GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Birth of Eurasian Trade Zone
* Cyprus Tax & Systemic Fallout
* Intro Golden Nuggets
* USEconomy Critical Points
* Europe & Japan Critical Issues
* Criminality in Gold World
* Aggressive Action in Gold World
* Controlled Bound Gold Price


HAT TRICK LETTER
Issue #108
Jim Willie CB, 
“the Golden Jackass”
24 March 2013


Editor Note: The Jackass made an error in citing dates in the Money War Report this month. The Bretton Woods Accord was broken in 1971, not formed in that year. Due to an extreme flow of events, no depth in an Economics section will be offered since well covered in the past. As in previous reports, no respect will be given the COMEX and Wall Street harlots by displaying Gold or Silver charts. The prices are corrupted beyond belief, the true prices much higher. The real stories center on the global USDollar rejection and the wider Gold Trade finance in formative stages. On another note, having nothing to do with finance, check out some really extraordinary human stunts and feats. Just plain fun to view, usually bringing about a jaw dropping response of WOW. People are Awesome is the headine (CLICK HERE). No apologies for length of report. History is being made. Read what sections interest you. Best wishes during the massive storm.

"It would have been better to put the German flag at the Presidential Palace. Do not you understand that this decision will destroy your country? The Russians lost in a day up to 3.5 billion Euros. Trust towards Cyprus as a safe place for placing money will be reduced to zero." ~ Vladimir Putin (the man from Vlad is Mad as hell)

"The Great Depression has never been fully understood. The United States emerged due to the Gold Standard, which provided real traction with business investment. The next adaption of the Gold Standard will be shoved down the arrogant US throat, but not until after the USDollar is globally isolated, trapped like a diseased rat. Finally the USGovt will be forced to kill it since it infects the national house, after severe devaluation in order to survive as a nation, to obtain imported supplies." ~ the Jackass

"The recent $trillion doled to the European banks will buy them several weeks of time, nothing more. It is doubtful bankers realize that they must repeat another $trillion every several weeks. Their biggest problem is cavalier confidence. They will never anticipate that their vapid non-solutions will require an increasing batch of $trillions. Such is the nature of Ponzi schemes and added layers of debt. So they will pull back off the monetary pedal and create conditions for their own collapse." ~ the Jackass

"Exposure of banker criminality is fine, but prosecution is nowhere. Their corruption and fraud have been converted to cost of doing business, with USGovt and court blessing and assistance. Slowly the United States leadership crew is shaping the nation into a global pariah." ~ the Jackass (very chatty this month)

"A dear friend of mine called to suggest that the focus on the [London] Gold Fix is not on the Gold Fix, but a Cease & Desist order to the Gold market. Because of his position, I have to give this serious consideration especially due to the character having changed in the Gold market." ~ Jim Sinclair (in response to the new inquiry in London)

"All the lobsters are in the pot. If you print enough money, everything is subsidized, bonds, stocks, real estate. This is a big, big gamble, manipulating the most important price in all of free markets. The Fed is printing a lot of money. They are forcing people into markets. They are not great value on an absolute basis. I do not know when it is going to end, but my guess is, it is going to end very badly. When you have the biggest price in the world, namely interest rates, being manipulated, you see a mis-allocation of resources, with a a very binary outcome, both bad." ~ Stanley Druckenmiller (fostering either a mal-investment bust or full fledged debt monetization with runaway price inflation)

"The pretense that the US banking system is somehow healthy at a time when the central bank itself is swollen to the bursting point with toxic debt, is the folly of this age. Stupid and crazy as the idea is, it got a big boost yesterday with the announcement that 17 of America's 18 largest banks had passed a Stress Test conducted by the Federal Reserve." ~ Rick Ackerman

"At a time when much of the world is looking with a mix of envy and excitement at the recent boom in USA unconventional gas from shale rock, when countries from China to Poland to France to the UK are beginning to launch their own ventures into unconventional shale gas extraction, hoping it is the cure for their energy woes, the US shale boom is revealing itself to have been a gigantic hyped confidence bubble that is already beginning to deflate." ~ William Engdahl

## BIRTH OF EURASIAN TRADE ZONE

◄$$$ See the Special Report entitled "Energy Chessboard & Producer Fault Lines" for March. The report features Chinese leadership in Western Asia, an exposure of the Bakken fraud, and more. Exxon-Mobil reserves received a recent boost, but the statement that they replaced output by 115% is fictitious. The pattern is evident in other energy firms. China has extended a critical $500 million loan to Pakistan for the completion of the Iran-Pakistan gas pipeline. The deal goes against USGovt pressures, and affirms Chinese trade partnership with Iran along the entire Western Asia region. The USGovt-led sanctions against Iran are a total disaster, ineffective in halting their energy trade. The threat is the anti-USDollar trade payments. The oil exports from Iran are on the rise even as sanctions widen. Iran's net export revenue did fall in 2011 and 2012, but the trend has reversed.

The Bakken declines are slowly coming into the open. A tremendous growth in new wells is required to overcome the naturally high depletion rates. An odd confirmation might come from the Bakken investor Ambani (from Reliance Industries) leaving the board at Bank of America and investing in Venezuela. US Shale is a sham. The Bakken typical well decline rate is enormous. Bakken is a customer base for toxic fracking chemicals sold by Halliburton, enabled by relaxed environmental laws, given further assist by the Gulf of Mexico drilling bans after the BP platform disaster that Halliburton likely perpetrated. The Keystone Pipeline was rejected by the Obama Admin to benefit Warren Buffett and Burlington Northern. Crony capitalism prevails at a time when the commodity business on Wall Street is collapsing. Goldman Sachs is the big loser. Asian energy pacts are near to completion. A summit meeting in Moscow hints of big deals to be struck between Russia and China. Tremendous income stream, shared project costs, and industrial development are being negotiated (SEE NEXT STORY). The Afghan mining stakes are up for grabs. The Chinese and British will compete. Given the aggressive tactics from the West used for centuries, expect China to prevail, since Beijing rarely imposes bank and policy restrictions like the Anglos.

Gold miners have played games in reporting costs. Accounting reform will reveal 50% higher net final costs than previously stated. Their mismanagement is grotesque. The mining stocks are an adventure in amateur hour. Many smaller firms are not efficiently managed, often subject to severe slams from basic stock share dilution, even by Canaccord naked shorting when part of finance deals. But the big gaping hole is marketing, a dropped ball. The mining firms in general do not educate the potential customer base on the motives for buying Gold in general. They leave that duty to the official mints who opposite the syndicate bankers. Marketing and education are sorely missing and result in flagrant ongoing criminal behavior, whose hedge is Gold & Silver investment. The solution for mining firms is to attract ten times the customer base. The challenge goes far beyond marketing. The mission would be to instruct the public on corruption of the Gold market, corruption of the USDollar market within the FOREX, and corruption of the USTreasury Bond market with derivative supports. The public does not understand Gold, cannot come to grips with the concept of wealth protection, and cannot usually quote the price of gold. The public does not know the primary cylinders of the Gold bull market, debased money and negative real interest rates.

◄$$$ SOME MAJOR ENERGY PACTS ARE BEING FORGED THIS WEEKEND, SUFFICIENT TO CHANGE THE FACE OF THE GEOPOLITICAL STRUCTURES. THE EURASIAN TRADE ZONE WILL HAVE AN ENERGY FOUNDATION EXTENDING FROM THE RUSSIAN & CHINESE CORRIDOR. THE RECENT ENERGY PACT BETWEEN THE TWO NATIONS WILL BE BUILT LARGELY WITH USTBONDS THAT PUSH OUT BRITISH PETROLEUM, AS THE NEW GIANT ROSNEFT TAKES A KEY ROLE. RUSSIA WILL ASSURE THAT CYPRUS DOES NOT FALL INTO THE WRONG HANDS, SINCE GAZPROMBANK HAS MAJOR ACCOUNTS THERE. EXTREMELY IMPORTANT DEVELOPMENTS!!

WITNESS THE BIRTH OF EURASIA, WITH NO BRITISH OR AMERICAN MEMBERSHIP. THE FIREWALL IS BEING BUILT THAT EXCLUDES THE UNITED STATES, THUS PUSHING IT TOWARD A THIRD WORLD SLIDE. THE ENERGY SUMMIT AND ITS PACTS ECLIPSE CYPRUS IN IMPORTANCE, BUT TOGETHER THEY SIGNAL THE EXCLUSION OF ANGLO-AMERICAN-EURO BANKERS FROM INFLUENCE. THE CYPRUS EVENTS PULL THE PLUG ON THE EUROPEAN BANKS, AND THUS THE LONDON BANKS. $$$

It is early, and details are sketchy but extremely broad. Implications are staggering. Russian leader Vladimir Putin will use his energy asset wealth to shape a new world. He will use the BRICS nations as the centerpiece of the Eurasian Trade Zone which is coming into view. It will be oriented away from the West, which bears responsibility for the financial meltdowns and ruin. The Russian oil & gas pipelines will be directed to serve China, Japan, South Korea, and more in Asia. Putin is drawing the traditional US allies within his sphere of influence. See the Russia Behind the Headlines article (CLICK HERE). The Russia-China summit is off to a spectacular start this past weekend. Notice the nil coverage of the geopolitically important meeting and energy deals in the Western media. See the South China Morning Post article (CLICK HERE) and the Rediff perspective from India (CLICK HERE) on personality comparisons.

A very important buyout took place by Rosneft. The $55 billion deal to take over BP-TBK will make Rosneft the largest oil producer globally ahead of Exxon-Mobil. The Russians are coming of age, using their energy wealth of domestic origin, unlike the American extended appendage strategy. See the UK Guardian article (CLICK HERE) and the EuroNews article (CLICK HERE). The distracted Western press has concentrated on Cyprus, which is important to be sure. The Cyprus developments point out the collapse of the Western banks, but the Sino-Russian energy deal points out the birth of the new Eurasian Trade Zone which confirms the sunset of the West. Its financial system is toxic from the USDollar structural wiring, its llusion of democracy unmasked, the vicious treatment of citizens coming into view.

The details of the Rosneft deal give emphasis to the faded Anglo Empire and the toxic USTBond coming home to die within the Anglo-American crater cavity. British Petroleum, a key player in the Yeltsin Gambit to control Russia by Western Oil Barons, will suffer from the terms of the deal. BP will hold a 19.75% stake in Rosneft, which makes clear that the UK is being forced to embrace both China and Russia as dutiful squires. BP will receive $16.7 billion in cash, $8bn going to share buyback and the rest will probably to go to pay US claims. The absent dividends or recycling into investments indicates clearly that BP insiders will be selling out. Recall BP was the patsy bitch created by the Halliburton sabotage in the Gulf of Mexico, hence forced into the hands of Rosneft, directly controlled by the Kremlin, a tough loss for the American mafiosi. The billboard messages are very negative for BP, the United Kingdom, and the United States in the reshaping geopolitical chessboard. Putin is a master chess player. See the Financial Times article (CLICK HERE). Additional loan financing brings the Rosneft total to $40 billion. See the Bloomberg article (CLICK HERE) for details on the finance terms.

Further details indicate the new pattern emerging in financed deals, vengeance doled out to the Anglo-American bankers. The currency will tend to be USTreasury Bonds held in China, shoved back into the already impaired London tunnels, where toxic bonds will soak, drip, and rot where Gold bullion has previously been discharged. One of the Rosneft holding companies is located in Cyprus. Some of the billionaires cashing out could have large accounts there. See the Reuters article (CLICK HERE) and RT News article (CLICK HERE). As part of finance for the acquisition, $6 billion came from GazpromBank, which operates out of Cyprus. Expect some high ranking people to find themselves in jail or in the morgue very soon, since big toes were stepped on. Putin and China turned the tables on the Western banks and their energy firm proxies. The oil deal could involve up to $30 billion in loans for Rosneft, which needs the money to cover the purchase of British-Russian TNK-BP for $55 billion. China will give $30bn in fiat USD/USTBonds to Western banks and in return receive ample crude oil supply! Regard the transaction as a CHECKMATE of the USDollar generally, of the Wall Street and London bankers specifically, and of the Anglo-American energy giants indirectly. The Chinese will dump some USTBonds held in reserve in order to finance the new Eurasian Trade Zone foundation.

The new giant Rosneft has pledged to gradually double oil deliveries to China National Petroleum Corp (Sinopec). They also clinched a deal to borrow $2 billion from China for 25 years. Consider it a buffer on good terms to ensure that the Western banks cannot squeeze Rosneft, which will be exposed during the digestion and buildout. See the RT News article (CLICK HERE), the Reuters UK article (CLICK HERE) and the Financial Times article (CLICK HERE).

As footnote, hardly of minor consequence, a 30-year deal with Gazprom will be signed in June to supply natural gas to China. The delivery will begin in 2018. The Chinese pipelines and city stations will have the five years to develop the requisite complex infrastructure. In the process, China will surpass Germany as a client for Russian natural gas. The large pieces are coming together to create the Eurasian Trade Zone. Not only is the US & UK tagteam led by criminal bankers excluded, but the London bankers will be forced to digest a large plate of toxic USTBonds as the deadly hoisted petard, some justice served. See the Reuters article (CLICK HERE). In 2008, the leading Russian crude oil producer secured a $25 billion loan tied to oil delivery. It was useful to finance construction of the East Siberia-Pacific Ocean pipeline, which currently supplies China and other Asian customers with crude oil. Another gas pipeline infrastructure deal will come similar to the oil pipeline deal. Again loans will be taken from Western banks initially and later surplus contaminated USTBonds returned to them via China, along the same pattern of deadly petard backfire of toxic paper. See the Bloomberg article (CLICK HERE) and Channel News Asia article (CLICK HERE).

Lastly, if the BRICS Development Bank has a successful launch and early stage of progress, big changes to global banking balance will come. Any rooted traction will offer serious rival to the compromised Intl Monetary Fund and the quickly turned obsolescent World Bank. Expect the Chinese Yuan to become the means of trade initially for the BRICS nations of Brazil, Russia, India, China, and South Africa. Later, look for the arrival of the Gold Trade Notes to settle transactions. By the way, the African Union and Egypt have also been invited. See the Institute for Defence Studies article (CLICK HERE).

## CYPRUS TAX & SYSTEMIC FALLOUT

The entire Cyprus story is full of intrigue, failure, contagion, hidden elements, global conflicts, and future hints. This section will raise hypotheses as much as lay out conclusions. The situation is dangerous, fluid, and critical. The events drive Cyprus into Russian arms in quite the chess game. Europe has very few ranking pieces, a certain loser in the game. The Iceland solution is coming forward slowly, with debt default certain to cause a contagion among the big Western banks. The EU and IMF made a grave error. They have set into motion events that cannot any longer be controlled. The event is a flash point. The tipping events will follow. The Jackass got it right that the extreme disruption could originate from a small corner of Europe, and radiate with contagion across the continent. Credit goes to The Voice, who said so in those exact terms to his ornery disciple at least one month ago. He is prescient.

