GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Intro Gold Fragments
* BRICS & Eurasian Trade Zone
* Oil Price Convergence & Petro-Dollar Sunset
* Gold Mines Losing Profitability
* Gold Vaults Going Empty
* Broken Ransacked Gold Market
* Historical Gold Inversion Signals



HAT TRICK LETTER
Issue #112
Jim Willie CB, 
“the Golden Jackass”
24 July 2013

QUOTES ON GOLD

"The collapse in paper gold price is confirming big moves in the background already taking place or planned in the very near future. Be sure to know that no bottom exists, as there is no market, the balance between Supply & Demand long ago abandoned. Physical Gold has gone into hiding. It will soon vanish from bullion merchant shops and then from jewelry stores across the world, in defiance. The climax will be the broad realization that no COMEX gold market exists, all a sham." ~ EuroRaj

"I recently had a conversation with a friend who works for Sprott. We were discussing the state of the precious metals market. He told me that people have asked Eric Sprott why he did not place an order for a $billion or more and stand for delivery of physical gold? The reason he does not is [that] it is written in the contracts that COMEX officials can fill the order with shares of GLD. There would NOT be a force majeure. What a racket! The leveraged paper game is so foul and rigged that the only game in town is physical metals." ~ David Schectman (Miles Franklin)

"The weight equivilant to nine Volkswagon Beetles of dirt equals that of one golf ball's weight of gold." ~ Mining.com (commenting on slight yields of gold in grams versus raw ore in tons, a standard feature in the mining industry)

"When the BRICS introduce a new currency, the demand for Dollars will instantly implode. Were Saudi Arabia to accept this new currency to pay for oil, all hell will break loose and Dollars from all over the world will come back home to roost. The inflation that we have exported for all these years will all of a sudden come back home and hit all at once. You could very well see a doubling or more the prices of many products as the Dollar supply chases the products. Add to this economic scenario one where we are at war over oil in the Mideast and prices could simply explode to unaffordable levels." ~ Bill Holter (indirectly, the new BRICS currency will be Gold, not a new currency, until the gold-backed Yuan is deployed in trade, but any departure from US$-based settlement will cause a price inflation shock inside the USEconomy, as the USDollar would find its lower equilibrium value)

"That is quite an understatement. This economic corridor, parallel to the Karakoram highway, will boast a series of special economic zones, fiber optic cables, a rail link, and a pipeline. This proves that the Iran-Pakistan (IP) pipeline, fought tooth and nail by both the Bush and Obama Administrations, will have an extension to China, will become the IPC, and will offer yet another Chinese access to the Indian Ocean. It will take that pivoting to Asia." ~ Pepe Escobar (on the Pakistan pipeline importance, soon to be called the Iran Pakistan China Pipeline)

"The Tocqueville Gold Fund manager John Hathaway's new investor letter attributes the recent fall in the gold price to a bear raid by investment banks and hedge funds doing naked shorting. Hathaway acknowledges gold's function as insurance against the failure of the policies of central banks and speculates that the Federal Reserve cannot return the German Bundesbank's gold because the Fed has re-hypothecated it into oblivion. Of course Hathaway still cannot quite formally link central bank policy to gold price suppression, despite all the documentation. But insofar as he now maintains that certain entities act in concert to suppress the gold price, he may start to be considered a conspiracy theorist and has earned a probationary tin foil hat." ~ Ed Steer (Gold Anti-Trust Action Committee, in a mocking comment since Hathaway has resisted for years that the gold price is illicitly suppressed in a corrupt market. Hathaway is a good but naive man who probably believes in the Easter Bunny.)

"I put the slam down to the people who are short gold. It has been very well-documented that certain parties had very large short positions in gold. The short holders, who were expected to deliver gold that was not deliverable, could have created this downdraft in order to cause gold to come into the market. But it totally backfired. The sudden drop in price led to extreme levels of demand for physical metal, even as paper gold sold off heavily. I would venture to say, at the kind of rates of consumption we have now, we might have a 4000-ton shortage in a 4000-ton market." ~ Eric Sprott

"The price of Gold is too low, which creates excess demand and inhibits supply. The current backwardation may be validating this view. Or another explanation is that investors have finally figured out that the jig (rig) is up. Let me explain, if investors want Gold now, today, it is worth paying more (interest upfront) to get it. Maybe investors are afraid that at a later date they will not receive delivery. Maybe the message has finally gotten out to enough investors that the whole game is that of Fractional Reserve, and just because you have a piece of paper that says that you own Gold, maybe you really do not. If I had to guess, yes, shortages have something to do with it, but the driving force behind the current backwardation is a lack of trust. Trust that you will receive your metal at a future contracted date. So you buy it now and get it delivered now, while you know that you still can." ~ Bill Holter (brilliant explanation)

"I would suggest that banks and institutions who play the long side of metals are subject to real accounting pressures, while institutions who are long USTreasurys up the wazoo are not." ~ Rob Kirby

"All of a sudden, people walk into Wal-Mart, as usual, and they think they have walked into Neiman Marcus. There is no way to close this deficit when corporations are moving the tax base off-shore." ~ Paul Craig Roberts (who anticipates a price inflation effect in future months, as no quick fixes exist for the bulging USGovt debt)

Editor Note: Apologies for the Obama quote on a July Fourth podium. It was a spoof and the Jackass fell for it. My bad! Fortunately, the accuracy of the work is typically good, or better than good. Disrespect is always intended at the banking and political leaders, but the facts must be presented correctly.

## INTRO GOLD FRAGMENTS

◄$$$ PROFESSIONAL GOLFER PHIL MICKELSON WON THE SCOTTISH OPEN AND THEN THE BRITISH OPEN IN A WHIRLWIND JULY. BUT HE IS HIT WITH A 61% TOTAL TAX BITE ON HIS WINNINGS, THANKS TO THE HEAVY TAX RATES IN THE UNITED KINGDOM AND CALIFORNIA. WELCOME TO SOCIALISM, THE NATIONAL SOCIALISM TYPE. THINK WELFARE, WASTE, AND WAR. $$$


The tax bracket on his golf championship prize money is 40% then 45% in Great Britain. Add atop the California income tax and self-employment tax since he is the employer of his golf bag. The total tax bite is 61%. Of $2.167 million in income, a ripe $954k in tax goes to London finance center. The remainder of the heavy tax imposition goes to Sacramento, and the bottomless overhead pit for the Golden State. Welcome to the vast world of socialism, the national socialism type. Lefty Mickelson must support the deadbeats who do not work, the endless list of agencies across California to protect the sedentary human life and migrant animal life (whose office names once filled five full pages in a 2007 Special Hat Trick Letter Report), the big bank welfare for Wall Street bankers, and the warmongers in the USGovt who kill for the love of the hunt and the joy of pillage. See the Daily Finance article (CLICK HERE). It is incredible what the governments take and then waste.

◄$$$ RUMORS CONTINUE THAT USTREASURY BONDS ARE BEING SOLD TO PURCHASE GOLD BULLION. PERHAPS DERIVATIVE DESKS ARE EXECUTING THE TRANSACTIONS FROM A LEVERAGED CONTROL ROOM, IN ORDER TO COUNTER-ACT THE SOPHISTICATED DESKS THAT MANAGE THE USTBOND PURCHASES. ALL THE ARTIFICIAL USTBOND DEMAND MIGHT HAVE FOUND ITS MATCH OF A COUSIN VARIETY, TO REDIRECT TOWARD GOLD BULLION. THE CONSTANT IS DRAINAGE OF AVAILABLE GOLD. $$$

No proof, no evidence, no trails, no data. Just deep suspicion by smart folks. The volumes would not have to be large to have a profound effect. The Asians are slowing converting paper wealth to tangible wealth. They do so very patiently. Some giant clients want to buy boatloads (not truckloads) of gold bullion, but instead, they buy what the market gives them. The drainage of supply is constant.

◄$$$ INSIDE THE VATICAN BANK, BANKER RESIGNATIONS. $$$

Two top managers of the scandal-plagued Vatican bank resigned recently, following the arrest of a high ranking cleric with close ties to the financial institution. It is the latest of a string of embarrassments for the Holy See. The Vatican is a major gold enclave, a primary short-term lender of gold bullion and bearer bonds, and a partner to organized crime. The satanic bankers in residence should never be confused with the religious Christian cardinals, although fascists permeate the college of cardinals, including the chair of the papacy. No links are provided since blocked and might be risky. These guys have friends in high places.

◄$$$ SHANGHAI SEES GLOBAL STATUS VIA NEW FREE TRADE ZONE. $$$

Shanghai officials are counting on emerging as a top financial center, furthered along by introduction of the Mainland's first free trade zone. Under the plan, endorsed by the State Council, Shanghai is expected to allow companies to freely convert foreign exchange within specified areas of the city, while allowing free capital and commodity inflow for the entire city. Shanghai has ambitions to become the nation's primary economic engine, leapfrogging Hong Kong as the dominant financial hub in the region. A healthy rivalry has begun. The long awaited policy incentive granted by the cabinet will only add heft to the burgeoning city's attempts to attract global capital and talent. See the South China Morning Post (CLICK HERE). If they could only improve air quality in the Chinese cities. Friends tell that Vancouver has been saturated, and the next target is Seattle, a project well along for the migration.

◄$$$ THE BRICS NATIONS ANTICIPATE SOMETHING BIG IN JULY WITH CHINESE PRESIDENT GIVING AN URGENT SIGNAL OF UPCOMING CHANGES. THE ROILED USTREASURY BOND MARKET PROBABLY HAS ACCELERATED THE TIMETABLE FOR THE GOLD TRADE SETTLEMENT SYSTEM TO BE LAUNCHED. THE LOWER GOLD PRICE HAS FURTHER AGGRAVATED THE EASTERN PLAYERS. THEY ARE OBVIOUSLY CONVERTING TO GOLD. $$$

The Taper Talk of relaxed QE by the USFed has rendered damage to the bond markets in Asia and Europe. The minor panic has drawn the attention of Eastern leaders in emerging economies, who must respond to construct an effective safety net to endure the storm in global financial markets. Spokesman for the Brazilian government Thomas Traumann announced that the BRICS will decide on coordinated action at a July meeting in Russia. On their agenda is the USDollar, their FOREX reserves, and always the progress of gold trade settlement. In a phone conversation, President Xi Jinping noted that some new and complex elements have occurred in international financial markets that deserved the BRICS nation close attention. Regard this is a red flag. China might be victimized by its inexperience in the interest rate derivatives, a hunch shared by some experienced analysts. See the China Daily article (CLICK HERE). The Jackass belief is that in reaction to Western turmoil, the East will accelerate its Gold Trade Settlement plans, and more rapidly develop its BRICS Development Fund. The fund is more accurately a clearing house for USTBonds in Gold bullion purchase. Turmoil breeds urgent reaction.

◄$$$ THE SWISS PARLIAMENT REJECTED THE USGOVT PRESSURE FOR ADDITIONAL DISCLOSURE IN A NEW LAW TO REQUIRE THE CANTONAL BANKS TO DIVULGE ACCOUNT DATA FOR FOREIGN CITIZENS. RETALIATION BY THE USGOVT IS TO COME. EXPECT A BACKLASH AGAINST THE UNITED STATES. $$$

In June the USGovt strongarmed the Swiss into pushing forward a new disclosure law. The Jackass even received a phone call from a trusted colleague in Zurich, who thought if in place, the Kantonal banks would face many $billions in fines that they could not pay. The law passed the Lower House in the Swiss Parliament from a ramrod, described by my colleague as passage without reading its details. Bruce Krasting has a guest post, surely one of the most astute of ZH contributors. He is Swiss and very informed. The USDept Justice bullied the Swiss to overturn their banking confidentiality laws. The final vote was telling. The somewhat surprising vote had the Swiss Parliament telling the USGovt to back off. Surely some US retaliation could result, but the trend is clear. The United States is shown disrespect more often, and shown the door as well. One is left to wonder how long before the Swiss join the BRICS in their effort to forge a new reserve currency regime. With Germany and Switzerland as the core from Europe in the Eastern Alliance, the Eastern Trade Zone, and the BRICS adjunct members, a formidable critical mass for the trade zone would be constructed. The Gold Trade Settlement would be a slam dunk.

Krastings commented on the NO vote in Switzerland, from which he expects US retaliation. Much is at stake, far more than foreign US citizen accounts. He wonders which Swiss Bank will come under the DOJ rifle scope. He expects a big Swiss bank to be targeted. Credit Suisse, Julius Baer, and the Cantonal Bank come to his mind. Any DOJ indictment of a Swiss bank would prevent it from making USDollar wire transfers. With other US banks boycotting the Swiss bank, it would functionally be shut out of all their US$-based business. No global bank can operate for long without the ability to make transfers in USDollars. This specific possibility has been discussed openly in Switzerland. The Parliament rejection vote outcome is therefore more important than it appears, since they comprehend the fallout. Next comes a hammer blow to one of the country's important institutions. See the Zero Hedge article (CLICK HERE). Switzerland is the big banker battleground right now. The Allocated Gold Accounts battles are fought there. The secret lawsuits are there. The biggest gold refiners are there. The retail gold supply comes from there. The last ditch BIS gold supply is there. The account data legal clashes are there.

Expect whatever action is taken to backfire on the USGovt. A war is being waged behind the scenes in all matters pertaining to banking. The issue of the Swiss NOT vote extends to Gold Allocated Accounts in some hidden manner, not known to the Jackass at this time. The United States step by step is becoming more isolated, even with its Allies, a normal sequence for the Nazis who run the WashingtonDC political center and the New York City bank center. The US leadership crew is running out of hosts while it proceeds as a parasite. The chief exports from the United States are bond fraud, war, and diabetes. Full global alienation is coming, then Third World, then the Nazis leave town and go into hiding. The USMilitary industrial complex will follow the path of the Odessa Group, seen in the 1940 decade. History will repeat itself. Notice no international forums (or Olympics) are to take place on US soil. There is no economic development in the US, only forced federal progams, heavy taxes, an archipelago of prison camps, and a sprawling socialist system with no evidence of democracy, where airports are a molestation pit.

◄$$$ THE BIG BANKS HAVE SWITCHED FROM MASSIVE NET SHORT TO MODERATE NET LONG IN GOLD FUTURES CONTRACTS. THE (ALWAYS WRONG) SPECULATORS ARE HUGE NET LONG, RIPE FOR THE SLAUGHTER IN THE AUTUMN MONTH RUNUP IN THE GOLD PRICE. IT WILL BE PERMITTED. $$$

Chairman Bernanke has bent, flinched, and caved in, his bluff called. More QE (aka hyper monetary inflation) means three things. The carnival atmosphere featured a gaggle of Fed Governors who either contradicted the official position, or disagreed openly with the wisdom of current monetary policy. First, the USFed and the Chairman have become a laughing stock to the world, with lost integrity in a failed franchise system of fiat money and controlled markets. He has guaranteed a dying USDollar global reserve currency, as nations scramble to contend with banking reserves losses. Second, the policy will go into constant uninterrupted high gear for monetary inflation. The financial markets depend upon it. The economies require it. A global collapse is the consequence to continued high volume money creation, even if at a rising cost structure consequence. Third, the big US banks seized the opportunity and exited a mountain of short positions in precious metals. The big dead insolvent banks indeed extricated themselves from their costly losing short positions in gold futures. The big US banks have gone from 106,000 net short contracts to 45,000 net long. Next comes the big gold price bounce, fully telegraphed.

