GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES


* Intro Golden Nuggets
* Escalating Battle in Currency War
* Gold Solutions Amidst Crisis
* Newfound Gold & Oldkept Gold
* Coin Rush & Investment Demand
* Gold Price Breakout in Asia



HAT TRICK LETTER
Issue #106
Jim Willie CB, 
“the Golden Jackass”
23 January 2013

"This low Gold price opportunity is actually great when you are in the market buying physical from people who had margin calls and other problems. This is the last time physical will be this cheap to buy. The Boyz are committing financial suicide. I believe they are clueless where all this ends for them." ~ The Voice (my highly reliable connected gold trader source, mid-December 2012)

"The statement by the Russian central bank head Ulyukayev is very misleading. We are not on the brink of a new currency war. We are coming to the end of several years of nasty competing currency wars, approaching the climax whereby Gold will illustrate its supremacy." ~ The London Siren

"Our clients are worried that a major currency crisis or mass bankruptcies would occur. It all has to do with falling confidence in the heavily indebted Western governments and financial institutions." ~ Gregor Gregersen (founder of Silver Bullion in Singapore, member of the Singapore Bullion Market Assn)

"Anyone can issue a currency; the problem is having it accepted." ~ Hyman Minsky (elder Austrian brilliant economist, along with VonMises, Rothbard, and Hayek.)

"It was once fashionable to argue that a divided government was good for the economy. The view then was that politicians would be too busy with political brinkmanship to get in the way of a dynamic private sector. As a result, unfettered by government interference, the private sector was more likely to invest, hire, and prosper. It is hard, very hard, to make this argument today." ~ Mohamed El-Erian (PIMCO, always with insight even if wrapped in a straitjacket to avoid controversy)

Editor Notes: Two corrections must be humbly made from the December Gold & Currency Report. A story was run on the Shanghai Gold Exchange, pertaining to the arbitrage potential. The differential in Gold price between the new Chinese mart and the US/London price fix is not minor. However, the effective price gap for arbitrage purposes is not as large as stated. A $25/oz spread translates to a US$80,400 arbitrage potential gain per kilogram. Note that 1 kg equals 32.1507 troy oz. Therefore, 32.1507 times 25 equals $803.76, which is very different from my figure of $80.4k per kilogram. The second story in dispute covered the removal of the penny and nickel from coin circulation by the USGovt, due to extreme issues related to rising costs to produce the coins way above face value. A retraction was given by Henry Wallen of Skew News on November 29th. He claimed to pen the article in satire. The Jackass fell for it, since the cost argument was compelling and very real. My apologies for the two errors.

## INTRO GOLDEN NUGGETS

◄$$$ IN THE YEAR 2013, THE FINANCIAL SYSTEM RELAPSES ARRIVE. $$$

Alasdair Macleod points to growing stresses and problems not being addressed or solved in the United States, United Kingdom, Europe, and Japan, where banks are interwoven with the existing financial structures but deeply insolvent, with incredibly acute strains related to derivatives, off-balance sheet liabilities, inadequate capital, and dogged lawsuits. He warns of many potential extreme stress points, such as developments in the following areas.

  • Inflation, which could pick up unexpectedly if there is a shift of preference from money to goods, the consequence being accelerating stagflation. Bear in mind that governments usually under-report inflation, while prices in the US, UK, and other nations are already increasing at a significantly faster rate than CPI measures suggest.
  • Interest rates, which should have to rise sooner than expected due to inflationary concerns. A consequent implosion of asset prices could begin if markets price in rising interest rates before they happen, destroying the ability of central banks to retain control of prices in credit markets.
  • A further downturn in the US private sector economy, excluding government.
  • Rising bond yields for Spain, Italy, or France.
  • Deterioration in the Japanese trade balance and weakness in the Yen currency.
  • The bursting of bond market bubbles, particularly in the US, UK, Germany, Japan, or France. These are big bond markets with corresponding disorder.
  • Crisis meetings by governments and central banks that resolve nothing and only further public understanding of their inadequacies.
  • Derivative markets, and their exposure to counter-party risk, hypothecation of collateral through secretive linkage.
  • Silver markets, where large short positions are held by the bullion banks all vulnerable to a vicious bear market squeeze. If this happens a sharp rise in gold prices will also be triggered, and possibly spread to other metals and beyond.
  • Growing social unrest, and further clampdowns on personal freedom.

Macleod concludes, "We are one year closer to a renewed banking and financial crisis, the pace of which is quickening, and which can be expected to turn eventually into a fiat currency collapse. These systemic risks increased in 2012, most notably in the EuroZone, but also elsewhere. None of the solutions applied anywhere did any good. On the evidence to date, it has become less likely any Western government can or will take the right steps to avoid an eventual collapse of their currency. So 2013 is more likely to realize systemic failures than 2012." See the Gold Seek article (CLICK HERE).

◄$$$ THE SOVEREIGN MAN PORTRAYS THE USECONOMY AT DEPRESSION LEVELS, WHEN THE G.D.P. IS PRESENTED IN GOLD TERMS. THE PRESENTATION IS UNIQUE AND STARTLING. THE RISE IN THE LAST FEW DECADES OF THE 20TH CENTURY WAS A FALSE READING. THE DECLINE IN THE NEW 21ST CENTURY IS DEVASTATING, A TRIBUTE TO FIAT PAPER MONEY, HYPER MONETARY INFLATION, REACTION TO IMBALANCES, ENDLESS WAR, AND THE RISE IN THE GOLD PRICE. THE USECONOMY IS AT PRE-DEPRESSION ERA LEVELS. $$$

The results are quite startling. To be sure, several heavy crosswind factors contribute to a poor report card on economic growth and management. In its earliest days, the Gross Domestic Product in the young United States on a per-capita basis was a mere 2.6 ounces of gold per person per year. The nation was young and growing, for the most part unencumbered by bankers and weighed down by war. The per-capita GDP grew quickly, effectively doubling in the 20-year period from 1791 to 1811. Most of the 19th century proved difficult for growth, with the Civil War and much industrial conflict preceding it. Other obstacles like the War of 1812 and the Mexican War made for a tough century. War always renders great harm to economies, the current endless wars more proof, but today they are sacred and forced into honor displays.

Few realize a key factor in the US Civil War in the 19th century, the control of cotton and other prices by the strong North, imposing their will on the production center in the weak South. The war was also over market control, with the convenient excuse of slavery offered to the historians, much like today the Islamic terrorists are ascribed blame for destroying towers and military office facades, as well as causing highway potholes and the common cold. In fact worse, Lincoln was assassinated for much the same reason as Kennedy. He angered the London bankers by creating a Continental Dollar, called the greenback. Rather than appeal to London for giant loans to finance the war, Lincoln chose the inflation route. Investors in the greenback were decimated with gigantic losses, like over 80% to 85%. But Lincoln was killed, with full preview given in the London Times newspaper editorial sections, anger shown, threats printed. That part of US history has been deleted by the bankers who work closely with the press and publishers.

An newly industrialized USEconomy began to thrive in the 20th century, where many inventions were fostered tied to Edison, Marconi, Whitney, and Bell. The GDP doubled from 12.00 ounces of gold per capita in 1892 to 23.55 ounces of gold per capita in 1916. But by 1929, it had almost doubled again to 41.12 ounces of gold per capita. Then came years of depression and economic stagnation, due to excessive debt abuse, primarily in the financial markets, where 10:1 leverage was common for stock investments. The next rise over several decades resulted in a peak GDP at 139.05 ounces of gold per capita in 1970. Then Nixon closed the gold window, and extreme economic deterioration became the norm for the doomed USEconomy. It had another runup in GDP gold terms with peak around 2000, but it was a fanciful phony prosperity. What kept the artificial heights were the powerful tech-telecom asset bubble, followed by the housing & mortgage asset bubble, combined with fierce control of the gold price. The Clinton-Rubin Era had gutted Fort Knox of its gold, driven down the Gold price to under $300/oz, and engineered a stolen decade of prosperity from which the nation has not and will not EVER recover. The next stage will be marked by USGovt debt default, global rejection the USDollar, chronic recession reaching depression, and civil disorder, as the police state is rooted by the fascists who brought the nation 911 and the Coup d'Etat of the government, working in collusion with the sprawling security organizations. The eradication of the Constitution is the work of nazis in power, who keep their identity well obscured. The byproduct of the endorsed Fascist Business Model is extreme economic deterioration.

The year 2012 recently ended with a shocking GDP size at 28.40 gold ounces per capita. It is based upon a trailing twelve month GDP data, which is itself exaggerated due to commonly applied accounting gimmickry. This is an astoundingly low figure, a testament to fiat currency and its ravaging effect on capital from a decade of rooted fascism and bond fraud by bankers. To put it in perspective, since the end of the Great Depression, US GDP per capita has only been under 30 ounces of gold two times, this year and 1980. The current USEconomy is an amazing 61% below the historical post-WW2 average of of 72.83 ounces of gold per capita. The blame goes to the bankers who killed Kennedy, halted the Gold Standard, installed an imbalanced system of fiat currency, sold the world USTBond debt securities, shipped US industry overseas, while attempting to sell the US public the notion that grotesque imbalances are the norm for an advanced nation with sophisticated financial sector serving in a dominant role. Full spectrum dominance has resulted in full bore insolvency and gradual stages of implosion.

Right now, the largest economy in the world is producing as much as it did in 1931, almost at the peak of the Great Depression. However, as the Chinese debt rating agencies prefer to point out, the USEconomy might include half of its lofty calculated GDP as debt paper pushed from desk to desk, with no associated work or benefit. Despite the propaganda by the USGovt and the master Wall Street dons, the data shows the trend growing worse. Each new year is worse than the year before. A massive decline has come, with profound economic contraction since 2001. Not coincidentally, the current time period coincides with the greatest expansion of debt and the growth in the monetary base in history, with a decade boasting a 4-fold rise in the Gold price in catch-up mode. The criminal Ponzi scheme with unbridled debt growth and monetary inflation has turned the clock back seven decades on progress. The architects demand respect and salutes, if not genuflection, when their financial fraud deserves prosecution and banishment.

◄$$$ THE USECONOMY CONTINUES ITS POWERFUL DECLINE. STUCK IN RECESSION FOR FOUR FULL YEARS, IT SHOWS VISIBLE SIGNS OF DEEP DECAY, SEEN IN RETAIL AND INDUSTRY. THE EMPIRE FED REPORT AND PHILLY FED REPORT SHOW CONTINUED DEGRADATION. THE EFFECTS OF THE BIG CONJURED STORM HAVE COMBINED WITH THE HIGHLY DESTRUCTIVE MONETARY POLICY TO PRODUCE A DEPRESSION. $$$

The USEconomy has entered its fifth consecutive year of powerful recession, which should qualify it for depression. The laughable promotion of a recovery is worthy of the King of Propaganda Goebbels from the National Socialists of Central Europe long ago. They are back, same genetic roots, but more technology and more collusion controls. Industry has succumbed to almost four years of capital destruction linked to monetary policy of zero percent conditions and extreme Weimar-like bond monetization, which has lifted the entire cost structure and shrunk profit margins. The Federal Reserve Bank of New York posts a general economic index (Empire Fed Report) which fell to minus 7.8 from a revised minus 7.3 in December. The factory activity for the region declined for a sixth straight month. Readings of less than zero signal contraction in New York, northern New Jersey, and southern Connecticut. Manufacturing makes up about 12% to 13% of the USEconomy. This is part of a so-called mockery called recovery. See the Bloomberg article (CLICK HERE). The leaders call it the harmful effects of uncertainty and volatility. Much blame is placed on the fiscal cliff spending negotiation impasse. The Jackass prefers reality, where monetary inflation and propped financial markets cannot be sustained amidst chronic deficits and systemic insolvency while endless sacred wars drain the nation. The rapid decay is from policy, not dubious vapid concepts.

Next in rhyming decay came the Philly Fed Report. The Federal Reserve Bank of Philadelphia posts a general economic index which fell to minus 5.6 from a plus 4.6 in December. This is part of a so-called mockery called recovery. The manufacturing sector in the Philadelphia region contracted hard and fast in January, a very dire indication for the area covering eastern Pennsylvania, southern New Jersey, and Delaware. Together with the Empire Fed Report, the data hardly shows a reverberation of economic recovery humming along coming into step. Just the opposite, it reeks of borderline depression. The reports across other regions are similar. To reflect the harmful effects, the confidence among US households fell to a one-year low in January, as higher payroll taxes hit with the new year rules. The Thomson Reuters/Univ Michigan preliminary index of consumer sentiment dropped to 71.3, the lowest since December 2011, from 72.9 the previous month. The usage of the word unexpected has become routine, but fully expected by the Jackass every month. Worse, the examples of success are hardly shining spectacles. The New General Motors is being transformed in full view to a Chinese supply line. It is happening in plain sight and no one seems to see what is going on in a blind nation. Gotta love that low-cost theme they sold since 2000, a massive blow the national solar plexus. See the YouTube video (CLICK HERE).

◄$$$ NOTICE THE RAILWAY TRAFFIC THAT STRUGGLES IN DEPRESSION. THE UNITED STATES IS FAST BECOMING A NATION OF DISABLED WORKERS. NOT MUCH IS MOVING IN THE USECONOMY EXCEPT TROOPS AND ANTI-RIOT EQUIPMENT. $$$

Against the backdrop of a powerful chronic entrenched recession in the USEconomy, the issuance of USTBonds supplied by the USGovt will continue. The corresponding USFed bond purchases will force more pressure on the USDollar. The banks will remain insolvent and in need of continued profound aid in the form of toxic bond redemption and hidden slush funds to cover their derivative burden. That will force more USFed action, and thus more pressure on the USDollar. The labor market cannot respond well during a USEconomy stuck in recession. That will force more deficits for the support to jobless workers, while the incoming tax receipts will remain low. A vicious cycle has been the norm for over three years. It will worsen, hence lead foreign nations and trade partners to reject the USDollar for reasons pertaining to self-preservation, eagerness for a new dawn, and basic disgust. The downward momentum is picking up great speed, like a locomotive going downhill without brakes. Retail sales and most distribution networks are badly stalled. Notice the US railway traffic, which aptly demonstrates the decline during this mockery of a recovery.