RICHES TO RAGS:

Cyprus went from prosperous to busted as a nation in five years. Joining the European Union was a deadly mistake. They changed their bank business practices. They joined a ruinous alliance, while maintaining ties to Russia in hidden manner. The island known for copper, natural gas, and offshore banking was not affected by the 2008 crisis. They were fiscally responsible and a prosperous country back then. Their fortunes converted to bankruptcy after following the EU lead, as their banks changed from responsible to reckless, no longer requiring 30% deposits on loans generally. They purchased huge amounts of Greek bonds and loaned out more money than their deposits, the deadly fractional practice. See the Sherrie article (CLICK HERE). For a general outline of events toward the crisis climax, see the Reuters article (CLICK HERE). See a Hinde Capital review of the entire table steeped in irony (CLICK HERE). Also, review the series of options and consequences laid out by Zero Hedge (CLICK HERE).

STUPID PLAN, MISREPRESENTED EXPOSURE:

The EU Commission for Cyprus was to lend EUR 10 billion, but to impose a 7% tax on small accounts, and a hefty 10% tax levy on large bank accounts, including those owned by Russian ex-pats. The plan has been scrapped. It is unclear what new model might be found. My source indicates the Russian accounts are at least 10 times larger, since the Russian banking system uses Cyprus as its front office for bank accounts of gigantic size, including elements of their giant energy firms. The Russians use the island banks as the window to the entire Western banking system. They use Cyprus as intermediary function. By the end of the week, the Cyprus Parliament rejected the entire tax plan, as abstention votes were well aligned from the ruling party. Chaos has resulted, and the banks remained closed. A loud NO to the EU Troika was given in response to the imposed blackmail attempt. Other mafia money is located in Cyprus banks, like the Italian mafia. Vendettas could come very soon. The IMF head Lagarde had her home in Paris ransacked. She might slip in the shower, or fall down the stairs, or fall off the balcony. So might others.

Many Cypriots blame German political leaders for the crippling demands imposed in return for the bailout. Outside the parliament in Nicosia, thousands of protesters have lined the streets for days on end. The Cypriot finance minister Michael Sarris rushed to Moscow last week. The proposal presented in talks is to give Russia shares in Cypriot banks and natural gas reserves in return for a Russian bailout.

One might regard the Cyprus tax plan as a controlled demolition plan with the fault line in Cyprus, ordered by the US bankers in order to make the US look more safe and secure. The land of unexpected consequences and unintended outcomes with full risk of lost control has been entered. Perhaps the Boyz are testing the system with Cyprus as Live Stress Test, since they realize the system is on the verge of collapse, held together by strained printing presses, phony accounting, and arrogance. They misjudge their ability to contain the outcome, ripple effects, contagion, and more. The have a very poor comprehension of the complexity and global reach for the entire interwoven global financial systems. The misjudge dangerous players with the Russian mafiya, the Russian oligarchs, and the Russian old KGB, in addition to the Italian mafia. They vastly under-estimate the long reach of Putin and friends. After 1985, the oligarchs roamed Russia while the KGB was transformed into a private business. The primary place for exported Russian funds was Cyprus. The European wrecking ball leaders decided to pursue the so-called Russian Black Money with illicit grabs, but those accounts are indirectly under control by the Russian Govt which is led by the ex-KGB head Vladimir Putin. This is the biggest mistake the IMF could possibly have ever made. The syndicate fails to perceive massive unintended consequences that turn into monsters, now drawn near, as events could turn uncontrollable. The victim of this Cyprus haircutting of depositors will ultimately be the USFed, the USDollar, the USTreasury Bond, JPMorgan, Goldman Sachs, while the winner will be GOLD.

ACCOUNTS FROZEN FOR SEIZURE:

The Cyprus bank accounts will remain frozen, caught as victims in the crossfire. What was originally a two-day suspension has become a two-week shutdown, with a very unclear report on account loss. See the Silver Doctors article (CLICK HERE). The Cyprus Govt had submitted a bill to parliament, giving the finance minister or central bank governor the right to impose capital controls on banks. They took emergency authority for order, thus bringing about an atmosphere of debt slavery to their citizens. See the Reuters article (CLICK HERE). A British national living in Cyprus is a Bix Weir subscriber. He reports that sentiment is depressing, as numerous friends and acquaintances see no scenario for recovery of money in their bank accounts.

The account holders might soon find themselves wishing for Russian stewardship, instead of European bank lords. Russia would help Cyprus if it joined Eurasian economic community. Cyprus considered nationalizing pension funds and ordered banks to stay shut till next week to avert financial chaos, after it rejected the terms of a European Union bailout and turned to Russia for aid. Among the other options, nationalizing pension funds of semi-public companies would yield up to EUR 3 billion. Issuing bonds linked to future natural gas revenue is problematic because pumping such gas revenue is years away.

RUSSIAN REACTION & CONSEQUENCE:

The Russian prime minister Dmitry Medvedev gave harsh criticism to the European Commission. He is angry about warning not given. In reaction, he stated plans for Russia to dump EuroBonds. The implication might be toward more Gold purchases. Speaking alongside Barroso at a conference in Moscow, the steady resilient Mededev called the EU handling of the Cyprus banking system surprising, absurd, preposterous. He left out desperate and suicidal. Earlier the same day, Medvedev told the Russian newswire Interfax that he is thinking of reducing the Russian holdings of Euro-denominated currency reserves. See the EU Observer article (CLICK HERE). Much more is occurring under the surface, impossible to properly gauge. The Russians are mobilizing, and it involved old wealth from the KGB, not just old oligarch funds.

Jim Sinclair believes Russia will accelerate its Gold purchases, and potentially work to break the Western intervention role within the Gold market. He estimates that far more than $130 billion is the true total of Russian deposits in Cyprus banks. The IMF has been thwarted when trying to steal the Russian elite (ex-KGB official) money, a very grave error of judgment. The Central Bank of Cyprus is routinely kept unaware of the Russian deposit volume, maintained as secret at the behest of the Russians. Sinclair wrote, "Any attempt to shift the weight of bank solvency to depositors has failed. This was the grand experiment which was the defining event where the financial shift from the onus of insolvency was to be placed on the shoulders of depositors rather than on Quantitative Easing. Part of the result of all of this is the Russian elite will now move heavily out of currencies and into Gold. Going forward, the Russian sovereign entity will now support the price of gold and it will be for the benefit of the Russian oligarchy. This will also serve to bring Russian and Chinese financial interests closer together, and in time, will finally result in freeing the gold market from Western price manipulation and influence. This IMF catastrophe in Cyprus is literally a landmark event in history, and the singlemost important event in the entire history of the Gold market. I full expect that the key point I have now made, that this concerns much more money than has been reported, will now be cloned in the mainstream media as well." Sinclair believes far more money is at stake than currently reported, with important fallout and backlash coming. See the King World News interview (CLICK HERE).

LURE TO RUSSIAN LAIR:

Advisor Sergei Glazyev called on Cyprus to abandon the EuroZone and to join the Eurasion Economic Community (called EurAsEC) with all the geostrategic benefits. Being in the community would enable Russian financial assistance toward solving problems created by being in the EU. Other nations have received aid like Tajikistan, Kyrgyzstan, and Belarus in recent months. The case is made difficult by Cyprus residing outside its jurisdiction. See the Hellas Frappe article (CLICK HERE). Russian investments in the island's banks and energy resources can be leveraged to reduce the Cyprus debt burden, paved by an extension of an existing EUR 2.5 billion Russian loan. Any attempt by the Western bankers to try to take down Europe to help save the United States will backfire. Russia is waiting in the wings to take strategic advantage of the situation.  Russian money for Cyprus gas, control of a bank window to the West, access to copper mines, and takeover of a naval port to be abandoned by Germany, these chips lie in the balance. The nightmare in Cyprus has prompted Russian energy czars to hasten development of the Pacific coast energy projects by means of a trade zone. Details on bank accounts and taxes are being laid out. See the RT News article (CLICK HERE).

RUSSIAN PROPOSAL:

The Gazprom proposal has been given to Cyprus, designed to relieve financial pressure on the island nation. A high ranking delegation from the energy colossus has the full support of Russian President Putin. The Greek Military news site was the first source to report that the energy giant submitted a proposal to the Cyprus leadership to buy out a couple of banks in the framework of avoiding the confiscation of deposits. In return the Russians want Cyprus officials to grant a certain number of lots in their expansive EEZ off-shore gas project, thus permitting Gazprom to construct a natural gas terminal in the area of Mari. The project has been on the table from Russia with love for more than 18 months now. The Anastasiadis Admin apparently offered shares from its already damaged banks, a lame offer. Talks are ongoing, but at an impasse of sorts.

A very hidden card on the table. Russia wants the German naval port. The Cyprus newspapers report that Germany could be removed with a 3-month notice of their Naval port in Cyprus. Not only does Russia want the Cyprus gas, but a strategic naval port for the Mediterrean Sea. It would serve well in offset to the important naval port of Tartus in Syria. See the Sherrie article (CLICK HERE).

MOTIVE AS HIDDEN ATTACK ON RUSSIA:

A nasty event took place a couple months ago, with little press attention. Any spotlight would have given unwanted emphasis and public awareness to heroin as business in Afghanistan, where the US brass warlords rule. The Russians seized a big heroin shipment on Afghan land, likely destined for Russian cities and towns. The story was presented as a loss to the Taliban lords, not so! It was a loss to the US Imperial Narco Barons. See the Rian articles (CLICK HERE & HERE). Conclude a motive for retaliation against Russia. Furthermore, the Cyprus bank tax could be response to a Moscow decision to forbid new foreign bank offices inside Russia. The Kremlin attempts to build firewalls against the USFed monetary inflation destruction. Perhaps contrary to popular opinion, the IMF plan might have been calculated and well thought out. When business is done with a Russian company, the transaction is always done through a bank in Cyprus, a fact not lost on the IMFund, but in no way visible to Western observers.

Given the gargantuan aid by the USFed via the Dollar Swap Facility through the Euro Central Bank window, the size of the Cyprus haggle is small at only EUR 15 billion. Hidden motive could be at work. The Western challenge of Russian assets in Cypress indicates that a major division is taking place among the elite chambers at the top. Another plausible explanation for the fiasco is a deliberate maneuver to crash the EuroZone, either by the US bankers in distraction or by the London bankers in a raid.

The counter-attack by Putin and Russia might be with Gold. The firm Jackass belief is that Putin is going to send a red-hot poker up the EU & London hind parts with actions overt and hidden in the Gold market. Gold is the great vulnerability, not banks. Perhaps he will orchestrate a Stress Test of a different kind like with an Eastern rush sale of USTBonds held in reserves, in order to see if the USFed can handle a cool $trillion in a few weeks. The Chinese have already shown their cards, using USTBonds as currency in energy deals with Russia, after years of using USTBonds in mineral deals in Africa. In all likelihood the gates are breaking wide open.

COPYCAT IN SPAIN AND NEW ZEALAND:

Spain has begun to change constitutional rules in order to enable a so-called moderate levy on deposits. Under previous Spanish law any such tax was expressly forbidden. The economy minister Luis De Guindos proclaimed in the Senate last week that bank deposits under EUR 100,000 are sacred, but by implication larger accounts are subject to tax. The political leaders are working an angle. They claim the bank account levy will be not much higher than 0% (hilarious) but are mainly aimed at regions in Spain that have made no effort to collect taxes. The amount will react to the cancellation of regional taxes, the exact amount the exact not yet determined. See the Zero Hedge article with reference to an El Pais excerpt (CLICK HERE).

The New Zealand Govt is hammering out a plan to levy a tax on overnight bank deposits. They are using Cyprus as their model, which will ensure that banks do not go bust. The small depositors loss in savings would fund big bank bailouts, the Green Party claims. The formal Open Bank Resolution (OBR) is the pet project by Finance Minister Bill English. Under the plan, if a bank fails, all depositors will have their savings reduced overnight to fund the bank bail out. Green Party co-leader Russel Norman said, "The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank." See the NZ Scoop article (CLICK HERE). Witness the basis for bank runs across the Western world, starting in Europe, moving to Great Britain and the United States, even Canada.

CYPRUS TO LEAVE THE COMMON EURO:

A German official admitted that Cyprus might quit the common Euro membership. He went further to stress a need to ring-fence other countries from contagion. A European Central Bank official warned that depositors might begin to pull money out of the Cyprus banks right away. The bigger danger is that bank runs might occur in Spain, France, and Italy, with Portugal, Belgium, and Ireland following suit. An economic recession is assured to remain in powerful terms across the entire EuroZone. The neighbor Greece suffered some fallout, as their bonds are in sell mode again. Not surprising.

BANK RUNS TO PREVENT BANK THEFTS:

A broad Cyprus bank run will catch fire in contagion with a bank run phenomenon across Southern Europe. It will be good for the Gold price, bad for the financial markets governed by paper valuations, and cause great disruptions. The people will react by removing their saving deposits from the potential risk for sanctioned government bank thefts in the form of illicit tax levies. Confidence in the European banks is on the verge of being shattered. People are angry at the prospect of having their savings taxed in order to save corrupt broken insolvent banks. The end to subsidies is near. The politicians and master bankers are giving the public population a real lesson on the prudence of keeping money out of the financial system, like in Gold. The entire house of cards is soon to fall, with exposed fraud and deceit. The dynamics of event driven scenarios are underway. Attempts will come to tax all funds that are not mobile, like sitting ducks. At risk is even property. The tax on bank accounts will do more to cause civil disorder than any other governmental action, except the advent of fast rising food and gasoline prices.

The Cypress bailout means bank thefts everywhere across the Western world. Cyprus is a beta test. The banksters are testing the viability of bank robbery in broad daylight. Instead of doing a standard not so large bailout of Cyprus, the IMF and the EU decided to test the concept of a wealth tax. The Cyprus Govt will eventually leave the EuroZone, the other option under ultimatim. The maneuver will set a very ominous precedent for the future, with powerful ripple effects far beyond Cyprus. After the banksters attempt to steal money from bank accounts in Cyprus, they will start doing it everywhere. The depositors, ordinary people of Italy, Spain, France, and Portugal should be very worried. The pattern of a one-time tax could easily turn into a series of taxes, then bank shutdown and total account loss. The progression could occur as the US and British and Western European banking system endures a gradual collapse. See the Economics Collapse article by Michael Snyder (CLICK HERE).

THE VOICE COMMENTS:

The Voice has been a cherished reliable generous source, a gold trader with German roots and upbringing, having clients and contacts across the entire world. He has been a guiding light for almost five years, steering the way on important turns, in ways that have made the Jackass look good. He sought me out in April 2008, claiming that only a handful of North American analysts had any semblance of a correct clue on current events and the pathogenesis toward a systemic collapse, the Jackass one among them. My gratitude is constant. He shared the following.

"Russia owns Cyprus 100%. It is their aircraft carrier in the Mediterranean Sea. You mess with the Russians, and they do not mess with you back. They kill you. The Russians and Chinese can paralyze the United States at a moment's notice. However, the Russians and Chinese are not naive and stupid. No one has an axe to grind with the American people, but the vile inner Beltway clowns are a different story. The wheels are coming off the wagon bigtime. The funds outflow from Greece started already by the second half of last year. The Cyprus episode show is nothing but a smokescreen. The monies that have been coming into Dubai, Singapore, and Hong Kong out of Cyprus are mind bending. The most recent Eric Sprott interview on King's website was a lot more powerful. All these guys, Turk, Sinclair, Sprott, Kirby, Willie, are all spot on since they know the system's inner workings. The bank run in Southern Europe is happening right now. People are not stupid. The Cyprus Parliament does not have the votes to pass the bank account confiscation, even though accounts have been hit by 10%. Cyprus will go bankrupt. They might apply to become a Russian Federation Republic. The Cyprus issue was decided years ago. It is only being implemented now. The Cyprus incident is a flash point but not a tipping point. That has yet to be seen, but it will probably occur in Southern Europe."

