GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Golden Potpourri
* Economic Reality of Deterioration
* Pension Slam
* Gold Game Shifts to Supply
* Gold Price Ambush With Physical Cost


HAT TRICK LETTER
Issue #96
Jim Willie CB, 
“the Golden Jackass”
18 March 2012

"Warren Buffet is so 1980's. His aura peaked in the 1990's. He should have sold out and moved to the South Pacific. By the time he dies, he will have made himself look like a complete [idiot], especially with regard to his comments about Gold. For me, Warren Buffet epitomizes everything about myth versus reality and the power of the media's ability to influence the perceptions of large masses of the population. The mainstream public and its penchant for instant gratification will typically, at best, catch only brief snippets of real news. The myth that, despite his billions, he lives in the same small red brick house in Omaha Nebraska with his wife is just that, pure myth.  He has not lived in that house or with his wife for many years." ~ Dave in Denver (on the grand fool Buffet whose financial empire is a hollow shell wrecked by the chronic crisis)

"There is credible evidence that shows that the price changes for Gold in the NY trading window [open early morning] are heavily skewed to price decreases as compared to the other periods of the day, beyond any reasonable statistical expectation. It is so obvious as to be almost notorious amongst seasoned traders. That alone should raise alarms with the regulators. No honest market has such obvious anomalies unless there is something terribly wrong in its structure." ~ Jesse (from Cafe Americain)

"Among people who have not been able to find a job in over a year (in some cases three years), the situation is distressing and actually very scary. About 34,000 people enter this situation every month. They are willing to do almost any kind of work, but there are no jobs. The fact is that foreign workers are taking their jobs. They are highly educated, and willing to work for a fraction of workers in the United States. My view: living standards will have to come down in the US if we are ever to get anywhere near full employment." ~ Richard Russell

"Iran is the hammer, oil is the nail, and the USGovt has bought the Petro-Dollar its coffin" ~ Jackass

GOLDEN POTPOURRI

◄$$$ A LARGE RECOVERED SUNKEN SPANISH TREASURE WAS HANDED BACK TO THE SPANISH GOVT IN A BLATANT BANKER SEIZURE. EXPECT LIMITED EXPLORATION IN THE FUTURE. THE ASSIST TO THE SPANISH INSOLVENCY WILL BE NEGLIGIBLE. THE US-COURTS REACTED TO A BANKER PHONE CALL. FUTURE DEAP SEA BOOTY RECOVERED WILL GO STRAIGHT TO THE BLACK MARKET IN RESPONSE TO SUCH VIOLATIONS OF SALVAGE LAW. $$$

A recovered sunken ocean treasure haul will be heading from the corrupted United States to Spain in a blatant violation of international salvage law. An incredible judicial decision defies jurist prudence, as the judge involved did not actually cite any specific law in his decision. Rather, the decision was of expedience. The Spanish merchant ship was sunk by the British in 1804 in international waters. The judge stripped the booty away from the salvage team and firm that discovered it, raised it, cleaned it, and salvaged it. The court simply gave it to Spain, claiming it to be part of its National Heritage. The judge dismissed summarily the similar claim by Peru which was more plausible. Laws mean nothing anymore. If giving the treasure back to Spain helps their banking system, then it will be done. The consequence is future salvage operations are to be limited and scarce. If they are conducted, expect the found treasures to go straight to the black market. See the BBC article (CLICK HERE).

◄$$$ HOLLYWOOD UNDERGOES A SLOW FADE TO BLACK. THE MOVIE INDUSTRY HAS SERVED AS A STALWART EXPORT INDUSTRY, A SHINING LIGHT FOR THE USECONOMY. HOWEVER, IN THE LAST DECADE IT HAS IN PART TRANSFORMED INTO A STURDY PROPAGANDA MACHINE, PAINTING A LAYER OF LEGITIMACY ON THE BANKER & WAR AGENDA AND IT SUPPORTING OFFICIAL STORIES. IT MIGHT BE LOSING ITS POWER AS THE RECESSION SLAMS THE MOVIE AND TELEVISION INDUSTRY. $$$

The curtain is very slowly descending on the Hollywood stage. Beyond the hype that glitters in the Academy Awards ceremony, Hollywood is contracting. It has been called off the set by the same forces that hit the USEconomy. Movie theater attendance hit a 16-year low last year. A business model paradigm shift is in progress. The freefall in DVD sales has been urged on by digital download streaming, a major shift. The independent film market is hollowed out. In Los Angeles and the Burbank studios, the number of television dramas produced last year dropped by 11.5%, reality shows were down 1.8%, and sitcoms (situation comedy) down by 12.8% as the industry pulled back. The movie output filmed in Hollywood declined by an enormous 26.4% in Q4 of last year. The human toll of the profound downsizing is great, the effect felt on the working actors, directors, and writers. They struggle to maintain their guild memberships, their health insurance, their mortgages, their gymnasium fees, their restaurant and bar bills. Favorite industry watering holes are often empty. A prominent indu stry observer commented, "People have no idea what is going on in Hollywood now. There is so little work. Everyone is living off the money they made in the 1990s. But they are acting like nothing has changed." The fabled Hollywood social code is cracking, which insists that no matter what, things are always great. The industry is in foreclosure, screaming in the night, but still awesome in the light of day and on the Facebook pages. See the New York Times article (CLICK HERE).

◄$$$ RUBIN ADMITS HE HAS TOO MUCH USDOLLAR EXPOSURE. HOW IRONIC AND PATHETIC!! SURELY HE HAS AN OFFSHORE ACCOUNT IN GOLD AFTER PILFERING FORT KNOX WITH HIS WALL STREET CO-WHORTS. THE UNITED STATES SUFFERS FROM THE RUBIN DOCTRINE OUTCOME. $$$

So former Treasury Secy Rubin claims he has too many USDollars in his portfolio. His resume includes draining Fort Knox, instituting the gold carry trade, diversifying and wrecking Citigroup, and much more. He is an American icon hero in an age of public gullibility and naivete as to deep criminal activity. The irony runs thick, since Rubin personally served as the champion for the Strong Dollar Policy. He complains that he has a disproportionate amount of strong USDollars in his personal investments. He believes more should be more allocated away from the USDollar. He admitted to being greatly overweighted in private equity and had investments in hedge funds. Perhaps he should be declared a financial terrorist, since foreign creditors announcing the need to diversify are routinely attacked by the USGovt. He probably has a Carlyle Group account, which is heavily invested in gold bullion as a significant counter-party to the Wall Street financial firm short positions. He made some unusually frank comments as well. His support for USFed Quantitative Easing has waned since the initial round, known as QE1. He said, "QE1 was a necessity. I sort of wondered about QE2. But QE3 would accomplish very little. Not only would it expand the money supply, it would undermine confidence that the Fed would ultimately monetize our debt." Exactly, except that QE2 never stopped, moving seamlessly into QE3 and Global QE with all major central banks participating. Rubin called the USEconomic outlook the most uncertain and the most complex it has been in the past half century. He cited concerns about the European sovereign debt crisis, the labor and housing markets, and stagnant wages. He warned about a public backlash, when he cited a lack of change in US income distribution could undermine public support for trade and market based economics. That must be a reference to multi-$trillion bank welfare programs and the shutdown of Main Street relief valves.

The consequences of the Rubin Doctrine have slammed the nation in a horrendous payback outcome of insolvency and lost wealth, even systemic failure. He is the author of the principle to kick the can down the road and to hope for a better day tomorrow when the mess produced can be reconciled. That is his doctrine. The Rubin Doctrine has exploded in the face of the United States, pushing it into the Third World. Pity his poor portfolio. He collected over $150 million in pay from Citigroup in the decade when he presided over its ruin. Rubin is a champion of failure and privilege. See the Bloomberg article (CLICK HERE).

◄$$$ GERMANY MUST HAVE PLAN-B. IT CENTERS UPON LEAVING THE EUROPEAN MONETARY UNION. THE HARD LINE PROPOSED TO GREECE HAS AN OBVERSE SEEN WITHIN GERMAN DOMESTIC POLITICS. THE ROAD IS BEING PAVED FOR GERMANY TO LEAVE THE EURO CURRENCY BEHIND AND GO ALONE ON A NEW PATH HEADING EASTWARD. $$$

The politics could not be more complicated. The Jackass has no monopoly on the information, only intution that has served well to join with solid hints. My German banker source has been correct at every turn, having taught me not to fall victim to the headfakes. The European politicians make debt deals that the bankers back home in Germany reject quietly, often permitting them to fade away and expire. Notice the keys to the puzzle. The Southern European nations are starting to reject the austerity budget programs, first Spain and soon Italy. After Sarkozy is de-throned, France will reject austerity as well. Despite the fact that the austerity path leads without exception to greater ruin, the stricture enables banks to attach prized assets in return for the assured ruin. That is the cynical perspective to the austerity card that so far has provided a correct view toward the European non-solution correctly to date. Not that all is correct, but the main elements have been seen with an accurate lens. German bankers see the same phenomenon. Nothing could solve Greece and they knew it. China grabbed more assets (like gold) from Greece than Germany, but the asset seizure story is not fully told on major properties and corporations.

Graham Summers of Phoenix Capital offered an essay that coincides well with my own viewpoint. He summarized the recent developments in concise crystal clear form, citing the key dynamics. He wrote the following. "Germany is aware of resistance within Italy and Spain to continue with austerity budget measures. Also there is no way German voters will go for bailouts of any more of the PIIGS, even if Germany, the IMF, and EuroCB had the funds to bail out Spain or Italy, which they do not. This is why Germany has decided to play hardball with Greece. It is also why Germany has put into place a contingency plan that would permit it to leave the Euro if it had to.

What is Germany's Plan B? Leave the European Monetary Union but remain in the European Union, maybe. If people find this hard to believe, consider that in the last six months Germany has: Passed legislation that would permit Germany to leave the Euro but remain a part of the EU, and Reinstated its Special Financial Market Stabilization Funds, (or SoFFin for short). It is the second of these items (the SoFFIN reinstatement) that the Western media and 99% of investors have missed entirely. In short, Germany has given the SoFFIN: 1) EUR 400 billion to be used as guarantees for German banks. 2) EUR 80 billion to be used for the recapitalization of German banks. 3) Legislation that would permit German banks to dump their EuroZone government bonds if needed.

That is correct. Any German bank, if it so chooses, will have the option to dump its EU sovereign bonds into the SoFFIN during a crisis. In simple terms, Germany has put a EUR 480 billion firewall around its banks. It can literally pull out of the Euro Monetary Union anytime it wants to. The question is whether its current EU power grab is successful. If it is not, and other EU nations refuse to play ball (like Spain has started to), then Germany could very easily leave the Euro. This is the black swan no one is talking about. If Germany bails [exits] on the Euro, the EU will collapse. It will be Lehman Brothers times ten if not worse." Agreed, agreed, agreed.

◄$$$ PROGRESS ON THE NORDIC EURO IS DIFFICULT TO ASSESS. LEAVE IT TO CONJECTURE, FILLING IN THE MISSING PIECES TO WHAT IS HINTED AND REVEALED. A PICTURE CAN BE PUT TOGETHER, THE REMAINING PIECE INFERRED. AGAIN, A DIFFICULT TASK TO HAVE IT ALL CORRECT AS THE DEVELOPMENT IS FLUID WITH MUCH NOT REVEALED. $$$

The update to the Nordic Euro currency is a tough one to describe, since so much is hidden. Several ways can be found to respond in the painted mosaic, actually only numerous items to patch together. The source of the Nordic Euro story is steadfast stubborn consistent. First of all, one German in the finance sector has mentioned the Nordic Euro that was detected a couple months ago. So surely others have mentioned it as well, to join together the strongest more viable nations in Central Europe. They have trade surpluses and sound finances, with an unyielding will to continue with generous welfare to Southern Europe. As Greece is pushed to default, it will become obvious that all PIGS nations to the South must also exit the Euro. They are lookalikes, with France the hidden item in the matching ensemble set. When the Jackass presses the German Source gently, he responds the same each way, with a comment like (my paraphrase) "The complete barter system platform is almost ready. Russia and Germany are behind its design. China will support it. It features Russian resources, Chinese funds, German know-how, and Persian Gulf cooperation. The collection of participating nations is called the Eastern Alliance. The system will have a Gold core for its short-term finance features. It has a couple smaller elements remaining to be put in place before complete. But it will not be launched until the current US/Anglo system collapses, a process which is occurring before our feet."  The above is a mantage of his comments made in several conversations, painting the picture each time more fully.