The switcharoo was enabled by duping the Speculators, who are almost never right and easily fooled at turning points. They are not informed with insider information on policy turns. The so-called Specs went short a record 130,000 gross contracts, as seen in the chart. In the last three to four months, they piled on to create a spike in shorts. They stand in opposition to the big banks. Expect a Gold price rebound and the big US banks again picking meat off the Spec bones. Despite the huge decline in official gold and silver prices, the metal stockpiles are not increasing. Quite the opposite, which indicates clearly that the liquidation freed up all the paper loans and lease contracts. The big US banks escaped the fate of vast underwater contracts. Otherwise there would be gold for sale everywhere in fresh metal supply. Instead, the world has seen apparent shortages for purchases of small, medium, and large quantities. No gold moved. It was a paper phenomenon.

◄$$$ THE COMEX WILL RUN OUT OF GOLD SOON AND GO TO CASH SETTLEMENT, SO FORECASTS SINCLAIR. INCREDIBLE GOLD HIGHS IN PRICE COULD COME IF THE BANKSTERS LOSE CONTROL OF THE SUPPRESSION MECHANISMS. $$$

In an interview with the Sprott Money Blog, gold mining entrepreneur and popular spokesman Jim Sinclair forecasted boldly that the New York Commodities Exchange is likely to run out of real metal for delivery in the next month (as in August) and convert to cash settlement soon afterwards. Refer to Cash & Carry market, a view shared by the Jackass. The event will signify defeat of the evil gold market, a free market soon to be born in its wake. Sinclair expects to see a gold price bottom set in early July, with eventual gold price high near $50,000 per ounce, provided the paper manipulators engaged in deep suppression lose full control. He reminds observers that this market has been like a beach balloon that has been pushed to depths never seen by man. See the Sprott Money Blog article (CLICK HERE).

◄$$$ THE PENTAGON BUDGET SEQUESTER IMPACT HAS TURNED VISIBLE. THE USNAVY CANNOT RULE THE HIGH SEAS ON LOWER BUDGETS. A CERTAIN GLOBAL INFLUENCE IS SURE TO ENTER DECLINE, IN GUIDED COMMERCE, THEN FINANCE. $$$

A client has a contact who is participant to Virginia Beach activity discussions, landside and seaside. It is a giant USNavy town on the Chesapeake, and a decent beach area once frequented by the Jackass (North Carolina favored). A real estate agent informed that his firm was taking over 1400 foreclosures in August. The USNavy has recently reduced personnel, shifts, and hours. The income for all non-combat personnel is to be reduced by 20%, due to the budget sequester cuts. A ship that had recently departed with set course was ordered to return to port within four days. Since the 16th century, the #1 superpower has always been the one which commanded the strongest biggest navy. Witness a sign of waning dominance and military presence. It is reflected in the USDollar, the USTBond market, and the WTI-Brent oil price convergence. The USNavy has only one carrier strike group ready to deploy to either the Persian Gulf or the Western Pacific. A year ago, it had three carriers availab le. The global influence as enforced by the USMilitary is seeing the early signs of twilight. My belief is that probably half the USDefense budget is stolen, finally catching up to the nation. See the Bloomberg article (CLICK HERE).

◄$$$ NOTES ON GOLD EXPLOSION FROM THE VOICE. A RESOLUTION IS NEAR. BANK REVELATIONS ARE NEAR. PURSUIT OF A NEW EQUILIBRIUM IS NEAR. THE RESULT WILL CLEAN UP THE INVESTMENT BANKS AND BULLION BANKS AND RESTORE ORDER. THE GOLD PRICE AND SILVER PRICE WILL SOAR TO GREAT HEIGHTS. $$$

The Voice has been very busy in the last month. But on a couple occasions he offered a systemic viewpoint that is very enlightening and encouraging, if not spectacular. He wrote the following thoughts, with my edits. Let it be suggested that people should buy as much physical Gold & Silver bars and coins as possible, as long as you can find it. The Boyz are pushing the paper gold screen price through the floor boards in a frantic attempt to save their sorry asses. However, by doing so they trigger the exact opposite of the intended effect. Instead of discouraging people to flee Au/Ag, people are streaming into buying like mad across the world, especially in the Eastern Hemisphere. One of the biggest banking scams and frauds is about to be blown into the open, exposing a fraud of a magnitude incomprehensible to most people. Focus on Deutsche Bank, which he has mentioned numerous times as being at the nexus of the bank frauds in its vulnerability. It will be like a spring loaded process. Once the forces are released and the criminal manipulations break down, we shall see physical metals going into the stratosphere. On the paper side, the banking systems, the currencies, the sovereign bonds, even entire economies and political systems will collapse onto themselves from the contagion and fallout and disorder. It is called Paradigm Shift that bring about great changes. In my view it is like a global financial earthquake.

The banksters are in for mega disclosures. The entire house of fraud and deceit will come cashing down not before long. The universe always strives for equilibrium, as all will balance out. Getting there is an incredibly brutal process. By the way, here are some Voice forecasts for all to savor concerning physical Silver. The Silver price will go to $400 per oz in today's US$-based value terms, in the near future, like not the next few years, more like sooner. He cannot provide any further concrete details, but he gave a guarantee with 100% certainty. He never does that. Be sure to know the silver deficit is enormous. The Jackass concluded that some important major accords have been struck, with implementation to roll out in the next several months, probably regarding Gold Trade Settlement with a strong Gold Trade Central Bank serving as foundation, where the understood Gold price will be at least $5000 per ounce and the Silver price will be at least $150 per ounce. Look for military protection of the new system to be provided by Russia & China.

My speculation beyond this event calls for clearance and cleanup of the COMEX & LBMA markets, and of the Wall Street and London City crime centers resulting in disposition of a mountain of naked shorts, combined with legal contract disposition of the fraudulent management of Allocated Gold Accounts. The entire process will then lift the Gold Price to $7000 per oz and the Silver price to over $300 per oz in a second resolution phase. All coming in the next couple years, when the entire banking, currency, bond, and gold systems break down totally and completely.

◄$$$ THE BALTIC DRY INDEX IS HAS RISEN 30% IN RECENT WEEKS. THE GLOBAL ECONOMY IS NOT IN RECOVERY. [JOKE: PERHAPS GOLD SHIPPED EAST IN WEALTH TRANSFER, AND USTBONDS SHIPPED WEST TO SENDER REDEMPTION.] IN REALITY, INSIDER SCOOP SAYS THE NUMBER OF ACTIVE SHIPS HAS BEEN SERIOUSLY REDUCED BY DECISIONS TO SCRAP OLDER VESSELS. $$$

## BRICS & THE EURASIAN TRADE ZONE

◄$$$ EVOLUTION OF BRICS DEVELOPMENT BANK IS IN PROGRESS. NEXT IS THE CAPITAL CORE TO THE BANK, THEN DECISIONS ON INITIAL INFRASTRCTURE PROJECTS. MUCH WORK LIES AHEAD IN THE ACTUAL DAILY OPERATIONAL FUNCTIONS OF THE GOLD TRADE SETTLEMENT. AT FIRST THE MEMBERS WILL DEPLOY BARTER AND SWAP DEALS, THEN LATER GOLD PAYMENTS WITH INTERMEDIARY SUPPLIERS. $$$

In the first two days of the St Petersburg Intl Economic Forum 2013, the agenda focused upon the potential and limitations of the emerging economic bloc, as well as the establishment of the BRICS Development Bank. The fund is cited as going operational in 2015, but the Jackass believes that is a distracting ruse. It will be much sooner, like in some form late in 2014, or by mid-year. The SPIEF panel concluded that the next step on the BRICS agenda should be to reduce dependence on the USDollar and the Euro in mutual trade. Think Chinese Yuan Swap Facility usage. What must be agreed on is the principal core capital size and the amount each country will contribute to the bank. Given the completed agreement on the BRICS Emergency Fund, expect quick agreement. The Russian deputy finance minister Sergei Storchak took the lead role. A decision must be made on whether the bank will finance investment projects in the five BRICS states or whether it will expand beyond them to other emerging markets. Hard work lies ahead on the nuts & bolts of the BRICS Development Bank, as only political accords have been done to date. Forming capital is the next major step. Storchak added that the experience of the post-WW2 period and Bretton Woods will be helpful for the BRICS states when working on the operational issues. The Jackass belief is that the buildout will eventually form the Eurasian Trade Zone initially, with satellite projects to help along Africa, Brazil, and Iran, thus linking them. The Yuan usage in trade will be temporary, a device used to wean off the USDollar in preparation for gold used in trade settlement. The USDollar has become an outsider looking in, with minimal US industrial output.

The Russian hosted G-20 Meeting will merge with the next Intl Economic Summit in St Petersburg this September, where the BRICS leaders will be in full attendance. Do not expect much of any US delegation to arrive. The first order of business for the BRICS Bank according to Kirill Dmitirev, the head of the Russian Direct Investment Fund, is to deal with two primary trajectories, infrastructure, and projects of high synergy effect. The investments in infrastructure will be gigantic. He mentioned joint projects between Russia and India. No US-based projects are to be on the table. See the BRICS Post article (CLICK HERE). The Bank will have a visible side with projects, and an invisible side with USTBond conversion to Gold bullion. The bank will serve as the Gold Trade Central Bank, issuing Letters of Credit for trade facilitation, known as Gold Trade Notes. The entire BRICS official devices are intentionally being misrepresented, so as to lull the USGovt to sleep and to keep them off-balance.

◄$$$ THE ROSNEFT ENERGY DEAL WITH CHINA IS FOR $270 BILLION OVER 25 YEARS. THE LONG-TERM PACT WILL FORM THE EURASIAN TRADE ZONE CENTRAL BLOOD SYSTEM, THUS ENCOURAGING OTHER PARTNERS. THAT GERMANY IS NOT ONBOARD IS A BIG MISSING PIECE. THE ENERGY SUPPLY, THE PIPELINE DEVELOPMENT, AND THE DEBT FINANCE ARE ALL VERY IMPRESSIVE. THE FOUNDATION IS BEING CONSTRUCTED. THE UNITED STATES WILL BE EXCLUDED. $$$

OAO Rosneft signed a US$270 billion supply deal with China National Petroleum Corp (aka Sinopec), making the Middle Kingdom nation the biggest market for Russian oil. The state-run Rosneft, the largest world oil producer by output, will receive a $70 billion pre-payment. It pledges to supply 360 million metric tons of crude to China over 25 years, double the previous deal. The agreement signed in April called for Rosneft to deliver at least 743,000 barrels per day to CNPC starting in 2018. Rosneft agreed to increase oil flows to China through an extension spur from the East Siberia-Pacific Ocean pipeline. The agreement highlights a growing partnership between China, the top energy consumer, and Russia, the largest oil producer. Rosneft and oil pipeline monopoly Transneft have already secured $25 billion from China in 2009 as upfront payments by pre-selling oil, thus gathering cash to finance growth and new construction projects. Russia first began supplying China by railway, then later by a new pipeline while opening a Pacific port of Kozmino in 2009. Together with supplies to Kozmino, Russia is already exporting around 750,000 barrels per day to Asia, or 17% of its overall exports of 4.4 million barrels per day.

The deal was announced by President Vladimir Putin at the St Petersburg Intl Economic Forum last week. The Sino-Russian energy deal signals two things, a firm commitment to China, but also a forceful warning to Germany to climb onboard. The trend is being set for fewer European deals, more Asian deals in commitment. As a result, the Russian oil output will be directed away from Europe. Rosneft was elevated to the biggest oil producer after acquiring TNK-BP for $55 billion this year. Russia produced 10.5 million barrels per day in year 2012. The pre-payment exceeds the entire Rosneft debt burden at $54 billion, making the giant debt free. The giant Russian firm will be more at liberty to develop its remote Arctic fields. To be sure, the Rosneft debt will be paid off in the form of USTBonds, the newest garbage asset.

China is the holder of the world's largest foreign exchange reserves. Rosneft completed the contracts for a long-term $2 billion credit line under an accord signed March 2013. Rosneft also signed oil supply deals with trader Trafigura Beheer BV (the Dutch multi-national commodity trading company) and PKN Orlen (a Polish refinery firm). The Trafigura deal includes an advance payment of as much as $1.5 billion for 10.1 million tons of crude oil and refined products over five years. Under the agreement with PKN Orlen, Rosneft will supply 8.28 million tons of crude under a three-year contract through June 2016. The delivery would be to the Czech Republic via the Druzhba pipeline. Estimated value is about $6.2 billion. See the Bloomberg article (CLICK HERE) and the Reuters article (CLICK HERE).

Putin is giving strong signals to Germany. The message is clear, that it is time to openly join the Eurasian Trade Zone, since China has explicitly committed to it with a 25 year deal. For the last few years since the Lehman black hole was created, followed by wretched insolvency, Germany has been bogged down with its European commitment. The Southern sovereign debt burden has been a millstone around its neck. It must clean house with its wrecked banks, and turn East for the future. The cost of delay will rise each year. At least Germany has refused further credit extensions to the South. However, many heavy rail lines extend from Russia to Germany, a sign of future commitments. It bears repeating, The banks and investors holding Rosneft loans and bonds will be paid with USTreasurys courtesy of China, as the big dump will commence very soon. The finance flows are never mentioned in the West.

## OIL PRICE CONVERGENCE & PETRO-$ SUNSET

◄$$$ THE WEST TEXAS CRUDE OIL PRICE AT THE START OF JULY WAS $4.28 BELOW THE BRENT OIL PRICE. A YEAR AGO IT WAS $18 TO $20 LOWER. THE CONVERGENCE IS WELL ALONG, ALMOST COMPLETE. IT COULD SIGNAL THE DEMISE OF THE PETRO-DOLLAR, THE END TO SAUDI OIL PAYMENTS IN USDOLLARS. THE NATURAL GAS COOP LED BY GAZPROM WILL DISPLACE OPEC AS THE MAJOR STABLE COMMODITY PLATFORM FOR THE NEW FINANCIAL SYSTEM. $$$

The Jackass desk received a great forecast call in April by my European source EuroRaj, that the two crude oil prices would merge. The convergence had only begun at the time, having been at least $15 for two years. He heard rumors among the finance center colleagues and friends that the Petro-Dollar sunset required a merger of the two important crude oil prices. The $15 to $20 per barrel spread (lower W.Texas price) had to be eliminated. He was correct, as it has been eliminated. Its convergences forebodes a demise of the Petro-Dollar. The confirmation will come from a few sides. Something important is near on the Saudi requirement of exclusive USDollar oil payments. When they converge, it will make the news, but be misinterpreted without a doubt. Like a nonsense story about stronger US demand from an economic recovery, finally arrived. Maybe the US media merchants will drone on about diverted Canadian Oilsands supply to China.

The crux of the oil relationship with the USDollar is simple, apart from the Saudi connection. Any control of the WTexas oil price is implicit control of the USDollar. Convergence thus means the US bankers lost control of the global oil price. But if the WTI price is actually linked to the Brent, then those who control the Brent price also control the US oil cost. Brent is controlled to a much greater extent by rough cut Demand & Supply, and not by derivative gaming done in New York or London. The Anglo Boyz have essentially lost control of setting energy prices, which drives trade and economic gro wth. Conclude that the US Boyz have therefore lost control of the USDollar itself. Explicitly sovereign nations will also see a lesser need to hold USTBonds as a reserve currency, since Brent is traded in quite a few currencies. Watch for big developments coming from Russia to set the oil price. The confirmation of the death knell will be the Saudis announcing acceptance of crude oil payments outside the USDollar.