Americans collecting disability insurance is a national tragedy, one among many. During the Obama Admin first term, the number of workers collecting federal disability insurance increased by 1,385,418 to a record 8,827,795. In January 2009, when Obama was inaugurated, 7,442,377 Americans were collecting federal disability insurance, according to the Social Security Admin. By December 2012, there were 8,827,795 collecting disability, a substantial increase. With 115,868,000 people working full-time in December, according the Bureau of Labor Statistics, calculate that 1 person collects disability for every 13 people working full-time. In 1970, the ratio was one in 51 workers collecting disability. This is socialism (not) at work, dragged down deeply. In the comparable period of the Bush Jr first term (January 2001 through December 2004), the number of people taking disability went from 5,052,895 to 6,197,664 for a 1,144,769 increase. The disabled worker list has grown by 75% in twelve years. To be sure, many workers are not at all disabled, and have found a device to kick back and enjoy the good life in the nation suffering from systemic failure in a growing police state. Some cases have been detailed in this report, like the woman with a car loan.

◄$$$ SPAIN DECIDED TO PLUNDER 90% OF ITS SOCIAL SECURITY FUND TO BUY ITS OWN DEBT. NOBODY WANTS IT, AND THE EURO CENTRAL BANK SOLUTIONS BACKFIRED ON THE INSOLVENT BANKS. SO SPAIN IS LEFT TO RANSACK THE NATIONAL PENSION FUND. $$$

The story sold is that the Spanish Govt Bond shows relatively healthy life signs, with a 5% bond yield as evidence. But it is supported by the EuroCB under Draghi with his armada of sinking rafts. Hidden has been the damage rendered to the Spanish banking system from their usage of the Long-Term Refinance Operation to purchase toxic (at least badly impaired) debt securities. The bond market has become unsure of what provides the demand for their debt. As Tyler Durden points out, wonder no longer. Their government officials have been quietly tapping the country's richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish Govt Bonds. They have ransacked it, drawing down the EUR 65 billion (=US$85.7 bn) fund by at least 90%, having invested in increasingly risky Spanish debt. The only difference between the Spanish abuse and the US abuse is that the finance ministers in Madrid act alone. They are the only buyers of their own toxic debt paper. Their Social Security Fund has turned into the marginal buyer, critical to support the sinking ship. The only way the bonds can clear in the public markets is through using the pension fund assets. The pensioners typically have little voice, hardly prepared to take to the streets in protest. They are being sold out. See the Zero Hedge article (CLICK HERE).

◄$$$ AFRICA IS WHERE THE UNITED STATES AND CHINA GO TO OPEN CONFLICT, AS THE HIDDEN CONFLICT OF THE LAST SEVERAL YEARS ERUPTS. AFRICA IS OFFICIALLY IN THE CROSS-HAIRS. THE CHINESE SUPPLY LINE AND COLONIZATION PLANS RUN IN DIRECT CONFLICT WITH THE ESTABLISHED TREND FROM THE US-BRITISH CENTURY. AFRICA IS A VAST CONTINENT RICH IN MINERALS AND RESOURCES, LARGELY UNTAPPED. IT HAS NUMEROUS BATTLEGROUNDS, LED BY THE CONGO AND THE HORN OF DJIBOUTI. THE USMILITARY HAS EXPANSION PLANS UNDER DUBIOUS GROUNDS. $$$

Several proxy wars will be fought in the future in Africa as a staging ground. The new chapter has focused on the Congo and the horn where Djibouti is a center of extreme activity. They are marked by heavy smuggling traffic and open hot battles with soldiers. The USMilitary has done well to conceal the soldier deaths and casualties treated from war waged on the horn. Michael Krieger provides some depth of detail in the new battleground of Africa, where the United States and China have been in pitched battle for a few years, unknown to the sleepy distracted challenged American public. The following is his analysis taken almost verbatim, labeled Africa in the Crosshairs.

The Dark Continent as it is known to many, has a dim history of modern foreign influence. While much of Africa was technically independent by 1960, memories of colonization and cronyism have lasted much longer. Infamous dictators like Sani Abacha and Mobutu Sese Seko held a net worth in the $billion category, due in no small part to the hypocrisy of Western nations like the United States. However, starting with the funding of a nearly $500 million railroad known as the Tazara Line in the 1970's, a new player started their emergence in the region, namely China. With its vast natural resources and geopolitical position, Africa is now in the crosshairs of the world's two superpowers. The Sino-US rivalry is an open secret in the hemisphere, destined to only grow.

In a collection of essays published by Columbia University entitled "China Returns to Africa," the authors highlight the "Chinese government's strategic pursuit of resources and attempts to ensure raw material supplies for growing energy needs within China." The Chinese hierarchy understands that with limited resources in the world, commodities will only become more valuable based on supply and demand alone, before debased currencies account for lower real value. Africa's fertile land, ample water, and its status among the world's lowest farming productivity all add up to foreign investment. Trade between China and Africa quadrupled from 2005 to 2011, passing the United States along the way as Africa's largest partner. Even the African Union's Ethiopian headquarters were funded by a $200 million gift from the Chinese. Largely avoiding military intervention on the continent, instead focusing on diplomacy, trade deals, debt forgiveness, and aid packages, China has worked to establish a strong foothold and relationship, in sharp contrast to the United States. Once again, China has pursued trade while the US pursues dominance. As Andrew Malone pointed out a few years ago, "The strategy has been carefully devised by officials in Beijing, where one expert has estimated that China will eventually need to send 300 million people to Africa to solve the problems of over-population and pollution."

As has been witnessed time and time again, the United States modus operandi is to let the military industrial complex lead its efforts to protect the Petro-Dollar, debt expansion, and every other business interest of bankers and politicians. However, with the growth of another superpower, the rules of the game have changed from the last 20-year period. A bipolar emergence in global governance can be seen as a balance of power, adding a degree of stability. However, this is not likely. See the Liberty Blitzkrieg article (CLICK HERE).

The recent development is ominous. The USGovt is sending troops to 35 African nations under the pretense of fighting Al-Qaeda and related terrorists. The USArmy teams will be directed to 35 African countries for training programs and other operations as part of an increased Pentagon role in Africa. The move would see small teams of US troops dispatched to countries with groups allegedly linked to activist terror groups such as Libya, Sudan, Algeria and Niger. Those convenient terrorists.

Glenn Ford argues about the USMilitary swarming over Africa. He wrote, "The 2nd Brigade is scheduled to hold more than 100 military exercises in 35 countries, most of which have no al-Qaida presence. So, although there is no doubt that the United States will be deeply involved in the impending military operation in Mali, the 2nd Brigade's deployment is a much larger assignment, aimed at making all of Africa a theater of USMilitary operations. The situation in Mali is simply a convenient, after-the-fact rationale for a long planned expansion of the USMilitary footprint in Africa." Timothy Alexander Guzman argues toward the new war to secure resources. He wrote, "The AFRICOM [the USMilitary's Africa command] goal is to eliminate the influence from China and other countries in the region. Africa's natural resources is another important element to consider because it includes oil, diamonds, copper, gold, iron, cobalt, uranium, bauxite, silver, petroleum, certain woods, and tropical fruits."

The reality collides with the official stories, as deception rules the networks. The USGovt sends in the military to fight terrorists in any country which has coveted resources, a clear extension of the exploitive techniques. The usage of terrorists as rationale is deeply embedded in the nazi strategic methods. Anthony Carlucci argues that the overthrow of Qaddafi was the opening salvo in the war for African resources. It bore a side benefit of confiscating the 144 tons of gold in the Libyan account, which will never be returned by the London bankers. See the Zero Hedge article (CLICK HERE). For more detail, see the Global Research articles (CLICK HERE and HERE and HERE).

◄$$$ A CHINESE CORPORATION STUNG CATERPILLAR WITH A MAJOR ACQUISITION, WHICH FOUND AN EMPTY ROOM AFTER PAYING OUT $650 MILLION. THE TRADE WAR HAS TAKEN A TURN. $$$

In the popular vernacular, Caterpillar was punked by Chinese fraud, in a blatant clever shell game congame. Fraudulent Chinese corporations are nothing new. They have exploited several public reverse merger companies that have generated trading profits along the way. The US industrial titan Caterpillar has become a victim of a shell game. It admitted to a loss from deliberate coordinated accounting fraud at a subsidiary of a Chinese company it acquired last summer. In the process CAT would take a $580 million loss, writing off almost the entire deal. It accounts for half their earnings of $1.70 for 4Q2012. Last June 2012, Caterpillar closed the purchase of ERA Mining Machinery Ltd and its subsidiary Siwei. In the deal CAT was expected to reap China's fourth largest maker of hydraulic roof supports. The price tag on the deal was HK$5.06 billion, equal to $653.4 million. ERA had been publicly traded in Hong Kong, doing business through Siwei. See the Zero Hedge article (CLICK HERE). Ten years ago, important foreign direct investment was made by US and Western firms in China. They have ended. Challenges over Google, constant squabbles over copyright violations, accusations of currency manipulation, and fraud with nasty tactics have replaced the investments.

◄$$$ THE BAKKEN SOLUTION IS A PIPE DREAM. ITS STORY IS LIMITED AND FINITE, IF NOT A PONZI SCHEME REQUIRING NEW WELLS TO COMPENSATE FOR VERY FAST DEPLETION. THE ENERGY RETURN ON INVESTMENT THEME WILL GATHER ATTENTION, AS SHALE DEMANDS FIVE UNITS OF ENERGY TO PRODUCE A SINGLE UNIT, WORSE THAN THE INEFFICIENT TAR SANDS. A PARALLEL ARGUMENT CAN BE MADE ON SILVER MINE OUTPUT, AS PEAK SILVER HAS ARRIVE WITH FORCE, THE DOWNTREND VIVIDLY CLEAR. $$$

The Jackass gives an invitation to read some outstanding analysis by an emerging young star in my opinion. Steve St.Angelo has made quite a splash with excellent superb work to expose the Bakken energy projects as lackluster, hardly the salvation for the USEconomy, and surely not to achieve any national energy independence. We have talked personally, and my hope is that he can launch a newsletter. His expertise centers on energy costs, the return on investment, and depletion trends. He applies the cost analysis to both the energy production fields and the silver mines. In the process he exposes the Bakken projects as a collection to fall short, actually appearing to be a Ponzi scheme. He also applies a similar analysis to the mining firms to reveal which thrive compared to cost incurred.

The Bakken energy projects focus on shale. They require at least 3 to 4 times as much energy to produce one unit of new output, making heavy usage of natural gas in the processes. The tar sands require at least twice as much energy to produce a single unit. That is not progress, and speaks to a socialism element in the energy industry as per a massive tradeoff of inefficiency. St.Angelo develops excellent arguments that shows almost an instant depletion rate on new oil wells, like in the first couple years when most Bakken wells suffer a 75% decline. The acceleration in new wells begun must be maintained in order to sustain output. That is not progress, and speaks to a pseudo-Ponzi energy field strategy. In a couple years time, the new well installations will slow sufficiently to expose the faulty Bakken dynamics. Then energy decline will be seen in the entirety, just like what is seen in the individual wells. More isolation is coming to the United States, which falsely claims a newfound reliance upon Bakken as savior. It might become politically unacceptable to dismiss the Bakken story. It is not the solution, nor is any shale oil solution. See the Market Oracle article by St.Angelo that covers a wide assortment of exposures to the energy industry's vulnerable side (CLICK HERE).

In the article, he covers world silver and oil production, the export land model where nations like Saudi Arabia suffer export declines from growing domestic economies, the badly declining trend in energy return on investment (EROI), the Bakken well depletion rates, the global peak oil convincing evidence, the decline in silver output and ore grades, and the reduced US role in silver & gold production. Honestly, his work is too comprehensive, excellent, and free (sorry, Steve). St.Angelo, who writes under the moniker of SRSrocco, concluded "If the world enters a depression within the next year or two, this will certainly guarantee the global peak of silver production. It will not matter if the global economy recovers in the next decade, because the peaking of oil and the falling EROI of energy will have destroyed enough net energy to kill any attempt to bring global silver production back to the level it was before. Lastly, anyone who is good at connecting the dots will realize the ramifications of this article go way beyond just the peaking of silver. The falling EROI of energy will not only be a destroyer of precious net energy, but will also help bring down the largest empire in the world." He has published many articles, but check out his analysis on the Silver price going past $100/oz on Financial Sense (CLICK HERE), and on Peak Silver with its own falling EROI on Market Oracle (CLICK HERE).

## ESCALATING BATTLE IN CURRENCY WAR

◄$$$ SWISS EXTREME RISK CONTINUES TO RISE TOWARD A BREAK POINT. THEIR EURO-SWFRANC PEG CANNOT BE HELD FIRM. AS THE EURO CONTINUES TO CRUMBLE (REGARDLESS OF EXCHANGE RATE), INVESTORS ARE FLOCKING TO THE SWISS HILLS. THE SWISS NATIONAL BANK CANNOT HOLD THE 120 DECLARED PEG. THEIR SHORT FRANC POSITION AND LONG EURO POSITION, WITH OTHER MAJOR CURRENCY LONG POSITIONS, WILL ASSUREDLY BREAK. THE COMPETING CURRENCY WAR MAKES IT CERTAIN, AS EACH MAJOR NATION WILL MANAGE ACCORDING TO THEIR OWN NATIONAL PRIORITIES. THE URGENT EURO DEFENSE HAS PROMPTED OTHER NATIONS TO TAKE DEFENSIVE ACTION. THE WAR IS ON. A NEW PHASE HAS BEGUN, WITH DAMAGE DONE TO OTHER NATIONS RISING. $$$

The London Siren has been covering this breaking currency dam for a year closely. Since the autumn months of 2011, the Swiss National Bank (SNB, their central bank) has been working feverishly to stop the rise in the Swiss Franc currency, as funds have flooded from across the entire European continent. The defense has required enormous resources, reportedly exhausting one third of Swiss cash reserves, with a recent acceleration. The SNB pegged the Swiss Franc to the Euro currency at 1.20 and has kept it in a very tight managed range for 16 months. All investors who wanted to leave the Euro received 1.20 SwFrancs. Hence, the SNB was selling SwFrancs short and buying Euros long. As time passed, the SNB has been working hard to reduce their Euro exposure by buying USDollars, British Pounds, and Japanese Yen, the major currencies. They are long all the majors outside the Euro, spreading the risk but not really reducing it. Their actions led to the strengthening of the USD, GBP, and JPY over 2012. On a net basis, the Swiss National Bank is massively short Swiss Franc, and massively long the Euro, but also somewhat exposed with long positions in the USD, GBP, and JPY. Suddenly, the Bank of Japan and new prime minister Abe announce they must defend their own turf. To preserve and restore the Japanese export trade, they plan to weaken the Japanese Yen currency. Ooops!! The Swiss are caught in the middle of the Competing Currency War in a dangerous new phase. As the various nations act in their own best interests, the Swiss among others will be ground to a pulp.

