GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Golden Nuggets
* Big Banks Fast Losing Control
* Gold Quest in Trade & Banking
* Nations Amass Gold
* Gold Price Loads Coiled Spring
* Failing Economy


HAT TRICK LETTER
Issue #99
Jim Willie CB, 
“the Golden Jackass”
17 June 2012

"What Von Greyerz did not mention in his interview is that when the customer finally got his gold, it was 2011 minted bars. This made no sense because he had been holding the Allocated gold for years. That is just another example that even the Allocated gold in the banking system has probably been loaned out. Many of these customers will wake up one day and realize they entrusted their gold to the wrong people." ~ John Embry (Sprott Asset Mgmt)


"The story about JPMorgan employee Bruno Iksil first broke when traders, using the size of price movements and trades they witnessed in a synthetic bond index known as CDX.NA.IG.9, suspected one trader of holding a singular massive position. Later, Iksil was revealed to be holding up to a $100 billion position in CDS (Credit Default Swap) exposure in this particular index. When the underlying bond market turned against Iksil's massive bets, reports started leaking that JPMorgan could be facing a $2 billion loss. Iksil's position also revealed [their apologist] Blythe Masters to be a master liar as she had just appeared on CNBC to refute allegations that JPMorgan traders ever engaged in deliberate manipulation of markets, just before the Iksil story broke. Remember, Iksil's massive position was discovered when other traders witnessed that one trader's moves were influencing the entire behavior of that index and put their positions at enormous risk, the very definition of manipulation." ~ JS Kim of SmartKnowledgeU

"The USTreasury Bond has to be the worst investment of them all from a business perspective, with annual $1.5 trillion deficits. What is left of the free bond market has embraced a significant rally underway. Nobody notices the mismatch, as they focus on the performance of the bond, not its fundamentals. The mismatch of rally versus lousy business is the epitome of a misallocation, sure to cause an economic trainwreck. Capital is not being directed to profitable business, part of the massive Black Hole swirl process. It is like pulling the bathtub plug on the USEconomy itself. In a perverse motive twist, the USFed will be motivated to harm the economic foundations in order to provide adequate market demand for bonds and to keep a lid on commodity prices. Thus the USFed is stirring the toilet as it drains." ~ the Jackass

"We bought some triple-A securities that we think are as good as Gold." ~ Jamie Dimon (CEO of JPMorgue)

## GOLDEN NUGGETS

◄$$$ THOSE CAMPS WHICH POSSESS THE GOLD MAKE THE RULES AND RULE THE WORLD. BY SELLING OUT FORT KNOX AND LEASING COUNTLESS TONNAGE OF ALLOCATED GOLD ACCOUNTS IN WESTERN NATIONS, THE UNITED STATES WROTE ITS EPITAPH. PILFERAGE REIGNED SUPREME. THE QUESTION REMAINS THE TIME OF DEATH. DECISIONS WERE MADE TO EMBRACE FRAUD AND THEFT, NOT PRODUCTION AND FAIR TRADE. THE CONSEQUENCES ARE RUIN, PAINFULLY EVIDENT ACROSS THE ENTIRE WESTERN WORLD. $$$

On a systematic basis, the Clinton-Rubin Admin gutted Fort Knox. They used a near 0% gold lease rate to access the gold bullion. They put on massive short gold futures contracts with the expertise of Rubin, formerly head of the London Gold desk at Goldman Sachs. The massive USTBond futures contracts magnified their ill-gotten gains. The result was the infamous Decade of Stolen Prosperity, led by the significant lengthy period where the USTreasury Bond yields came way down. The reduced cost of capital enabled the USEconomy to benefit from lower borrowing costs. But it was a queer expansion tilted toward the finance sector, complete with its warp drive engineering. Unfortunately, the nation became victims of consumer addition, followed by eager players in the housing bubble. The entire 15-year period has left the United States in ruins, beset by diverse insolvency in every sector.

The wrecking zone was not limited to the United States. Canada sold off almost the entirety of its gold bullion reserves, in support of the US gaming. To compound the destructive damage, the Wall Street crooks by all indication have sold an enormous amount of gold snatched from Allocated accounts belonging to citizens of various Western nations. Not only does the US have zero gold in Fort Knox, the Wall Street thugs sold the gold in foreign accounts held in New York City. My best gold trader source has informed me repeatedly that the Western bankers (US, London, Swiss) have sold 20 thousand tons of Allocated gold improperly. The figure could be higher than 30 thousand tons of gold. They must find a way to replace it, to condone its theft, or to make owners satisfied with cash redemption. That is not gonna happen! The extreme legal problems in Switzerland over the improper raids on Allocated accounts have resulted in multi-$billion lawsuits, all kept out of the news by obedient servants.

The Interest Rate Swap buttress can no longer keep the USTBond towers from falling. The architect in JPMorgan is going to experience a wicked but deserved death event. On the other side of the Atlantic Ocean, Deutsche Bank will fall too, from the Interest Rate Swaps and scattered Credit Default Swaps they insure as the primary European derivative under-writer. The stage was set when D-Bank acquired the cesspool remains of Bankers Trust in 1999. The gold is finding itself in Eastern hands, having been part of a massive one-way flood of transport from Western bank locations, all part of the gold cartel network drainage process.

The age-old maxim is true, always was true, and always will be true: WHOEVER HAS THE GOLD MAKES THE RULES AND RULES THE WORLD. Some clownish commentary has come in recent weeks about how it does not matter if the USGovt has its gold anymore. The vast military complex cannot keep a dead hollow banking system upright. The ample output from the Printing Pre$$ cannot construct strong walls upon which the weight of the world's banks can operate as credit engines and investment bank proving grounds. Decisions were made to embrace fraud and theft, not production and fair trade. The sun is setting on the Western empire led by the United States and its puppeteer England. The sun has lost its golden shimmer. The next chapter will be led by Asia, unless the West decides to use physical weapons of mass destruction in its vengeance.

◄$$$ BALTIC DRY INDEX OFFERS MORE EVIDENCE ON GLOBAL RECESSION. SHIPPING COSTS OF DRY GOODS AND DRY MATERIALS ARE MAKING NEW MULTI-YEAR LOWS. THE STORY TOLD BY POLITICIANS OF A RECOVERY IS PURE RUBBISH. A COORDINATED RECESSION IS GATHERING FORCE. $$$

◄$$$ FARMLAND PRICES ARE RISING STEADY & FIRM. THE CENTRAL BREAD BASKET HAS SEEN THE STRONGEST PRICES AND GREATEST GAINS. THE MOVEMENT TOWARD HARD ASSETS IS EVIDENT. $$$

The Farmers National Company regional land value reports compare 2011 to 2012 value. They show strong commodity prices continue to create record demand and sales activity for farmland. Heavy turnover has come, from intense sell-side interests. The inventory of Midwest land for sale is tight. The firm reports sales volume rose 40% compared to 2011, on a record pace that continues. The farmers consortium sold $600 million of farmland in the past twelve months, which included $350 million in past six months. This equates to over 800 farm sales during that time period.

A clash of positive and negative market pressures is at work. The positives have demand for grain from world markets remaining strong against a limited supply of land, boosting land prices. Revenue returns to land owners have been strong over last year even though input costs have increased. The negatives have uncertainty from in Europe, potential for price inflation on the cost side, the risk of drought, the risk from a successful bumper crop, and the potential for increased capital gains taxes. Farmland is perceived as a safe tangible investment, part of the hard asset investment trend to defend against monetary debasement. Gold & Silver, energy, and farmland will stand as stellar investments thoughout the crisis. Art works and antiques will drop off.

◄$$$ THE CITY OF BUFFALO NEW YORK REMOVED $45 MILLION FROM JPMORGAN BANKS. THE TOOL OF DEPOSITOR BOYCOTT IS VERY EFFECTIVE, SINCE IT FORCES HIGHER LEVERAGE ON THE INSOLVENT BIG US-BANKS AND WORKS TO DEPLETE THEIR CAPITAL. THEY HAVE MAJOR CHALLENGES IN BALANCING THEIR RECKLESS POSITIONS. $$$

Buffalo City Comptroller Mark Schroeder announced in late May that the city would yank $45 million in funds from an account with JPMorgan Chase. The Occupy Buffalo movement had expressed its concerns and exerted its influence on the funds withdrawal. The group of activists have been critical of the giant bank's well publicized predatory foreclosure practices. The Buffalo Sewer Authority funds will be deposited into the local bank First Niagara, to earn a slightly higher yield. A loud message to JPMorgan Chase has been given that the City of Buffalo is not happy with their business practices. In his public statement, Schroeder called for more federal financial regulation. He claimed the Volcker Rule in the Dodd-Frank FinReg Bill was not enough to keep the financial system stable. He threatened to watch JPMorgan closely over the next few months. See the Raw Story article (CLICK HERE). The entire nation should undertake the same boycott strategy. JPMorgan has hundreds of thousands of depositor accounts, each owner a potential activist. The clients should remove funds and strangle the big bank. Opposite the depositors, the army of mortgage holders should pursue demands to see property titles. If not produced, all mortgage payments should be halted and legal action taken to forgive the loan in its full amount. The Lilliputians must rise against the Monster.

◄$$$ WEALTHY AMERICANS SAW THEIR WEALTH SLIP IN 2011. SINGAPORE AND SWITZERLAND ARE THE SITES OF THE GREATEST WEALTH. $$$

America's millionaire population declined in 2011 for the first time since the financial crisis. The population of US millionaire households fell to 5,134,000 from 5,263,000 in 2011, according to a study by The Boston Consulting Group. Total private wealth in North America fell by 0.9% , to $38 trillion. The ultra-rich were the largest losers, their stock accounts mostly to blame. Households in North America with investible assets of more than $100 million suffered a 2.4% decline in wealth. The class declined in size slightly to 2928 from 2989. The main culprit for all this wealth loss was stocks, as the elite are increasingly dependent on stocks as wealth vehicles. Their stock accounts fell by 3.6% last year. Further declines are to come.

Although more millionaire households exist in the United States than any other country, the class size fell by 129,000 in 2011. Japan and China ranked 2nd and 3rd behind the US in terms of total number of millionaires, with 1.6 million and 1.4 million respectively. However, the robust nation of Singapore that lies on the tip of the Malay Peninsula took the title for country with the highest density of millionaires. Over 17% of all households in Singapore qualify for millionaire status. Switzerland edged out Singapore for the most ultra-wealthy, with 11 out of every 10,000 homes categorized in that range. See the New York Daily News article (CLICK HERE).

◄$$$ THE PERSIAN GULF STRIVES TO BUILD AN INVESTMENT BANK CENTER, A REGIONAL FINANCIAL HUB. IT IS VERY SLOW IN HAPPENING, WITH SOME DISAPPOINTMENT. THE REGION BOASTS FINANCIAL CLUSTERS, BUT NO CENTRAL HUB, NO COMMON SET OF RULES, NO ENFORCED RULES FOR INVESTOR PROTECTION. THE GULF WILL REMAIN A REGION OF DE-CENTRALIZED POLITICAL POWER, AND THEREFORE OPERATE WITHOUT A CONCENTRATED CORE. THE DUBAI CENTER IS GREAT FOR A MEETING PLACE, BUT SURE STILL TO PROSPER. $$$

Despite its vast wealth, the Persian Gulf region has not developed fully as an investment bank and financial center. The buzz of activity a few years ago saw Western banks piling into Dubai, expecting it to become a hive of merger, acquisition, and stock issue activity much like Hong Kong. The modest boom that did occur was sidetracked by the Dubai World debt bust. The Mergers & Acquisitions and stock equity offerings reached a peak of $1.4 billion in 2007, but later fell to $450 million in 2011. The problem, or better described as hindrance, is that much regional business remains in government or royal family hands. Such owners tend to engage in fewer corporate transactions, keeping possessions close to the vest (or toga). Ordinary bond issuance has become a mainstay of Gulf investment banking, with M&A activity very minor. Financing the hundreds of $billions in construction projects is also a brisk business, from new industrial cities in Saudi Arabia and to a rail network in Qatar.

