GLOBAL MONEY WAR REPORT
DEBASED CURRENCY COMPETITION
SOVEREIGN BOND BREAKDOWN
CENTRAL BANK DISCREDIT

* Monetary Shrapnel
* USFed Under Pressure
* USDollar Enjoys a Reprieve
* Global Attack on USDollar
* Battleground of Precious Metals
* Silver War a Focal Point
* Asia Unites While Japan Reels


HAT TRICK LETTER
Issue #86
Jim Willie CB, 
“the Golden Jackass”
15 May 2011

[Editor Note: The global financial crisis has ratcheted upward by one level. Entire platforms are in the process of fracturing openly, even as widespread rejection of the USDollar is occurring. For months, my past forecasts of a chronic bank insolvency have come true and persisted. Forecasts of a chronic housing decline have come true and persisted. Forecasts of global revolt against the USDollar, and its chronic decline have come true and persisted. So the Hat Trick Letter moves on to focus on the Global Monetary War in full glory. We are witnessing the ruin of the COMEX in the process of chronic corruption of the USTreasury Bond market from rampant debt monetization, soon to be recognized as chronic, another realized forecast turning persistent. Given the nature of the current developments, the Hat Trick Letter will adapt. Although in the future, other Macro Economic Reports might be issued and posted, the emphasis will be made on the expanding monetary wars in progress at a high level. The first report posted this month is the Global Money War Report. It will focus on the Competing Currency War with grand debasement, the sovereign bond breakdown that supports the currency system, the systemic factors justifying the continued Gold & Silver bull markets, and the total discredit of the central bank franchise system which has resorted to hyper monetary inflation in order to cover the USTreasury Bonds. Foreign creditors have largely stopped buying them. The second report to be issued will continue to be the Gold & Currency Report, which will focus on more ground level stories with greater detail. And by the way, I never respond to invitations to FaceBook or LinkedIn, or any other social network, for security reasons, but thanks.]

"Believe me, the next step is a currency crisis because there will be a rejection of the dollar. The rejection of the dollar is a big, big event, and then your personal liberties are going to be severely threatened." ~ Ron Paul (reference is to global US$ rejection)

"The bankers are waging a paper silver war on paper longs. This is why I urge all of you not to play the crooked COMEX game. The COMEX is nothing but a paper game. Do not use leverage whatsoever. Just go and buy the physical silver from your local dealer or bank. This is what will kill the bankers game." ~ Harvey Organ

"The biggest reason to stay in Gold is that central banks around the world can see the writing on the wall long term, which is that the dollar will be devalued one way or another and that Congress has no appetite for hard decisions which would be deflationary in nature. You also have the Chinese consumer, who has become a very large Gold buyer, matching almost the Indian consumer and I think quite clearly, will exceed the Indian consumer. I think ultimately, physical Gold is the story. It is a scarcity story. The more the United States dithers and the more the Fed is willing to print money, as opposed to dealing with inflation properly, the more this trend will happen." ~ John Burbank (from Passport Capital)

"The once great nation of America is now a goat rodeo where the electorate is both confused and ignorant, yet stubbornly believes itself otherwise. Adroitly ruled by corporate and banking Elites whose deadly threat remains unrecognized, America today is bereft of leadership and options, a shadow of the nation intended by its founders." ~ Darryl Robert Schoon

"This is America. Corporate stealing is practically the national pastime, and Goldman Sachs is far from the only company to get away with doing it. But the prominence of this bank and the high profile nature of its confrontation with a powerful Senate committee makes this a political story as well. If the Justice Department fails to give the American people a chance to judge this case, if Goldman skates without so much as a trial, it will confirm once and for all the embarrassing truth: that the law in America is subjective, and crime is defined not by what you did, but by who you are." ~ Matt Taibbi (Rolling Stone)

"The consciousness of being at war, and therefore in danger, makes the handing over of all power to a small caste seem the natural unavoidable condition of survival." ~ George Orwell