ICELAND TYPE OF SOLUTION:

As the Cyprus crisis unfolds, and options are examined, the solution is highly likely to center upon the Iceland solution, a daring path that defies the big bank power centers. The Iceland formula is to default on big bank loans from the European power centers, to exit the Euro currency, to devalue the new currency, to rebuild, and to form a solid banking system with a more secure core. The Cypriot banking system has been eviscerated, now gutted by insolvency, gone bust. Leaving the common Euro union will cause a temporary storm that features economic recession, an end to off-shore finance, and some social disorder. They will soon revert to the Cyprus Pound as currency, and repeat the path taken by Iceland. A quick look shows the other island nation in the North Atlantic is thriving again, ICELAND, economic growth restored, banks revived, and threats from the British bank pillboxes empty. If on course with a new currency (or reverted to old currency), the Cyprus Economy would be free from the restrictions placed by the Euro Commission and the Euro Central Bank. Simply stated, doing an Iceland Dance makes sense for Cyprus, Spain, Italy, Portugal, and probably a few other European nations. See the Forbes article (CLICK HERE).

The firm Jackass belief is that Cyprus will be the unfortunate trigger in providing Southern Europe a showcase of how following the Iceland recovery path through debt default will succeed. The European elite are scared witless that the PIIGS will go Iceland on them. The other island nation of Ireland seriously regrets not following the Iceland path, once considered. The politicians and bankers were threatened by the London banks, probably the British MI6 as well. As a result, my Irish clients tell of Ireland as totally ruined.

## INTRO GOLDEN NUGGETS

◄$$$ THE IRAQ WAR WAS A MONUMENT TO FAILURE, WASTE, FRAUD, AGGRESSION, AND MISALLOCATION, RESULTING IN TRAUMA AND WIDESPREAD DESTRUCTION OF THE COUNTRY. THE ULTIMATE COST IS AROUND $6 TRILLION. AT LEAST HALF OF THE USGOVT $17 TRILLION IN DEBT IS FROM WAR OVER THE DECADES, WITH THE DOMINANT EXPENSE RUINOUS AND LITTLE BENEFIT. $$$

The Iraq War has many costs. At least 134,000 Iraqi civilians died, according to the Costs of War Project by the Watson Institute for Intl Studies at Brown University. The civilian death count is likely several times higher, perhaps well over a million, most coming in the first couple years of the war in 2003 and 2004. The high number dismisses any claim of nation building, and confirms exploit with abuse. The infrastructure was devastated, only to be rebuilt supposedly. To be sure, much was rebuilt, but the fraud and missing funds from the Reconstruction Fund rise above $10 billion, considered by GW Bush to be acceptable. The report concluded the United States gained little from the war while Iraq was traumatized by it. The war also energized radical Islamist militants in the region, conveniently labeled as insurgent terrorists. The war had other harsh social impacts. Lastly, the $212 billion in reconstruction costs was largely a failure of efforts, with most of that money spent on security or lost to waste and contract fraud, or outright theft, according to the report. The disaster was typical of war aggression with ulterior motive. See the Reuters article (CLICK HERE).

Always bear in mind that war as business is a nazi trait, whose confirmation comes with the genocide practiced. The heavy emphasis on security equipment outlays, markups by service contractors, and missing funds attest to the other motives for war far from any nation building role. Attacks on civilians, target practice, torture, condoned criminal activity on Halliburton property, these are the telltale signs of the nazi element filtering down from the top. As footnote, consider the thousands of soldiers with missing arms and legs, having problems from post-traumatic stress disorder, or addicted to pain medication, or with lost wives and homes foreclosed by JPMorgan. The Iraq War was a great disaster for cost and investment, a tremendous success for the nazi gangsters who profited, like from a business project. To require a salute at sports events is a travesty. The Jackass honors military service and sacrifice, unless it is to promote fascism and to build a heroin empire over a pile of dead soldiers who are largely unaware of what they sacrifice for and the vile nature of the masters they serve. Let alone that in recent months, more USmilitary soldiers die by their own hand (suicide) than in actual combat. They are exhausted and abused.

◄$$$ THE C.I.A. CONFISCATION HAS BEGUN AT BANK SAFETY DEPOSIT BOXES. THE REPORTED SEIZURES ARE NOT YET WIDESPREAD, BUT EXPECT THEM TO BE SO. THE PATRIOT ACT LEGALLY PERMITS THE THEFTS, WHICH WILL PROVIDE AN ADDITIONAL SUPPLY OF GOLD FOR THE WALL STREET BANKER ROBBER BARONS. $$$

A Steve Quayle subscriber has reported that the two dozen gold Krugerrands he kept stored in his safety deposit box have been taken in a bold swipe. The Fifth Third Bank is located in Cincinnati, the site of the sanctioned theft. After the confiscation, the bank manager sheepishly informed the man that a CIA agent was the culprit who cleaned out his supply of gold coins, but all the stored USDollar bills were left untouched in the safety box. Recall broad warnings concerning the rules delineated within the Patriot Act, which forbids usage of bank safety boxes to hold coins, jewelry, or any metal items of wealth. Only documents, contracts, papers, photographs, and other non-metallic objects like a treasured scarf are permitted. They have finally struck, thefts sponsored by the USGovt and its security agency overseers. Expect the location of thefts to grow much wider, with more prevalent reports. See the Silver Doctors article (CLICK HERE).

◄$$$ THE NARCOTICS MONEY LAUNDERING ISSUE IS ON THE TABLE WITH MORE OPEN DISCUSSION. ALTHOUGH THE FOCUS IS WITH BRITISH H.S.B.C. BANK ON RECENT VIOLATIONS, THE RELAXED TREATMENT REVEALS HOW THE USGOVT IS COMPLICITOUS, FROM SIDE LIGHTS. THE ANGLO-AMERICAN BANKS ARE VERY DEPENDENT ON ILLEGAL ACTIVITY TO STAY LIQUID. $$$

Newly elected Senator Elizabeth Warren entered into a heated debate with David Cohen of the USDept Treasury with duties on terrorism and financial intelligence. Warren pushed the question repeatedly on how much drug-laundered money it takes before banking regulators work toward shutting down a bank. Nobody answered the question, even though repeated. HSBC was charged with laundering $881 million, but faced only a fine. The illegal activity has been converted to a cost of doing business, in this case not so small at $1 billion in fines. The answer is simple. Hand slaps and fines are the only consequence, no felony prosecution, no court spotlights, no jail time, minimal attention. The reason is open to further debate, but it seems clear that the reason has to do with the USGovt involved in hundreds of $billions in narco money laundering. So hard line public statements are replete with hypocrisy, and treatment of violations with kid gloves. The US and London banks would have shut down long ago if not for the illegal money flow. The authorities will not shut down these banks for illegal activity. The activity prevents them from being shut down, in total reverse. See the YouTube video clip (CLICK HERE) and the Daily Bail article (CLICK HERE). For her vigor, Warren will not serve in any position of high authority.

◄$$$ GOLD HAS OUTPERFORMED THE PAPER STREWN DOW JONES INDUSTRIAL STOCK INDEX BY OVER 100% SINCE 2007. IT IS WATERLOGGED BY USFED LIQUIDITY. THE D.J.I.A. INDEX HAS RETAKEN NEW HIGHS SET PREVIOUSLY IN 2007. SOUNDS GOOD EXCEPT IN THE PERIOD OVER FIVE YEARS, THE GOLD PRICE HAS RISEN BY 115%. THE PROPAGANDA BLARES, BUT THE DATA SCREAMS GOLD AS THE WINNER. GOLD WILL CONTINUE TO WIN. $$$

On the 5th of March 2013, the DJIA closed at 14,254 to reclaim the record high, and to break its prior record high closing level of 14,164 in October 2007. The data is in nominal terms before inflation adjustment. Based on the Bureau of Labor Statistics, the CPI-U consumer inflation has risen about 11.0% since October 2007. Any conservative adjustment in real terms wipes out more than 1400 points in the current DJIA level, versus October 2007. The inflation adjusted results for the supposed DJIA record high look much worse using Shadow Statistics alternate CPI measures, which would dictate lopping off another 1400-2000 points to reveal in real terms the Dow stock index actually lost a significant amount of value.

So the DJIA index has made a recovery to the old October 2007 high, revealing almost six flat comatose years of no gains. If an investor who bought physical gold in October 2007, marked by the London afternoon fix at $736 per ounce at the time, the investor would have been ahead by 114.6% (119.0% for silver) as of the 5th of March 2013. That is the story, not the Dow Jones stock index at record highs again after over six lost years.

The folly of standard investment in the US financial markets will go down in history as a grand sinkhole for the small investors. The hedge funds meanwhile are set up for an important hit. They are massively long USTreasury Bonds and short Gold. They expect the same outcome as after Lehman, which is not going to happen. The bonds cannot conceivably gain much since yields are near zero. They are buying the asset bubble, just like with housing the subprime mortgage bonds. They are buying the conventional supposed low-risk story. There is never such a low risk lying on the table. The public is once more the supplier of paper flow, new paper, incoming funds, the source of profit for Wall Street. See the Bloomberg article (CLICK HERE).

◄$$$ MEXICO UNEXPECTEDLY CUT KEY RATE FOR FIRST TIME SINCE 2009. THEY PAINTED THE STORY AS FROM STABLE INFLATION, WHICH MIGHT HAVE SOME BASIS IN FACT. MEXICO HAS NOT BEEN PLAYING THE MONETIZATION GAME WITH AMPLE PRINTED MONEY. $$$

The Mexican central bank made a surprise rate cut to its benchmark interest rate for the first time since 2009, announcing that price inflation remained within the target range while growth slows. Banco de Mexico reduced the overnight lending rate by 50 basis points to a record low 4%. The nation serves as the second largest economy in Latin America. It was a holdout, the only nation in the Group of 20 to leave borrowing costs unchanged. They also refrained from buying bonds to ease monetary conditions since July 2009. That could be why Mexican price inflation is not out of control like in the leading Western industrial nations. The G20 nations will be a shining example of economic recovery rebound and regrowth.

◄$$$ EXPECT THE SPROTT FUND TO HAVE A FUTURE ROLE IN BANKING, TIED TO ASIA AND CHINA PERHAPS. IN THE NEXT CHAPTER, NEW BANKS WILL SPRING UP FROM ATTEMPTS TO CAPITALIZE THEIR GOLD CORE, WHICH IS TRUE WEALTH. THE CURRENT BANKING SYSTEM LACKS A STABLE LEGITIMATE CORE, ITS PAPER NUCLEUS TURNED TOXIC. THE BIG GOLD INVESTORS WILL MORPH TO BANKERS, WITH A SELECT CLIENT BASE INITIALLY. $$$

An important new phenomenon and force is soon to hit global banking. It pertains to true wealth held in the form of precious metals. Banks will spring up, as capital engines from the core of PM assets, or as linked extensions. My sources report that Eric Sprott is working on the preliminary stages to create what could turn out later to be new banks, whose core assets would be primarily gold. With wealth comes capital formation potential. In the USEconomy, with debt and electronic money chits came false wealth and collapsed capital systems with colossal loss of home equity, the primary citizen asset. The source surmises that Sprott might be planning with Chinese & Russian support to confront the Wall Street and London bankers, the Asians providing some security protection.

An end game was offered in conjecture, hardly wild. The Sprott Fund will ultimately trade its silver, platinum, and palladium to China for Gold. The fund would then use the Gold to launch its own bank which would conduct business with Western corporations, very likely miners and agriculture related. The client base would be essentially hard asset extractors. This will be the way the world will function going forward, since it has a legitimate basis foundation. The current financial system has a zombie foundation and toxic core, ripe with insolvency that offers extreme dysfunction. The successful Gold investors will be the future bankers of the world. This  is how the giants operate. As footnote, dunces like John Paulson will not be in a position to transform into a bank, since his large fund owns no gold. It owns GLD shares in the exchange traded fund, which serve as vehicle ramps for Wall Street inventory raids from shorted shares. For a bright guy, Paulson is either lazy or stupid.

◄$$$ CHINESE EXPORTS JUMPED IN FEBRUARY, POSSIBLY THE BENEFIT OF STATE SUBSIDIES. IMPORTS TO CHINA HAVE FALLEN, A BAD SIGNAL. MANY HOLLOW COMPLAINTS BY IDIOT ANALYST TOOLS ARE PUT ON THE CHINESE DOORSTEP, LIKE ABOUT OVER-CAPACITY IN INDUSTRY, ABSENT CONVERSION TO FINAL DEMAND, AND MISSING APPETITE FOR WESTERN GOVT DEBT. THE COMPLAINTS ARE SHRILL AND IRRESPONSIBLE, SINCE THE WEST INVESTED IN CHINESE FACTORIES, THE ASIANS ARE SAVING, AND THE ASIANS RECOIL FROM BOND PURCHASES DUE TO CENTRAL BANK HYPER MONETARY INFLATION IN THE WEST. THE UNITED STATE HAS A DEBT CRISIS, SOLD AS A TRADE CRISIS. THE MONEY VELOCITY IS MAKING RECORD LOWS, A VIVID INDICATION OF EXTREME MONETARY POLICY FAILURE. $$$

The Chinese story is turning potentially dangerous. The basic data is a 22% rise in exports in February, but a 15% decline in imports, a bad mix. The data from South Korea and Taiwan is very weak. Asia is not in recession but its growth is slower. Ambrose Evans-Pritchard concluded, "This is exactly what pessimists feared. For all the talk of a great shift by China away from export-led growth to internal demand, the reality is that the Politburo is still propping up the same old system, still shoveling subsidies to loss-making firms and state behemoths to keeps factories open." The healthy signal is that investment in China is a robust 49% of GDP, with consumption only 36%. Compare that to 70% consumption and miniscule investment in the United States. Still somewhat deformed, the Chinese Economy owes much of its deformations and blemishes to being tightly linked to the USDollar with a rigid currency peg for 15 years. As its economy has grown at a more brisk pace than any nation in the West, so have its imbalances, its regional debt holes, its empty cities, much of which is attributed to the reliance upon a fiat paper foundation borrowed from the West.

The monthly trade surplus with the US is the highest in four years. Curiously, China is building a current account deficit, now at 2.6% of GDP. It must encourage foreign investment, but foreign corporations are retrenching in defensive mode, calling money home. The combination of the Yuan currency limits, keeping the Yuan from rising fast, and the state subsidies, has the potential to build resentment not only in the West but also in Asia. Recall Japan has adopted extreme defensive posture, complete with a powerful currency devaluation initiative. Some hypocrisy abounds. The complaint that the West suffers from excess global capacity in manufacturing is absurd on its face. The Western corporations shoved over $23 billion in foreign direct investment into China in rapid style in the early 2000 decade, with full government blessing. Lately criticism has been the refusal of Asian nations to recycle money in the form of demand. Another absurd complaint, since they are saving during stormy times, something in the United States that has become a lost art. Evans-Pritchard makes the argument that it is a trade crisis masquerading as a debt crisis, the status no closer to escaping the trap. Implicit is the complaint that China and Asia generally are not investing in USTreasury Bonds, EuroBonds, and UKGilts like before. Another baseless complaint, since the major Western nations are debasing their currencies, undermining the Asian reserve assets. The Chinese are exercising caution.