Regional wealth management has been another profitable line for the region's massive government funds like in Abu Dhabi, which is in possession of over $600 billion in assets and cash. In recent years, the sovereign wealth funds of Kuwait and Qatar have committed $9 billion as anchor investors in the initial public offerings of Chinese banks while an Abu Dhabi fund called Mubadala has an $8 billion joint venture with a Malaysian state company. Another main issue is the conservative nature of the sovereign wealth funds. They generally invest in blue chip companies and businesses outside of the region, like Saudi Prince Alwaleed and his strange bedfellow affair with Citigroup.

The lower profit margin business of underwriting bonds has become a the reliable staple for the region. So far in 2012, HSBC and Deutsche Bank are the region's top debt debt brokers. Islamic law itself is an obstacle. The sukuks are somewhat popular, securities intended to attract Middle Eastern and Asian investors who might refuse ordinary bond offerings. The interest they pay violates Islamic law. About $6 billion in sukuks were issued in the six countries of the Gulf Coop Council in the first quarter of this year, according to Emirates NBD bank in Dubai. The revenue is often produced by real assets like property. Aimed at Asian investors, HSBC recently issued a $158 million bond denominated in Chinese Yuan for Emirates NBD. Such bonds push the UAE as a financing center for Asian investors.

The debt underwriting has become a steady business for Persian Gulf regional banks. In contrast, the frightening ride comes with the Gulf stock markets, which have a history of consistent volatility. Their local rules only weaker the channels. Concerns about investor protection in the UAE and about foreign ownership restrictions in Qatar keep foreigners away, which helps to avoid hot money vanishing acts, but also prevents a stable core from developing. The culture of Moslem nations is more tilted toward private gold ownership. After a horrible 2011, the Gulf markets show positive signs. The greatest gains have gone to Saudi Arabia, which at more than $400 billion counts for half of regional market value. Much credit is given for the Saudi rise to new laws designed to open up the closed market to outside investors.

The ultimate problem is of de-centralized sheik governance. The Gulf has no main financial hub that could concentrate regional capital, which could provide a uniform set of regulations for investors. Instead, Saudi Arabia, Qatar, and the United Arab Emirates all compete to attract funds and lucrative jobs. The United Arab Emirates has three stock exchanges, the most divided of nations, a loose conglomeration of autonomous emirates. The region will continue to operate as five or six financial clusters. Dubai has the greatest ambitions to be the regional hub. However, it serves mainly as the only really congenial developed base for international financial professionals.

◄$$$ RUSSIA & CHINA FORM A STRONG TEAM BUT WITH LONGSTANDING INNER CONFLICTS THAT GO BACK SO FAR AS TO BE GENETIC. THE TWO GIANTS ARE STRENGTHENING TRADE TIES. PUTIN IS PLACING A RUSSIAN BET ON CHINA. THEY RECOGNIZE THEIR STRENGTH TOGETHER, WHOSE GLUE IS THE VERY ANIMOSITY TOWARD THE UNITED STATES. $$$

In the first week of June, the presidents of Russia and China laid out ambitious plans to forge a closer strategic and economic partnership. Both Beijing and Moscow seek to use each other to counter-balance their relationship with the United States. The two critical Eurasian leaders Hu Jintao and Vladimir Putin created a goal to at least double bilateral trade from $83.5 billion last year to $200 billion in 2020. The ambitious target was cited in the when large investment and trading deals were being signed, at which meetings was also discussed an international response to the violence in Syria. Chinese President Hu wishes to pursue a goal to set the global political and economic order in a more fair and rational direction. The Chinese state media praised close and growing bilateral co-operation and consultation of the two nations. In the Peoples Daily, the guest Putin wrote "Without the participation of Russia and China, without considering Russia and China's interests, no international matter or issue can be discussed and implemented." On the dark side, both Moscow and Beijing have angered Western nations with their refusal to back an intervention in the nasty civil war in Syria. However, it is a strained alliance, as Russian and Chinese analysts claim the two countries are still far away from a close alliance. See the CNN article (CLICK HERE).

The rugged strong leader Vladimir Putin in plain terms is betting on China. His recent three-day visit to China succeeding in warming Sino-Russian relations. Their ties are inevitably a struggle of interests. The cheerleaders on the side are the Russian foreign minister Sergei Lavrov and the Chinese official newspapers. President Hu Jintao said, "Better and more intimate relations between China and Russia are a blessing for the two countries and to the world." During the visit and before, Putin has stressed a comprehensive Russian-Chinese strategic cooperative partnership on high level without precedence. The defiance by Putin has been clear and noticed. In May, he refused to attend the Group of 8 summit in the United States. The gesture against the G-8 was a nod in favor of China, always an invited relegated guest.

Each nation has big problems. The struggle for Russia with economic growth requires an urgent response as Putin begins his third term as president. The sprawling nation undergoes a transformation amidst steady domestic opposition. One of his campaign promises was to push the Russian Gross Domestic Product from its current global ranking of 11th into the top five over the next decade. Stronger ties to Central Europe will enable a success. Despite its slowdown, Russia appears much stronger than the US and European economies, whose monetary foundations are being shaken to the core. To use a popular Chinese metaphor, Putin intends to use the Chinese wind to propel the Russian boat. The clear focus of the recent trip was trade. A strange battle is played out in the press. During Putin's campaign to win the presidency, he engaged in a war of words with the United States over the fairness of the election. When he won, the message came from WashingtonDC only congratulating the Russian people. The name of Putin was not mentioned. The US election anomalies, inconsistencies, and vote fraud might be more publicized in November. See the Market Watch article (CLICK HERE).

My view is not unique. The Sino-Soviet friction was mostly in the past, in recent decades over the concept of communism. They each tried to lead in world communist movement as intense rivals. That is not the case really anymore, since a basic capitalism thrives on cooperation and expanded trade in mutual benefit. China does not produce oil or natural gas like Russia. In turn, Russia does not have a great factory lineup like China. Also, the Russian metal output is enormous, which China needs and cannot produce alone. A factor never mentioned is Russia's vast fresh water supplies and Chinese perilous water shortages (especially in Beijing). A huge oil pipeline network has been built between the two countries, to be expanded upon. Expect at least a decade of solid cooperation and mutual respect without hostility. On the communist front, they were nasty adversaries. On the capitalist front, they fit together like a hand in glove, both despising the US leadership. But one can never put aside the 1000-year old conflict between Czarist Russia and the disorganized Mongol Horde of China. That historical enmity with countless rounds of attacks went so deep as to become genetic. What provides the glue in their current bond is their resistance to global US hegemony, to corrupt USDollar management, to the exported tools that disrupt foreign economies.

◄$$$ CATHERINE FITTS OFFERS A USEFUL REVIEW OF PRECIOUS METALS VAULT OPTIONS. $$$

See her Solari website for a review of several optionns for storing precious metals in vault centers across the globe (CLICK HERE). The Jackass favorite is Gold Money, using Hong Kong as the vault location. Never trust London or Switzerland.

## BIG BANKS FAST LOSING CONTROL

◄$$$ THE FAILURE OF THE BIG US-BANKS IS AN EVENT CLOSE AT HAND, MADE OBVIOUS BY THEIR LOSS OF GOLD. THE BIG US-BANKS HAVE ONLY ONE ASSET OF UNDENIABLE VALUE, GOLD BULLION. AS THEY LOSE THAT ASSET FROM EASTERN ENTITIES STRIPPING THEIR GOLD DURING MARGIN CALLS IN OFF-EXCHANGE TRANSACTIONS WITH EXTREME PRESSURE APPLIED, THE BIG US-BANKS ARE PUSHED CLOSER TO A DEATH EVENT. A STRING OF BANK FAILURES IS NEARBY. THESE BANKS ARE FAR MORE HOLLOW AS STRUCTURES THAN PERCEIVED. BEGIN THE DEATH WATCH FOR MORGAN STANLEY, WHICH FACES A POSSIBLE TRIPLE DEBT DOWNGRADE IN A COUPLE WEEKS. $$$

The removal of 5000 metric tons since late February, the gold bullion having been stripped from Western banks within the gold cartel, and relocated in Eastern locations, primarily Chinese banks, is extremely significant. The entire migration of gold creates an extreme risk for the Western banks. They have many assets on their balance sheets, mostly toxic paper from USTreasury Bonds, Euro sovereign bonds, mortgage bonds, mortgage loan assets, corporate bonds, commercial paper, and commitments tied to derivatives. The great majority of such assets on balance sheets is toxic paper, in a fast-paced process of imploding in value. Those balance sheets also used to contain gold bullion in high volume. That is no longer the case, the bullion having been leased & sold in past years and raided in a massive systematic scale in reent months. In a hidden desperate maneuver, many cartel banks will attempt to move gold bullion from private executive accounts to save themselves.

The bank balance sheets have been thus hollowed out, leaving their structures to stand on toxic paper, and much less on sturdy gold metal. Recall that insolvency plus illiquidity forces bank failure. The many bank runs are like a grand final hollowing process that affects the entire banking sector, large and medium sized banks alike. The big US banks are left vulnerable to failures. The event is coming. My candidate for the first bank death failure is Morgan Stanley. They own the same risky Interest Rate Swaps that have caused great pain and loss to JPMorgan. However, Morgan Stanley does not have the size or depth of resources or skill to manage the entire structure, their own smaller Tower of Babel. Watch for a MS black hole to form. It might happen sooner than we expect. Most Wall Street banks do not have identical books of derivatives. They are not aligned in the event of extreme events. My firm belief is that the outlier among them might die. Lehman Brothers was the outlier in 2007, with a heavier load of mortgage assets. Their collective arrogance might actually cause their undoing.

Morgan Stanley faces a possible 3-notch debt downgrade by Moodys by end June. The company claims it has the collateral and liquidity to handle whatever comes of the decision. Such an extreme downgrade would lower the firm's rating from A2 to Baa2, the second lowest investment grade. In February, Moodys put 17 global banks on review for potential downgrades, including Morgan Stanley, alone with the triple threat. A three level cut would require the investment bank to post $9.6 billion in additional collateral to counter-parties, exchanges, and clearing houses provided a second ratings agency were to take the same action. Moody is so far alone.

In defense, CEO James Gorman mentioned a reform program for the firm over four years, $179 billion in cash, strengthened risk management functions, and steps to diversify revenue. Morgan Stanley has doubled its headcount in risk offices in the last four years, aware of the disaster that hit in 2008. MS deploys over 3000 market risk limit rules. The firm conducts extensive internal stress tests, and has raised its single name counter-party credit risk limits. It continues with a $1.4 billion expense reduction plan. The extreme risk for Morgan Stanley is two-fold. They are a primary executor of the high-risk Interest Rate Swaps that defend the USTBond artificially low yields. They share the task with JPMorgan. Also, they have significant European sovereign bond exposure, having extended a huge private USDollar swap to big European banks until the USFed stepped in a few months ago. See the Fox Business article (CLICK HERE).

◄$$$ THE N.Y.S.E. FINANCIALS INDEX PROVES THE CHRONIC INSOLVENCY OF THE US-BANKING SYSTEM. DESPITE AN ENDLESS SUPPLY OF USGOVT SUPPORT IN PURE FAVORED FASHION, THE SECTOR REMAINS RUINED. IF NOT FOR ABANDONED F.A.S.B. ACCOUNTING STANDARDS, THE US-BANK SECTOR WOULD HAVE BEEN LIQUIDATED THREE YEARS AGO. THE SECTOR IS DEAD AND LIFELESS, UNABLE TO RESPOND TO MASSIVE LIFE SUPPORT. $$$

The NYSE Financial Index is currently hovering in stable fashion near the minus 60% line from its Bear's Eye View line, meaning 60% below its last all-time high in June 2007. Consider the remarkable development, testimony to the chronic insolvency and ruin to the US big bank sector. Literally $trillions of big bank welfare support has been injected into these companies in one manner or another since October 2007, from TARP Funds to bank aid to bond redemptions to coverage of their derivatives. The valuations of these financial firms cannot recover set in 2008 and 2009 for a simple reason. They are dead entities. If a dead cadaver receives blood transfusions with a force-fed pump, the body does not come back to life.