The Swiss peg strategy losses will first arrive from the JapYen front. The Japanese have a long history of defending their industrial sector, with great fervor and sensitivity, if not deep national pride. Their industrial sector is vast, like Germany's. The other front where losses will be incurred is the British Pound, which is also falling versus the Euro. A strange phenomenon might be at work, where the damaged currency sees a burst rise in valuation, as debts are settled in the Euro currency before its funeral procession. The Euro versus British Pound (cable) recently broke above 0.82, and the London Siren expects it to head to 0.86 as the GBP weakens further. Therefore, the Swiss Natl Bank is suffering on its long JPY position and possibly next its GBP position. Some distress calls went to Goldman Sachs in all likelihood. Lord Blankfein was beseeched to do more of God's work. Clearly, Draghi was instructed to talk bullish on the Euro with all their wondrous monetary measures, none of which by the way has been successful, since none has been outside the toxic realm. Regardless, the Euro has been pumped higher, in order to put some gains on the SNB balance sheet. The Euro/SwFranc exchange rate has gone from 1.20 to 1.22 suddenly. It is all temporary and illusory. The backroom action has only motivated the competing currency players around the world to take action of their own. No nation will take domestic damage lying down.

The arbitrage pits and hedge funds watch all this. They see futility on the billboards, even desperation to hold back the ocean tide. They participate. Some smart money has bet the other way against the Swiss, on an extremely cheap opposing tail risk option. With the official position to support the Euro, the other side becomes cheap. The official defense of the Euro appears like an attempt to shake out the opposing nettlesome arbitrage gamers. In time later on, in the coming weeks or months, the Euro peg at 120 will break, probably on a grand scale, to go even below 100 parity in the view of the London Siren. Investors who are long Gold in Euros will start feel the pain and start to unwind, and risk missing the resolution which will force the Gold-Euro price much higher. However, the disruption and unstable currency regime situation will encourage legions of investors and institutions to enter the Gold trade as a hedge from chaos. The reason is simple: the USDollar is dying and is soon to be rejected.

The Swiss Natl Bank has converted itself to an ill-fated hedge fund in danger of massive losses. Its losses are mounting. The Euro-SwFranc peg is doomed to fail, has been from the start. Note that the JapYen has moved from 128 (=78.1 in $Y) in October to 112 (=89.3 in $Y) in January, a substantial 12.5% decline in only three months time. A look at a 50-year chart should cause alarm, since the trend over two generations appears to be in the early phase of a reversal. The JapYen is falling rapidly by designed pressure, the chart showing Dollar-Yen ($Y). The SNB has entered the fray aggressively on three occasions. They cannot win and will not prevail, as they can only win short-term battles. Massive losses are coming from the Swiss bets on the Yen, along catastrophic losses from an explosive upward move in their own SwFranc currency. The focus of the Competing Currency War right here right now should be squarely on the Swiss and Japanese.

A warning signal can be identified, an important one. The Siren calls it a big tell. It screamed that this was a technical trade and not driven by fundamentals. When the Euro currency goes up, the financial credit spreads and equities typically rally. They did not time; instead they sold off. The tell was made. The London Siren warns. Financial credit spreads and equities are telegraphing that trouble lies ahead in the US and UK with regards to many troublesome irreconcilable areas, including 1) economic weakness, 2) fiscal problems, 3) debt ceiling plus sequestration on federal spending cuts, and 4) debt downgrades for both US and UK from rating agencies.

The London Siren warns about distress across the entire continent. Even the slight rise in the Euro currency, doctored to be sure, will aggravate the EuroZone economic weakness. Due to more costly exports, it will assure more unemployment across the continent, which at 11.8% is already at an all time high. The EuroZone economic weakness implies that highly disruptive radical forces in Italy gain strength in the upcoming February elections, where the Energizer Bunny Berlusconi has returned to toss Monti off the GS-gilded throne. A reversal of the imposed Italian Palace will cause major problems with the Powerz that remain in visible control. Then France, the other hot spot shows distress. Regarded as more stable and stronger, it is neither. The nation is teetering, and feels the extreme heat from capital flight to safer locales. Then Germany, the solid core shows distress. The German auto makers have begun to feel the pain in all global markets. They face German elections in September. When the US/UK downgrades come, when the deep debt dilemmas hit like a hurricane, the result will be exposure of the sham solutions by the Draghi ECB. The futility, fraud, and failure of the QE programs will be put on stage for all to see by both the USFed and EuroCB. They combined forces but solved nothing. The bond monetization initiative weakened all major currencies, raised the cost structure, rendered deep harm to the economies, but only bought time. Yet time is running out.

When the US/UK regimes are stripped of their phony facades, the Gold trade will come into view with grand publicity and fanfare, as the only true safe haven. My Jackass hope is for louder bravado with talk of gold confiscation. The project would result in a colossal blowup in the USGovt and UKGovt faces, since an impossible errant mission. It would result in the Gold price rising 20% overnight and 50% in the following year. The flimsy pathetic attempt to rebalance the SDR basket under the watchful eye of the weakened tainted Intl Monetary Fund will add fuel to the failed fiat currency regime. The SDR basket trade is on. Expect it to generate massive amounts of FOREX market volatility as word circulates. Meanwhile, China is laughing at the leaderless stupidity and flailing futility underway at the USFed, the EuroCB, the Bank of England, the Swiss Natl Bank, and the Bank of Japan, as the West makes cheaper and cheaper Gold for large scale acquisition in Beijing. The Western observers seem blind to a gigantic Paradigm Shift, as the power shift from West to East, as the Gold moves from West to East. The sun is setting on the West. Deep thanks to the London Siren for his excellent analysis and contribution, from the London vantage point.

◄$$$ BIG DISRUPTIONS ARE COMING VERY SOON TO BOTH THE FOREX CURRENCY MARKET AND THE GOLD MARKET. THE COMPETING CURRENCY WAR IS ENTERING A NEW DANGEROUS PHASE. THE PROP OF THE EURO WILL KEEP THE US-DX INDEX UP, SINCE THE EURO HAS AN ABSURD OVERWEIGHT IN THE QUEER INDEX (ARTIFACT OF PAST ERA). THE GOLD PRICE RISE WILL COME LIKE A SUDDEN BURST OF WIND, A FOUL SULFURY NETHER WIND IN THE BOYZ EYES. WATCH FOR THE SWISS AND JAPAN TO BECOME KEY NEW MEMBERS IN THE EASTERN ALLIANCE, WHICH WILL PRODUCE THE USDOLLAR ALTERNATIVE. IT REQUIRES A CRITICAL MASS FOR SUCCESS. THE STRESS FELT IN THESE TWO NATIONS WILL MOTIVATE THEIR PURSUIT OF THE EASTERN SOLUTION. $$$

The London Siren finished with a note toward a paradox, a curve ball. He wrote, "In the US DX basket, everything EXCEPT the EUR will fall versus USD quite significantly. The EUR will appreciate marginally versus the USD, thus keeping the overall DXY index in the 80 range. Those who trade Gold based solely on the DXY will not understand what is going on behind the scenes. They will be greatly surprised and taken off guard by the poweful upward move in Gold when it arrives. Stack your Gold. In fact, Gold is an extremely cheap tail risk hedge and wealth preservation vehicle." The Competing Currency War is soon to enter a new phase, a very confusing phase, where the major players stop working together and defend against unintended attacks from the other side of the world. They will work to preserve their own domestic economies, as saving the homeland will become the main priority. They will no longer work to preserve the USDollar and the export trade to the US alone. They will seek a viable solution with a fresh global theme, not Anglo collusion which offers no protection any longer.

The big irony in the Jackass viewpoint is that the Swiss will become a key force as an important swing vote. The potential is there for a hidden role. They might join the global gold-backed currency movement that replaces the USDollar in trade settlement. After all, the Swiss own a huge mountain of gold. The worldwide movement to create a legitimate stable new currency (or trade vehicle) requires a critical mass of at least 70% to 75% of global trade for participation. The Swiss were a victim in early 2011 from a fast rising Swiss Franc currency. The Japanese are the other victim, from the aftereffect of the 2011 earthquake & tsunami with the reconstruction. Only when a significant critical mass of trade partners gathers to create and then to use a new currency, only then will it work to stabilize global trade, an important Jackass theme. The Japanese will seek the security of joining the Chinese, Russians, Germans, and Gulf nations to create a more stable global currency for trade purposes. Then the other swing nation is Switzerland, but a long shot. Watch Japan and Switzerland. The lunacy of the Swiss Franc defense from higher valuation is the new extreme battleground. It is the crux focal point of the fiat currency mess, seen from a European perspective, recently tied to Japanese monetary policy. To defend the Swiss Franc seems pointless and a guaranteed wreck, but they must do it. The Competing Currency War is entering a new highly destructive phase. The Japanese and Swiss both desperately need the cooperation of China, Russia, Germany, and the Gulf nations to boldly move forward on the new currency (or trade vehicle). They need the cooperation for the same reason, a bizarre development in the war.

◄$$$ THE SWISS NATIONAL BANK WENT ALL IN THREE TIMES AND COUNTING WITH HEAVY COMMITMENTS TO DEFEND AGAINST A FAST RISING SWISS FRANC CURRENCY. THE SWISS HAVE A TRULY GIGANTIC AND DEADLY COMMITMENT, SEEN BY THE SIZE OF THEIR CENTRAL BANK BALANCE SHEET. DETAILS OF THE INTERVENTIONS ARE FULL OF INTRIGUE, IF NOT HIGHLIGHTS OF THE FUTILITY. HUGE LOSSES AWAIT THE SMALL NATION DOMINATED BY ITS BANKS. $$$

As prologue the USFed has a big balance sheet, equal in size to over 20% of the USEconomy size, as measured by GDP. The Euro Central Bank goes further, with a balance sheet of 30% of GDP for the EuroZone. The Swiss take it to a new level, two to three times larger. The nation is small, but the carried risk is staggering, enough to collapse their financial system. It is already badly damaged from the loss of secret private accounts, the loss from underwriting mortgages in Eastern Europe, and the loss from US$-based toxic bonds. Next comes potentially catastrophic losses from currency regime defense, sufficient to topple the nation. The balance sheet of the Swiss National Bank contain assets amounting to about 75% of the Swiss GDP. They have literally bet the bank on three separate occasions recently. They have defended against a flight of funds into the Swiss banking system that runs the constant risk of lifting the Swiss Franc currency to levels sufficiently high that it renders deep damage to their economy.

The Swiss Natl Bank has entered the FOREX market on a regular basis for 16 months, engaging in semi-stealth currency warfare by buying other sovereign currencies. They attempt to push down the Swiss Franc exchange rate, thus avoiding a nasty impact on their economy which is rather balanced. It is hardly just chocolate, clocks, cheese, and skiing tourism, but rather includes a vast pharmaceutical industry and much more. Its banking system has a new project underway, to cut its workforce labor obligations. So claims two contacts in Switzerland close to the matter. With all the currency roadblocks and active interventions, one would expect the USGovt to declare the Swiss to be currency manipulators, since far more extensive their activity than China. If truth be told, many regular orders are given to the USFed from the Swiss hills where castles are located.

The Swiss central bank has wagered an amount approaching the total Swiss national output, transforming the conservative staid nation into the globe's biggest risk-taker. Ironically, Switzerland's virtue is the root of its problem, owing to the broad confidence in the Swiss currency by players across the continent. Investors are hungry for Francs to escape Euros, during the prolonged bond crisis that plagues Southern Europe. The rising Franc currency runs the risk of imposing much higher Swiss export prices. In the past three years, the Swiss National Bank has printed Francs to buy Euros and other currencies in a fast expanding portfolio of foreign assets. Its portfolio is currently four times the size compared to the beginning of 2010.

Most major central banks are purchasing unusual assets to resurrect domestic economies in the wake of the worst global recession in 75 years. They are no longer confined to the traditional sovereign bonds. The USFed is buying mortgage bonds and mortgage portfolios. The European Central Bank is making long duration loans to banks against shoddy collateral. The Bank of Japan is buying real estate investment funds. China and Russia are buying gold bullion with both hands in vigorous fashion, by sharp contrast. The Eastern majors are not interested in more toxic debt strewn securities. All these Western major central banks risk losing a tremendous amount of money. However, the Swiss exposure stands out in character and scale. Its central bank is buying assets from other nations. Its holdings of currencies, bonds, stocks, and Gold, nearly CHF 500 billion worth (=US$541 bn) are fast approaching the size of the nation's gross domestic product. In contrast, the USFed portfolio and EuroCB portfolio are much smaller.

In September 2011, the Swiss Natl Bank set a goal of keeping its currency from rising beyond 1.20 francs per Euro. At the time, the SNB Chairman Thomas Jordan called the threshold its line to fiercely defend, where the bank would fight to maintain with the utmost determination, in his words. Given its golden reputation, the SwFranc became a magnet for investors fleeing the beleaguered Euro. The threat to cripple Switzerland's export driven economy prompted extreme reaction. Little known is the heavy dependence in midsized specialized companies, which form the backbone of a manufacturing industry there. It actually accounts for 20% of Swiss GDP. Exports produce half the GDP, with the EuroZone by far its largest customer. See the Wall Street Journal article (CLICK HERE) and the Zero Hedge article (CLICK HERE). The graph below provides an excellent timeline for events up to when the 120 peg was set, and beyond as it has been defended.

A quick footnote. The first death threat to the Jackass came in 2005, from a Swiss banker who objected to my accurate story told of the Nazi Playbook being used on the events of 911, with details on the various standard nazi themes used following the demoltion of the World Trade Towers. The banker was 92 years old at the time. The newsletter complied with his wishes. My sincere hope is that he is part of the subsoil system at a cemetery with yodeling heard in the background to entertain the insects and bacteria that consume his rotten corpse. His team is fighting for survival, and the Jackass spits on his grave from afar. The team is probably defending itself in court against illegal access of Allocated Gold Accounts. May Lucifer claim him and ream the hind parts with his own special hot poker.