Recommended is a research report on "The Great Rebalancing" by Professor Michael Pettis from Beijing University. He explores the above themes in depth, painting a picture of a stalemate all too similar to the 1930s that preceded a world war. The West is trying to counter the crisis effects by currency devaluation, bond monetization, exported inflation, and implicit currency war. Asia has countered with outright competitive currency devaluation in Japan and to some extent SKorea, but with exchange rate pegs and dirty floats in China. The ultimate blame goes to the faulty paper currency system and endorsed Western hyper monetary inflation conducted by the central banks, which is causing distortions worldwide and causing a rise in the cost structure globally.

Evans-Pritchard correctly posits that QE as a tool has been exhausted. It has spawned intense trade war that hardly masks the currency war any longer. The totally missed factor is the severe decline in Money Velocity to the lowest level ever recorded, despite the hyperbolic rise in money supply, which he notes. THE CONTRAST INDICATES TOTAL MONETARY POLICY FAILURE. He is a fine analyst from across the pond. His work would not be tolerated in New York. If the M2 money supply goes into decline, even the braindead US economists will awaken to sound the alarm since they so far have dismissed the decline in Money Velocity as a temporary quirk, being the dreadful lousy economists they are. See the UK Telegraph article (CLICK HERE).

## USECONOMY CRITICAL POINTS

◄$$$ WAL-MART IS BEING SQUEEZED WITHIN THE SUPPLY CHAIN, AS ACCOUNTS PAYABLE IS RISING FAST RELATIVE TO ACCOUNTS RECEIVABLE. THE WAL-MART SITUATION IS WORSENING, AS SALES ARE DOWN AND SHELF REPLENISHMENT STRUGGLES MIGHTILY. POSSIBLY CHINA IS BEHIND THE SHORTAGE FROM DENIED SUPPLY CHAIN. $$$

February sales were a total disaster, but the reasons why are not simple. The Wal-Mart problems focused upon inventory re-stocking issues serve as a glaring signal to warn of supply shortages. This has been a longstanding Jackass warning for over two years, which signals the early phase of global USDollar refusals. Many Wal-Mart stores across the country are showing bare shelves, actually frightening customers and alerting them to a national systemic crisis on supply. From certain food items to consumer goods to bathroom hygiene supplies to gardening supplies, shortages persist. The giant chain runs efficient but tight control on accounts. The foreign suppliers might be inhibiting the product flow, but also simply might not be paid properly. An internal snarl is evident.

Dave of Denver is one sharp guy. He has a theory, built with a friend who studies the Wal-Mart model. For the last two years, Wal-Mart has run accounts payable to accounts receivable at a 10:1 ratio. Meaning, the amount they owe suppliers and other various entities is $10 for every $1 receivable. It is standard in retail but not extreme. Because WMT is the gorilla in retailing, they have been able to stretch their payment terms with suppliers to the limit. During any sales slowdown, their ability to fund payables out of cash flow becomes stretched from the leverage whiplash, which means suppliers cannot pay from their usual sources of financing. Then the middlemen suppliers cannot acquire goods to sell to Wal-Mart. As sales slow down, the lower cash flow presents a problem. It could be squeezing Wal-Mart's cash-in, cash-out to payable accounts mechanism that puts a severe restriction squeeze on its ability to replenish inventory. Thus the many empty shelves. Watch Best Buy and JCPenney, which are also squeezed hard in their sales. See the Zero Hedge article (CLICK HERE).

There are self-inflicted wounds from an accounts management strategy that is too tight. There are customer strains from the new ObamaCare taxes and higher Social Security FICA taxes. The USGovt sequestered spending cuts have not even kicked in yet, more strains soon to hit. A hidden factor might be the Chinese withholding supplies for the Wal-Mart giant. This must be born out with more data. After all, Wal-Mart owns over 160 manufacturing plants inside China. Maybe they are less willing to accept certain types of corporate paper of dubious value to balance the payments. Some gigantic snarl could be building, possibly even from the Chinese Govt on terms of supplier payment.

◄$$$ THE GRAND BLIND SPOT IN AMERICA AMONG ECONOMISTS IS BUSINESS INVESTMENT. IT WENT TO THE PACIFIC RIM IN THE 1990 DECADE. IT WENT TO CHINA IN 2000-2004, WITH OBVIOUS EXPECTED RESULTS IN SYSTEMIC BREAKDOWN. UNLESS AND UNTIL ENORMOUS BUSINESS INVESTMENT IS PLACED WITHIN THE USECONOMY, NO RECOVERY WILL COME. $$$

My brief mentor Kurt Richebacher spent four hours on a sunny veranda in Cannes with iced tea in hand, citing how business investment is the staggering blind spot for US economists. Build it, produce it, and pay workers, and poof, people have real money to spend provided good products are built and reliable customers are lined up. Without business investment, nothing happens. No stimulus to consumer spending can come in sustained manner without the huge business outlays in plant, equipment, roads, and worker training. The last decade of consumption driven by home equity extraction was an absolute disaster that threatens to kill the US body economic, and open the door to a wretched police state. It is like having great baseball players and excellent teams, yet no stadium or buses.

Important economic decline comes when business investment is diverted elsewhere, like to Pacific Rim in 1980s and 1990s, like to China in 2000 decade. After the 1999 Most Favored Nation status was granted to China, a tremendous amount of business investment stopped in the United States due to treason on the economic field. Without a good overlord in the USGovt, conditions for investment are absent. The Wall Street criminal bankers made a big contract with China, wherein they posted a large slab of Mao Tse-Tung era gold for lease to Wall Street in return for MFN status. It was a betrayal of huge proportions. US businesses pledged to build up the factory base. China promised to recycle trade surplus in USTBonds, just like the Saudis did in the 1980s and 1990s. However, no new financial colony was created like with the Persian Gulf, bound by the Petro-Dollar. The US bankers reneged on returning the gold, and China launched a horrific trade war that continues to this day, escalating every year.

Ireland encouraged business investment in the 1980s in a great success, with my old employer Digital Equipment Corp. The nation offered corporate tax breaks and requested university grants for engineers, as the business investment married well with the developmt side. Factories were converted. All went sour when Ireland followed the US lead on the housing bubble, which stands as the total destructive opposite of business investment. Furthermore, business investment means more than fundamental sources such as energy for power, the ideas with knowledge (patents) toward technology for efficiency, and the cycle for adaptation. It goes far beyond rules of commerce, debt management, and central bank policy. Without investment in a business with capital and plant and equipment and offices and roads in & out, there is no business. The US economsts have very little concept of business investment, capital formation, and product development. They are stuck in their perverted incestuous walls of consumer spending and braindead sentiment, pre-occupied by money growth (aka inflation management). It is utterly amazing that American PhD Economists know so little about building an economy. The Jackass has debated three such PhDs from Ivy League pedigree. Each sounded smart but were dumb as fenceposts on the risks and sinkholes of debt expansion and unsound money.

## EUROPE & JAPAN CRITICAL ISSUES

◄$$$ BIG-UK BANKS ARE TEETERING. THEIR MARK-TO-MARKET GIMMICKS TRY TO CONCEAL THEIR GROTESQUE INSOLVENCY, BUT NOT WELL. THEY ARE HOLLOW PROUD PILLARS OF ROT ON THE BACK END OF ROYAL STENCH. FOLLOWING THE AMERICAN HOUSING & MORTGAGE BUBBLES WHICH HAS WRECKED THE NATION. $$$

Accounting fraud has been the norm in both the US and United Kingdom since April 2009. Like the Americans, the British banks prefer to mark to their own designed self-serving values, not mark to market with realistic accounting. The manipulation enables the UK banks to conceal at least GBP 60 billion (=US$90 bn) in losses across the UK banks, not just in London. Not deterred, banker bonuses continue to rise. PIRC estimates the biggest hidden losses lie with HSBC at GBP 10.4 billion, the Royal Bank of Scotland at GBP 9.4bn, Barclays at GBP 7.3bn, Lloyds Banking Group at GBP 2.5bn, and Standard Chartered at GBP 2.2bn. These are not small numbers, with further damage in the mid-sized and smaller British banks. Look for bank restructurings and plans to raise capital in desperation. See the Zero Hedge article (CLICK HERE) and the UK Telegraph article (CLICK HERE).

◄$$$ THE MOVEMENT FOR A EURO CURRENCY SPLIT ALONG TEUTONIC-LATIN LINES IS MAKING PROGRESS IN GERMANY. THE COALITION IS FORMING. THE POPULAR SUPPORT IS GROWING. NO SOLUTION EXISTS WITHIN THE COMMON EURO CURRENCY FRAMEWORK. THE GERMAN LOCOMOTIVE ECONOMY IS SPUTTERING. $$$

The anti-Euro party led by economists, jurists, and Christian Democrat rebels is gaining ground in Germany, with a solid foundation and rising popular support. It is called Alternative für Deutschland (AfD), so far backed by one quarter of the nation. They want to end the fatal error of the common Euro currency, and to return to the D-Mark currency. Many regard grave errors made in judgment. They are in favor of a new renegade currency formed with the Dutch, Austrians, Finns, and like-minded nations. The French are excluded, and the lines drawn appear to run along the ancient line of cleavage dividing Latins from Germanic tribes. Witness the early stages of the Nordic Euro cited by the Jackass in 2010 and 2011, finally germinating as seed. It has sometimes been called the Teutonic Euro, apart from the Latin Euro. The South would keep the Old Euro, to be heavily devalued by perhaps 30%. The design draws on work by Hans-Olaf Henkel, former head of Germany's industry federation (BDI), which opposes a Cyprus bailout. The AfD party might do much better in elections than critics expect, given the startling Beppo Grillo success in Italy. A ripe 65% of Germans believe the Euro is an albatross of sorts. They will react to the blight in Europe. See the UK Telegraph article (CLICK HERE). German industrial production unexpectedly stagnated in January as Europe's debt crisis weighed on company spending and investment. The turn will affect voters. See the Bloomberg article (CLICK HERE).

◄$$$ ITALY IS LIKELY TO PROVIDE A BONFIRE OF THE EUROPEAN VANITIES, WITH FULL CONTAGION ACROSS EUROPEAN CONTINENT AND TO LONDON. THE ITALIAN ECONOMY IS IMPLODING RAPIDLY. THE REMOVAL OF MONTI (ALTHOUGH GOOD) WILL HASTEN THE COLLAPSE SINCE THE CORRUPT TENTACLES WILL BE REMOVED THAT SUPPORT THE BIG BROKEN BANKS. ITALIAN GOVT BONDS WERE DOWNGRADED TO DEEPER JUNK STATUS. $$$

Cyprus is the flash point, but Italy might be the tipping point. The former is like a fuse, the latter like dominos pushed over. Its bonfire could push the unstable continent over the edge into chaos. To comply with the bank bailout in Italy, the austerity plan instituted by the Goldman Sachs unelected preppy Mario Monti has guided Italy into the worst economic recession among the EuroZone nations. The New York Times estimates that among Italy's six million companies, businesses of all sizes have been going bust at the rate of 1000 per day over the  last year. The deep damage has struck the small and midsize companies that form the backbone of Italy's shrinking economy. A crisis climax is coming very soon. The stupidity of tax hikes and spending cuts makes for a poison pill, a Jackass prescription for disaster held firm for three years. The nation objected to property tax hikes to serve the bank bailouts, when they lifted Beppo to push out Monti, the biggest political insult ever seen by my eyes. See the Zero Hedge article (CLICK HERE). Fitch slapped Italy with a debt downgraded to BBB+ with negative outlook. They cited four main reasons: election results which push off track the structural reforms, deeper than expected recession, greater than expected budget deficits, and a weak government unable to respond to shocks. See the Zero Hedge article (CLICK HERE).

◄$$$ BLIGHTED EUROPE IS LOADED WITH OTHER HOT SPOTS. $$$

Take Spain, which is terminally blowing up. Its corruption at the top, growing list of financial firm failures, and obscene unemployment make it a tinderbox. Then France, which is attempting to reverse its massive budget cuts. It cannot stop proceeding through its self-designed socialist stumbling blocks. It is genetic. Capital flight creates deep sink holes. Then Portugal, which is seeing a new wave of public demonstrations with millions of people showing disgust and intense anger. It will follow Spain, its neighbor. Even Ireland, whose banks will begin to repossess almost 100 thousand homes in arrears by over six months. In no way is their housing market millstone removed from its neck. Ireland should have taken the Iceland path, which is the showcase of recovery. The blight of Europe continues, with fuses scattered across the continent waiting to be lit. The Jackass suspicion is that the Wall Street maestros will attempt to set Europe ablaze in order to make the USDollar look better, and to lift sentiment toward the United States generally. The US bankers are sociopaths, diabolical, purveyors of cancer.

◄$$$ JAPAN STRUGGLES WITH PRICE RISES ACROSS THE BOARD, IN RECIPROCAL RESPONSE TO THE FALLING YEN EXCHANGE RATE. MOST COSTS ARE IN USDOLLAR TERMS. THE EXPORT STIMULUS HAS A HEAD WIND IN RISING COSTS. THE GAINS FROM VACANT SOLUTIONS IN CURRENCY INTERVENTION ARE ILLUSORY, PROBABLY NEAR NIL. $$$

The response to intentional currency devaluation was to be expected. It is always the same result, yet never anticipated by officials, only by naysayer lunatics shown steady disdain. Although not cited explicitly by the Jackass, it was all too obvious, just like with the QE from the US base. The QE from the Tokyo base is causing price inflation problems in important areas. Consumers are facing at least a 15% hike in utility costs, as a nasty side effect of stalled nuke plants. They already endured higher gasoline and food prices. The stimulus from a lower Yen on the export side is illusory, in a zero sum game of sorts. Lower domestic disposable income, lower corporate profits, slower monetary velocity, these bitter fruit belie the nutty expected advantages from an export trade wealth effect. Naysayers like Tyler Durden were correct again, as the wealth has not arrived. Any gains from export trade are to be minimized by higher production costs from the input items. Furthermore, these gains come with a domestic cost of higher living expenses for households. Thus the zero sum game. See the Zero Hedge article (CLICK HERE). The bonafide solution is to scrap the floating currency system built on debt, and to adopt a Gold Standard from the trade routes. Japan will join China in this revolt, motivated by pain.

