GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Golden Potpourri
* Deep USDollar Decay
* Central Banks Need Gold
* USEconomy Drags Down USDollar
* Gold Investment Surges
* Explosive Price Moves Ahead


HAT TRICK LETTER
Issue #88
Jim Willie CB, 
“the Golden Jackass”
24 July 2011

"Future inevitable money printing will lead to a collapse in currencies and bond markets. Late 2012 or early 2013 is going to be another very difficult period." ~ Ray Dalio (of world's largest hedge fund Bridgewater, with $80 billion under management)

"Private banking clients of Credit Suisse in Switzerland have great difficulties getting their money out that is in current accounts. CS refuses to execute wire transfers for funds right now." ~ veteran German banker

"On QE2, you cannot really call it a failure because I do not think anyone was really worse off because of it. So at the end of the day, QE2 really did not cost us anything. The Fed used the $600 billion it created to buy US debt. So that really is a net zero." ~ Stephen Gandel (Time Magazine, moronic perspective by a hack financial journalist, since all costs rose sharply)

"Although you may have some time, nothing else has to happen before a big collapse could take place, even within days. Consequently, after 30 years of watching writing and creating protective retirement planning and financial strategies, today I am finally going to yell FIRE inside the closed Financial Iron Curtain which is America. If you have failed to store your precious metals outside the United States, to diversify out of the dollar, or to reduce or terminate your private retirement plan, there is now a clear danger of a Washington dollar and sovereign debt crisis which could sweep away most of your remaining wealth and financial security." ~ Ron Holland (of Freedom Matters News)

"The criminals in Washington, New York, and London have so tainted the paper markets with fraud, that futures prices may be abolished permanently in the Gold & Silver markets, or at least for a generation. When that happens, physical Gold & Silver will not even be available, let alone at any price close to the current levels. Aside from the real thing, perhaps certain closed-end bullion funds will be able to protect you (such as CEF, GTU, SVRZF, PHYS, PSLV), and perhaps select online precious metals ownership groups such as Goldmoney.com.  But that is it, and you had better have your gold and silver positions in hand when this event happens, since you will not get a second chance!" ~ Andy Hoffman (of San Diego Torrey Hills Capital)

"The financial press says gold is rising on concerns over the USGovt debt impasse. But when the debt ceiling is raised and QE becomes apparent again, gold will rise more from additional currency debasement. It is amusing to hear of their messianic tap on explanations, as though they know. Their propaganda is stifling. Gold is rising from a broken global monetary system and widespread ruin to sovereign debt, compounded by rabid debt monetization. The United States, the United Kingdom, and Europe are all crippled by economic recession, runaway deficits, and insolvent banking systems, where the remedy relies upon unending monetary inflation. Gold is warning of a currency collapse in a climate where the American arrogance of failure is gradually being swept away." ~ the Jackass unleashed

GOLDEN POTPOURRI

◄$$$ THE BIG US-BANKS HAVE INSURMOUNTABLE PROBLEMS TO SURVIVE, THEY CANNOT CONCEIVABLY PREVAIL. BANK OF AMERICA, JPMORGAN, AND GOLDMAN SACHS ARE FIGHTING OFF SHARKS BY WATER, WOLVES BY LAND, AND VULTURES BY AIR. THEY EPITOMIZE THE FINANCIAL CANCER. $$$

Bank of America posted the biggest quarterly loss perhaps in US banking history after agreeing to an $8.5 billion settlement related to sub-prime mortgages. The loss for the quarter ending in June was a whopping $8.8 billion. It is not the last, only the first. Included in the losses are payments to defrauded investors and insurers, and charges for future claims over home loans. The precedent has been set for future cases, like with those parties opting out of the agreement, and other subsidiaries. Their revenues for the quarter were $13.2 billion, down 55% from a year ago. See the BBC article (CLICK HERE). Goldman Sachs posted quarterly profits that disappointed, to put it mildly. It was a gross miss, as their fixed income trading dropped sharply. Revenues in the fixed income, currency, and commodities segment fell 53% from a year ago, blamed on weak economic growth. Overall net revenues fell 18% to $7.28 billion. The future on GSax continues to rest on its trading desk, which is under increasing strain. The biggest advantage of the firm is front running USGovt policy. They have been banned in sovereign bond issuance in Europe, and their investment banking business in the US is at subsistence level. If the truth ever came out on its profiteering from USGovt stock propping activity through the Working Group for Financial Markets, as well as placing trades ahead of the SPR oil release three weeks ago, it would be shut down by the SEC and CFTC in an honest worl. Such is the privilege of the Fascist Business Model at work. See the BBC article (CLICK HERE). As for JPMorgan, it is under constant attack for its naked shorting and oversized positions in the precious metals market. It is fending off RICO racketeering lawsuits. The Maguire attacks will redouble and amplify when the August GATA conference meets in London. The Morgue posts good numbers, since their bad bets are all shoved into the USGovt national security hopper, probably in the Fannie Mae nether bucket. The PR department is still working overtime from after the bank improperly foreclosed on actively serving soldiers in Iraq. Times are tough, when one of the strong departments profits on Food Stamp debit cards. This trio is a grand blemish on US finance.

◄$$$ CONTAGION RISK QUIETLY DRIFTS INTO LONDON. THE FAULT LINE MIGHT JUMP STRAIGHT FROM ITALY TO LONDON, AND BYPASS SPAIN FOR A SHORT PERIOD. LATER, IT WILL FIND SPAIN WITH A VENGEANCE EQUAL TO THAT SEEN IN ITALY IN THE LAST COUPLE WEEKS. $$$

Sigma X trading on debt insurance suggests the European debt crisis contagion is shifting from Greece to Italy and then possibly to the United Kingdom, a potential shock wave. In late June, the Italian Govt bond yields exploded to the upside. Last week was telling, the biggest moves made. The Goldman Sachs dark pool reveals that Credit Default Swap contract rates have begun to move up noticeably for both Italian and London banks. Check out the fast rising volume for Lloyds, Royal Bank of Scotland, and Barclays. The usual suspects from Italy appear, like leader Unicredit, Intesa Sanpaolo, and Banca Monte dei Paschi di Siena. Even the German giant Commerzbank appears in the top ten. Rank is according to volume traded, but the highest debt insurance rate among the London banks remains Barclays at 2.14% cost. The date stamp is July 18th on the table shown. Investors have been actively positioning for serious fallout in Italy soon. But as Tyler Durden points out alertly, the probable largest domino could soon fall on London itself. More emphasis is usually given to volume as a sign of the size of the gaggle of circling vultures, rather than the rate itself. Volume leads to price rise. As he concludes, "If Lloyds goes, the ones that will follow are Barclays and RBS. At that point, the financial crisis goes global." London banks have exposure across all of Southern Europe for the sovereign debt, and more. See the Zero Hedge article (CLICK HERE).

◄$$$ ANDREW MAGUIRE IS A FEATURED SPEAKER IN LONDON AT THE G.A.T.A. CONFERENCE IN AUGUST. THE CLIMATE IS MORE HEATED AND RIPE COMPARED TO THE LAST 2005 MEETING. EXPECT HUGE FUEL TO THE GOLD FIRES. $$$

The Gold Rush 21 conference might generate as much attention and vitriolic response as the Dawson Creek conference did in August 2005. One colleague attended it, providing details of the angry reaction by both Russian central bankers and Arab private billionaires back six years ago. This year, the deep fraud revelations by Maguire are sure to spark a great deal of controversy once again. He is an independent London Bullion Market Association (LBMA) Trader with over 40 years experience as a metals trader. He also previously served as a Goldman Sachs employee in the same capacity. Last year Maguire disclosed in public interviews his notification to the United States Govt regulators at the Commodity Futures Trading Commission of fraud being committed and price manipulation in the international gold and silver markets by JPMorgan. The CFTC did precisely nothing, as JPM is immune from criminal prosecution. It has been called the largest fraud in history but to qualify, it would have to surpass the mortgage bond fraud in the $trillions that is ongoing. More on Andrew Maguire and his views of the new Pan Asia Gold Exchange impact is covered in the Metals Exchange section. My sincere hope, tied closely to a realistic expectation, is that the GATA conference will generate significant interest and fuel great demand with avid enthusiasm again. In 2005, the conference was held in the remote corner of the Canadian northwest wilderness, for security reasons. It still caused great impact. The August GATA conference will be in London, the heart of the most vile bankers on the planet, for impact reasons. The patriot and intrepid soldier Bill Murphy has turned bold.

◄$$$ BUY SILVER, HOLD GOLD, AND AVOID THE MINING STOCKS, SO SAYS GRIFFITHS. ANALYST CAZENOVE WARNS TO FAVOR THE METAL AND TO SHUN THE STOCKS. THE PURE METAL ASSET IS FREE FROM RISK DUE TO COUNTER-PARTY AND MANY OTHER FACTORS LIKE GOVERNMENT PROPERTY CONFISCATION. MINING STOCKS ARE NOT REFLECTING A HIGHER GOLD PRICE. $$$

Robin Griffiths from Cazenove is excited about precious metals. He gives direct commentary on the metals versus the mining stocks. About gold, he said "I think the long-term trend for gold is absolutely in place and the final high is so far higher than we have been, that there is nothing to worry about. However, in the short-term it became overbought and it is very likely to fall back to its 200-day moving average which is in broad numbers $1400." Not very accurate, as the $1480 level was capably defended. Much more strength has been seen in the gold price. The ruptures across Europe and the budget deadlock in the United States made it very difficult for gold to sell off. About silver, he said "In the case of silver, which of course had a huge catch-up move with gold and then had a shakeout after that because it moved far too fast, the low of that correction period is in. We are within days of the correct moment to be buying back into silver again." Very true, as silver held at the $34 level when the comment was logged. The strong resistance in decline was evident in gold, but the high speed bullet is clearly silver. Both Gold & Silver last week made what were considered breakout moves. About mining stocks, he said "I was in South Africa just the other day where some of the richest holes in the ground exist, but the miners have to go down four kilometers and then along seven kilometers to get to the seam. It can take them two hours out of each working day to get to and from the place where they do the digging. So there is no way they are going to be making money out of that just yet. The price of bullion needs to go way higher before the stocks themselves start to fly. The day will come when the mining companies take off, but that is in the future still." True again, and consistent with the Jackass view toward the mining stocks. They are chronic laggards.

My outlook turned sour on the mining stocks in early 2008. The mining stocks have done very little since that time. They are priced for $1200 gold. The typical profit margin for major mining firms is approximately $1000 per ounce. The lack of share price rise speaks loudly to the absence of available capital for miners and the absence of available investment funds. The hedge funds are indeed well financed to continue with their spread trades, buying the metal and shorting the stocks. Rumors are strong that the politically motivated Barrick Gold provides financial support for such activity. It has two boards, one for clumsy oversight, another for dark global interests. See the China Business News article (CLICK HERE), whose date is not accurate, since the article was first read two weeks ago. The mining stocks might rise with strength when gold takes off again, and makes great strides as the $2000 price approaches. They do not inspire confidence. My suspicion is that the Goldman Sachs team uses their own GDX fund to slam the mining stocks. For GSax to suppress the sector would be consistent with everything known about the syndicate fortress. They created the GDX basket to short it illicitly.

◄$$$ MINING STOCKS HAVE COMPLETED A RETEST OF THE 2010 BREAKOUT LEVEL. ALTHOUGH NOT IMPRESSIVE IN FOLLOWING THE GOLD & SILVER PRICE MOVES LAST YEAR, AT LEAST THE SUPPORT HAS BEEN SUCCESSFULLY TESTED. AN OPPORTUNITY FOR STRONG RECOVERY HAS BEEN LAID OUT. IT IS UNCLEAR HOW MUCH THE MINING SECTOR WILL SURGE. $$$

Many subscribers are openly concerned with the mining sector stocks. They remain committed far more than the Jackass, who prefers the unencumbered bullion metal investment. Some critical support has been confirmed. Jordan Roy-Byrne of the Daily Gold wrote a fine summary of the mining sector. He wrote last month, "At the start of the year we wrote about what we could expect from the gold stocks and juniors over the first half of the year. All of these markets experienced significant multi-year breakouts in late 2010. This year called for a retest of those breakouts before the next advance would begin. We believed that these markets would spend much of 2011 retesting the breakouts, and that markets would later be in position for an unabated advance into 2012 and beyond. We wanted to provide an update. First we have the NYSE Gold Miners Index. This is broader than the HUI and GDX but generally follows the same pattern. The market [sector] broke out in September 2010 and successfully retested the breakout in January and two weeks ago. The large cap miners have struggled but are now in an excellent position. Essentially there is no resistance after the peaks near 1800. We also want to note that on any historical gold stock index, the 2008 highs are essentially the same as the 1980 highs. Thus, the breakout in late 2010, if sustained, is a historic breakout." Clearly, select mining stocks can vastly outperform the major index HUI and the broad index GDM. It closed at 1685 last week.

◄$$$ THE STRATEGY BY THE GLOBAL ELITE IS TO DECIMATE THE CRUDE OIL PRODUCTION IN THE MIDDLE EAST & NORTH AFRICA. THEY WISH TO RAISE THE OIL PRICE CONSIDERABLY, AND THUS REALIZE THE STORED OPPORTUNITY OF VAST NORTH AMERICAN OIL DEPOSITS. $$$

A long range plan has turned into action. Regardless of past major deals, regardless of what appears to be motive for targeted war, regardless of support cited for popular movements, a sinister plan is underway to remove oil production from the Middle East and North Africa. The supply from the Gulf of Mexico has been halted, also part of the strategy. My belief is firm as bedrock that sabotage was perpetrated by Halliburton on the BP Deepwater Horizon oil rig, covered up by key USGovt agencies (EPA, Coast Guard). Still eleven of twelve whistleblowers are dead, including one missing, mostly Southern professors at universities. Overseas, the strategy continues. With more violent attacks, the Libyan oil facilities will be made quiet. Regime change is a ruse. It is about confiscated $90 billion in wealth held at London and New York banks, and about curtailing oil output. See the Lindsey Williams interview (CLI CK HERE), who used to serve as pastor for many oil executives and learned too much.