MONETARY SHRAPNEL

◄$$$ ALL 12 WHISTEBLOWERS FOR THE GULF OF MEXICO SABOTAGE ARE DEAD OR MISSING. THE MOST PROMINENT MURDER VICTIM IS MATT SIMMONS, THE ORIGINAL PEAK OIL ANALYST. THE STORY WAS THE LAST FOR THE HAT TRICK LETTER CRISIS COVERAGE REPORT. $$$

The Jackass ended the Crisis Coverage Report in October 2010 after the Simmons murder. He revealed the sabotaged British Petroleum DeepWater Horizon oil rig platform, and a larger threat to the Gulf states from a grand geological shift that is beyond the scope of this newsletter. Simmons had appeared on the King World News radio interview ten days before his murder in Maine in a hottub. He drowned in 3 feet of water, with help. Simmons used to work at Halliburton earlier in his career, but before former Vice President Dick Cheney took the helm and converted it into a criminal syndicate stronghold. Simmons had access to information whose exposure led to his death. Since the Jackass had interviewed with Eric King before, that was too close to home. The Crisis report had covered systemic ruin topics like the swine flu genocide plan, the Gulf spill, the 911 false flag attacks to conceal the Nazi Banker coup d'etat of the USGovt, the gulag of US-based FEMA camps for processing Americans (much like Auschwitz and Dachau), the upcoming USTreasury default, mysterious suspicious mid-level banker deaths (see Freddie Mac CFO and ABN Amro), the march by the United States into the Third World, the phony War on Terrorism to provide a smokescreen for the militarized capture of the global narcotics trade, money laundering into Wall Street banks, violations of NATO treaties, and the escalating war with China. These are indeed important and nasty concepts, still relevant, but beyond the scope of this newsletter. They are dangerous topics to the extreme. In no way whatsoever is the decision to discontinue the Crisis report regretted, despite a handful of objections by subscribers who looked first to that report when entering the website. A great many subscribers have read the alarming reports and awakened. They served a purpose for two years. The tradeoff of my personal safety and prospect of a uninterrupted life, even enjoyable gray haired years is favored against continued publication and heightened risk. Those familiar with the Vietnam War will recognize the template of the famous photo where a Vietnamese Army officer shot a bound young man in the head. That image is forever etched in my memory from around 1970. By the way, all Exxon Valdez cleanup workers from 1989 are dead, not of mysterious death, just basic toxic poisoning from too much exposure to chemical fumes.

The whisteblowers thought they were doing the noble deed. They were. Many have paid the price with death, victims of syndicate murder. Many were targeted and killed. Some are missing. One is imprisoned with the syndicate favorite of child pornography, the same charge used for internal whisteblowers in 2002 at the USDept of Homeland Security, the FBI, and the USCongress. A few Congressmen opposed to the Patriot Act were either killed or intimidated until its passage into legislation. The coercion continued in 2008 with passage of the TARP Funds. The coercion continued last year when all Tea Party advocates signed the Patriot Act extension. The US press & media does not report the stories, because they are a key branch of the syndicate, its information wing. See the phony War on Terrorism in continued media coverage, the phony 911 stories, the phony Bin Laden stories, the dead end reporting of missing Madoff money, the favorable light shown to Wall Street banks, the absent coverage of mortgage fraud cases, the phony USEconomic recovery stories. The US press & media still mocks the Truthers of 911 despite a group of 500 US university engineers who cite contrary evidence, despite a group of 1000 architects and engineers who cite contrary evidence. The BP oil spill will go down as the greatest environmental crime in modern history, complete with official coverup. It followed the greatest high profile mass murder crime in modern history, the 911 attacks on the World Trade Center and the Pentagon. The attacks were a Nazi Banker coup that enabled full control of the USDept Treasury, unleashed an endless war for narcotics control, and forced full media blackout of dissent. Just some tidbits. Small water bottles are not permitted onboard airlines because that is a popular method to transport clear diamonds. Caribbean gambling websites have been shut down without jurisdiction. The syndicate lodged in the USGovt security agencies is actively attempting to isolate and obstruct money flow for competitors in the narcotics trade.