◄$$$ JAPAN STRUGGLES WITH EXPORTS, AS THE ALL IMPORTANT MACHINE ORDERS WENT INTO DECLINE. THE LOWER YEN IS NOT PROMPTING THE CURE. NO PANACEA IN THE FOREX ROOM, YET NO OTHER COURSE OF ACTION IS SEEN BY THOSE COMMITTED TO THE FIAT PAPER SYSTEM. $$$

Japan is a showcase of failed central bank tactics on floating manipulations, and failed Keynesian stimulus strategies on budget outlays, over a 22 year period with nothing learned. The big headline news item is the 13% decline in January machinery orders, which for the Jackass has been the most important economic statistic for Japan in all my years of following the nation. Machine orders are the core of business investment, and Japan is the most advanced, experienced, and reliable. My initial interest came when Intel started the trend of offshore industry setup, and the PacRim craze began. It gutted the US technology industry, prompted asset bubble dependence, and led to vanished legitimate US income, as the Japanese zaitech was born. The machinery order decline for January versus December was an order of magnitude worse than expected, under 2%. The investment road has a rigid blockade. It is from systemic failure among Japan's biggest customers in Europe, the United States, and even the Middle East North Africa region. Denial and shock make for a bad cocktail. Clowns in the Tokyo financial sector expect the monetary policy benefits to kick in with a little more time, as optimism springs eternal from the currency intervention. They dismiss a single monthly data point, typical of the chronicly misguided economists and financial wonks.

One clown, Izumi Devalier, a Japan economist at HSBC Holdings in Hong Kong, actually forecasts rising consumption, with greater residential and public investment, despite the rising cost headwinds. Like others of his ilk, he probably regards rising prices as a beneficial occurrence in Japan, since they have lived under the deflation cloud for too long. The powerful pushdown in the Japanese Yen exchange rate from 128 in October to the 104-106 band in recent weeks will not solve anything. The 18% devaluation will only change the equation that yields the same drip from the industrial faucet. The debt burden has gathered proper attention without address. Japan has a debt-to-GDP ratio approaching 250%, the highest ratio of all developed nations. Japan achieved that dubious distinction because of at least 15 separate stimulus programs of the useless Keynesian variety. The risk run is for higher domestic costs without rising exports, a major squeeze likely to come. See the Bloomberg article (CLICK HERE). The Jackass must admit that two months ago, my conclusion was that a bigger exporter gain would come from the cheaper Yen, but temporary. The domestic effect from a higher commodity cost component arrived very quickly, faster than my anticipation. Also, other Asian nations enacted the same competitive devaluations, thus nullifying the Japanese supposed advantage.

◄$$$ THE COMPETING CURRENCY WAR IS A RACE TO THE BOTTOM. THE IRONY OF THE WAR IS ASTONISHING AND NOT RECOGNIZED BY THE POLICY MAKERS. ONLY THE GOLD CROWD AND ALERT WORRIED ANALYSTS PAY HEED. THE LOSER DIES LAST, THE USDOLLAR FOR CERTAIN. $$$

The heart attack is in occurrence here and now, in Japan. The big shock from volatility signals the growing crisis. Solutions ordered are most extreme in Japan, but also in Switzerland. Many astute analysts expect the Japanese Yen currency to die first. It has the worst debt relative to GDP. It has been the worst abuser of government stimulus with porky and wasteful projects. It features the worst population trends. It is in possession of near zero resources. The nation's central bank just announced the ultimate in desperate measures. The Bank of Japan has proposed an expansion in the asset purchase program to include derivatives, an extreme act. Its low equity ratio needs some US-style vaporous foundation built of derivatives. In the last decade, some undercut was seen by China, as the PacRim offshore leader was harmed by its own minor offshore exodus. Japan is the nation to watch for the Eastern shock waves. In the West the shock is Cyprus and Southern Europe, with a Swiss ticking timebomb. See the Financial Risk Mgmt article (CLICK HERE).

## CRIMINALITY IN GOLD WORLD

◄$$$ WHILE MOST OBSERVERS CONTINUE TO MISS THE STORY, AND OTHER INFORMED WATCHERS PERMIT THE STORY TO SLIP INTO THE BACKGROUND, THE BIG PRESSURE IS ON REGARDING THE ALLOCATED GOLD ACCOUNTS. A TOTAL OF 60 THOUSAND METRIC TONS (EQUAL TO 25 YEARS OF ANNUAL MINE OUTPUT) IS UNDER SCRUTINY, AN EXTENSION OF THE GERMAN OFFICIAL GOLD REPATRIATION INQUIRY. THE SCANDAL IS SLOWLY PUSHING FORWARD FOR PUBLICITY AND ACTION, POSSIBLY PROSECUTION. EVENTS ARE HAPPENING FAST. THE PROTECTION IS WITH PRECIOUS METALS. THE PRICE OF SILVER IS GOING TO ZOOM PAST $80 PER OUNCE IN THE NOT TOO DISTANT FUTURE, WHEN THE CRISIS RAMPS UP. $$$

As preface, if 60,000 metric tons is in focus, then the amount is much much more than official government gold accounts. The owners of referenced allocated accounts are important, and will be revealed in time. They might have some power to bring about change, pressure, action, even justice to the fractured world run by competing syndicates. Since the spring 2012 and the drainage of gold from London, the events are surely happening more quickly. But the same leading figure criminals are still firmly seated. My biggest concern on Paradigm Shifts and natural rebalancing is the introduction of lethal viruses (human & computer) as part of a major vengeance program by those who lose power, the Western bankers. They will try to cut deals to share power.

The following is a discourse by The Voice, who notices grand changes in progress and huge fractures that will engulf the vile bankers. He spoke of great acceleration in breakdown events. The Voice was the source of the clue that a small seemingly minor corner in Europe would light the fuse, which appears to be Cyprus. They are his words and thoughts, with my edits. At a meeting in early March, once more some decision makers in the world of finance revealed themselves as oblivious to unfolding events. They cling to the false belief that the US$, Euro, and Yen will survive, but more pathetically, that the worst is over in the global financial markets shakeup. Many others sense what is coming but they are paralyzed and scared. These people are set up for the ultimate financial kill shot. Only people invested in hard assets with self-repricing capability like precious metals, agriculture, mining, and energy will survive what is coming. The entire world is on a financial Titanic. The lifeboats are made from precious metals.

The Voice goes on to make a startling conclusion. Some professionals are trying to push deep into the fraud concerning the certificated Allocated Gold Accounts. Its volume is huge, at approximately 60 thousand metric tons, equal to 25 years of global production. Its investors have been bilked, given gold certificates of dubious value. In order to penetrate their fortresses, the banks had to be softened with heavy artillery fire. They have been gradually perforated. After heavy holes, they can better be challenged on the core issues. The big bankers know what is coming to them and are running scared. Deutsche Bank already has the German authorities under great pressure, administering unpleasant weekly enemas. It was the Germans with their audit and repatriation demand for their Gold that motivated all the others moving in the same direction. Notice Austria, Nederlands, and a cast of other nations.

However, forces are at work now that are far beyond normal people at the controls. The unfolding systemic changes are paradigm changes that are linked to very powerful forces, difficult to comprehend, some natural, some not. Humanity is in big trouble, facing destruction. The issue is not about justice but rather about the entire system being reset and rebalanced. Do not expect justice to be meted out, but rather for a fairer system to be imposed. A great many unsavory figures and evil people will simply fall by the wayside. Difficult messy times await , but rest assured, precious metal will defiantly survive, as it always has. So will its owners, but they must be nimble and aware.

The Voice described aspects of Silver. The metal ore Coltan (for nobium and tantalum) and Silver are they key ingredients for all electronics. All high resolution screens use a lot of Silver. The monetary component for Silver is also significant. The Silver price will be going to anywhere between $80 to $120 per ounce not before long. Some seers who claim the Silver price will not sustain higher levels are dead wrong. During the next runup in the price of Gold, the price in Silver will be pulled much higher due to dire shortages. However, there will also be a fast ratio collapse that will take the current 54:1 ratio to 25:1 for Gold/Silver. People who do not comprehend the fast rise in Gold, and faster rise in Silver, are useless to talk to. People want to believe what they want to believe, to live within their protective psychological walls, and never to see the hard cold facts and rapid changes that surround them. All who are holding physical precious metals can go to the beach while the world goes up in flames. All the paper hanger advocates can stay home, wait for the fire trucks that never come, and watch their wealth go up in smoke.

◄$$$ THE LOCATION OF THE WESTERN WORLD'S GOLD IS UNCLEAR. A LOOK WITH SCRUTINY AT THE BANK OF ENGLAND RAISES QUESTIONS AND DOUBTS. THE MAJORITY OF THEIR GOLD IS EITHER LEASED OR STOLEN. POSSIBLY IT NEVER EXISTED AS OF 2006, HAVING BEEN LEASED DURING THE CLINTON-RUBIN ADMIN OF THE 1990 DECADE WHEN FORT KNOX WAS PILLAGED. $$$

A detailed look at Bank of England gold is revealing and rather simple for supporting accusations of stolen gold held on account. The London Bullion Market is the global trading center for physical gold. The Bank of England holds gold on behalf of other central banks, for convenience in trade settlement. The inherent trust handed to the bank appears not deserved. A significant portion of the world's monetary proven gold reserves should be located at the Bank of England. The data does not bear this out. Alasdair Macleod has attempted to apply some direct calculations in order to ascertain how much unidentified central bank (monetary gold) is in London at the Bank of England.

Derived figures are from February 2006 and 2012. Subtracting the known or reasonably estimable quantities listed in their table leaves 2220 tons unidentified in year 2006. The stated quantity held rose to 4691 tons in year 2012. Macleod then made a second calculation to produce a global context. He assumed that China, Russia, and the middle-Asian states should be removed, on the basis that their gold reserves are mostly from local mine production. Moreover, for political reasons they are unlikely to hold gold in London given the adversarial relations of recent years. The United States is assumed to hold all its gold on its own territory. Follow Macleod's arguments which make sense, with his logic.

Immediately a disparity arises. The unidentified central bank holdings declined by 464 tonnes, whereas the Bank of England reports an increase of 2471 tonnes in custody. Macleod assumed the World Gold Council/IMF figures without challenge. Conclude therefore that either central banks have been shipping their gold to London, or much more likely, the increase is not monetary gold at all. If the latter is correct, the maximum figure for monetary gold has to be within the 2220 tons recorded in 2006.

This 2006 figure includes an undeclared quantity of gold held on behalf of bullion banks. A comparison of the LBMA clearing statistics from the two dates suggests little overall variation in LBMA stocks. Logically the balance must be non-monetary gold held on behalf of governments and sovereign wealth funds, on the basis that no one else would be eligible for a bullion account with the Bank. Given the political instability in the Middle East and elsewhere over the last decade, it is very likely that this is the origin of the ownership of much of this custodial bullion. And if that is the case, we can assume that these holdings began to accumulate in the Bank's custody before 2006. A conclusion can be made. A significant portion of the 2006 figure of 2220 tonnes must also be non-monetary gold. Therefore, on the basis of reasonable supposition it appears that the total amount of monetary gold at the Bank of England, including that of Germany, Austria, and Mexico, plus the UK's own stock, cannot be more than 3320 tonnes. The total is perhaps significantly less. The belief that the world's central banks store a significant amount of their gold in London is therefore incorrect. London is not a great repository of Western gold. See the Gold Money article (CLICK HERE).

No mention of Libya's stolen gold hoard is included in the logic, certainly held in London, possibly in private banks. The Jackass belief is that the majority has been pilfered by the bankers into private accounts in the Vatican, Basel, and elsewhere. But the point made by Macleod is that London is not the great repository for Gold. Neither is New York for that matter. The Anglo-American system has no gold in official volume. The monetary foundation for the USDollar, Euro, and British Pound is a ruse, a Ponzi scheme being uncovered suddenly in the last decade.

◄$$$ THE SWISS CITIZEN PETITION WILL MOVE TO A NATIONAL REFERENDUM, DESIGNED TO BAN GOLD SALES, AND TO DOUBLE THE GOLD PORTION IN RESERVES HELD. ALSO IT WILL REQUIRE REPATRIATION OF ALL OFFICIAL SWISS GOLD HELD IN FOREIGN LANDS. $$$

The conservative Swiss People's Party (SVP) has gathered enough signatures to force a referendum. The lead figure is SVP politician Luzi Stamm, whose movement  was reported in past Hat Trick Letters. Two years in the making, the initiative would prohibit the Swiss National Bank (SNB) from offloading its gold reserves as well as force it to hold at least 20% of its assets in gold. It declared Gold reserves not to be speculative objects for the bank or politicians, but rather wealth of the people. The organizers called on the SNB to increase its gold reserves towards the 20% mark, and to dump the Euro currency accumulated through interventions. The SNB sold 250 tonnes of gold throughout 2007 and 2008, causing public criticism. Gold is worth twice the price fetched back then, a travesty to defend the corroded system. The initiative also states the SNB's gold would have to be stored within Switzerland. At present, the exact storage location of the gold reserves is maintained as secret by the SNB. Under crisis scenarios, the central bank has not stored the gold bullion all domestically. Since 2005, the majority has been held in Switzerland, the SNB admitted.

At the end of 2012, the SNB held 1040 tonnes of gold valued at nearly SWF 50.8 billion (=US$54 bn), and apportioned at over 10% of total assets of SWF 499.4 billion. The SNB has concerns about influence of monetary policy nature. They claim a requisite flexibility with freedom to maneuver in shaping monetary policy. Swiss citizens can bring initiatives, a key feature of Swiss direct democracy, if they collect 100 thousand signatures within 18 months. However, a nationwide popular vote on the gold initiative might be years into the future. The vote would face an uphill battle to win majority backing, after a similar attempt failed in the Swiss Parliament.  See the Reuters article (CLICK HERE).

◄$$$ A FEDERAL AUDIT OF OFFICIAL MEXICAN GOLD HAS DEMANDED PHYSICAL INSPECTION OF SOVEREIGN GOLD HOLDINGS. FOCUS IS PUT ON A 2011 PURCHASE THAT RESTS IN LONDON, PROBABLY IN THE FORM OF GOLD (PAPER) CERTIFICATES. THE MEXICAN CENTRAL BANK CALLED BANXICO IS BEING ACCUSED OF FAILURE TO COMPLY WITH MEXICAN LAW. $$$

The Mexican Superior Audit of the Federation (ASF in Spanish), in its late February official report pertaining to audit functions, gave a stern recommendation to the Bank of Mexico (Banxico) concerning the nation's gold reserves. It seems that Inteligencia Financiera Global might serve a similar defender role in Mexico to the US-based Gold Anti-Trust Action group on sovereign gold matters. After  four months of legal wrangling with Banxico, the central bank reluctantly yielded the information requested, about the supposed physical location of Mexico's sovereign gold holdings.

The result was disclosure that 95% of the Mexican gold reserves (about 125 metric tons) were located in London England. In their statement, the ASF addressed the last documented purchase of 100 tonnes of gold made in 2011, for a total of US$4.543 billion dollars. "They found that Banxico has not conducted physical inspections to gold to verify compliance with the terms of acquisition and the conditions regarding its storage, in order to be certain of the physical custody of this asset." In perhaps intentionally shoddy manner, the only details in documents held pertain to terms and conditions, the dates of the transactions, and payment vouchers. Nothing on location for storage of the Gold bullion, or confirmation of the existence of the Gold purchased. It smells like paper gold in certificate form. The Mexicans slowly will follow the German lead, in demanding a full accounting of the national treasure allegedly held by the central bank.

