking balls. The dead man asset bubble is the USTreasury Bond, the final episode to be monitored in the economic morgue. Thanks to Shadow Govt Statistics for the graph shown.

◄$$$ A RETAIL APOCALYPSE IS UNDERWAY IN THE US-ECONOMY, AS MAJOR RETAIL CHAINS PLAN TO SHUTTER HUNDREDS OF STORES. THE REALITY IS 180 DEGREES OPPOSITE TO A RECOVERY. $$$

Many of the largest US retail chains are closing hundreds of stores. They contradict emphatically the propaganda of even a slow stubborn USEconomic recovery. What is occurring is a relentless deterioration, with accelerated collapse in recent months. Before the end of 2013, hundreds of marquee named retail stores will shut down, names like Sears, JCPenney, Best Buy, and RadioShack. The Circuit City chain is already dead and buried. Even the sturdy Wal-Mart is in trouble with falling sales, sure to shut down under-performing stores later this year. They described internally the February sales as a disaster. Just another unmistakable sign that the USEconomy is degrading and falling apart right in front of our eyes. Incomes are declining, taxes are going up, costs are rising everywhere (food & fuel & more), and USGovt dependence is at an all-time high. The labor force is shrinking, despite the distortions in the data sent over the airwaves by the paid shill talking heads. The large disposable incomes that the big retail chains have depended upon in the past simply are not there anymore. So retail chains all over the United States are now closing up unprofitable stores. The stampede has begun. It will feed on itself, since workers will be shed, and they in turn will spend less.

The rapid decline of some of our largest retail chains really is stunning. The norm has taken the form of half empty malls and numerous boarded up storefronts in cities all over America. The conversion to Third World is in progress. Follow some of the store closing numbers for 2013. These numbers are from a recent Yahoo Finance article. Best Buy forecast store closings: 200 to 250. KMart forecasts store closings: 175 to 225. Sears forecasts: 100 to 125. JCPenney forecasts: 300 to 350. Office Depot forecasts: 125 to 150. See the Investment Watch article (CLICK HERE). A colleague with direct ownership and experience in high end retail in the Los Angeles reports that small independent retail shops out there and very high end also are dropping like flies. Many are in the process of being shut down. On the very thin bright side, a promising trend is that a lot of the information technology related companies are opening stores, such as Google, Amazon, and Apple. Soon perhaps Samsung. By going directly from producer to retailer, they enjoy tremendous profit margins from big markups.

◄$$$ US-GDP WENT NEGATIVE. BLAME IT ON THE STORM AND THE FISCAL CLIFF FREEZE. BLAME IT ON GLOBAL WARMING OR THE MAYAN CALENDAR ABSURDITIES. HENCE THE USECONOMIC GROWTH IS AT LEAST MINUS 6% IN POWERFUL RECESSION. ENTER REALITY. TRUE BLAME IS ON A GENERATION OF ASSET BUBBLES FOSTERED BY FINANCIAL ENGINEERING. TRUE BLAME IS ON WALL STREET BOND CRIME IN THE $TRILLIONS. TRUE BLAME IS ON THE ACIDIC MONETARY POLICY. TRUE BLAME IS ON BAD ECONOMIC GUIDANCE. TRUE BLAME IS ON GLORIFIED ENDLESS WAR. ULTIMATE BLAME IS ON THE DEPARTURE FROM THE GOLD STANDARD. $$$

The USEconomy declined by 0.1% in the fourth quarter of 2012. The hurricane was a very significant damper on business activity. Ignore the big bank economists, who have been touting a sluggish recovery like total idiots, better described as harlots. The official word is Q4 was the first decline in GDP since 2009, but in reality the nation has not pulled out of the deep clutches of the recession. The US has been stuck in recession for five years, since the doctored price inflation provided deep distortion in growth. Each 1% lie in price inflation translates to a 1% lie on growth. Therefore the true GDP is about 5% to 6% worse than reported every year. The propaganda talks about sluggish recovery and stall speed, when grotesque chronic recession is the reality. A plunge was seen in USMilitary spending, as the Iraq war is winding down. Consumer spending in Q4 appeared resilient, as people once more show a predilection for raiding home equity when stupid banks permit it. Home building and business investment in equipment and software showed a rise also. Construction on new homes and apartments rose 15.3% to mark the fifth straight strong gain. The imbalance in home inventory held by banks remains a grand sore, a massive bubble in overhang. Business spending on equipment and software recovered for a 12.4% gain after falling for the first time in three years. See the Market Watch article (CLICK HERE).