◄$$$ THE STRATEGIC PETROLEUM RESERVE WAS RELEASED, AN EFFECT BRIEF, A SPENT OPPORTUNITY, NOT EASILY REPEATED. GROSS MISMANAGEMENT BY THE USGOVT AND ITS SATELLITE GOONS. MEANWHILE, CHECK OUT THE SPREAD OF BRENT OIL OVER WEST TEXAS OIL. THE SPREAD IS BACK TO $20, JUST LIKE BEFORE THE EARLY MAY AMBUSH ON THE COMEX, FOLLOWED BY THE RELEASE. THEY HAD LITTLE EFFECT IN THE GRAND SCHEME. BRENT OIL IS IN MY VIEW BEING USED TO HEDGE AGAINST CURRENCY DEBASEMENT AND EUROBOND DISTRESS. $$$

The release of a mere 30 million barrels from the USGovt Strategic Petroleum Reserve sounds huge, but it is not. The European release similarly of 60 million barrels from the IEA is also not very large in terms of daily demand. The global need is over 90 million barrels per day, while the US need is almost 19 mb/day. So the release total by the US alone was less than two days demand, and the combined release total amounted to one day of global demand. The effect was startling and asymmetric in the crude oil price, even the gold price. The maneuver was a blatant market manipulation ploy in the face of actual surpluses noted in the Cushing Oklahoma facilities. The objective was to knock down a significant cost factor within the USEconomy, obviously. The ploy did not succeed for more than a couple weeks. The crude oil price is almost back to $100 per barrel. But surprisingly, the Brent crude oil price has recovered even more. Brent must be used as a hedge against financial market distress generally by Europeans, even against USDollar risk. This view is consistent with the Gold/Euro breakout in price. The much watched oil price spread has returned over $20 from the West Texas price. The Boyz have really lost their mojo, unable to suppress price in any market except the USTreasurys, where the cost of money is well controlled. See the Zero Hedge article (CLICK HERE).

◄$$$ THE JAPANESE TANKAN HAS SUNK LOWER. PARTS OF THE INDUSTRIAL SECTOR ARE EXPECTED TO RETURN TO NORMAL OUTPUT LEVELS IN THE NEXT FEW MONTHS. THE FINANCIAL EFFECT IS A DIFFERENT STORY, SINCE THE RECONSTRUCTION MUST BE FINANCED. ONE CAN INFER THAT INSURANCE FIRMS ARE SELLING USTREASURYS IN BRISK FASHION, AS THE JAPANESE YEN CURRENCY HAS RISEN ABOVE THE IMPORTANT 125 RESISTANCE LEVEL, BUT HAS GATHERED ALMOST NO GLOBAL ATTENTION. THE YEN CARRY TRADE IS IN FULL UNWIND. PRICE INFLAITON WILL BE IMPORTED TO THE UNITED STATES. $$$

The Japanese Tankan survey is the most important in the nation. It is like all the regional Fed indexes rolled into one, therefore very important on direction. The June Tankan large manufacturers deteriorated badly to minus 9 from plus 6 in March, indicating strong decline. The survey reflects the present difficulties extending from the major earthquake and tsunami four months ago. On the bright side, the big firms expressed intention to boost capital spending by 4.2% in fiscal 2011, much greater than the consensus 2.4% forecast. Companies expect the index of sentiment to improve to plus 2 in September.

Optimism is rather widespread that economic activity will recover almost fully by next year, especially by government ministers acting as cheerleaders. A V-shaped recovery is in progress. Carmakers such as Toyota and Honda have almost completely restored operations. While the rebound is stronger than my Jackass forecast, the nation will be hard pressed to avoid a trade deficit for a couple quarters. For certain, the government deficit will be a lulu, quite extraordinary due to the national weather disasters. The financial sector, including the large insurance firms, have already begun a massive campaign to raise cash. They must pay for the vast reconstruction. Thus witness the important breakout in the Japanese Yen currency. It has risen above 127, amidst forecasts that is will return to 120 and more tranquil levels next year. Doubtful. The breakout in the Yen has gathered almost no global attention, given the European bond fracture and the USGovt debt debacle. The corresponding effect is a grand raft of USTreasurys sold in the campaign to raise funds inside Japan. The process has taken root to liquidate assets in a manner so as to minimize domestic price inflation and to keep down the ballooning national budget deficit. Asset sales continue on a path of least political resistance. A process of liquidating the highly lucrative Yen Carry Trade has entered a powerful phase that will be hard to stop. It will take on a life of its own.

The massive dumping of the USTBonds by Japanese financial firms has continued. It should persist for a full year during the reconstruction, which should be greater than original estimates. In my view, this phenomenon will eventually catalyze a GLOBAL QE among major central banks. The April pact to buy the USTBonds sold by Japan was forged in a suddenly convened G-7 Meeting in late March. They will convene again, agreeing to coordinate efforts to soak up the USTBonds sold by Japanese banks, insurance firms, and financial firms. The selling of USTBonds will beget further selling of USTBonds as the Yen Carry Trade unwinds. The hidden impact will be higher price inflation in the USEconomy for all imports from Japan, like some cars, but all cameras, photocopiers, audio video gear, stereos, construction equipment, and a raft of intermediary electronic components. It is coming like morning sunshine after a long night. In order to avert price inflation inside Japan, their liquidation actions will result in exported inflation to the United. States. This is a zero sum game.

Details on the optimism are a breath of fresh air, even if contrary to my earlier forecast. Financial consequence and economic activity come from different domains. The Toyota CEO announced the recovery way ahead of schedule, with production in Japan to return to normal after July, and to return to normal in North American in September. Also, Honda has hired temporary workers in Japan to increase production. Renesas Electronics is the largest manufacturer of micro-controllers used in cars. In mid-June it will restore output at its main damaged plant to the pre-disaster level by the end of September, ahead of schedule. The rest of the corporate sector is not out of the woods yet, as disruptions have been nettlesome. Naturally, April indicators were wretched, as seen in the vital machinery orders, and in overall exports. The uphill climb will make for easy comparison gains, but the challenge is to restore to formal levels of output at a time when Asian neighboring economies struggle with slowdowns, inflation pressures, and banking problems. The Japanese national GDP fell by 3.5% in 1Q2011. Recall the earthquake struck in mid-March. The 2Q2011 economic data will be much worse, like minus 6.5% or so. Government budgets are supplemental. The first was for 4 trillion Yen (=$50 billion). A second is planned to total 2 trillion Yen (=$25 billion). See the Bloomberg article (CLICK HERE).

◄$$$ MULTI-NATIONAL CORPORATIONS ARE HIRING IN FOREIGN LANDS. INDUCEMENT IS TOO STRONG TO TAKE SUCH STEPS. MANY FACTORS DISCOURAGE HIRING WITHIN THE UNITED STATES. THE TREND CONTINUES. THE HYPOCRISY IS THICK. NO REFORM IS PLANNED OR MENTIONED. $$$

A vivid graphic display provides details of the number of US workers whose jobs have been cut and eliminated by the US multi-nationals. The latest is Cisco Systems, the leading network firm in California. They lied about their job cuts, as a subscriber close to the firm informed that thousands of jobs will be transferred to Asia in a cost reduction project. The hiring of overseas workers continues nons top. Tax incentives offered by the USGovt continue to encourage the jobs outsourcing, a demonstration of policy hypocrisy and self-destruction. The current administration has mentioned nothing on their removal. Notice the foreign hiring in blue, contrasted with the domestic job cuts in red.

The Obama Admin is the object of much direct criticism for hostility toward business. Steve Wynn of the Vegas resort hotel was the latest on heavy taxation and regulatory burden. Donald Trump was very specific about obstacles like overboard environmental protection. See a tirade by Wynn during a quarterly conference call (CLICK HERE). The Bush previous Admin stood out in many corrupt ways like a profiteer war, but the Obama Admin distinguishes itself as hypocritical and destructive of business. The health care imposition is a grand expense. The funds transfer regulations also act as great impediment. Red tape in the form of endless forms are everpresent obstacles. Much talk has come of encouraging $2 to $3 trillion in US-owned foreign subsidiary funds to repatriate and return to the United States. It is like a violent child abusing parent inviting a kid back home from the street. The USGovt has the highest corporate tax rate of all industrial nations. It complements the levies with further burdens of regulatory strictures like no other nation. The foreign funds will not come home. When funds last returned in the 1990 decade, they did not lift business investment, but rather supported stocks and executive bonuses. For an indication of what big business does with large sudden sums of money, refer to the TARP Funds of 2008. Same story.

DEEP USDOLLAR DECAY

◄$$$ EURO CURRENCY SPLIT IS HAPPENING SLOWLY, IN NATURAL RESPONSE TO THE BREAKDOWN OF GREEK AND PORTUGUESE SOVEREIGN DEBT. THE DEEP EUROPEAN MONETARY UNION (COMMON CURRENCY) DISTRESS IS THE PRIMARY PROP TO THE USDOLLAR. FORCES WILL PULL THE COMMON EURO APART, LEAVING IT WITH A GERMAN CORE. THE LATIN EURO WILL BE DEVALUATED SHARPLY, WHILE THE CORE EURO WILL APPRECIATE. THE GOLD DEMAND IS MOTIVATED BY BOTH EUROPEAN AND USGOVT DEBT PROBLEMS DURING THIS BIRTH AND FORGE PROCESS. EXPECT CONTINUED BANK BAILOUTS AND BOND REDEMPTIONS, AS THE SYSTEM HEADS TOWARD CHAOS. THE ONLY CERTAINTY IS SOME BIG BANK FAILURES, WHETHER A SPLIT IS EXECUTED PROACTIVELY OR NOT. $$$

European Union woes aid and support the USDollar in deep decay. The faulty debt foundation of the Euro currency is crumbling. Ambrose Evans Pritchard has a solid grasp of what comes in my view. The Core Euro will survive, since the toxic periphery will be shed like legs suffering from galloping gangrene. He believes only one option can be orderly. Germany and its partner nations must withdraw from the European Monetary Union, leaving the Greco-Latin bloc to hold a badly impaired Latin Euro currency. This concept was raised within the Hat Trick Letter almost a full year ago. The EMU would spin off a Latin Union consisting of Southern European nations which would fly a residual currency, the Latin Euro. It would be immediately devalued upon inception, embraced by the PIIGS nations. Their debt default deserves a common vehicle as currency. A devaluation would enable economic stimulus but come with a price inflation tag. The Intl Monetary Fund should stand ready with flexible credit lines to assist the Latins in the early stage, but with carpetbaggers in line to take prized assets. The key is collateral in loan grants. The nations of Southern Europe, joined by ailing Ireland, would regain some degree of competitiveness in the hope to grow out of debt traps. The debt default would be part of the reconstruction process, something Ambrose overlooks. Debt would be written down, as CDSwaps would pay out to bond insurance holders. He suggests Ireland could split away from the Latins later on, and launch its own new Punt currency, complete with huge debt writedowns and a devalued currency.

The failing austerity solutions force the issue. The population has awakened to the elite collateral grabs and bank-held bond redemption at public expense, coupled with widespread job cuts and budget cuts. An orderly alternative is sought, but great disruption will come from big European bank failures. The new focus on Italy has changed the entire perspective, forcing a solution. The next steps include splitting off the PIIGS from the European Monetary Union, where the common Euro is used. The other side would consist of what Ambrose calls the new Teutonic Mark currency, where the Netherlands, Belgium, Austria, Luxemboug, and Finland would join the Germans. My name has been the Nordic Euro, which was handed to my desk from a source involved in its construction. These are the stronger nations of Europe, most of whom own a trade surplus. The red herring in the core crowd is France. Although not in deep throes, it has deteriorating trade and debt figures that eat corrosively at its vitality. France resembles the PIIGS more than the core Teutonics, except with arrogance. The Elysian palace guard would consider any separation from Germany as a catastrophe. Inclusion of France is assured. My good German source is confident of the inclusion, since Germany owns 95% of French Govt debt, and since German bankers do not wish to order their own massive writedown losses. Besides, they need squires to carry their luggage. Ambrose actually proposes that France might instead accept a new role as leader of the Latin Union, given its penchant for leadership and influence over North Africa. Paris and Sarkozy could be Lord of the Southern Flies. He offers Marseilles as the new Euro Central Bank headquarters, which could be renamed the Mediterranean Central Bank. The choice seems appropriate. The city is the main drug trafficking center of France. He calls it a great millenial hub of civilization, a certain lapse of judgment. The currency bloc would quickly become a force in Europe. My choice for CB HQ is Barcelona.

The actual Latin Euro and Teutonic Euro have seen estimates put forth. HSBC analysts have produced variants of this scenario. They calculated that the Peripheral Euro in Latin usage would decline rapidly to 65 cents versus the USDollar, about a 55% devaluation. They estimate the Core Euro would follow the recent upward moves of the Swiss Franc and surge to $1.83 rapidly. Their analysis is consistent with Jackass rough figures stated in the last year. These changes would have radical effects on bank assets, forcing many to fail, including some weaker German banks. The HSBC review located France in the core group with Germany. If instead, France opted for the Latin group, they estimated that the Latin Euro might stabilize at a 30% discount to the Core Euro instead of 70% discount in a grand trashing process.