The Banxico officials implied they were bound by London rules, which must hold the purchased gold in custody at the Bank of England, which sets strict standards for weight and purity (but not for theft). The BOE provided Allocated Gold Accounts, the infamous type that are routinely raided (stolen). The bank provides serial number and stamped certifications of purity of each ingot, so the victim of the theft is well informed of the crime later. Yet Banxico has none of these lists. Last year the central bank could not answer a single question made by a certain journalist, through a legal Request for Information about the number of bars that make up the Mexican gold reserves. The Banxico clowns actually issued some mushmouth comment about "due to the variability of the content of gold in the bars, it is not possible to specify with certainty the exact number of bars purchased." Therefore conclude a violation of Mexican law. Their mandate of Section I of Article 19 of the Bank of Mexico Act stipulates clearly that the reserve shall be composed of "The currencies and gold owned by the Central Bank, free of all liens and whose availability is not subject to any restriction." The Banxico head Agustin Carstens actually said an inspection such as that recommended by the ASF would have a significant cost. Advocates within Mexico are calling for a full accounting, bringing the Gold wealth home, and preparing for the financial storm. See the Inteligencia Financiera Global article (CLICK HERE).

◄$$$ OUTFLOWS FROM G.L.D. AND COMMODITY FUNDS HAVE BECOME VERY HEAVY. THE GOLD EXCHANGE TRADED FUND IS FAST LOSING CAPITAL. THE INVESTORS REACT SURELY NOT TO CORRUPT MANAGEMENT, BUT RATHER TO FALLING GOLD PRICE. THE GOLD FUND EXODUS FOLLOWS THE BIG-US BANK LEAD IN PRICE SUPPRESSION VIA MASSIVE NAKED SHORTING. THE USDEPT TREASURY AND USFED FEAR A GOLD EXPLOSION IN RESPONSE TO HYPER MONETARY INFLATION. A MOVEMENT INTO BONDS HAS BEEN UNDERWAY, CONFIRMING THE ASSET BUBBLE BY THE DUMBEST AND MOST GULLIBLE GROUP OF THE FINANCIAL MARKET, THE PUBLIC. $$$

The argument laced with Wall Street blatant propaganda regarding cash waiting on the sidelines has run its useful course. The money inside the Unites States distrusts the stock market. The money outside the US distrusts the USGovt. In an early March week, equity funds reported net cash outflows of $940 million, a combined figure. By contrast, the US equity funds reported an outflow of $4.1 billion for the week, the largest weekly outflow this year. Stocks lost almost a cool $billion. The locals exited, while the foreigners entered. Domestic reported outflows of $2.6 billion and non-domestic reported inflows of $1.65 billion.  Most of the selling was broad based Exchange Traded Funds, like for commodities such as energy (crude oil), or agriculture. The largest outflows seen for a category were from the corrupt gold fund (symbol GLD), which suffered a $2.08 billion exit. It is doubtful their investors are awakening to corrupt custodians or raided inventory under their myopic noses. Instead investors are likely reacting to the push-down in price by the big bank naked shorting that is universaly permitted by US regulators and USGovt officials. Commodity funds reported their largest historical weekly outflow ever in volume terms, reaching $3.2 billion in exit. The combined stock and commodity outflow screams recession as the perception, and the reaction.

For the week of March 15th, the story was similar but milder in volume. Investors withdrew a modest $136 million from commodity ETFunds on the week. The outcome was mixed, as energy funds saw $326 million in inflows, while the other sectors saw varying outflows. The two big gold funds continued to see sizable outflows, with the SPDR Gold Trust (GLD) and iShares Gold Trust (IAU) losing $321 million and $106 million respectively. Broad market (multi-commodity) funds had outflows of $152 million, agriculture funds lost $36 million, and industrial metals lost $10 million. See the Hard Asset Investor article (CLICK HERE).

The gold ETFund universe has experienced net outflows of $5.4 billion year to date, according to IndexUniverse data. The funds are sold as tracking the precious metal prices, when the flagship is used to control the gold price. Redemptions have been heavy. A record $4.1 billion was extracted from gold ETFunds in February. The removal is the largest single month of net outflows for the group on record, almost twice the previous high of $2.6 billion in January 2011. The big US banks have raided the GLD fund, shorting the shares, and removing the inventory. Some analysts are blaming the recent gold price pullback on automatic spending cuts in the USGovt, seen as reducing inflationary risks. Such reasoning is the work of Goebbels advocates. The real reason is incredibly high volume of naked shorting by the Wall Street banks on gold futures contracts with full impunity and blessing by the minions in the USGovt. The USDept Treasury and USFed are worried to death that their huge chronic $1 trillion deficits and multi-$trillion bond monetization plan will cause an explosion in the Gold price from the currency debasement and debt ruin. See the Yahoo Finance article (CLICK HERE).

◄$$$ A BAN ON TURKISH GOLD HAS BEEN SLAPPED ON DUBAI. THE USGOVT SANCTIONS AGAINST IRAN TOOK COLLATERAL DAMAGE ON THE TURKISH GOLD BAR DEALERS. GOLD TRADE IN TURKISH BARS HAS DWINDLED SINCE THE SURGE LAST AUGUST. THE UNITED ARAB EMIRATES IS A TRADE STATION FOR IRAN, WHICH ARRANGES FOR PAYMENT TO IRAN IN TURKISH GOLD FOR ENERGY PURCHASES. THE PRACTICE WILL DIE DOWN. BOTH IRAN AND TURKEY WILL FIND OTHER ROUTES. $$$

The US and London bankers are angry about a side-stepping practice. Trade in Turkish gold bars to Iran via the Dubai station is dwindling as more banks and dealers refuse to buy the bullion to avoid the risks associated with Turkey's gold-for-gas trade with Iran. They fear indirect USGovt retaliation. The news is that most dealers in Dubai's bustling gold souk shun Turkish Gold. They operate often in secret manner. The banks have watched the Turkish Gold trade with Iran boom. Traders in Dubai are anxious over a possible local government probe and harsh penalties pushed by the Americans and British to discourage the entire gold payment angle used by Iran. The USSenate approved the expanded sanctions on trade with Iran's energy and shipping sectors, which would also restrict trade in precious metals. That increasing US pressure has already started to create troublesome repercussions for exporters of Turkish Gold. Nevertheless, the USGovt cannot stop the gold avenue. Turkey will find another station, possibly India. In doing so, the USDollar will be more isolated.

The burgeoning exchange of gold bullion for natural gas has pushed Turkey's gold exports toward the UAE. But the trade is cutting back, down to $621 million in November from nearly $2 billion in August, according to the latest official UAE trade data. Here is the pathway. Iranians buy gold bars in Turkey. The couriers then carry the gold worth $millions in their hand luggage to Dubai, where it can be sold for foreign currency or shipped to Iran. The bankers in the region have reacted. Some international banks are simply staying away from any gold bullion that is coming out of Turkey. For instance, Standard Bank in London, which is active in Dubai's gold market, said it was not trading any Turkish branded gold currently. Curiously, Gold bars produced in the two largest Turkish refineries, Nadir Metal and Istanbul Gold Refinery, are both registered on the LBMA Good Delivery list. The dealers in Dubai (like Emirates NBD) and other Western dealers such as ScotiaMocatta (a division of Bank of Nova Scotia) will currently stop dealing with Turkish gold bars, even though legitimate LBMA quality. Sense the hypocrisy within the market, and open door for circumventing the obstacle. Watch Turkish Gold bars show up in Saudi Arabia, China, and Russia, maybe even the Shanghai Metals Exchange to meet delivery demands. Turkish Gold has 1000 years of solid tradition in the entire Moslem world, which will not change by Anglo dictums.

The authorities in Ankara Turkey are working hard to repair damage. Representatives from the Turkish jewelry makers visited the Dubai Multi Commodities Center (DMCC) platform in December in an effort to disperse the clouds over the image of Turkish Gold. The US broader pressures have made a global issue around Turkish Gold, especially at the Dubai station. The direct and indirect shipments of gold to Iran do not breach existing Western sanctions imposed over its disputed nuclear program, but they help Tehran manage its finances. An interesting angle has been used in defense. Turkish ministers claim the gold-for-gas trade is conducted entirely by the private sector and is not subject to USGovt sanctions. An officia l stated, "We do not feel legally bound by any unilateral sanctions by any country, except if they are endorsed by the UN Security Council under Chapter 7. We have a huge natural gas consumption requirement from within Turkey. On the gold issue, if the Iranians go to the market, we cannot prevent them. If they buy gold here and send it somewhere else, that is up to them. It is not government or government agencies selling gold." See the Reuters article (CLICK HERE).

◄$$$ A MAJOR SOUTH AFRICAN MINING FIRM ALMOST WAS ACQUIRED BY THE WALL STREET BOYZ. THE DEAL IS DELAYED, MAYBE DEAD. SOME DESPERATION IS IN THE ROOM. $$$

Bill Murphy of GATA informed that a major gold producer was on the verge of being acquired last week. The details are scant, but implication is that a big US bank is in hot pursuit to acquire its vast gold operations and considerable reserves. It could be added to some Deep Storage Gold (real or imaginary) that the USGovt finds so useful. The desperate need for a new indirect collateral was part of the motivation. Neither the USDollar nor USTBond has any collateral whatsoever except for federal buildings and national parks, with some expansive lands that contain minerals and resources. Some complications arose to delay or scuttle the deal. My sources confirmed the story as true, and the mining firm to be from South Africa. If a criminal organization like JPMorgan were to complete an acquisition for a major gold mining firm, the entire gold world would change, the desperation laid bare, and the global gold demand probably rise fast and furious. The bank would have some newfound ability to cover their giant killing field of naked shorts.

## AGGRESSIVE ACTION IN GOLD WORLD

◄$$$ SOUTH KOREA ADDED 20 METRIC TONS OF GOLD IN FEBRUARY. IN DOING SO, THEY JOIN RUSSIA AND KAZAKHSTAN IN LIFTING GOLD RESERVES. THE KOREAN ADDITION IN GOLD BULLION IS IN DIRECT OFFSET TO PORTFOLIO DECLINES IN THE EURO BONDS AND UKGILTS. THE CURRENCY WAR IS PROMPTING MORE GOLD PURCHASE IN RESERVES, THE STABLE CURRENCY, THE HONEST CURRENCY, THE VALID ASSET. $$$

Central banks supposedly increased gold assets held in reserves by 17% last year, lifting their total tonnage to 534.6 tons, according to World Gold Council. It is doubtful the London outfit has the best data out of the Kremlin or Beijing. By making additions, South Korea joined Russia and Kazakhstan in boosting gold holdings, even as the metal has seen a tough (fake paper) price decline, the worst since 1991, due to naked shorting by the big US and British banks. The Asian mini-giant holdings rose by $1.03 billion in value to $4.79 billion at the end of last month. The Bank of Korea added 20 metric tons in February, raising its gold reserves by 24% to 104.4 tons. However, SKorea has always had a distinction of having a puny gold portion in reserves held, equivalent to 1.5% of total foreign exchange holdings. The central bank with offices in Seoul made purchases as part of its fifth round of buying since June 2011. During the period, their bullion reserves rose by 30 tons in 2012 and by 40 tons in 2011. Their public statement referred to diversification of currencies (a reference that gold is indeed a currency), and of FOREX securities. They also referred to no focus paid to price movement. SKorea possesses the 7th largest total FOREX reserves in the world. The total portfolio is suffering some damage from exchange rate declines in the Euro and British Pound. It is curious that the Asian mini-giant is purchasing more Gold in response to the Competing Currency War fallout. They must sense the need to defend against central bank hyper monetary inflation. Best to do it and talk little.

Russia increased its central bank official holdings by 12.2 tons to reach a January total of 970 tons. In the full year, official data claims Russia grew gold reserves by 8.5%, but they did so much more. The IMF data is incomplete. For state security reasons, the Kremlin does not reveal the full purchases, which is utterly huge, multiples higher than official data. They are planning for the next chapter of gold trade finance, and assuring stability during the massive upcoming disruption to the monetary system, with ample gold held as ballast. The gold hoard in reserve for Kazakhstan rose by 1.5 tons to reach 116.8 tons in total. Not much to add, but last year they grew gold reserves by a robust 41% amount. The public analyst observations on the purchases were the usual drivel, about acquiring long-term commodities, bad timing for entries, and the trounced gold price. The shallow corps of press reporters fail to mention profound central bank debasement of major currencies, as motive for gold additions. They overlook the profound naked shorting of futures contracts, where months of global output is sold in contracts never to be delivered. See the Bloomberg article (CLICK HERE).

◄$$$ INDIAN GOLD DEMAND SURGED 41% IN THE FOURTH QUARTER. THEIR DEMAND WILL PUSH WEST ASIAN GOLD DEMAND, COMPENSATE FOR US-BASED GOLD DUMPS, AND PROVIDE SOME FUEL FOR GOLD TRADE FINANCE IN THE REGION. THE HIGHER IMPORT DUTIES DID NOT DETER THE INDIAN CITIZENS EAGER TO HEDGE THE INFLATION AND RUIN. THE INDIAN GOVT RAISED IMPORT TAX FROM 2% TO 6%, BUT IT MATTERED NOT AT ALL. $$$

Indian gold imports surged 41% in the 4Q2012, trampling the import duty that tripled. The Indian Govt struggles to cover a rising Current Account deficit. The import duty hike did nothing to halt demand, as Indians bought 51% more bars and coins and 35% more gold jewelry in Q4 compared to the same quarter one year ago. The Indian finance ministry raised import duties from 2% to 6%, which was expected to discourage buyers. Not so! The overall national gold demand for Q4 was 262 tons, up 41% after factoring in all types. Furthermore, with the Indian Rupee currency down about 10% in the last year, the sharp increase in demand is all the more impressive since it came with higher domestic gold prices. The demand was not diminished by record high prices above R32,000 for the precious metal inside the country. The managing director of the World Gold Council for India projects demand for the entire 2013 year could improve on the 864 tonnes in year 2012, to reach as much as 960 tonnes.

The importance of Gold in Indian culture is mystical, traditional, and firm. Gold is the #2 import item after crude oil. Amazingly, Indian households hoard (with firm grip) over 18,000 tonnes of gold worth over $900 billion, equivalent to half the country's GDP. Bank certificates of deposit pale by comparison in volume. India's famous weddings account for 500 tons of fresh gold demand annually, from a staggering 15 million weddings, according to ICICI investment strategist Mundra. He quoted how gold consists of 30% to 50% of wedding expense. See the Mining article (CLICK HERE).