◄$$$ US-DURABLE ORDERS ARE LACKLUSTER, BUT A 0.3% DECEMBER BUSINESS CAPEX DECLINE SHOULD CAUSE WORRY. IT IS THE ONLY ORDERS MEASURE WORTH MONITORING. $$$

Orders to US factories rose by 1.8% in December, after a revised 0.3% decline in November. Demand for durable goods increased 4.3%, but such headline news is not very important in the overall picture. So minor gains were seen in construction equipment and computers. The critical measure remains CAPEX, the core business capital expenditure that the Jackass focuses on consistently over the years. Demand for capital goods excluding aircraft and military equipment fell 0.3% in the USDept Commerce report, derived from the January 28th durable goods report. The figure includes items such as computers, engines, and communications gear. The increase for November CAPEX was revised up to 3.3% from 3.0%. However, business investment in equipment and software climbed at a 12.4% annual rate in the fourth quarter, the best performance in more than a year. The business CAPEX cannot get off the ground.

## EUROPEAN ECONOMY CHAOS

◄$$$ CONFIDENCE IN EUROPE IS IMPLODING. CORRUPTION HAS UNDERMINED FAITH IN THE SYSTEM. EXPECT A RAPID ACCELERATION IN THE FINANCIAL STRUCTURE BREAKDOWN, UPHELD BY SHEER PAPER OUTPUT. CONFIDENCE IN LEADERS IS EVAPORATING FAST. THE EURO CURRENCY IS ON LIFE SUPPORT, WITH ENORMOUS INTRAVENOUS BAGS HOOKED FROM ON HIGH, BUT IT DRIPS ACID. $$$

The EU crisis will worsen in the coming months. Their financial crisis is not over. In fact, it will merge with a new political crisis in an insidious weave. The best indicators are not the major stock indexes and government bond yields, as is often promoted. The Euro Central Bank held Europe together in 2012, but the political leaders and woven corruption threatens to bring down Spain and Italy. Nations rot from the head down, just like fish, as is seen in the United States also. The EuroZone economic growth has gone into reverse, even as the unemployment has a hit a new record. Radical quasi solutions are being imposed. Various government interventions on a massive scale have become the norm, whereas 20 years ago the public would have been aghast. In the case of Spain, they raided 90% of their social security fund to buy Spanish Govt Bonds, a desperate measure that will produce temporary results. They are dealing with a black hole.

The entire financial system is bound by the credibility of the political class. Therefore corruption scandals can implode the system. Europe is a in ruins without potential for recovery within the present fiat currency structure, in much worse shape than even six or eight months ago, if truth be told. Nothing has been fixed, as solutions have been spurious and quirky. In fact, most solutions like bond redemption and higher subordinated bonds have made the crisis much worse. Corruption is being exposed as the tide goes out. The Spanish banking system is collapsing at a rate worse than that Eastern nations did during the Asian Contagion of the late 1990 decade. The debt contagion has now spread to Spain, Italy, and even France, all of them too big to be bailed out. Which means it is the End Game. The parade of defaults is coming and the Euro will implode. A fresh $trillion will be required every few months to keep the Euro afloat. Each application will lift the cost structure and break the capital base further. The scale of the collapse is an order of magnitude larger than seen in the 2008 collapse of Lehman Brothers.