◄$$$ RUSSIA SPOKE OUT VISCERALLY ON THE GROWING GLOBAL AWARENESS OF AN OPEN CURRENCY WAR. EVENTS ARE NOT OF A FRESH WAR, BUT RATHER A CLIMAX. IT COULD RESULT IN A GOLD STANDARD IMPLEMENTED IN PLACE, WITH THE ANGLO-AMERICANS DEPOSED. NATIONS STRIVE FOR ECONOMIC STABILITY AND GROWTH, WHILE FORCED TO PROTECT THEIR EXPORT TRADE. THE PRACTICE OF COMPETITIVE DEVALUATION HAS TURNED ROUTINE. ALL ACTIONS TAKEN BY INDIVIDUAL NATIONS INVITE QUICK REACTIONS BY AFFECTED PARTNERS. CONVERSELY, THE SUCCESSFUL NATIONS DO NOT TOLERATE PUNISHMENT WITH A HIGHER EXCHANGE RATE. A GOLD STANDARD WOULD PROVIDE REWARD INSTEAD OF PUNISHMENT. $$$

Russia has warned that the world is nearing a currency war. Hardly! The Competing Currency War, with competitive devaluations and export trade protection has been raging for years, recently turning white hot. The new element is that Europe has entered the fray, and Asian nations are reacting quickly to the Japanese initiative to bring down their Yen currency. Nations are attempting to defend their economies, in particular the export trades. The paradox is that successful nations are punished by too high a currency, while industrial powerhouse nations must resort to intense efforts to weaken their currency at the risk of wrecking the ir financial structures. This is the currency war entering the final phase, where the Gold Standard could potentially emerge as the global solution. The returned imposition of the standard would enable successful nations to garner more gold as reward (see Norway, Switzerland), and punish sluggish demented wayward socialist nations by sending them to the Third World (see the USA, UK). Shots are being fired in a very vocal public manner, never seen before, as FOREX trading desks observe the battleground from glass offices.

Russia's central bank head Alexei Ulyukayev brought attention to the currency war when he said, "Japan is weakening the Yen and other countries may follow." An echo was heard by Euro Central Bank official Jens Weidmann, who cited pressure on the Bank of Japan has led to a threat of a currency war with alarming violations in his words. The central banks are actively printing money to support their economies, causing a profound debasement of the currencies. The main point is that nations complain about the high economic cost from rising exchange rates, and its great harm. The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies are exhausted, and proved ineffective. The world is slowly coming to the realization that a Gold Standard is the only solution, not more central bank reckless money output or stupid bond redemption. A grand spectacle cometh when in February the Group of 20 (G-20) conference is held in Moscow. The skirmish may lead to a major clash of the twenty finance ministers, pitted against the major central banks who are the great destroyers of wealth and economic capital. Emerging national economies are bitterly angry over rising currency exchange rates, dictated by Western central bank policies.

Recall the shattered objective made in 2009. It was reiterating just three months ago, to refrain from competitive devaluation of currencies. No nation refrained, as it is total empty rhetoric. When pressured and under attack, individual nations will act in their own domestic best interests. Rumor is circulating in London that neither the United States nor the United Kingdom will attend the G-20 Meeting in Moscow. Refusal to attend by the Anglos would open a giant gate to coordinate plans on the new trade settlement system with attendant platforms. Rather than creating a new and better currency, they are more likely to establish a gold-backed trade settlement process that will render the USDollar obsolete. Imagine Letters of Credit is the form of short-term Trade Notes with gold core backing. The new system requires a tremendous amount of gold for its stable core. Failure to attend by the US-UK tagteam of financial fascists would ignite the Eastern led consortium on motivation toward the launch of the new system. The Third World awaits the nations held captive for two generations by the US-UK hegemonist criminals.

The minor central bankers are beginning to take aim at the major central bankers that typically dominate monetary policy. Ulyukayev sees how the competitive devaluation in Japan will cause reciprocal devaluations that harm the global economy. USFed governor James Bullard is disturbed by the Japanese position, as the risk of beggar thy neighbor policies proliferate. The Australian central bank head Glenn Stevens pointed out a degree of disquiet in the global policy making community, as his nation prepares to become a Chinese colony. The Bank of England head Mervyn King is openly worried about the fast rise of actively managed exchange rates, a euphemism for competing currencies and their intentional devaluations. See the Bloomberg article (CLICK HERE). When the American and British control currencies, it is toward the greater good, but such is not the case when the lesser nations do so. What hypocrisy!

Some important events highlight the Competing Currency War clashes:

  • Brazilian Finance Minister Guido Mantega first dubbed a currency war in 2010 in open terms, engaging the richer nation. He must be credited with the initial challenges and confrontations of the major central bank powers. Brazil has protected itself with extensive Chinese Yuan swap facility agreements.
  • Luxembourg Prime Minister Jean-Claude Juncker complained of a dangerously high Euro. Its 7% gain against the USDollar in the past six months poses a fresh threat to the EuroZone economy. The European Central Bank states that it is not prepared to favor a weaker currency. It is led by a toxic snake oil merchant of Goldman Sachs pedigree, who is judged for loyalty to the syndicate more than effective service to the European economy. Mario Draghi should be fired.
  • Switzerland has been blocking the Franc appreciation against the Euro since September 2011. Their central bank balance sheet has gone over 70% of GDP, but will fail to achieve any success. Great losses await in the blowback.
  • The central bank of Norway (Norges Bank) has received pressures from the finance ministry, in reaction to a strong Krone currency. The ministry urges more accommodation, and not to continue conducting a tight fiscal policy. The Krone has been rising due to a responsible government, and long successful North Sea oil project with about $1.6 trillion held in sovereign wealth funds. Lust for the fund to enter the depleted London banking system was the motive behind the terrorist event in Oslo back in 2010 perpetrated by the US-UK security agencies, with full misdirection in the media and a standard lone gunman patsy to take the fall.
  • The central bank of Sweden wishes to execute a rate cut in order to avert a stronger Krona currency. The Riksbank head has argued for deeper rate cut than the 0.25 basis point enacted. They prefer the basic self mutilation method.
  • Japan has reignited new major battles, as newly elected Prime Minister Shinzo Abe urged a more aggressive central bank, turning it into more of a political arm. The result has been an 11% Yen decline since December against the USDollar. Their 22-year interventions are a total disaster, and example to observe. Expect Japan to join forces with the Chinese, and work through differences, even while the US-UK security agencies whip up conflict over disputed islands.
  • The Bank of Korea has formally stated an urgent response is needed to defend against the falling Japanese Yen. He is concerned about the harmful impact to exports and investor confidence. Their finance ministry wishes to put forward an agenda item at the G-20 talks in Moscow, on adverse effects of monetary easing in the United States, Europe, and Japan. Expect South Korea to join forces with the Chinese, as they diversify out of USTBonds.

◄$$$ THE NEW GLOBAL TRADE SETTLEMENT SYSTEM IS FULLY READY, AS IT IS WAITING FOR A LAUNCH EVENT. IT WILL HAVE A GOLD CORE ON SHORT-TERM TRADE NOTES, USED IN FORMAL LETTERS OF CREDIT. THE COMPETING CURRENCY WAR WILL BRING SUPPORT TO THIS VIABLE ALTERNATIVE THAT HAS BEEN IN FULL-BORE PREPARATION TO IMPLEMENT FOR THE LAST THREE YEARS. $$$

The alternative trade platform will sweep the USDollar off the stage like so many burger wrappers, empty coke cans, torn paper invoices, and other rubbish with destructive American markings. The numerous bilateral Chinese currency swap agreements act like barter in a gigantic foundation, much like a strong net of steel reinforcement rods for pouring cement on an elevated platform. As the Hat Trick Letter has been describing for almost a year, the new trade settlement system will have a Gold core. Its face is slowly being revealed. The short-term Gold-backed Trade Note will serve the role of the formal Letter of Credit, which will facilitate individual deals between parties bound by contract in high volume. Do not be surprised to see the Chinese Yuan later as interchangeable with the gold trade note. But first the Yuan must be convertible into the many major currencies actively traded in the world. My expectation is for the Chinese Yuan eventually to be interchangeable with the Trade Note. That will signal its implicit gold backing. While many events and steps are not known, and many surprises will be thrust on stage, the guiding pathways are slowly coming to light.

## GOLD SOLUTIONS AMIDST CRISIS

◄$$$ GOLD COULD BE THE LAST RESORT IN SOLUTION TO STABILIZE THE EUROPEAN SOVEREIGN BONDS, BANKING SYSTEM, AND ECONOMIES OF SOUTHERN EUROPE. ALL OTHER METHODS HAVE BEEN TRIED AND FAILED, NONE A SOLUTION, EACH STEEPED IN SHALLOW FOUNDATIONS AND ACCOUNTING PRIVILEGE. A GOLD-BACKED BOND WOULD LIFT THE DISTRESSED NATIONS OF SOUTHERN EUROPE, AND AVOID NUMEROUS CURRENT PROBLEMS LINKED TO THE VACANT SOLUTIONS TO DATE. $$$

It is often said that the United States will attempt every wrong and misdirected solution, until it actually puts in place a viable correct solution. They same might be said of Europe. A consensus is very slowly growing that Gold will emerge as the ultimate option to treat the stubborn Euro debt crisis. The Draghi Euro Central Bank has offered a series of truly vacant shallow solutions. His bonds and lending facilities have centered on newer better subordination devices, on continued loans against impaired bonds with generous collateral terms, and on facilities that mockingly are deemed effective only because not used. The European Union is running out of options as it seeks to emerge from the debt crisis that undermines the entire financial and economic systems of its troubled member states. They are caught in persistent ongoing crisis.

Economist Ansgar Belke is a former research director for International Macroeconomics at the German Institute for Economic Research in Berlin, and director of the Institute of Business and Economic Studies at the University of Duisburg-Essen in Germany. He advises European politicians on future decisions. He authored a research paper for the EU Parliament on using Gold as collateral for highly distressed sovereign bonds. He explained how the use of Gold as collateral can support the sovereign bond issues of struggling burdened countries. He sees the possibility for Gold to emerge as the center of a solution for the European debt crisis. He spoke to Lars Schall about his submitted research paper. The futile spurious treatments conducted by the Draghi EuroCB have been ineffective and somewhat counter-productive efforts. Monetary policy cannot be used to solve the structural issues that have plagued the EuroZone. Belke foresees no permanent reduction in bond yields to the Southern sovereign bonds. He brought attention to the latest EuroCB hack project, the sovereign bond purchase program consisting of Outright Monetary Operations. If the OMTs fails, then Europe's options look grim. Austerity and growth programs have fallen flat. The outlook is clouded by the fast dwindle of the funds from the Internatl Monetary Fund, the EFSF/ESM, and the SMP in the many absurd bailouts. Most have been conducted without proper democratic consent. The Southern European Govt Bond yields are artificially held down, in a manner that cannot be sustained. The moral hazard is long past out of control, as big investors expect the Euro Central Bank to buy bonds even if conditions are not met.

Belke believes that Europe is gradually running out of time and options. He suggests an alternative plan to lower yields by issuance of securitized government debt, backed by gold reserves. The objectives would be identical to the EuroCB bond purchases programs, but without the deep structural disadvantages. New legal issues would be raised, but no different from the ESM, SMP, and OMT programs. The Gold Bonds would work well for Italy and Portugal, for instance, which possess gold reserves equal to 24% and 30% of their two-year funding requirements. Using a portion of reserves as leveraged collateral would reduce their costs of borrowing significantly. The current flimsy devices lack transparency, thus cannot build trust. By contrast, usage of existing central bank gold reserves would add needed transparency. It would be attractive for investors, seen as more fair, and would enable speedy approval by the European Parliament with public support. The odious fiscal transfers from the North to the South would go away along with the onerous penalties. The EuroCB would not gobble up toxic bonds as buyer of last resort. No sterilization problems would arise. No dead ends from unconventional heretical monetary policy would be faced.

The gold-backed bond solution avoids what Belke calls the path dependence of the existing solutions. By that is meant once on a bad course, the next steps are determined to be equally bad in order to support the previous errant steps. The gold solution is less prone to inflation, and would not impinge upon the ECB balance sheet. All bond programs by Draghi to date were based on accounting rule games, were shrouded in secrecy, solved nothing, caused problems, and added to the deep moral hazard. The time has come for a Gold-backed bond as solution. The central banks from member nations might confront the Euro Central Bank lackey head with Goldman Sachs stripes. See the Asian Times article (CLICK HERE).

◄$$$ EAST VERSUS WEST IN GOLD. IN RESERVES, DEMAND, AND OUTPUT. THE EAST DEMONSTRATES GREATER EMPHASIS AND DIRECTION IN GOLD. THE SCORECARD SHOWS THE PARADIGM SHIFT UNDERWAY FOR THE LAST FIVE YEARS. $$$

Thanks to Nick Laird for excellent charts. The Hat Trick Letter has been telling the message for the last five years of a grand Paradigm Shift in progress, with Gold (wealth) and power moving from West to East. The financial and economic systems led by the US, UK, and Western Europe have gone into such a state of degradation, that vast wealth has been transferred to Asia in response. The transfer is as much to rectify the past errors as to avoid the ultimate outcome. The East still has a long way to go to catch up to the West in terms of gold reserves accumulation, even though the Western reserves are surely less than half of the claimed volume. Clearly the West is in a massive decline, while the East rises and continues to dominate the accumulation of the only real money, namely Gold.

The first chart below addresses the officially stated Western gold reserves versus Eastern gold reserves. Put aside that much gold has been leased into the market already, under current challenge. Stress must be given that Western gold is much lower than stated, and Eastern gold is much higher than stated. For the Asian percentage of reserves to rise from 13% in 2000 to 21% in 2012 is testimony to the motivated active pursuit, if not scramble to acquire physical gold by China and other Eastern nations. Recall the time honored adage, "As gold goes, so goes the power." The US & UK have led the paper gold parade into the financial quicksand.

The second chart accounts for both fabrication and investment demand for gold. The Eastern dominance over the West is even more emphatic. China has led the movement to build its gold reserves, even more than officially stated, as a matter of national security. Also, China for the last several years has not permitted any gold to be exported, even while becoming #1 in global gold mine output. My gold source The Voice assures that both Russia and China have far more gold reserves than officially stated, since he has seen the former under the Kremlin and assisted in the latter in several acquisitions. The West produces more gold, but the vast majority of it flows into Eastern vaults. Eastern demand has transformed into an insatiable appetite, as official demand is matched by a vigorous public retail demand. An important turning point occurred in 2003, precisely the time of the bottom of the Gold market marked by the Brown bottom. It was named after Gordon Brown, who as head of the Bank of England dumped a gigantic hoard on the market to establish the bottom.