◄$$$ CHINA IS PREPARED FOR THE CURRENCY WAR, WITH AN ENORMOUS HOARD OF GOLD BULLION. THE BEIJING CENTRAL BANK PAYS LITTLE HEED TO THE CLAIMS OF NO CURRENCY WAR. WHILE REMINDING OF THE G-20 DIRECTIVES, THEY PREPARE FOR FINANCIAL BATTLE AND SURVIVAL. THEY WILL MATCH THE ACTIONS OF THE WEAKEST OF MAJOR CURRENCIES, NOT TO LOSE TRADE ADVANTAGE THEMSELVES. $$$

The Chinese central banks are fully prepared for the currency war in full swing. It is not threatening or looming, but rather in powerful full bore thrusts and volleys with hostility seen and deep damage felt. Put aside the stupid shallow comments by IMF head Christine Lagarde, who claims no currency war is in progress. China is already one step ahead of most nations (except Russia), fully prepared to roll out its own FX army. According to China Times, "China is fully prepared for a looming currency war should it, though avoidable, really happen, said China's central bank deputy governor Yi Gang." The Japanese and Swiss have confirmed a currency war with open comments about currency devaluation as policy by Tokyo, and a full year of currency peg maintained by Swiss alongside some big battle scars on their balance sheet from diversifying into UKGilts and JapGovtBonds. Tyler Durden of Zero Hedge points out the zero sum rule which causes benefits for the debasing nation on currency policy to take the benefit from competitors in trade. Thus the slogan Beggar Thy Neighbor arose long ago. The global consumer will be granted no incremental income, against stagnant cash flow. The practiced currency debasement has no impact when everyone does it. Worse, it results in systematic decline in global trade, from the opposite of cooperation and bridge building. Actually, each economy suffers from higher costs, since more money goes toward commodity inflation hedges than toward business investment and job creation. Currency war is a plague that destroys capital structures.

Central bank deputy governor Yi Gang is prepared, with several tools. But he took time to remind the world of the G-20 objectives reached by consensus at the February conference in Moscow. The trend in the war has been for major economies to drive down their own currency through monetary easing policies, so as to gain a trade advantage, keep the export trade brisk, and fortify the domestic economy. The exact opposite results. Yi reminded that a currency war could be avoided, if policymakers in major countries observed the G-20 consensus. It called for nations to use monetary policy as a tool for bolstering the domestic economy. G-20 members promised that they would not wage a currency war, but each reacts defensively to the powerful effects from the USFed monetary policy of QE and ZIRP. They worry that removing the stimulus will plunge their economies into another recession. Actually, their monetary policy assures that plunge. The ongoing bond monetization and zero bound interest rate has undermined the USDollar, seen as a manifested higher currency trend for their exchange rates. No nations have shown signs of scaling back monetary easing that has injected a flood of cash into global markets. Yi Gang concluded, "China is fully prepared. In terms of both monetary policies and other mechanism arrangement, China will take into full account the Quantitative Easing policies implemented by central banks of foreign countries."

The PBOC left it vague what monetary policy response would be. Past history shows their tools clearly. For starters, they will continue to accumulate massive amounts of Gold bullion, multiples more than they admit in official data. The Gold will hedge against their deep US$-based bond exposure, serve to enable the convertibility of the Yuan, and stabilize their banking system. They will link the Yuan currency, already pegged to the USDollar, to the Japanese Yen or the British Pound, or whatever is the worst performing on the FOREX market. They will adjust the CNYuan trading band on a daily basis. China will also continue to use its USTBonds as currency in African energy and mineral deals. The quintessential challenge for the Chinese currency control room, as well as other major central banks, is to prevent rising energy and food prices. It leads to civil disorder. The ugly fact of life for Competing Currency War is that once started, it does not stop until a climax of crisis or wider war. History is a good teacher of this fact. See the Zero Hedge article (CLICK HERE).

◄$$$ ARIZONA COULD SOON APPROVE GOLD & SILVER AS LEGAL TENDER. BY DEFINITION, THE PRECIOUS METALS COULD BE LEGALLY USED TO SETTLE DEBTS AND TO PAY TAXES. $$$

A measure to recognize gold and silver coins minted by the USGovt as legal tender is close to passage in Arizona. It would become the second US state to recognize gold and silver as legal tender, if the Arizona House approves SB 1439. The bill has already won the approval by the Arizona State Senate and the Arizona House Financial Institutions Committee. They just voted the legislation out of committee on a 4-2 vote last week. The only other state is Utah to recognize gold & silver as money. The defiant measure is under consideration this year in four states. The Arizona bill defines legal tender as a mode of paying debts and taxes. The measure specifies that any coin or bullion that has gold or silver content and is issued by the USGovt can be defined as legal tender, effective in year 2014. However, no party can be compelled to accept such coins or bullion. The other states with such measures on the path have been Virginia, where it died in the general assembly in February, and Indiana, which buried it on the table. South Dakota rejected the measure in January. The champions for the movement have been the Gold Standard Institute and American Principles in Action, which so far have not been slammed by the USGovt as terrorists. See the MineWeb article (CLICK HERE).

◄$$$ TEXAS IS TO CREATE A STATE GOLD REPOSITORY AS SANCTUARY, AND CREATE A TEXAN FORT KNOX PROTECTED FROM ANY POSSIBLE FUTURE USGOVT CONFISCATION. THE STATE TEACHERS PENSION IS THE FRONTLINE FOR INVESTMENT. TEXAS IS WORKING TO REPATRIATE $1 BILLION WORTH OF GOLD BULLION OWNED BY THE UNIV TEXAS ENDOWMENT. WITNESS THE FIRST REAL FINANCIAL STEP TOWARD SECESSION. $$$

Plans have been hatched for a Texas Bullion Depository run by the state of Texas that holds Gold, to be protected from federal confiscation under invocation of the Tenth Amendment. The dictatorship in WashingtonDC must abrogate the rest of the Amendments to the Constitution, or else face financial insurrection. The new laws on gold as legal tender are not gaining traction in any state. Movement for state investment is much more clever and effective. The proposed legislation would allow Texas pension funds to invest in physcial gold bullion. Freshman Rep Giovanni Capriglione is leading the effort. Refer to the Texas Teachers Retirement fund, one of the largest pension funds in the world after CALPERS in California. The initiative would create the Texas bullion depository, essentially the Fort Knox of Texas. An interesting defiant provision is included. The bill contains a clause nullifying any confiscation of gold by the federal government. Assuming the legislation passes, it may be looked back upon one day as the first step in the State of Texas seceding from the United Socialist States of Amerika. The champion Kyle Bass deserves some credit for his broad influence, but he might be labeled a financial terrorist.

Governor Rick Perry is another champion, and very much on the front lines. He wants to bring the state's gold reserves back from a New York vault to Texas for safe keeping. The established Texas Bullion Depository would initially house $1 billion worth of gold bars owned by the Univ Texas Investment Mgmt Company, or UTIMCO, currently stored by the New York Fed. The repatriated batch would serve as an excellent initial core. The alert Texans wish to provide gold bullion as backstop for any failed banks and prevent any potential bank runs. See the SMMercury article (CLICK HERE) on the retrieval story. See the Silver Doctors article (CLICK HERE) and the Yahoo Finance article (CLICK HERE).

 ◄$$$ GOLDCORP C.E.O. JEANNES EXPECTS MORE TROUBLE AHEAD WITH FOREIGN RESOURCE NATIONALISM. IT IS A GREAT THREAT TO MINING FIRM OUTPUT, ALONG WITH LABOR DISPUTES AND VIOLENCE AT THE MINE PROPERTIES. GOLD MINING HAS BECOME A BIG TARGET OF GOVERNMENTS THAT STRUGGLE WITH SUBSTANTIAL BUDGET DEFICITS. $$$

During a recent meeting in Boston, Goldcorp CEO Chuck Jeannes shared his concern about gold mining risks. The rich deposits owned in foreign lands are currently a big target of governments struggling with substantial budget deficits. They see the wealth as their own, readily available for seizure. Jeannes recently told analysts the issues of resource nationalism and governments in deficit spending mode looking for new sources of revenue keeps him up at night. It should. The mining firms are helpless. At the macro level, the nations that contain rich ore deposits are suffering from the global recession based upon monetary inflation as policy, toxic money disbursements, and an archipelago of dead banks on welfare. At the micro level, the same nations are suffering from worker distress at the household level as they attempt to provide for and feed their families at a time when food prices are rising. The revenge by the poor nations is to seize property if their royalty payouts and worker wages are not satisfactory. The excuse heard is that the contracts were made before the crisis, conditions having changed. Jeannes addressed the major threat to miners, saying the following.

"This issue of resource nationalism and the fact that countries around the world, where we do business or where we think about doing business in the future, are operating their governments in deficit spending mode and they are looking for new resources of revenue. We are an industry that is making profits. So we have a very big target on this. We heard last week the government of the Dominican Republic talk about the biggest piece of the pie at Pueblo Viejo. I am going to Montreal next week to consult with the government about what they might want to do in Quebec in terms of tax policy. This is an ongoing issue pretty much everywhere we do business. It is up to the mining industry to do a better job of representing itself and representing its finances. The key to that has been and is to start talking about the all-in costs of producing an ounce of gold rather than cash costs. Goldcorp has taken a leadership role in that. We came out in early January with all-in cost numbers, both for 2012 and going forward. We expect to fully move to reporting all-in costs over the course of time. We are working with the World Gold Council and we will conform to whatever the industry standard that results from that effort. Frankly, our investors and analysts certainly know that sustaining capital and G&A [general & administrative] and exploration are other costs that have to be accounted for in our business. The governments and other stakeholders that we deal with do not necessarily have that detailed view from our financial statements. So, when we talk about producing gold at $300 an ounce, it sends an inaccurate message. Right now, we are talking about giving the full story, sustaining capital, G&A, exploration, everything else that goes in to producing gold. That will allow us to have much more productive discussions with these governments." Always best to avoid the impression of operating with larger profit margin than in reality.

The foreign governments will not care much about detailed fanciful arguments. They will push for higher royalties, re-negotiated contracts, more generous wage deals for their workers, and possibly outright appropriation of property. Interpret what Jeannes said. He led off by providing the explanation why future mine output for a large gaggle of mining firms is likely to be subpar and not meet expectations. He argued for investment in the physical metal, due to an assured decline in mine output. But he is distracted by the prudent management of his firm. The smarter firms will offer deficit ridden nations sweeter deals to avoid nationalism. Only the idiot mining firms will present data at the table of exaggerated profits. The newly established shortage will aggravate the precious metal supply, driving up price. The same reduced output will aggravate the mining firm production, driving down stock share prices.

◄$$$ THE TRADE DEFICIT IN THE UNITED STATES CLIMBED MORE THAN FORECAST. FOCUS ON MOST COSTLY OIL IMPORTS AS GOLD EXPORTS WERE REDUCED. THE KEY POINT IS THAT GOLD EXPORTS ARE MAKING NEWS. $$$

The US trade deficit widened in January as demand for imported crude oil grew again. The trade gap grew by 16.5% to $44.4 billion from a revised $38.1 billion in December. Exports fell for the first time in three months as sales of fuel oil and gold reversed gains in the prior month. The story line is that consumers delayed their spending, due to the storms and watching the federal spending debate. In January, imports climbed 1.8% to $228.9 billion from $224.8 billion the prior month. The figures reflected a jump in energy costs, as the number of barrels of imported crude jumped to 8.41 million, the most since August. Excluding petroleum, the trade shortfall was little changed at $20.1 billion, compared with $19.5 billion in December.

Move to the new kid on the export block, Gold. In general, exports declined by 1.2% in January to $184.5 billion. Sales of industrial supplies dropped by $2.63 billion, reflecting the retreat in fuel oil and gold sent overseas. Keep an eye on gold export ledger item, which could be China requiring trade deficit closure with real money, not bubbly toxic bonds of dubious value. The usual drivel followed press reports, about expected future lift from a fictional global growth outlook. A boost is expected for John Deere and Caterpillar with construction and earth moving equipment. Not likely, as Big Cat sales are down 13% in last three months. Among countries, the trade gap with South Korea rose to the highest level since November 2004 and the deficit with Canada was the biggest in more than four years. Translate to mean Asia is sturdy and domestic energy costs are rising. The trade shortfall with China widened to $27.8 billion in January, compared with $26.0 billion in the same month a year earlier. Always interesting will be the US effect felt from lower foreign currencies, to attract more US trade, thus raising the trade gap during the horrendous chronic USEconomic recession sure to be aggravated by broad sequester spending cuts. See the Bloomberg article (CLICK HERE).

## CONTROLLED BOUND GOLD PRICE

◄$$$ THE GOLD VS SILVER RATIO IS AT CROSSROADS. IT IS DECISION TIME. THE PENNANT PATTEN IMPLIES TIME RUNNING OUT. BIG RESISTANCE WORKS AT 56 IN RATIO. THE NEXT RALLY WILL BEING DOWN THE RATIO, MEANING SILVER WILL RISE MUCH FASTER THAN GOLD IN PRICE. $$$

The Gold/Silver Ratio (GSR) is soon to decline, as Silver makes a bigger move up. The resolution will come with a breakout in both metals. A higher GSR indicates a rise in systemic risk, from narrow hedging and fear of economic damage. The next chapter will be much different from 2008 with Gold going higher, but Silver much higher. A lower GSR indicates more Quantitative Easing, the equivalent of pumping a dead cadaver with blood, as higher commodity inflation wrecks havoc, causing a short squeeze in Silver. The trapped short positions in Silver must cover and the price zooms higher. The coming move is going to be big in direction (absolute terms) as well as from a ratio (relative) perspective. The 6-year chart offers perspective on the important ratio. It demands a resolution, with time running out. My entire gut, brain, and soul expects Silver to prevail and the Gold/Silver Ratio to return to its normal range near 20.

◄$$$ FREEGOLD SILVER ADVOCATES DO NOT EXPECT THAT SILVER WILL PARTICIPATE IN THE PRECIOUS METALS RALLY DURING THE CRISIS PHASE THAT SOON COMES. THEY ARE MISTAKEN. SILVER WILL ZOOM. ARGUMENTS ARE GIVEN OF NECESSITY OF CHEAP PRICE, WHICH IS ENTIRELY BACKWARDS. NECESSITY WILL FORCE A HIGHER PRICE, AS HISTORY SHOWS. THE EXCEPTIONS OCCUR ONLY WHEN REPLACEABLE ALTERNATIVES ARE DEVELOPED. $$$

The premise in the FreeGold argument is that necessity of a cheap Silver price is the order to be satisfied. The economies require a convenient Silver price that accommodates the many irreplaceable applications for the white metal loaded with unique characteristics. The argument is blockheaded stupid, and reminiscent of many mindless Keynesian beliefs. People "need" cheap gasoline to get to work and ship products. People "need" cheap food to survive. People "need" cheap heating oil in New England winters. People "need" fresh water for life. The "need" argument is laced with socialist stupidity klapptrapp and mental deficiency. Do not buy into it. The Jackass might "need" a slick BMW or two for my garage. The Jackass might "need" the best medical care. Whenever the economic argument brings in "need" to argue lower price, the stupidity enters the room with a sharp break from reality. Truly bad analysis follows, worth ignoring. A basic in Supply & Demand is that shortage dictates higher price. To relieve chronic shortage, the Silver price will go much higher. Bums on the street "need" money for food and wine. Incredibly shallow! GREATER NEED DICTATES HIGHER PRICE!! Always has, always will, really simple concept except to simpletons. Those ever popular comm devices will possibly see empty shelves since they "need" lower prices. The real market is a bitch!

Two extremely important factors must not be overlooked when future Silver price is argued and forecasted. 1) Silver is not replaceable for a long growing list of applications, from industry to photography to consumer items, to medical, and lately to pressure treated lumber. Moreover, the incremental cost per product is very small, since a tiny but critical ingredient. 2) Silver has a huge annual deficit from mining output versus demand which worsens by the year, not resolved. The conclusion is higher price comes, much higher price. In fact, the stated FreeGold premise for need is precisely the argument for higher price. They are FOFOA are dead wrong with stupid arguments. They argue that the cost of communication devices would rise too much, or camera items would rise too much, or various electronic products large and small would rise too much. But they overlook something very important.