The big US banks are rotten to the core, insolvent beyond description. They would have collapsed long ago if proper accounting standards had been enforced. In April 2009, the Financial Accounting Standards Board lowered their standards. No, more accurately, the FASB dropped all standards, and permitted the banks to declare the value of their own balance sheets. How many students would fail if they graded their own final examinations in school? None! The big US banks would have collapsed long ago if colossal support from the USGovt and US Federal Reserve for the past five years had not been made available, upon request. It was not from requests, but rather demands from the Syndicate that controls the USGovt. Thanks to Mark Lundeen of the Gold Speculator for the graphic.

◄$$$ ON JPMORGAN AND MFGLOBAL, THE TRAIL IS MORE VISIBLY CLEAR FOR THEFT, PROTECTION, AND COVERUP. THE EVENTS LAY OUT A LOGICAL SEQUENCE OF MOTIVATED THEFT WITH THE AID OF SUBSERVIENT REGULATORS, COLLUSIVE USGOVT JUSTICE DEPARTMENT, AND DEVOTED PRESS. $$$

  • Recent losses announced in May by JPMorgan attest to a motive for theft
  • JPMorgan has struggled for several months with severe collateral problems
  • JPM inherited gold & silver from client accounts, equal in volume to Delivery Notices
  • Civil lawsuits await MFGlobal CEO Jon Corzine, a Goldman Sachs alumnus
  • Exposure of misleading share holders will come on the MFG liquidity problems
  • At least $1.6 billion in client funds were stolen, and zero returned (despite press stories)
  • Class action lawsuit continues (8000 parties) from Commodity Customer Coalition
  • Losses from European bonds led to liquidity pressures, the motive for JPM pilferage
  • Losses from revealed USTBond derivative maintenance led to more liquidity pressures, continued motive for pilferage
  • The National Futures Assn agrees with the CCC lawsuit, giving JPM pressure
  • Silver re-hypothecation is rampant in the COMEX, where illegal collateral is declared and attached
  • See the Silver Vigilante article (CLICK HERE) which offers hope for justice
  • MFGlobal is the visible thread pulled on the JPM sweater, to fully unravel
  • JPMorgan has bigger problems in the collapse of the USTreasury Bond & Interest Rate Swap structures, whose Tower of Babel will fall to the ground and create a Black Hole of monumental proportions, leading to the banking system collapse and USGovt debt default ultimately. To the dull naysayers, the process has begun and will not stop until the collapse is complete. The structure is too complex to manage or save.

◄$$$ MFGLOBAL WAS A FRAUD FROM THE START DOOMED TO FAILURE FROM THE ZERO PERCENT INTEREST RATE SHAM. THE STRAINS ON SOVEREIGN BOND MARKETS WERE TOO GREAT TO UNDERTAKE WITH TOTAL SUCCESS. BIG INCIDENTS WERE ASSURED. INTERNALLY, THE SHUFFLING OF FUNDS HAD REACHED A HECTIC COMPLEX PACE, WHICH MADE THE CHALLENGE IMPOSSIBLE TO MAINTAIN. $$$

The MFGlobal post-mortem continues, the analysis as complex as the criminal actions under increasing scrutiny. The Repos to Maturity were a centerpiece in the complex puzzle founded in fraud. Recently filed documents from the regulatory offices depict MFGlobal as a train wreck waiting to happen. Ironically, the firm is a casualty of Zero Interest Rate Policy. MFGlobal historically had earned most of its income from low risk activities, such as the staid interest on customer margin which largely vanished. Since the entire business model, based upon phony Repo to Maturity trade, rested on this fiction, the customers were doomed at the point this was approved. Corzine was under great pressure to maintain a high level of profitability by the ratings agencies, which were considering a debt downgrade of the MFG firm. The Giddens report from the class action lawsuit revealed how the MFG firm was on the verge of insolvency before the JPMorgan theft, as FINRA had demanded a fresh infusion of $183 million in cash to shore up finances. Divisions within the company were told of ample cash, while some managers were frantically engaged in a shell game to keep their game going.

One shenanigan committed in the final weeks was to declare book profits at the expense of liquidity, a commodity in short supply. The entire Repo to Maturity trade was a ruse sold to regulators and the public, a bet that Italian Govt Bonds would not default before maturity. The benefit of the trick was to keep such assets hidden off-balance sheet. Unlike CEO Fuld at Lehman Brothers, the executive management at MFGlobal did not bother to rent the counter-party balance sheet in order to pull off the accounting scam. In this respect Corzine was particularly aggressive. However, like Lehman, the MFGlobal case will receive a pass from regulators and prosecutors (both still silent), and be left to settle in the civil arenas. See the excellent article by Yves Smith on Naked Capitalism (CLICK HERE).

◄$$$ THE JPMORGAN DIRECTORS OVERSEEING THEIR C.I.O. FUNCTION INCLUDE A MUSEUM EXPERT FROM A.I.G. INFAMY AND A FELLOW 25 YEARS REMOVED FROM THE BANKING WORLD. THEY WERE OBVIOUSLY HIRED FOR THEIR IGNORANCE AND INABILITY TO OBSERVE EVENTS. $$$

The risk oversight committee of the largest US lending institution lacks directors with bank experience, especially in financial risk management. All five next largest banking firm competitors to JPM have greater experience on staff. The three directors who oversee risk at JPMorgan Chase include a museum head who sat on the governance committee at American Intl Group in 2008. He was the grandson of a billionaire and the CEO of a company that makes flight controls and work boots. The only member of the risk oversight staff with any Wall Street experience is James Crown, who was brought into service after 25 years outside the industry. Those were horse & buggy days with respect to derivatives, hedging, and hypothecation. To be sure, Crown is well paid with heavy lunch expense accounts. Even university finance professors find such oversight bereft of skill, like Anat Admati at Stanford University. The watchdogs were in no way capable of observing events as they spiraled out of control, still out of control. CEO Dimon attempted to transform a London-based office responsible for cash management into a profit center that entered the casino world of illiquid credit derivatives. Many such exotic wagers were so large that they distorted market prices.

The risk committee staff details are given. James Crown is president of Chicago-based Henry Crown & Co, and lead director of defense contractor General Dynamics. Ellen Futter is president of the American Museum of Natural History in New York. Lastly David Cote is CEO of Honeywell Intl Inc. According to JPMorgan official documents, the committee met seven times last year but has not changed its makeup since 2008. The committee approves the JPM risk policy and oversees the chief risk officers. Despite having $1.13 trillion of deposits, JPMorgan is the only one of the six largest US lenders without a former banker, regulator, or finance professor on its risk committee. That is clearly by design, to permit carte blanche. The above information was provided by Dawn Kopecki of Bloomberg News.

◄$$$ DIMON WHIFFED ON VOLCKER RULE DEFENSE BEFORE HIS MINIONS. HE PLAYED DUMB VERY WELL. HE ACCEPTED THE ADULATION OF THE CONGRESSIONAL FINANCE COMMITTTEE, HIS OWN WELL PAID SUBJECTS OF HARLOTRY. HARDLY A TOUGH QUESTION CAME IN THE TWO-HOUR SESSION. $$$

The appearance before the USCongress by JPMorgan CEO Jamie Dimon was more amusing than revealing. The string of supposed leaders cowtowed and genuflected before their boss, in a display that reminds one of Mencken's claim that the USGovt is the best money can buy. Only two senators ruffled Dimon, the only senators not to receive donations, the only senators not compromised. Most questions were respectful and curious about how the problems at the prestigious bank faces challenges and how recent losses could have been avoided with better legislation and regulation (that JPMorgan could dictate and write). Oregon Senator Jeff Merkley and New Jersey Senator Robert Menendez were each feisty, as expected. The former pressed Dimon on his position for additional loopholes on the Volcker Rule. The supposed genius Dimon actually claimed not to know what the rule was, that it had not been written fully yet. That smug reply contradicted his previous public statement made two weeks ago, that the rule would not have prevented the outsized trading loss. The latter pressed Dimon on his disdain for controls previously stated before the same panel. Menendez practically called him a liar. The meeting was without substance. The arrogance of Dimon was not so stifling, likely due to speaking before his own minions, his well paid political harlots hard at work assuring welfare for the big US banks. Too big to fail is a mantra for political dominance.

Hardly a tough question was asked. Each panel member should have been required to state the dollar amount of the JPMorgan donations to his office. The members seemed like amateurs on their ignorance of modern finance. As footnote, the proposed Volcker rule is vaguely defined, perhaps intentionally, since Wall Street contributes to drafting laws regularly on bank matters. The Volcker rule allows for hedging of bank holdings on the macro systemic positions, but it prohibits a hedge that creates significant new risk exposure. Without definition of risk, the rule is meaningless, but by design, despite the six-step process for allowance. Any program to assure compliance would be submitted to some hooligans on a regulatory board staffed by Wall Streeters. The Whale Iksil would have been required to submit trader mandates to ensure compliance, in order to prevent rogue trading activity. But again, such mandates would be to the management that demands the high risk trades. In fact, when a trade goes awry, the management fixes blame on some rookie without white skin. Plenty of precedent, plenty of confusion on how to distinguish between a trade and a hedge. See the Yahoo Finance article (CLICK HERE).

## GOLD QUEST IN TRADE & BANKING

◄$$$ IRAN HAS ACTIVATED AN ALTERNATIVE SYSTEM FOR SWIFT, THE BANK PAYMENT DEVICE. THE BYPASS NO LONGER RELIES UPON THE USDOLLAR. NEED SPAWNS INNOVATION. THE USGOVT BACKFIRE ON IRAN SANCTIONS CONTINUES, SURE TO BLOSSOM INTO A NON-US$ PAYMENT SYSTEM THAT WILL BE DE-CENTRALIZED. $$$

Iran Governor of the central bank Mahmoud Bahmani claimed in late May that a new system has been activated that is designed to replace the SWIFT bank transaction device. The beseiged nation has designed and implemented a new system for conducting international transactions. The SWIFT group CEO Lazaro Campos in Belgium issued a statement that the society has discontinued offering services to Iranian banks. The Western bank and political leaders believe that the SWIFT response renders impossible the global financial transactions. Not true, as alternatives are being developed. The transactions are blocked in USDollar terms, thus opening the door for non-US$ transactions. Dollar arrogance is as stifling as it is ignorant. Bahmani rejected reports about a Japanese bank freezing transactions with Iranian banks. See the PressTV article (CLICK HERE).

◄$$$ GOLD IMPORTS TO IRAN SURGED IN APRIL, $1.2 BILLION FROM TURKEY IN APRIL ALONE. THE SHIPMENTS CONTINUED IN MAY. TURKEY IS A CHANNEL LIFELINE FOR IRAN. OIL PAYMENTS IN GOLD AND NON-USDOLLAR CURRENCY ARE BECOMING THE NORM FOR IRAN, WHOSE CITIZENS ARE STORING MONEY IN GOLD TO AVOID THE DAMAGE FROM INFLATION. $$$

Iranian Gold imports surged in April, and continued in May. A device bypassed the USGovt sanctions by relying heavily upon Turkey to receive oil payments. A new huge source of gold demand is emerging from Iran, related to oil. Iran imported a massive batch of precious metals from Turkey in April alone. Turkish exports of gold, precious metals, pearls, and coins to Iran rose to $1.2 billion in April from a miniscule $7500 a year earlier, according to Ankara data. One can conclude easily an official involvement from Turkey in the imports from the Central Bank of Iran. This trend continued in May when Turkish gold imports grew still more by 150% in May due to relentless demand from Iran, still under the strain of sanctions. Turkey imported 19.47 tons of gold in May, up from 7.78 tons in April, according to data at the Istanbul Gold Exchange. Foreign trade data showed Turkey gathered revenues of $1.27 billion from exports of 23.9 tons of gold in April, totally eclipsing the $75.4 million earned from sales of 1.65 tons last year. A hefty 95% of the total gold exports went to Iran in April. The trend is upward and strong. The Turkish gold imports in the first five months of the year totalled 35.18 tons, compared to 79.70 tons in all of 2011 and 42.49 tons in all of 2010. Some of the increase was attributable to the violence in neighboring Syria, but minor.