The Source has mentioned that he himself was on a specific task force whose name tells almost all, described by him as the Dollar Kill Switch. He is tight lipped about it, since personally involved. My usual device is to inquire further while offering my best guess about its nature. He agreed that the switch centers on the abandonment of the Petro Dollar payment system. The sale of crude oil eventually will not be exclusively US$-based, which will put a stake in the heart of the USDollar and USTBond global demand in support of the reserve banking system. When pushed that the Saudis were the center of the kill switch, he didnt respond (which could be interpreted as silent Yes). The Source has made numerous comments about how German politicians are almost irrelevant these days. Notice not a single recent deal on Greece has stuck, as the bankers discard the deals, revealing where power lies. Merkel has no political base, having lost her own region by 80% vote, yet continues to pretend to wield power from the throne. The bankers have taken away her power stick. The politicians are not selling out anything, since they are not the real dispensers of power in the important development.

Meanwhile, the Source repeats that Germany will not comply with anything that supports Southern Europe any longer. Germany has been drained of well over $3 trillion in savings over the last decade, at $300 billion in annual PIGS welfare, which will be halted. He has mentioned consistently that Netherlands and Austria and a few other nations will band together. Their identity will be made known only after other nations are splintered off, cast to their fates in an isolated currency situation, ready for devaluation. He has made a few comments in the recent past that France will not be brought along with Netherlands and Austria. That decision was made about six to eight months ago, not made public. The complication there is that Germany owns 85% of French Govt debt. He has confirmed a few times that the new barter system platform is the physical manifestation of the Nordic Euro system, its designers and chief promoters sometimes called The Group. Apologies for not being a definitive response in update, but the project is not on the public stage for review, nor revealed much in private circles. The entire platform and barter system awaits an event for its birth. Imagine the awaited event of a huge Las Vegas hotel being demolished or falling of its own poor structural integrity. The hotel was vital for a certain unique important function. Only when the vital building falls can a hidden building be unveiled and shown. The new structure will be presented as a viable alternative to the former building's function, at a time when no alternative exists besides it. The promotion will gain credibility by the nations that support it during the presentation procedure.

◄$$$ RUSSIA WILL BECOME A MUCH BIGGER PLAYER IN THE NEXT CHAPTER, DURING THE NEXT TWO DECADES. RUSSIA IS TO EMERGE AS THE CENTRAL PLAYER IN A UNITED EURASIA. RUSSIA IS AT THE CENTER OF EVERY MAJOR MULTI-NATIONAL PROJECT AND MOST CONSORTIUM GROUPS. SEVERAL KEY MOVEMENTS PLANNED BY THE UNITED STATES HAVE RUSSIA IN A KEY OPPOSITION ROLE. AMERICAN DOCTRINES ARE BEING DISCARDED AND DISPOSED, FOLLOWING HEATED FRICTION ON NUMEROUS FRONTS. EUROPE WILL LOOK EAST, NOT WEST, AS THE FINANCIAL IMPLOSION CONTINUES ON COURSE. RUSSIA HAS ENORMOUS RESOURCE WEALTH. $$$

Vladimir Putin is the most important single figure in geopolitics and the shaping of the next decade's framework for commerce, complete with important organizations. Russia holds many cards at the poker table. The sprawling nation has no debt to speak of. Its leaders are great tacticians who never back down. The United States prefers to denigrate the recent election that propelled Putin once more into the President post, but the US needs to take a closer look at its own election counting process which is loaded with fraud. No US institution is free from the thorns of deep fraud. The US has a some new powerful adversaries. Put aside China for the moment. Russia with its vast resource wealth, including fresh water, is the new formidable ally. It is a super-power with nuclear capability. More important, Russia has endured some recent harsh experience with regard to the Eastern Europe deployment of US missiles during the Bush II Admin, that caused profound resentment. Putin plans to correct the past betrayals, as he sees them. Watch Russia join forces with Germany in key avenues to catapult Russia into the geopolitical and economic forefront. Those who point to past conflict between these two nations from a millennium overlook the new forged ties and cooperation, if not motives to align against the Anglo American power base.

As President, Vladimir Putin will be commander-in-chief in charge of the military, foreign policy, and all national security matters. Preface with mention of the Putin 2007 speech in Munich when he harshly criticized the Bush II Admin for its imposing unipolar imperial agenda that manifested the obnoxious Full Spectrum Dominance, replete with over-stepped national borders and violations of treaties. The USGovt has been given warning. The Putin foreign policy has several key features: no war on Syria, no war on Iran, no humanitarian attacks, no more color revolutions in former Soviet republics. Putin intends to derail any New World Order engineered from WashingtonDC. Putin bristled at the humanitarian bombing of Libya to bring liberation, reinforced by clandestine usage of Al-Qaeda troops. He surely noticed the gold bullion theft of Qaddafi's London account by London bankers.

Putin has his own doctrine. He will not permit any US bases to encircle Russia, and will no longer tolerate US missile defense under false pretense. He has put Russia in a tight alignment with the BRIC nations (Brazil, Russia, India, China) on economic ties. But what gathers the most attention lately has been been the new integration project for Eurasia, for a future in the making. It was Putin chess hidden check move against the North Atlantic Treaty Organization (NATO) and the Intl Monetary Fund. One must wonder if Putin has a plan to interrupt the narcotics distribution chain extending from Afghanistan through Turkey and Bosnia to the NATO bases across Europe. He has visions of a Eurasian Union as a modern economic and currency union stretching all across Central Asia. It seems that like with China, the Putin Russia will overlook horrendous trampling of civilians in Syria for the sake of preserving the crucial Russian naval base in the Mediterranean port of Tartus. In his future vision speeches on Eurasia integration, Putin makes reference to putting great efforts into coordinating "a powerful supra-national union that can become one of the poles of today's world while being an efficient connecting link between Europe and the dynamic Asia-Pacific Region." Those in NATO should regard the strategy as supplanting NATO, and worse, leading Europe to align with Russia and China for participating in the future. The USGovt alternative seems like a dud, as the trade war with China heats up (exactly as the Jackass forecast three to four years ago), as the Iran sanctions backfire on every Asian trade partner, and as the Persian Gulf nations turn their backs slowly on the United States in favor of Russia and China as protectorates.

Putin has more powerful cards to play regarding pipelines. While the US stumbles on the Keystone Pipeline (a hidden curtsy to China), the Russians are dominant in Europe and Asia with vast networks in broad expansion. Putin almost single-handedly has spearheaded a Russian resurgence as a mega energy superpower. Oil & gas represent for two-thirds of all Russian exports, cover half of the federal budget, and account for 20% of gross domestic product. Expect major expansion in niche areas. Although Russia holds 30% of global gas supplies, its liquified natural gas (LNG) production is under 5% of the global market share. That will ramp up. Putin will have somewhat of an uphill struggle to attract the required foreign investment in the Arctic from the West and especially Asia, in order to maintain high crude oil output. It has a spotty track record with Western oil giants, and bad memories from the Yeltsin years. Russia must cut a complex comprehensive deal with China of $trillion magnitude, centered on Eastern Siberia gas fields. The East Siberian Pacific Ocean (ESPO) pipeline is ready, a key strategic system and a tremendous advantage over the clumsy US ploys in Asia.

Putin has energy supply to Europe locked up. The South Stream pipeline is progressing, which will likely consolidate the continent but cost a staggering $22 billion. The shareholder agreement has signatories in Russia, Germany, France, and Italy. South Stream is Russian natgas delivered under the Black Sea to the southern part of the European Union, through Bulgaria, Serbia, Hungary, and Slovakia. If South Stream succeeds as expected, the rival pipeline Nabucco would be checkmated, a major Russian victory. The Nabucco pipeline is set to link Turkey with Austria through Eastern Europe, pushed by the US and EU in Brussels. The insolvency of the US and EU hinder progress. The entire energy pipeline battles in Central Asia are dubbed Pipelineistan. As the Afghan War degrades further, expect the US initiative known as New Silk Road to flounder. The flooding of US supplied narcotics into Iran and Russia is the dirty little secret in the conference rooms during discussions, tied to tremendous resentment. As conflict grows between the US and Pakistan, aggravated by thousands of civilian deaths by USMilitary drone aircraft, look for Pakistan to embrace the Shanghai Cooperation Organization (SCO) under direct Putin invitation. China is pushing for incorporating Iran into SCO with equal vigor. The repercussions would be significant for geopolitical balance, as Russia, China, Pakistan, and Iran would work to coordinate not only their economic integration but their mutual security inside a strengthened SCO. Energy supply could pave the way for pipelines.

Pakistan and Iran serve as key swing states for Eurasia integration. With Russia, Central Asia (former Soviet Republics), with Iran controlling at least 50% of the world gas reserves, and with the inclusion of Iran and Pakistan as virtual SCO members, the integration of Asia would meet and marry the integration of Eurasia at the Great Global Energy Ball Dancefloor. It remains to be seen what agenda the SCO alliance will undertake. But clearly in recent months it has had an interest in gold, as it assisted Venezuela and Iran on retrieval of gold reserves and usage of gold in the oil trade. Pipelineistan has the potential to integrate the SCO nations as an economic force under a security blanket, enough to rival NATO in offset. The New Silk Road offered by the USGovt seems empty by comparison, unless it offers a share of the lucrative narcotics trade. To be sure, the US tacticians, think tanks, and negotiators are fretting bigtime over Putin on numerous fronts. They see Putin as forging greater ties with China, fortified by energy pipelines as a foundation. They expect Putin to obstruct activity in Afghanistan, to facilitate autonomy in Pakistan, and to provide a neutralizing force in the Middle East where Syria and Iran are hotbeds. The next chapter is being fought, but unfortunately for the United States, it has no energy cards and must contend with profound resentment from the last couple decades. See the exellent Asia Times article by Pepe Escobar (CLICK HERE).

ECONOMIC REALITY OF DETERIORATION

◄$$$ CALIFORNIA IS IN THE MIDST OF A COLLAPSE. THE TAX REVENUE PLUNGE TELLS THE STORY, NOT THE PUPPETS ON THE FINANCIAL PRESS NETWORKS. A DISASTER IS IN FULL SWING THAT SCREAMS SOMETHING WORSE THAN SIMPLE RECESSION. $$$

The tax revenue stream of California is plunging faster than gravity, more efficiently than a toilet. Businesses are exiting like as if an earthquake is expected. The official tax revenue for the month of February compared to February 2011 fell by 22.55% even with one more day in the month. The state income tax receipts were down 16.5% year over year to $328 million. Adjusting out a tax hike of one cent that expired last July, the February sales tax were about $400 million, a 12.4% decline. The corporations are departing in droves, smelling ruin and anticipating tax slams. Their tax revenue is down 37.7% year over year. The vehicle license fees fell off the cliff by 97.5%, which reads like a misprint. One must wonder if that comes from liquidations and repos. The one bright spot is liquor excise tax! No economic recovery here, despite the pump prime propaganda heading into the presidential election. The dutiful financial press is doing the syndicate work. See the Global Economic Analysis article (CLICK HERE). Now repeat the story for Illinois (featured last month), Florida, New Jersey, and Arizona, perhaps ten other strapped states.

◄$$$ COMMERCIAL REAL ESTATE IS IN MELTDOWN. EXTEND & PRETEND IS COMING TO AN END. THE TIMETABLE FOR LOANS DUE PEAKS IN 2012. THE MALL VACANCY RATES AND OFFICE VACANCY RATES REMAIN NEAR RECORD HIGH LEVELS. COMMERCIAL PROPERTY PRICES HAVE NOT REBOUNDED. THE FRAUD BY BANKS EXTENDS TO THE COMMERCIAL SECTOR. $$$

The real world revolves around cash flow. Families across the land understand this basic concept, while banks usually do but recently rely upon USFed largesse to survive the monthly onslaught of storms. Cash flows arrive from wages, investments, and recently from the government spigots. The Federal government, Federal Reserve, Wall Street banks, regulatory agencies, and commercial real estate debtors have colluded since 2008 to pretend cash flow does not matter. Their plan has been labeled Extend & Pretend in well publicized embarrassment that defies reality forces and conforms to corruption. They pray for an economic recovery that does not arrive to save them from their greedy and foolish risk taking during the 2003 to 2007 extravaganza and debauchery. The Wall Street master plan has been to pretend that hundreds of $billions in debt would be repaid, despite the fact that declining developer cash flow and plunging real estate prices would make that impossible. The master cover-up plan continues, the commercial loans still not repaid, carried like millstones on the bank balance sheets.