Ambrose has thought this process through very well. Temporary capital controls might be needed to smooth the split process. German and French banks would suffer profound losses instantly on assets from devalued Latin area debt. Governments would have to recapitalize and perhaps nationalize some of the leading financial firms in order to preserve the financial system. However, and a key point, the cost would be cheaper than the 2 trillion to 3.5 trillion Euro sums currently floated by analysts as the likely cost of staunching the sovereign debt contagion after it spreads to Italy and Spain. The local recapitalization process would be easier to justify to their parliaments. The North would benefit from a sizeable gain on the implicit reduction of national debts denominated in Euros, due to the rising Core Euro. The South would benefit from stimulated export trade, which would be hampered in the North from the much higher currency. Reluctance to execute a split into the Latin and Teutonic Euros is very likely, since the big European banks prefer bond redemption rather than realized losses in massive writedowns. The split would require some bank failures to be accepted. My belief is the current system will continue until it is on the verge of collapse, with no constructive efforts toward a split until it is forced upon the principal parties. The banks will prevail with redemptions until the public uprisings spread much worse across Europe. The glimpse of Athens has been repeated only to a minor extent in Madrid and Paris.

Refusal by European Union leaders to split, to instead permit events to run their current course will result in a certain natural profound breakdown in banking insolvency marred by chaos, violence, anger, and resentment. My expectation is for between two and four European Lehman Brothers banks to fail in full glory, huge implications to follow. Their busts will force summit meetings in Versailles to execute the split. The European banking system will be pushed toward a disintegrated condition. The big loser in the process will be the Euro Central Bank, which has been affectionately called the bagholder. A series of EuroLehman events would be very disorderly, since creditors have lost so much confidence in sovereign states themselves, their debt having turned toxic. The chaos would engulf London and New York through multiple channels. A study by Fathom Consulting found that German, French, Dutch, and Belgian banks have insured much of their Club Med debt through the Credit Default Swaps contracts . Gross CDSwap contracts are $292 billion on Italy, and $168 billion on Spain. See the excellent UK Telegraph article (CLICK HERE). One should keep in mind that the split process is not a train that operates on a clock schedule. Rather, it is a train that moves from station to station when the conditions are ready and the track is cleared. Obstacles are both from bankers and politicians. The bond market sends the train down the track. European leaders have finally run out of time. If they fail to agree on some form of debt pooling and fail to make difficult decisions at Thursday's emergency summit on July 21st, they risk enormous damage in Southern European bond markets and a disorderly collapse of monetary union. See a more pessimistic follow-up UK Telegraph article by Ambrose (CLICK HERE).

◄$$$ PUTIN CRITICIZED THE USGOVT MONEY PRINTING DESK MANAGERS AS HOOLIGANS. THE CREDIBILITY AND PRESTIGE OF THE USFED HAS DISAPPEARED. BOND FRAUD AND MONETARY INFLATION DEPENDENCE TO FLOAT DEBT HAS RENDERED THE USGOVT A LAUGHING STOCK. THE RUSSIANS GROPE FOR A SOLUTION TO REPLACE THE CANCEROUS USDOLLAR. $$$

Russian Prime Minister Vladimir Putin accused the USGovt finance ministry of hooliganism over dependence to ease financial problems by injecting hundreds of $billions into the economy. The criticism is abuse of the global reserve currency privilege, to cover obscene and uncontrollable debt. The Weimar America is visible, with nazi bankers the common link, grandfathers in 1930 planted seeds to progeny. The actual words by Putin were more conversational. Before a meeting of economic experts at the Russian Academy of Sciences, he said "Thank God, or unfortunately, we do not print a reserve currency. But what are they doing? They are behaving like hooligans, switching on the printing press and tossing them around the whole world, forgetting their main obligations." Such critical words undermine the prestige and legitimacy of the USDollar as the global reserve currency. The evidence and basis of the sharp insult is the QE2 program, where the USFed bought $600 billion worth of USTreasury bonds. The first round of QE amounted to almost $300 billion in additional monetized USTBond debt. The Russian finance ministry would prefer to see a basket of currencies including the Ruble to replace the USDollar as the main reserve currency, such as an extension of the IMF solution. Most analysts believe a more realistic target for Russia to be a Ruble used as a regional reserve currency for the Community of Independent States, the remaining core of the Soviet Union. See the Ria Novosti article (CLICK HERE).

◄$$$ THE CHICAGO MERCANTILE EXCHANGE WILL SOON LAUNCH FUTURES CONTRACTS FOR THE CHINESE CURRENCY. THE YUAN (RENMINBI) IS COMING OF AGE AND TAKING ITS SPOT ON THE WORLD STAGE. SINCE 2005, THE EURO HAD COMPETED WITH THE USDOLLAR AS A SECONDARY GLOBAL RESERVE CURRENCY. GIVEN THE EUROPEAN SOVEREIGN DEBT CRACKUP, THE NEXT MAJOR COMPETITOR TO THE USDOLLAR IS THE CHINESE YUAN. ITS BASIS HAS BEEN ESTABLISHED IN THE PAST COUPLE YEARS IN BILATERAL SWAP FACILITIES. $$$

Call it yet another nail in the USDollar coffin. The Chicago Mercantile Exchange will launch a Chinese Yuan futures contract on August 22nd. The foundation has been set during two years with bilateral swap facilities to enable Chinese trade. Refer to Russia and Brazil. Trade is active with Iran for crude oil. In the next year, trade will explode with the Persian Gulf and Southern Europe, where a vast array of contracts are in place. The futures contract to be traded at the CME (The Merc) will be in USD/CNY futures, which will be available in standard (US$100k) sizes and mini sizes (US$10k) to be quoted in conventional interbank FX market terms. Financial risk and commercial risk can be done in one easy step, hedging one currency to the other. Some claim the USDollar has lost yet another battle, as it continues to lose the war. Rapid growth in deposit and trading volume has paved the way for the newly launched contract. The need is great. The currency is used for business transactions in multiple locations such as Hong Kong, Singapore, Korea, Australia, and elsewhere. Therefore, a need for capital risk management tools for the Chinese currency surfaced and was met. Regard the Yuan futures launch to be a tremendously important step for becoming a global currency with full convertibility. See the Zero Hedge article (CLICK HERE).

◄$$$ FOREIGN CENTRAL BANKS WERE NET USTREASURY BOND SELLERS IN THE MONTH OF MAY. THE REVOLT AGAINST THE USDOLLAR CONTINUES. IT WILL PICK UP SPEED WHEN DEBT MONETIZATION RESUMES, WHETHER OR NOT IT IS CALLED QE3. THE DEPENDENCE UPON DEBT MONETIZATION IS LIKELY TO GROW ACUTE, THE INTERNATATIONAL RESENTMENT ACUTE ALSO. $$$

Foreigners creditors purchased fewer long-term USGovt debt securities in May. The full tally reveals that foreigners were net sellers of all US assets for the first time in 11 months, according to USDept Treasury data. The United States attracted a net long-term capital inflow of $23.6 billion after a $30.6 billion inflow in April. But in May that reversed as they sold a net $67.5 billion, after factoring in short-term assets such as USTBills. The tide has turned in a dangerous way. A reversal has been registerd. The April results recorded a revised net inflow of $66.6 billion. The May tally was the first net outflow since June 2010. The largest foreign USGovt creditor remains China, which held $1.160 trillion in May, up a tick from $1.153 trillion in the previous month. Talk of China having shed almost all its $1 trillion in US$-based debt is pure stupid talk. They have struck numerous deals to dump USTBonds, but if they have dumped even 50% of it with such deals, it would be a significant feat.

The Jackass is a movie buff, a great diversion from the stresses of the day. Many might recall the movie entitled "Day After Tomorrow" in 2004. It starred the scientist Randy Quaid and his son Jake Gyllenhaal. The northern hemisphere suffered from fierce triple arctic hurricanes that struck rapidly, freezing the multitudes to death. That is what the global financial system is going through in the last three years, and likely the next couple years. The climax will be slow and lethal, but complete in its destruction. To put into perspective the USGovt debt, it amounts to $46,600 per man, woman, and child. Worse, each year the debt grows by $5000 for each of the 300 million citizens The system is broken and will end brutally. The majority of Americans are not prepared for what comes. They will turn into the homeless, the new poor, and the violent with woefully inadequate pensions and savings, unless they own a raft of gold & silver. Expect the FEMA Camps to come into use for the violent.

◄$$$ THE USDOLLAR IS NO LONGER THE FOCUS FOR A SURGING GOLD PRICE. ALL CURRENCYS ARE DEEPLY DAMAGED. HOWEVER, THE WEAK USDOLLAR RESULTS IN A HIGH COST STRUCTURE GLOBALLY. $$$

CENTRAL BANKS NEED GOLD

◄$$$ THE USFED BALANCE SHEET OF RESERVES HELD HAS RISEN SIGNIFICANTLY SINCE JULY 1ST, DESPITE THE SUPPOSED END TO QE3. THEY MIGHT BE BORROWING THE EXCESS BANK RESERVES HELD BY MEMBER BANKS. THE USFED IS RUNNING OUT OF CASH. $$$

Between July 1st and July 13th, the USDept Treasury cash balance dropped dangerously from $130 billion to $39 billion, otherwise known as USFed cash holdings. It actually represents a liability on the USFed balance sheet under the USTreasury general account entry. At the same time, the US M2 money supply surged by $165.6 billion over the same two weeks without any rise in the USFed balance sheet in compensation. Since the fabled end to QE2, the USFed assets have been flat. The only plug available to compensate for the cash plummet is the USFed to take aim at the Excess Reserves held from the member large banks. This is the same redirected Loan Loss Reserves that banks sent to the USFed that concealed the central bank's insolvency and left the banks vulnerable to losses. They in turn raise capital with stock and debt offerings, exposing the corporations as derelict vessels. The sudden drop in USTreasury cash prompted reserves to surge even without any change in assets. No funds are safe in the USGovt and its Syndicate appendages. All are fair game. Notice the nearly $100 billion rise in the USFed reserves. Nice accounting game shift, or raid, or whatever. The USFed has become a grand bagholder whose balance sheet is perhaps $1.5 trillion in the red. See the Zero Hedge article (CLICK HERE). The ruined condition of the USFed demands a Gold Standard.

◄$$$ THE DETAILS OF THE EURO CENTRAL BANK BAGHOLDER ROLE ARE COMING TO LIGHT, AS GREEK GOVT DEBT WORKS ITS WAY TO DEFAULT. NEXT COMES BOND MARKET FREEZE AND RIPPLE EFFECTS FROM THE SCOURGE OF UNINTENDED CONSEQUENCES. THE EURO-CB CANNOT HELP ITSELF, STILL BUYING MORE WORTHLESS BONDS. THE RUIN OF THEIR BALANCE SHEET IS ASSURED. $$$

So after two or three Greek Govt patchjobs, the debt default remains tomorrow's looming threat. Even the Euro Central Bank admits that fact. The Greek bonds are in the midst of a vanishing act on value, reaching astronomical yields before relaxing after yet another bailout patchjob. The EuroCB is a clueless bunch of eager buyers of acidic lemonade. No worthless sovereign bond has been refused at the official loan window, even if declared junk paper by the debt rating agencies. With one hand they serve as buyers of last resort. With the other hand they open the door to a Greek default, under pressure from the Germans. So the hardly venerable central bank is left as bagholder. Short a wheelbarrow, they resemble the Weimar desperados of 1930. The Greek Govt 2-year bond has gone nuclear, blowing up to 40% on yield. A default has been resisted all along, so that bankers could be redeemed on toxic bonds at popular expense and national asset forefeiture. But the bond market has sent the same bonds to the trash bin, leaving the EuroCB as proud owners of perhaps $1 trillion in deeply impaired PIGS debt securities collectively.

According to the ECB's Ewald Novotny, the central bank has caved in to German demands. A temporary Greek default will be permitted. The details will be worked out later. The unintended consequences will flow like big battering rams later. Bank officials claim to be in control, but far from it. The Athens leaders have no potential for meeting loan repayment demands. A complete freeze in capital markets comes next. The contagion is fast spreading to Italy and Spain. The summit meeting last week solved nothing, just another big $229 billion patchjob to cover the wound without staunch of the bleeding, which lacks any credibility. Bond yields on debt from Italy and Spain rose above 6%, adding to the borrowing costs. While officials attempt to avoid negative consequences, the entire European bank foundation is descending into a grand sinkhole. European banks are not taking any chances. They are rushing to the loan window. The Main Refinancing Operation at the EuroCB is doing a brisk business, with weekly borrowings surging to a 2011 high of 197 billion Euros. The banks are taking action in advance of a likely total liquidity freeze by next week. Perhaps it has been averted. But the ECB is chockfull of toxic paper. See the Zero Hedge article (CLICK HERE). The ruined condition of the Euro Central Bank demands a Gold Standard.