Wider sanctions against Iran and its banking sectors take effect in July. The transaction payments to Iran have been prohibited by the SWIFT system. Iran announced a newly implemented replacement system for the Society for Worldwide Interbank Financial Telecommunication (SWIFT,) which facilitates the bulk of global cross-border payments. Unilateral orders by the USGovt to cut off Iran are the central issue, a blacklist that involves Europe. The chairman of a leading Russian bank has criticized the United States for imposing sanctions on Iran, citing the US sanctions as violations of international laws. Many nations include Russia and China refuse to comply, since unilateral and not from the United Nations. He cited the IMF charter which demands free trade between all member states, so stated Andrei Kostin, the Chairman of Russian Vneshtorgbank. The sanctions and economic warfare have thrust neighboring Turkey to serve as an important channel for the Islamic republic of Iran. The scale of gold movement clearly indicates official channels used by the Central Bank of Iran, which is holding some of its oil revenues in gold bullion form. So believes Gokhan Aksu, vice president of Istanbul Gold Refinery.

Tehran announced at the end of February its acceptance of oil payments in gold as well as the national currencies of importer countries, according to Mahmoud Bahmani, Governor of the Central Bank of Iran. The Financial Times reported in March 2011 that Iran has bought large amounts of gold bullion on the international market to diversify away from the USDollar, citing a senior Bank of England official. Currency wars persist and will expand until a non-US$ trade settlement system is in place, which will serve massive damage to the United States and its Syndicate. Meanwhile Iranian citizens sock money into gold as a safe haven store of value. Their native Iranian Rial currency is losing value quickly from price inflation. That is a US objective in my view. See the Zero Hedge article (CLICK HERE).

◄$$$ THE EXCHANGE TRADED FUNDS ARE SLOWLY BEING EXPOSED AS FRAUDS. THE RECENT REVELATION IS THAT THE SPDR-GOLD FUND OVERLAPS WITH ANOTHER VAULT FACILITY. THE BORROWS AND RAIDS ARE ENABLED. THE INFAMOUS C.N.B.C. GOLD BAR HELD BY PISANI HAS BEEN IDENTIFIED, AND WITH ANGRY BACKLASH. THE G.L.D. INVENTORY OFTEN SHOWN IS A PHONY REPRESENTATION. $$$

Ned Naylor-Leyland of Cheviot Asset Mgmt brought an end to the odd mystery of who owns the gold bar raised for camera view by the clueless tool Bob Pisani of CNBC. The Silver Doctor introduced the Cheviot managing partner, who provided some explosive details regarding the infamous GLD gold bar presented by Pisani which was quickly discovered not to be on the GLD official bar list. The story quickly went viral, a comedy of revelations. Ned revealed the actual owner of the gold bar shown with stamped serial number ZJ6752 is actually ETF Securities, which shares the vault facility. All those photos of the vast GLD inventory of gold bars include stacks of bars not exclusively in the SPDR Gold Trust possession. Worse, the bars are within easy reach of other funds for swapping purposes. Pisani was not granted permission at CNBC to handle the highly valuable gold bar. The bar owner was shocked to see Pisani claim their bar as part of the holdings of the GLD fund. In Naylor-Leyland's words, "This tells you everything you need to know about ETF's!" The day will come soon when the GLD gold inventory holdings are largely swaps from the LBMA in London in a vast illusion lake of paper. Investors will one day awaken to discover that the bullion they thought they owned is really re-hypothecated paper held in the form of gold certificates of dubious value.

Ned Naylor-Leyland summarized, "I have been saying that to clients, to potential clients, and to my colleagues in London, and in the investment world since 2003-2004! Effectively, you MUST BE CAREFUL WHICH VEHICLE YOU USE! There is no question that at some point this is going to be a huge problem. You will remember that amazing video interview with Bob Pisani that CNBC ran where they went into GLD vaults in London. You know they took his mobile phone off him and he ended up in the vaults. He held up this bar and [brought attention to it, showing the serial number]. Then immediately everyone jumped all over it and said 'wait a minute, that bar is not on the bar list!' CNBC basically went all quiet on that issue. About three weeks after it happened, I happened to have ETFS (EFT Securities), which is another ETF product company, come into see me at Cheviot. I brought up some problems with ETF's, and I mentioned this video to them and I asked them whether they had seen it. They said no, they had not. So I forwarded that to them and [requested comment]. I got an email back which stated 'That was interesting, and what is even more interesting is IT IS OUR BAR!'"

The gold bar held up by Bob Pisani, who was standing in the GLD vault, is actually owned by another Exchange Traded Fund named ETFSecurities. Further investigation reveals how the GLD prospectus allows for gold swaps. Furthermore, Harvey Organ has done research that indicates the GLD gold is routinely swapped and re-hypothecated from the Bank of England. See the full Silver Doctor interview (CLICK HERE) with Ned Naylor-Leyland of Cheviot, which covers far more than the controversial GLD gold bar, like the European banking crisis and the Spanish bank bailout. He perceives full blown contagion.

◄$$$ ERIC SPROTT SHARED MANY OPINIONS, HIS USUAL FARE. THE COMMENTS ARE LOADED WITH INSIGHT. THERE WILL BE NO ECONOMIC RECOVERY. THERE IS NO GOLD TO BUY. HE SPOKE ON A DIVERSITY OF TOPICS. $$$

The Silver Doctor sat down with Eric Sprott of Sprott Asset Mgmt to discuss the European debt contagion, the latest gold and silver massacre, the massive rush into physical metals, and his outlook on gold and silver for the rest of 2012 and beyond. As usual, Sprott provided a steady stream of valuable nuggets. Rather than present numerous quotes, a summary is given. See the full transcription on the Silver Doctor article (CLICK HERE).

No bailout of banks like in Spain will cure the sovereign debt problems in Europe. The problem is much bigger than central banks or governments can deal with. The contagion will spread, since the situation is untenable. No nation has funds to deal with the problem, since deficits are mounting. Their bonds are under attack. (ME: if truth be known, the culprit in sovereign bond attack is likely Wall Street.)

Expect the Spanish banking system losses to escalate in a huge way, much like they did with AIG. The US insurer started with a $40 billion estimated loss, then it ratcheted up in three steps to $185 billion. (ME: it is probably more like $2 to $3 trillion by now, counting the derivative coverage by the USGovt.) The European peripheral nation assets cannot be liquidated, and therefore the bailout funds must continue flowing. With roughly 40% underwater, look for their $1 trillion in mortgages to require about $400 billion in aid, bailouts, redemptions. All in time.

The Euro Central Bank is way behind the curve, the entire EuroZone being quite dysfunctional. Winning agreement among 17 groups is impossible. Different interests prevail for the stronger countries versus the weaker countries. They lack the illusory advantage by the USFed in printing money at will in high volume with electronic engines at no cost. They must alleviate their growing bank run.

Spain was just downgraded three notches by Fitch. They cannot easily bail out their own banks, since too costly. Every nation is behind the curve, never to catch up. They are extending and pretending, program after program, which cannot be permitted to stop. Nothing is being done to address the sliding economies. Each bailout addresses the financial sector only. (ME: Spain has been the nation slowest to properly engage in bank accounting, thus the most dreadful situation now, the greatest shock in a move toward reality.)

The United States is bankrupt. Japan is bankrupt. To be sure England is bankrupt. They all have huge and growing percentages of debt to GDP. They are all way past their Minsky Moments. Given the abnormal interest rate environment, no resolution will come quickly. Nothing is normal anymore, what with QE, LTRO, unlimited Dollar Swap lines, and numerous bailouts. The responses to date never accomplish anything, while the economies continues to weaken as costs still are going up.

USFed Chairman Bernanke has been releasing his comments at exactly 10am, enabling an orchestrated ambush of precious metals. No surprise that the MO has changed. They stage gold attacks when Bernanke speaks or when the Fed announcements come out, or FOMC minutes are published, all well timed. However, all of the data is incredibly positive for precious metals. China is buying 100 tons of gold in April, Iran is buying, and Turkey is buying. Even remote Kazakhstan announced a move from 12% of reserves to 15% in gold. Huge volumes of gold are being demanded, far beyond the ability of the miners to provide that gold in supply. Central banks must be leasing or supplying the gold into the market somehow. These bankers cannot solve a single problem.

The inefficacy of the SEC & CFTC is blatantly obvious. Gensler has been vacant on position limits. It will be up to the physical markets both in gold and silver to deal with the corrupted paper markets.

The Gold/Silver ratio will recover strongly. In 2011 again the silver sales exceeded the gold sales in dollar volume. The 56:1 ratio cannot remain as it is without grandiose shortages of silver. About 70 million ounces of gold per year is available for investment, with very little used in industry. Of the annual 900 million ounces from total mining output, perhaps 450 million is available for investment, including jewelry. Hence there is 6.5 times more physical silver available to buy for investment versus gold. Yet people are buying the silver at the current 56 to 1 price ratio. That ratio will budge eventually in a strong way.

Nevermind Buffet on gold matters (irrelevant). Gold is the canary in the coal mine. It is putting pressure on the central bankers. In the last two letters, Bill Gross at PIMCO mentioned that he will buy more hard assets, including gold. The Bond King suggests gold. Nations with big wealth funds will turn to gold, since their stock markets and bond markets are in terrible shape. Bonds that yield 0% encourage gold buying. New highs will be registered in both Gold & Silver eventually. All factors dictate it. Almost nothing in financial markets has clothes. All are fake priced.

For a price turnaround in Gold, look for changes in the old ways. Central banks have indeed stopped selling, and have become net buyers. The hedgers have stopped hedging, like large mining firms. The physical demand for gold far exceeds the supply. The extreme programs like QE1, QE2, LTRO, and Dollar Swaps stand in the way of the Gold price. Ultimately the real purpose for gold owned is to avoid a leveraged financial counter-party going down. All the official programs are veiled money printing. (ME: Sprott misses the important point of a divergence to come that shows a great spread between the COMEX gold price and the physical price. He should be well aware, since his fund's purchases require a price premium to acquire the metal.)

Sprott gave credibility to the story that the gold bars under GLD roof have been re-hypothecated from the Bank of England and Arab investors. He emphasized how the Sprott Gold Fund places its gold at the Royal Canadian Mint. His fund will not lever anything. He warns that refusal to hold physical metal often results in a sudden wake-up call with the outcome being no ownership, since the counter-party died or vanished.

◄$$$ GERMANY HAS REQUESTED EURO DEBTORS TO CASH IN GOLD. THE EUROPEAN DEBTORS ARE BEING LED TO PAWN THEIR GOLD FOR EUROBOND REDEMPTION, COMMITTING THEIR NATIONAL TREASURES. A NEW GERMAN STABILITY PACT IS GAINING MOMENTUM IN GERMANY. THE MISALIGNMENT BETWEEN NORTH AND SOUTH CANNOT BE ADDRESSED, EVEN WITH A CLEVER PACT ON CREDIT, SINCE A CURRENCY DEVALUATION IS NOT POSSIBLE. $$$

Southern European debtor nations must pledge their gold reserves and national treasure as collateral under a EUR 2.3 trillion stabilization plan that under development in Germany. The endless credit from the powerhouse in Central Europe will no longer continue without effective collateral posted. The German scheme is known as the European Redemption Pact, which would be permitted by the German Constitution in order to break the political logjam. Although a highly creative way out of the debt crisis, the leaders of Italy, Spain, Portugal, and other nations might balk at gold relinquishment. They might opt instead for debt default in order to retain their gold. Various party leaders within Germany see some benefits from lower interest rates and joint liability.