In late 2009 it was clear to the USFed and USDept Treasury that the $1.2 trillion in commercial loans maturing between 2010 and 2013 would cause thousands of bank failures if the existing regulations were enforced. New tax rules were put into place that allowed commercial loans to be refinanced without triggering tax penalties for investors. They were part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs. These vehicles were vital to Fannie Mae & Freddie Mac supply valves. The USFed stepped in to instruct banks throughout the country to Extend & Pretend by amending the timespan the bank gave borrowers to repay a loan. Banks were also encouraged to modify loans to help cash strapped borrowers. Bernanke and bank officials pushed banks to do troubled debt restructurings. Such restructurings involved modifying an existing loan by changing the terms or breaking the loan into pieces. Bank, thrift, and credit union regulators quietly gave lenders flexibility in how they classified distressed commercial mortgages. Banks were able to slice distressed loans into performing and non-performing loans, and institutions were able to magically reduce the total reserves set aside for non-performing loans, sending them to the USFed under the mislabel of Excess Reserves. But the timetable works against the master plan, since loans come due without respite.

Thanks to the accommodation at the USFed, the bubble was re-inflated with easy money and missing regulatory oversight. Commercial real estate loan issuance skyrocketed to $1.6 trillion per year by 2008. The difference between bad retail mortgage loans and bad commercial loans is about 25 years in duration of loan. Commercial real estate loans usually have five to seven year maturities. This meant an avalanche of loans began maturing in 2010 and will not peak until 2013, to continue with gusto through 2016. With $1.2 trillion of loans coming due between 2010 and 2013, disaster for the Wall Street banks awaited, but the loans did not receive the usual treatment. They were not handled or valued honestly. A perfect storm of declining property values and plunging cash flows for developers should have resulted in enormous losses for Wall Street banks and their shareholders. But the day of reckoning cannot be put off forever. The pressure is on, since the commercial prices continue down. The fact is that commercial property prices are currently 42% below the 2007-2008 peak. The slight increase in the national index is solely a result of strong demand for apartments, as millions have been displaced from their homes by foreclosure, often using fraudulent loan documentation. The national index has recently resumed its descent. Industrial and retail properties are leading the decline in prices, according to Moodys. The master plan of Extend & Pretend was implemented in 2009. Three years later commercial real estate prices are even 10% lower, and the plan is up for renewal.

Reality has interfered with their desperate gamble of fraudulent accounting. Office vacancies remain at 17.3%, close to 20-year highs, as 12.3 million square feet of new space came to market in 2011. Vacancies are higher today than they were at the end of the recession in December 2009. Any recovery in cash flow has failed to materialize for commercial developers, the real pain felt. Strip mall vacancies at 11% also remain stuck at 20-year highs. Regional mall vacancies at 9.2% linger near all-time highs. Vacancies show no sign of decreasing. Despite these figures, an additional 4.9 million square feet of new retail space was opened in 2011. The folly continues with motive to preseve jobs in construction, similar to China. It happens every cycle in the USEconomy, as wisdom and good judgment take a leap off the scaffolds. The disaster unfolds. Many big box retailers will be forced to close thousands of stores in the next five years. It is clear the plan put into place three years ago has failed. The ruse tactics do not service the debt. Only cash flow can service debt. Hundreds of $millions in commercial loans coming due are set to collide with a swamp of factors to create a perfect storm in 2012 and 2013.

A recent article from the Urban Land Institute provides some insight into the current state of the market. Their conclusions differ markedly from the analysis done by the USFed and Wall Street. Ann Hambly once directed the commercial servicing departments at Prudential, Bank of New York, Nomura, and Bank of America. She believes a wave of defaults is coming in commercial mortgage backed securities (CMBS) space. Note that CMBS investors booked $6 billion in real losses in 2011, and CMBS has already taken on $2 billion more in losses so far in just two months this new year. The pace has doubled. Hambly expects it will require a miracle for many borrowers to refinance their deals when they come due between now and 2017.

Carl Steck is a principal in MountainSeed Appraisal Mgmt in Atlanta. He reports that lenders who have assumed the portfolios of failed institutions are discovering that the values of the loans are being appraised at much lower than they aniticipated. Consequently, he believes a fire sale of commercial loans lies just over the horizon. Analysts expect 2012 to be a record year for commercial real estate defaults. In late February, delinquencies for office and retail loans hit the highest levels in history, according to Fitch. The value of all delinquent commercial loans is now $57.7 billion, according to Trepp consultancy. The criminal Wall Street Robo-Signing fraud goes much further, reaching into the commercial property lending and accounting. The fraud uncovered in the commercial lending orbit will dwarf the residential swindle, according to the Burning Platform. Research by Harbinger Analytics Group shows the widespread use of inaccurate fraudulent documents for land title underwriting of commercial real estate financing. See the Burning Platform article (CLICK HERE).

◄$$$ THE HOME FORECLOSURE PARADE CONTINUES. REPEAT FORECLOSURES ARE BECOMING THE NORM. THE NEW HOME LOAN AID PROGRAM (NEXT SHAM IN A LONG LIST OF SHAMS) WILL PUSH MORE FORECLOSURES IN THE FLOW, PREVIOUSLY CAUGHT IN THE ROBO-SIGNING FRAUD PROSECUTION OR LITIGATION STAGES. THE NEGATIVE EQUITY SITUATION WILL BECOME WORSE. THE HOUSING MARKET HAS TWO MORE YEARS OF DECLINE IN STORE. THE NIGHTMARE CONTINUES. NO SOLUTION IS SOUGHT. $$$

Hat tip to Ken Kappel for his diligent work on the housing wreckage. Diana Olick of CNBC speaks more honesty about the ruined housing market than most, but her paycheck hints of bias. She emphasizes a renewed effect that had been seen in 2009 and 2010, in a huge spike of repeat foreclosures. The object of the banker game is not to fix a home loan, not to aid a homeowner, but to alter the mortgage so that legal liability is removed. Past fraud is wiped away effectively, at least on the mortgage contract and mortgage bond securitization. Never lose sight of the fact that most of the oncoming foreclosures are illegal, because they were based on fraudulent home loans or document forgery afterwards. Kappel has a great catch phrase that fits, "The pig in the python is suddenly moving." Thousands of foreclosures that were stuck in process due to delays over the so-called Robo-Signing scandal, the contract fraud in the document process, are working their way through a revamped banking system and heading toward final bank repossession. What some call a scandal is more like forgery. Like missing MFGlobal funds are more like stolen.

Foreclosure starts surged 28% in January from December, according to a new report from Lender Processing Services. More than 230 thousand loans began the foreclosure process in January. The tragedy and hypocrisy is revealed in the repeat foreclosure rate, which hit an all-time high in January, accounting for 47% of all FC starts. Repeat foreclosures are either failed loan modifications or loans that banks were attempting to modify but could not or refused. The large backlog of foreclosures with borrowers not making payments for an extended period of time indicate a resolution via climax is coming. Some banks still refuse, hoping for a Fannie Mae white horse to collect a satchel full of toxic loans. Fannie makes regular rides through banks, to be sure.

The pipeline of home foreclosures is nowhere near an end or conclusion. Lender Processing Services Herb Blecher concluded, "This is what the market is looking for. While painful to housing in the short term, moving the huge pipeline of delinquent loans to their inevitable end will help the overall market in the long term. There are nearly four million loans now in some stage of delinquency which have not even entered the foreclosure process. Banks are modifying loans more aggressively now, but many of these mortgages simply cannot be saved. The sooner they are processed and new buyers are found for the properties, the sooner overall home prices can recover." The dislocation comes from the bank lending. If banks are reluctant to lend, the buyers will not appear with money in hand to complete sales. All too often, mortgage loan applications are approved but never are completed at the attorney's office. The renewal surge in foreclosure starts has created an parallel surge in foreclosure sales. These bank short sales are nasty, destructive to both the seller and the bank. The USEconomy suffers from the entire sector implosion and drain of capital. The bank allows the property to be sold for less than the value of the mortgage, making final the owner wipeout of equity, but inflicting a loss to the bank finally. Foreclosure sales rose 29% month to month in January.

The market consequence is clear. Home values will be forced down further. Expect even more underwater homeowners, as home values slide below the home loan balance. Alan Greenspan warned over a year ago, that if the housing market descended another 10% in price, an entirely new very large swath of homeowners would be driven into negative equity, with a profound additional bank impact. It has happened. Home equity will turn more deeply negative for the entire nation, as the nightmare continues, even worsens. That spells more home foreclosures next year. Housing prices cannot remain stable in the face of such a relentless storm. Thus the Jackass forecast of another two years of falling home prices, my annual refrain stated since 2007 and repeated every year (translation: permanent decline). The housing market is nowhere near a bottom, as prices will find the 1987 values eventually. No solution is sought. A true solution would liquidate the big banks, liquidate the mortgage bonds, and liquidate the housing inventory. None of the three requisite events will occur, nor be considered.

Lastly, a comment on states. Still a stark contrast between states is evident, between those that require a judge in the foreclosure process and states that do not. Foreclosure sales in non-judicial states outnumbered those in judicial states by three to one, according to LPS. But signs are that even judicial states are ramping up, with foreclosure starts increasing twice as much as they did in non-judicial states in January. The backlog is ready to be unleashed. Over 40% of loans in foreclosure are more than two years past due. Incredibly, the judicial states have 63 months of foreclosure inventory to work through. Cheers for the improvement over February last year, when foreclosure inventories hit an all-time high of 147 months. See the Use Foreclosure Law article (CLICK HERE).

◄$$$ A NOTE OF CONFIRMATION CAME FROM THE CLEVELAND FED, WHERE DETAILS SHOW THAT OVER 75% OF R.E.O. SHORT SALES RESULT IN AT LEAST HALF LOSS ON HOME SALES FOR THE BANKS. THE BANKERS ARE HINDERED BY LACK OF KNOWLEDGE ON HOME VALUES HELD IN INVENTORY. THEY ARE FROZEN IN A DISASTER, BEYOND THEIR FIELD OF EXPERIENCE. $$$

The bloat of bank owned (REO) homes is causing a crisis nightmare for the banks. From 16,012 recent short sales by the banks, the average loss was 42% of the sale price. That is a disaster. Thomas Fitzpatrick and Stephan Whitaker wrote a summary on the problem. They wrote, "Swelling REO inventories are the latest fallout of the housing crisis, costing lenders money and contributing to neighborhood blight. Yet lenders could avoid taking on so much REO if they could more accurately estimate the value of the homes they foreclose on, especially in weak housing markets. Correcting this apparent misunderstanding of the market could speed the clearing of REO inventories, save lenders money, and help stabilize housing markets." They are dreaming, focused on only one of several plaguing problems. The parade continues with a fresh flood of new foreclosures every month. The market cannot clear because the supply chain has constant flow and the biggest banks refuse to liquidate. If they did, the home prices would descend by 40% in two month's time. The converse problem is that the banks are defunct, and would become more dead upon liquidation to reveal their actual much lower balance sheets. The FASB fantasy on accounting rules permits these Zombies to operate, adopted and blessed for the system. Ironically, Congressional members are given huge campaign donations by the banker lobby, who receive huge bank welfare aid by the USGovt to keep the Zombies going, ordered by the banker buddies in the USDept Treasury, in an incredibly incestuous circle. The banks have lost their credit engine function, as they disable the USEconomy from recovery. Thus more foreclosures come in the Ponzi Economy meltdown. Check out the excellent summary graph of quartiles of home sale transactions and associated losses in the Cleveland Ohio area. Some losses are total. Calculations are from data between January 2006 and June 2011, as the difference between the property's auction reserve and the price exiting the REO. Even that understates the loss incurred, since the homeowner equity is not factored. Notice that over 75% lose more than half the value, from the banker perspective. See the Rithholtz article (CLICK HERE).