By July 10th, the Brent-WTexas spread was below $2.50 per barrel. It finally went below $1 last week, to call it a convergence, as forecasted. In the first half of July, actually a 12-day period, the West Texas price rose 14% from $92.67 to $105.99 in the wake of the eruption in Egypt. It did not rise from growth or its hope. Tyler Durden reported the collapse of the oil price spread as self-feeding. Between infrastructure issues in the United States, technicals in the market, and Middle Eastern unrest, the premium is building in the WTexas price. The USEconomy must soon react to $4 gasoline. The growth story will be very difficult to sell.

Many have been the days when the West Texas Intermediate (WTI) oil price has risen over $1, sometimes over $2, but the Brent price had been up much less. A strange factor must be watched, which tends to confirm the manipulated price spread. If Egypt was a major price factor, WTI should have been unaffected while Brent should have spiked as it passes through the Suez Canal. That has not happened. None of the Egyptian parties have hinted at closing the Suez Canal, nor would their army allow it. The convergence is a red flag. EuroRaj goes further, expecting the Obama Admin to allow the Keystone Pipeline construction possibly soon. Just last week, Obama gave a speech favoring the resumed progress of the controversial pipelines. See the RT News article (CLICK HERE). The US is backed in a corner. The West Texas Intermediate crude oil price has been a longstanding benchmark, but it will become redundant. The Brent convergence means it will be redundant, and worse, that the Petro-Dollar will die, or enjoy a not too slow sunset. Unfortunately, it means the USDollar will lose its global reserve privilege, and the United States will slide into the De-Industrialized Third World.

EuroRaj wonders if by September or October, the oil for export is pegged to the Brent price. The usage of Brent in pricing signals a USDollar that no longer enjoys their reserve currency role, abused in hegemony. He believes the Saudis might be quietly requesting more Gold in the oil trade, as a direct response to the USFed monetary inflation initiative, called euphemistically QE, but called QE to Infinity by the Jackass. The hidden factor is that Saudis no longer want USTreasury Bonds, as a result of diminishing USMilitary role by the United States in the entire Middle East. With the rise in the Chinese Yuan currency (swap facilities), and Gold Trade Settlement near, the Petro-Dollar is being phased out. Confirmation is the Brent-WTI convergence.

When the US benchmarks its oil price to Brent, it will be following a global benchmark which will be determined by Demand & Supply dynamics, and not by derivatives out of New York. The convergence signals a reduced role by the gaming on Wall Street at the big Morgan Stanley commodity desks, for instance. The inability to control energy prices will be the biggest blow to the USDollar, sure to push average prices at the pump beyond $4 per gallon. Notice the rising gasoline price during a long recession over the past decade. All the while, the Gulf of Mexico production has been shut down by the Halliburton chess move, complete with their sabotage of the DeepWater Horizon platform. They took control of the onshore fracking chemical business, while dominating in the onshore leasing business. Think murder for commercial motive, which resulted in Matt Simmons being suicided in his Maine jacuzzi in August 2010.

The demise of the Petro-Dollar will be timed with the expected fall of House of Saud, and the rise of the new NatGas Coop led by Russian Gazprom. The other natural gas players will be a truly strange set of bedfellows with Qatar, Iran, Israel, and Turkmenistan playing big supplier roles. The energy core foundation is tied to a financial platform, which will displace OPEC. Expect the OPEC to fracture, as the Saudi royals gradually lose their grip of power. Chaos is coming to the Persian Gulf. For an enlightened review of the critical factors involving the USDollar, crude oil, and Gold, see the I-Tulip article by Eric Janszen (CLICK HERE). His reference to Planet ZIRP would be more amusing, if not so tragic. A surreal setting on earth is taking over.

◄$$$ TWILIGHT IN THE DESERT, AS THE UNITED STATES IS REBUFFED IN EGYPT OVER THE SAUDI AND UAE SUPPORT, FOLLOWED BY A QATARI EXIT. THE IMPLICATIONS ARE FOR A GRADUAL SUNSET OF THE PETRO-DOLLAR, A CRITICAL FOUNDATION OF THE GLOBAL RESERVE ENFORCEMENT. AMERICAN INFLUENCE IN THE REGION IS DISCREDITED AND VANISHING, WITH GROWING MOMENTUM AND WIDER RECOGNITION. THE DEMAND FOR USDOLLARS TO SETTLE FOR ARAB OIL WILL BE ENDING SOON, PARTLY BECAUSE OF FOREIGN POLICY. THE SAUDIS WILL NEXT TURN ATTENTION TO STRONGER ACCORDS WITH CHINA, IN FURTHER DEFIANCE OF THE USGOVT. $$$

The untold story about Egypt is the fallout effect with Saudi Arabia. The ouster of President Mohamed Morsi in Cairo involved direct participation by the Saudis behind the scenes. In fact it was a joint Saudi & UAE project, as they do not approve of the Muslim Brotherhood that the USGovt and Obama Admin is so closely tied to. The Saudi defiance of the White House marks a turning point in foreign relations. The history goes back almost 70 years between the House of Saud and the US-UK Empire. In 1945 on his return from the fateful Yalta Conference, US President Franklin Roosevelt met Saudi King Ibn Saud and won exclusive rights for the US oil companies (Rockefeller group) to conduct commerce with Saudi Arabia, to tap its vast oil wealth. The Seven Sisters were born. During the 1973 oil shock called the Arab Oil Embargo, believed to be orchestrated by Kissinger, the OPEC producers hiked the oil price almost 4-fold. The great recycle plan was put into effect, where the Saudis and other Persian Gulf oil nations would sell their oil in US$ terms, and recycle their surplus in USTreasury Bonds. They also invested in the big US banks like Citibank. The pact assured the USDollar would become the world reserve currency. The pact is otherwise known as the Petro-Dollar defacto standard. Also in return, the USGovt agreed to sell advanced US weapon systems to the Saudis, including training for the Saudi Air Force.

The US arms sales saw a giant quantum leap in 2010. When the Arab Spring was launched, and a queer version of democracy broke out in North Africa, as in Tunisia and Egypt, soon to reach Libya, the Obama Admin announced the largest arms deal in US history. The US agreed to sell the Saudis 84 new F-15 jets (fighter aircraft) and to upgrade another 70 fighter jets as part of a $60 billion deal. The plan was to isolate Iran.

The plot thickens on the aid front. Before the Egyptian military coup, the Saudis had given secret assurance in Cairo to Defense Minister and head of the Army, that the Saudis along with other conservative Gulf oil states including Kuwait and UAE would guarantee financial support in the event the Obama Admin cut the EUR 1 billion annual aid to Egypt's military in retaliation for ousting the US puppet Morsi. On July 17th, the newly sworn Egyptian transitional government confirmed that it has received EUR 6 billion in grants, loans, and fuel from Saudi Arabia and the UAE. The details are straightforward. The Saudis approved EUR 4 billion in aid to Egypt, and the UAE offered EUR 2 billion in desperately needed support for the economy. The Saudi funds consist of a EUR 1.5 billion central bank deposit, EUR 1.5 billion in energy products, and EUR 750 million in cash, as confirmed by Saudi Finance Minister Ibrahim Al-Assaf. The UAE will make a EUR 750 million grant to Egypt and a EUR 1.5 billion loan to the Egyptian central bank, as an interest free deposit. The Arab aid package news is doubly insulting, since the USGovt had insisted that Morsi regime conform to harsh IMF conditions for financial aid. Think austerity.

Qatar reacted emphatically. The Gulf energy rich state was absent from the aid to Egypt. In fact, the Qatari Emir Hamad bin Khalifa al-Thani had sunk over EUR 6 billion in Egypt since the revolution almost three years ago. He also bankrolled another estimated EUR 7 billion for Islamists in Libya, Syria, and Gaza run by Hamas. He had been major financial backers for the Muslim Brotherhood that had run Egypt, now toppled. Qatar is home to the a giant USMilitary complex, the US Central Command Forward HQ and the Combined Air Operations Center. Until the military coup against Brotherhood rule in Egypt on July 3rd, Qatar was home to leading members of the Muslim Brotherhood. Immediately following the Cairo Coup, the Emir of Qatar abdicated his throne in favor of his son. Suddenly Hamad bin Jassem al-Thani, architect of Qatar's pro-Muslim Brotherhood foreign policy, has been silenced. He was removed, replaced by a military figure. The Qatari leadership is embroiled in a recalibration on foreign policy, so as not to be completely isolated within the Saudi-dominated Gulf Arab states. The USMilitary finds itself in a precarious position, resident in Qatar. The muscles flex to US arms, but without testicalia, and surely a dysfunctional brain stem.

The Saudi decision to support the overthrow of the US puppet Morsi, and derail the Muslim Brotherhood revolutions across the Islamic world has dealt a major setback to the crazy destructive US strategy. The Brotherhood has been given a spear in the back. The undermine of China in Persian Gulf and East African region is no longer active. Expect that China gave approval of the Egyptian change of guard. The analyst consensus is that the Saudi monarchy began to fear that the secretive Brotherhood would one day rise in insurrection against their rule as well. The Saudis are still bitter of the USGovt smashing the Baath Party secular dictatorship of Saddam Hussein in Iraq, since it brought a majority Shiite power to their neighbor to the north. The ties between Iran and Iraq grow each month on the commercial front. The Saudis had enough of US meddling. The House of Saud finds itself not stable, given King Abdullah is clinically dead. The Saudi rule is more in jeopardy from reform demands, internal strife, rising food prices, royal family friction, and competition over the throne. The Obama Admin has been silenced with hands tied, able to do little. The conclusion is basic, a strong indication of the declining US global power. See the Global Research article (CLICK HERE).

As footnote, The Voice gave advanced warning of the Egyptian military coup three days before it occurred, from direct communications through a contact from a ranking general. Therefore the Jackass is informed in realtime on some events, but they are gnarly. Note that the death of the USDollar will come about for political reasons as much as banking reasons, laced with economic justification (rising global costs). It has turned toxic with QE to Infinity, aka hyper monetary inflation. Weimar is not a solution. It is morphine for a rotting corpse.

An addendum story. The Saudi violence in civil disorder incidents in the eastern provinces adjoins the Bahrain location. The situation is different there, since majority Shiite but ruling moderate Sunni royals. Bahrain is catching fire next door to Saudi. Dozens have been injured in Bahrain as police and protesters exchange fire. The risk is acute for Saudi Arabia, on its eastern border with Bahrain, and on its western border with Yemen. It is only a question of time before the entire Middle East will be on fire. Those in power can drag it out a bit longer but they cannot stop it from blowing up into their faces. See the RT News article (CLICK HERE). The financial victim will be the Petro-Dollar.

◄$$$ INDIA PLANS TO PAY FOR IRAN OIL IN RUPEE CURRENCY. IRAN MIGHT BE RELAXING THE GENEROUS TERMS TO INDIA. LOOK FOR INVESTMENT BY IRAN IN INDIAN REFINERIES OR OTHER ENERGY RELATED INFRASTRUCTURE. MORE LIKELY, THE BULK OF RUPEE HOLDINGS WILL GO TO PURCHASE GOLD BULLION DIRECTLY BY TEHRAN. THE OIL FOR GOLD TREND WILL ACCELERATE IN THE EASTERN HEMISPHERE. $$$

The previous arrangement had been the Indian oil purchase from Iran, paid 50-50 in Euros and Indian Rupee currency, an equal split. A closer review reveals that Iran cannot easily convert Euros to Gold. Possibly the Iran leaders do not trust the European system after what happened in Cyprus. Their accounts in Europe could be frozen and looted at any point. Or the Iran Govt leaders do not wish to tempt with further motive on sanctions with gold on the table. Essentially an Oil for Gold swap is in place, paid with INRupees and Indian banks being the middlemen. Any undue downward pressure on the Rupee is because of general elections next spring, the result of the massive freebies the present government has been doling out. On the other side, Indians are looking to export pharmaceuticals to Iran so as to bring down the net Rupee deficit. Maybe an investment stake in Reliance Industries is in store by Iran, toward the large refiner in India. Help could come to help support the Rupee by holding those funds or investing them in Indian businesses.

Maybe Iran will announce the construction of new energy facilities in India, since still growing in its middle class. The key is for Iran not to dump the Rupees rapidly, causing more downward currency pressure for India, which would cause even more price inflation. The direct plan is for Iran to use the Rupees to buy Gold bullion for its reserves, an extension of the Gold Trade Settlement, or perhaps a precursor. Doing so comes with the understood impact of not preventing the Rupee exchange rate to go lower. Look for closer commercial ties between Iran and India, in direct investment, perhaps in a new pipeline or port facilities, even off-shore platform projects. India is in trouble with gold imports and crude oil imports both.

EuroRaj pitched in, whose shared thoughts have been valuable. These events fall in his domain of expertise in India, Iran, and Turkey. He emphasizes that Iranians are very crafty. They offer a four-pronged approach to India. 1) They have offered very good terms of trade with regards to crude oil purchase. This means extended price fix and credit terms. 2) They are dangling exploration contracts to the Indians, who are active in off-shore exploration. 3). They are dangling the Iran-Pakistan gas pipeline to India, for inclusion or extension. 4) India in return is requested to supply car and pharma exports to Iran. The major point to recall in the USDollar demise is that ultimately trade will lead geopolitical events. It is destined that India and Iran will be very strong partners over the coming decade. They will also continue to bond with gold intermediary connections. They make for a natural fit from a geopolical, demographic, and trade perspective, along with being neighbors. Be sure to know, all of this buildup in bilateral commercial relations happens under the watchful eye and guidance of the Russians. See the PressTV article (CLICK HERE). The middle finger from India goes to the United States. On the surface the Indians play the Anglo game to hold back the gold retail tide. Behind the scenes, they cut major deals with Iran.

## GOLD MINES LOSING PROFITABILITY

◄$$$ GOLD HAS CRASHED THROUGH PRODUCTION COST LEVELS FOR MANY MINING PROJECTS. MANY FIRMS SUDDENLY HAVE IMPORTANT PROJECTS THAT HAVE TURNED UNPROFITABLE. THEY WILL BE SHUT DOWN, IF NOT RIGHT AWAY, THEN SOON. THE EFFECT TO SUPPLY WILL BE HARSH AND SUDDEN. EXPECT 2013 GOLD OUTPUT TO BE 10% TO 15% LESS THAN LAST YEAR. DITTO FOR SILVER, MAYBE WORSE SINCE A BYPRODUCT METAL. THE COLLECTION OF LARGE MINING FIRMS HAVE SUFFERED A SIGNIFICANT FALL IN THEIR MARKET CAPS. $$$

With the magnificent COMEX Gold price decline that flirted with the $1200 level, the threat has been critical for many mining firms. For many projects, large and small, the current official price has gone below the common cost for producing an ounce of gold. The mining sector will suffer an impact, if prices remain at or near the $1200 to $1300 range. Andrew Su at the Compass Global Markets (brokerage house from Down Under) said the all-in costs are rising fast, from both increased costs and more accurate comprehensive cost analysis. He suspects the mining cost per gold ounce is much higher than $1000. He pointed out that several gold mines closed recently in Australia. Some companies will actually go bust. They did not react quickly enough. Widespread job cuts have been announced on all continents, from Australia to North America to South America to South Africa.