Halliburton is a main cog in the crime syndicate. They have a blanket of on-shore oil contracts to benefit from the off-shore oil drilling ban. They visited the BP Deepwater Horizon oil rig twelve hours before its explosions. They have built all 250 FEMA extermination camps inside the United States. They collected much of the missing $50 billion from the Iraq Reconstruction Fund. They have received numerous hand slaps for $billion fraud in USMilitary service contracts to provide food and fuel. The BP incident is shrouded by USDept Environmental Protection collusion, where water samples have been falsified in countless cases. University researchers have numerous samples in direct contradiction to the USGovt results on water samples. The BP incident is shrouded by the USCoast Guard, which kept people and cameras at bay when millions of fish were disposed of, even two whales. The dead marine life would have cost BP a cool $10k fine per fish or mammal. The same USCoast Guard has a main responsibility of shipping in narcotics for the syndicate. The US security agencies run a narcotics monopoly on a global level. Without the dirty money laundered into Wall Street, the big US banks would have folded in 2009. Even the United Nations came to the same conclusions in a global drug report. See the Health Freedoms article on the BP deaths (CLICK HERE). By the way, the archived copies of past Crisis Coverage Reports will gradually fade away from the member area of the website. The BP oil spill stories are found from June to October in thorough style. No more crisis reports will be written.

◄$$$ WILLIE RAP SONG, JUST HAVING FUN. SERIOUS BUSINESS, FOR SURE. $$$

Housing market still feels the screws

Bank owned homes are buried with blues

The Economy stuck in toxic ooze

Job Growth is such a ruse ... ooo aaa ooo aaa

Ben Bernanke is looking confused

Central banks have no clues

Sovereign debt is so abused

USDollar is such a ruse ... ooo aaa ooo aaa

Expect more Japanese Yen rescues

QE3 is what they will choose

Purchasing power is sure to lose

Fiat money is such a ruse... ooo aaa ooo aaa

Negative home equity endless, turn to booze

No retirement as workers sing the blues

Big Banks get the money, people the screws

Change never came, all just a ruse... ooo aaa ooo aaa

Bin Laden dead is to confuse

Propaganda is the only news

In the end, expect blame in Moslem spews

The War on Terrorism is such a ruse ... ooo aaa ooo aaa

Soon to crumble, the Ruling Elite continues

Hang the Big Bankers without their shoes

◄$$$ THE USHOUSING MARKET CONTINUES IN A GRADUAL DOWNWARD SPIRAL. CONSUMERS WILL BE STRAPPED WITH LESS EQUITY. BUSINESSES WILL BE HARMED FROM LOWER DEMAND. BANKS WILL BE WRECKED FROM THEIR ALREADY INSOLVENT CONDITION. NO USECONOMIC RECOVERY IS POSSIBLE WITHOUT A HOUSING REBOUND, WHICH WILL NOT COME. THE BANK INVENTORY IS HUGE AND GROWING. THIS MARKET WILL BECOME FAR WORSE. $$$