The plan splits the public debts of EMU states. Anything up to the Maastricht limit of 60% of GDP would remain sovereign. Anything over 60% would be transfered gradually into the redemption fund covered by joint bonds. The interest costs on joint debt would be higher than the attractive low yield on 10-year Bunds. The nations of Italy would switch EUR 958 billion, Germany EUR 578 billion, France EUR 498 billion, and so on. The total government debt was EUR 2.326 trillion as of November. However, the debt is a fast moving target, as the European slump corrupts debt dynamics. The pact is progress in the opposite direction to fiscal union. While Euro Bonds are a federalist catalyst, the fund would be a temporary initiative toward sovereign control over budgets again. The ingenious design gets around the German high court, which ruled in September that the budgetary powers of the Bundestag cannot be alienated to any EU body under the Basic Law, the founding text of modern Germany.

Germany would have control over the fund, in a position to enforce discipline. Each nation would have to pledge 20% of their debt as collateral, such as gold bullion. The assets could also be taken from their currency. The collateral posted would only be used (forfeited, confiscated) in the event that a nation does not meet its payment obligations. That event seems like a sure event, followed by physical loss. This new collateral demand could enflame opinion in Italy and Portugal. Both nation have retained their bullion, resisting the rush to sell as Britain and others have. Italy owns 2451 tons of gold, valued at EUR 98 billion in March. Alessandro di Carpegna Brivio is a gold expert at Camperio Sim in Milan. He urgent caution, saying "Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy. We should use our gold to take care of our own debt, collateralizing bonds above 100% of GDP. That would be a far more targeted approach."

Other experts regard Germany as not yet prepared for the redemption fund. The Germans must to do something, either fashion a better fund or reject further aid. No progress might be done until after the elections next year. Spain will pass through the storm before the pact is final, which will change all the dynamics and the debt figures. Nothing alters the intra-EMU currency misalignment between North and South, or help the Latin states to close the great gap in labor competitiveness. They face a long process of debt default, internal asset writedowns, and restructure hobbled by the absent opportunity to devalue their currency. See the UK Telegraph article by Ambrose Evans-Pritchard (CLICK HERE).

◄$$$ BASEL RULES MAY MAKE GOLD A TIER-1 ASSET. BANKING CAPITAL ADEQUACY RATIOS ARE IN THE PROCESS OF BEING ADJUSTED, BY DICTATED ORDER. IN RESPONSE TO THE GLOBAL BANKING CRISIS, THE RULES ARE TO BE TIGHTENED IN TERMS OF THE ASSETS THAT BANKS MUST HOLD, A MOVE THAT COULD POTENTIALLY BE VERY FAVORABLE TOWARD GOLD. NEW ENCOURAGING RULES TOWARD GOLD AS A BANK RESERVE COULD RESULT IN 1700 TO 2000 TONS IN PURCHASE. THINK OF IT AS BANK BALLAST. $$$

The Basel Committee for Bank Supervision, a group within the BIS, defines capital requirements through the the so-called Basel III rules. The ultimate central bank is on the verge of declaring Gold to be a Tier-1 asset for commercial banks with 100% weighting. Curiously, it is currently a Tier-3 category with just a 50% risk weighting. Like gold is only half money, how absurd!! They are set to increase the amount of capital banks also must set aside, a double win potentially. The incentive away from Gold toward risky assets such as stock, currency, and debt-related assets has turned disastrous. A category upgrade in Gold would effectively drive up its value relative to other competitive qualifying assets. By elevating Gold to a bank reserve asset, stability would enter the equation, since the yellow stable metal move inversely to the risky paper assets that have crumbled. Gold is ideal as it bears no credit risk, and has no counter-party risk, only theft risk (due to desirability) and shell game risk (from certificate games).

An upgrade to Tier-1 asset would make a triple win: 1) An endorsement of wealth preservation and store of value from the syndicate penthouse, 2) inducement for significant gold purchases by major financial institutions, and 3) reappraisal of gold's value with respect to other Tier-1 capital such as quality sovereign debt. Under the new rules, Gold could find a significantly larger proportion of a reserve pool pushed into sudden growth. The Bank For Intl Settlements might turn coward, as time will tell. The calculus is appealing. If 2% of total current Tier-1 capital held by commercial banks globally were to be converted into gold, a suggested 2% of the $4,276 billion would amount to $85 billion in gold purchases. That comes to the neighborhood of 1700 tons of gold bullion. Hence banks would be encouraged to hold gold with similar motives to central banks, which hold 16% of reserves in gold. Even if they hold only 10% in gold, given that they are dedicated liars, the new impetus for Gold purchases would be a major change agent of epic proportions. See the Investment Europe article (CLICK HERE).

◄$$$ THE BANK FOR INTL SETTLEMENTS APPEARS TO HAVE SNAGGED MUCH CENTRAL BANK GOLD FROM GREECE, PORTUGAL, AND SPAIN IN HIDDEN CURRENCY SWAPS. THE DATA INDICATES GREEK GOLD WAS USED IN SWAPS AS A TYPE OF COLLATERAL FOR BAILOUTS BEFORE THE DEFAULT WAS FULLY ANTICIPATED. ABSENT ITS NATIONAL GOLD, GREECE MIGHT HAVE NO ASSETS TO ENGAGE IN GLOBAL TRADE. $$$

Julian Philips is razor sharp in his analysis. He has uncovered evidence of massive gold confiscation, for lack of a better term. The Bank of Intl Settlement held 500.7 tons of gold as at the end of 2010. By 3Q2009 it held just under 120 tons. The bullion served as collateral within currency/gold swaps. Party names are confidential, to protect the guilty. Do not expect the gold bullion to be returned, since too coveted. The totals could be nearly the entire official gold holdings of Greece, Portugal, and Spain, hardly an odd coincidence. The nation of Greece used to hold 111 tons of gold, believed lost and forfeited in collateral seizures. Quite the heavy price to remain in the Euro Monetary Union, which assures economic destruction as well. Although conjecture, to link the gold holdings of three of the EuroZone's financially weakest members to the BIS seems logical and indicated.

In 1Q2010 the BIS recorded the jump in gold holdings that it had acquired. Four years earlier, the nations of Portugal and Spain had sold gold through the Washington Accord on the open market. Apart from such official sales, these BIS transactions should be acquisitions like what typically occur through a set of complex Currency/Gold swaps. Concurrently, the EuroZone debt crisis exploded on the scene. In advance of any rescue plans, when the various central banks probably began discussions on the matter, a standard procedure would have been to make a collateral arrangement using the asset of last resort to secure their gold against any future bailout package. The prized collateral asset would be Gold. Although a swap arrangement is not a sale of gold, nor is it a disposal, the ownership would transfer to the BIS in the event of a debt default. The central bank accounting is of little help, since clandestine.

The fate of the 111 tons of Greek gold has been avoided in the news, a sensitive topic. Similarly the 144 tons of snagged Libyan gold also avoided much news scrutiny. The monetary war centers often on gold captures. Any bailout package that forces the sale of state assets must somehow involve the Greek gold, worth about $5.5 billion. The data appears to show the Greeks handed over their gold in an ill-fated swap contract. There will be hell to pay when revealed. In turbulent times, the 111 tons of gold is more important toward international collateral to a bankrupt Greek nation than $5.5 billion. The bullion is the means to cover imports. Their national gold might be the only asset recognized and accepted for global commerce. It could be gone, thus isolating the Greek economy.

## NATIONS AMASS GOLD

◄$$$ CHINA IS BUYING GOLD EN MASSE, MOSTLY FROM HONG KONG. THEIR PURCHASE FROM THE FORMER BRITISH COLONY IS ON A SKYROCKET TRAJECTORY, UP ALMOST 8-FOLD IN ONE YEAR. THEY ARE PROTECTING THEIR RESERVES WITH DIVERSIFICATION OR PREPARING FOR A NEW TRADE PAYMENT SYSTEM. PROBABLY BOTH. $$$

China purchased a record 100 tons of Gold in April from Hong Kong locations. Imports from Hong Kong were 135,529 kilograms (=135.53 metric tons) over a three month period between January and March, up tremendously from 19,729 kilograms in the same period a year earlier, according to the Hong Kong regional government. The ascent is a skryocket, as shipments in March rose 59% from February. Gold imports by mainland China from Hong Kong climbed 65% sequentially in April to a record, advancing strongly for a third straight month. With recent purchases, China has surpassed India. Investors continue to seek a hedge against financial market turmoil, sovereign bond wreckage, and an economic slowdown. Shipments to China totaled 103,644.5 kilograms (=103.6 metric tons) in April from 62,913 kilograms in March. An independent tally came from Bloomberg, which reported over the first four months of 2012, imports were 239,174 kilograms, compared 27,114 kilograms a year earlier. In other words, over the first four months of 2012, Chinese purchases have increased by an staggering 782% over 2011. This traffic is only the wide berth from Hong Kong.

The Chinese central bank is stockpiling gold in preparation for something big. They might be growing the gold hoard as mere diversified protection within their vast nearly $3 trillion reserves. But more likely they are preparing for the convertible Yuan launch, followed by some gold-backed transaction system alternative on trade settlement. A big splash is coming to de-throne the USDollar on trade. Expect a formal announcement from the Peoples Bank of China in the months ahead, indicating their gold hoard has increased by at least 100% from the official figure of 1054 tons. Anyone who believes that stated amount is a moron if from the gold community, and very naive is from the public ranks. The official gold hoard is at least five times the stated amount. They have no interest in a truthful account anymore.

The Chinese central bank is boosting its gold hoard, according to Wang Xinyou, a senior analyst at Agricultural Bank of China. They respond to the grand global debasement of money itself, as economies falter, banking systems fail, and sovereign bonds crumble. Bear in mind some reality. Chinese official gold purchases are 5 to 10 times larger than announced. The Russian official gold purchases are also much larger. Furthermore, the Russian official inventory in gold reserves is perhaps 100 times larger than reported, an expert has informed the Jackass, someone with consulting experience during the Yeltsin years. Russia has almost as much gold stored in a vast tunnel system under the Kremlin, whose volume rivals the Vatican. While demand from India continues, it has fallen from the record levels recently. Demand from other Asian countries is robust across Southern Asia from Thailand, Vietnam, Malaysia, and Indonesia.

◄$$$ INSIDERS AT USFED AND OTHER WALL STREET BANKS ARE LOADING UP ON PHYSICAL GOLD. CONFIRMATION COMES FROM NEW YORK AND CHICAGO. $$$

A Gold Anti-Trust Action committee member passed on word to Bill Murphy at his LeMetropole Cafe. A fellow named John wrote, "There is a buzz about precious metals on Wall Street, that brokers are buying physical metals for themselves and not just Exchange Traded Funds! I have had this confirmed many times by my broker in Chicago. I know of at least one former USFed official that is 90% physical. One could further speculate that many insiders are loading the boat and have been for many years. This information will make it to Main Street, but probably in about three years when these guys want out of their positions. It stems from the cheating concept. Cheaters are not going to go out of their way to help the suckers at the table while the game is still in progress." The Jim Sinclair revelation in March 2009 should be heard on a repeated basis. The Wall Street executives have private accounts with heavy gold investments, with the Carlyle Group. They are wrecking their Wall Street financial firms, to be bailed out at USGovt expense, while hoarding gold investments within their private accounts.