Su added that fixed costs like worker wages are actually rising quite significantly while gold prices have fallen, adding pressure to mining operations. To be sure, the gold companies are scrambling in a panic. Worse still, the market capitalizations of the majority of mining firms have fallen hard, adding to discouragement and perhaps some bad judgment. The marquee names are down in headline stories, like Newcrest Mining (3rd largest gold producer) down over 50% since April, like Newmont (2nd largest gold output) down 50% in the last ten months, like Barrick Gold (1st in gold output) down almost 50% also since April, like Kinross Gold down 35% in the last four months, like Royal Gold down 30% in four months, like Gold Fields down 50% in the last six months. like Anglo-Gold Ashanti down almost 60% in the last year. The list of damaged stocks is long. The last two are South African firms, beset by additional problems like labor and marxist nitwits.

Gold falling below $1200 to $1300 per ounce is a serious range at which the miners, especially the smaller ones, will face profitability issues. Here is the business factor that appears to prevail, something the Jackass minimized somewhat a month ago and two months ago. Many mining firms will chose to maintain certain production levels for a while just to see what happens in the market. The delayed decision to cut back on production will prove to be costly, as they will waste their valuable assets from ore in the ground. The industry is currently seeing a lot of marginal production from many of the smaller miners, all at risk. My belief is that many mining firms are not properly disclosing their project halts and curtailed vein work. They do not wish to render deeper harm to their stock share valuations from negative press releases. They will admit the reductions to production when they must. But many will delay, relying upon unfounded false hope of a quick rebound. Some companies will find it hard to stop the momentum of a big business, with supplier commitments and contractors under contract. They cannot turn on a dime (change direction quickly). While some nimble companies will cut back quickly to save funds, many others will continue due to concern over worker income, even losing workers. Su expects that mining firms will start to close down some of the more costly mines, delay on marginal project launches, and spend less on exploration, thus investing less in general. Smaller Australian miners that have ceased operations completely in the past year include Central Norseman Gold and Navigator Resources.

Su offered a dire outlook that reflects the extreme conditions. He said, "Prices may fall for a very brief period of time, but I think the economics of it is such that the entire industry will fail to exist if gold falls further. This fall in the price of gold is not truly based on Supply & Demand. It is based on expectations of what the Federal Reserve is doing. Somewhere along the line the gold prices will simply start rising, because production will reduce supply significantly." The Gold market will eventually respond to a significant reduction in supply as miners cut back, in his opinion. It will first be stabilization, then a sharp rise in the Jackass view. Ignore Su's comment about USFed expectations, since he seems oblivious to the naked shorting concept and paper ambush weapon being used in grand style. That weapon is not discussed openly in the financial press, any more than banker sexual perversions or satanic rituals. See the CNBC article (CLICK HERE) and the Kitco article (CLICK HERE) and the Mining.com article (CLICK HERE) and the Seeking Alpha article (CLICK HERE). The sheer volume and diversity of cost analysis analyses on the mining industry has never been witnessed before, like the illicit naked shorting with total government impunity provided, protected, and sustained.

◄$$$ !!! THE BEST APPROACH WOULD BE FOR SEVERAL LARGE MINING FIRMS TO ORGANIZE AND TO DECLARE A STRIKE AGAINST COMEX & LBMA, TO HALT ALL PROJECTS FOR A 30-DAY PERIOD, MAYBE A 60-DAY PERIOD. THEY MUST STOP SUPPLYING THE CORRUPT METALS EXCHANGES, FOR A MAXIMUM EFFECT. THEY SHOULD SEEK OUT ALTERNATIVE BUYERS FOR THEIR PRECIOUS METAL OUTPUT. !!! $$$

Only if the New York and London centers of corruption are dealt with like crime centers, will the gold market recover sufficien tly. The other alternative would be to formally announce alternative supply arrangements with the Sprott Fund, the Chinese central bank, the Russian central bank, and major hedge funds. They might be smart to divert supply to the desperate bullion banks that oversee raided Allocated Gold Accounts in Europe, and supply them secretly. The Jackass does not believe the mining firms have the stones for such a bold organized maneuvers, nor the business skill at the executive management level generally. A Silicon Valley high-tech firm in California would never continue plant operations at a loss like many obtuse lumbering mining firms.

◄$$$ JACKASS IS GOING ON RECORD SAYING THE 2013 MINE OUTPUT FOR GOLD & SILVER WILL BE 10% LESS THAN 2012, PERHAPS 15% AND HORRIFIC. THE STRESS TO THE GOLD & SILVER MARKETS WILL BE ENORMOUS AND CAUSE GREAT CHANGES. THE PRESSURE FOR A GOLD MARKET BREAKDOWN RISES WITH EACH PASSING MONTH. HOWEVER, THE BIG DECLINE IN MINE OUTPUT MIGHT NOT BE SEEN UNTIL YEAR 2014, AS COMPANIES WILL BE SLOW TO RESPOND. SELF-DELUSION COULD PREVAIL IN PRUDENT DECISIONS ON PROJECT SHUTDOWNS BEING DELAYED. $$$

The forces are numerous. Lower official Gold & Silver prices, natural accidents like cave-ins and mudslides and underground wall collapses, labor strikes over worker conditions and pay scales, hostile government confiscations seeking to execute their resource nationalism, even legal challenges to mine property ownership, these all form grand obstacles and challenges for continued mine output. These factors have been laid out at length in past Hat Trick Letter reports. Some suspect sabotage, like at the Kennecott landslide in Utah. My doubts linger that it was indeed sabotage, but rather nature. Witness a natural and human response to the corrupt COMEX pricing mechanisms for precious metals. These banksters have royally screwed themselves, like putting plastic bags on their heads while stabbing themselves in rituals on stage. The telling report card will be lower 2013 mine output, sure to feature shocking declines. By August or September, some analyst extrapolations will hit the news wires. Expect at least a 10% reduction in gold output, possibly 15%. For silver a slightly different factor must be reckoned with. Silver is a common byproduct of other metals mined, like zinc, lead, and copper. The global economy has lower industrial metal demand, but these metal prices are not suppressed like gold & silver. Regardless, the 2013 mine output for precious metals will deliver a massive shock when widely recognized.

My colleague and friend Steve St.Angelo (aks SRS Rocco) pitched in with some astute thoughts on the global mine output issue. It makes for a complicated picture. What follows are his thoughts, with my edits. The highest cost mines in the portfolios are normally the smallest producers of the bunch. For example, US Silver & Gold shut down their Drumlummon mine in Montana because it was producing gold at $2000 per ounce. The mine was only producing a few thousand ounces of gold annually. Also, Golden Minerals shut down its mine for cost reasons, but they only were producing 5000 to 6000 ounces of gold per year. Furthermore, Chinese gold miners will produce 10% more gold this year, nothing being shut down due to lower prices. They have a locked buyer at their own central bank. But they have different motives, in their best interest to keep these mines pumping out gold bars. The first stages of the huge gold paper price takedown for the miners call to cut costs and to curtail cost in mine production processes. The industry should see a small decrease in gold production this year. From Rocco's experience analyzing mining industry in the past, it takes time before big moves like 20% to 30% production declines are seen. It might take until 2014 or so to happen if official prices remain low.

My Jackass rejoinder is that many large mining firms might temporarily shut down their own marginal mine projects, without much notification after some accounting chicanery and deception. Also, some mining firms might operate under the assumption that the Gold price will recover quickly. They will be slow to make big business decisions until their hopes are dashes and optimism crushed. Another final COMEX price ambush, done with motive to help the big US banks to escape their costly wrong-sided futures contract shorts, might be met with a broad mining firm action to shut down many more projects, and to reduce precious metals output.

◄$$$ SOUTH AFRICA'S MINERS CANNOT OPERATE WITH GOLD BELOW $1500, ACCORDING TO GOLD FIELDS. THE AUSTRALIAN MAJORS LIKE NEWCREST ARE UNDER PRESSURE ALSO, LOGGING MASSIVE WRITEDOWNS. THE NORTH AMERICAN SILVER PRODUCER US SILVER & GOLD WILL FURLOUGH ONE THIRD OF ITS WORKERS IN IDAHO. $$$

The lower ambushed Gold & Silver prices will render so many projects as unprofitable, that the projects will be ordered shut down. Two cases in point are worth discussion. Lower mine output is the hot topic. It is the dagger in the heart of gold market, acting like a massive blood clot to the industry. As supply is curtailed, it is like denial of oxygen to the human body. Next comes organ damage. The corrupt bankers are so cooked, since soon they will have exhausted the supply. Gold Fields and Galena are exhibits of curtailed mine output. Gold Fields CEO Nick Holland claims the Gold price must be at least $1500 per oz for the gold mining industry to be sustainable in South African operations. He is speaking from his vantage point, the once ripe industry locale. Holland calls the current $1250 price unsustainable, where vacant rationalizations will be heard to continue projects like sustained employee incomes. He stressed how mines cannot keep producing when they are losing money. Producers like Gold Fields face a severe squeeze, following spending programs by the industry valued at $195 billion on acquisitions during a decade long price boom that peaked in 2011, when prices reached $1900 an ounce. Since then, the corrupt market mechanisms went into hyper-drive.

The South Deep mine in South Africa owned by Gold Fields is one of the few mines that could survive at the current gold price of $1250 an ounce, claims Holland. The mine's size and its mechanized operations translate into less reliance upon labor, feature lower costs, and result in fewer troubles. However, continued output at the low-cost mine is a massive waste, a squander of the resource. Australia's biggest producer is Newcrest Mining. They wrote down the value of their mines by A$6 billion (=US$5.5 bn), the biggest one-time charge in gold mining history. Rivals such as Barrick Gold and Newmont Mining may be next in massive writedowns, according to Jefferies research. See the MineWeb article (CLICK HERE). Thus big declines in stock valuations will persist. The Jackass sees more reasons to own bullion bars and coins, rather than mining stock shares, with each passing month.

US Silver & Gold announced last week a workforce cut by 126 personnel at the Galena Mine in Idaho as part of cost reduction. Mining aint profitable at this artificially low silver price. Despite 10% higher tonnage, 19% greater output, and 8% lower cash costs, the profit line is a mess. President & CEO Darren Blasutti blamed the job cuts on the declining silver price. He said, "The ongoing decline in the price of silver required us to look for further cost savings in order to be profitable and protect our balance sheet going forward. We have therefore taken the difficult step of identifying additional strategic measures that will allow us to cut costs over the immediate and longer term. I deeply regret the impact this will have on our employees, who have worked hard to help us achieve the progress we have made." They will implement the Small Mine Plan, scaling back the number of operating stopes, cut staffing from 351 down to 221, and to put both the Coeur Shaft and Mill in addition to several levels of the Galena Mine into care and maintenance mode. The company reported the CEO and board members will take a voluntary 20% pay cut. with executives taking a 10% pay cut. See the ABC KXLY article (CLICK HERE). As paid off morons in the USGovt and the babbling harlots on the financial networks talk about an economic recovery, they ignore the rising cost structure generally, and the lower profitability locally in the entire mining industry.

◄$$$ REFINERIES ARE THE WEAK LINK TO THE SYSTEM, THE MOST VULNERABLE ELEMENT, AND THE LIKELY POINT OF FAILURE IN THE GOLD MARKET. THE SUPPLY LINE TO THE REFINERS IS INADEQUATE, THE NEW CHOKE POINT. $$$

After a few fruitful conversations with The Voice concerning the breakdown from rising demand and falling supply, some light was shed on a key weak link for the gold market. The refiners are a choke point. They provide the high volume supply to the market exchanges and the biggest retail sellers. Demand cannot be met unless refiners produce gold bars. No matter whether from mine output or recast bars. Refiners cannot produce the required supply undless the mining firms deliver on their site output. A growing volume of the refiner activity is satisfying orders from the big vaults and brokers, who are also busily engaged in recasting of older bars. Much of the recast work is to conceal central bank leasing of gold. The banks (sellers) wish to hide their tracks and criminal deeds. The investors (buyers) wish to make their trails clean with a fresh start, even to give the appearance of being supplied by the more pristine sources. The investors seek plausible deniability, except for bold types like William Kaye, who admits his bars in Asia are from leased central banks.

◄$$$ SURE WOULD BE NICE TO SEE A MINING INDUSTRY STRIKE. IT WOULD MAKE PERFECT BUSINESS SENSE. $$$

The Gold & Silver mining firms face fierce profit pressures. They would be very unwise to squander their best and lowest-cost projects with continued production. They will slowly shut down the marginal projects, which might make tiny profits, no profits, or lose small money. The paper gold price schemes will work against the mining firms in a fierce way. The mining firms collectively could declare a strike of sorts against the Wall Street bankster gangsters. They could first shut down many more projects. They could second deny output to the COMEX and GLD funds, both snake pits of bank criminality. They could turn instead to Asian bullion buyers in direct defiance, and justify the move as seeking the best price. Boycott remains an effective business technique.

◄$$$ PURE SPECULATION THAT CHINA MIGHT BUY BARRICK GOLD. ALTHOUGH THE TARGET IS RIPE, THE OBSTACLES ARE VISIBLE WITH THE CANADIAN GOVT APPROVAL, AND HIDDEN WITH ANGLO BANKER DIRTY SECRETS DESIRED AS KEPT BURIED LIKE ORE. $$$

China is aggressive with gold, growing their official gold reserves, inducing their citizens to own gold, retaining the full national output from their mining industry, importing through the Hong Kong door, and establishing gold exchanges. The extent of the nation's gold appetite is reinforced by realizing that the pace of Chinese gold demand is equivalent to 50% of world mine production. China must continue to source its demand with secure adequate supply. Doing so has become a national priority. They have recently revealed their strategy in a string of recent acquisitions. Next comes a bold acquisition of one of the major gold miners. The stock valuations and market capitalization of the gold mining firms are at historic lows, at levels not seen since the Global Financial Crisis in 2008. The struggle to maintain profitable operations in the face of corrupt and artificially low official precious metals prices. The Canadian miner Barrick Gold is vulnerable. It boasts 140 million ounces of proven and probable reserves, 7.3 million ounces of annual production from 27 mines in nine countries, and US$2.3 billion in cash. However its low share price sets its market cap of a mere $15 billion. To its favor, Barrick is larger than its competitors, more geographically diversified, and one of the lower cost producers on an all-in cost basis. On the detrimental side, they lead the industry with a massive debt burden. They also have used consistent deceit in describing their large hedge book.

The gold reserves in the ground at Barrick are alone worth about $180 billion at current prices. The mining firm presents a tempting target for China, given its oversized $3 trillion savings account. Although it might surprise the market, an acquisition of this sort is very plausible. Two recent attempts by foreign firms have occurred to acquire large Canadian corporations, one successful and one not.  The two Canadian target companies were oil & gas giant Nexen and fertilizer firm Potash Corp. On a simple precedent basis, an attempt by China to acquire Barrick might lead the Canadian Govt to approve the deal. Like Nexen, mining operations at Barrick are largely outside of Canada and spread diversely around the world. Little direct impact could be cited against Canadian natural resource ownership and security. By contrast, the Potash Corp deal involved large scale deposits of a critical global resource located within Canadian borders. See the Kitco article (CLICK HERE).