Since 2003, the Gold price has risen 4-fold despite a extensive price fixing schemes being maintained. Western vaults continue to be emptied of their gold through leasing programs, which persist in draining supplies of remaining gold out of Western central bank vaults. The drainage has become acute since March 2012, when 6000 metric tons have been shed from London, shipped East. The Voice was part of the highly pressured off-market transactions in those months. Some extreme power games have been at work in a vast tug of war. The reason why the Gold price has not faltered in the last year has been the strong Eastern demand, so graphically illustrated in Laird's images. The Chinese, other Asian, and even Middle Eastern countries, compete with each another on price declines to accumulate physical gold. To facilitate their own demand, the Eastern nations have given greater emphasis to domestic gold production, no longer reliant entirely on the Western sources of supply. As the Western banking, bond, and currency systems continue to implode in a devastating unstoppable process, the Gold, Silver, and other hard assets will be all that is left standing. The Ponzi paper financial markets are quietly burning, the solutions to no avail, while an eventual monetary reset is coming like a powerful Eastern wind. It will arrive as a new trade settlement system built around a Gold core, with no USDollar role. See the King World News article (CLICK HERE). Refer to the article for additional fine charts.

◄$$$ GOLD FLOW FROM HONG KONG TO CHINA CONTINUES TO MAINTAIN A TORRID GROWTH RATE, EVEN AS RECORDS ARE SET. $$$

The flow of gold bullion from Hong Kong to China reached the second highest level in history. Hong Kong exported 90.763 tonnes of gold to mainland China in November 2012, an increase of 91% on the month. The Chinese gold appetite remains enormous and relentless. The demand gave support to gold prices. The HK gold imports from China rose 23% to 27.681 tonnes, in the other direction as the banks filled their vaults with mining output and received collateral for large property purchases. Data is according to the Hong Kong Census & Statistics Dept. The total net gold flow in the first eleven months of the year was 462.75 tonnes, already exceeding last year's total of 379.573 tonnes. Complete data is hard to arrive at, since China does not publish gold trade data. The Hong Kong trade numbers offer a reliable glimpse of the demand for bullion from the Middle Kingdom. See the MineWeb article (CLICK HERE).

◄$$$ THE TIME HAS COME FOR THE IRANIAN PETRO-RIYAL. UNDER FINANCIAL SIEGE TURNED ECONOMIC, THE IRANIAN GOVT MIGHT SOON OFFER AN ENERGY BACKED CURRENCY. THE SOLUTION COULD BE MOTIVATED BY THE NASTY PLUMMET IN THE IRANIAN CURRENCY SINCE THE US-LED SANCTIONS WERE IMPOSED. PRICE INFLATION HAS BECOME A SCOURGE INSIDE IRAN. THE CURRENT CRISIS ENVIRONMENT IS RECEPTIVE FOR NEW IDEAS AND CONCEPTS. $$$

Iran is in a state of turmoil, with imminent elections, harmful sanctions, fierce price inflation, and economy stumbling even as the Riyal currency exchange rate has plummeted. Such an environment of turmoil might be perfect, so believes Chris Cook, for an expedient solution to be examined that would address many difficult challenges, even though a shortage of financial market expertise is causing problems. The mullahs are good at prayers, silly speeches, and stealing oil funds, but not in making detailed policy or enacting unusual solutions. Talk has swirled about a new currency to be issued by the Central Bank of Iran backed to energy resources, in response to the cutoff from the USDollar payment system for trade. The challenges are technical but workable.

In principle, neither central banks nor private banks can issue energy-based currency (units returnable in payment for energy use) because they do not produce energy commodities such as crude oil and natural gas. However, like with Hong Kong, central banks can play a strong role as a monetary authority toward managing the issuance of currency. The new vehicle must be accepted and useful if to be made viable. Crude oil is limited in that respect since useful only to refiners. But dig deeper. A currency based upon the usage of carbon fuels such as natural gas, gasoline, diesel, heating oil, and fuel oil is another matter. Cook's advice to the Iran finance minister and staff was for the issuance by carbon fuel producers of a new generation of Petro-Riyals that are returnable in payment for a fixed amount of natural gas, and also against an energy equivalent toward other carbon fuels. The process could begin initially with state energy producers.

One big advantage of this approach is that Iranian carbon fuel prices could be raised to global levels, pulled away from the mire of sanctions. Subsidies could be paid in Petro-Riyal units. No potential for inflation would arise, since the central bank would not issue new conventional Riyal paper. A side beneficial effect would center on altered behavior of Iranians towards energy conservation, even adoption of renewable energy and energy saving projects. The energy currency units from issuance would have to be transparent. The monetary authority would need to work closely with producers in authorizing issuance. Many other policy implications would have to be tackled, none insurmountable. The foundational concept is based upon the indisputable notion that a unit of energy is the only absolute tangible unit. No foreign nation like the US or UK could step in and declare the backing as frivolous, vaporous, or phony. Such criticism would open up direct challenge that the USDollar and British Pound are frivolous, vaporous, and phony.

Cook concluded, "An energy currency could therefore come to set a new standard for national, regional, and even global financial stability. But note that for a transitional period of introduction, there is no reason at all why transactions settled in Petro-Riyals could not be priced in the dollar unit of account, which is of course widely familiar and used in price formation. As I said to the Tehran Chamber of Commerce last year, I believe that Iran will come to thank the United States for detaching them from the dollar system, because it means that a superior and sustainable system may now be adopted, one based firmly upon the values that underpin all the great religions, but which Islam alone has not forgotten." What an insult it would be to create a new energy backed Riyal, and peg its value in USDollar terms, only to eclipse the USDollar itself during its sunset. See the Asia Times article (CLICK HERE). Chris Cook is a former director of the Internatl Petroleum Exchange. He is now a strategic market consultant, entrepreneur, and commentator.

## NEWFOUND GOLD & OLDKEPT GOLD

◄$$$ PERUVIAN GOVT DELAYS ON APPROVAL OF MINE PROJECTS IS CAUSINT PROBLEMS. THE POSTURING CONTINUES BEFORE MUCH WIDER PROPERTY CONFISCATIONS IN THE JACKASS VIEW. THE TREND IS BULLISH FOR METAL PRICES (DUE TO CONSTRAINED SUPPLY) AND BEARISH FOR MINING STOCK PRICES (DUE TO REDUCED OUTPUT). THE POOR NATIONS SEEK NEW INCOME SOURCES, A MAJOR MOTIVE. $$$

Big mining projects in Peru, worth $7.5 billion pertaining to 135 delayed projects, are stalled in Peru as the nation's environmental authorities linger over the environmental impact assessments (EIAs) submitted last year, reports the newspaper El Diario. Still 53% of reports submitted to Peru's Mining Environmental Affairs department are still under evaluation. The president of the Peru Central Bank warned last month that private investment in their resource sector was expected to decrease by at least $ 2.9 billion between 2013 and 2014 due to the official delay. He also warned that several important mining projects, in particular for copper, are at risk of being indefinitely suspended due to processing squabbles and social conflicts. The national mining, petroleum, and energy society (SNMPE) stated last September that investors had started looking for other opportunities. Hence mining investment in the South American nation was expected to fall 33% this year. The impasse stems from almost a year of non-stop anti-mining protests in different regions. Peru is the world's second biggest producer of copper and silver behind Chile, and a major producer of gold, zinc, lead, and other minerals. See the Mining article (CLICK HERE). The nations like Peru and Chile and Bolivia will find a way to halt mining sector output. Then they will see the self-serving wisdom of confiscation via nationalization. The mineral producing nations of the Andes region are hard pressed within their own economies, racking up deficits, increasingly desperate to locate income sources. This ugly trend is bullish for the metal price, but bearish for the mining stock price, the same pattern identified for four years by the Jackass.

◄$$$ WAR IN AFRICA RAGES, BUT WITHOUT PRESS COVERAGE. A NEW FRONT IS OPENING UP IN MALI, WHICH HAS RICH GOLD DEPOSITS. THE ULTERIOR MOTIVE IS NOT MENTIONED. MALI IS PURSUED IN A METHODICAL MANNER, FOR ITS MINERAL RICHES AND MORE, SUCH AS DIAMONDS. $$$

The staging for war took place like a carnival moving from area to area, or a concert tour moving from city to city. War is coming to town. Many advanced preparations must be made like supplies on ordinance (bombs, ammunition) and soldier support. While the amateur analysts babble on about a major war in the Middle East, with telltale migration of the Islamic terrorists south, the reality is this war has been going on all across Africa for a decade plus now. Yet the Western media and its controlled academics and pundits continue to blather on about each African conflict as if they were separate. The various African battle fronts are part of a multi-stage proxy war between China and the United States. The mention of Africa should include all of North Africa, as described by the new term MENA, which stands for Middle East & North Africa. The real battlegrounds extend far south to the sub-Saharan Africa, like Congo, Kenya, and Djibouti.

For an unorthodox viewpoint, check out the recent Keiser report, which features Max and Stacy Herbert discussing what they call the butch welfare queens in Virginia, Maryland, and WashingtonDC who rely on the untouchable Pentagon budget and the diverse lucrative weapon and consulting contracts. They also discuss the USGovt deploying both its financial extortion, monetization, and devaluation to finance its government debt along with deficit requirements. They colorful pair cover the troop deployment to 35 African nations. In the second half of the show, Max Keiser talks to Dan Collins of The China Money Report about the new Petro-Yuan and the Chinese gold hoard. See the RT News article (CLICK HERE) that includes the Keiser video.

The introduction to the expansive war in North Africa must first be clear on Libya. It was invaded for its existing gold bullion, crude oil, and vast underground water. Mali is being invaded for its gold deposits and other minerals. The Voice (my excellent gold trader source) is a deep expert on gold matters, including African matters. He said, "It appears the wider war is for all the minerals that are in Mali. It is more about keeping the Chinese at bay rather than putting the rebels under control. One wonders who organized and armed these rebels? Most of their hardware was transferred from Libya to Mali by the West." He described a staged new war theater. One must keep at the forefront that war is a principal part of a Fascist Business Model economy like in the United States, but never is it presented in such context.

◄$$$ THE NEW FRONT OPENING UP IN MALI IS DESIGNED TO CAPTURE ITS RICH GOLD DEPOSITS AND MINERAL RESOURCES. ITS LAND-LOCKED TERRITORY HAS BEEN NOTICED FOR ALMOST 20 YEARS. IT IS THE SITE OF NUMEROUS MINE PERMIT LICENSES. REVIEW ITS OFFERINGS. THE INDUSTRY ADDS TO THE MAIL GOVT AND PRIVATE SECTOR INCOME. $$$

Some new focus with eyes on Africa has been engaged. Mali should be mentioned for its mining sector with a focus on gold, while minerals are largely unexplored. Mali is a poor, heavily indebted, and land-locked country located on the southwest border of the Saharan Desert. Its potential wealth includes bauxite (aluminum), iron ore, base metals, and phosphate (fertilizer) deposits. Unfortunately, its undeveloped infrastructure has hindered mineral resource exploitation. Little known, the Mali Govt reformed the mineral code in the 1990 decade, which attracted numerous foreign investors, in particular the gold industry. Currently, Mali is the third largest gold producer in Africa, behind only South Africa and Ghana. Hence, gold production forms the cornerstone of the Mali mining industry and comprises 95% of the nation's mineral output.

Mali has a brief mining industry history, having formed an important component within the Malian Economy. In 1991 a commercial mining code brought internationally standards. From that point, commercial gold production grew rapidly from 4 metric tons that year to 48 metric tonnes in 2008, a 12-fold rise in 17 years. Further relaxed enforcement of mining codes led to greater foreign investment in the mining industry. From 1994 until 2007, national and international mining companies were granted around 150 operating licences along with more than 25 certificates for mineral exploitation and an excess of 200 research permits. A dependence has grown from the success. Government revenue coming from mining contracts grew from under 1% of state income in 1989 to nearly 18% in 2007. The rising gold price has stimulated the entire industry. The total Mali income (govt and national firms) has doubled from gold production in the process. They have managed to impose higher royalties (minimum of 3%, maximum of 65%), taxes on profits, and hand out dividend payments. The royalty fee depends upon when the mine entered into production.

The Mali wealth is actually diverse in its abundance, led by minerals. Its biggest export item is cotton. But Gold has become Mali's second largest export item. Behind only Ghana, Mali is the second largest gold producer in West Africa with an estimated 2009 output of 1.6 million ounces (49 tons) and total estimated gold deposits estimated at 350 tonnes. THUS THE ATTRACTION BY THE USMILITARY. Its uranium potential is estimated to be 5200 tonnes. Furthermore, Mali has the potential for diamonds. In the Kayes administrative region, 30 kimberlitic pipes have been discovered of which eight show traces of diamonds. Diamonds have also been discovered in southern Mali. Diverse iron ore deposits estimated at over 1.3 million tons have been detected in certain other areas. Bauxite reserves are estimated to be 1.2 million tons, directed toward aluminum output. Also, the ledger lists 46 million tonnes of copper reserves, 1.7 million tonnes of lead & zinc, 4 million tons of lithium reserves. Coal potential exists with an estimated 870 million of bitumen (soft coal). The many projects range in stage from being operational to discovery phase, and feasibility studies. A rich pipeline of projects involves international companies, such as North Atlantic Resources, African Gold Group, Axmin, Etruscan Resources, Golden Rim Resources, Merrex Gold, and Pelangio Exploration. See the Consultancy Africa article (CLICK HERE). Expect the economy to be trampled by the USMilitary, the foreign firms to scatter, and new firms hidden under the Halliburton label to appear with fresh contract awards under dubious conditions.

◄$$$ CRISIS IN THE CONGO IS CONSTANT. THE SECRETIVE ROLE OF THE USGOVT AND USMILITARY HAS BECOME MORE DEEPLY ROOTED IN THE LAST FEW YEARS. THE TARGET IS MINERAL EXPLOIT. THE OUTCOME AS USUAL IS GENOCIDE IN THE PURSUIT OF METAL SUPPLY WHEN PROPPING TYRANTS. CONGO HAS BECOME A GIGANTIC SMUGGLING CENTER FOR GOLD, INCLUDING THE GOLD DUST FORM. $$$

Congo is unique in Africa for spectacular mineral wealth, having grown in prominence to become the biggest smuggling center in the world. It moves 1000 metric tons of gold per year out of the country, not an exaggeration. The gold is not part of any global industry accounting. It is transported by cargo trucks, like the everpresent liquid cargo tracks for gasoline, milk, and water. Thus the focus by warlords and aggressive military like the the industrial complex from the United States. The role played by the US allies Rwanda and Uganda has been important in causing the greatest humanitarian crisis at the dawn of the 21st century in Africa.