◄$$$ SECOND TIER NATIONS BOUGHT GOLD AT THEIR CENTRAL BANKS, LED BY MEXICO, KAZAKHSTAN, UKRAINE, AND PHILIPPINES. THE GLOBAL CENTRAL BANKS ARE REACTING TO THE BREAKDOWN IN THE WESTERN MONETARY SYSTEMS THAT REST ATOP CRUMBLING BOND MARKETS. THEY SHOW GREAT DISTRUST FOR USTREASURY BONDS AND EURO BONDS, PREFERRING GOLD. CENTRAL BANKS ARE EXPANDING GOLD PURCHASES, BUT MOSTLY IN THE EAST. $$$

Mexico, Kazakhstan, and Ukraine were active buyers in the gold market in April. The IMF data shows the Philippines lifted its reserves considerably in March, as their central bank grew gold reserves by more than one million troy ounces. The purchases collectively are impressive. Those by Philippines are the largest reported addition to a country's gold reserves since Mexico bought 2.5 million ounces in March 2011. The Philippine gold holdings stood at 6.245 million ounces at the end of March, up from 5.212 million ounces in February. It was the seventh consecutive month the bank added to its official gold reserves. Emerging market central banks have been buying Gold in reaction to the sovereign debt crises that sidetrack the traditional reserve currency investments based in the USDollar and the Euro. They have lost favor from distrust, fraud, default, and debasement. The major nation sovereign debt is either over-priced in a bubble like the United States (and Germany) or cratering like in Europe. The USTBond haven is phony and manufactured, while the German haven is very real. Both have gone too far, matching Japan. Global gold demand is growing quickly, despite the sluggish price dominated by the naked shorting of paper futures contracts.

Mexico added to its gold reserves by almost 100 thousand ounces in April, its a second consecutive month. The data showed their central bank purchases of 94,000 ounces of gold, lifting its official reserves to 4.04 million ounces. Kazakhstan was a buyer for a fifth straight month, adding 65,000 ounces to its reserves. At the end of April, their gold hoard stood at 3.16 million ounces. The central bank in Ukraine also reported additions to its stockpile, with a 45,000-ounce rise in its gold holdings to the 984,000 oz level. In a banking twist of policy, the Turkish central bank began last year to accept gold as collateral from commercial banks. Consequently, Turkey reported a hefty 954,000-oz lift in its reserves in April, reaching a level of 7.69 million ounces. Industry analysts regard the additions to be almost solely the result of deposits from commercial banks. To be sure, some gold is double counted, from ownership by investors and firms, but held at the cetnral bank.

Turkey is most likely not making direct gold purchases in the international market. Russia admitted to adding only 3000 ounces to its reserves, which stood at 28.8 million ounces on the official distorted IMF data sheet. Putin prefers to store caverns of gold in much higher multiples but in secret stores, not reported to the Western press. The metals consultancy GFMS (formerly known as Gold Fields Mineral Services) estimates net central bank gold purchases jumped to around 430 metric tons in 2011, more than a five-fold increase on the previous year and the highest level recorded since 1964. The global central banks are reacting to the global fracture of spineless paper money, with the majority of activity done in Asia.

◄$$$ GOLD SALES IN TURKEY FOR THE FIRST TIME SAW GREATER DEMAND FOR INVESTMENT PURPOSES THAN FOR JEWELRY. TURKEY OFFERS VIVID PROOF OF HOW FALLING JEWELRY DEMAND CONFIRMS THE GOLD BULL MARKET. GOLD DEPOSITS OF $1 BILLION HAVE BEEN COLLECTED BY TURKISH BANKS. $$$

Turkey is an intruiging nation caught in the Iran confrontation. It is strategic for NATO on a military front. It is key to the Arab world, since Islamic but with many relational fronts with Europe. It is a neighbor with a common front border with Iran. The Ankara government officials have shown surprising defiance of the West and their guidance (more like dictums), such as disobeying the USGovt. They have been bypassing the UN sanctions by trading with Iran for oil in exchange for gold. At one time they even acted as intermediary bankers for Iran oil payments. The Turkish Statistical Institute reported that gold sales to Iran from Turkey soared over 30-fold in March, confirmed last month. Data shows gold exports between the two countries increased by nine metric tons, a significant amount considering the previous year the amount was a mere 286 kgm. The Turkish Govt is playing fast and loose. They assured the USGovt of reduced oil imports from Iran this year, but total trade increased by 47% in 1Q2012 between the two countries. Past is precedent for mutual trade. Turkey built close trade relations during the Iran-Iraq war in 1980-1988. Turkey has been responsible for the tripled demand by Iran for Turkish precious metals, mainly gold.  The longer the Islamic Republic remains isolated, the greater the trade in Turkish gold.

The World Gold Council reports a material change in the demand pattern within Turkey. The graph below shows the gradual transition from demand for gold jewelry to gold for investment purposes (coins and bars). Between 2010 and 2011, an 80% increase (year-on-year) was seen in retail investment demand for gold coins and bars. The gold demand has tripled in total since 2007. Notice how as the gold price has increased, the demand for jewelry (dark green bars) has decreased, yet gold investment demand (light blue bars) has grown strong. The share of jewelry demand has fallen from 79% in 2004 to 48.5% in 2011. The WGC report indicated that in 2011, for the first time Turkish gold investment accounted for over 50% of total consumer demand. This effect drives home a very important gold bull market confirmation. As the gold price rises, investment demand grows significantly. Coincidentally, jewelry demand drops off. The mainstream press dutifully prefers to misrepresent this concept, pointing to falling jewelry demand as indicative of an end to the gold bull market. They repeat their stupidity every year, only to be contradicted by plain evidence. History shows clearly the opposite to be the case. The gold bull market is confirmed loudly by Turkey. The press is deeply committed to being the Wall Street harlot horn of propaganda.

The chart on Investment vs Jewelry against Volume proves convincingly that falling jewelry sales is bullish. It confirms the Gold Bull market, contrary to propaganda. Gold is the traditional savings vehicle in Turkey, a country whose current account deficit is slowly going out of control. Common estimates have Turkish households in possession of 5000 tons of gold across the country, an amount greater than the official German gold holdings in the Bundesbank at 3400 tons. Compare to Turkey's own central bank, which contains 2200 tons. According to the recent WGC report, Turkey has the 8th largest retail demand for investment gold. This year they have invested in 72.9 tons of gold bullion. Turkey remained the #1 nation in the world in gold coins minted in 2011. Gold bars grow in popularity among investors, but gold coins still retain a majority market share. The people can pay in gold at most jewelry shops in the country.

## GOLD PRICE LOADS COILED SPRING

◄$$$ SPROTT FUND APPEARS TO HAVE BOUGHT A CARGO OF GOLD EQUAL IN SIZE TO A G.L.D. REDEMPTION AT THE SAME TIME. OR ELSE THE GOLD CARTEL FILLED THE GAP THAT SPROTT LEFT BEHIND AFTER A SIZEABLE PURCHASE. NO COINCIDENCE HERE, ONLY CAUSE AND EFFECT. THE EVENT EMPHASIZES HOW THE G.L.D. FUND IS THE CENTRAL BANK OF BULLION BANKS, NOT THE UNDERSTOOD FUND BY ITS DUPED INVESTORS. $$$

An amazing sequence of events took place in early April that reveals the extremely tight physical gold market last year. It has only become tighter. Kid Dynamite laid out the events with precision. 1) On the 5th April 2011, Sprott's Physical Gold Trust (symbol: PHYS) announced a secondary offering of 24.821 million shares, each valued at $12.54. The total proceeds, including the underwriter over-allotment option, was $340.6 million. Then 2) The SPDR Gold Trust (symbol: GLD) published its holdings on a daily basis. On 5th April 2011, the Trust held 38,990,976 ounces of gold. On the next day, the Trust held 38,756,954 ounces of gold. The decline was 234,022 ounces. Then 3) The value of the 234,022 ounces of gold redeemed from GLD (at a $1455 per ounce price back that day) was $340.5 million. In summary, PHYS bought $340 million of gold, while GLD saw $340 million in redemptions, over a two-day period. This event all occurred last year.

Some analysts wonder whether Sprott indeed was supplied his high integrity gold fund with competitor gold bars at the SPDR Gold Trust. Doubtful! It could be that the Sprott supplier found a way to replenish his stock from the GLD fund right away. It could be that the supplier merely created a hole in the gold market, that the gold cartel controllers decided to fill with GLD gold right away. The buyer broker might have gone to tap the GLD fund, maybe so and maybe not. Regardless, the hole was filled with or without motive by the Sprott supplier or string of suppliers. The overarching conclusion is reached by Kid Dynamite, that the GLD fund is the Central Bank Of The Bullion Banks. See the Kid Dynamite article (CLICK HERE) and bear in mind that this event occurred last year. Thanks to FOFOA for the story. The same patterns probably continue, with the GLD fund routinely raided by fill holes. This purpose surely was one of the founding motives for the fund, in addition to diverting demand into true physical destinations. Investors continue to be duped.

◄$$$ THE SPRD-GOLD TRUST (G.L.D.) IS THE CENTRAL BANK OF THE BULLION BANKS WITH INDICATOR TRAITS. THE SO-CALLED PUKE INDICATOR FLASHED POSITIVE ON MAY 22ND, A BULLISH SIGNAL. A FINE BACKGROUND IS PRESENTED ON THE CORRUPT FUND THAT PROVIDES A SKETCH OF ITS INNER WORKINGS. $$$

So far so good on the Puke Indicator bull signal, a tool developed by Lance Lewis. It flashes when an extreme withdrawal of GLD exchange traded fund inventory occurs. Whether it is illegal is another matter altogether. The signal is optimized at a defined puke size of about 0.5% of the corrupted fund inventory. Victor The Cleaner found in a quick analysis that using this criterion, equivalent to 250,000 ounces in puke size, the Gold price climbed four times as much (annualized) in only one-third of the time (between puke and replenishment) as it did during the remaining two thirds of the time. The result is significant, showing that the Puke Indicator really does work. Using Lance's more strict 1% threshold, the trading strategy was a little less optimal. However, the inherent higher threshold is more immediately predictive of big moves like seen two weeks ago. The Gold price made a jumbo move up by more than 4%.

Victor The Cleaner completed an excellent article about GLD, where he calls it The Central Bank Of The Bullion Banks. He wrote, "In this article we explain how the signals can be computed from the variations of the inventory of the SPDR Gold Shares exchange traded trust. We explain why the inventory adjustments can hardly be caused by price arbitrage between the GLD share price and the loco London spot price alone. We rather claim that bullion banks finance their inventory by lending it or selling it to GLD investors, and that bullion banks manage their physical reserves by accessing the physical gold inside GLD. The fact that a certain type of inventory adjustments has predictive power, supports the idea that large inventory changes are the result of active reserve management. This provides us with a unique window into the flow of physical gold that is usually obscured by the dominance of paper gold trading. A similar, but somewhat less robust result is shown for the iShares Silver Trust (symbol: SLV)." He is too kind, referring to lending or selling to GLD investors. The fund inventory is raided and gobbled without consent in a manner that would enrage its investors if they were made aware.

Victor The Cleaner explains the nature of the GLD baskets and the Authorized Participants, mainly the big US banks that possess gargantuan naked uncollateralized short positions. He discusses the creation and redemption of the baskets, and displays statistics on the data that shows a bias toward small withdrawals and large deposits, not quite a normal bell curve. He discusses the gold price arbitrage, whereby any price premium that appears would quickly vanish from the ease of shorting GLD shares and removing metal from inventory. He discusses the commonly practiced arbitrage on the GLD fund. He cites the work of Warren James at Screwtape Files, which revealed a fax discovered from HSBC, the custodian of GLD. The memo confirmed the reallocation of about 760,000 ounces (or 1907 LGD bars of about 400 oz each) related to the redemption of 79 baskets by Merrill Lynch, Goldman Sachs, and JPMorgan on the 16th August 2011. Think smoking guns of gold raids on the GLD inventory. The investors represent weak hands, while the raiders of inventory represent the strong hands of Wall Street, all by design. The article is worth the read on background for the fund's criminal management. See the Victor The Cleaner article (CLICK HERE).