More recent distress comes from the Pascua Lama project on the Argentine border of Chile. The remote project has been a giant sink for invested capital, not to be repaid. It leaves Barrick vulnerable to takeover from a different angle, assumption of debt. The firm surely does not wish to write down this project, a gem on its balance sheet. Yet the Chinese might seize the moment and capture it in a publicized rescue, rendering themselves the knight on the white horse. In the process of acquistion, China could actively dump USTreasury Bonds used in the buyout. In the trade the practice is called Indirect Exchange, a very deadly practice coming to New York and WashingtonDC. The USTBonds are coming home for redemption, as in Return to Sender. The Rosneft acquisition of TNK-BP from British Petroleum is another example of the nasty Indirect Exchange dump of USGovt debt, having turned toxic.

The hidden factor is the biggest factor in the Jackass view, a potential obstacle. Barrick has a long history of deep collusion with the central banks, including maintaining a gigantic scummy hedge book that refuses to go away, despite two truly massive secondary stock offerings in recent years. The origin of Barrick is replete with executive and board posts filled by bankers, including some US security agency wonks. Barrick holds many secrets deems never to be told. Therefore, look for China to approach other large global mining firms for acquisition, unless they wish to make a frontal assault at the Anglo-American bankers with a play for Barrick Gold.

◄$$$ BARRICK IS ON THE EDGE OF THE ABYSS. ITS FAILURE MIGHT BE 10 TIMES MORE DANGEROUS THAN LEHMAN'S DEATH, DUE TO POTENTIAL EXPOSURE OF PAST DEEDS. THEIR HEDGE BOOK IS A LITANY OF LIES AND CORRUPT EVERGREEN CONTRACTS. THE DEFAULT INSURANCE LOOKS LIKE A DEATH EVENT IS BEING TELEGRAPHED. $$$

Rob Kirby pitched in. He said, "The Powers that be might want to be a bit careful about making a public spectacle failure of Barrick. Many bones are buried in the graveyard of Barrick's hedge book. Also disclosure of their Evergreen contracts would be high risk, where they leased Central Bank bullion that never had to be repaid. Piss the wrong people off and details might emerge that make Snowden look like grade school tattle-tale piker." See the graph above for the Credit Default Swap contract on Barrick Gold. It looks much like Lehman's did in the summer of 2008 before it croaked, or was killed. The failure of Barrick Gold could become a quintessential turning point in a grand backfire, an industry response to controlled corrupted Gold price. To be sure, the Pascua Lama legal impediment has created a grand complication. One must wonder if the Chilean Govt smells a rotten vulnerable giant, and wishes to attack the Anglo bankers.

◄$$$ MORE TROUBLES FOR BARRICK GOLD AT PASCUA LAMA, AS FURTHER DELAYS ARE ANNOUNCED. AT RISK ARE LARGE RETAINED EARNINGS, AS BIG WRITEDOWNS LOOM OVER THE EMBATTLED FIRM. THE LOWER GOLD PRICE AND LEGAL WOES FOR BARRICK PRESENT A SYSTEMIC RISK THAT COULD EXPOSE 20 YEARS OF CRIMINAL ACTIVITY WITH WALL STREET. $$$

The troubled Pascua Lama project is (was) scheduled to produce 800,000 to 850,000 ounces of gold per year in the first full five years of its 25-year life. It was scheduled to start production in the second half of 2014. But Barrick has announced an important delay, now looking at late 2015. Its capital costs will be higher, as project cost estimates have been raised to $8.5 billion. China could be planning a bid for Barrick very soon, just to shake things up in the banker world. If smart, if they might seek a bargain basement price on cheap assets by waiting for bankruptcy. They could buy the assets at the auction, and cause an international uproar if blocked. The could actually threaten to dump USTBonds if not given the right to acquire. They might deny rare earth metals to the United States if not given the right to acquire. They might halt Apple i-Phone exports if not given the right to acquire. They might collude with Saudi Arabia to accept non-US$ oil payments if not given the right to acquire.

The lower gold price plus the legal challenges at Pascua Lama might have made for a gigantic backfire for the bankers. The firm could face severe capital problems, even face bankruptcy. The event would reveal a litany of past crimes, collusion, and corrupt practices, like selling gold to Wall Street what they cannot produce, with no intention of supplying it, like leasing central bank gold with no intention to replace it. The legal entanglements in Chilean courts are a true nightmare, una pesadilla! See the Mining.com article (CLICK HERE). Retained corporate earnings are at risk of vanishing like a cold breeze on the High Andes. Project writedowns will have the same effect financially as a Utah landslide. See the Financial Post article (CLICK HERE). Furthermore, Barrick Gold plans to overhaul its board of directors in the wake of a backlash from powerful shareholders, the Canadian pension funds. The Globe & Mail reported the insurrection that hopes to eliminate lavish perks in the slush fund that is known as Barrick executive compensation. An April vote opposed a US$17million salary for the company's new Vice Chairman John Thornton and $multi-million payments to directors Peter Munk and Brian Mulroney. The company faces a wake-up call for the chairman of vice and his henchmen.

◄$$$ BARRICK STOCK IS HEADING TO $10/SHARE. MORE DREADFUL NEWS IS COMING SOON. BARRICK WILL BE FORCED TO UNWIND ITS HEDGES DUE TO LACK OF PRODUCTION. THEIR SUPPLY OF THE G.L.D. EXCHANGE TRADED FUND HAS BEEN CURTAILED. THEREFORE THE FUND WILL BE DRAINED RAPIDLY. $$$

The Barrick Gold stock share price (ABX) hit a new 52-week low. It appears headed to challenge the $10 level. Given the lower output from smaller marginal projects and the big threat from Pascua Lama, the mining firm will be forced to unwind hedges. When no physical mine output can be delivered against future obligations under contract, those contracts must be covered and bought back. Ironically, Barrick might trigger the long-awaited rally in the COMEX gold price in a grand backfire, certain caustic flatullence in the banker eyes. Many smart analysts expect the SPDR Gold Trust (aka GLD fund) will be drained quite soon and quite significantly. The Barrick bond default insurance is sure to rise further in cost, if and when the hedge book gains more attention. The gold bars and coins look much better in ownership than toxic Barrick paper, either equity or bond.

◄$$$ GRASBERG IS BACK ONLINE FOR ITS OPEN PIT MINING OPERATIONS. THE TUNNEL WORKS ARE STILL OFFLINE, WHICH ACCOUNT FOR 20% OF OUTPUT. THE INDONESIAN GOVT STILL BLOCKS THE TUNNEL NETWORKS FROM PRODUCTION. $$$

More supply is coming back online, but large amounts remain captive out of production still. The giant Indonesian mine has returned to mining operations in its massive open pit. However, the tunnels remain shut down due to the chronic safety problems and wall collapse events. They make for 20% of output at the huge mine. So Grasberg is 80% back online, which will aid in global gold supply. See the Bloomberg article (CLICK HERE).

## GOLD VAULTS GOING EMPTY

◄$$$ A SAVAGE LOSS OF GOLD IN PRIMARY VAULT LOCATIONS IS BEING RECORDED ACROSS THE ENTIRE WORLD. THE SHORTAGE OF SUPPLY IS ACUTE AND GLOBAL, WITH A PATTERN. THREE CANADIAN FUNDS DO NOT PARTICIPATE IN CORRUPT PRICE GAMES. $$$

The chart below tells a vivid story. The declines have been extraordinary in physical gold holdings in the global Exchange Traded Funds. However and in stark contrast, a zero percent reduction of physical gold is recorded for both the Central Fund of Canada and the Sprott Gold Trust during the entire vicious decline in gold. They do not play the gold suppresion game. The lesser known Canadian Central Gold Trust (GTU) also showed a 0% reduction in inventory. The ETFunds are the provincial grounds of harlots serving Wall Street and London bankers. The devoted corrupt accomplices permit the raids to investor gold held in inventory, thus betraying their investors, who did not bother to read the prospectus carefully. The three Canadian funds are as solid as a rock. It is not clear that the CEF permits metal withdrawals, but the Sprott Fund does permit them. Neither fund participates in collusion with the gold market ambushes. The day will come when these honestly run funds will be the primary destination for mined gold, paying a premium.

◄$$$ COMEX GOLD IS BEING DEPLETED. THE MAIN DAMAGE IS THE REGISTERED ACCOUNTS, WHICH ARE FROM CLIENTS WHO ARE LIKELY ARE LOSING FAITH AND TRUST WITH THE MAIN BANKS LIKE JPMORGUEN. IN A FEW MONTHS, ALMOST NO REGISTERED GOLD WILL BE IN THE OFFICIAL VAULTS. LEMONADE STANDS WITHOUT LEMONADE FAIL AS A BUSINESS. $$$

Registered accounts are ready and available for COMEX delivery. Eligible accounts contain gold bars that conform in size and quality to become Registered. Clearly, the clients of the COMEX are losing trust and confidence at a rapid rate. They see up close the criminal activity, principally by JPMorguen. Before long, the COMEX will be more isolated, with main clients abandoning their shell game congame fraud scheme. On a single day, the JPMorgue shed an incredible 66% of Eligible gold in its vault, as clients vacate the premises. See the Zero Hedge article (CLICK HERE).

◄$$$ JPMORGUEN IS VERY LATE IN JUNE SILVER DELIVERIES. THEIR VAULTS CANNOT MEET THE VOLUME OF DELIVERY DEMANDED. CONTRACT FRAUD IS OBVIOUS. THEREFORE, THE BIG BROKEN CORRUPT BEHEMOTH BANK IS EATING ITS SHELVES. $$$

The Jackass is grateful to Turd Ferguson for passing the information, and to Harvey Organ for serving as the watchdog with pen in hand. In all, JPMorguen received 5024 formal Delivery Notices for the June gold contract at the COMEX. Harvey cannot find any iota of evidence that indicates JPM has settled any of them. Here we are in late July. That amounts to 502,400 troy ounces that must come from their Dealer or Registered side. In a recent inventory tally check, the JPM vaults only contained 390,000 ounces. Abiding by legal contract is not something the big corrupt bank is burdened by, not in the modern era. A big withdrawal of Eligible gold appears to have finally satisfied the requirement JPM had standing for May Delivery. Organ cited 43,000 ounces of Eligible gold and an outsized 112,000 ounce shortfall in Registered gold. The gold is gone! The controversy could grow leaps and bounds if JPMorguen settles everybody at the bid in cash, similar to what ABN AMRO did in April. Yet more price ambushes from hammers at the COMEX could be executed in order to 1) Dissuade August contract holders from standing for delivery, and 2) Create a cascade of GLD ETFund sell orders which they can use to raid the GLD for the tonnage in satisfaction for August and the leftover 112k ounces from June. Organ said, "The entire fractional reserve bullion banking scheme is unraveling before our eyes." True datt!

◄$$$ EVIDENCE POINTS TO JPMORGUEN HOGGING ALMOST ALL THE JULY SILVER CONTRACT DELIVERIES. THEY HAVE TAKEN 90% OF DELIVERIES TO THEIR OWN ACCOUNT. JPMORGUEN HAS VASTLY REDUCED ITS NET SHORT POSITION IN SILVER. IT APPEARS THAT THE HOUSE OF MORGAN IS EXITING THE SILVER MANIPULATION GAME, A BULLISH SIGNAL. $$$

The TFMetals Report with Turd Ferguson has been all over the story in reporting. On the London scene of the crimes, Andrew Maguire has been noting for about the past three weeks, a large institutional buyer has appeared at every London Silver Fix. Due to the order size, this buyer could only be a Bullion Bank. He has deduced that is likely JPMorgan Chase. If true, then suddenly JPM has been acquiring as much physical silver as they can, as secretly as possible. Conclude they are out of silver in their inventory.

Ted Butler has been tracking JPMorguen like a hunting dog at the COMEX. He wrote the following. "I believe the statistics from the first six days of the July COMEX silver futures contract provide enough data for attention. The standout feature for the first week of deliveries against the July silver contract indicates that JPMorgan has taken roughly 90% of the metal offered for delivery, or a total of 1637 contracts out of a cumulative total of 1828 delivered so far. In turn, of the silver contracts stopped or accepted by JPMorgan, 90% (1479 contracts) were for JPMorgan's own house or proprietary trading account. In other words, JPMorgan took delivery of roughly 7.4 million ounces of silver in the COMEX warehouses for their own benefit and risk." The monster has become a hog at the London trough.

Butler provided an update shortly afterward. The trend continued, to bring the total contracts delivered in the July silver contract to 2220. JPM took 2006 of them, including 1829 into their own house account, a ripe 90.4% overall and 82.4% into the account. Butler raised the question of JPM double dealing, since JPMorgan customers have delivered close to 200 silver contracts. With over 1800 contracts going into its own named accounts, JPM has gone above the 1500 contract limit imposed by COMEX, for a single trader in a single delivery month. One more rule the big corrupt bank avoids in prosecution or enforcement. A few days ago, about 1200 July contracts remain to be settled. It bears repeating. Of the 2220 contracts for July Silver that have been settled so far this month, JPM has claimed over 90% of them. Furthermore, they have gone mostly into the JPM house account.

JPMorguen is soaking up as much COMEX silver as possible. JPM appears each day at the London Fix, buying up as much silver as possible there also. One must always doubt any substance behind a CFTC warning. By volition of coercion, JPMorguen is exiting the silver manipulation game. Over the past nine months, JPM has reduced their naked short COMEX position from roughly 35,000 contracts down to about 15,000 contracts. Given that the Other Commercial ledger item listed at the exchange is net long between 40,000 to 60,000 contracts, JPMorguen as the market backstop is prohibited from reducing their naked short position to zero. TFMetals concludes that JPM has three options, the third being what appears to be their chosen action route. They can 1) Cover the remainder of a large number of Silver short contracts, and do so into rising prices. They tried that in 2011 and it caused a massive price spike toward the $50 mark. 2) Go the so-called potato route and simply default on delivery, sure to invite a skein of lawsuits. 3) Continue to cover the naked shorts in piecemeal manner, but also acquire as much physical silver as possible. Deliver on contracts late, and coerce many to settle in cash. Option #3 is the current tale of the tape. The corruption is becoming far more open and visible. Such is the way of the COMEX & LBMA criminal bank management as 2013 moves along, from crisis to crisis rapidly.

◄$$$ HENRY BATH DELISTED 21 LONDON METAL EXCHANGE STORAGE UNITS WORLDWIDE. IT SERVES AS THE WAREHOUSE MANAGER FOR JPMORGUEN. $$$

Henry Bath & Son Ltd (owned by JPMorgan Chase) requested the London Metal Exchange to delist 21 of its warehouses and storage facilities with immediate effect. Five warehouses in Baltimore, three in Liverpool, six in Rotterdam, and two in Bilbao Spain, were delisted. Henry Bath also had other warehouses delisted, namely two in Singapore, and others in Chicago, New Orleans, and Busan South Korea. This news all according to the London Metals Exchange. See the Bloomberg article (CLICK HERE). The news can only mean one thing, cost reduction since almost no metal available in inventory. The hints have become obvious to a blind man.