◄$$$ CENTRAL BANKS ARE ADDING TO GOLD RESERVES WHILE SOUTH AFRICA HAS ENTERED A CHRONIC DECLINE IN GOLD MINING OUTPUT. DEMAND GROWS WHILE SUPPLY DOES ONLY MINIMALLY. NOTICE THE DEMONSTRATED INELASTIC GOLD SUPPLY. $$$

The central banks of the world have been adding to their gold holdings. Maybe not so much the Western bankers, hellbent on ruin from gross insolvency. Indications show the trend will surely accelerate. The tally on central bank gold reserves rose over 2% between 2008 and the end of 2010. The strongest buyers among central banks were Brazil, Russia, India, and China, as well as the Middle East, according to data from QNB Capital. In 1Q2011, hardly unnoticed the Mexican central bank purchased 100 metric tonnes of the inert gold metal. A reversal in trend is well underway from the previous decade. No longer are the central banks regular reliable sellers of gold, especially from the Western nations. The US Global Investors survey of 80 central bank reserve managers revealed their expectation that the most significant change in their reserves over the next 10 years is planned gold purchases. Even better, the same reserve managers forecasted that gold should be the leading performer among asset classes. They foresee sovereign debt defaults as the principal risk to the global financial system. The defiant position of foreign central banks demands a Gold Standard.

South Africa was once the proud undisputed leader in gold mining output. Three years ago that all changed, as marxist nitwits took control. They wrecked the electricity grid system. Then they imposed heavy tax levies on the industry, their cash cow. The right in politics is full of corruption that favors business. The left in politics is full of morons that harm business. It is the same in every nation. The South African gold output in 1Q2011 declined by a rock shivering 9.3% compared to 4Q2010. That is a single quarter of time! The Chamber of Mines revised downward slightly the total gold production for 2010 to 6,751,506 ounces. Rising costs are given as a phony blamed excuse, but profit margins are rising with a lifted gold price. Barrons reported that the average overall cost for gold miners rose by 19% in 1Q2011 from the previous year, to stand at $1081 per ounce. While marginally profitable producers are squeezed, the rising gold price offsets the effect. The global gold output is barely growing, proof positive of a powerful inelasticity of supply that favors gold investment. The phenomenon complements the demand gold fever.

◄$$$ EUROSYSTEM GOLD RESERVES ARE ON THE RISE IN CLEAR TERMS, ESPECIALLY AFTER CONSIDERING THEM IN VALUE TERMS. CENTRAL BANKS PREFER TO CONSIDER IN QUANTITY TERMS, SINCE THEY PRINT VOLUME AND NOT VALUE. $$$

In early July, the Euro Central Bank published its quarterly Consolidated Financial Statement for the entire Eurosystem. Two details jumped off the pages of the report. It stated, "In the week ending 1 July 2011, the increase of EUR 12.6 billion in gold and gold receivables reflected quarterly revaluation adjustments. The net position of the Eurosystem in foreign currency decreased by EUR 0.6 billion to EUR 176.6 billion." The trend seen over the past decades continues to strengthen. Gold assets are rising significantly upward, while the foreign currency  sinks downward slowly. The ConFinStat report is published in all 52 weeks per year. However, in only four weeks per year related to ending quarters does the ConFinStat report complete mark-to-market adjustments to reveal big shifts on the balance sheet. The EuroCB marks its reserves to their current value at these times. For over the last decade the trend has been that gold reserves are rising while foreign currency reserves are falling. The preferred official perspective focuses on volume, not value. Over the last 12.5 years, foreign currency reserves (mostly USollars) have grown from $260 billion to $310 billion. Meanwhile the Eurosystem gold reserves have fallen from 402 million ounces to 347 million ounces in volume. They favor this method since central banks can only print volume, not value. The valuation method reveals the rise of Gold on the ECB balance sheet in stealth manner. See the EuroCB financial statement (CLICK HERE) and the FOFOA article (CLICK HERE). The trend toward Gold in the Euro Central Bank accounting demands a Gold Standard.

◄$$$ A FALSE STORY ABOUT RUSSIA SELLING GOLD HAS CIRCULATED. THE STORY IS PURE GARBAGE PUBLISHED BY THE SYNDICATE AFTER GIVEN THE BAIT BY PUTIN. BE SURE THAT RUSSIA IS PREPARING FOR THE NEXT CHAPTER OF THE GLOBAL BANKING SYSTEM AFTER THE WESTERNER RUIN THEIRS. $$$

The once respected New York Times published a propaganda piece of drivel, taking bait from the chess master Putin. The NYTimes wrote, "In short, Russia is selling gold because this has been a seller's market, and the nation needs the money. After years of surpluses before the recession, Russia's federal budget has slipped into a deficit. And economists predict that Russia could also run a trade deficit within a few years, something that could be addressed in part by exporting gold." The government deficit is doubtful, since they do not support a grand social safety net as a nation. A trade deficit is also doubtful, since their natural resources are sold widely on the world market. Their energy income is huge, and their commodity stores run a brisk sale.

A veteran banker with experience from the Yeltsin years in Russia pitched in with a comment, when solicited. He said, "Never forget that the Russians are brilliant chess players, always at least five moves ahead of their opponents. Trust me, this is a bullshxx story that was well placed for a very specific game that is playing out right now." So a project is underway, probably involving significant gold acquisistions. The story is a distraction that serves a purpose. The news syndicate is only too happy to cooperate with whatever Putin is up to. Russia is reported to possess the largest underground cavern going for miles filled with gold, silver, art, and more. Some favored guests have been shown a golf cart tour of the hoard that might come in a close second to the Vatican. It has been described as an eye popper. As king, Putin has taken $50 billion for himself. Russia is converting energy money into hard assets like gold, silver, and diamonds. Be very confident that Russia is not shedding its gold. They know what comes, financial ruin for the Western banking system. The Russians have sold almost zero gold mine output since the GATA conference at Dawson Creek in August 2005. Nothing has changed regarding its policy. The defiant position of foreign central banks demands a Gold Standard.

◄$$$ THE USMINT IS DRAINING COMEX SILVER ON A STEADY BASIS. ITS 2011 SILVER COIN PRODUCTION IS ROUGHLY 50% GREATER THAN THE SILVER MINING OUTPUT FOR THE UNITED STATES. NATIONAL SILVER OUTPUT IS ON THE DECLINE BY OVER 12% ANNUALLY. GIVEN THE 38% COIN DEMAND GROWTH, THE USMINT IS ADDING TO THE PRICE PRESSURES. THEY MIGHT BE FORCED TO PURCHASE SILVER AT THE COMEX. $$$

The USMint is aggravating the COMEX silver inventory decline, and adding upward pressures to the silver price. The COMEX has been bleeding silver, whose supplies are buttressed by direct raids on the JPMorgan SLV sleazy fraud fund. The reported COMEX silver inventory has been reduced to an historic low of 27.7 million ounces of deliverable silver. By USGovt law, the USMint is required to obtain its silver from domestic US production sources, no exception. In recent years, the USMint silver sales have outpaced domestic production. The USMint is actually draining silver from the COMEX at more than a minor amount. Examine details of national US silver production compared to USMint Silver Eagle sales during the years 2010 and 2011.

US silver metal output during 1Q2011 declined by 12% versus 1Q2010. This is a significant decline. Next consider that USMint Silver Eagle sales in 1Q2011 were 12,429,000 coins, a significant rise over the same quarter a year ago. USMint Silver Eagle sales in 1Q2010 were 8,993,500 coins. Repeat the data in summary for effect, since it is radically bullish. The January-March 2011 Silver Eagle sales were 38.2% greater than over Jan-March sales in 2010, while US silver production was down 12%!

The Silver Eagle minted coin business adds great strain to the Supply & Demand equilibrium for the silver market in the United States. Bear in mind that numerous other industries demand silver besides coinage. The USMint must by law not suspend operations. They must supply Silver Eagles in whatever quantity meets public demand. The USMint might import the silver, but again the law states that the metal input must come from domestic sources. The last resort is for the USMint to purchase directly from the COMEX inventories and to let the metals exchange deal with the market consequences. As in, let the silver price rise. A logjam might ensue with JPMorgan, which coerces customers at the COMEX to accept cash settlement. The USMint will soon make huge purchases from the COMEX itself. Perhaps the USMint could deploy futures contracts, accept the cash settlement from the cash bonus of 25%, then hire a US-based middleman to purchase the silver metal from Mexico or China. What irony if the USMint appendage of the USGovt actually pushes JPMorgan over the edge, and makes public their metals market charade. The internal conflict between the USGovt and metals exchange concerning coinage demands a Gold Standard.

USECONOMY DRAGS DOWN USDOLLAR

◄$$$ THE USDOLLAR COULD DEPEND MORE DIRECTLY UPON THE USHOUSING INDUSTRY AND ITS MILLSTONE ASPECT TO THE US-BANKING INDUSTRY. THE WEIGHT OF THE MILLSTONE COMES FROM THE GROWING SHADOW INVENTORY. THE INSOLVENT BANK SECTOR IS INCAPABLE OF PROVIDING ADEQUATE CREDIT TO THE USECONOMY. IT IS ON THE EXTREME DEFENSIVE. ATTENTION GROWS. THE USECONOMIC RECESSION IS VICIOUS, CERTAIN TO TURN INTO A DEPRESSION. $$$

The following graph embodies statistical evidence of the great lie. No USEconomic recovery is in progress, unless Orwell lives. If year over year calculations are done on nominal totals of domestic goods & services sales, without adjustment, then the Shadow Govt Statistics truest measure of the Price Inflation is applied, the result is the red line in the graph. It indicates a powerful recession that struck in 2008, grew worse in 2009, and remained horrendous in 2010, shown in the big red circle. The USEconomy is actually slowing from last year. The preferred official method is to take quarterly results in sequence, then blast them with cockeyed hedonic adjustments, and finally massage with the soft CPI that purports a 2% to 3% price inflation. The Shadow Govt Statistics annual price inflation has been measured between 9% and 10% for several months. Great work by the Market Ticker on the graphs. The nominal GDP without any adjustments at all showed a minus 2% recession in 2009 and 4% growth in 2010. If the CPI was positive in 2009, that translates into a worse than 2% recession that year, shown in the green circle. If the CPI was above 4% in 2010, obviously the case, that translates into a recession also. The lies are thick, devices for deception easily torn apart. It don't take a PhD in Statistics. The ramification is a USDollar in deep decline, where monetary inflation as policy stems the decline by installing cost inflation as a substitute effect.

◄$$$ APPLICATION OF DEBT IS HIGHLY INEFFICIENT, EXCEEDING THE ECONOMIC OUTPUT IN EFFECT. THE NATION IS DROWNING IN UNPRODUCTIVE DEBT. A SATURATION LEVEL HAS BEEN REACHED. THE EFFECT IS A BILLBOARD SIGN OF SYSTEMIC FAILURE. $$$

The following chart is important to understand the death process at work in the USEconomy. The decay centers upon inefficient debt. The chart displays a mathematical ratio of the additional benefit to Gross Domestic Product created versus the total added new debt created, regardless of the source or destination within the USEconomy. If $1 of GDP expansion corresponded to $1 of debt expansion, then the ratio is zero since nothing beyond the debt occurred. If more debt expansion occurs than GDP expansion, then the ratio is negative. If $2 of GDP expansion results for each $1 of debt expansion, then the ratio is 100% since the debt produced added activity equal to the debt incurred. Mathematically the debt efficiency ratio is (Quarterly Change in GDP) / (Quarterly Change in debt). Therefore, for any quarter in which this indicator is positive, debt is being used effectively toward the productive expansion of output. In the last year or so, the GDP has turned negative relative to the debt. The incremental economic activity is not even as great as the expanded debt!! The data is taken from the Bureau of Economic Analysis and the USFed. Observe grotesque inefficiency and systemic deterioration. If continued, it will lead to systemic failure and assured USGovt debt default. My prognostications of USTreasury default are not made lightly. The full glory of the dysfunction has been visible in the last two weeks, as political factions can accomplish nothing.

The hidden economic collapse has sustained itself over three decades, from unproductive debt, now saturated debt. Notice the entire 1980, 1990, and 2000 decades have been victims of unproductive debt. Activity within the USEconomy has not kept pace with debt growth. Ironicaly, from 2Q2009 through 1Q2010, with the virtual freeze on credit extension, the nation realized positive debt adjusted growth. But since 2Q2010 last year, the path to negative ground has returned. Tragically, since 1980 there has not been a single three month period in which GDP expanded faster than new debt, except during the crisis climax itself. A vast deterioration has taken place following the departure from the Gold Standard in 1971. The Clinton Years from 1992 to 2000 saw the reading go from minus 2% to minus 4%, nothing positive the entire decade. which the Jackass prefers to call the Decade of Stolen Prosperity. That is the era when Rubin stole the entire Fort Knox gold supply in order to fuel a USTreasury rally, a stock rally, and a supposed economic spurt. The dividend from the abuse of debt at all levels is the deep dependence on the housing & mortgage finance sectors from 2003 to 2007, after shedding industry to Asia in a final stage, a crucial injury. The USEconomy cannot conceivably recover unless the housing market recovers. The financial condition of households and banks is directly reflected. The nation has millions of homes in strategic default, pointing out defiance and outright revolt. The nation has millions in delinquency, pointing out the feeder system. The nation has millions of empty homes, pointing out the broken market. The US housing bust will linger for years, assuring a depression and USGovt debt default. See the MSNBC article (CLICK HERE). The ramification is a USDollar in deep decline, where debt no longer works.