◄$$$ LONDON TRADER CLAIMS 515 TONS OF GOLD WERE SOLD IN A FOUR-HOUR PERIOD LAST WEEK. THE EVENT COINCIDED WITH A BERNANKE SPEECH. A MAJOR BACKLOG HAS BUILT IN SILVER DELIVERY, WITH DELAYS SEEN ALSO FOR GOLD. AN ASIAN BUYER COMPLETED A VERY BIG SILVER ORDER, JUMPING AHEAD OF THE LINE. THE SILVER PRICES ARE IN BACKWARDATION. HENCE HEAVY PRESSURE IS ON THE SPOT PRICE AS FORWARD SUPPLY IS SOLD TO BRING TO MARKET, THUS RELIEVING THE SUPPLY PRESSURE. $$$

Another installment came from the London Trader in a King World News interview. He reported a shocking amount of paper gold sold in just four hours on June 7th. He also confirmed that the mainstream media is not reporting the staggering amount of physical gold that has actually been purchased by China recently. That confirms in a sense the indication of 5000 metric tons removed from Western banks, relocated in Asia. This time around, his message contains less meat. Here are his points. 

China has purchased hundreds of tons of gold in the last couple of months, but continues not to disclose their true reserves. Gold imports totaled over 100 tons through Hong Kong to China in April, but that is just the tip of the iceberg. A dramatic acceleration of physical gold purchases has occurred as the price has been drawn down. On a single day in early June, in one full hour before Bernanke's testimony, the bullion banks started selling. Over the next 4 hours, the bullion banks sold the equivalent of 515 metric tons of paper gold. They continued for another three hours after the Fed Chairman began to speak. Here is the suspicious part of the event. During the entire orchestrated takedown, zero physical gold was available for sale in the market. During the attack on gold, hedge funds and managed money were forced out of their paper positions. The wave of selling caused the paper gold market price to drop $40 in a matter of minutes. The activity created tremendous paper supply for Eastern buyers to lock in the spot price of gold, which will patiently be converted to physical in the coming weeks. Conversely, many bullion banks are trying to exit out of some of the massive naked short positions on their books. During all of the chaos of the last couple of months, certain Eastern entities have been vacuuming physical metal out of the market.

Gold has gone into backwardation, and silver has been mired in backwardation for weeks. The demand for precious metals at nearby forward prices is huge, draining distant forward supply. For immediate delivery of gold in high volume, long delays persist. Worse, the silver backlog is extraordinary. An absolutely staggering amount of silver was purchased by an Eastern buyer three weeks ago near the $27 level. This order was breathtaking in terms of the size, currently in queue at two refiners. The backlog has been three weeks and running. 

The London Trader concluded, "The bullion banks are ringing the register at both ends, while trying to extricate themselves from their short positions in the paper market. They are attempting to do this before transparency comes in to the market. They do not want a situation where the aggressive hedge funds actually get evidence that these bullion banks are naked short. They are concerned that if it is discovered they are naked short gold and silver, those hedge funds will aggressively target those banks. This is what happened to JPMorgan recently, when the London Whale got caught. As soon as Jamie Dimon was forced to admit a $2 billion loss, the sharks realized they were vulnerable and came in to attack. That has greatly magnified the size JPMorgan's loss. The last thing powerful entities want to see is for this to occur in the gold and silver markets." See the King World News interview (CLICK HERE).

◄$$$ MANAGED FUND SHORT POSITIONS STAND FAR PAST PEAK LEVELS, SIGNALING THE NEXT MOVE UP IN GOLD PRICE. PAST HISTORY HAS SUGGESTED THE PATTERN QUITE ACCURATELY. WHEN COMMERCIAL SHORTS GO THE EXTREME, ON A RELIABLE BASIS THE GOLD PRICE RISES SOON. THE CURRENT SHORT POSITIONS ARE MORE THAN EXTREME, LIKE A COILED SPRING. $$$

The story is much the same for each precious metal. The gold charts offers a reliable indicator that a bottom in closeby, to be followed with heavy likelihood by a rapid move higher very soon. The indicator focused upon is not the managed money in hedge funds or investment fund. It is not speculative longs. Rather is the group widely regarded to control the gold market, the Commercials. The Managed Money short positions have provided a consistent trend. As the managed money shorts reach a high peak in contracts, the price of gold and silver tends to hit a bottom. These charts show the Managed Money short positions are hitting exaggerated new high levels not seen in years. The pink chartreuse series shows the gold & silver prices in respective charts. The silver short level in progress is actually a new high record, eclipsing the 2008 peak. The gold short level is approaching the 2008 peak. Since the summer 2010, a clear pattern reveals itself. The extreme commercial shorts indicate the next runup in price for gold & silver. Midterm lows in precious metals are here. The next move is up.

◄$$$ MULTITUDES OF POWER SIGNALS FLASH FOR THE GOLD MARKET. CLAIMS OF AN END TO THE GOLD BULL ARE LAUGHABLE AND ABSURD, MERE PROPAGANDA MESSAGES BY A DESPERATE BANKER HIVE OF FAILURES. CONSIDER SOME SIGNALS OF VALIDITY. POINT TO CURRENCY DEBASEMENT AND THE GROSS MISALLOCATION OF CAPITAL. $$$

Jeff Nielson of the Gold Anti-Trust Action committee offers some fine secondary reasons that justify more strong price gains for gold. Nielson points to excessive money printing, gross misallocation of capital, and long-term destruction of the supply chains within the economy. The monetary expansion has turned insane, if not desperate, as the central banker actually dictate policy to supposedly sovereign governments. The competitive currency devaluations are at work, wrecking economies as export trade is protected. The poison pills of austerity measures are not designed to resuscitate economies, but instead to install fascist technocrat leaders loyal to castles occupied by trillionaires. The mainstream media is more fascinated in a false bond rally in USTBonds than in the systematic broad-based debasement of money. The media cannot detect the anomaly of a USTBond rally with gigantic deficits, and a Super Committee failure in full view that could not bring down spending.

Investors are not flocking to gold in the United States, still affected and misled by the media and Wall Street barkers (not bankers). Hence Americans are primed for massive wealth loss. Preservation of capital would require heavy purchased investments of gold & silver. When not going to the poor house, most are investing in stocks and bonds, the paper variety laced with toxicity. Banks are loaded to the gills with toxic sovereign bonds, having regarded them as safe havens. In Europe first, with London and New York next, they will learn of their errors as bonds fail and morph into toilet paper. In the US the bonds will fail from their own rally, building a paper mache tower as monument to failure. Someday before long, if not severe debt writedowns, look for debt jubilees or bond burning parties, leaving investors high and dry. The obvious outcome of bond ruin comes by noticing that solutions imposed result in much worse deficits, no solution, as the Jackass has clearly stated since 2010 when Greece ruptured. The waves flowing into worthless bond paper will be followed by a massive stampede into an inadequate number of gold lifeboats.

The Western banks have exhausted their gold reserves, having sold them in grand fire sales at half the current gold price. The conduit of the Intl Monetary Fund was a major player in the deceptions of both double counting gold reserves and brokering gold sales that were actually covered gold shorts by the USGovt. The IMF never owned any gold, only held pledges of gold accounts, counted twice. The devious illicit practice of gold leasing enabled sales into the market without authorization from Allocated account holders, but with full blessing by conspiring central banks. Without permission from their governments, the central banks violated the trust and depleted national wealth stores. As the central banks grow desperate in saving the economies and banking systems they were entrusted, they will flip-flop and become major gold buyers. Unlike year 2000, the time of the last crisis meltdown, the central banks of the West do not possess much of any gold from which to pull their insolvent systems out of the quicksand. The gold is owned by Eastern entities, the site of the next era of dominance.

My addendum contains numerous other important gold factors. They have been argued and analyzed for a few years in the Hat Trick Letter. They include 1) negative real interest rates for three years, 2) revolt against the USDollar global reserve currency, 3) over 20 thousand metric tons of Allocated gold accounts short, 4) government bond system crumbling, which supports monetary system, 5) fractional gold bank management, 6) lost faith in money itself, and 7) fast growing annual gold mining production deficits. Lastly, the granddaddy of gold factors. The Eastern nations are driving a non-US$ trade settlement system that will contain a gold element, details to be provided later. This is a revolutionary change. It is not simply an alternative to SWIFT bank transactions dominated by the US$ fortress. It is a de-centralized method to conduct trade payments with a gold core, which will work in nice complementary fashion with the soon to be recognized barter system taking shape. That system will be woven together by numerous bilateral trade facilities, otherwise known as barter.

◄$$$ CONSIDER 10 REASONS FOR GOLD OWNERSHIP AND INVESTMENT. $$$

Ryan Jordan presented 10 gundamental reasons for higher Gold & Silver prices. All are valid factors, some more important than others, but certainly bearing mention. Most pertain to lost trust of some kind. A fiat paper currency system depends critically upon trust. When lost, it takes a long time to regain that trust. Enter Gold, which requires no leap to trust. See the FOREX Pros article (CLICK HERE).

1.      The 0% central bank monetary policy has entered its fourth year. Inflation is still an engrained policy goal of Western central planners.

2.      Major countries like India, China, and Iran are trying to bypass the USDollar, at least to some extent. Purchases of physical gold by foreign (mostly Eastern) central banks continue to increase.

3.      Gold & Silver will serve as a safe haven in China, where the real estate bubble continues to burst, their stock market is unstable, and their banking system is problematic.

4.      The recent JPMorgan derivative blowup will eventually require grandiose and grotesque bailouts, essentially massive monetizations. The loser will be the USDollar and major currencies. The blowup will hasten a USGovt debt default.

5.      The Facebook pump & dump scheme once again deceived the public in perhaps the final great deceiption. The Wall Street attitude is to treat retail investors like dumping grounds and congame objects. Distrust is peaking on the paper game. Facebook could redeem itself from earnings deception by opening a new Friend for gold purchases online, spreading the word to the masses about sound true money.

6.      Bank runs have finally begun in Spain, Italy, and Greece. The savings accounts are being depleted within a broad vanishing act. Argentina is the lesson few learn.

7.      The MFGlobal crime scene left over 140,000 victims of theft. Neither MFG nor JPMorgan has been charged with criminal responsibility. Brokerage accounts are not safe, of any type, whether stock, bond, or pension. A hidden victim of the MFG crime is the COMEX itself, having suffered many client departures from lack of trust.

8.      Flash crashes can happen again and again, taking down investments. The perpetrators are computers, managed by supposedly smart people. Unfortunately, as the public moves away from the stock market, the predator flash traders begin to prey on each other. The stock market is left highly unstable.

9.      With the American Dream in homeownership a faded memory and ongoing nightmare, the public is awakening to the notion of gold being a true safe haven and the best long term investment.

10.  The USDollar is undergoing a global revolt. Within the United States itself, another unusual revolt is occurring, although slowly. People are objecting to usage of paper money in commercial transactions. Several US states like Utah and Virginia are taking the lead to permit ordinary purchases with gold and silver. The remonetization of the precious metals is underway, but in an excruciating slow process. At the margin, the movement is gaining momentum. The banks are in the early stages of designating gold as Tier-1 capital.