◄$$$ THE SPANISH PROPERTY SLUMP HAS PUSHED THE GIANT REYAL URBIS OVER THE EDGE. THE INSOLVENT REAL ESTATE FIRM FILED FOR BANKRUPTCY AFTER FAILING TO RENEGOTIATE ITS DEBT WITH CREDITORS. THE ESTIMATE IS THAT THE SPANISH BANKS ARE SITTING ON EUR 200 BILLION IN BAD DEBT, MUCH HIGHER THAN THE EUR 40 BILLION PREVIOUSLY ESTIMATED. THE RIPPLE EFFECTS WILL BE SIGNIFICANT. $$$

Spain suffered its second biggest corporate crash this week when real estate giant Reyal Urbis filed for bankruptcy. Banks have lost patience and pulled the plug. The company officially filed after failing to renegotiate EUR 3.6 billion of debt with creditors. The housing market in Spain continues to decline, with home prices still falling four years after the bubble burst. The overhang of unsold new properties is estimated at one million houses and apartments. The strain is on many large developers burdened by debt. Reyal Urbis valued its property portfolio at EUR 4.2 billion in June 2012, surely over-valued. Real estate developer Martinsa Fadesa became Spain's biggest insolvency in 2008 when it defaulted on EUR 7 billion of debt. The Spanish Sareb bad bank, created to accept toxic assets from banks rescued under a EUR 40 billion EU deal last year, is Reyal Urbis's biggest creditor. Bank creditors report that other real estate companies could soon follow in major bankruptcy cases. It appears that many rollover loans were refinanced within the last two years ago, under the hope that conditions would improve. They have not. See the UK Guardian article (CLICK HERE). The Spanish Reyal Urbis event will revive the debt and banking crisis in Europe in a significant manner. A banker source in Europe informs that the Spanish banks are sitting on EUR 200 billion in bad debt, much higher than the EUR 40 billion previously estimated. Spain has dragged its feet incredibly for four years.

◄$$$ CAUGHT IN A FIVE-YEAR RECESSSION, THE UKECONOMY MUST BRACE FOR PRICE INFLATION HITS LIKE A STORM. WITH THE POUND STERLING FALLING 7% VERSUS THE EURO THIS CALENDAR YEAR, IMPORTS FROM THE CONTINENT WILL BE HIGHER PRICED. THE BANKING LEADERS HAVE LOST CONTROL, ARE WRECKING THE SYSTEM, AND MIGHT NOT EVEN BE AWARE DUE TO THEIR STIFLING ARROGANCE. $$$

Even the Bank of England (BOE) admits price inflation is running hot, and will remain elevated for the next two years. Tightening monetary policy is not the solution, a surefire formula to could push the UKEconomy recession quickly into a powerful depression. The Pound Sterling has fallen sharply since January 1st, from 163 to 155 versus US$, a firm 4% decline. Against the Euro, the Sterling exchange rate has fallen from 123.5 to 116 since the start of the new year, a bigger 7% decline. Thus import prices will rise commensurately. The average income of UK workers has been falling in real terms for the last three years. Observe a lost decade. The UKEconomy has entered a triple dip recession. More accurately, like in the United States, they are in their fifth straight year of recession, and being drawn into a depression. Neither the US nor the UK ever emerged from the 2008 recession. See the Zero Hedge article (CLICK HERE). The BOE is truly cornered. This week, the discussion of an extended bond purchase of GBP 400 billion in UKGilts sent the British Pound down hard. The currency fell by 1.2% single day decline to 151.94 with some degree of concern. Their mere talk will result in higher import prices. The bankers should shut up. The clowns hope for stimulus to growth, when they will actually earn high prices and more job cuts. See the Reuters article (CLICK HERE).

BOE head Mervyn King is openly worried, with inflation stoked by monetary policy and no other options available. He said, "We do need to get back to normal interest rates, but if we were to try to get back today or this year, we would simply turn the economy into a deeper recession. Trying to reconcile those two positions is the challenge of the paradox of policy and it is proving exceptionally difficult. I do not have an easy answer to it. In this case, it is not a temporary deviation from long-term growth. This has not been a normal recession and this will not be a normal recovery." There is no paradox, since the fiat currency system and debt foundation for money has run its course, led the nation into the monetary corner, with collapse next. The solution is a return to the Gold Standard, which the arrogant pompous economic butchers will realize soon enough. Their solutions are killing the economy.