◄$$$ PRICES OF NECESSITIES CONTINUE TO RISE. CONSUMERS ARE RELYING INCREASINGLY UPON CREDIT CARDS AS INCOME ERODES. THE COST OF FOOD & FUEL IS EATING INTO BASIC BUDGETS. PRIMARY FOOD STAPLE ITEMS ARE RISING IN PRICE IN A NOTICEABLE MANNER. $$$

US Consumers increasingly use credit cards to pay for basic necessities. Despite USGovt data, income is negative after proper adjustment to the 9% to 10% price inflation. Income after taxes adjusted for inflation fell 0.1% from January through May, according to the bogus USDept Commerce data. They use 3% CPI in the inflation adjustment. Therefore, the real income fell over 9% in a systemic crush of the real world. Incomes cannot keep pace with rising food and fuel prices. Three items as staples in the food chain are rising in price, caught on the radar. They are pasta, coca cola, and domicile rents. The dollar volume of purchases charged on credit cards rose by 10.7% in June from a year ago, while the number of transactions rose 6.8%, according to the July SpendTrend report issued by First Data.

Gasoline is the big villain. The volume of gasoline purchases paid by credit cards swelled by 39% in June versus a year earlier, compared with a 21% rise in June 2010. Lower income households must be relying upon plastic payments for more everyday items like food and fuel. Bear in mind that the USGovt and USFed leadership crew want to avoid second inflation effects, namely rising wages. They actively desire the crush of the society, buried in costs, a graveyard policy. The First Data results are consistent with the USFed. Revolving credit, primarily credit card balances, increased by $3.37 billion to $793.1 billion in May from an almost seven-year low of $789.8 billion in April. The gain was equivalent to a 5.1% increase at an annual rate, but again using a bogus inflation adjustment. Economist David Rosenberg at Gluskin Sheff & Assoc in Canada calls the credit card data a smoking gun indicative of last resort facilities being tapped, often after jobless benefits run out. See the Bloomberg article (CLICK HERE). The ramification is a USDollar in deep decline, where the cost structure is burying the nation.

◄$$$ SCARY JOBS GRAPH SHOWS LENGTH OF UNEMPLOYMENT DURATION. IT IS GOING OUT OF SIGHT. THE USDOLLAR IS AT GREAT RISK FROM BASIC RECESSION THREATS. THE LOST CRITICAL MASS OF THE INDUSTRIAL SECTOR REMOVES THE POTENTIAL FOR RECOVERY. THE CONSISTENT JOBLESS CLAIMS OVER 400 THOUSAND MAKE LIARS OF LEADERS WHO CLAIM A RECOVERY IS IN PROGRESS. TO BE SURE, THE HOUSING MARKET REMAINS THE 2-TON CEMENT ALBATROSS AROUND THE NECK OF THE USECONOMY. $$$

The wretched US labor market is a downstream symptom of deep distress, if not gross deterioration. Some call it the most scary jobs chart ever. It shows the average duration of unemployment, and it is skyrocketing without any hint of rest. The big lie is that jobs are being produced each month, shown in the Non-Farm Jobs Report. It is a work of fiction and creative statistical modeling, whose main impetus is the mythical rebound of small business, the same sector complaining loudly about the health care impositions. Every March, the jobs created must endure a near one million reduction in count, a return to reality not reported adequately in the press. Even though jobs are being created each month, this would seem to point to a large, brewing, structural unemployment problem. A significant chunk of the population has been tossed permanently out of the workforce. Historically, we have never seen anything like this.

Apart from the reckless suicidal housing & mortgage asset bubble cycle gone bust, the USEconomy lacks a critical mass in the industrial sector. The 1980 decade saw the migration led by Intel to the Pacific Rim and Japan. The 1990 decade saw migration to Mexico and India. The 2000 decade saw the final coup de grace in the migration to China. The US manufacturing sector is in dreadful decline since the 1990 decade. The USGovt is doing nothing to remedy or address it. They do not even recognize its cause, high US wages and heavy USGovt obstructions. The USDollar will continue to decline as the USEconomy stumbles along with a grotesquely inadequate industrial base. The USGovt deficits are a reflection of Uncle Sam operating with one leg and one arm. The other trouble is that the arm is constantly holding a rifle in a war theater, shooting itself in the foot. Gold will rise from the crippled national economic and monetary condition that requires such grandiose debasement of the currency as leaders cover the costs in order to avoid collapse.

The US jobless claims have registered 15 consecutive weeks over the widely watched 400 thousand level. Each weekly report does nothing to convince anyone that the job environment is improving. Each report contradicts official assurances of USEconomy in slow recovery. It is a grand lie. The recession is minus 7% to minus 8% per year, and still shedding a million jobs per year. The ramification is a USDollar in deep decline, where the labor market represents the system unable to rise off the pavement.

◄$$$ THE SLOWING USECONOMY (MORE LIKE ACCELERATING RECESSION) AT TIMES SUPPORTS THE USDOLLAR FROM A SPECULATIVE ANGLE. SLOWER DEMAND PULLS DOWN THE CRUDE OIL PRICE, WHICH IN TURN LIFTS THE USDOLLAR FROM THE HEDGE FUND ACTIVITY. $$$

A perverse battle was underway in June. The crude oil price was intentionally pushed down by means of a coordinated oil release from the USGovt Strategic Petroleum Reserve and the Intl Energy Assoc in Europe. The combined 90 million barrel oil release pushed down the crude oil price about $10 per barrel. But also importantly, the ploy exposed how in vivid terms the USDollar found some support by the ambushed crude oil price. The analysts and talking media heads proclaimed that the USDollar rose from the reduced cost strain on the USEconomy. That is a real factor, but much smaller in effect than the speculative factor where US$ versus crude oil is leveraged in the financial markets. On one particular day the West Texas oil price fell over $2 and the US$ DX index rose significantly, like almost 50 basis points. The entire CRB commodity index fell almost 1% on the day. The day was celebrated. It was a day marred by more interventions that have contributed to the ruin of US financial markets. Hardly a single market is fair or pure. The ramification is a USDollar in deep decline, where not even a softer crude oil price can help.

GOLD INVESTMENT SURGES

◄$$$ CHINESE FUNDS POSITION FOR HUGE GOLD PURCHASES. THEIR FAITH IN THE USDOLLAR AND ITS VEHICLE THE USTBOND IS FAST VANISHING, IF NOT GONE ALREADY. THE CHINESE FUND MANAGERS SEEK ADDITIONAL WAYS TO INVEST MUCH LARGER SUMS IN GOLD BULLION. THE MIDDLE KINGDOM IS EXPANDING LIKE A MUSHROOM, WEALTH ACCUMULATED, GOLD PRODUCED, POPULAR SAVINGS, AND A GROWING SET OF INVESTMENT ALTERNATIVES. THE APPROVED INVESTMENT FUNDS ARE LINED UP AND GROWING. VAST SUMS OF MONEY ARE BEING INJECTED INTO THE FUNDS, DIRECTED TO PRECIOUS METALS. $$$

The Chinese Govt has for years limited external investment opportunities by strict rules on approved foreign vehicles. Citizens have been permitted to invest in gold coins and other gold related items freely. They have limited alternatives, but changes slowly come to expand them. The official SAFE sovereign wealth fund, and other smaller funds, are designed to sterilize incoming FOREX reserves. The Beijing bankers must constantly eliminate the risk of new external funds bidding up the Yuan currency exchange rate. So they keep a mammoth supply of foreign securities, now totaling $3.197 trillion. They maintain the sterilized reserves carefully apart, and devote a minor amount of funds to gold bullion set in reserves. The latest announcement expands their planned gold purchases from tangents to the official channel within the general population. The strategy to break the global Anglo financial grip expands.

China's asset managers have been approved to raise $70 billion for gold purchases. Put the figure into perspective, almost bigger than the entire global silver market. They will make overseas allocations in gold and precious metals in reaction to protect the nation against soaring price inflation. The United States suffers from similar price inflation, but is much more effective in lying with the official statistics. Beijing works slowly but deliberately, next to build a list of approved financial firms to conduct the investment. Five companies have been approved so far this year to raise significant cash for investment within the qualified domestic institutional investors program. At present, 20 more applications for resources and commodity investment are pending. The details have been provided by Hu Miao, an analyst at the fund research firm Z-ben Advisors in Shanghai. The first to place a big wad of funds was Lion Fund Mgmt. They raised over 2 billion Yuan (=$495 million) to invest in foreign gold exchange traded funds. Let's hope they do not fall into the GLD/SLV fraudulent trap. New QDII products are attracting grand interest, linked to gold and precious metals. A trend away from stocks, too volatile and loaded with recent losses, and into gold has occurred. The QDII program represents an historic change in direction, since it allows purchases of overseas financial assets from within China. QDII had approved $68.4 billion in investments by the end of last year, up lately to $70 billion, according to the State Administration of Foreign Exchange (SAFE). Harvest Fund Mgmt is backed by Deutsche Bank, and has started to raise money. It has received approval to raise money for a gold theme fund. China Universal Asset Mgmt was cleared to start a fund that will invest in ETFunds backed by gold, silver, platinum and palladium. It already has lined up investors such as China Eastern Airlines. Others include Efund Mgmt and Bosera Asset Mgmt.

Details on Chinese demand is staggering, enough to change the entire global dynamics. Recall this is the tail on the Paradigm Shift dog. China surged into the lead spot as the largest physical gold investment market in 1Q2011, according to the World Gold Council. Price inflation is rising fast. The Shanghai stock market has been a roller coaster, up and down. The property market is shaky. Many smaller banks are shells. The population is worried, but has fixated on gold, silver, and other precious metals. China is the world's largest gold producer, as South Africa under marxist clown rule has stumbled while deposits are more challenging. Their investment demand more than doubled in the first quarter to 90.9 metric tons as the nation overtook India to become the largest market for coins and bars. The rules within China forbid the usage of exchange traded funds, where investors can buy like stock shares without any physical delivery involved. China does not have gold ETFunds, but Hong Kong has several legitimate such funds certain to attract cross-border attention. Typically, investors choose to buy physical gold or contracts traded on the Shanghai Gold Exchange and the Shanghai Futures Exchange.

◄$$$ THE GLOBAL SILVER DEFICIT CONTINUES, AS AUSTRALIA GOES INTO DECLINE. THE SCRAP SOURCE DWINDLES AFTER A SHORT PERIOD IN RESPONSE. THE CHRONIC DEFICIT ASSURES A SILVER PRICE AN ORDER OF MAGNITUDE HIGHER IN COMING YEARS. $$$

Global 2010 mining output in silver was between 700 and 750 million ounces, depending upon the reporting agency. One reliable figure was 735.9 moz reported by the Silver Institute. Global 2010 silver demand was between 850 and 1050 million oz. The shortage in 2010 was between 100 and 350 moz. The Australian source has surprisingly turned down since 2004 (shown in brown line), whether for deposit quality reasons or capital needs, possibly due to floods. Mexico is the juggernaut for silver output, along with China. A main source has grown from scrap sources, but it dries up fast. As the price rises, scrap locations are tapped and drained quickly. Supply from stockpiles has stopped, as they are added to, not drawn down. As a result, investment demand grows while supply channels are more strained. In two years time, much attention will be drawn to new scrap sources, like the ones shown, old cell phones, circuit boards, television sets, cameras, and other domestic electronics. See the Before It's News article (CLICK HERE). Thanks to the Casey gang for a great silver deficit chart.

 

◄$$$ INDIAN GOLD DEMAND HAS GROWN TREMENDOUSLY. BUYING PATTERNS ARE CHANGING. NO LONGER ARE INDIAN CITIZENS ONLY BUYING AT FESTIVALS AND WEDDINGS. THEY ARE HEDGING AGAINST INFLATION AND PROTECTING THEIR FAMILY WEALTH. $$$

The growing Indian economy, its middle class, and its wealth have bolstered gold demand. One driver during an unseasonal rise in the gold price has gone largely unnoticed, namely an unexpected surge of buying from India. The nation battles high price inflation, and sees gold as a means of wealth preservation, just like in China and throughout Asia. According to the most recent data from the World Gold Council, India and China accounted for 58% of global physical gold demand in 1Q2011. The scale of the Indian buying has been surprising because its gold market is usually quiet in June. The country has traditionally bought gold in seasonal patterns, dictated by festivals such as Akshaya Tritiya in May and Diwali in September, as well as the wedding season, which runs from September to December. Individuals nowadays are buying gold whenever the opportunity arises, whenever good bargains are available. Large bullion dealing banks reported a surge in buying from the country, an unusual factor in recent years. Sales to India from Union Bank of Switzerland were more than double the level of a year earlier. Tom Kendall at Credit Suisse said, "Undoubtedly over time the market is becoming less seasonal. What used to be wedding season now lasts for nine months of the year. There were not enough auspicious days of the year, so they found some more." Indians have begun to approach gold more like Western investors, placing a proportion of their wealth into gold and buying opportunistically on dips.

An echo in unison comes from inside India. Atul Shah is head of commodities at the brokering firm Emkay in Mumbai. He confirms the change in popular buying patterns. He said, "Indian consumers are buying gold all year round. Whenever they see the price dip, they immediately buy more as they are confident that valuations are going to go up again." Vishal Kapoor is head of wealth management at Standard Chartered in Mumbai. He said, "In recent times we have seen a shift in buying trends. What is different of late is the availability and the acceptance of gold as a financial asset, and not just as something you keep in a locker at home." See the Financial Times article (CLICK HERE). Gold interest in China and India combined is huge. The trend is growing. A virtuous shock in demand is being felt from Asia generally. The risk of large dislocations is nigh. The giant middle class populations in Asia, especially China and India, are buying physical gold bullion in volume due to concerns about global growth, to protect themselves from stubbornly high inflation, to ward off concerns about the declining value of paper currencies. Gold demand in China alone is expected to rise about 20% to near 700 tonnes this year from 570 tonnes in 2010. The increase in demand from Asia appears sustainable.