Millions of Congolese have lost their lives in a conflict that the United Nations describes as the deadliest in the world since World War II. Both Rwanda and Uganda invaded the Congo in 1996 (then Zaire) and again in 1998. The result was enormous loss of lives, systemic sexual violence and rape, and widespread looting of spectacular Congo natural wealth. The nation has a long history, dating back to the Belgian Congo when the Jackass was a boy. The ongoing conflict, instability, weak institutions, dependency and impoverishment in the Congo are a product of 125 tragic years of colonial rule, that has featured enslavement, forced labor, assassinations, dictatorship, wars, external intervention, mineral exploit, and corrupt rule. See the YouTube video (CLICK HERE) in which analysts examine whether USGovt policies and corporate goals have supported warlords with a priority for profit over the people in the heart of Africa.

◄$$$ THE RIO TINTO DISASTER HAS EXPOSED MISMANAGEMENT IN RECENT ACQUISITIONS. THEY GROSSLY OVERPAID IN DEALS. ITS HOME GROWN ARROGANCE OFFERS A PRELUDE TO CHINESE ACQUISITION IN FULL TAKEOVER. DISORDER AT THE HELM WILL CAUSE DEEP DISRUPTION. $$$

Rio Tinto is the world's second largest mining company after BHP Billiton, both centered in Australia. That does not qualify it for being well run. In mid-January, the company announced a $14 billion writedown for overpriced aluminum and coal mining assets it had acquired, a devastating blow to the company. The CEO Tom Albanese resigned after five years on the job. Sam Walsh from the iron ore business unit was quickly named as its new chief. The size of the writedown provides a clue on how much the company had misjudged the values of the acquisitions, the most recent grabbed two years ago. See the New York Times Dealbook article (CLICK HERE).

A veteran global business consultant, a valuable source for over two years, pitched in with an opinion since he deals with Chinese firms. He wrote, "It is all home made. These Rio Tinto guys are so arrogant and full of themselves, that this news should not come to anyone's surprise. By the time this all sorts out, these companies will be taken over by the Chinese. The Chinese have already taken over Barrick's mining operations in Africa." A pattern is forming. Observe a phase-out of Western dominance in mineral development.

◄$$$ THE BUNDESBANK IS TO COMMENCE REPATRIATING GOLD IN A TRULY HISTORIC EVENT. AS THE STORY UNFOLDS, LOOK FOR EXPOSURE OF MASSIVE GOLD LEASING AND IMPORTANT CHANGES TO THE IMAGE OF LONDON BANKERS. SOME COMPROMISE HAS BEEN MADE IN THE PUBLIC VIEW, BUT EXTREME PRESSURES ARE MADE IN PRIVATE MEETINGS AND STRAINED COMMUNICATIONS. TRUST TOWARD LONDON IS VANISHING VERY QUICKLY. A MORE LOGIC BUT THIN EXPLANATION MIGHT BE RELATED TO OBLIGATIONS LINKED TO THE EURO CURRENCY MONETIZATION. HOWEVER, THE FINGER OF SUSPICION POINTS TO THE AUTUMN 2011 REACTION, AFTER THE GOLD PRICE WAS REBUFFED FROM THE $2000 MARK. THE VIGOROUS DEFENSE LEFT THE USGOVT EXCHANGE STABILIZATION SHORT WITHIN ITS GOLD FUND. SOME ANTICS BETWEEN OUTGOING TREASURY SECRETARY GEITHNER AND GERMANY MIGHT BE AT PLAY. $$$

The story continues to unfold, with some confusion. Permit scattered points made, since the details are all over the map in type and context. The central bankers never provide more than 20% of the working details, preferring their privilege and honor shown among brethren, even if corrupt to the core. In no way is the Jackass privy to the many salient items for the entire story. Some details might be in contradiction, since possibly old information not updated. Let it be known that irony is thick. The Bundesbank has in recent years shown respect to the Euro Central Bank, to allow implicit monetization of peripheral nation debts. The Germans have returned the favor by lighting a fire on the greatest physical gold scramble of all time, which might present London and New York bankers as giant sized criminals. Physical gold in deliverable claims is the issue, much like demanding cash from your bank savings account that has sat there for many years, or better yet, demanding the family jewels from your bank deposit box that has sat in storage for many years. The contents are largely gone, with frantic efforts by London to recover and replace the gold from sources like Basel Switzerland and the Roman Catacombs. Doing so forces cross deals of hidden global geopolitical importance. The older the gold that moves to recover and replenish, the bigger the stakes in the hidden deal, since different rules apply to very old gold, with different family castles.

Gold owned by the German state will be returned to the Bundesbank upon demand by the Parliament. James Rickards calls the Bundesbank demand for repatriation to be world historical. The current 3396 tons are held 31% in Germany (Frankfurt), 45% in New York, 13% in London, and 11% in Paris. The recent demand is for all gold held in London and Paris in the German official account to be returned to the Bundesbank, often called the Buba. The account used to be 4000 tons years ago, but some gold bullion was directed to the IMF for official sale, and some was converted to minted coinage. A severe shift has occurred. The large German account is in focus, and must be authenticated, then repatriated. Trust in central banks by other central banks is ending. One might infer from the demand given to London and Paris that Germany realizes their New York holdings are gone, long ago leased and sold. Parliament representatives were refused the right to view their gold account at the New York Fed last September, and later, evidence in document form revealed that London and New York intentionally colluded to deny information to Germany on its gold account. See the Zero Hedge article (CLICK HERE).

A formal statement was made from Germany's central bank. It reads like cloud cover and smokescreen for Paris. "The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the Euro [currency]. Given that France, like Germany, also has the Euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial center in which to exchange gold for an international reserve currency, should the need arise. As capacity has now become available in the Bundesbank's own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt." What nonsense, that suddently Germany has come of age with vault storage capacity. No way did it take the Bundesbank over ten years to conclude that the Bundesbank is no longer dependent on Paris as a financial center. The bankers are brethren, even if they distrust each other, much like the mafia dons that show public respect but afterwards, order murders. See the Zero Hedge article (CLICK HERE).

Jim Sinclair offers a different explanation altogether. He believes, based upon his information, that the German notification resulted from actions taken by the USGovt Exchange Stabilization Fund, related to long-term plans to strengthen the Euro currency. The ratio of gold bullion to fiat Euro currency has been changing to the extreme in recent months. Germany apparently responded to a nasty parting shot made by Tim Geithner, who exits his role as Treasury Secretary. Some cleanup was required from the important defense of the $1900 gold price in August & September 2011. That defense was executed by the highly secretive Exchange Stabilization Fund. The fund's Gold Bank has been short gold for almost 18 months. Sinclair has been told that the effort to break gold by the Exchange Stabilization Fund was considered a direct attack on the Euro strategy for what the endgame would look like. Such a factor indicates the Europeans have a different view toward Gold as a future entity. He sees the German gold account repatriation demand as a direct warning that they could demand return of their gold just like DeGaulle of France did in the 1960 decade. Sinclair repeats his belief that the Gold price will go beyond $3500 per oz, and that Gold will be marked to market by the majority of major central banks. The grand change will enable balance sheet restoration of the many major debtor nations, thus providing the platform for recovery.

An announcement was made that the German gold repatriation will be given seven years to occur, with each the US and France citing a seven year timeline. They must have forged a deal whereby London has the time to replace the leased, sold, stolen gold. Consider the extension an olive branch. The two hard pressed national central banks will be forced to appeal to Basel and Rome. Ben Fulford makes an intriguing point. The French are pursuing the Mali gold, which might offer 85 tons output per year, according to available 2006 statistics. After seven years, the almost 500 tons produced in Mali, sequestered by colonialists, might be roughly equal to the 674 tons owed to Germany. The details are the US Federal Reserve owes Germany 300 tons in gold, and the French Central Bank owes Germany 374 tons in gold. Fulford implicitly raises the question of whether Mali is seen as a solution to the German gold repatriation demand by colonial bankers, in a joint US-French Military operation. It makes sense. He reminds that the German request for gold repatriation comes after many gold plated tungsten bars were found at the German central bank, according to an British MI5 sources. That means the Germans have joined the Hong Kong banks as victims of tungsten fraud originating apparently from the USFed during the Clinton-Rubin Admin, again according to the MI5 source.

The Fast Money clowns on CNBC openly discussed the mystery of the day that routinely captivates their attention. Last week, they discussed in round table why Germany might want repatriation of its Gold. Curiously two of the four sitting so-called hotshot experts in leveraged short-term trading within the rigged markets believe the event is serious because maybe the Gold is not there. See the Max Keiser article (CLICK HERE).

◄$$$ THE NETHERLANDS GOVT IS THE NEXT BIG PARTY ON THE GOLD REPATRIATION TRAIN. THE FOLLOW THE GERMAN LEAD, AS DOES AUSTRIA TYPICALLY. $$$

The rest of the world is seeing this crack in the London banker fortress, as the light reveals the deep corruption. The stories are thick that the London bankers have been maintaining the fiat paper currency game for two decades with vigorous lease and sale of gold bullion from third-party official accounts. Seeing the brave bold confrontation between Germany and the Americans under British aegis, the Dutch CDA party has requested that Holland's gold account be repatriated. The Dutch government says it has 612 tonnes of gold - with a value of around E24 billion - and is thereby in the top 10 of countries with gold reserves. The bulk of the Dutch gold reserves is supposedly located in the United States, but with additional gold bullion from their official account stored in Canada and United Kingdom. Only about 10% of their gold account resides in Amsterdam. See the Zero Hedge article (CLICK HERE).

◄$$$ AZERBAIJAN TOO. NO TRUST IN EAST ASIA FOR THE LONDON BANKERS EITHER. THEY ARE FOLLOWING THE COUNSEL OF DEFIANT NATIONS, WHETHER FROM GERMANY OR THE ASIAN S.C.O. GROUP. THE ALLOCATED GOLD GAME IS FAST CLOSING DOWN, AND RISK IS RISING FOR LONDON CROOKS. $$$

Apparently East Asia has no trust of the big British banks either. The State Oil Fund of Azerbaijan (SOFAZ) has withdrawn the first ton of its physical gold from JPMorgan vaults. The big state fund announced it will withdraw all of its physical gold assets from JPMorgan warehouses in London. The size of the gold withdrawal from the cartel bullion banking system is not the important element in the Azerbaijan story, as only 480 thousand gold oz are involved. The critical theme is the growing list of repatriation requests that could expand to call home every last rehypothecated gold bar. The game of bullion banking allocated gold storage is rapidly coming to an end, with consequent risks for London bankers rising to the extreme level. Recall little Ecuador joined the list last month, following the key leader Germany. One must wonder if Germany is advising smaller nations to join. My firm belief is yes, since my sources inform that Germany has a tactic to talk constructively in public, yet to work toward the Eastern solution in a USDollar alternative system behind the curtains and closed doors. Also, the Shanghai Coop Org (SCO) with Asian basis has played a big advisory role, like with their urgent counsel for Venezuela to demand its gold from London in 2011.

Brinks has moved the first ton from the SOFAZ account, according to the fund and ABC AZ News. The placement ended up in their own central bank vaults in Baku. It was purchased at the London Stock Exchange (LBMA) within the SOFAZ investment policy. The oil fund has been acquiring physical gold since February 2012 in batches of 10,000 ounces per week. By early 2013, the SOFAZ account had gold assets equal to 14,934 kg (=480,146 oz). All the gold will be transferred to storage in Azerbaijan gradually. The SOFAZ investment policy allows it to keep in gold up to 5% of assets held in reserve. See the ABC AZ News article (CLICK HERE) and the Silver Doctor article (CLICK HERE).

## COIN RUSH & INVESTMENT DEMAND

◄$$$ COINS COINS COINS!! THE USMINT COULD DOUBLE THE SINGLE MONTH SALES RECORD IF PRODUCTION IS NOT HALTED. AN IMPRESSIVE ACCELERATION IN DEMAND HAS COME. THE PEOPLE ARE HEDGING AGAINST INFLATION AND WORSE, PERHAPS A BANKING SYSTEM COLLAPSE. THEY MIGHT NOT ANTICIPATE THE GLOBAL REJECTION OF THE USDOLLAR, WITH ALL THE ATTENDANT FALLOUT IN STEEPED CRISIS. $$$

In mid-January the USMint notified the primary dealers that Silver Eagles are sold out. Sales are suspended through January 28th. The USMint reported another one million Silver Eagles sold on a single day, Thursday the 10th. The hefty burst raised the January sales total to an astonishing 6.007 million ounces in less than two weeks of sales. The coin demand is accelerating sharply and powerfully. At the time, half of January remained. Barring a complete shutdown by the USMint, the total January 2013 Silver Eagles sales will overwhelm the all-time monthly sales record set in January 2011 at 6.422 million ounces. The USMint is on pace to sell 12.66 million ounces of Silver Eagles in the first month of 2013. Not only does the amount exceed any past yearly sales total before 2008, but it will contribute to sucking the corrupt COMEX dry of inventory when it is already vulnerable. The overnight emergency shipments to avert default are an open topic. See the Silver Doc article (CLICK HERE). Below see real money, my little pretty!!

◄$$$ WHILE THE USMINT STRUGGLES MIGHTILY TO OBTAIN SILVER FOR COIN FABRICATION, THE DEEPLY TAINTED S.L.V. FUND HAS SEEN FIT TO ADD 18.4 MILLION OZ SILVER IN A SINGLE WEEK. IT IS THE BULLION CENTRAL BANK FOR ABUSE BY THE MAJOR BANKS. LOG IT AS AN ACCOUNTING ENTRY ON COVERED SHORT POSITIONS. THE SIGNAL IS SEEN FOR HIGHER SILVER PRICES, EVEN IF CORRUPTED TO THE EXTREME. $$$

The contrast is highly revealing. The US Mint has once again halted the sale of Silver Eagles, since sold out of supply, even ramped up supply. Bear in mind the USMint as a government outfit to serve the public is still legally obligated to buy silver at any price in order to fulfill demand. The Silver Eagle program is managed by the USDept Treasury under Geithner's direction. They announced a rationing plan in the future, surely in response to absent supply. They are also to raise prices (premiums) on all silver coins. Contrast with the indescribably corrupt (clever devious shifty device) Silver Exchange Traded Fund run by JPMorgan. The SLV fund recorded a near 20 million oz increase in a matter of days. Anyone who believes or expects the CFTC or any regulatory errand boy to force the issue and expose the scummy practices in my opinion is naive to an absurd level, not worthy to dispense advice, and not prepared to manage funds..