◄$$$ THE POSITIVE FEBUARY JOBS REPORT WAS FULL OF MORE DECEPTIONS AS USUAL. TOO MANY BOXES. TOO MANY PEOPLE FALLING OUT OF THE SYSTEM. TOO MUCH CONTRADICTION BY LARGE SITE JOB CUTS IN HEADLINE NEWS STORIES. EACH MONTH THE NON-FARMS JOBS REPORT IS TORN APART FOR ITS CREDIBILITY. $$$

The true unemployment picture is hidden and obscured by essentially classifying the jobless Americans and placing them in one of three different box categories: the official unemployment box, the full unemployment box, and the workforce participation rate box. Fewer Americans participated in the USEconomy, therefore the jobless rate went down in fuzzy logic. Clinton and Rubin deserve credit for the innovative categorized deception. The number of long-term unemployed workers in the United States was 2.6 million in January 2009 at the beginning of the Obama Admin.  Today, that number stands at 5.6 million. Far too much attention is paid this sham report, which often does not mesh with the ADP report. Each has gaping holes and glaring flaws. Let it be heard that 227 thousand new February jobs were created on a net basis, and the wondrous USEconomic expansion continues unabated and undeterred. Give some credit also to cherrypicking the Census results. The revision on past months saw +51k in January & December additions. The jobless rate fell to 8.3% after hundreds of thousands fell off the wagon when their extended 99 weeks of coverage ended. Wages grew by 0.1% in a miracle. Check the graph for a clean quick view of where the nine million people vanished in the convenient USGovt agency calculations. For those wishing to read further on the labor market deception analysis, see the excellent forensic work by Bank of America economist Michelle Meyer in the Zero Hedge article (CLICK HERE) and the Financial Sense article by Sy Harding (CLICK HERE) and the Before It's News article by Daniel Amerman (CLICK HERE). The Jackass will not devote any more space to critique on this report.

As footnote, consider the Challenger Gray & Christmas large site job data. By sector, the announced job cuts were technology by 36,260 and transportation by 14,250 and capital goods  by 12,550 and food & beverage by 11,840 and banks by 9,850. These are large significant numbers in a single month. By corporation, the leading job cuts came from AMR (American Airlines parent) at 13,000 and NEC at 10,000 and IBM at 9,000 and Pepsi at 8,700 and Nokia at 6,900. Notice the sectors and corporations are broad, indicative of a systemic problem. But this is during a supposed a national economic recovery. Not at all!

◄$$$ THE E.C.R.I. WEEKLY LEADING INDEX POINTS DOWN, CONFIRMING A CONTINUED RECESSION. NO EXIT EVER CAME FROM THE 2008 RECESSION, ONLY A TWITCH AND WINK. NUMEROUS FACTORS SUPPORT A CONTINUED RECESSION, SUCH AS GOVERNMENT SPENDING CUTS AT ALL LEVELS, SLIDES FURTHER DOWN IN HOUSING, WEAK HOUSEHOLDS, AND REDUCED CAPITAL OUTLAYS. $$$

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute came in at minus 2.6, accounting for data through March 9th. The spin is given, how it marks the eighth consecutive week of improvement on the growth index. However, the important indicator has run negative since July 2011 in a long skein of bad signals. Lakshman Achuthan is co-founder of ECRI. He defended the ECRI recession call, saying "Obviously, ECRI's recession call remains quite controversial in financial circles. The perma-bears are generally supportive of the forecast, while the predominantly bullish mainstream financial view ranges from highly skeptical to dismissive. The credibility of the ECRI call has been undermined by a number of recent economic indicators, including today's addition of 227,000 new jobs in the monthly unemployment report. Likewise the rally in major US indexes since the ECRI call casts additional doubt on their position." On September 30th, the ECRI publicly announced that the USEconomy is tipping into a recession, to the dismay of all the propaganda artisans who promote the jobless recovery charade.

The ECRI generally does not provide the general public with the analytical details behind its calls. Turn to Hoisington Investment Mgmt for their Q4 Report, which also makes a 2012 recession call. They provide an extended economic analysis that dwells on several key factors that reinforce the recession forecast, like soaring debt-to-GDP ratio, contraction in fiscal and monetary policies, anticipated decline in exports, a weakened consumer, and capital spending cutbacks. The nation faces the exact opposite of expansion and recovery, in strong terms. See the Financial Sense article by Doug Short (CLICK HERE).

◄$$$ THE DURABLE SPENDING DATA WAS DOWN HARD. IT IS THE PRIMARY INDICATOR OF ECONOMIC EXPANSION. SUCH DISTINCTION DOES NOT EVER GO TO CONSUMER SPENDING. DURABLE ORDERS PORTEND ECONOMIC SLOWDOWN FOR AT LEAST HALF THE 2012 YEAR. $$$

American economist thought is backwards and bankrupt, having led the nation to ruin. But banker investment accounts are filled to the brim. The commonly held notion is that consumer spending powers the USEconomy. It did in the 1990 and 2000 decade, and the reward was ruin. The economists failed to notice. Instead, the sound legitimate economic thought dictates that the origin, the primary step toward economic expansion, must be the installation of equipment and machinery, the deployment of plant and buildings, the commitment of capital. It is called capital formation, a totally foreign concept to the clueless cast of incredibly inept US economists who suffer from false indoctrination in college and compromise on the job. The headline durable good orders data for February was minus 4.0%, and minus 4.5% for business durable orders. Excluding the volatile transportation sector, it was minus 3.2% for such orders. The ballyhooed consumer spending spree at the end of last year is finished, powered by pleasant winter weather. That is NOT the stuff of economic expansion or sustenance. More importantly, the big investment tax credits expired. Expect a big decline in final demand for the first half of the 2012 year.

◄$$$ SMALL BUSINESS IN THE UNITED STATES IS BURDENED BADLY BY TAXES AND REGULATORY STRICTURES. THE MARXIST COLLECTIVISM MOVEMENT IS TRAMPLING SMALL BUSINESS FROM BELOW, WHEN THE FASCIST BUSINESS MODEL SMOTHERS IT FROM ABOVE. $$$

Small Business in America is burdened, crushed, and downtrodden. The USGovt has  made it increasingly costly and risky to open a small enterprise. It is no wonder unemployment remains high, since the sector is the most successful in creating new jobs. Stories are common about the stifling bureaucracy in Greece, even the stubborn regulatory burden and prevalent nepotism in Italy. But America's Status Quo is trying its best to destroy small enterprise with taxes and crushing bureaucracy. See the OSHA requirements, and lately the mandatory Health Care rules. An unbridgeable divide exists in any discussion of small business, between those who have no experience in entrepreneural enterprise and those who have such a past. They tend to have worked for the government, in non-profit organizations, or in career corporate positions. Too many politicians make pronouncements about small business vitality, when they actually suck the life out of it with endless rules and budget cuts. See the Of Two Minds article (CLICK HERE).

THE GREAT PENSION SLAM

◄$$$ THE PENSION SHORTFALL HAS RESULTED IN VAST WAVES OF REDUCED PENSION BENEFITS OR BASIC VANISHING ACTS ON A WIDESPREAD BASIS. THE STATE & LOCAL GOVT COMMITMENTS HAVE BANKRUPTED MANY PENSION FUNDS. REALITY HAS FINALLY HIT HOME. BABY BOOMERS ARE RETIRING AT 10 THOUSAND PER DAY OVER THE NEXT 20 YEARS (THUS THE NAME BOOMERS). THE NATIONAL SHORTFALL FOR PENSIONS IS ABOUT $6.6 TRILLION. READ THE SIGNPOST TO THE THIRD WORLD. $$$

The United States as a nation is facing a retirement crisis of unprecedented magnitude. Promises must be broken since the money is not there. The shortfalls are astounding but measurable. Pensions are being brutally cut or are simply disappearing altogether. Workers are seeing their benefits cut unilaterally with no input from them, after often 20 to 30 years of dedicated service. This is a new age, the age of economic breakdown and pervasive fraud. The pension funds are either victimized or subject to lavish promises that cannot be kept. The government agencies and big companies have promised far more than they are able to deliver. According to Northwestern University Professor John Rauh, the latest estimate of the total amount of unfunded pension and healthcare obligations for state and local governments across the United States is $4.4 trillion. The term pension reform has come to mean reneged promises out of practicality. The message is clear, that America is becoming a poorer nation. Pension benefits will be cut drastically, or taxes will be raised drastically, or the USGovt will dole out a QE-Pension with replenishment in monetary inflation.

The elderly are plunging into poverty, as the Third World is encountered step by step. Some local governments around the nation are already declaring bankruptcy. Decisions are being made to eliminate pensions or cut them back deeply. The stories are from a Nightmare on Elm Street. According to the Boston College Center for Retirement Research, workers in America covered by a traditional pension plan fell from 62% in 1983 to 17% in 2007. Some call it a tidal wave of insecurity and imminent poverty. Many private pension plans are severely underfunded. The Verizon pension plan alone is underfunded by $3.4 billion. Many people who plan their financial future around a pension plan are going to be bitterly disappointed. They must try to fund their own retirements and not rely upon the system. Most Americans are not putting away much of anything for retirement. They have been encouraged to spend spend spend, after borrowing from their homes to the hilt.

Central Falls in Rhode Island last August declared bankruptcy after announcing its pension fund was short $46 million. The Pensacola Florida mayor revealed the city's annual pension liability is more than the yearly property tax revenues. Jefferson County in Alabama has actually gone bankrupt, the victim of Wall Street predatory actions. Stockton California is ready to do the same, after suspending $2 million in bond payments. It will begin negotiations with bond holders, creditors, and unions. Pension and healthcare benefits are often to blame for the insolvency. The state of Pennsylvania is in dire straits. Its Public School Employees Retirement System and State Employees Retirement System had an accrued unfunded liability of nearly $26.5 billion. That hole is expected to grow to $43 billion by 2019. They are praying the stock market rises tremendously on a misguided hope. The state of Illinois is facing an unfunded pension liability of more than $77 billion. Given that Illinois has unpaid bills and huge deficits that make national headlines (and Hat Trick Letter feature paragraphs), those pension obligations will likely never be paid. In California, the Orange County Employees Retirement System is estimated to have a $10 billion dollar unfunded pension liability. In just California, the pension consultant Girard Miller told the Little Hoover Commission that state and local government bodies in the state have $325 billion in combined unfunded pension liabilities. That comes to about $22 thousand for every single working adult in the state of California. See the Economic Collapse article (CLICK HERE).

◄$$$ IN THE UNITED STATES, EXPECT SOON AN ASSAULT ON PENSION FUNDS THAT BEGINS WITH I.R.A. ACCOUNTS. THEY ARE TOO LARGE NOT TO BE TARGETED AND PREYED UPON BY A BANKRUPT USGOVT. EXPECT A REQUIRED FEATURE TO BE USTREASURY BOND INVESTMENT VERY SOON, SINCE THE NEED IS TOO GREAT TO BE IGNORED AND THE VULNERABILITY OF THE FUNDS IS OBVIOUS. $$$


The USGovt can smell the $trillions locked in personal private pension funds. The pension funds like IRA and Keough plans are sure to be pursued like from birds of prey. It is even possible that in the future, after the initial assault, the large managed pension funds will be restricted to index funds and bond funds led by USTBonds. An Individual Retirement Account (IRA) is a tax-free zone for accumulating wealth. Whether it is a traditional IRA (fed by deductible contributions) or a Roth IRA (withdrawals as tax free), an IRA offers a big advantage from compound growth. But they also have attracted the attention of the crime syndicate that operates the USGovt, with all its attendant insolvency and desperation. Do not be given comfort by the robust political constituency supporting the generous tax treatment given to IRAs. One element is the 40 million people who have an IRA. A second element is the retail financial industry, such as the banks, brokerage houses, mutual funds, and insurance companies that often manage the funds. The tax haven for Main Street earns scrutiny and lust by the finance ministers to the USGovt, who require evermore funds to feed the broken social network beast, the banker welfare state machine, and war machine. The temptation is too great since the volume of funds is great, like a field of plump rabbits under a fleet of hawks.