The central bankers caused most problems, and have no solutions left. Their available additional tools are more elaborate versions of the same destructive devices. They talk about productivity saving the day like utter morons. They wish to tighten rates, but they cannot, since caught trapped in a monetary corner, exactly as the Jackass described in the summer of 2009 when no Exit Strategy was open. Their stimulus has turned deadly. They preside over systemic failure. King is correct. He views a charred landscape in a death procession with collapsed monetary and banking foundation. The main question is whether the US or the UK will completely collapse first. No, Europe will!! See the CNBC article (CLICK HERE). The British Economy is worse than during the Great Depression on many counts. See the Info Wars article (CLICK HERE). The only hope the Jackass offers is to adopt the Gold Standard and run the gauntlet of liquidations.

◄$$$ BADLY DECLINING GERMAN ELECTRICITY USAGE CONTRADICTS THE ECONOMIC GROWTH STORY. USAGE IS HARD TO ADJUST IN GIMMICKS. THE FORWARD PRICE SHOWS A SHARP DROP IN USAGE. THE RISING D.A.X. STOCK MARKET INDICATES EASY MONEY FINDING A DESTINATION. THE RECESSION DOES NOT JIBE WITH RISING STOCKS. $$$

One market not manipulated in Germany is the utilities sector, where electricity usage struggles to keep a constant drawn demand. The forward market for electricity is in rapid decline, with prices having fallen almost 20% in twelve months. In the opposite direction goes valuation of DAX stocks. One could employ standard finance theory and declare the recovery just around the corner, but that would be savagely dim-witted. Instead, the easy money from the Euro Central Bank (by means of USFed currency swaps, to be sure) has enabled the major stocks to climb without obstacle. Their valuation is not about future expectation, but rather easy money seeking paths of least resistance. The divergence is plain simple stark ugly, and cannot continue. See the Zero Hedge article (CLICK HERE).

◄$$$ GERMAN RETAIL IS IMPLODING. ACTUALLY WESTERN RETAIL IS IMPLODING FROM A BROKEN ECONOMY, BANKING SYSTEM, HOUSING MARKET, AND LABOR MARKET. WITNESS GRADUAL BREAKDOWN IN THE CENTRAL EUROPEAN POWERHOUSE. NO NATION IS IMMUNE. $$$

Europe is on the fast track to quicksand. German retail is imploding. Just like in the United States, the confidence index is mostly a function of the major stock index on the domestic front. The inflation engines have pumped up the stocks, and thus pumped up the indicator of confidence in a perverse exercise. The rising DAX is no different. Without doubt, the confidence index is full of rubbish with no predictive power, with large weighted components in nonsense and hot air. It is totally disconnected from the real world. The reality strikes with basic retail sales. The German HDE retail association reported Christmas sales for November and December were down some 0.7% from the prior year. Sequentially, German retail sales plunged by 1.7% from November, far worse than the clownish economists forecasted. Unlike the perversions in the US, the Germans do not blame it on weather or shifting holidays. The German Economy continues to deteriorate. By contrast again to the US fascist bankers, the Bundesbank responded, as head Jens Weidmann announced that ongoing bailouts could threaten the strongest members. See the Zero Hedge article (CLICK HERE). Try imagining the USFed Chairman wizard of paper oz claiming that further bailouts might threaten JPMorgan. The label fascists is mild for the New York bankers, when in truth they are diabolical disciples, traitors, thieves, parasites, liars, pilanderers, ego-maniacs, and pedofiles. But the Jackass digresses.