Let an easy explanation be offered. The big banks that use the SLV as a bullion central bank covered some of their massive shorts. The price of silver (paper price discovery from futures contracts) has been giving some signals in the last month or so. The price is not going down any more than it already has, having gone below the 30 line for a brief spell. Here is the conjecture that makes sense. The SLV managers have seen numerous big US bank players come to their window for the purpose of covering their oversized short positions, not all of them, but a small portion of them. The short covering that has occurred gave a small lift to the paper silver price. No silver moved from armored trucks to consummate the transactions. It is all bookkeeping movement of numbers, not metal. Regard it as a microcosm example in contrast to the Intl Monetary Fund. Their supposed sales from 2003 to 2006 were announced with trumpets, but no metal was moved. The USGovt covered large short positions from the past decade of gold thefts. Same phenomenon.

The details of the accounting ledger shift are interesting. On a cold day in mid-January, the SLV ETFund technically added 18,378,092 ounces of physical silver equal to 572 tons. This was accomplished on a single day. The outlier sticks out like sixteen thumbs on the silver addition chart. A yearend 2007 rebalance saw another anomaly of smaller scale. Put the volume in perspective, as it was more silver added to the ETF than all of 2012, when just 544 tons were added in the entire year. The process was driven by the creation of 19 million shares of SLV overnight. The total share count comes to 356.8 million shares, a fresh new basket created which can be accessed for shorting purposes by the big US banks. They might have been motivated to create more shares specifically to short, as part of some complex arbitrage scheme. Once shorted, shares can be used to withdraw metal from the SLV inventory of vaults. The public cannot do this, only the big banks. To be sure, the 18.4 million oz silver batch was not purchased on the open market. Its custodians at HSBC offer no explanation, just like in May 2011 the SLV inventory was reduced by a large 522 tons of silver. Take some bullish scent off the story, since the big short covering was executed when the bank cartel believes the Silver price would not go lower. See the Zero Hedge article (CLICK HERE).

◄$$$ DEMAND FOR CANADIAN SILVER MAPLES (COINS) HAS RISEN 23-FOLD OVER THE LAST SIX YEARS. THE GROWTH RATE IS OVER 50% PER YEAR, OVERWHELMING SUPPLY. $$$

A quick exercise shows the past history of minted volume for Canadian Silver Maple coins in past years. In twelve years, production has gone up over 70-fold. The growth rate is over 50% per year. Maples demand was up 83% in 2010 over the previous year. Some figures to ponder. In 1999 the total Silver Maple sales were 300,000 and later grew to 403,652 in 2000. By 2003 the total rose to 684,750 coins. In 2007 it had grown to 3,526,052 and then more than doubled to reach 7,909,161 the next year. The last three years showed total coin sales of 9,727,592 (in 2009), 17,799,992 (in 2010), and 23,129,966 (in 2011). The important point to take away is that investment demand is skyrocketing. The public demand from coins and bars is draining supply. Over history the most important factor behind a precious metals bull market has clearly been the powerful factor from strong investment demand, of which coins are a major part. They might be simple coins in a pocket, but multiply their effect by millions of people making purchases.

◄$$$ SMALL INVESTORS FORM THE ARMY OF LILLIPUTIANS WHO TOGETHER RENDER GREAT HARM ON THE SYNDICATE BY REMOVING PHYSICAL SUPPLY FROM THE SYSTEM. THE PUBLIC IS A GATHERING FORCE OF SUBSTANCE. THEY DRAIN SUPPLY, THUS FORCING THE METAL PRICE UP. NOTICE A NEW DEVICE WITH COMMERCIAL POTENTIAL. $$$

Private investors in Switzerland, Austria, and Germany are lining up to buy gold bars the size of a large business card. The card can easily be broken into one-gram pieces and used as payment in an emergency. The Lilliputians have a new weapon. The Asians have a long history of holding such small units, eagerly purchased in India and China.

The gold trader who has been called The Voice offered an opinion. He believes fervently in the small investor making a dent on the syndicate and their cartel. He wrote, "The normal small time buyers and other people are catching on. They see that things are going sour, the system collapsing. They are buying small quantities of investment grade Au and Ag coins, as well as these gram plates. It is this demand that adds up to big volume, which takes physical metal out of the market, reducing supply. The physical investment grade Au and soon Ag is already selling at steep premiums. These premiums are rising on a daily basis, regardless of the screen LBMA price, manipulated by the Boyz bigtime. There is going to be a bloodbath in the market when the scramble for physical investment grade metal reaches a fever pitch. The Boyz who deal in paper gold along with allocated and unallocated metal certificates will go up in smoke, exposed then ruined. It is incredible how clueless the so-called professional investors with their funds are. They are the ones who got the financial system into today's situation in the first place." He often calls gold Au and silver Ag. On the United States he added some comments on how the nation is being softened by artillery attack from all sides, before the real attack is launched. He believes the United States has already committed financial suicide. The corpse is in free fall but has not hit the ground yet for everyone to see, in his words. The label of fiscal cliff is so deceptive.

◄$$$ THE PUBLIC IS BUYING MONSTROUS AMOUNTS OF PHYSICAL GOLD & SILVER. HAYNES (AT C.M.I.) BELIEVES THE NEXT PHASE IS OCCURRING FOR THE BULL MARKET. THE HEART OF ANY GOLD BULL MARKET IS INVESTMENT DEMAND GOING UP WITH VIGOR. THE KEY IS DRAINED PHYSICAL SUPPLY, WHICH FORCES UP THE METAL PRICE. $$$

Back in 2011, both James Turk (GoldMoney) and Eric Sprott (Sprott Asset Mgmt) reported that the US$-based volume of silver sales was equal to gold, a remarkable detail. Sales were huge, hitting records, but the unit volume of silver oz sales used to be 50 times gold. An update, as Bill Haynes of CMI Gold & Silver told King World News that the public is now buying monstrous amounts of physical gold and silver, in his words. Haynes anticipates the unprecedented buying will have a marked impact on the market. Haynes had the following to say after the holiday weeks, with best parts taken concisely. 

"This was a 3-day week for us because of the holiday schedule. In  3 days we did more business than what we have done in any single week in years. The buying is monstrous in here. As an example, we had one buyer which completed a transaction for $6.8 million. No doubt about it, there is fear and there is acceptance that the West is in real trouble here. We are seeing unimaginable buying here of both physical gold and silver. This is the type of buying you see when you are nearing the end a long period of digestion, and you are about ready to break out on the upside. As prices breakout to the upside, gold and silver will be looking at another massive move higher. Gold and silver investors, if they have cash on the sidelines, that is not the place for it. It needs to be in this market. We may have just broken into stage II of a three phase bull market. Phase-II is the longest phase in terms of duration. If I am correct that we just broke into Phase-II, we are looking at a phase that could run about 15 years. This is because Phase-I lasted 11 years, and [therefore] Phase-II will be even longer.

During Stage II, gold will consistently hit new highs. But each and every time the establishment and the mainstream media will declare a top and tell people to get out of their gold. The people who are buying Gold & Silver are extremely successful people. These are people that have accumulated a great deal of wealth from a wide range of industries, and they are now looking to protect their wealth. If somebody has cash that they do not have plans for in the next two years, it definitely needs to be in gold or silver. The type of buying we are seeing here at our firm is happening across the country. There is a bit of a run on gold and silver here." See the King World News article (CLICK HERE).

◄$$$ AMERICAN SHEEPLE ARE SELLING THEIR SILVER HEIRLOOMS IN DROVES. THEY NEED CASH, MAYBE FOR CHRISTMAS SHOPPING, PROBABLY FOR HOUSEHOLD ESSENTIALS TO KEEP THEIR FAMILIES GOING. THE MAJORITY OF SHEEPLE WILL LOSE THE BENEFIT OF OWNERSHIP WHEN THE SILVER PRICE GOES MULTIPLES HIGHER. $$$

The following is a story submitted to Bill Murphy at LeMetropole Cafe, an adjunct of the noble GATA movement. The story will be passed on. The person Roger told Murphy that over ten years ago, he made a great purchase. He bought out a coin dealer for all the silverware and hollow-ware he had collected over the years in inventory. The price of silver was $5/oz and he wanted $7/oz an ounce for the entire batch. The man bought it all for $175,000 and reportedly did very well, since the silver price launched past the teens after 2009. He loves silverware and enjoys viewing it and presenting it. He saved 24 beautiful sets for himself. He offered an update. He wrote, "I just talked to some of the largest silver dealers in the country (and therefore the world) about selling this. Every one of them said people are pouring in to sell their silverware and other gold and silver items. The [dealer] inventory is going through the roof. The dealers are paying bottom dollar. They are just buying complete lovely silverware sets for melt. Trust me, the sheeple are still selling their scrap gold & silver." He commented that the phenomenon has happened in the last two weeks.

◄$$$ CONSIDER TWO PROMINENT FUNDS THAT HAVE SIZEABLE GOLD HOLDINGS IN ASSETS UNDER MANAGEMENT. EDELWEISS IN SWITZERLAND AND PACIFIC GROUP IN HONG KONG WILL BE IMITATED AS THE FINANCIAL SECTOR IS AWAKENING TO GOLD BEING THE ULTIMATE HEDGE AGAINST THE SYSTEMIC CRISIS, AND THE REAL MONEY ALTERNATIVE. $$$

Formerly of Societe General, strategist Dylan Grice finally left the big bank scene. He has been a favorite of editor Tyler Durden at Zero Hedge for a few years. Grice spoke the truth, exposed the reality of the big banks gaming the system, and dutifully carried the risk. He has moved on as promised. He sought the greener pastures of the Edelweiss Fund based in Zurich. His new home has a rather stunning allocation of Assets Under Mgmt to precious metals. A ripe 60% of the Edelweiss capital is allocated to precious metals, as over the past seven years, more and more cash was allocated to gold, silver, and platinum. In 2005, their allocation in precious metals was only 10%. The devotion to PM is an order of magnitude greater than the real asset allocations for most other wealth preservation funds. The fund's performance has greatly outperformed the vast majority of its competitors in the past decade. Their prospectus boldly states that as stewards of capital, they seek to provide durable refuge in an uncertain world. They reject the hollow output of an unprincipled financial system, preferring instead the timeless substance of honest entrepreneurship. See the Zero Hedge article (CLICK HERE).

Yet another respected hedge fund, the Pacific Group in Hong Kong, has decided to follow the Gold brick road. They will convert one third of the $100 million assets in the hedge fund into physical gold. They believe that gold will continue to rise as governments print more money to pay off debt and pursue dead-end solutions. The pattern is clear. Some of the smartest managed funds in the world are diversifying a sizeable portion of their holdings into physical gold. Others like David Einhorn and Kyle Bass have diversified into gold, preferring the safety of allocated physical gold bars. The Pacific Group founder and chief investment officer William Kaye claimed the fund plans to take delivery of $35 million worth of gold bars that can be traded on the London Bullion Market Assn and other international markets. It will be stored in Hong Kong vaults. He expects the movement toward alternatives to fiat currencies, as investors grow deeply disillusioned with wasted government money printing to service insurmountable public debt.

Kaye is very aware of the trends to debase the currencies. He cites no tangible backing for the fiat currencies. He pointed to how central banks have so far been able to manipulate interest rates to allow governments to service their debt at low costs, thus averting market seizures. Despite the ongoing stresses, he expects the next big rally in precious metal prices might be 18 months to two years away, triggered by a financial catastrophe. He cited a 100:1 ratio of gold held in financial instruments, such as COMEX futures contracts, versus the physical gold that exists above ground worldwide. The system of gold management has a 100-fold hidden leverage. Kaye concluded, "Gold, the way we look at it, is anywhere from being undervalued to being seriously undervalued. We are in the early stages, in our judgment, of what would likely be the world's largest short squeeze in any instrument. All you actually need for a major upward revaluation of gold is for a small fraction of people to physically reclaim from major central banks or other depositories that are holding your gold and using it for their purposes." The repatriation of gold accounts is precisely what is happening. The Pacific Group has just converted the first tranche of such investments, buying gold bars from local refineries. See the Max Keiser article (CLICK HERE).

## GOLD PRICE BREAKOUT IN ASIA

◄$$$ THE GOLD IN YEN TERMS IS IN BREAKOUT MODE. JAPAN IS AT RISK OF A BLOWOUT FOR ITS INDUSTRIAL ECONOMY. THE JAPANESE YEN IS BEING PULLED DOWN IN AN UNPRECEDENTED MANNER BY THE JAPANESE GOVT AND THEIR CENTRAL BANK. IT HAS FALLEN FROM 129 IN SEPTEMBER TO 112 THIS WEEK. THE EFFECT ON THE YEN-GOLD PRICE IS GREAT, CAUSING A STRONG BREAKOUT. EXPECT ANOTHER 13% RISE IN THE YEN-GOLD PRICE RUNUP. THE COMPETING CURRENCY WAR HAS A WINNER, GOLD!! $$$

Too much Gold chart analysis focuses on the US$-based price. The suppression and intervention and derivative pressure is greatest in the United States where corrupt markets are widespread and the norm. The key to the gold market is the currency which permits a price breakout or breakdown. Right now, the two to watch are the Japanese Yen for a breakout, and the Swiss Franc for a breakdown. The JapYen and Swiss Franc are in the spotlight in the FOREX currency market. Rather than show another JapYen chart, consider the price of Gold in Yen terms. It is on the verge of a breakout to capture Asian and global attention, as their economy is being fiercely defended and their currency crushed. With all the attention give to the Japanese Govt entering the monetary business, influencing the Bank of Japan unduly, in desperate straits trying to defend their export business, the pressure point is seen in the Yen-Gold price. Asia has a new Gold Rush player, while the Swiss are being attacked in the Competing Currency War gone wild. At risk is the vast Japanese industrial base with strong export emphasis. It will be preserved, even if a gigantic gold bull runs wild in Japan and tramples the Swiss in the way. Look for gold bar and gold coin demand in Japan to skyrocket. Both China and Japan will be the primay cylinders to the gold bull market, as Asia takes center stage both economically and financially. Next is the direct challenge to unseat the USDollar by extraordinary methods.