The total value of IRAs and other tax-favored retirement plans is now counted in the $trillions. The politicians are hungry for the sweet pot that awaits their grabs. Those who do not expect the USGovt to change the pension fund tax treatment are naive fools. In early 2009, the Jackass was asked by the younger sister what to do with the gigantic IRA stored away at risk. My suggestion was to exit the IRA, pay the big tax, and wait two years for a nice recovery after investing in a legitimate Gold & Silver fund, after watching the precious metals prices double. The gold price was around $850 and silver price was around $12 at the time. She ignored my advice and refused, with some measure of contempt for the direction suggested. In a few years, she will deeply regret the decision. Hundreds of thousands of Americans make the same mistake.

Consider some potential avenues for the reach into the vast IRA wellspring of personal retirement wealth. In Japan the federal pension funds must invest in JGBonds by law, even though set at lofty prices linked to near 0% yields. They are horrendous investments. In the last two years, the Hat Trick Letter has warned that the tax deductible angle will give the USGovt the open door to dictate terms of usage. It is coming like night follows day. Here are possible avenues for them to come after your IRA. In other countries like Canada, the names change but the concept on seizure is the same. Some or all avenues could come to pass, since the federal finance picture is so incredibly bleak and unfixable. My expectation is for forced USTBond investment shown in item A, at least. The corrupted inventive minds of the finance minister lieutenants is certain to engage a pet project even if unpopular. The growing priority these days is to remove the IRA funds from USDollar risk and United States location before the grappling hooks sink deep into them.

A) Mandatory investing. The federal government might require your IRA to invest some share of its assets (50%, for example) in USTreasury securities. Your IRA would be exposed to inflation decay or even a restructuring of USGovt debt forced upon creditors.

B) IRA bonds. The funds might be required to invest in special USTreasury Bonds issued for retirement plans only. This worse option would enable the USGovt the free rein to set an absurdly low fixed interest rate, and hold to it even when price inflation is running wild.

C) Green stocks and bonds. It is a politically open game. The politicians could attract allies by including green investing as part of some lame initiative to produce the next over-priced and under-performing broken electric car. It could even supply funds to the next corrupt venture like Solyndra, which had Obama secret investment. Funds could be required to invest in stocks and bonds issued by companies officially designated as environmentally correct.

D) Surtax on large IRAs. The USCongress once passed but later rescinded a 15% tax, called an excess retirement accumulations excise tax. It targeted large retirement plans. Reviving that tax is a possible path.

E) Integration with Social Security Trust Fund. The USGovt might join pension funds with the depleted Trust Fund. It also might reduce Social Security payments to people who are receiving distributions from an IRA.

Idealists prefer to imagine various effective opportunities for IRA accounts. If not for the systemic failure from disastrous inflation management, betrayal of the nation's workers, corruption on Wall Street, and devotion to war, the idealists might have some basis for hope. The Jackass is a realist and pragmatist. The insolvency of the USGovt finances and the gaping growing deficit will preclude any such productive innovative opportunities. But for the dreamers among us, it would be great to stretch the envelope of investment choices with an Open Opportunity IRA, the custodian personally selected in a limited liability company (LLC) and managed personally. The possibilities would be ripe. Acting as manager of the IRA LLC, a person could do the following at the least:

1) Buy gold coins and store them at bank safe deposit boxes, vault depositories, a friend's garage, or buried deep 30 meters due north of the big maple tree on the farm.

2) Buy real estate either for appreciation or income, maybe a small farm.

3) Attend auctions for the purpose of buying foreclosured property.

4) Buy and rehabilitate dilapidated houses or wrecked houses from foreclosure.

5) Buy tax liens for high yield income with risk.

6) Lend on adequately secured second mortgages.

7) Enter into the equipment leasing business.

8) Invest in intellectual property (copyrights, patents, software, etc) and collect royalties.

9) Buy an apartment condominium in a faraway place or a farm in New Zealand.

10) Invest in the education of a protege.

GOLD GAME SHIFTS TO SUPPLY

◄$$$ AUSTRALIAN GOLD PRODUCTION FELL IN YEAR 2011. SUPPLY IS STRUGGLING TO KEEP PACE WITH SURGING PHYSICAL DEMAND. THE DYNAMICS ARE GRADUALLY CHANGING AS THE GOLD PRICE RISES, MAKING DEEPER AND LOWER YIELDING DEPOSITS MORE ATTRACTIVE AND PROFITABLE. THE OUTPUT MIGHT DECLINE, BUT THE PROFITS HAVE CONTINUED UPWARD. $$$

Australian gold production fell in 2011. The consulting firm Surbiton Associates conducted a study on Australian gold production. On a full year basis, for the year 2011, output failed to meet forecasts for average production. Last year, Australia kept its position as the second largest gold producing country after China, but in comparison with 2010, Australian gold production dropped by two tonnes. In 2011 mining companies Down Under produced a total of 264 tonnes (=8.5 million troy oz) of gold. In 1997-1998 Australian gold production reached a peak of 318 tonnes, a record not matched in recent years despite more attractive prices. Production declined by 6% year-on-year in Q4. Despite the decline, most Australian mining companies increased their profits due to higher gold prices. Last year China produced a total of 300 tonnes. America is the third largest producer.

Some details on the gold industry Down Under in Aussie. Due to greater challenges, less easy low lying fruit, and depletion of deposits, last year major mining companies pursued projects to extact gold at greater depths. If not from fewer opportunities, perhaps the higher gold price enabled more challenging projects to become lucrative. Gains in the gold price relative to input costs have changed the industry dynamics. Three major projects lead the Aussie industry. In 2011, the Super Pit mine operated by Barrick Gold and Newmont Mining produced 796,000 troy ounces of gold. The Newmont Boddington mine produced 742,000 troy ounces of gold. The Telfer mine operated by Newcrest Mining followed with 554,779 troy ounces.

◄$$$ SOUTH AFRICAN GOLD PRODUCTION HAS HIT A 90-YEAR LOW. MULTIPLE FACTORS ARE INVOLVED, FROM GROSS MISMANAGEMENT BY THE MARXIST CLOWNS TO LABOR INTERRUPTION AND EVEN DEPLETION. THE OFFICIAL BLAME IS GIVEN TO DEPLETION, BUT IT IS A LAME EXCUSE. A REAL EXAMPLE IS GIVEN IN CONTRADICTION. $$$

The scale of the collapse is utterly incredible. The output from the former lead dog South Africa has fallen by a factor of five or more in the last 40 years. Some wonder aloud if the old Apartheid regime routinely exaggerated the size of their national gold production. At one point several years ago, it was boasted that 35% of all global gold above ground was originally mined in South Africa. In January, a sizeable 11.3% decline was realized, which eclipsed the already hefty December 8.2% gold output decline. The explanation attributed by the Johannesburg government ministry is that many of the country's biggest gold mining operations having reached the ends of their lives and have closed down. They say depletion has occurred. Don't believe it, nonsense. They fail to mention recent attempts to impose higher taxes on the cash cow industry. The higher gold price justifies deeper mining efforts and even lower yields, as seen in the Australian example.

Three years ago, the new Marxist nitwits in charge of the electrical utility used substandard coal to save on costs, gummed up the machinery, and ruined the high output generation for the entire country. The repairs cost almost 1000 times the savings. The mining firms rely heavily upon electricity to run pumps (water in mine shafts), to run air conditioning (heat down below), and to run equipment (sometimes diesel too). The electricity rationing was a big impediment to mine output, reported by the Hat Trick Letter. The nation is stampeded by labor problems, pay grades, disputes over worker deaths in unsafe conditions, deep operations and flooding, all of which have resulted in strikes. The global gold investment demand is growing exponentially, while physical gold production in several important nations is flat, in decline, or in South Africa's case in steep chronic decline due to horrendous mismanagement and stupidity. It all adds up to shortage of supply and much higher physical gold price. See the Gold Core article (CLICK HERE). Observe the reduction since 1970 from 2600 tons of annual SA output, while the SA share of global output has fallen from 80% to 15%. Marxist morons do what they do best, ruin industries.

A real example came in response from a gold trader who has SA contacts. He offered details in a reclamation project that turned into riches, a success story. He wrote, "The white mine owners went underground for centuries, but totally ignored the placer/aluvia deposits. Those are very rich and plentiful. The big mining firms jump for joy if they get 3 to 5 grams per ton of dirt moved. We have a number of aluvia mines exclusively supplying refiner outfits that have 150 to 285 grams per ton. A South African mining engineer recently bought a closed shaft, deep mine from his former employer for peanuts. He turned the mine into an aluvia operation and produced 890 kilograms of nuggets and dust at 94% purity last year. He expects to bring it up to 2 tons this year and beyond for the next 10 years." So opportunities exist is these so-called shut down mines that are supposedly depleted. The Marxist morons cannot even assess what is under their noses, after they destroy an industry.

◄$$$ SEMI-INFORMED BATTLEGROUND CONJECTURE. TREMENDOUS EVENTS OCCURRING BEHIND THE SCENES, DEADLY BATTLES, DESTRUCTION OF FINANCIAL FIRMS AT THEIR GOLD DESKS, TOUGH TASKS TO BE COMPLETED. THE GAME HAS CHANGED. ENTER A LATE STAGE CHAPTER WHERE AT TIMES THE ROLES ARE REVERSED AND THE GOLD MARKET IS EVEN MORE CONFUSING THAN BEFORE. THE GOLD CARTEL LOSS OF GOLD HAS GROWN CRITICAL AND LETHAL. THEIR FIRMS ARE BEING KILLED. THE DERIVATIVE EXPOSURE MIGHT BE ACCELERATING THE PACE. $$$

The Jackass must be honest. My best gold trader source has been more secretive, more tight lipped, and careful. He shares many things, but his painted pictures from 2009 and 2010 leave much to be filled in nowadays. He explains some general condition changes, but has been much busier than in the past with pet projects. He has been in charge of important tasks. My suspicion is that several important changes have taken place. He is directly involved in some side projects directly related to the gold defense by the Good Guys. For instance, over a year ago he served as counselor to the Chinese, and provided them the idea to pursue discounted PIGS sovereign bonds. He hinted later that China would eventually lay claim to much of their central bank gold. He refers to projects underway using extreme pressure to complete sales. He mentions a lost liberty to divulge much details, since the projects are ongoing. He makes clear statements that the gold cartel is being slaughtered behind the scenes, not at all in the news since the networks are syndicate mouthpieces. He claims the cartel has grown much weaker, cannot stop the inevitable collapse, and has resigned itself to forfeit the remaining gold in order to retain political power and to keep the price lower. They are in fact victims of their own paper game crimes, forced to deliver vast gold supply at the lower price than they wish. At lower prices come much higher physical demand. The Chinese are the principal buyers, but he swears that China is not alone. One is left to guess that Russia and Arabs are buying with both hands. Perhaps Germany is buying also in volume, preparing for the next chapter in alliance with the East. The biggest mistake that gold and silver investors can make in these critical weeks and months is to be disheartened by the falling paper prices. The trend is up. The battle is being won in the vaults, where the gold cartel is being depleted and ruined, very gradually but step by step. Each ambush is lowering the paper gold price but killing more members of the cartel, cutting off their appendages.

The world has entered a very dark dangerous critical timeframe, my view. The next phase will see the gold cartel and their Evil Boyz, some of whom are satanists, many of whom are nazis, drained and depleted of their gold bullion, not totally, but significantly enough to render them helpless in defense. As preface, some of us (me included) are seeming frustrated with lack of information on the extreme battles fought at the highest levels, between major Western banks and Eastern billionaires. An occasional story comes like the targeted ruin of UBS in a major sting. They took the bait and lost their entire gold bullion in inventory, then issued a demented absurd story about a rogue trader. My admission is not to know what is happening in key battlegrounds, only hints. When my source shares, he divulges little, but divulges plenty in sketch. Some complex events are happening. Key platforms are being destroyed, platforms used by the evil Boyz. Important enormous orders are being forced to be filled against the will of the Evil Boyz. He called them difficult assignments, as though targets have been placed on other institutions like with UBS. Months after UBS, banks in vulnerable positions are forced to satisfy large gold orders at low prices. trapped in losing positions forced into liquidation.