## FAILING USECONOMY

◄$$$ HOME FORECLOSURES SPIKED 9% IN MAY. THE BANKERS HAVE OPENED THE FLOODGATES AND REFUSE TO HOLD MORE INVENTORY. THE ROBO-SIGNING CONTRACT FRAUD IS LESS A FACTOR THAT HALTED THE HOME SEIZURE PROCESS. NO END IN SIGHT TO THE NIGHTMARE THAT CONTINUES TO PUSH DOWN HOME VALUES. $$$

Foreclosure filings in May spiked 9% compared with a month earlier, according to RealtyTrac. The group reported that 205,990 US properties received May filings that include default notices, scheduled auctions, and bank repossessions. The gates are back open, as this marks the first monthly increase since January. Bank repossessions climbed steeply, up 7% to 54,844 homes. The Repos in April had reached the lowest level since 2008. Once the banks reached a massive $26 billion settlement in April with state attorneys general watching over mortgage contract fraud abuses, it was expected that their foreclosure efforts would resume. They did. The lenders are more confident in pushing delinquencies through to foreclosure. The industry has been under intense scrutiny, even dealt with lawsuits. The margin looks bad also. Foreclosure starts jumped 12% in May, signaling a bumpy ride. Banks are liquidating more rapidly. Homes with delinquent loans are now more likely to exit the foreclosure process as a short sale than in the past, and not add to bank inventory. A short sale involves a final sale price below the bank loan balance, thus a recorded bank loss. Damage to home values could actually be lessened by the practice. Their REO inventory is bloated to the extreme, like with ten million homes nationally. See the Yahoo Finance article (CLICK HERE).

◄$$$ US-HOUSING PRICES WERE DOWN AGAIN FOR MARCH ON AN ANNUAL BASIS. THE CASE-SHILLER HOUSING INDEX HAS BEEN ALTERED TO MAKE IT LOOK BETTER, IN KEEPING WITH STANDARD AMERICAN DECEPTIVE OFFICIAL STATISICS. THE HOUSING WRECKING BALL REMAINS AT WORK. THE MARKET IS RUINED. GIVEN THE REMOVAL OF US-FACTORIES, THE HOUSING MARKET SIGNALS SYSTEMIC FAILURE. $$$

The Case-Shiller housing index declined 2.6% in March year over year versus a year ago. The sequential data is difficult to monitor and interpret, kind of like the GDP official economic growth. It is important to note that the commonly watched housing index has been altered recently in order to lessen the harmful effect of distressed sales and foreclosure sales. Although such sales are an increasingly share of the system, although they push down prices through their entire neighborhood communities, although they have a profound effect on banker decisions to liquidate further, the screwball wisdom prevails to distort the statistic. Therefore, the CS index is skewed to the high side. The reality is clearly more worse on home price decline trends. Mortgage rates are low and fall lower each month. The 30-year mortgage rate is 3.77%, and the 5/1 adjustable rate mortgage is 2.92%, both an absurdity in relation to risk. Falling rates and falling prices signify a ruined housing market. Despite the artificial low interest rates by the USFed, the housing market refuses to reinflate. Despite the new programs by the USGovt which enable  buyers with decent credit to make purchases with no down payment, housing remains in serious decline. An actual movement is underway to repeat the subprime movement for loan approval to unqualified buyers. It is not succeeding.

It should be repeated regularly that since the US factory base was largely removed and relocated to China, the US housing market is signaling a national systemic failure. The USEconomy shifted in the 2000 decade from reliance upon factory income to home equity raids. Legitimate income was replaced by dependence upon asset inflation, with full central bank approval. The shift was disastrous. Unless and until the US returns its factory base home, the nation is at risk of systemic failure. The continued decline in US home prices indicates such failure, with climax being the USGovt debt default.

◄$$$ THE MAY JOBS REPORT HIT LIKE A SHOCK WAVE. IT WAS UNDENIABLY WRETCHED. IN FACT, IT WAS MUCH WORSE THAN RECOGNIZED. THE APRIL JOBS REPORT WAS ALSO BAD. NO RECOVERY IN SIGHT. $$$

Sadly the USEconomy is showing recession signals everywhere. The May Non-Farm Jobs Report came in terrible at +69k but it was much worse than the headline figure. Negative revisions were given in the last two months, a very important directional indicator. The April number was revised down to +77k (from 115k), and the March number was revised down to +133k (from 153k). The infamous Birth-Death Model once more prevented a big negative number which would have set off alarms. The BDModel official fudge factor added 204k fictional jobs in May, after the same BDModel added 206k fictional jobs in April. The model is supposedly designed to put a plug into the measurement that addresses small business. But the US small business index fell in May. It is easy to call the Birth-Death Model a liar.

The National Federation of Independent Business reported its optimism index fell 0.1 points to 94.4% in May, a level "historically low and consistent with the sub-par performance of GDP and employment growth." The NFIB sales index fell 4 points to 2.0% and the earnings component dropped 3 points to -15%. The employment index, a gauge of hiring plans, did rise 1 point to 6%, but the rise is negligible. Thus no basis whatsoever for any such lift from the fudge factor model. See the Market Watch article (CLICK HERE). The only positive aspect to the bad job reports is the discontinued tiresome annoying nonsense from the political leader occupying the White House on a recovery. Political and banker deception make for a deadly brew.

◄$$$ JOBLESS CLAIMS REMAIN STUBBORNLY HIGH. $$$

US unemployment insurance applications rose to 386k for the June 8th report, up slightly from the 380k a week earlier. Once thought to be improving by the rose colored glass set, no more. The continuing claims is the bigger story, steady at 3.29 million. Many will soon fall off the extended insurance coverage. The USGovt in its devious statistical manner will declare them no longer jobless. The headline jobless rate will improve. The stat rats in the official agencies should lose their jobs instead. If the USEconomy were in a recovery, the weekly jobless claims would be in the 100k range. See the Yahoo Finance article (CLICK HERE).

◄$$$ LARGE SITE JOB CUTS WERE UP SIGNIFICANTLY IN MAY, WITH THE COMPUTER INDUSTRY THE BIGGEST VICTIMS. THE SYSTEM IS IN VERY BIG TROUBLE. $$$

No evidence of USEconomic recovery. Far from it, more like a rapidly decelerating situation. Challenger, Gray & Christmas compiled data for  job cuts were up 66% at large work centers in May compared to last year. The 61,887 announced cuts was the biggest rise in eight months. The computer industry saw over 27 thousand alone. See the Business Insider article (CLICK HERE).

◄$$$ A USECONOMY IN REVERSE GEAR IS EVIDENT FROM THE NATIONAL INDEXES. THEY ARE ALMOST ALL POINTING IN THE SAME DIRECTION. $$$

The Hat Trick Letter disputed vigorously the propaganda earlier this year about a recovering USEconomy. The data shows the dispute to be well-founded. The Chicago PMI fell to 52.7 in May from 56.2 in April. The Philly Fed index fell to minus 5.8 in late May from 8.5 in April. The Empire State index fell to 2.3 in June from 17.1 in May. The Dallas Fed May business activity index dropped to minus 5.1 from minus 3.4 in April. The Richmond Fed index fell all the way to 4 from 14 in late May. Other regional indexes were similar. The highly regarded Conference Board index of consumer confidence fell to 64.9 from 68.7 in April. It is lagged in reporting, the latest figures.

◄$$$ DURABLE GOODS ORDERS WERE MIXED, BUT THE ALL IMPORTANT CAPEX WAS DOWN 1.9% IN APRIL. BUSINESS INVESTMENT IS SHRINKING, A MAJOR SIGNAL OF USECONOMIC RECESSION. $$$

Most economists simply fixate on the overall Durables order growth. They were up 0.2% in April. At a seasonally adjusted $215.53 billion, the figure seems steady and nothing to be concerned about. But it is loaded with transportation orders like for jet aircraft and military spending, neither of which indicate a solid trendline from the base USEconomy. Strong demand for motor vehicles and parts, up 5.6% last month, drove the overall increase. This is precisely the area of USGovt programs toward reviving a subprime lending niche, hardly a mainstream gold star of approval. Furthermore, the gain was mostly offset by declining orders for machinery and computers. The more important measure was negative. A key barometer of capital spending by businesses fell in April. Orders for non-defense capital goods excluding aircraft decreased by 1.9% again. The implication is clear, as falling capital expenditures (CAPEX) suggests downward pressure on the USEconomic recovery. The almost four years of 0% official rate is having a marked effect on the capital base, a constant Jackass theme, one ignored by hack economists.

◄$$$ STUDENT LOANS ARE OFFICIALLY A NEW SUBPRIME BASTION. $$$

As the aggregate student loan volume has exceeded a ripe $1 trillion, a vexing new problem has emerged. It is not the lack of jobs for graduates, as in 50% of new degree holders cannot find a job. The ugly story is the growing number of young people have a mountain of debt but no degree to show for it. Nearly 30% of college students who took out loans dropped out of school, up by over 5% from a decade ago, according think tank Education Sector. College dropouts default on loans more often, with delinquency rates four times higher than graduates. They even have a name, the Non-Completers group. The benefits of college education are seen as dwindling in the endless USEconomic recession. Even the trades such as carpenters, electricians, plumbers, and masons are on the wane, with the home construction industry down hard. Educational costs have risen faster than price inflation. A subprime problem has emerged, in part encouraged by readily available USGovt-backed student loans. Qualification is all too easy, basically a warm body with a pulse. The effect is disillusionment and growing anger among the younger masses. See the Daily Reckoning article (CLICK HERE).

◄$$$ BILL CLINTON WARNED ABOUT THE NEED FOR EXTENDED TAX CUTS AND FURTHER STIMULUS, ADMITTING THE USECONOMY IS IN RECESSION. HE COMPREHENDS THE NATURE OF PRIVATE EQUITY FIRMS. HE WISHES THE PRIORITY TO BE FIRMLY ON ECONOMIC REPAIR. CLINTON AND OBAMA ARE A STRAINED PAIR ON STAGE WITH LITTLE IF ANYTHING IN COMMON. $$$

Former President Bill Clinton offered to share his wisdom in a public forum. He actually made several important points, some of which will surely rub against his own party leaders. If truth be known, the Bushes, Clinton, and Obama are all from the same Narco Party that has two colored jackets (red & blue) to deceive the public. Bill Clinton believes the USEconomy is already in a recession, and urged Congress to extend all the tax cuts due to expire at the end of the year. He regards plans to cut the USGovt deficit as a threat that could plunge the country further into the debt abyss. He recommends some difficult balancing act that avoids the fiscal cliff, avoids an economic contraction, deals with the long-term debt reduction soon, like after the election. Pollyanna is in the room, since he describes an impossible task.

Clinton advises against ending the tax cuts that are set to expire at the end of the year, widely seen as skewed to benefit the upper income earners. He defended the current tax structure, which he believes would not look so bad if the USEconomy were doing better. He pointed a finger to the multitudes on food stamps, the many people on jobless insurance, the many people on Medicaid. He seems to comprehend that both the European bond & bank crisis and the USCongress policies are having an economic impact in the United States. Unlike the entire Obama Admin, the ex-president can see the USEconomy as in bad shape and not in any recovery mode. By expressing his desired priority for the presidential debate being the economy, he goes counter to Obama curiously. The incumbent president appears clearly to wish for debate to center upon taxing the wealthy, gay marriage, and empty ideals, and other distractions. Obama wants not to make the election a referendum on the USEconomy. My view has consistently been that Clinton and Obama do not belong in the same political party or in the same room, sitting on opposite ends of the liberal spectrum bench. Clinton was no more a typical Democrat than Bush Jr was a typical Republican, because they were joined by the narco warehouse.

Clinton praised challenger Mitt Romney's record in private equity at Bain Capital. He suggests confronting the Romney record as governor of Massachusetts instead, rather than as a businessman at Bain. Clinton comprehends the nature of private equity firms, unlike 80% of the impish ignorant public. He offered a final point, saying "The most important thing in this election is what will President Obama do and what will Governor Romney do with the economy and how will they deal with people who disagree with them. Will they be divide and conquer, or would they bring everyone together?" See the CNBC article (CLICK HERE). My response is a question on how does one define the word BRING? He might mean with cash in pockets, or perhaps gathering to prison without due process. See the recent executive decrees to kill citizens, jail citizens, seizure citizen assets, and force citizens to work at slave wages. They are the National Defense Authorization Act and the National Defense Resource Preparedness Act.

## 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.