◄$$$ FRANCE IS COLLAPSING QUITE RAPIDLY, EVEN THOUGH THE PERIPHERY GARNERS MOST ATTENTION. FRENCH RETAIL SALES ARE FALLING FAST AS RECESSION GRIPS. FRANCE IS SINKING INTO THE ABYSS, AFTER ITALY. THE FRENCH LABOR MINISTER CALLED THE FRENCH STATE BANKRUPT, IN A BOUT OF HONESTY. CAPITAL FLIGHT CONTINUES APACE, AS THE SOCIALISTS SCARE MONEY RIGHT OUT OF THE COUNTRY. $$$

French retail sales dropped for the 10th consecutive month, accompanied by a notable decline in employment. Neighboring Italy saw retail sales drop for the 23rd straight month. Generally Eurozone retail sales have been collapsing for the last 15th months, as wholesale prices soar. The mix is almost uniformly bad, as the systemic failure tightens. Few economists connect the central bank actions with shrinking profit margins as a result of rising cost structure. Sales are down year-over-year across the board. Price inflation is up across the board, bringing about a profit margin squeeze in a broad manner. Employment is down. France is sinking into the abyss after Italy has already found the abyss. See the Global Economic Analysis article (CLICK HERE). The wise observers have shifted attention away from the periphery, where Southern Europe has broken down for three years. New attention has been directed to France, where the core is collapsing. France is a PIIG in disguise, a point long made by the Jackass. See the Zero Hedge article (CLICK HERE). It is not the German banks but rather Goldman Sachs and the French banks who are exposed neck deep into the Greek debt drama. The PIIGS will submerge France.

Michel Sapin made the gaffe in a radio interview, which left French President Francois Hollande battling to undo the potential reputational damage. The Labor Minister spoke too freely and honestly when he said, "There is a state but it is a totally bankrupt state. That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective." The collapse continues, aided by an extreme capital flight that continues from last autumn when Hollande was elected. A growing number of entrepreneurs enter into protest over the policies of the socialist government. Money is being removed from the clutches of the socialists at accelerating speed. See the UK Telegraph article (CLICK HERE) and the Acting Man article (CLICK HERE).

◄$$$ A NEW ESPIONAGE SCANDAL IN SPAIN HAS JOINED THE FINANCIAL CORRUPTION SCANDAL. THE GOVERNMENT IS AT RISK OF COLLAPSE. NEIGHBORING ITALY SUFFERS FROM ITS OWN WIDENING SCANDAL, AS A MAJOR BANK RECEIVES YET ANOTHER BAILOUT. ITALIAN PROSECUTORS HAVE OPENED INVESTIGATION INTO FIVE BANKS OVER DERIVATIVES. BERLUSCONI POPULARITY GROWS IN A COUNTER-ATTACK AGAINST THE ESTABLISHED GOLDMAN PREPPY, THE LEADER MONTI. $$$

Add a few logs on the Spanish fires, as a vast political espionage scandal has erupted in Spain, to add to the already sordid financial corruption scandal that touches their leadership crew. A horrendous economy with staggering unemployment, a prime minister and ruling party tarred by corruption, with collapsing banks, is all bad enough. But recently a fresh political espionage scandal erupted, scattering debris and money laundering allegations across the Madrid landscape. See the Testosterone Pit article (CLICK HERE).

Not to be outdone, Italy has its own widening scandal, but such is not all that new in Rome. The banks Monte, BNL, Unicredit, Intesa, and Credem are all under investigation for corrupt practices related to derivatives. It is just LIBOR price rigging in the adjoining room. The third largest Italian lender is under massive pressure to recapitalize due to derivative losses and additional losses on its bond portfolio. The collateral damage is extensive. The old guard led by Berlusconi has seized the opportunity for a comeback. Watch to see if the Goldman Sach preppy Mario Monti is pushed out of his unelected office, or off the palace balcony. See the Zero Hedge article (CLICK HERE). Reliable sources report that polls toward the Italian election indicate Monti's rating has dropped from 70% to 30% very quickly. Ex-PM Berlusconi is running a very close second. The Italians love their criminal class politicians, especially when they have flair. See the UK Independent article (CLICK HERE).

## 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, and more.