◄$$$ RUSSIAN GOLD OUTPUT RISES, A MODEST INCREASE. RUSSIA IS ALSO A CONTENDER IN SILVER TOO. MEXICO, PERU, AND CHINA ARE CLEAR SILVER LEADERS. $$$

The Russian gold industry association recently released data. Their national gold output reached 59.105 tons in January to May, an increase of 11.2% over the same period. Recycled gold production increased by 15.3% to 3.661 tons. Russia ranked fifth in the world of gold mine output, accounting for 7% of the share. See the China Business News articles (CLICK HERE and HERE) with clumsy translation and some obscurity. According to the Silver Institute World Silver Survey 2011, the following list ranks the top 20 countries in the world in terms of silver production, measured in millions of ounces (moz).

Mexico 128.6

Bolivia 41.0

Canada 18.0

Sweden 9.2

Peru 116.1

United States 38.6

Kazakhstan 17.6

Indonesia 6.9

China 99.2

Poland 37.7

Turkey 12.3

Guatemala 6.3

Australia 59.9

Russia 36.8

Morocco 9.7

Iran 3.4

Chile 41.0

Argentina 20.6

India 9.7

South Africa 2.8

◄$$$ JPMORGAN SIDESTEPPED THE STANDARD APPROVAL PROCESS IN BECOMING A COMEX METAL STORAGE VAULT OPERATOR. THE COMEX HAS UNDER 1/3 OF THE METAL IN INVENTORY CLAIMED. THE S.L.V. FUND CAN COVER AT LEAST 1/3 OF THE METAL IT SHOULD HAVE IN INVENTORY. EXTEND & PRETEND HAS TURNED NUCLEAR IN THE METALS MARKET. JPMORGAN IS STREAMLINING ITS SILVER FRAUD AND GUTTING OF THE SILVER EXCHANGE TRADED FUND IT SERVES AS CUSTODIAN FOR. $$$

Coming to light in the main body of the internet journals, and to some extent the mainstream financial press, is the absurd imbalance between the huge JPMorgan short position in the silver futures market and the direct raids in physical silver at the SLV exchange trade fund managed by JPM. Their short position is several multiples of the amount of reported physical silver listed as available at the COMEX. It is debatable whether such inventory actually exists. Here is the big news, newer news. The Chicago Mercantile Exchange (CME) has approved JPM to operate a COMEX metals storage vault. The giant corrupt bank bypassed the full review process, thus raising the suspicion of many knowledgeable players in the precious metals market. They are well aware that JPM has by far the largest short position in paper silver in the universe, in addition to also having the largest proprietary position in OTC gold and silver derivatives. In no way does JPM have the capability to deliver the underlying physical metal. So they spread their cancerous reach. The crux of the problem is no legally enforced scrutiny. The CME decision of hasty approval confirms that it is unwilling to enforce legal scrutiny. Bear in mind that the White House Chief of Staff is William Daley, of JPM pedigree. The Syndicate rules.

Operating a gold and silver vault will enable JPM to exploit the fact that most metals players who take delivery of their metal typically let it remain at COMEX vaults for safekeeping. Usually this is an efficient practice, one of convenience that saves delivery fees, as long as the owners of the metal hold the vault operators accountable. Other current vault operators, especially HSBC and Scotia, have engaged in fractional bullion banking, holding a portion of deposits, leasing the majority. The new kid JPM is the biggest of all in its short position. The decision by CME is clearly permitting the fox into the hen house of the metals vault storage game. The COMEX is running extremely low on deliverable metal. Next expect secretive JPM raids with regulatory protective cover provided.

The fraud-ridden Exchange Traded Fund SLV is also running low on silver metal. The JPM firm is the vault custodian for SLV. The giant bank has routinely, according to scattered persistent insider reports, been using SLV inventory metal to cover COMEX shorts. The short position of SLV shares testifies to this abuse. The SLV vaults are not empty, just down 30% to 40% from what they should be if investors were actually investing in silver bullion. Maybe they are depleted much more. Truth In Gold goes further. They put forth the hypothesis that ties together criminal activity in the silver market by JPM. Truth In Gold believes the SLV fund is at least 1/3 covered, and the COMEX is less than 1/3 covered. This is the proximal motive for JPM to rush into the vaulting business, where they can conduct silver metal raids. Thus the urgency for quick approval by the COMEX, skirting the standard rules. JPMorgan is preparing to streamline an effective efficient fraud that will eventually gut the SLV exchange traded fund completely. In a year or two, it will be shown to have zero silver metal, having betrayed the stupid lazy investors who preferred the easy route of a click in the stock account, rather than the process of opening for instance a GoldMoney account that would be a legitimate metal account offering solid protection. See the Truth In Gold article (CLICK HERE).

◄$$$ COMEX SILVER INVENTORY IS IN THE MIDST OF A VANISHING ACT. ALWAYS FACTOR IN THAT A SIZEABLE AMOUNT IS A FICTION, A BASE AMOUNT THAT DOES NOT EXIST. THE SILVER EXCHANGE IS BECOMING TIGHTER. THE REGISTERED SILVER AVAILABLE FOR ACTUAL DELIVERY IS VANISHING. $$$

On a Friday in late June, a paltry 27.97 million ounces of silver were held in the Registered category of silver inventory at all the warehouses associated with the COMEX in New York.  The Registered inventory has been falling to dangerously low levels, which meets Delivery demands, as in can be sent to the shipping trucks. In compensation the Eligible category has increased, which meets quality requirments, and could become Registered later. Users and speculators have been taking delivery of silver in tremendous volume for almost a full year, draining the COMEX. The amount of available silver marked as available for delivery at the COMEX is tiny relative to the huge number of contracts which remained open on the futures contracts. Typically, the Open Interest volume is more than six to seven times the amount of silver metal that could be delivered into those contracts. The falling COMEX inventory figures speaks emphatically about tight silver supplies. Also, some silver in the system might have stipulations to sell only above the $75 or $100 price. It will not go anytime soon to the shipping trucks. The bull market roars. In a matter of time, like a year or two, the COMEX will be a Cash & Carry store, since the inventory fraud will be exposed after it is all drained dry.

EXPLOSIVE PRICE MOVES AHEAD

◄$$$ THE ASIAN EXCHANGES GENERALLY WILL PROVIDE A UPWARD THRUST TO LOCAL GOLD DEMAND. THE NEW PAN ASIA GOLD EXCHANGE WILL ENABLE THE UPWARD MOVEMENT OF GOLD PRICES TO COUNTER THE CORRUPT US & UK NAKED SHORTING. ASIANS HAVE A MUCH GREATER APPETITE FOR GOLD THAN WESTERNERS. THREE GLOBAL PRICE FIXES ARE TO COME, GIVING NEW YORK AND LONDON OVERNIGHT COMPETITION. THE ILLICIT CHANNEL IS THICK BETWEEN THE COMEX AND S.L.V. SILVER FUND RUN BY JPMORGAN. $$$

The new Pan Asia Exchange has lifted hopes for more justified Gold & Silver prices in tune with market forces, and away from paper dominated price determination extended from amplified naked shorting practices in New York and London. Former Goldman Sachs trader Andrew Maguire (and JPMorgan whistle blower) believes the new exchange will create huge incremental demand, enough to drive Gold & Silver prices much higher. At the same time concrete evidence is provided that China plans to make the Yuan currency a global currency, fully convertible. The realistic effect could be that corrupt Anglo bankers will be trampled overnight, every night, victims of their own devices, traps set by day. Maguire said, "The Pan Asia Gold Exchange is going to send shock waves through the mechanisms for the price discovery for both gold and silver. It is backed by China's State Administration for Foreign Exchange (SAFE) and also the Chinese security regulatory commission. The 10-ounce gold mini-contract is going to have a major impact on the demand side of precious metals equation. There are 320 million customers of Ag bank of China, who are going to be plugged into this exchange platform. If just 1% of their customers bought a single 10-oz. contract, that would require new physical demand of 1000 tons. It is going to attract a lot of the world's precious metal business, providing much more of the Chinese and the international customers an alternative platform on which they can buy and sell buy and sell physical gold and silver. We know silver is a much smaller market and it is already in tight supply. This is the tinder box."

The SAFE is a gigantic Sovereign Wealth Fund. Maguire plainly stated how the upward surge effect on the Silver price could be much greater than Gold. As much as he stresses the gradual dissipation of the COMEX paper futures contract influence, he believes the big bombshell is the offer of RMB gold contracts for international investors. It undermines the USDollar further. Maguire expects that the first contract, a 10-ounce gold mini-contract for the domestic Chinese retail market, will go live in late July. It will control a mere $16k worth of gold bullion, a more affordable unit than the ten times larger COMEX contract.

Here are some fine points made by Maguire in the interview regarding the new Pan Asia Gold Exchange. Shock waves are certain to come to the precious metals market. It will propel the Gold & Silver prices much higher, the white metal multiples higher. A third PRICE FIX will finally arrive from Beijing, to compete with the New York and London prices, bringing more competition and less paper price influence. The Yuan currency is about to enter the world stage of acceptance and convertibility. Imagine the potential demand from 320 million Ag Bank clients who have an open door to enter precious metals. (Get it? Open Door Policy?) Much improved price discovery is to come, more accurate and legitimate. The impact will be a potential stampede to ruin Wall Street illicit naked short positions. Notice the recent COMEX events, marred by low metal inventory and longer delays in delivery. Notice the 30 million oz short position in SLV, the corrupted exchange traded fund. SLV shares have been used to satisfy COMEX short positions, draining the corrupted fund. Blockhead stooge Adam Hamilton will be the last guy to awaken to the fraud. These paper holders will someday be settled in cash, only to buy actual metal at much higher prices, accompanied by anger and even lawsuits. An historic point has arrived to affect Gold & Silver price dynamics, that make even the playing field. Maguire expects the shorts finally to be crushed in a series of climax events. The common analysis floating about does not properly factor in the new Asian demand. New market forces will work toward establishing more valid price discovery.

China is still hungry to grow its market. Previously, the Shanghai Gold Exchange had only five external bank members including the Chinese divisions of HSBC and Standard Chartered. The list will expand soon. Ellison Chu from Standard Bank Asia in Hong Kong said, "China's domestic production of gold, albeit the largest in the world, cannot satisfy its demand. By allowing more foreign participation and more Chinese commercial banks to import and export, China can better balance its demand and supply." Another parallel view comes from Europe. Bayram Dincer from LGT Capital Mgmt in Switzerland said, "China's gold market liberalization sends a strong demand signal. It is very positive for the price of gold. It is a structural demand shift which must result in higher gold prices, as the global equation has changed now significantly with more gold consumers and investors." The Beijing bank authorities have consistently downplayed the concept of using gold as a foreign reserves asset. My source is close to the process, and assures that China officially has vastly increased its official gold reserves. With a public voice, China encourages its citizens to maintain personal savings in the precious metal, which coordinates well with trade war focused on USDollar revolt. The new development will bring more players into its gold market, and enable overseas investment by large bullion companies. The strategy is quite clear to the observer unless gullible and dimwitted. See the China Business News article (CLICK HERE).

The detrimental effect of rapidly debased currencies has resulted in stronger Gold demand. Global demand for tangibles has reached mines, energy deposits, forests, and art works. The COMEX ambush in May was not a capitulation event at all, wrongly characterized by a desperate syndicate, supported by a subservient financial press. The May ambush enabled a consolidation phase, whereas price is set to resume its upward trend. A common device for acquiring Silver metal has been revealed, but again wrongly reported in the press. If an investor purchases 50k shares of SLV from the ETFund, the ensuing step can be demand for redemption. This is a quick efficient formula for a metal raid. The precious metals are moving into strong hands, only to be tucked away safely into Eastern vaults in Asia. Notice the short interest volume on COMEX goes hand in hand in the data with the short interest volume that pops up in SLV shares. The exchange traded fund is losing its metal to satisfy COMEX shorts. This abuse will be revealed in time. See the King World News interview of Andrew Maguire (CLICK HERE). Some background on the abuses of the SLV fund is neatly packaged, on how it enables direct suppression of the silver price. See some evidence on the Silver Gold Silver weblog (CLICK HERE).

◄$$$ JOHN EMBRY AGREES WITH ANDREW MAGUIRE THAT THE SILVER SHORTS WILL BE DESTROYED BY THE ASIAN EXCHANGE. THE LEVERAGE OF ACTUAL METAL VERSUS THE PAPER CONTRACTS IN THE SILVER MARKET IS ENORMOUS, SOMETHING LIKE 20:1 RATIO. PHYSICAL DEMAND WILL OVERWHELM THE PAPER SHORTS. $$$

John Embry is chief investment strategist at Sprott Asset Mgmt. He offered a reaction to the Maguire comments on the Pan Asia Gold Exchange potential. When asked if this could create the upside explosion in Gold & Silver that Maguire anticipated, Embry responded, "First, I happen to agree with about 99% of what Andrew Maguire says most of the time and I certainly agree with this. It sort of encompasses two things. It has been well documented. The Chinese interest in gold and silver is immense. They have a natural tendency towards it. They are getting wealthier. They are setting up an opportunity where the public can get easier access to [precious metals]. So to me that just cements the demand side of the equation. The other side that Andrew knows a lot about because of his vast experience is the paper short positions that are carried by the bullion banks. The fact is these [Wall Street] short positions are extremely vulnerable, and they can be taken out by physical demand. When the pricing mechanism changes from the paper market to the physical market, which is what Andrew is suggesting, this is the inflection point where the price of gold is going to go berserk. Silver even more so because of the tightness in the silver market and the fact that the short position is even more extreme... I have always believed that a lot of these silver contracts are going to be settled for paper because the silver is not available. I have seen some staggering statistics about the little amount of silver underlying all of the paper silver that is floating around. My partner Eric Sprott and his associate Andrew Morris wrote a brilliant paper on it a couple of weeks ago. They indicated that the amount of silver that is trading on the various paper exchanges, and the amount of physical silver that is in inventory on these exchanges is preposterous! If anybody went in and asked for 5% of the silver, it would be all gone. The catalyst (to explode the metals markets) will probably be something that we did not foresee. Nobody was talking about this Chinese exchange until Andrew Maguire pointed it out. The market is amazing. Sometimes it just kind of glides along and then all of the sudden something gets its attention and it changes the whole dynamic."