◄$$$ JPMORGAN CHASE AND GOLDMAN SACHS ARE SEEKING TO SELL THEIR METAL WAREHOUSING UNITS JUST THREE YEARS AFTER A CONTROVERSIAL ENTRY TO THE INDUSTRY, EVEN AS A PROPOSED RULE CHANGE BY THE LONDON METAL EXCHANGE IS LIKELY TO REDUCE THE ATTRACTIVENESS OF THE BUSINESS. INSIDERS HAVE BEEN LODGING COMPLAINTS ABOUT DELAYS, PROFITEERING, AND FRAUD. $$$

The two giant US banks (corrupt pillars at the syndicate gate) entered the niche warehousing business in 2010 at a time when fast rising inventory stocks was the norm. The financial crisis triggered a boom for storage companies. But their ownership of warehouses struck a nerve when metal users filed regular and frequent complaints, charging the companies were profiting from bottlenecks in the system that distorted prices. The JPM & GSax fraud was clear to the insiders. Both firms have informally sounded out buyers for their warehousing subsidiaries in recent months. Some blame has gone to tougher regulations, if not greater competition, but the real story ties to acknowledged fraud on a systemic basis. The central banks have begun to review the practice where banks own warehouses, but have a stake in the futures contract game with oversized positions. See the Financial Times article (CLICK HERE). Again the hint, no gold in inventory.

◄$$$ JPMORGUEN AND GOLDMAN SACHS HAVE BEEN CHASED OUT OF THE ASIAN METAL STORAGE BUSINESS. THE HK-OWNED LONDON METALS EXCHANGE HAS A RIGID CRACKDOWN AS AN AGENDA. THE APPARENT REASON STATED IS TO REMOVE BOTTLENECKS IN DELIVERY. FEE GAUGING IS COMMON IN FOOT DRAGGING DURING METALS IN MOVEMENT THAT OBSTRUCTED TRUE PRICE DISCOVERY. $$$

By all appearance, the new LME Chinese-based owners have let their presence be known right away. They are kicking ass and taking names in the metals warehousing sector. The LME ownership has decided to use itself as leverage to influence the warehousing practices. Some legitimate rationale has been used to clear some of the corruption in the gold ramps. They wish to remove bottlenecks in slow metal delivery. The delays are to enable fee gauging, much like check kiting for the unstated motive to earn more from a captive client base. In taking action, the new owners have imposed an easy reform. The LME's proposed rule change takes aim at bottlenecks that slow the delivery of metal from the warehouse. Even when they are full, like in recent weeks, long queues develop to move metal from one location to another. The delays have been profitable for warehouse owners, since the rent continues to apply until metal actually leaves. The new rule would prevent this practice, in effect forcing stocks at the most dominant warehouses to be drawn down, eliminate the extra rent paid. Other warehouse owners with large LME stockpiles, including traders Glencore and Trafigura, would also be affected. "The LME has cratered the valuations of these companies," said one rival trading house executive, referring to JPMorgan and Goldman Sachs. The proposal will remain open to consultation until September. It marks a step toward reform at the LME, following its acquisition by Hong Kong Exchanges & Clearing in December. Before then, the LME was owned by banks and brokers, with JPMorgan and Goldman as the two largest shareholders.

My friend and colleague Aaron Krowne offered an interpretation. He said, "To any who need the dots connected, precious metals warehousing with its anomalous lengthy delays (100+ days to withdraw metal, as recently reported), has become a key manner in which the wholesale PMs market has been kept dysfunctional. Delay and shortages develop to keep overt price impact muted and to prevent a feedback loop of wholesale (and downstream retail) demand from rightly boosting the main precious metals price benchmarks. Of course, this practice would tend to boost the apparent warehouse stocks as well. If there were any questions about whether the Chinese would be content to sit back after purchasing the LME and to let the game be played as it was before, with the Western banking cabal continuing to distort and exploit virtually every corner of the precious metals market, this should answer it. I have rarely seen anything like this. The top two trading banks, JPM and GSax, fleeing with their tails between their legs, as an exit from a sector after a mere three years." The great game is changing, and momentum has shifted. See the Implode-Explode article (CLICK HERE).

◄$$$ JPMORGAN VAULTS ARE GOING EMPTY OF GOLD BARS LEAVING FAST AT THE COMEX, AS ARE BRINKS VAULTS. THE VAULTS ARE ONE CHASE MANHATTAN PLAZA ARE GOING BARE. $$$

In the first week of July, the JPMorgan vaulted gold volume dropped to a record low. The Brinks vaulted gold actually plunged by 24% in a single day. These are historical declines in available gold bars never seen before in modern history. While record amounts of paper gold are sold, the actual physical holdings held by official COMEX vaults continues in a steep decline. The JPMorgue disconnect is being publicized, between the epic delivery requests and its reported scant gold holdings. In a recent COMEX update, another 6800 ounces of gold was pulled from the world's biggest gold vault owned by JPMorgan at One Chase Manhattan Plaza. Their total gold inventory reached a fresh record low. Bear in mind that the Commodity Exchange Inc disclaims all liability whatsoever with regard to its accuracy or completeness. So false data should be assumed, as in worse than reported. See the Zero Hedge article (CLICK HERE). As for the JPMorguen fire, put aside the big concerns of arson to cover their paper gold certificate tracks. The fire originally was supposed to be at the main One Chase Manhattan address where the big vaults are located. According to the Fire Dept of New York, instead the fire was at 15 Broad Street, the site of the JPM former headquarters. This is a non-story with a lot of smoke, despite conjured thoughts of connected tunnel systems. See the Silver Doctors article (CLICK HERE), which include corrective updates.

◄$$$ LONDON IS ALREADY OUT OF GOLD AT THE LONDON METALS EXCHANGE. LONG DELAYS IN DELIVERY ARE THE NORM, WITH OFFERS TO ESCAPE THE LINE IN QUEUE BY TAKING CASH SETTLEMENT. THE BANKSTERS ARE BACK INTO DESPERATE MODE, JUST LIKE IN APRIL. IT WILL BE HARDER TO CONCEAL THIS ROUND. THE DELAYS ARE MET WITH CASH SETTLEMENT THREATS, BUT WILL SOON BE MET IN RETURN WITH LAWSUITS FOR CONTRACT FRAUD. $$$

The term check kiting applies, but magnified to the extreme. Fraud is being confirmed in the open at the London Bullion Market Assn. Clients at the metals exchange pay good money upfront, but are forced to wait over 100 days for delivery on bullion Gold & Silver orders. The delivery schedule must accommodate the London bankers to find the bars at source, since all fingers point to empty official vaults. Only one conclusion can be arrived at: the LBMA has no Gold or Silver. The rampant criminality in bullion markets becomes more apparent even to outside observers. The official babble excuse is that delays are due to warehouse queues and paperwork in compliance (like asking for the client's wife's maiden name). Heck, it is an easier process with long lines to secure a new I-Phone. So juxtapose the long delays in delivery with the propaganda of a bear market. When supply does not exist, the official COMEX price is therefore not the equilibrium market price. The Gold market is corrupt to the core. The entire Western economy transformed into Just-in-Time Inventory management long ago. The bankers need more thefts (see MF-Global), more raids (see GLD Fund), more wars (see Libya), more smuggling (see Congo), and more colonization (see Mali) in order to keep up with gold demand. The German Govt repatriation demand changed all!!

The implication is quite clear, as the three month wait is typical for final multi-step door-to-door delivery from mine locations of fresh dory bars to refiners, who cast the concentrated metal into gold bars, which is then shipped to the London market. A deep irony is at work. In the past two decades, the big mining firms used to forward sell their Gold & Silver in elaborate hedging strategies. They are all wrecked books as deep with red ink as the mine shafts were deep in coughing up metal ore. Nowadays, banksters are effectively forward selling the gold and silver of these mining companies in real time, as customers wait for the shipment from the mine source. In most cases, the bullion bars does not  yet exist. In other instances, refiners are requested to recast stolen bars from Allocated Gold Accounts like from the German account, or from wealthy Central European familes. The recasting covers the criminal tracks. The futures contract holders who take Delivery are essentially forced to accept a rollover contract three months forward, or else be black-balled by the exchange officials in reprisal. Think check kiting, with zero interest paid on already invested funds. The banksters enjoy free use of buyer money for that period, no apologies, no certificate of gratitude worth a five-star restaurant dinner either. Worse, the customers are told quietly and individually of their only recourse option, cash settlement. Thanks to Jeff Nielsen for some sage thoughts on the London story.

EuroRaj added some thoughts. Precious metals are going into hiding fast, as the paper gold market is being destroyed. The supply chain will be wrecked, which will resurrect the gold market on the physical side from the ashes of burned paper. The inescapable trend showing itself is that big paper market price declines (ambushes) mean the paper markets are dying quite rapidly. The ransacked GLD fund should collapse very soon. At these prices, the miners are bust and supply is shut in as projects are put on hold. The bullion merchants will be buried, as they cannot obtain supply, nor can they handle this kind of volatility. The jewelry premium will surge as that will be the only gold available. There is no bottom to this market as there is no proper mark for the market.

◄$$$ MORE MAGUIRE, MASSIVE OUTFLOW FROM THE LBMA THREATENS THE FINANCIAL SYSTEM. THE FLIGHT OF GOLD HAS REACHED INCREDIBLY HIGH VOLUMES. IN DEFENDING THE FOREX AND SOVEREIGN BOND MARKETS, GOLD MUST BE PUT IN PLAY BY THE MAJOR CENTRAL BANKS. IT IS TREATED BY THE CENTRAL BANKS AS CURRENCY (DEEP HIDDEN IRONY). THE PRACTICE EXPOSES THE SUPPLY FOR QUICK REMOVAL, WHICH IS GOING TO EASTERN ENTITIES IN HISTORICALLY UNPRECEDENTED VOLUME. MAGUIRE BELIEVES THE TRANSFER OF LBMA GOLD OUT OF LONDON THREATENS THE ENTIRE WESTERN BANKING SYSTEM. THE EASTERN ALLIANCE IS WORKING HARD ON A FORMIDABLE REACTION, A COUNTER-ATTACK. $$$

Andrew Maguire provided some juicy information of the massive outflows. He sees a massive transfer of physical underway into Eastern (Asian) locations. He accused the April and June gold market declines of being absolutely conducted by the USFed. The immediate goal was to bail out the defaulting bullion banks. The ABN AMRO refusal to honor gold accounts exposed the whole LBMA system to a probable default, causing a major crack in the system. The gold ambush followed right away. Maguire concluded, "The result of this official intervention is clear. There is a tradeoff involved here because it tipped the balance and irreversibly broke the relationship between the paper markets and the global physical markets now. The majority of all traded volumes are actually paper gold in the far less transparent Over-The-Counter foreign exchange markets." He accused the master minds in the paper control centers for the gold market to be the USFed and the Bank for Intl Settlements in Switzerland. A clear unequivocal accusation. In fact, the CME hiked the gold futures contract margin requirement after the June ambush. The 25% margin hike would make no sense, except to aggravate the price suppression, not to bring order to the futures arena.

Maguire went on to explain the internal dynamics of the extreme dislocations that are addressed and treated in the magnificent ambushes. The banker treatment of Gold is just like a currency in the elaborate defenses, but they deny Gold is a currency, what is a blatant contradiction always made in public. He said, "You have to understand that gold/currency crosses are the primary focus of these official interventions that we see daily. In other words, unlike all other commodities, Gold & Silver are first and foremost a heavily central bank manipulated market, and are traded as a foreign exchange cross. But here is the rub. This has created a huge problem for the central banks. As a tradeoff in supporting the dollar, it forces the shorting of Gold, which then in turn leads to the Eastern central banks exercising the other side which is their long Gold side. They convert that into real physical allocations at the daily precious metals fixes in London." The new strain, far more than a wrinkle, is that in the past the swapping was a nuisance. The gold bars could easily be borrowed and later replaced. However, these past few months, the sheer volume of bullion being transferred out of the LBMA has become a major threat to the Western central banking system, in his words. He has never described the ominous situation in such dire terms before. He described an untenable bind for the USFed, which must prop up the fiat paper currencies in the FOREX and the Bond markets to prevent a global crash. But in doing so, he and his banker masters open the door very wide for the Eastern entities to take transfer of gold wealth. Thus the grand shift of wealth eastward.

Witness the greatest transfer of wealth in the history of the world, all to sustain a corrupt and fraudulent paper currency system, all to keep a banker syndicate in power, all to enable grand $trillion thefts. The world is in the process of reacting on numerous powerful fronts, from dismissing the USDollar as global reserve, to working toward the castoff of bankers into secret prisons. The demand for physical gold has never been higher from his standpoint. See the King World News interview (CLICK HERE). A confirmation opinion is given by Keith Barron. He consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century. Available gold supplies are disappearing as the gold price declines, and the conflict intensifies in the gold market. See the King World News interview (CLICK HERE).

◄$$$ VOLUME OF GOLD TRANSFERRED CLIMBED TO 12-YEAR HIGH IN MAY. THE LONDON EXCHANGE IS HERMORRAGING GOLD. THE PROCESS IS TRANSFORMING THE WEST INTO A DE-INDUSTRIALIZED THIRD WORLD. THE EXHAUSTION OF LONDON GOLD SUPPLIES IS GREATER THAN FOR SILVER SUPPLIES. $$$

The amount of gold transferred between accounts of London Bullion Market Assn members rose sharply in May while the amount of silver transfers declined. The LBMA releases clearing statistics each month on the net volume transferred among members accounts. Interpret most to be going out of the system, not staying within it. Details are amazing. Total gold transfers rose by 17.2% to a daily average of 28.2 million ounces, the most in 12 years. Strong increased physical demand for gold has come in response to falling prices, particularly from India and China. The average daily value of gold transfers topped $39.8 billion, the highest level since August 2011. A record high was seen in April. Deals have grown in average size to 5539 gold ounces per transfer. The story for silver is not as robust. In April, a 16-month high was realized in transfers. The latest data shows a 13.7% decline from those highs, to a daily average of 142.6 million silver ounces. The May volume is still around 6 million ounces above the monthly average over the last 18 months. The value of silver traded is down 21% to a daily average of $3.28 billion, the lowest level since last October. The number of transfers rose to an average of 1027, the highest level in two years. Notice that the average daily volume in Gold at $39.8 billion is at a 12:1 ratio to Silver at $3.28 billion, despite a metal prices at over a 60:1 ratio. See the Kitco article (CLICK HERE). Sales of coins have been almost even in value volume for two years. The pressure is on for convergence to 10:1 ratio in price. Eric Sprott points out that the mining output has a 11:1 ratio.

◄$$$ THE G.L.D. FUND INVENTORY DEPLETION COULD DICTATE THE BOTTOM IN THE CORRUPTED GOLD PRICE. THE COMEX IS PUSHED DOWN FROM ACTUAL SUPPLY BEING DUMPED, AS WELL AS THE NAKED FUTURES CONTRACT SHORTING. REDUCED MINE OUTPUT THREATENS TO EXPOSE THE CRIMINAL RAIDS OF THE GOLD EXCHANGE TRADED FUND. THE G.L.D. EXCHANGE TRADED FUND IS BEING DRAINED BY ALMOST THE EXACT AMOUNT THAT THE GOLD CONTRACTS ARE BEING MET FOR DELIVERY DEMANDS. $$$

The SPDR Gold Trust (aka GLD fund) went below 1000 tons of gold in inventory in the last month. It is being whittled down by ten or more tons almost every day. Two factors are important to describe the drawdown in its inventory. The big US banks are shorting the GLD shares, helping themselves to the inventory. But also, and a phenomenon not reported or perceived much, is the reduced quantity of Gold in Motion. The reduced mine supply has not been in a position to keep the GLD fund replenished. The entire SPDR Gold Trust is an elaborate hoax, to provide investors an opportunity to own Gold in Motion, which never rests in a vault, always en route from the mine source.