The Good Guys demand pain, with gun to their heads, by means of a low price on physical purchases. They wish to deplete the Evil Boyz almost completely of their gold. They have seemingly put the Evil Boyz on surgical tables, tied them down, and are cutting off their legs, draining their blood to the last drop. The markets appear to be pushed down by the Big Four like JPMorgan and the criminal collusion team. In reaction, the Good Guys are using the opportunity, like ambush counter-attacks during the evil predictable ambushes. It is like they are saying "Go ahead, take down the paper gold price, since we will cut your legs off and drain your gold supply. Go ahead, make my day" but in actual events. The real time is dragged out, as massive $billion buy order take days and even weeks to fill. So the process is long and drawn out in an arduous time consuming painful series of ugly chapters with scant information.

Nothing can be installed anew for a new financial structure and monetary system without the complete collapse of the current system, which would demand the new viable platforms. The Good Guys are allowing the Evil Boyz to dictate the pace by means of the paper price reductions, accepted with glee as discounts. Often the Good Guyz help to push down the price in order to drain the gold cartel at lower prices and even higher volumes. They let the gold cartel start the process, but the Good Guys take the price much lower, to meet their gigantic buy orders that drain the Big Four banks. My source still calls for an event to occur that will not be given proper importance. It will be used by the Good Guys to exploit the situation and decimate the camp of the Evil Boyz. He used the phrase "quickly, ugly, unexpectedly, like the assassination of Archduke Ferdinand that triggered World War I" in its passage. He clearly is either part of or privy to a series of extremely important projects and powerful task forces. He hints that he cannot talk about details since too dangerous and too complex and too thorny. Sometimes several weeks later, he will fill in details. My belief is that divulging details might be risky to him and risky to me since the story would quickly find its way into the Hat Trick Letter reports. So he is protecting me. He appears more battle hardened, equally generous, a wonderful fellow who pursues the equitable fair system, but who is unable and unwilling to talk to a different lower caste from the battle field that operates under more pedestrian rules. It is like he was promoted from Major to General from successful battle campaigns, has assumed more responsibility, bears more risk and cannot talk with the Lieutenants and Captains anymore for security reasons that are very understandable. The Jackass is a lowly lieutenant, whose main weapons are a computer and a pen wielded over the internet roadways in battle. The Jackass knows his place and his strengths.

My conjecture is that two important battles are being fought with ferocity and extensive damage, wielding great destruction to gold cartel ramparts, the gold drain from the Evil Boyz camp and the surfacing of the corrupt derivative market. They are inter-related. Greece has brought the derivative market to the forefront, where it can be seen more clearly as corrupt to the core. The derivative exposure is resulting in tremendous losses behind the curtains, and my belief is that they are causing significant gold relinquishment from battered banks. Massive payouts are being covered by the central banks. My loose napkin guess is that the covered central bank largesse to assist banks might have reached $3 to $5 trillion in just the last few months.

Here is a direct quote related to the battles. He wrote, "I doubt very much that the major Western banks have any Gold left at all. They are tapping deep sources like at the Bank of England and Swiss banks. However, some of them hold Gold bullion for clients. CommerzBank of Germany is the continental precious metal bank in Europe like HSBC is in Asia. In 24 to 36 months, there will be no bank left trading and/or holding precious metals. They are being wiped out. As for the arrival of [the replacement monetary and trade system], it is very complex to explain. The banks cannot be destroyed overnight without having a plan B, well along in implementation, ready in place to take over. There is a self-cleansing component that will kick in while the demolition will be controlled. The Boyz know that they are finished. What you are witnessing is the tail end of a dying system. That is all I can say."

◄$$$ BEN DAVIES REPORTS A NEW CENTRAL BANK BUYER HAS ENTERED THE GOLD MARKET, BUYING IN SIGNIFICANT VOLUME. THE BUYER IS TAKING DELIVERY OF PHYSICAL BULLION WITH BOTH HANDS. IT IS A CENTRAL BANK, WHICH STILL IS NOT IDENTIFIED. $$$

"Last time we spoke, I said the market would chop wood so to speak and that is what has actually happened, just a chop sideways. We felt that the market was going to break out over the bank holiday on Monday [February 20th]. You often have turning points over these weekends. It is either a resumption or it is a trend change. But because we had come from a structurally oversold element in the market, we felt there was going to be a resumption (to the upside). There were a number of reasons. The sentiment was still very attractive and positioning was light. There are flows into physical that some participants are not seeing. But we are hearing about it, making us wary that the shorts were getting into a trapped position. With oil prices starting to resume to the upside, there were a lot of geopolitical pressures that could underpin the gold market and send it higher. Everyone is looking for a reason why gold needs to go higher. The fact remains not enough people own the physical.

A new player came into the market and that caught the market substantially offside. It started on Monday. The market was quiet, but a lot of option activity was taking place in the market and then again on Tuesday in the physical market. A bigger player (and a new player) came into the market and it is a central bank. The fact is people don't get what is happening and that tells me the market is going higher."

◄$$$ WEIMAR GLIMPSE, COPPER BROKE DOWN ALONG WITH THE ECONOMY, BUT PRECIOUS METALS SOARED FROM THE RUIN OF THE MONETARY SYSTEM AND FLIGHT TO SAFETY. BE ON THE LOOKOUT FOR A SIMILAR DEVELOPMENT IN THIS DAY & AGE. $$$

The finance sector is the dominant beneficiary of massive hyper monetary inflation. Response to systemic failure through expansion of the money supply goes amok. The economy is gradually degrading into insolvency and vanished profitability across the spectrum. Final demand is harmed irreparably. The impact is seen as rising precious metals prices and plummeting copper price, the most widely metal demanded, key to industry. The global financial system could be on a similar course. Thanks to DavidA in California for sharing the unique graphs.

◄$$$ ANDREW MAGUIRE EXPLAINED HOW THE PAN-ASIAN GOLD EXCHANGE WAS SABOTAGED, WITHOUT OFFERING THE NAME OF WHO ENGINEERED THE WRECK. IT WAS A ROTHSCHILD, DONE WITHOUT CONCEALMENT, IN BROAD DAYLIGHT. THE LEGITIMATE HONEST COMPETITION WAS NOT WELCOMED BY THE SYNDICATE. WATCH FOR THE NEXT CHINESE GOVT REGIME TO FORMALIZE A RELATIONSHIP BETWEEN THE YUAN CURRENCY AND GOLD. $$$

A great interview took place with Andrew Maguire. The once ballyhooed Pan Asian Gold Exchange was quite the flop. The Jackass expected erroneously that it would challenge the Western naked short artisans and their highly corrupted gold marts. It did not. It was co-opted and ruined before its birth. Excuse the minor editing to make the interview readable, without altering the message in any way. London whistleblower Andrew Maguire told King World News that the launch of a physical Gold & Silver exchange in China was interfered with and subsequently killed by a New York based entity with very powerful Chinese connections. Think the Rothschilds. Maguire also said the recent smash in Gold & Silver (February 29th) was blatant manipulation, as he offered his brief thoughts. Maguire concluded with a comment about the next Chinese Govt regime planning to install some kind of a Gold-related Yuan currency in a formal relationship. The details will be interesting to say the least. See the King World News interview (CLICK HERE). The Chinese reaction to the PAGE exchange sabotage will be broad deep counter-attack that cannot be stopped. The elite interference has invited a more powerful response in reaction.

"[The February 29th ambush] could not have been more blatant intervention in the gold market, could it? Talk about not worrying about hiding your footprints. This was obviously sanctioned somewhere at a higher level because of the amounts of contracts, paper contracts that hit the market, all at once, within seconds of each other. This was not normal trading. This manipulation was 100% to protect resistance levels that were about to be breached. However, I do not think for a minute this has fooled anybody. Anyone in the physical market was waiting for something like this. You only have to have enough of the weak money in there, and sure enough the [cartel] will flush it out. The Commercials have been meeting these futures buyers head on, one for one, short for long, for the last couple of weeks. We have been seeing it build up and all they (Commercials) have done is cash it in. We were seeing massive order flows. We were seeing every single bid being hit. The offers were just massive. I mean we were seeing 10 and 20 thousand contracts at a time being unloaded by single individuals. This would be the agents that control the markets. I do not believe for a minute it was genuine selling. This was 100% paper orchestrated selling, and it had nothing to do with the physical market whatsoever. They came in with massive sell orders, creating absolute panic in the marketplace.

Let me remind just what PAGE (the Pan Asian Gold Exchange) was going to be. This was going to be a Chinese Exchange that was to completely change the way gold and silver trade globally. If you recall from our previous interview, it posed an immediate threat to the current fractional reserve bullion banking system. It was the competition of a brand new fully allocated gold and silver contract being pitched up against unbacked paper contracts. It is not a stretch to imagine what a threat these contracts posed to the bullion banks. The whole thing was killed. We recently found out how PAGE was interfered with. Within hours of our King World News interview last July, the interference stemmed out of a New York based entity with very strong Chinese relationships. It delayed it enough to kill it and it was killed. China has recently been taking back control of all of the regional gold exchanges. But it is more of a bullish thing that is happening here. The Chinese are actually formalizing a proper Renminbi/Gold relationship, once the new government is in place.

The original people behind the international PAGE contract, they stepped aside from PAGE when it ran into this interference from the New York based entity. They moved to set up their own dedicated international exchange. It has been in the works quietly for many months now. We will soon be able to announce the first official trading day. This is a game changer. There are just two of these bullion banks that control almost 95% of all precious metals derivatives. So you can only imagine how welcome this new competition is going to be. Now the LBMA and the COMEX based bullion banks, they are already defending what is really a growing and unsustainable underwater naked short position in Gold & Silver. That is why we see the kind of antics we saw on Wednesday [Leap Day ambush]. So things are about to change. This new competition will give naked short holders a heck of a lot to think about. This is a bombshell." Bring it on, please !! The trouble is that such new systems, even at the single mart level, take a tremendous amount of planning and time to set up.

The Silver Shield offered a strong admonishment and warning to Andrew Maguire, who has survived one near miss in a hit & run car incident in London. He is playing a dangerous game, but worse, his professional efforts are trapped within the system he opposes. The Silver Shield wrote, "The Rothschilds got their Hong Kong Mercantile Exchange up and running in no time but the outsider plan of the Pan Asian Gold Exchange (PAGE) got shut down. I fear that while a few phone calls shut down the PAGE, something much worse might put an end to Andrew Maguire's next venture. He is up against men that have their wealth and power derived off of debt and death. These families that he is up against own the world's central banks, and by extension, all other banks, corporations, governments, regulatory agencies, militaries, and so on. This battle is not just about Silver. It is about world control and there is no way to win inside a paradigm that they control. These men that control nations can wage physical war against other nations to maintain their power. Maguire's new company Coghlan Capital is to help people stay within the paper paradigm that they claim they are fighting against. You cannot reform a corrupt system, by gambling in their corrupt casino. You cannot defeat a electronic market with another electronic market. You cannot defeat a centralized power with a collective action. You cannot overturn a secretive banking institution with more insider guidance. In order to truly win this battle you need to be of the opposite consciousness on every level."

GOLD PRICE AMBUSH WITH PHYSICAL COST

◄$$$ THE BATTLE HAS EXPANDED. IT IS NO LONGER ON PRICE. IT HAS FOCUS ON DRAINING THE EVIL CAMPS OF THEIR PHYSICAL GOLD. THE LATEST WRINKLE IS THE REVELATION THAT THE DERIVATIVE SECTOR IS CORRUPT TO THE CORE AND LIABLE FOR HUNDREDS OF $TRILLIONS THAT IT CANNOT PAY FOLLOWING YEARS OF HEFTY RIPE FEES TAKEN IN. THE CONSTANT BACKDROP SINCE 2008 IS THAT THE BIG WESTERN BANKS ARE ALMOST ALL DEAD BANKRUPT INSOLVENT AND MORIBUND OPERATING ZOMBIES. THEY ARE SLOWING HAVING THEIR GOLD REMOVED, AS A CONSEQUENCE OF THEIR INSOLVENCY AND RUIN, AGGRAVATED BY THEIR DERIVATIVE EXPOSURE. $$$

The Gold Wars have significantly changed in the last two years in particular. From 2004 to 2009, the battle was to win a fair higher gold price. No longer. The war has turned the corner and reached an end game scenario. But it too will be drawn out over time. The objectives have changed. The tactics used have been altered. The upper hand by the Good Guys against the Evil Boyz is evident. Some new confusion has entered the room. The objective is to remove gold from the bullion bank inventories and major bank inventories, all of it. This is war, and it will be to the death. Being a Zombie means losing all the gold in reserves, in a time hourglass process that reflects the reality of their balance sheets. Price implications are part of the sacrifice, as the Good Guys will help to push down the Gold price at times in order to kill a gold cartel player. Like right here, right now. My best gold trader source informed that a massive order must be filled this month, at a low price, for the benefit of the Good Guys, with an evil player in a vulnerable position, who knows he is dead and must forfeit its gold. Therefore the Gold price stay down until the order is completely filled, and only then will recover a couple hundred dollars in price per ounce only after this gold cartel player is killed off. The player is resisting, but its fate is written, as the epitaph has been carved in stone, the tombstone awaiting the cadaver and entrails. The source could not reveal anything more on details. Doing so might affect the transaction process.