◄$$$ GOLD IN SWISS FRANC TERMS IS AN OPPOSITE STORY. THE SAFE HAVEN STATUS OF SWISS BANKS AND FUNDS IS ON THE VERGE OF A BREAKDOWN. THE PRESSURE IS FOR THE SWISS FRANC TO RISE AFTER 16 MONTHS OF THE LUNATIC FIXED EURO-FRANC PEG. THE SWISS NATIONAL BANK (CENTRAL BANK) LOSSES TO THE BALANCE SHEET WILL BE MASSIVE. WATCH A BIG DECLINE IN THE SWISS-GOLD PRICE. $$$

Risk of gold value loss to big Swiss banks will force a great change, as its historical role is being upset. The impact could result in the Swiss joining the USDollar alternative movement, a transformed global monetary system toward a Gold Standard. Imagine the impact of the standard which would require a huge influx of funds into Switzerland to be followed by a huge flow of Gold bullion to match it. Wow! Instead of wreckage to the Swiss Economy, would come a tremendous caravan of trucks and aircraft bearing gold bullion. That is precisely why the Swiss will react in an unexpected way when their central bank shows catastrophic losses to their investment on the balance sheet. Big changes are coming. The Japanese changed monetary policy will deliver deadly blows to the Swiss bankers, the latest event on the Competing Currency War front. The Swiss banks will be losers on the Tokyo paper tsunami that hits Europe in damaging repercussions.

◄$$$ THE GOLD PRICE IS GOING TO $10,000 PER OZ, CLAIMS PENTO. HE CITES THE COMPETING CURRENCY WAR, THE COORDINATED DEBASEMENT OF THE MAJOR CURRENCIES, THE DEFENSE OF ECONOMIES, AND THE GROWTH OF THE MONEY SUPPLY. HE EXPECTS THE USDOLLAR TO LOSE ITS GLOBAL RESERVE STATUS AND THE USTREASURY BOND MARKET TO COLLAPSE. $$$

Michael Pento is given credit for spotting QE4, the quick renewal of QE3 before the third initiative even entered full swing. Pento is the President of Pento Portfolio Strategies and serves as senior market analyst for Baltimore-based research firm Agora Financial. He identified the charade that is central banking monetary practices. They are actively engaged in Competing Currency War, pushing down their domestic currencies in a competitive devaluation sequence that is intended to preserve the export trade and keep their economies from faltering. Instead, all major economies will be dealt incredible damage, some even death blows. See the interview by Michael Pento on King World News (CLICK HERE). His commentary follows.

"So Japanese Prime Minister Shinzo Abe has promised to declare a war on the Japanese middle class. He has also declared a war on deflation and he is saying he is deliberately attacking the value of the Yen and has a specific inflation target of at least 2%. Now that sounds very familiar to what we have with Mario Draghi, and doing whatever it takes to control the entire bond market of Europe. It also sounds very familiar to inflation targets here in the United States with Ben Bernanke. This is a watershed epiphany on the part of central bankers. This [Competing Currency War fever pitch] has never been seen before in the major economies of the developed world. When can you point to a time in history when the leaders of the developed world, when the owners of the world's reserve currency, have all decided that they are going to destroy the value of that currency versus not only other currencies, but against precious metals and hard assets? We have seen it before (at different points in history) in Weimar Germany, Argentina, Hungary, but we have never seen it where Europe, Japan, and the United States have a declaration of war on their currencies.

You have [the US] central bank printing $85 billion per month. Just look at any of the monetary aggregates, M2, MZM, M1. They are soaring. Money supply growth rates will continue to expand, and their rate of expansion will grow. The Gold price is going to bring gold much, much higher than anybody is factoring into their predictions right now. If you look at the rate of destruction of the purchasing power of all of the developed world's currencies, it is a slam dunk that Gold is going much, much higher than its inflation adjusted high of around $3200 an ounce. People are realizing this is an unprecedented scenario where all of these countries have been put on the life support of the their central banks to perpetuate the illusion of solvency. And when you get to that condition, there really is no limit to how high gold can go. It would not surprise me if Gold eventually goes to $10,000 per ounce or even higher because there is no limit to the productive capacity of central bankers to produce currency. I think it would be more surprising if gold did not go to $10,000 an ounce. When the US dollar loses its world reserve currency status and the US bond market collapse is in full swing, a $10,000 gold price may prove to be very conservative."

Keep in mind that a hyper expansion of USDollars is more likely than a USTBond market collapse. The Jackass expectation is for the USGovt debt default to occur when the USTBond yields are absurdly low but supported by USFed purchases in Weimar mode with new $trillions printed at decreasing intervals of time. Notice Pento referred to the 1980 gold peak price of $800/oz, translated into current real value to be $3200/oz. That is realistic.

◄$$$ THE SHANGHAI GOLD EXCHANGE HAS SEEN A SURGE IN DEMAND. THE SHANGHAI ARBITRAGE PREMIUM IS BEING NOTICED IN THE GOLD PRICE. BEFORE LONG THE SHANGHAI GOLD & SILVER PRICE FIX WILL COMPETE WITH LONDON. THE WESTERN BANKER CORRUPTION WILL BE EXPOSED. $$$

German analysts at Commerzbank report the Shanghai Gold Exchange (SGE) saw a record trading volume in its physical 99.99% gold contract on January 7th. A great kickoff to the new year. According to the SGE, some 627,000 ounces of gold were traded on that Monday, which equates to four times last year's average daily trading volume. A total of over 1.3 million ounces of gold were thus traded in the physical gold contract on the SGE in the first four working days of the current year, up 8.3% up on the same period last year. The higher activity was attibuted to the Chinese New Year festivities arriving in early February, where sales of physical gold and gold ornaments and jewelry run at strong levels. Coupled with the Indian wedding season, which peaks in November and December, conclude that Eastern demand for gold will continue with strong momentum. See the Mineweb article (CLICK HERE).

First heard in the Hat Trick Letter Gold report was the arbitrage in the precious metals price, where the Shanghai gold is offered at $20 to $30 higher than the COMEX corrupted price, and its silver is offered at almost 10% higher price than COMEX. The London Siren sounded the warning. Andrew Maguire commented in a recent interview, "Something I saw in Shanghai early this morning, I had to double-check, in fact I had to triple-check. We are talking about the kind of divergence [in the physical market] now that is unprecedented. Today the opening premiums [showed] a $2.89 disparity in silver. I am not talking gold. When spot silver was trading in London at $29.61, silver actually traded at $32.50 in Shanghai. If you take an equivalent COMEX contract, and I realize spot is not COMEX, but if you take an equivalent 5000-ounce COMEX contract, that equates to a $14,430 premium per contract. It is ludicrous. There are reasons why you may or may not have a premium in Shanghai, but not to that extreme. The divergence has now become ridiculous. These high and low closing premiums literally illustrate the massive divergence between the paper market and the physical market. This is on an exchange (Shanghai) that within the next two years is actually going to become the world hub of physical gold and silver trading. It is going to have its own fixes. Price up to now has really been assisted by government (mainly US) defense of the dollar in the over-the-counter FX gold markets. But the central banks (out of the East) and the bullion banks are now jointly buying this discount."

Since 2011, the Jackass has been forecasting a large growing divergence between the physical and paper Gold price. It is here!! Maguire expects Shanghai to feature a Gold & Silver price fix that competes with London, and thus reveals the British banker corruption and fraud. Maguire pointed out that the intervention manipulators are at risk. Their short-selling algorithms are having little if any input relating to the physical market. Any precious metal price move against them will cause big internal problems for the big US and London banks. They might not comprehend why it has turned, the physical drain being acute. The central banks have been buying tonnage of gold bullion. See the King World News article (CLICK HERE).

◄$$$ SILVER LEASE RATES HAVE GONE NEGATIVE, WHICH ENABLES EASIER SUPPLY SECURED TO DUMP ON THE MARKET. NEGATIVE LEASE RATES ATTRACT NEW SUPPLY BY MAKING IT SLIGHTLY PROFITABLE TO MAKE ILLICIT ACCESS TO BULLION BANK SUPPLY. THE FLAT LOW RATES SINCE NOVEMBER HAVE AIDED IN THE ENGINEERED SILVER PRICE DECLINE. $$$

One finger of suspicion is pointed at Scotia Mocatta for provision of Silver bullion. The formerly reputable firm might have joined the big four US banks in criminal naked shorting also. The nearly constant silver lease rates since November indicate a strong hand in control, most assuredly with motive to suppress silver. Big financial institutions are indirectly encouraged to lease silver in order to sell it into the market. The Rubin Doctrine dictates selling out the future in order to live for another few months. That strategy has gone on too long, and has begun to backfire in the faces of New York and London bankers. They flirt with systemic failure. See the Kitco website for lease rates (CLICK HERE).

◄$$$ ANOTHER ERIC SPROTT MESSAGE RINGS CLEAR AS A BELL. THE USFED IS STUCK WITHOUT POLICY OPTIONS. THE FISCAL CLIFF BUDGET DEAL ACCOMPLISHED NOTHING BUT A TAX HIKE, WHICH EVEN THE CONGRESSIONAL BUDGET OFFICE BELIEVES WILL ACTUALLY RESULT IN $4 TRILLION BIGGER DEFICITS. THE HOUSEHOLDS ARE HITTING THE WALL. WESTERN CENTRAL BANKS HAVE TURNED INTO BUYERS, WHILE PROBABLY PROVIDING SECRETIVE SUPPLY TO MEET THE HUGE MARKET DEMAND. THAT HAS PUT THEM INTO A BIG JAM, MADE WORSE BY OFFICIAL ACCOUNT REQUESTS FOR REPATRIATION. THE PURCHASE DEMAND AT THE SPROTT FIRM FOR SILVER IS 50 TIMES GREATER THAN GOLD ON A UNIT BASIS. THE SUPPLY IS AVAILABLE AT A 11:1 RATIO. THE RESULT WILL BE STRONG CONTINUED UPWARD PRESSURE ON THE SILVER PRICE. $$$

Eric Sprott has become a regular guest at King World News. In the recent interview, he offered an opinion on a sequence of factors, developments, and events. The following are his thoughts with my edits to make it flow as readable. On the FOMC Meeting minutes, he was direct, claiming the USFed is trying to suck and blow at the same time. The minutes mean nothing because it is not policy. The precious metal prices were both hit hard during the minutes release, yet housing stocks rose and bond yield moves were negligible. That explains the hypocrisy of the USFed. Their statement was intended to keep a lid on inflationary indicators. The central bank has spent $4 trillion buying bonds which has accomplished nothing. The total USGovt budget deficit from the various obligations is really $5 trillion per year in a $16 trillion economy. Shadow Stats is estimating that it could be $7 trillion. The fiscal cliff resolution is a non-resolution, consisting of all tax increases and minor spending cuts. The CBO expects deficits will go up over $4 trillion more over the next ten years based on the fiscal dliff deal just struck. Look for 77% of taxpayers to pay more taxes, with a 2% increase in Social Security taxes. The across the board payroll tax hit will remove $120 billion out of people's paychecks. The result is significant to the already tapped out consumer and the chronic USEconomic recession that is fully denied.

On the Gold & Silver market, Sprott paints a very bullish picture. The central banks used to sell 400 tons of Gold bullion per year, but now are buying 500 tons per year. That is bullish. The USMint sales change saw a shift upward in demand by 36 tons per year. That is bullish. Chinese and Indian consumption is up. That is bullish. There has been no increase in gold mining supply since 2000. That is bullish. To be sure, the Western central banks have been supplying physical gold in order to satisfy the marketplace demand to buy physical gold. They are probably in a great big jam. That is bullish. The physical demand for precious metals is overwhelming them. That is bullish. Then we have a new wrinkle, with Australia, Austria, and Germany questioning where their gold is. Sprott believes through his own analysis that their gold has been sold and leased in the market. As discovery of the malfeasance is made clear, the price of Gold & Silver will respond with strong upward moves, perhaps in historically unprecedented powerful moves.

Sprott is stunned at how the USMint sells 45 times more silver than gold on a volume basis. That is extremely bullish for the silver price. The previous two issuances by Sprott Trust raised almost the same amount of money. Investors are still willing to put as much money in silver as gold, which means his firm buys 50 times more silver than gold on volume. But the two metals are not available at 50:1 ratio in terms of gross production. Actually the supply ratio is 11 times more silver than gold. That would dictate a converge to a 11:1 Gold/Silver ratio, and either a move down for Gold or a big move up for Silver. A lot of silver goes to industrial production, while very little gold does. The ratio for investment demand dictates a major price move up in Silver. He is not at all surprised that the USMint halted sales of Silver Eagles in mid-December. See the King World News article (CLICK HERE). Thanks to RobH in Washington for transcription.

◄$$$ SILVER SHORTAGE IS LIKELY BEHIND APPLE PRODUCT SHIPMENT DELAYS, AND PROBABLY THE DEVICE PRICE HIKES ALSO. HOWEVER, BEWARE OF BACKFIRES ON SHORT CUTS THAT HAVE NOT BEEN SUCCESSFUL IN QUALITY CONTROL FOR THEIR MANUFACTURING PROCESS. SAMSUNG IS PREPARED TO PICK UP THE DROPPED BRUISED APPLE. $$$

A local independent Apple dealer named Bally has reported on his watch of Apple product delivery dates. He mentioned receipt of a consignment of the new 21.5-inch iMacs which dried up fast. They await the new 27-inch iMacs. Their retail shelves are bare with many back orders piling up, something never seen before. Apple announced the new iMacs at end October 2012. Apple has announced another three to four weeks to deliver the 27-inch iMacs, with ten long weeks passing since any have been shipped. Apple states cites production problems that are causing the delay. Some observers believe a shortage of silver could also be the root cause. The new Iris screens use a lot more silver than the older models, including the new iPads. Production glitches have sprung up. If they can produce the 21.5-inch iMacs, they can produce the 27-inch iMacs, reason dictates. Apple has announced the products, but a full quarter delay has occurred for delivery.

One logical answer is that the brighter screens require substantially more silver than the earlier models. That would account for part of the $100 price increase on most models of the iMac. Apple manufacturers its iMacs and iPads in China, now a big silver importer. Even at 1/10 of an oz or less per iMac, still seems to me the only explanation. If silver shortage is the problem, Apple would not reveal it for fear that silver prices would skyrocket, with an impact felt to profit margins. Curiously, Apple could be exposed on fulfilling the back orders at no profit or even at a loss.

A wise source of information with extensive Asian connections offered an explanation of a different type. My belief is that both silver shortage and quality control problems are to blame. He wrote, "Lots of valid points to Bally's recounting of problems, but that is not the reason for the Apple delivery delays. The delays are due to massive quality problems since Apple tried to cut corners in the production process and thus increase margins. The German carmaker Mercedes tried the same thing a decade ago and they never regained their AAA quality standing. Apple will eventually fail and Samsung will clean up the market big time. Samsung is already a much better product when it comes to hardware and software. Best of all, Samsung has no delivery problems."

## 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.