◄$$$ RAISING THE USGOVT DEBT LIMIT ASSURES ANOTHER GRAND UPLEG IN THE GOLD PRICE. THE CORRELATION IS VERY CLOSE. THE RAISED LIMIT WOULD ENABLE FURTHER CURRENCY DEBASEMENT. $$$

A new Quantitative Easing round, or series of rounds, will amplify the power of the gold bull market. A raised debt limit permits vast increases in expansion of the money supply, which leads to a lower USDollar value versus the constant Gold. The QE and raised debt limit work together with the 0% rate policy to produce a magnificent toxic brew that destroys the USDollar, the USTreasury Bond, the USEconomy, and capital throughout the business sector. The debasement process for the currency is a primary pursuit with dedication for the nation, except war with all its destructive effects. Oops, include bond fraud and market intervention as national fiber.

◄$$$ PERMANENT QUANTITATIVE EASING (WITH QE3 & MORE) COULD MEAN $5000 GOLD AND $1000 SILVER, AN ACCURATE MARK FOR GOLD BUT EXAGGERATED A LITTLE FOR SILVER. TO BE SURE, SILVER GOES TO THE MOON, FROM A GREAT SHIFT IN MARKET DYNAMICS AND INVESTOR SENTIMENT. MANY SILVER BULLISH CONTRARY SIGNALS CORRECTLY FORETOLD OF THE MOVE SEEN OVER THE $40 LEVEL. $$$

Peter Hambro is chairman of Britain's biggest pure gold listing Petropavlovsk. He is excited naturally. He sees extraordinary leaps in the precious metals prices. He said, "It is very scary. The flight to gold is accelerating at a faster and faster speed. One of the big US banks sent me a message today to say that if QE3 actually happens, we could see gold at $5000 and silver at $1000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency, because they are not going to be able to buy things with that paper money." Keep in mind his own vested interest, revealing a slight bias. The two choices to stop QE3 or to launch QE3 are both bad. Just like with the USFed trapped without monetary policy options in early 2009 when they wanted eagerly to take an Exit Strategy. They could have hiked interest rates back two years ago, and rapidly crushed the housing market and dragged down the USEconomy from higher borrowing costs, not to mention USGovt debt service costs. Or they could have stayed the course, and permitted vast price inflation, but resolved nothing. Obviously they chose to kick the can down the road, where here it is 2011 and the can has gone nuclear while they ran out of road.

The two choices today are to stop all debt monetization, or to continue it. A halt would permit failed USTreasury auctions, lead to USGovt debt default in a frontal assault, and fast lead to USEconomic collapse. Or they can engage QE3 in the next round, permit higher price inflation to resume, and watch both business failures and consumer shutdowns from lost profit margins and vanished discretionary spending. Either way, regardless of option taken, the Gold & Silver price will zoom upward from failure or inflation, both roads merging anyway. With a fully enforced QE3 and its continuation from urgent need, the $5000 gold target would be easy, but $250 silver would be a more likely ultimate target. See the UK Telegraph article (CLICK HERE) and Zero Hedge article (CLICK HERE).

◄$$$ THE KEISER SILVER RATIO HAS BEEN SUGGESTED, EVEN CITED. WELL, MAYBE NOT CITED MUCH OF ANYWHERE EXCEPT BY MAX HIMSELF, BLESS HIS HEARTY SOUL. HE IS A SOLDIER WITHOUT UNIFORM. WITH THE SILVER PRICE RISING FASTER THE JPM SHARES, THE GIANT BANK CANNOT EFFECTIVELY USE ITS SHARE TO SHORT THE SILVER METAL. $$$

It is of interest to monitor the path of JPMorgan stock (symbol: JPM) versus the path of the Silver metal price. The nemesis to the fair free market silver price is the once venerable bank, due to its heavy leveraged illicit suppression by JPMorgan Chase. Its history is full of scummy intrigue, deep criminality, and national betrayal bordering on treason. The giant bank organized an elaborate central bank system that essentially wrested back control by England in 1913 through the devious Federal Reserve Act, whose legislation was passed during the Christmas holiday session with what would not qualify today as a quorum. The devious act enabled the bank to establish valuable and practical lifeline cables back to the powerful London bankers. They were deeply angry by the Civil War finance details only 40 years earlier. The creation of the Continental Dollar bypassed the London bankers, who called for Lincoln's death openly in the London Times editorial section, since they would not earn hefty interest fees on the war. Precedent exists in such endeavors, as in the Napoleonic Wars and possibly the Bolshevik Revolution in Russia. Harken back to the present. The bank is involved in plenty of sordid activities, such as serving as clearinghouse with for Afghan narcotics payments through the Export Trade Bank of Baghdad in Iraq. JPM operates the bank. They were a principal fraud colluder in the structural operation of Enron. They have been accused of massive counterfeit of USTreasury Bonds totaling over $2 trillion. The evidence for Enron and USTBond counterfeit used to lie in Building #7 of the World Trade Center, the same building that was felled without a jet aircraft collision into its flank. The bank has been on a merger acquisition spree for 20 years, gobbling up numerous marquee name banks, from Manufacturers Hanover to Chemical Bank to Bank One. They are a cancer on the US banking industry. They are a pillar in the financial crime Syndicate.

JPMorgan is rumored to be using its own stock shares as collateral in schemes to short silver. The strategy fails if the Silver metal price rises faster than JPM shares. The uptrend is making itself evident. But the collateral value they would put up in their mountainous outsized silver short futures contracts is also suspect. The irony is that without the FASB accounting laxity, the insolvency of JPMorgan the bank might come to light. Even its stock shares are a hidden fraud in the face of the public. My bottom dollar bets that JPM is insolvent and its stock should have zero value. Silver is making progress putting JPM stock shares in its rear view mirror. A falling JPM equity share certificate limits the opportunity to continue such a silver shorting practice. The zombie giant bank stock must rise versus the silver metal price as a basic requirement. It is not.

◄$$$ SPROTT HAS PLACED $266 MILLION IN HIS 'PHYS' FUND WITH A SUCCESSFUL SHARE OFFERING. IT IS TRUE BLUE HONEST OF THE HIGHEST LEGITIMACY. ALL METAL IS STORED AND ACCOUNTED FOR, AVAILABLE UPON DEMAND QUICKLY. THE OFFERING WAS DONE WITH NO EFFECT TO SHARE PRICE. CONTRAST THE CHALLENGE TO SOURCE THE SPROTT FUND METAL WITH THE OVERNIGHT ADDITIONS OF GOLD TONNAGE BY THE JPMORGAN CROOKS. $$$

With gold closing at an all-time high on July 15th, the Sprott Physical Gold Trust was able to price $266 million in fund shares at a strong price. The final price was $14.00/share, the exact price PHYS closed at the night before. The total raised amount will be $305 million when the greenshoe is exercised for the over-allotment. It will be eagerly scarfed up by the brokers involved. Such an event is rare even for closed end funds, such as the Central Exchange Fund of Canada (CEF), the Central GoldTrust (GTU), and the Silver Bullion Trust (SBT). On average the discount to the closing price has tended to be 7% in the past, or 4% to 5% more recently during the strong bull market. Later on, such deals will be completed at slight premiums due to the positive impact of their own purchases on physical markets. Then much later, such offering will cease altogether when large amounts of physical gold will not be available. The Sprott Fund managers made a decision to pursue gold instead of silver in the PSLV fund, since the gold fund trades at a modest 4% premium to Net Asset Value whereas the silver fund trades at a sizeable 20% NAV premium. The gold offering choice is actually a very bullish indication for silver. The last PSLV offering took 3 to 4 months to be delivered from metal sources. The managers probably expected a longer delivery time if they pursued silver this past month, given the global financial system on the brink of collapse. Problems would have resulted with an extended period to source any silver metal, only to demonstrate inability to locate it. The gold cartel is being overrun by physical demand, a truly beautiful thing to see. Two big events lie on the horizon to amplify the pressures. The GATA Gold Rush conference in London will produce great publicity. The Pan Asia Gold Exchange will produce a third price fix, where overnight the Anglos will be trampled in their sleep. See the Yahoo Finance article (CLICK HERE). The Sprott Physical Gold Trust trades under the symbol 'PHYS' in the United States, and under the symbol 'PHY.U' in Canada.

John Embry commented on the Sprott gold fund recent offering in its details. He said, "Basically it was priced very well, almost right on the market instead of at a huge discount. It went very well. It was a $266 million issue, and if the overage is exercised it will be $305 million. That will buy roughly 190,000 ounces (6 tons) of gold. In this market that is a lot of physical gold. From every aspect we are very happy with the deal. We are very pleased that the public chose to participate. [The gold and silver markets are] extremely constrained. The average person is still ignoring it. The driving force in the gold market right now is the unbelievable chaos in the world's financial situation. This drives the bus right now in the gold market. It does not make any difference what time of year it is. This is reality. It is very easy to foresee triple digit silver. I do not consider that the least bit outrageous. [The silver price] might be high triple digits before it is over." He is talking over $100 per ounce silver, and higher.

Harvey Organ made an astute comment to contrast the Sprott gold fund offering and its logistics. He complained that JPMorgan & Friends added supposedly 10.6 tonnes to their inventory in a matter of a day or two recently, as in between coffee breaks. The Sprott folks provide a legitimate glimpse at what logistic hallenges must be overcome in order to source 6.6 tons. It took them two months this spring to complete the large acquisition. Organ said, "The Sprott Asset Management required two full months to obtain its 6.6 tonnes at source. These guys [at JPMorgan] get 10.6 tonnes in a heartbeat. They sure are good at what they do. In reality this is gold that moved from one cubby hole at the Bank of England in credits to the GLD, where it swapped the gold for cash. The problem of course is that the Bank of England can unwind this swap and any time of their choosing. The shareholders of GLD will get hosed!!" See the Organ weblog (CLICK HERE).

◄$$$ THE GOLD PRICE HAS BROKEN OUT IN MAJOR CURRENCYS OF THE USDOLLAR, THE EURO, AND BRITISH POUND. IT IS ON THE VERGE OF A BREAKOUT IN JAPANESE YEN AND THE CANADIAN DOLLAR. THE GOLD PRICE HERALDS THE RECOGNITION OF A GLOBAL MONETARY CRISIS AND CENTRAL BANK FAILURE. EVERY MAJOR INDUSTRIAL NATION HAS PROFOUND PROBLEMS, MANY IN COMMON, MOST UNFIXABLE WITH THE USUAL TOOLS. $$$

◄$$$ A EUROPEAN FIREWALL WILL NOT PREVENT A GLOBAL CONTAGION AS GREECE DEBT DEFAULTS. IT HAS GONE VIRAL. THE LATEST GREECE PATCH, ESTIMATED AT $229 BILLION, WILL ONLY DELAY THE GREAT BANK BUST. NOTHING CAN PREVENT THE DEBT CONTAGION FROM REACHING ITALY AND SPAIN. NO PATCHES CAN BE APPLIED TO THESE TWO LARGE NATIONS. $$$

The solution has been pathetic and ineffective so far. The theme is to protect the big European banks, to demolish the domestic economies, to pretend the banks are solvent, to stick the public with the bills, and to raid select assets. The solution has been to just print Euro money and buy PIGS bonds, to just print USDollar money and buy USTBonds, to just print Yen money and do reconstruction in Japan, to just print Pound Sterling money and recapitalize all the London banks, but not to solve the structural defects. The deceptive outcome during the high level futile efforts will be the common debasement of money itself. If they all print money at equal rates relative to their banking systems, the FOREX market would remain stable and bankers could declare a success. They could deny the indirect effect of a skyrocketing cost structure worldwide. The Gold price will likely reach $3000 in two years time and the Silver price will likely reach $150 in two years time. The major toxic rub will come to the entire global cost structure, most noticed in food and energy. Wages will not rise as long as China remains an industrial competitor. Expect a global recession by 2012 that forces the debt issue. As the destruction becomes painfully clear on the global stage, money will chase Gold & Silver as the only safe haven. Money will be destroyed like in a raging fire, since sovereign debt has been posing as money for 40 years. The game is ending. A gigantic wealth transfer is in progress. The last opportunities to move to safe ground are fast coming to an end.