The hoax is apart from the basic fraud of the fund, which serves as a Gold Bullion Central Bank that is pilfered by the big US banks on a regular and frequent basis. They suppress the gold price with shorted (leased) GLD gold bars, and profit from the shorted shares from their own corrupt practice. They cover their futures contracts held net short for profit, and cover their GLD shorted shares for profit, making money coming and going, all highly illegal. Note also that the infamous Bar List from the SPDR Gold Trust has been revealed as a grand fraud, highly inconsistent, even redundant with duplicate serial numbers. The regular inconstencies are further proof of the fund being Gold in Motion. The GLD drainage in June was almost exactly equal to what is standing for June Delivery. This is fraud, since there are no coincidences. Harvey Organ is all over this story.

## BROKEN RANSACKED GOLD MARKET

◄$$$ CHINESE GOLD IMPORTS ARE ACCELERATING, THE PACE GAINING. THE IMPORTS ARE DOUBLING EACH YEAR ON A NET BASIS. WEALTH IS MOVING FROM WEST TO EAST, WHILE THE WEST SINKS IN A SEA OF TOXIC PAPER SWEPT BY INSOLVENCY, FRAUD, AND CORRUPTION. WHEN PEOPLE THOUGHT THE CHINESE PACE COULD NOT BE SUSTAINED IN 2013, IT HAS DOUBLED AGAIN IN AMAZEMENT. $$$

◄$$$ OUTSPOKEN HONG KONG HEDGE FUND MANAGER WILLIAM KAYE DISCUSSED THE MISSING USFED AND GERMAN GOLD, AND WHERE IT HAS GONE. IT IS RECAST AND SOLD TO EASTERN ENTITITES. HE BELIEVES THE PEOPLE'S BANK OF CHINA (PBOC) REALLY OWNS MULTIPLES MORE GOLD THAN ADMITTED. $$$

Fund manager William Kaye has been extremely outspoken and bold on the gold world, as it relates to Asia. What follows are his views, my edits. The Asian region is changing fast. The Chinese are positioning themselves to be the leading global power over the next five to ten years. His sources tell that contrary to the available official data, China has between 4000 and 8000 tons of physical gold held in reserves (confirms what my source says, except The Voice claims over 10,000 tons). They are not only the largest producer of gold, and the world's largest importer of gold. They are the bigger acquirer of gold also. It is a strategic initiative. They are frenetically accumulating the gold being discharged from the West at a rapid pace. The effect on global dynamics is profound, sure to elevate the Asia-Pacific region. In the next chapter, the positions for China, Russia, and Brazil will be enhanced. The position of the United States and Western Europe, including the United Kingdom, will be diminished. Those are the major consequences from both the industrial shift and gold migration.

Kaye went on with bold stories and accounts. The Western central bank gold has been leased, even admitted by the major central banks. The USFed has admitted it. So have the Euro Central Bank, the Bank of England, as part of a wholesale leasing of gold to the market. The price suppression is managed typically by JPMorgan, sometimes Goldman Sachs. They arrange for gold leasing in quantities from 20 to 50 tons. He clearly stated that the central banks reserve the right to call it back, but they tend never to do so. The USFed leans on contracts, when making claims of gold ownership in official accounting, in a grand charade. Once JPM and GSax obtain the leased gold, they go net short and sell it for leveraged profit.

Here is the most controversial nut from the interview. Kaye said, "But in reality the gold has been sold into the market. That gold winds up in places like Beijing. But before it gets to Beijing, it frequently goes through Hong Kong. And when it goes to Hong Kong, it goes to our refiner, the same people we use. And by the way, we may own some of the gold that Germany thinks that they own. But Germany will never see that gold because it is safely stored in my account and for our investors at the Hong Kong International Airport. Regarding that gold, which could have had the symbol of the Bundesbank on it when it arrived in Hong Kong, a leading refiner, one of the biggest in the world that deals with the Peoples Bank of China (PBOC), certified. The gold is gone. It has been hypothecated and re-hypothecated. It is gone. Not only does the Fed and the USTreasury not own 8,000+ tons, they probably own nothing." See the King World News interview (CLICK HERE and HERE). Third World, dead ahead for the US & UK, due to gold fraud and discharged wealth. For a good historical education on the past criminal activity behind the Silver Market, see the YouTube video on the Silver Bullet and the Empire of Lies (CLICK HERE).

◄$$$ THE SHANGHAI GOLD EXCHANGE WEBSITE INDICATES THE FIRST HALF OF YEAR 2013, SHANGHAI MOVED 1200 TONS OF GOLD. HUGE GROWING VOLUME AT THE THE EXCHANGE FORETELLS OF GREATER PRICE INFLUENCE. OVER ONE THIRD OF CONTRACT VOLUME RESULTS IN DELIVERY. THEIR ACTUAL DELIVERY VOLUME EXCEEDS THE GLOBAL MINE OUTPUT FOR GOLD. $$$

Each Shanghai gold contract assigns 1 kg of gold. The total gold delivered from January 2013 to the end of June was approximately 1200 tons. The torrid pace was even interrupted between April 19th and May 28th, during the Anglo gold ambush from its after effects. An extrapolation to the full year would bring about volume of 2400 to 2500 tons, which is roughly the total global mine output. See the Shanghai Gold Exchange (SGE) website data (CLICK HERE). Furthermore, some nuggets can be plucked from the Shanghai data, an exchange which has received more interest lately than any other in the world of precious metals. Max Keiser compiled some interesting statistics. The Shanghai physical emphasis indicates growing role in setting gold prices in the future. See the Kaiser article (CLICK HERE).

  • SGE volumes are only about 3% of COMEX volumes
  • Deliveries on SGE at 37% are significantly greater than COMEX at 2.7%
  • SGE deliveries totalled 236 tonnes in April 2013
  • Mythical premiums to COMEX barely exist, averaging 1.41% higher
  • Delivery amounts exceed HK gold imports and global mine supply.

◄$$$ THE SHANGHAI GOLD EXCHANGE MOVED 83.4 MILLION OZ SILVER IN THE MONTH OF MAY. IN TIME THE PRICE WILL BE SET BY THE EAST, WHICH OWNS THE METAL, MOVES THE METAL, AND BUYS THE METAL. ASIA IS NOT A PAPER GOLD & PAPER SILVER CASINO. $$$

The silver contract on the Shanghai Gold Exchange assigns 15 kg of silver. Therefore in May, a total of 83.405 million troy ounces of silver were delivered on the SGE. The COMEX and LBMA fraud arenas will not be able to withstand the physical influence coming from Shanghai, and from Hong Kong. See the Reuters article (CLICK HERE).

◄$$$ MORE COMPETITION FROM SINGAPORE ON THE GOLD MARKET FRONT. THE CITY STATE HAS LAUNCHED ITS FIRST PHYSICAL GOLD & SILVER EXCHANGE. COMPETITION WILL DISABLE AND EXPOSE NEW YORK AND LONDON, AS THE TALE OF TWO CITIES GOES INTO NEW CHAPTERS. $$$

Welcome the Singapore Precious Metals Exchange (SGPMX), launched with peer-to-peer bullion trading capabilities integrated into the trading platform in Singapore, launched on July 3rd. The custodian will be Certis CISCO for bullion storage, a vault service since 1986. The Singapore exchange will provide the platform for private individuals, traders, and institutions to buy, sell, store, and exchange precious metals including gold and silver bullion, without incurring high spread margins. Liquidity will come to the city state, eliminating the costs of assay linked with purchases. The SGPMX intends to cater to the rising demand for consolidated end-to-end precious metals trading in Asia. It is a large trading hub in Asia, with an expanding base of industry players, storage vaults, delivery services, and trading desks for gold to meet investor demands. The SGPMX boasts a growing customer base of 11,000, is privately held and independently funded. See the Scrap Register article (CLICK HERE). Every nation now wants to give New York & London some competition. Free market competition is a powerful force, enough to knock out the Anglo centers of corruption.

◄$$$ SOUTH KOREA WILL OPEN A GOLD TRADING EXCHANGE IN 2014, THUS JOINING CHINA, RUSSIA, AND SINGAPORE. THE WAVE IS PAN-ASIAN IN OPPOSITION TO THE CORRUPT WESTERN GOLD MARKET MANAGEMENT. $$$

South Korea will open the gold exchange in the first quarter of 2014. A public market will feature Gold spot market trading. It will feature gold spots to be traded in the public market like listed stocks, according to the Financial Services Commission (FSC).

The government regulators wish to put an end to the growing trend of underground gold transactions to evade value added taxes. Such unofficial trading accounts for over half of the country's annual gold transactions. Included in the unique gold exchange will be smelters and importers of gold as well as gold craftsman and distributors. To encourage transactions in the new gold market, tariff tax exemption will be offered while providing reduction in corporate and income taxes. See the Xinhua Net article (CLICK HERE). Add South Korea to Singapore in new competition for the Anglo fraud kings and paper merchants.

◄$$$ RUSSIA TO LAUNCH A PHYSICAL PRECIOUS METALS EXCHANGE, WHICH WILL COMPLEMENT ITS CURRENT FUTURES TRADING. IT CAN COMBINE WITH SHANGHAI TO CREATE TWO POWERFUL CENTERS FOR GLOBAL GOLD ARBITRAGE. INITIAL VOLUMES WILL BE SMALL. $$$

The Russian stock exchange will start trading Gold & Silver by the end of this year, and platinum and palladium in 2014. Trading physical metals is expected to boost liquidity in the market and work together with the futures trading that already exists at the Moscow Exchange. On occasion, gold has been sold on the Over-the-Counter market using a benchmark for price set by the central bank quotations. Soon comes a gold price in Rubles. Countries such as Russia with a significant gold mine output can work to control the price more when a local exchange sells the physical bars in local currency. Trade volume will grow over time. Spot metal trading will be based on the platform of the existing foreign exchange market. Credit institutions licensed to conduct operations with precious metals and non-banking professional brokers will be the main players on the market, according to the bourse officials. The next G-20 Meeting is next September in Moscow, a perfect opportunity to make any important announcements. See the RT News article (CLICK HERE).

When The Voice was asked to comment, he was coy. He had experience in the 1990 decade in cleaning up after the Yeltsin mess created by the Anglo big oil firms, making numerous important business contacts. He mentioned the Russians have very good advisers whom they implicitly trust, in his words. Methinks he refers to himself and a colleague, as having personally giving counsel to the Kremlin. He wrote, "There could be a lot more behind this than meets they eye. Russians are very good chess players, always five moves ahead of most others. It also helps to know that 80% of all internal Russian trade is settled by barter. These guys are not idiots and are far ahead of the West when it comes to trade without a functioning banking system." He likes to remind that 100% of all trade was settled within the COMECON, the former East Bloc behind the Iron Curtain. It was not settled in USDollars or Deutsche Marks back then. Based on past conversations, methinks The Voice was behind more counsel given to Venezuela in demanding repatriation of their Gold from London in 2010. Regard the Russians as working a certain key angle that will be more clear in time, not evident today. My belief is that the new Moscow spot gold market will be integrally tied with Gold Trade Settlement with the BRICS nations and Eurasian Trade Zone.

◄$$$ STEPHEN LEEB COMMENTED ON GERMANY, FRANCE, THE YUAN SWAP FACILITY, THE USDOLLAR RESERVE CURRENCY STATUS, AND GOLD. THE WEST IS DOING DESPERATE DEEDS. SOON GOLD WILL BE PLACED AS A TOP TIER BANK ASSET AMONG THE CURRENCIES AND BONDS FOR BANK RESERVE MANAGEMENT. THE GOLD PRICE IS HEADING TO $10,000 PER OUNCE. $$$

Stephen Leeb has been a successful fund manager for two decades. He is alert to some global patterns with respect to Gold, the Chinese Yuan currency, and Bank reserves management. He made the following points, put in summary form with my edits. Germany stands out as an exception, demanding its gold to be repatriated, while many nations in Western Europe work to support the London crew in the gold supply network, which is shipped East to satisfy important demands. All of a sudden Germany, Toronto, and London all vying to become the hubs for Yuan trading. He left out Paris. The Chinese Yuan Swap Facility will enable the Yuan to become a reserve currency on the fast track, soon to be used widely in banking systems. The trend will continue with gusto. Germany with the Frankfurt Main financial center strives to become the European hub for Yuan trading. It will compete successfully against London.

Leeb saw the Gold ambush with official price decline as symptomatic of desperation creeping into the American mindset, desperation to keep the USDollar at the forefront of reserve currency management. Refer to the USTreasury Bond within the banking systems. Leeb does not really believe the USGovt owns 8000 tons of gold reserves. The BIS exclusion of gold from a top tier asset holding has significant meaning. If Gold could be used by big banks as a liquidity buffer, critical for holding in case of emergency, "[the Bank For Intl Settlements] would be blessing the concept that Gold is a currency. Once that happens, Gold goes to the moon. If you call the moon five digits, that is where the Gold price is going. That is what the United States is scared to death of. Once you let that little secret out of the bag, that Gold is a top tier currency, there is no stopping [the rise in the] Gold price. There is no stopping Silver. When you look at what has happened to Gold in 2013, it will go down as the last desperate attempt to hold Gold back. The West still had one gun left and they fired it in 2013. That was something that had to happen. The West was going to do whatever it could to keep Gold down. But eventually it will not be enough." Leeb sees no top on the Gold price. He called the recent events a chapter that could be given a title about a dying West turned desperate at their last gasp. He anticipates a $10,000 gold price in the near future. See the King World News interview (CLICK HERE).

As footnote, apart from any commentary from Leeb. China is fast accumulating Gold bullion, while the United States is fast accumulating narcotics. The Chinese will recover from the banking crisis, while the US will sink into the Third World within a sea of toxic paper and a rejected global currency that must stand on its own value merits. The reality behind bank overnight management is truly ugly, incredibly disgusting and ugly. The Anglo bank kings do not wish to declare Gold as a primary asset, but they permit usage of heroin bricks in hard paper packets to be routinely used in vault storage to demonstrate overnight bank holdings. My source of this information is a fellow with friends who worked deep in the USDept Treasury in the late 1990 decade. The projects described were as scummy as one could imagine, with a central figure in Papa Bush.

◄$$$ A MONSTER PRICE MOVE IS COMING IN THE SILVER PRICE, WITH STRONG DEMAND AND DEEP SHORTAGE. ROSEN FORECASTS A $4300 GOLD PRICE AND A $146 SILVER PRICE IN EARLY 2016. HIS SILVER PROJECTION IS BASED UPON THE PREVIOUS THREE HISTORICAL PEAKS BEING 2-FOLD, 4-FOLD, AND 6-FOLD LEAPS IN PRICE. HE EXPECTS THEREFORE AN 8-FOLD LEAP IN THE CURRENT SILVER PRICE WHEN THE BULL MARKET RESUMES. $$$

Ken Rosen is a 58-year market veteran who has seen it all. He said, "We are on the verge of the biggest move in the history of the precious metals market, and it is not far away from beginning. It is going to be a monster move. What I do not understand is why everybody does not see it. There are so many analysts out there and if they just knew how to look at a monthly chart, and put it in a logarithmic form, they would see that gold and silver are going to explode. It will outperform to such an extent that it will almost be beyond belief. We are looking at a massive move in front of us that will top sometime in 2014. At that point there will be a correction. Then, a massive blowoff will take us probably into early 2016. People who have been tortured by this long corrective phase, they will be thrilled if they have the ability to hang on. They just need patience here. I expect the gold price to hit $4300 in early 2016, but the really fascinating thing here is the silver chart, because there have been three peaks. The first peak increased two times from the previous low. The low was $4.01 and silver went over $8 in that move. The second peak was $21.44. So silver increased four times the previous low, which was $5.45. The third peak was $49.82, and that was six times the previous low, which was $8.40. You have an old guy like me who has been at this business for almost six decades, and he sees 2, 4, 6. There is only one number that comes up next, it is 8. We then multiply 8 times the low of $18.17, and we have a silver price of over $148 sometime in early 2016. It is as clear to me as the sun rising and setting." Rosen expects the precious metals mining stocks to enjoy a tremendous rise in the frenzy. He forecasts an HUI Gold Bugs Index trading over 1000 before the bull market is finished, with peaks reached in the metal and stock shares together. See the King World News interview (CLICK HERE).