Consider just an Apple comm device, which requires silver. It requires very small amounts of silver. To be sure, if the entire fleet of Apple products would be forced to pay five times as much for the silver component, then so be it. The price of the Apple product would rise in a small way, probably much less than the shipping cost from distribution centers would rise. Nowhere is the argument by the Freegold brainless crowd that shipping costs will be forecasted lower since the economies need it. The higher silver price would be very bearable indeed, since a small increment in overall production cost. If Apple executives explained that due to the five-fold rise in the silver price, for instance, the comm device was going to be $3 to $5 more expensive, the reaction would be a yawn. Even if $10 to $12 more costly, a yawn would come. The opposite is true. Since indispensable, customers would be willing to pay the small incremental cost if the silver price shot up sharply. Apple would pay up, and even possibly assist in the investment for the supply chain.

The FreeGold argument for more prevalent recovery in recycling also lacks substance. The cost of recovery is rather high, relative to the current price. My belief is that not until the Silver price is over $70 to $80 will much recycling from electronics junk heaps be economically feasible. They would disagree, but let them disagree. The recycle ledger item for Silver supply is still small, to be overwhelmed by increasing investment demand, which always is the driving factor in a bull market. They might include household silverware meltdown with electronics salvage recycle, as data is collected. Let them observe the fast rising Silver price certain to occur in the next crisis chapter. Their arguments were heard when Silver was in the teens, now doubled in price.

◄$$$ JUNK SILVER COINS ARE SEEING A RISING PREMIUM PRICE OVER SPOT SILVER. THE SHORTAGE IS CLEAR, AS IS RISING DEMAND. THE POSTED PRICE FOR SILVER IS FALSE, TOO LOW. $$$

Thanks to the Texas Sandman for details. He provided a snapshot two weeks ago. He wrote the following. "Dividing $21,242.65 by 715 oz per $1000 face Junk Silver yields $29.71 on the silver price paid. This is what APMEX will pay you for $1000 face Junk Silver. This amount is 80 cents above their current  silver bid price, (on March 8th). See the APMEX premium paid as compared to silver prices since 2010. As expected, they reduce premiums as prices rise and increase them as prices fall. However, the magnitude of the recent rise is quite dramatic. This is signaling, in my opinion, a definite shortage in Junk Silver that started inside my circle in the chart, on or around 6 December 2012. As prices begin to rise, we will see a reduction in their premiums, now at 80 cents over silver spot, but not to the extent we observed when prices reached $48 seen in 2011. The available Junk Silver to be purchased just is not plentiful enough to satisfy future demand." See the APMEX website (CLICK HERE). Scroll down to their $1000 face Junk Silver buy prices.

◄$$$ GOLD & SILVER PRICING IS GRADUALLY MOVING AWAY FROM THE PAPER DEVICES THAT HAVE CONTROLLED THEM FOR DECADES. MARKET REALITY WILL TAKE CONTROL, AND IN DOING SO REFLECT THE GREAT SHORTAGE IN SILVER. EXTREME MOVES UP ARE COMING. THE INDUSTRIAL USERS WILL EASILY FACTOR IN HIGHER COSTS, SINCE SO LITTLE SILVER IS USED PER UNIT. $$$

John Embry from Sprott Asset Mgmt agrees with Jim Sinclair that the pricing mechanism of the Gold & Silver markets is moving toward the physical market and away from the corrupted paper price discovery method from futures contracts. Embry adds that the metal in inventory is nearly exhausted. Embry disagrees with Sinclair in that Embry expects a much higher Silver price to stick. Rather than reciting a long quote, the following are Embry's sage thoughts from his unique perspective within the Sprott tower.

The USFed is engaged in rampant currency debasement with the ongoing QE program to monetize bonds. A disaster awaits. The upcoming moves in the Gold price will be shocking, if not spectacular. Most people miss the big picture. The Chinese continue to exploit the artificially low Gold price, buying heavily, accelerating the drainage from the West. Considering the positive long-term fundamentals against extreme negative sentiment, this situation is almost surrealistic. The Silver market is extremely tight, the market in enormously short supply. Demand will overwhelm available mine supply. The JPMorgan silver short position is the primary reason for the low Silver price, nothing more. When the precious metals prices begin their next move higher, Silver will move a lot faster, resulting in a collapsing Gold/Silver ratio. The ratio could plunge to 10:1, which means a skyrocket in the Silver price. Virtually all of the available above ground silver is gone. In addition, the US and Chinese silver stockpiles have been exhausted as well. The market has been outstripping supply for years, certain to intensify in the future. The dynamic forces are present for higher prices, or else widespread shortage problems.

Embry concluded, "The physical market is going to take over and the paper market is headed to the dustbin of history. The paper market has been in charge now for 25 years. But the paper markets for both Gold & Silver are coming to a close, because physical demand for Gold & Silver is outstripping supplies. As that transition takes place, the pricing mechanism will change completely. Once silver clears $35, the sentiment will change. Because the market is so tiny and there is this massive short position in silver, [the Silver price] will move very violently to the upside. The reality is that it will be easy for the industrial and medical fields to absorb a higher price, because it is a sufficiently small portion of the costs in both sectors. I am surprised the manipulators have been able to hold back the price of silver this long. When silver truly surges it will leave market participants speechless." See the King World News article (CLICK HERE). Embry understands market forces of supply versus demand well. Either higher price is seen or widespread shortage appears. Hidden supply had prevented the Silver price from rising much from 2007 to 2010, with a finger of suspicion pointed at India for providing supply.

◄$$$ BACKWARDATION OF GOLD & SILVER PRICES ARE LEADING TO A GRAND EVENT. SOME BELIEVE A SERIOUS PRICE DECLINE IS COMING, LIKE IN 2008. BUT IT IS A DIFFERENT WORLD, WITH MUCH GREATER CHINESE BUYING AND WESTERN COIN DEMAND. INSTEAD, EXPECT FASTER DRAINAGE OF WESTERN BANKS OF THEIR GOLD, WITH THE BUYERS MOSTLY EASTERN. WITNESS A CLIMAX OF BAD SENTIMENT. $$$

The price divergence between the paper and metal prices is growing wider. The confusion is great, with gullible shallow Gold investors falling prey to fears and shallow arguments, alongside systemic propaganda. A COMEX default is more likely than a massive dumping by the investment crowd. In early March, the TFMetals Report published a guest post arguing that the current backwardation in Gold & Silver in a falling market is signaling that bullion prices are about to experience a 2008 style collapse. The Silver Doctor has long believed that the Gold & Silver futures markets would experience a massive take-down immediately preceding their upcoming largest gains amidst the coming systemic collapse. Legendary gold trader Jim Sinclair recently stated the same, predicting an imminent wash-out that would test the resolve of even the staunchest gold bulls, prior to gold heading to $3500 per ounce. See the Silver Doctors article (CLICK HERE).

The Jackass must emphasize the extreme differences in epoch of time. Shallow thinkers expect repeated chapters and lower price, despite the passage of time and profound structural changes. Not here! It is a very different world now compared to 2007 and 2008, worth delineating. Therefore, lower prices will not happen. List the litany of important changes. China was not buying back then, now at 100% annual growth. Western nations were not buying coins back then, now close to 100% growth. The Shanghai Gold Exchange is the new kid on the block, which did not exist back then. The arbitrage between Shanghai and Londonn is just starting on price pulling supply East from West. Furthermore, try to buy some volume bullion bars and pay heavy premiums, not back five years ago. The low paper price is to draw in the Darwin Dummies to dump at the corrupt paper price. Refer to nature, which punishes dummies by Darwinian natural selection, making them extinct. The gold community needs to clean house with some truly mental midget players, so let them be weeded out. They go for GLD and SLV exchange traded fund traps and mining stock dead paper. They sell at the lows. They follow the COMEX price like it is gospel valid, when it should be ignored. Ignore them, for tomorrow they will be bankrupt.


This is a very different world with tremendous gold flow momentum on the metal side. The stock market follows the flow of funds, but shallow gold community advocates do not bother to follow the gold flow East. It reminds me of the stupidity on pedestals with comments years ago expecting a repeat of 1980 and a Gold price crash after the move to $1000/oz. More stupidity on display. Again, the world is 180 degrees different, with countless new factors integrated. A Gold move to $1450/oz and a Silver move to $25/oz would be welcomed. It would hasten the Eastern drainage of the West, since the COMEX/LBMA tagteam would offer a fire sale of their fast dwindling inventory. They would become the Darwin victims, made extinct. The death of the New York & London scum bankers would come, as the heavy volume would flow faster from West to East. Any further price declines on offered precious metals will hasten the drainage and death of the Western banks.

My gold trader source (The Voice) is an acting broker for some unnamed Eastern entities, part of the process. He actually enjoys watching the price divergence, since it accelerates the drainage and will bring the current stalemate to a conclusion, manifested as a collapse of big banks. He is broker to big purchases that exploit the artificial low Gold price. It is temporary, until the drainage of London is complete. The principal vulnerability is with the COMEX itself. As the Gold price declines, the COMEX will approach a default since it has almost no metal, and with each passing month it has fewer clients. Unfortunately, right before the powerful moves, a climax of shallow mental discussion and debate emanates from the gold community. It signals a climax of wretched sentiment.

◄$$$ USMINT GOLD COIN SALES JUMPED BY OVER 250% IN THE FIRST TWO MONTHS OF 2013, VERSUS LAST YEAR. USMINT SILVER COIN SALES JUMPED BY 43% VERSUS THE SAME PERIOD IN 2012. A VERITABLE EXPLOSION IN GOLD COIN SALES HAS IGNITED, STARTING IN FEBRUARY. $$$

The US Mint sold 80,500 ounces of American Eagle gold bullion coins during February compared to 21,000 ounces in February 2012. That racks up to a 283% increase. January 2013 made the record book at sixth place with gold coin sales of 124,500 ounces. So an extreme acceleration is underway. Attribute it to endless QE bond purchases by the USFed, the federal spending sequestered cust, the festering mess in Europe, and a recognized fast decline in the USEconomy. The public is awakening to an unfixable crisis, replete with confusion. Even if not fully understood, the public is buying coins as protection. Overall, total gold coin sales for January and February were 430,500 ounces. During the same two months last year, sales were 124,500 ounces. That racks up to a hefty 246% increase.

Sales were brisk but not as impressive on the silver side. For American Eagle silver bullion coins, reported sales were 3,368,500 ounces during Feburary 2013, a sharp 126% increase over February 2012. Total silver coin sales for January and February were 10,866,500 ounces, up only 43% from 2012. Sales last year over the same two months were 7,597,000 ounces. See the Mining article (CLICK HERE).

◄$$$ SANTELLI CALLS THE GOLD PRICE CONTROLLED BY THE PAPER GOLD MARKET IN CLEAR TERMS. HE STATED THAT GOLD CERTIFICATES HELD BY THE BIG BANKS MIGHT HAVE NO GOLD BEHIND THEM. THE FEISTY POPULAR C.N.B.C. REPORTER FROM THE CHICAGO PITS QUALIFIES AS A TRUTHER, A FINANCIAL TERRORIST, SINCE HE REVEALS THE BANKER CRIMINALITY WITH RESPECT TO MARKETS. $$$

The loud angry guy on CNBC is Rick Santelli. He is both smart and brave. He understands the deceptive economic reports and the rigged Gold market, refuting them equally and regularly in entertaining fashion. He makes the claim in plain terms, accusing the Paper Gold (the futures contracts) of suppressing the price of physical gold. He had better be careful, or else be labeled as financial terrorist by the bank nazis. Santelli made great points, one after the other, hard hitting slams. He claimed buying Paper Gold in securitized form defeats the purpose of investing in gold in the first place, since it would be difficult to tell if there really is any gold behind the paper. He alludes to the vast network of fractional reserve gold banking backstopped by central bank gold sales, gold bullion leases, and gold related derivatives that are collectively responsible for keeping the published Gold price at half the level it should be. The key is mountains of imaginary gold to deceive investors, thus maintaining central bank power. See the CNBC video clip (CLICK HERE).

◄$$$ A SMOKING GUN CAN BE SEEN TO SUPPORT THE CLAIM OF GOLD PRICE SUPPRESSION WITH THE PAPER DEVICES. THE FUTURES DEVICE SHOWS LOWER COMMITMENT TO GOLD FOR CAPTURING THE GAINS. THE G.L.D. EXCHANGE TRADED FUNDS ARE SLIDING OUT OF FAVOR. THE SMOKING GUN CAN BE SEEN FOR A DIVERGENCE OF GOLD PRICE VERSUS THE PAPER SHAMS. EASTERN CENTRAL BANKS ARE EXPLOITING THE PRICE DISCOUNT ON GOLD, GIVEN BY THE CORRUPT NEW YORK AND LONDON BANKERS. ASIANS REMAIN HEAVY BUYERS ON THE PHYSICAL SIDE. $$$

Focus on the last three years. Since August 2010, the major financial players have been anticipating, seeing, and feeling the effects of the massive experiment called QE by the central bankers. Refer to the bond monetization that effectuates the profound hyper monetary inflation led by the US Federal Reserve, duplicated by Europe and England and Switzerland and Japan. Basically, when the major central banks were set to begin the grand debasement of their currencies, their field marshalls at Wall Street and London City began a gigantic suppression game. The evidence is seen in two rooms. The exposure to Gold futures contracts and related options has gone down, which means the players do not have a commitment on leveraged instruments to take advantage of a rising Gold price (COMEX losing its client base). Also, the total GLD shares outstanding is a flat line (GLD fund being shunned). Perhaps an adequate explanation is that the retail stock investor has been depleted, defeated, and driven away dejected. A better explanation centers upon the abuse of the GLD fund by the big US banks, who short the shares, raid the metal inventory, and dump the gold bars on the market. The abuse of the GLD fund might be finally hitting the streets in nasty publicity. The Western bankers are slitting their own throats, offering scarce Gold bullion at artificially low prices. The Asians grab it!

The retail investors might have turned away, preferring vaulted accounts or coins in possession. The fact stands that with a rising Gold price since late 2010, the leveraged positions are not coinciding at all, nor is the GLD stake. Witness Gold price suppression and abusive raids of the indescribably corrupt exchange traded fund. The chart below shows the discrepancy in vivid terms. If the investors hold Paper Gold, whether a GLD share or a gold certificate, nothing is held of substance. Furthermore, such fake instruments and devices will not enable them to profit from the Gold price rise. It is an empty hug, a snatch of air, a foul flatullence. The chart shows the smoking gun, as the collapse of paper will accelerate. In fact, the COMEX is the bonafide paper junkie grave yard. See the Zero Hedge article (CLICK HERE).

During the recent takedown covering late January and early February, the Eastern central banks have taken a massive 225 tons from the physical gold market. They are exploiting the opportunity, regarding it as a price discount fire sale, according to Andrew Maguire. He lifts the curtain to reveal what is going on behind the scenes. See the King World News interview (CLICK HERE). The volumes are less than the drainage of London banks last April through July, but the drainage continues.

## THANKS

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