The damage done to the gold cartel is immense, yet not adequately reported. The syndicate controls the Western press networks, the big banks, government finance ministries, and more. They only report that the gold price (paper discovery) is down hard, and gobs of people and firms are selling out, as sentiment wanes. They would never report on a cartel bank having to sell $70 million worth of gold bullion below market prices to relieve a short disaster position, the pressure applied by a Russian billionaire with connections and nasty leverage to enforce the order completion over a two-week period. A better understanding of the damage done would come from Asian financial press sources. The Africans have a wonderful proverb that addresses the issue of bias. They say "Until the lion has his own historian, the hunter will always be a hero." How true!

◄$$$ GOLD PRICE DIPS ON THE PAPER SIDE ARE RESULTING IN ENORMOUS BUYING AT THE PHYSICAL SIDE IN LONDON. THE ANONYMOUS LONDON TRADER OFFERED DETAILS IN A FOLLOW-UP. THE INTERVIEW WAS GIVEN IN LATE FEBRUARY, DIRECTLY BEFORE THE LEAP DAY AMBUSH. TIME WILL TELL IF MORE MASSIVE PHYSICAL GOLD BULLION BUYING WILL OCCUR IN ITS UGLY AFTERMATH. EXPECT CLEARLY AND OBVIOUSLY YES. NEVER LOSE SIGHT OF THE FACT THAT AS THE GOLD CARTEL LOSES ITS PHYSICAL GOLD, IT WILL LOSE ITS ABILITY TO ABUSE PAPER GOLD AND MOVE THE PRICE. THE GOOD GUYS ARE EXPLOITING THE EVIL BOYZ ILLICIT ACTIVITY AND TAKING THE DISCOUNT TO PURCHASE PHYSICAL GOLD. $$$

The gold cartel might be pushing down the paper price and covering their shorts, but they have other guys at their side rushing to fill gigantic physical orders. The Good Guys are exploiting the discounted price. The gold cartel is losing their physical gold bullion as a direct consequence of their corruption in the COMEX futures market. They notice their own death in progress. In horror, they are seeing the Good Guys help to push the paper price a little lower to gather in an avalanche of buy orders, to drain the evil camp of their gold. Witness the paradigm change in the end game. The London Trader said, "Yesterday when we dropped through $1700, you would not believe the amount of physical tonnage orders that filled. US centric traders tend to concentrate on the COMEX, but the real market is made in London. The commercials have been covering their short positions and the local traders are all short at this point. All of the guys who were long and vulnerable at the highs, are now short and vulnerable and this exactly what we need to make a bottom. These momentum traders ran into a very large sovereign order near the $1680 area. When gold broke through $1680 there were layered physical orders. Over 40 tons of physical gold were filled below $1680. These physical orders increase exponentially in size going all the way down to $1650. The bullion banks know that these orders are down there, but obviously it is all about where the lines cross. So these bullion banks are covering like crazy right now. These high frequency traders and locals are so lopsided short at this point that they are just being used by the Commercials. So, not only are the commercials heavily covering short positions, but the actual amount of paper tonnage that was converted to actual physical on that dip yesterday is significant. Some of it, no doubt, is to pay for some of the leases that were underwater from the bullion banks. A big chunk of it though, is physical metal that is going to disappear to Eastern vaults.

What has also happened is a lot of the spot buyers, who have not converted to physical yet, have indexed themselves to spot and are now converting those spot contracts in to physical and will continue to do so for the next three to five days. So these paper raids have an enormous impact on the underlying physical market. This morning on the London AM Fix, a very large number of spot indexed buyers converted to physical.  At the PM fix today in London, a very large number also converted to physical. What is happening over here in the physical market in London is totally missed by the US centric short-term day traders. Right now the high frequency traders are doing all of the work for these guys (Commercials), as paper is being converted into physical. This is being done by the bullion banks covering shorts and also very strong physical buyers accumulating at these levels. Anyone in the know is accumulating physical and the shorts are just pressing down on a spring here. It is like anything with leverage. Once it unwinds, it unwinds rapidly. We saw that on the top end and we will see it from the bottom end. The shorts now face larger and larger sovereign orders for physical metal to get the price lower.

You have to remember the bullion banks are naked short the gold and silver markets. They are losing the very ammunition they need to manipulate price. They have to be careful not to lose more on the physical market than they profit on the paper market. What these sovereign entities are doing to take metal from the physical market is they are buying on the spot market on dips, quietly accumulating spot, on the long side. Then on dips in premiums, they are converting that into physical gold and that has a lagging effect under the market that is yet to feed through. During this entire takedown in the gold market there has been absolutely no selling of physical gold, only accumulation. You see people saying gold is headed to $1620, $1600, $1500. I guarantee you these individuals do not know what is going on in the physical market. There is a massive fight going on and if we hold above the 200-day moving average for a COMEX close (the virtual market), the bottom is in.  Commercials would rather cover shorts below the 200-day moving average. These high frequency traders and weak handed traders are now selling. The fact is they are being used by the bullion banks, so the bullion banks can cover their short positions." The sovereigns are the Coalition, the billionaire players of Russia, China, and the Persian Gulf. They have had enough of the Anglo bankers. There are two prominent games going on simultaneously, one paper and one physical.

◄$$$ CENTRAL BANKS ARE EXPLOITING THE LOWER GOLD PRICE AFTER THE SIGNIFICANT PRICE DECLINE. THEY PURCHASE IT THROUGH THE BANK FOR INTL SETTLEMENTS, TO HIDE THEIR TRACKS. AN ESTIMATED 4 TO 6 METRIC TONS WAS PURCHASED BY THE COLLECTION OF CENTRAL BANKS IN THE O.T.C. PHYSICAL MARKET. THEY BUY WHAT THE PUBLIC SHEDS. $$$

Several gold traders report that large central bank purchases have taken place in the last few weeks. They exploited the naked short ambush, which resulted in significant shedding of precious metal by retail investors and managed funds alike. These traders have direct knowledge of the transactions. The Bank for Intl Settlements acts on behalf of central banks. The central bank of central banks, fortress of the syndicate, has been buying significant quantities of gold on the global market amid falling prices. According to several estimates, the BIS bought four to six metric tonnes of gold bullion worth between $250 million to $300 million at current prices. The transactions took place in the Over-The-Counter physical market last week, with particularly high volume at the end of the week. The total purchases over the past three or four weeks is likely to be close to ten metric tonnes, according to the traders. See the Financial Times article (CLICK HERE).

◄$$$ THE HALF-LIFE OF GOLD PAPER AMBUSHES IS REDUCING IN TIME, WHILE THE EFFECT HAS NO LASTING POWER. SMALL AMBUSHES SEE A RECOVERY IN DAYS. BIGGER AMBUSHES SEE A RECOVERY IN MONTHS. EACH AMBUSH CAUSES MORE PAIN TO THE GOLD CARTEL IN THE FORM OF DEEPER PAPER LOSSES AND GREATER PHYSICAL GOLD DRAINAGE. $$$

To be sure, no mincing words, the gold cartel has realized some success in quashing the growing enthusiasm in gold. They can read a chart also, and reacted to the imminent surge to $37 silver and $1800 gold levels. The biggest effect seen is the success in setting a perception that Gold is a commodity. It is a repeated refrain, linked in stories to the crude oil price. In the last three months, the frequency of illicit naked short sales (extreme ambushes) has accelerated in order to keep the Gold price steady. Observe a corollary to the Ponzi theory where funds must accelerate to keep a fixed price. The timeline is offered by Andy Hoffman, aka Ranting Andy on the brutal interventions by the cartel. Notice how the time duration between attacks is shrinking. He openly yells that "hopefully one day in the not too distant future, their interventions will have the half-life of half a day!!" The duration has gone from 173 days in May 2011 to 26 days for the Leap Day hit.

◄$$$ A PRELIMINARY RAID BEFORE THE LEAP DAY AMBUSH WAS A FAILURE IN MID-FEBRUARY. THE STRENGTH OF RESISTANCE TO CORRUPT NAKED SHORTING WAS SEEN. HOWEVER IT MOTIVATED A GREATER AMBUSH IN A PRE-EMPTIVE STRIKE BY THE CARTEL LED BY JPMORGAN AT THE END OF FEBRUARY. REGARDLESS, THE FAILURE ON FEBRUARY 24TH WAS A BEAUTIFUL EVENT WORTHY OF DISSECTION. $$$

The powerful resistance to corruption was seen vividly on February 24th. The physical market is resilient, up to the task of lapping up the naked short dumping exercises by the most corrupt market the world has ever witnessed in history, led by the United States and London as perpetrators to defend the fiat paper USDollar currency system. The cartel dumped 102.5 million ounces of paper silver in a mere seven minutes. Yet the raid failed badly. Silver was preparing to overcome the limit 35 price level of significance. The gap from 35 to 40 awaited in a clear unobstructed path. The cartel acted, but failed. With malice of motive, the cartel stepped in with a massive paper raid to prevent such a bullish weekly close. Check out the following price and volume chart screen shot on this 1-minute silver chart courtesy of NetDania. Notice the massive volume that began between 12:45pm and 12:55pm, when 4000 paper contracts dumped on the market in a single minute, followed by 2500, then 1800, then 3200, then 3000, then 2900, and finally 3100 over the next several minutes. Have a look. That was 20,500 paper silver contracts equal to 102.5 million ounces of paper silver suddenly dumped on the market in a span of seven minutes! Anyone who believes these were legitimate sell orders with physical silver bars behind them has no concept of the COMEX corruption, naive to the extreme. However, the silver price failed to collapse into a waterfall decline. What followed was an outside reversal, when the GLOBEX session closed above 35.50 in impressive style.

My veteran gold trader contact pitched in with some harsh reality to assess the day. He said, "If you are up against more than US$75 billion of artillery on the hill, you will go nowhere but to your grave. It is at the choosing of the guy in charge of the fire power on the hill :-))" He pointed out in late November and early December that a well funded coalition from the East, based out of Russia, has an arsenal of over $50 billion ready to resist any and every gold cartel naked short ambush with physical orders awaiting. He cautioned that their reaction would be tempered and strong, but not always immediate, since their motive would be to kill the Anglos at their own corrupt game. They would use the lower paper prices to execute on massive physical purchases taken at the offered corrupt discount. They would use other pressure tactics that he was not at liberty to describe. A method revealed is often a weapon lost.

◄$$$ THE LEAP DAY GOLD AMBUSH WAS CLEARLY A BLOODY DAY FOR THE GOLD ANNALS. IT WAS VINTAGE CARTEL ACTIVITY. THE NAKED SHORT WAS EFFECTIVE IN PUSHING DOWN THE GOLD PRICE. NO CONCERN WAS GIVEN TO SELLING EFFICIENTLY TO GATHER IN MAXIMUM PROCEEDS. THE MOTIVE FOR THE AMBUSH WAS JOINED BY THE GOOD GUYS IN ORDER TO FACILITATE A GIGANTIC ORDER. MASSIVE DRAINAGE IS OCCURRING TO BE SURE, AS THE GOLD CARTEL SUFFERS BACKFIRE FROM THEIR OWN AMBUSH. $$$

Hugo Salinas Price, president of the Mexican Civic Assn for Silver, commented on the February 29th ambush of the gold price. It was a coordinated central bank operation that should not deter anyone from continuing to acquire the monetary metals. Their vile illicit deed covered up a gargantuan Dollar Swap Facility grant of funds to bail out big European banks on the identical day. Price said, "If I saw the price declining little by little, day after day, that would be a worrisome signal. That would mean the market is not eager to acquire more gold or silver, but that is not the case. When I see that kind of collapse in gold, I know it is not the natural market doing that. Nobody getting rid of their Gold & Silver is going to dispose of it in that manner. They are going to do it little by little. This seller was definitely not interested in losses. What they were interested in was suppressing the price." Obviously, but with a major backfire!