◄$$$ STUNNING LEVEL OF SILVER PURCHASE IN INDIA WILL CRUSH THE SHORTS. THE OBSTACLES ON GOLD IMPORTS WILL RESULT IN EVEN GREATER SILVER PURCHASES FROM MUMBAI TO DELHI AND OTHER BIG CITIES. INDIA & CHINA ARE GOBBLING UP SILVER AT AN ASTONISHING LEVEL, A LARGE PORTION OF WHAT THE WORLD PRODUCES, APART FROM INDUSTRIAL DEMAND. $$$

The data out of India is astonishing, magnificent. In the first five months last year, India imported 1900 tons of Silver. So far in the first five months of year 2013, India has imported 2400 tons, a 26% comparable increase. Next contrast to the global annual silver mining output at 25,000 tons. Extrapolate to find India on track to take out 5760 tons of silver this year. Therefore India is grabbing 23% of global silver production. This is not sustainable at current prices. The destination is not industrial usage, but savings and investment forms like bars, coins, bullion items, and jewelry. The data showed that India imported 720 tons in April (annualized at 8000 tons). In May it rose to 900 tons (annualized at 11,000 tons). The acceleration is phenomenal. Juxtapose in reality to a 25,000 ton market. That is impossible to continue. There is not that amount of silver available for investment. Price must adjust, or the supply chain halts altogether. The lesson from India is that if obstacles have been put in place to purchase Gold, the citizens of the one billion population nation will turn to Silver in purchase. They do not want fiat paper. Eric Sprott concluded with some emotional cheer, "It looks to me like the [two nations] India and China are buying it all right now. If this data is true, we have the most phenomenal story for Silver that you could possibly imagine. We will just nail those paper sellers to the wall here." See the King World News interview (CLICK HERE). The banksters will lose control of the gold gate, but the silver horse will speed through.

◄$$$ GOLD SMUGGLING HAS GONE RAMPANT IN INDIA, AFTER BANK OBSTACLES, NEW IMPORT DUTIES, AND OTHER TAXES WERE IMPOSED. DESPITE SOME LARGE SEIZURES AND CAPTURES AT AIRPORTS, MOST SMUGGLED VOLUME PASSES THROUGH THE BORDERS AND AIRPORTS. THE PRACTICE WILL GROW FURTHER. PRICE PREMIUMS JUMP IN INDIA, AS IMPORTS DRY UP, LEAVING JEWELERS VULNERABLE TO SHUTDOWNS. $$$

Gold smuggling has ramped up in India, as response to tougher laws and rules. The Air Intelligence Unit of the Mumbai Customs thwarted another attempt to smuggle gold into the country from Dubai, one of several cases recently. A big shipment was caught in the first week of July, weighing 2.86 kg in gold valued at $113k. The level of smuggling from Dubai is massive, having reached unprecedented levels since it is more costly in Mumbai. A different seizure last month was of 94 gold biscuits worth $437k from five Sri Lankan nationals at Chennai airport. The racket is active and in high volume. Be sure to know that only a tiny fraction of the smuggled gold is actually being dis covered and caught.

The proximal cause is the halt in bank sales of gold coins, then the hike in import duty. Officials pointed out that smugglers and buyers of smuggled gold tend to save on import duty as well as other taxes like value added tax and income tax. The VP of the Mumbai Jewelers Assn expects smuggling will gain momentum in future weeks and months. See the Mine Web article (CLICK HERE). The Indian wedding custom is to regale the bride with gifts of gold, a tradition extending over centuries. See the daughter of the Muthoot Finance Corp CEO, whose outfit bears 5 kg gold in a wedding ceremony. Most weddings feature gold jewelry worn, but rarely in such grand ostentatious volume.

The Law of Unintended Consequences is hard at work across the cities of India. The motive to slow the vast import business that threatens the Rupee currency in devaluation has instead threatened the organized merchants in the gold industry. The jeweler shops and retail centers are in dire straits. Their survival is not assured. Gold has been selling at huge premium prices, as imports quickly dry up. The surge in smuggling demand will serve the market well. Those who abide by the rules will be knocked out of business. See the Economic Times article (CLICK HERE).

## HISTORICAL GOLD INVERSION SIGNALS

◄$$$ PICTURE WORTH 1000 WORDS. THE GERMAN GOLD REPATRIATION DEMAND IS A TURNING POINT IN MODERN GOLD MARKET HISTORY. IT PROMPTED OTHER NATIONS TO DEMAND THEIR GOLD, ALONG WITH EXTREMELY WEALTHY FAMILIES IN CENTRAL EUROPE. IT PROMPTED THE ANNOUNCEMENT OF A FRESH WAR IN THE AFRICAN NATION MALI, WHERE TERRORISTS WERE NEWLY SPOTTED (ABSURD). IT ALSO PROMPTED THE NEED FOR GOLD MARKET AMBUSHES, WHICH WILL EVENTUALLY LAY BARE THE CORRUPTION OF THE COMEX AND ITS NULL INVENTORY. THE SHUTDOWN OF THE COMEX IS A GUARANTEED FUTURE EVENT. $$$

Gold fund manager Grant Williams attributes the recent pounding of the gold price to Western central bank efforts to recover enough real metal for repatriation of the Venezuelan and German gold reserves vaulted in the London maze. With so much Western central bank gold long ago having been leased and then sold into the market to suppress the price, the shortage required ambushes. The ostensible motive was to ferret out more gold from wrecked futures contracts, and even to depress demand for Gold. But what has resulted is a massive rise in gold demand worldwide, and exposure of the COMEX dire shortage in inventory. Williams cites all the recent developments noted by GATA in confirmation of schemes in market rigging. The graph shows vividly how the gold price plummeted after the German gold repatriation request, in lockstep with plummeting ETFund holdings of gold. The gold in the major funds is being stolen, pillaged, ransacked, altered, and robbed in the open daylight.

The psychopaths on Wall Street and in London City have turned desperate, probably immediately after the German Govt demanded its gold from the official account in New York and London and Paris. Other nations followed. Lower official gold price is very likely, as the bankster criminals attempt to pry more metal loose. But they have not pried much metal at all. Their actions have opened the door for covering more short futures contracts. The banksters have exacerbated the situation, igniting gold demand worldwide, while exposing the COMEX & LBMA as dry empty vacant market arena. The latest symptom is the negative GOFO forward rate for gold, probably negative for much longer than they report, due to falsified data. See the Cafe Americain article (CLICK HERE).

◄$$$ JAMES TURK REPORTS ON REMARKABLE EVENTS IN GOLD MARKET. THE BACKWARDATION IMPLIES SHORTAGE OF PRECIOUS METALS, DISTRUST OF THE DELIVERY PROCESS WITHIN THE PAPER MARKET MECHANISMS, AND THE RETURN OF GOLD PRICE CONTROL TO THE PHYSICAL MARKET. THE RISE IN LONG-TERM USTBOND YIELDS MEANS THE USFED HAS REACHED A TIPPING POINT. INTEREST RATES ARE RISING IN PART FROM THE EFFECT OF MONETARY INFLATION APPLIED FOR OVER THREE YEARS. TURK OFFERED A BRILLIANT BRIEF LECTURE ON FAILED BANKER SOLUTIONS, INTEREST RATE EFFECTS, AND GOLD PRICING SIGNALS. IN THE PROCESS, THE USFED BALANCE SHEET HAS REACHED THE $3.5 TRILLION MARK. $$$

"There are two major events underway which everybody should be paying close attention. The first one is rising interest rates. We saw another huge surge in rates to a new multi-year high after the unemployment report on Friday, which is very telling. We need to look at this rise in interest rates in relation to an economy that is barely crawling along. Here we are nearly five years after the 2008 collapse, yet people are still looking for an economic recovery. [Think no official solutions anywhere.]

Of course there have been some bright spots, but they are isolated. The economy remains in a weak state and will not reach its pre-collapse level until employment goes back to its previous high, with people once again filling the quality jobs they previously held, rather than the part-time and hamburger flipping positions that have distorted the unemployment report by making the headline number look better than it really is. Yet the Fed continues to purchase more government debt, as its balance sheet last week reaching another new record high with total assets of $3.49 trillion. The Fed is not tightening monetary policy, so why are interest rates rising even though the economy is weak and the Fed continues to purchase debt for its QE program?

I think there is only one logical answer. Interest rates are rising because of QE. We have reached a tipping point, meaning that QE can no longer keep interest rates from rising. The market is now focusing on the dark side of QE, which is the inflationary consequences of all this money printing. [Foreigners also are angry over debasement of their FOREX reserves by the USFed.] Rising interest rates with QE ongoing means that we have reached the stage where the Fed has now lost control. This result was inevitable because market forces always beat central planners and its groupies in the end. Only the timing of this event could not be predicted. Since the bailout of the financial system in the autumn of 2008, and the launch of QE in March 2009, desperate central planners had been hoping their crazy theories, which try to create wealth by printing money, would work. But those theories never had a chance. All one had to do was read monetary history to see that these schemes have always failed.

The key point is that the market is now responding to this central planning foolishness. Capital is protecting itself by demanding higher interest rates, and as interest rates climb, the fallout will be immense. This brings me to the second key event taking place. Even the LBMA website now shows that Gold is in Backwardation.  The Gold Forward Rate out to three months is negative. The LBMA stopped reporting Silver Forwards last year because they were artificial. They showed silver in contango, but you could not deal at those rates. The obvious implication is that Silver was actually in Backwardation. The point is that Silver, and particularly Gold, are not supposed to go into Backwardation, at least in theory. That is because they have huge aboveground stocks, in contrast to other commodities that have limited aboveground stocks. [Hence the aboveground stocks are much lower than listed, from rampant leasing, as Gold has gone into hiding. See Gresham's Law.]

Look at the current backwardation in crude oil for example. The August 2013 contract is $10.47 higher than August 2014. So if you have physical crude in hand, you sell it today and immediately buy the Aug-14 contract, earning not only the $10.47 per barrel price difference, but you also have the use of the $103.22 you receive as the proceeds from your sale. To top it off, you avoid storage charges for one year. So clearly, there is a shortage of crude oil.

Backwardations in oil can occur because its supply is limited. Its aboveground stock is counted in days of use, in contrast to gold where the aboveground stock is essentially all of the gold mined throughout history. So when backwardation occurs in gold, it is an earthshaking event. People who own physical metal do not want to profit from the backwardation, even though they are only taking a credit risk for as short as one month. They want to own physical metal, regardless of the potential profit, because earning this potential profit depends on the ability of the entity selling the future contract to deliver physical metal to you when the contract comes due [NO TRUST].

Gold Backwardation is occurring because the big bullion dealers, hedge funds, and arbitrageurs do not want to take this risk. This phenomenon highlights the difference between physical metal and all of its paper substitutes. When backwardation in the metals occurs, it means two things. First, people want physical metal and not paper promises to deliver metal in the future. Second, it means that the physical market is starting to drive the price of the metal, rather than what we have seen the past several months where paper selling drove Gold & Silver prices to abnormally low levels.  The bottom line is that in a year or two when we look back at today, we will marvel at how cheap the prices of physical gold and physical silver plummeted to." See the King World News interview (CLICK HERE). Contrast Turk's frontal lobe explanations with Rob Kirby's higher level hidden machinations in explanation. Both are valid.

◄$$$ A HISTORIC INVERSION HAS BEGUN. GOLD FORWARD RATES HAVE TURNED NEGATIVE FOR THE FIRST TIME SINCE THE LEHMAN FAILURE. IT MEANS SHORTAGE IN THE PHYSICAL GOLD SIDE, HEAVY SELLING IN THE PAPER GOLD SIDE, AND A POSSIBLE BULLION BANK FAILURE IN PROGRESS. $$$

While Gold Backwardation in general means a lack of trust and confidence in the fiat monetary system, and a defacto rejection of paper money, the negative Gold Forward Rate means even more. Ignore the decline in the official gold price, since no price discovery exists in the COMEX & LBMA anymore. The negative GOFO rate is an immediate distress signal across all chambers of the gold market from all the interconnected moving parts. It is the monetary multiple fire alarm, which will blossom into the basic Backwardation in the futures contract prices for all to see.

In early July, the 1-month Gold Forward Offered (GOFO) rate turned negative, going from +0.015% to -0.065%, the first negative print in nearly five years. The last time was right after the Lehman bankruptcy and AIG bailout in November 2008. Harken back also to the 1999 announcement of the Washington Agreement on gold among central bank collusion, to find another time that particular GOFO rate went negative. The shock of central bank collusion ending in open control of the gold suppression at that time, and the shock of the introduction of Quantitative Easing by the USFed in 2011, made for important flips in the GOFO rates into negative territory. Witness history being made.

The Gold Forward Offered Rate are rates at which contributors are prepared to lend Gold on a swap against USDollars. Quotes are made for periods of 1, 2, 3, 6, and 12 months. The contributors are the Market Making Members of the LBMA. They are the Bank of Nova Scotia & ScotiaMocatta, Barclays Bank, Deutsche Bank, HSBC Bank USA at London Branch, Goldman Sachs, JPMorgan Chase, Societe Generale, and UBS. Basically it is the core of the banking syndicate. From the GOFO is derived the Gold Lease Rate, obtained by subtracting the average GOFO rate from the corresponding LIBOR average in USDollar terms. The set GOFO price is established by quorum contributors, much like with LIBOR. The GOFO price is used as a basis for some finance and loan agreements, as well as for the settlement of gold Interest Rate Swaps. In a sense, Gold serves as a money equivalent collateral for a quasi-secured loan against USDollar paper fiat in hand. When the GOFO goes negative, it means gold market dislocations have occurred. It is a good indicator of major stress in liquidity, counter-party, and collateral in the gold market. All three are interconnected in crisis times. In early July, both the 1-month and the 3-month GOFO rates went negative.

Interpretations of the historic inversion are difficult to pinpoint. Something very abnormal, and even historic, is afoot at the nexus of the gold fractional reserve lending market. See the Zero Hedge article (CLICK HERE). The story has gone mainstream, soon possibly to go viral since so important. Even a CNBC story cited the inversion. See the Reuters article (CLICK HERE) and the Financial Times article (CLICK HERE). Regard the negative GOFO rate as an indication of an explosive upmove in the Gold price due to magnificent shortage amidst a broken market, certain to kill the COMEX in time. Tyler Durden concluded that it could be one of many things.

  • A repricing of paper and physical gold induced by Exchange Traded Funds
  • Ongoing delivery issues amidst shortages for COMEX or a member
  • Torrent of liquidations in the paper gold market
  • A shortage of physical gold for a commercial bank
  • A major hedge fund unwinding a futures contract with gold leased
  • A bullion bank failure in progress linked to allocated gold accounts
  • All of the above.

## THANKS

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