 

 

◄$$$ SILVER IS SETTING THE STAGE FOR AN ASSAULT ON THE $50 MARK. OVERHEAD RESISTANCE WILL NOT BE TOO STRONG, SINCE VERY LITTLE TIME SPENT ABOVE THE $45 LEVEL. BIG MOVE COME BY YEAREND,         LED BY GOLD. WITH CROSS-BODY BLOCKS, GOLD WILL OPEN ANOTHER BIG WINDOW FOR SILVER TO SPRINT THROUGH ON ITS WAY TO $100. $$$

◄$$$ THE SILVER MARKET ABSORBED $10 BILLION IN ILLICIT NAKED SILVER FUTURES SHORT CONTRACTS IN ONE HOUR ON JULY 19TH. BY THE END OF THE WEEK, THE SILVER PRICE HAD RECOVERED TOTALLY, CLOSING AT $40/OZ. IT SHRUGGED OFF A NASTY SUCKER PUNCH WITH EASE. THE TOUGH RESILIENCE IS A GUARANTEE OF A MAJOR SILVER BREAKOUT IN THE NEAR FUTURE. THE BIG BANKS ARE PETRIFIED, REALIZING THEY CANNOT HALT THE MOVES. $$$

◄$$$ QUOTES FROM VARIOUS LEADERS IN THE GOLD COMMUNITY. EMBRY, SPROTT, ARMSTRONG, DAVIES, TURK, SINCLAIR, NORCINI, BOYD, HATHAWAY, SANTELLI, TAYLOR, AND DINES SHARE THEIR BULLISH THOUGHTS. THEIR OUTLOOKS AND FORECASTS FOR THE LAST TWO YEARS HAVE BEEN ACCURATE AND ON THE MARK. FOR CONTRAST, CONSIDER ROUBINI AS THE GROUP MORON WHO HAS BEEN WRONG LOUD AND OBNOXIOUS FOR TWO YEARS. $$$

John Embry is the chief investment strategist at Sprott Asset Mgmt.

  • The world is dealing with so much debt issuance, that it has produced debt indigestion. The debt saturation which will bring down the fiat currency system since it cannot be serviced. The solution they rely upon has been to print money in debt service. In the end, hyper-inflation will result.
  • Austerity plans imposed on nations that struggle lead invariably to depression.
  • The HUI major mining stock index should reach 840 at minimum. If gold hits $2000 (an easy forecast within 12 months), then HUI could double to hit 1200.
  • He yells from the rooftops that the Western central banks do not possess the 30,000 tons of gold bullion. The bank ballast was sold into the market, long gone, not to be returned.
  • He regards a rasied debt ceiling as no solution, simply a stayed execution for a short period. The great leveraged debt unwind is deeply entrenched since the failure of OTC derivatives in 2008. No meaningful intervention in this economic downward spiral will come since no reform or remedy was done surgically at the cause.

Eric Sprott leads the fund he founded.

  • The money printing (monetary expansion) is unbelievable, in his words. Suggested strategy is to continue purchasing precious metals in a dollar cost averaging scheme, which means to devote equal volumes of cash at regular price intervals.
  • Doubters have littered the path all along since $400 gold through $800 gold. This is a secular bull market with much more to come. Wealth protection must be done in an asset free from debt.
  • If QE3 is announced, gold & silver will go bonkers, in his words.
  • Official solutions and programs to deal with the financial crisis have aided precious metals enormously, since they all involve debasing the USDollar currency. It is losing its purchasing power. The common theme is bank rescue and toxic bond redemption, which taints money.
  • The risk of a string of bank failures in contagion is great. People are moving money out of banks and into Gold, in order to avoid having money trapped or lost.

Martin Armstrong was falsely imprisoned for attempts to reveal profound systemic financial fraud in rigged markets by Wall Street. He was regularly beaten in prison. He was released this spring from prison after popular protest. He has been prescient in forecasting up & down cycles in the stock market, currency market, and precious metals market.

  • Gold will continue to rise and make astronomical highs through year 2020.
  • Eventually the USDollar as we know it will disappear as a currency.
  • He forecasts a Gold high in August of $1700 to $1730 per ounce.
  • He warns that if Gold hurtles to $2000 this summer, then to expect a long correction lasting until February 2012.
  • He had consistently forewarned (for a year) that the June 2011 timeframe would register a Gold low and a Silver low before a magnificent run in the next three or four years. He was correct, and his work gained more attention justifiably.

Ben Davies has been extraordinary in his forecasts for most of the bull market in precious metals. In the early month of 2011, he forewarned of a rapid rise in the Silver price to $50 in April, followed by a sudden somewhat frightening correction to $35, followed by at least a six to eight week consolidation period, followed by a resumption in the powerful bull market through until the end of the year 2011.

  • He has consistently cited a $1450 to $1475 support low for the Gold price in the spring and early summer months. He expects an early August upturn with gusto in a run to $2000 gold.
  • He has consistently cited a $34 support low for the Silver price in the past few months.
  • An important impetus behind the ongoing support for gold has been the new $1 trillion in global reserves. Export nations continue to gather and store new savings in the form of reserves. The Western nations continue to discharge capital.
  • He is very unimpressed with mining stocks, pointing out the widening spread of share prices versus metal prices.
  • He called the crude oil release from reserves in the US and EU a blatant attempt to provide economic relief. The motive to compensate for lost Libyan output was called rubbish, in his words. He expects the crude oil price to resume its rise in September.
  • Look for a collective move gradually toward debt monetization (QE) in both the United States and European Union.

James Turk is founder of GoldMoney, a global investment warehouse for personal wealth preservation in vaulted holdings. It has vault services in London, Zurich, and Hong Kong, metal purchase alternatives in gold, silver, platinum, and palladium. It has almost a dozen major currencies as options for fund movement. He has a great expertise in dissecting the prospectus and legal compliance of various exchange traded funds. He identifies the GLD and SLV funds as tremendous frauds perpetrated on the ignorant investment community.

  • With the USGovt parties in total deadlock and seeming disarray, expect more QE as the patch job to keep the system running. But its abuse will destroy the USDollar and produce a lot more price inflation.
  • This summer that could surprise people. It is setting up like the summer of 1982, when gold soared during the Mexican debt default.
  • Gold could hit $2000 very quickly, and Silver hit $50 very quickly.
  • The London Trader deep throat warns that tremendous price moves up are likely after $1600 gold and $40 silver from short covering by speculators.
  • Exiting the USDollar, exiting the Euro, exiting the British pound, investors are pushing Gold to record highs against all three of those currencies.
  • Price deflation is apparent when prices are measured in terms of Gold. But price inflation is evident when prices are measured in terms of USDollars.
  • As we go through this financial bust, people should avoid financial assets and focus on tangibles. That will ensure survival and the best preservation of wealth possible.

Jim Sinclair is the charismatic independent and benevolent gold counselor. He is also the CEO of Tan Range, a gold miner with African properties. Dan Norcini is his sidekick, a great technical analyst with deep insight on the shorter term and mid-term price movements.

  • Gold at $1764 is an important critical point, just like gold was at $524 several years ago. After a move above $524, the gold market went into a runaway back then. It is the exact same setup here. But a price over $1764 should bring in some significant supply. He expects a move above $1764 to generate widespread forecasts for a gold price multiples higher, like several $thousand per ounce. Therefore, the $1764 level will be defended vigorously.
  • The political platforms that haggle over the debt crisis could serve as a catalyst for Gold rising above the important $1764 level. Explosive volatile price moves will follow after the $1800 level, with moves of $100 or more on a daily basis.
  • Norcini believes the strength of Gold in the summer months is very significant, usually a weak period. All-time highs in three major currencies have just been registered. Gold is acting as a currency of last resort, a reserve asset, but not at all as a commodity. Confidence in the monetary authorities of these Western nations is being lost rapidly. The USFed is trying to back away from QE3, but the debt supply and absent auction bids by foreigners means they cannot walk away.

Sean Boyd is the CEO of Agnico Eagle, a mid-sized excellent and highly profitable mining company. The firm has an $11 billion market cap.

  • He corrected forecasted a $1600 Gold price and a $50 Silver price earlier this year.
  • The slow summer month pattern will not apply this year, since the market is global, driven increasingly by Far East demand in Asia.
  • Great resilience has been seen. When precious metals prices fall, they recover quickly from constant buying pressure.
  • Upon temporary solution to the USGovt debt challenge, expect some weakness in the gold price but it will be brief.
  • Central banks are no longer supplying gold to the market. They are actually buying gold, a great pattern reversal.
  • Based upon solid fundamentals and increasing demand, prices could rise next year by 25% to 30% at least. Product offerings are broadening, encouraging greater demand.
  • In the 12 to 18 month timeframe, prices will be in the $2200 to $2400 range for Gold and the $60 to $75 range for Silver.
  • The official government and monetary policy response will be to continue to supply liquidity to the markets, in a continual currency debasement process. It is an Inflate or Die situation, a perfect situation for the precious metals bull market.
  • Mining stocks could benefit from new rounds of merger deals, and from hikes to stock dividends. That would demonstrate a confidence in their own businesses, aided considerably by a tremendous cash flow being generated.

John Hathaway is a gold community statesman and executive of the Tocqueville Gold Fund, a highly successful pillar in the managed mining stock arena.

  • Some money going into gold is from financial entities nervous about both Europe and the possibility of a US default.
  • Our fund is very much positioned for further advances in the gold price and more importantly further advances in gold mining stocks. Earnings will be sensational.
  • A big stall in the USEconomy would mean poor corporate earnings, which will be compared against excellent mining firm earnings in a favorable contrast.
  • Any great stumble in WashingonDC on the debt issue and budget challenge will propel the Gold price to $2000 quickly. But upon any resolution, even if temporary, the price will be unstable.
  • Money is moving into Gold since rates of interest have remained negative for three years.
  • Silver will follow the Gold lead in price. The Silver price must work off the emotional excess that it collected on the way to $50 earlier this spring.

Rich Santelli is the irrepressible figure on CNBC from the Chicago pits at the MERC. He is highly outspoken and critical of every chamber of the United States leadership.

  • He foresees a political and financial train wreck, as the debt and budget battle continues with very little willingness to compromise shown. All political parties have disappointed. The practical reality is that cuts have come to mean reductions in increases to the budget, in blatant baseline games.
  • The financial markets are pricing in a compromise, but not necessarily one that has the right substance. The debt rating agencies will vote on the substance part.
  • He regards steadfastly that the rising Gold price was a thumbs down vote of confidence against the USFed as a central bank with all its monetary policies.
  • A $1600 Gold price is a grand insult to central bankers because the effect on fiat currencies of the world for their purchasing power is not tolerable to smart investors.

John Taylor is the author of the Taylor Rule that clarified the paradoxical relationship between the short-term USTreasury yield and the Gold price. He is a former economic analyst for the USFed. His negative view toward Gold after the next runup indicates his blind spots. He regards Gold as a commodity. A repeat of 2008 is not going to happen this time, since the entire world has had over two years to prepare for this well anticipated collapse.

  • He forecasts that Gold will extend its rally to $1900 by October, to be accompanied by a rally in the Australian and Canadian Dollars as the European debt crisis eases.
  • He anticipates a plunge afterwards in the Gold price to $1100 following liquidations, as a powerful global economic recession grips the world, far worse than the 2008 version.
  • He expects the Euro currency to drop to 115, and might hit parity in 2012.

James Dines is a crazy man with a very good track record. He has been removed from the conference circuit as a result of his antics, like appearing with sexy women on each arm from the modeling agency he acquired. His insistence of first class air freight for his luscious props by the conference managers earned him an exit. Yet his views are highly perceptive, having correctly exploited the internet craze in the 1990 decade. He was late to the gold game.

  • The central investing fact in the world today is the coming end of the age of debt. The US government is borrows 40 cents out of every $1 in its expenditures. The USGovt has responded to debt finance challenges by conducting an unlimited paper printing mania.
  • The whole world is on the verge of a final scramble to lock up hard assets as part of a flight out of paper money. The capitalism system is being transfigured into a monopoly game, out of paper and into tangible assets.
  • It is incorrect to say there is no risk of inflation from printing of money in great volume. Rather that is the definition of inflation. So prices will go up. The tragedy is that QE1 and QE2 were failures. The leaders do not realize that Keynesianism does not work any longer, and probably never did. More debt increase cannot be used to pay off unmanageable debts. More money cannot be printed in order to cure all of the money already printed. All this printed money is flooding the world and wreaking havoc everywhere.
  • The price of silver is going far higher than anybody realizes. It is going far higher than $50. It is going to test the $100 an ounce level, and beyond that somewhere between $300 and $500 an ounce.
  • He gave warning. If people do not own gold, they will rue the day they decided not to buy it.

Nouriel Roubini sold out to Wall Street, and compromised his excellent economic analysis produced in 2003 through 2006. His clientele probably dictated the tainted perspective. He is a New York University professor of Economics and an embarrassment to his profession. He has turned into a dunce, a fool, a lapdog. He is a resident counselor among the Deflationist Knuckleheads. He is a tool to the establishment and a broken voice against the Gold community. He has embarrassed himself as stupid on Gold, as his lousy track record testifies, and his incorrect analysis has proved amply.

  • He denigrated gold in December 2009, when the price was $1125. He mocked those who said gold was going to $1500 and later to $2000, claiming they were speaking nonsense. Instead, he spoke nonsense.
  • He has consistently believed that the Gold price would stay down from deflation forces. He has been consistently wrong. He does not understand the monetary effect on gold.
  • He has consistently believed that gold bulls had it all wrong expecting a global financial crisis. Instead, Roubini has been wrong all along as the crisis mushrooms to touch all bond markets and all nations.
  • He has a stupid perspective toward Gold, believing its price can rise only from two factors, price inflation and systemic financial crisis. He dismisses the price inflation threat, relying on the ignorant plank of excess capacity in glut with weak final demand, along with slack in the labor market. He did not foresee the global financial crisis.
  • He is ignorant of monetary inflation effects on anything and everything, like most practicing mainstream economists.
  • Last, least, and lunatic, Nobel Prize Winner Paul Krugman calls the gold rush a total marketing scam. We call the Nobel parade of prizes purchased by the Syndicate an intellectual scam, which includes Obama and his peace prize during a comprehensive narcotics war.

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.