If the task is to liquidate a large position, there are many ways to go about it. No experienced trader would take a very large position and dump it into a thin market, if the purpose was to achieve some sort of reasonable economic benefit from selling that position. Unless they were under extreme duress. The key is having some other motive than profit. In the business, such a trade is called 'selling against yourself.' Usually one parses the positions slowly and carefully, selling some and buying other positions without roiling the markets. The complete trade is executed over several orders and perhaps several days, if done without ulterior motive. Any trader who is paid to obtain the best value for the seller would be fired if they simply dumped a large position in the market, driving the prices realized down almost 10% in less than an hour. The same fingerprints and modus operandi occurred at the same time in the silver market, as hundreds of millions of paper ounces of silver were just dumped in the market in less than an hour. The silver price broke down dramatically in parallel manner. Such unbridled selling triggers other selling from margin calls, as the complex web of trades and relationships drives other parties to liquidate their positions after triggering stop loss orders.

By all accounts, a single large seller of gold dumped on the market with a 10,000 contract sale. The gold price did a quick down-tick by $40 per ounce. The single order represented one million ounces of gold sold. But it was paper gold, not backed by metal, as in naked short sale, of the illegal variety. Roughly 200,000 gold contracts trade per day. Therefore it is very unusual to see such a large single trade. The explanation of sale at expiration does not apply in this case. The single seller sold 1.8 million ounces of gold on the day. Such is not a story of a party with deep pockets selling. It is a party that is never held accountable to profit and loss on futures contracts, permitted to conduct naked shorting, done with an ulterior motive. On the same day, a tremendous infusion of funny money hit the European banks after tapping the Dollar Swap Facility. Witness an example of hyper monetary inflation being dedicated to naked short exercises in a travesty. The primary justice served is from knowing that the gold cartel is being drained of its gold, since they reduced the price at which physical gold bullion is being sold. The buyers are well funded with $75 billion in a war chest. They reside in the East, as in Russia, China, and the Persian Gulf. If the paper factory merchants otherwise known as the central bankers wish to ambush the gold price on the paper side, they leave vulnerable drainage of their own gold from member bullion and mega banks within the cartel. That is precisely what is happening. Take solace in this factor, since the gold cartel is being weakened significantly by each ambush they conduct.

◄$$$ THE GOLD PRICE IS SETTING UP A POTENTIALLY POWERFUL REVERSAL PATTERN THAT POINTS TO OVER A $2000 GOLD PRICE. TO BE SURE, THE AMBUSH IN LATE FEBRUARY WAS EFFECTIVE. BUT IT CARVED OUT THE SECOND SHOULDER. WATCH FOR KEY SUPPORT HERE. THE ATTACK PRECEDED WHAT COMES NEXT IN A GREEK DEFAULT AND RESOLUTION. MY SUSPICION IS THAT A SIMULTANEOUS HIDDEN BANK RECAPITALIZATION WILL OCCUR THAT COVERS NOT ONLY THE GREEK GOVT DEBT BUT AN OVERLOAD OF DERIVATIVE EXPOSURE. THINK MULTIPLE $TRILLIONS IN PURE HYPER MONETARY INFLATION. $$$

◄$$$ THE SILVER PRICE PATTERN HAS NOT MATCHED GOLD'S PATTERN IN AT LEAST TWO YEARS, MAYBE MORE. THEY MATCH NICELY NOW LIKE IN AN OVERLAY. THE LATE FEBRUARY NAKED SHORT AMBUSH CARVED OUT A SIMILAR SECOND SHOULDER. THE SAME IMPORTANT REVERSAL PATTERN IS EVIDENT, BUT KEY SUPPORT MUST HOLD HERE. LIKE GOLD, THE SILVER PRICE IS STABILIZING. IN A REVERSAL, THE TARGET WOULD BE A $45 SILVER PRICE. $$$

◄$$$ THE GABELLI GOLD FUND MANAGER POINTS OUT THE GIGANTIC INFUSION OF FIAT PAPER TO FORTIFY BOTH THE EUROPEAN SOVEREIGN DEBT AND THEIR BANKING SYSTEM. BOTH ARE RUINED, PROPPED BY THE SAME TAINTED PAPER THAT CAUSED THE PROBLEM. TO COUNTER THEIR OWN DEBASEMENT OF CURRENCY, THE CENTRAL BANKS ATTACKED GOLD WITH A HUGE NAKED SHORT, THE LARGEST IN ALMOST A FULL YEAR. THE VERY DAY 400 BILLION EUROS WERE CREATED, THE GOLD AMBUSH TOOK PLACE TO SQUELCH THE REACTION BY THE FAIR MONEY METER, THE GOLD PRICE. SEE THE SAME ILLICIT TACTICS AT THE CRIME SCENE. $$$

The Gabelli Gold Fund manager Caesar Bryan told King World News that he expects the Southern periphery countries of Europe will experience major turbulenced for a long time, as longer-term problems remain. The nations in the South are uncompetitive to the North. Any solution requires either a major reflation in Germany, or major deflation in Southern Europe. This deflation is far more likely, which will occur on a bigger scale than the Great Depression.

Bryan shared many views, but the most germane related to the vast inflation underway and the effect on the Gold price. He said, "Let's just remind ourselves, taking the long approach, in 1971 when we came off the Gold Standard, the USDollar-Yen rate was 360. Now it is 80. Gold was $35 and now it is $1700 per ounce. We are in the money printing business in a major way here in the Western world and real assets will remain in a bull market. Things were looking extraordinarily grim towards the tail end of last year [in the European bond market]. They issued 400 billion Euros to the banks and then on the 29th of February, the day Gold fell sharply, another 533 billion Euros. So they have put over a trillion dollars into the banking system, which has clearly helped the short-run funding issues. Some of that has found its way into the bond markets in Italy and Spain, where we have had a big rally. Bear in mind how much money is being created. The Euro Central Bank has just added $1.3 trillion to their balance sheet in the last six months. We are optimistic there is quite a bit more to go in this Gold bull market. Most bull markets end in some blowoff fashion or mania. It is tough to think this would not happen in gold." Notice the motive for the illicit Gold ambush. The central banks injected $400 billion in phony money into the financial system on a single day, and offset the action with a powerful naked short of 22 million paper ounces of gold. It was an orchestrated event, but it will result in massive gold drained from the cartel inventory. See the King World News interview (CLICK HERE).

◄$$$ A CONSISTENT PERVASIVE CYCLE POINTS TO A JANUARY LOW, AND THE START OF A NEW CYCLE. DESPITE THE AMBUSH WHACKING TO THE GOLD PRICE, THE JANUARY LOW HAS HELD FIRM, NOT EVEN CLOSE TO BEING APPROACHED IN THE LAST COUPLE WEEKS. $$$

The McClellan Market Report summarized the cycle description. An excerpt has, "If successive peaks are higher, and prices make a higher high after the mid-cycle low, then the implication is more bullish, and the decline to the major cycle low should not be as severe. In the current cycle, we have already seen the mid-cycle low exceeded at the December 2011 bottom. So our interpretation is that the new decline that is just getting started should attempt to take out that December low of $1543, on a closing basis for the April gold contract. Whether Gold succeeds in taking out that low is in doubt, but it should make a valiant effort in doing so." My belief is that the December low of $1550 will continue to hold, even if the mid-cycle low did not during the fierce cleansing low registered from a previous powerful ambush late in February.

◄$$$ THE INTRINSIC VALUE OF GOLD IS ELUSIVE. A CURIOUS ANALYSIS CAME FROM CHRIS PUPLAVA WORTHY OF COMMENT. HIS BASIS IS CENTRAL BANK BALANCE SHEET ASSETS, EXCEPT THAT IS ISOLATED AND RUINED FROM THE MANY EMERGENCY BAILOUTS. REFER INSTEAD TO THE SINCLAIR METHOD. PUPLAVA POINTS TO A $1900 GOLD PRICE, BUT SINCLAIR OFFERS THREE APPROACHES THAT INDICATE MUCH HIGHER GOLD PRICE IN A FAIR VALUATION. $$$

Chris Puplava leads in his argument on a nearly $2000 gold price. He concluded, "Given the extremely high correlation between central bank balance sheets and the price of gold, it is possible to determine the implied price relative to current debt levels. In doing so, we calculate gold's central bank balance sheet value at around $1900 an ounce." He considers the various elements of the USFed balance sheet and its recent mid-term association with gold. Any regression analysis with a starting date of 2009 seems like a statistical weak anchor. Longer time lines are required, like 20 to 30 years to capture an effect, a trend, and changes.   

However, to claim the Gold price can be inferred from the USFed balance sheet ignores the other 99% of its circulation and obligations. It would make more sense down this particular alley if the USFed was combined with all other corrupt US big Wall Street banks and their balance sheets. The best such analysis is by Jim Sinclair. He analyzes the debt from the USGovt and future obligations to arrive at Gold valuations of $7000, $12,000 and $25,000 when the Gold must match the circulation, the debt, and the promises. That makes much more sense. Gold should be determined from USA Inc, its money in circulation, its internal debt, its future promises from the social net, not just the central bank for the broken system. One should also incorporate the $16 trillion plus $9 trillion in USFed grants from TARP and the follow-on, in addition to the Dollar Swap Facilities for $2 to $3 trillion more in the tally. So the Sinclair method must allow for higher expansion for the $7000 to $25,000 estimates after the recent grants and swap expansions are figured in. See the Financial Sense article by Chris Puplava (CLICK HERE).

◄$$$ A VETERAN LUMBER TRADER COMMENTED ON THE GOLD MARKET CORRUPTION. A UNIQUE PERSPECTIVE FROM A FELLOW WITH A TRAINED EYE AFTER EXPERIENCE GATHERED FROM A FAIR MARKET. $$$

Mr Lumberjack spent nearly 30 years in the lumber market. He used to hedge in a legitimate manner against actual forest output in a fair equitable market. He instinctively knows when a market feels free of interference. He claimed to be capable of readily identifying the anomalies in a corrupt market. He turned his eye to the incredibly scummy, horrendously corrupted gold market. One is hard pressed to identify additional flaws, as his analysis seems almost complete. Here are 20 anomalies that exist in gold that rarely, if ever occur in lumber:

1. Outside day upside reversals nearly always fail.

2. Technicals frequently run askew.

3. Daily chart patterns often look nearly identical.

4. Gold rallies stop at 1%, or more rarely at 2%.

5. Gold price plunges are always more violent than price rises.

6. Gold futures margin hikes always impact gold negatively.

7. Gold prices wane on the market open.

8. Gold prices wane on the London close.

9. Gold exceedingly trades counter-intuitively on bullish news.

10. Gold often trades in lockstep with the Dow, or other fiat paper products.

11. Gold primarily rises only after US markets are closed.

12. Days for First Notice Delivery and days opposite expiration are nearly always bearish for Gold, rather than short squeezes.

13. Gold futures and derivatives determine price discovery, NOT physical.

14. Mining stock prices wane, signaling imminent failure in the Gold price.

15. Most mining companies will not support or even talk bullish about their own product.

16. True data regarding leased, loaned, or verifiable audited Gold is nearly impossible to discern.

17. Those classified as Commercials are heavily and perennially short.

18. Those classified as Commercials sell in thin markets without regard to maximizing profit.

19. Gold analysts who are given the most media attention are actually adversaries in bullion banks, Wall Street companies, and derivative traders.

20. Gold analysts who have been dead wrong for 12 years still have credibility, and even more amazingly still have a job.

His analysis reads like a powerful indictment before the court. A review at the Lumberjack list helps an investor to grasp the magnitude of effort the cartel deploys to discourage gold buying. However, conversely, a review enables a realistic perspective of how the odds exceedingly favor a spectacular failure of the manipulation in force underway. Nothing can go counter to fair market forces for so long without producing a dire need for remedy, and a nasty counter-attack by Mother Nature. While the Gold price has risen from $260 to over $1900 over the course of ten years, the evidence suggests that heavy ammunition has already been spent by the criminal gold cartel during the long containment phase. What a unique perspective, that even a veteran oil trader could not provide!

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.