The US housing market is in a death spiral, a ruined market, which continues as an extremely powerful millstone on the entire USEconomy and USFinancial system. The overall price index does not accurately portray the damage, and is thus a little misleading. It does not reflect huge price declines in the high end, which still suffers from enormous inventory. The housing market has taken a further tumble, right on forecast with the Hat Trick Letter. The gimmicks are gone like the tax credit. The overall housing market index fell by 3% in 1Q2011 versus the Q4 of last year, and fell by 8.2% in March 2011 versus March last year. It was the most significant monthly decline since 2008. Additionally, a Zillow survey indicates nearly 30% of borrowers owe more than their homes are worth, the pervasive negative equity, upside down insolvent condition. The clueless cast of US economists has responded like lemmings, as they push back their forecast of when the housing market will reach bottom. My call is no recovery for at least another two years, the same phrase used in the Hat Trick Letter in 2008, in 2009, and in 2010, which implies a potential permanent decline. To repeat, the bottom will be reached when the existing home prices are approximately 25% to 30% below home construction costs. The abundance of foreclosed homes is weighing down the market, as described in these reports for several months in basic analysis. Prices have fallen for 57 consecutive months, according to Zillow. Last year, the housing market showed signs of improving as price depreciation slowed, but the progress was spurred by federal programs that gave buyers up to $8000 in tax credits, a fleeting vacant concept. Sales collapsed when the credits expired last summer, and prices in many markets have been falling ever since. Stan Humphries is the Zillow chief economist. He called the monthly declines for February and March staggering, pointing out that the true underlying demand cannot compensate for the overwhelming supply. Humphries believes prices will not hit bottom before next year and expects they will fall by another 7% to 9%. He is conservative.

The flood of foreclosed homes on the market continues to push down home values. Prices are greatly affected by the many foreclosed properties that often sell at a discount, which forces other sellers to lower their prices in a grand cascade. Appraisers must respond, and are acting more carefully to avoid lawsuits. Nationalized mortgage firms Fannie Mae & Freddie Mac have sold more than 94,000 foreclosed homes during 1Q2011, a new high that represented a 23% increase from the previous quarter. They held another 218,000 properties at the end of March, a 33% increase from a year ago. So the situation has actually worsened over time. Two weeks ago, Fannie reported a $6.5 billion net loss, mainly from higher loan loss reserves in anticipation of falling home prices. The pathogenesis bears repetition.

The USEconomy depended in insane fashion on the housing bubble as it expanded. Consumers withdrew home equity to finance their spending, often losing their homes later. As US manufacturing departed the nation for several years, legitimate income was replaced by debt. The USEconomy has been left vulnerable to systemic breakdown. This is the tragic stupid reckless incompetent legacy of US economic guidance. No recovery is possible without a housing rebound. It will not come. At best in two to three years, a long consolidation period will occur, that depends upon liquidation of the big US banks. They must be liquidated along with their toxic portfolios, as restructure prerequisite. That will come only with a USTreasury Bond default. The USGovt is funding or backing 90% of home mortgages. The USFed is artificially suppressing interest rates by setting the Fed Funds rate near zero, and worse, printing money to purchase USTBonds and some USAgency Mortgage Bonds. Yet the housing market continues to sink, a clear signal of a wrecked market that the corps of economists cannot perceive. The USFed monetary policy is failing before the entire nation in full view.

◄$$$ THE USFINANCIAL SYSTEM IS ALREADY DEAD. THE FATAL HEART ATTACK OCCURRED IN SEPTEMBER 2008. THE REVIVAL HAS PROVED TO BE WITHOUT BASIS OR VALID SUBSTANCE. THE USDOLLAR HAS REFLECTED THE RUINOUS SITUATION. WITNESS THE RUIN OF MONEY, THE DISCREDIT OF CENTRAL BANKS, AND THE BREAKDOWN IN SOVEREIGN DEBT ISSUED BY GOVERNMENTS. THE KILL SHOT WILL BE WITH THE GOLD & SILVER MARKETS IN A BROKEN COMEX, AND THE USDOLLAR DISCARDED IN GLOBAL TRADE. $$$

One of my strongest and most reliable contacts from the Gold trading world made some stirring riveting comments about the financial market activity in the last two weeks. He always has an edge to his comments, with an eye on geopolitics. They are as disturbing as they are enlightening. Great change is in progress. My view is that in the first week of May, the COMEX showed clear evidence of default, failure, and desperation clouded by a rapid skein margin hikes. They were not in a position to meet May Silver deliveries lined up for demand, and thus strived to corrupt the market in a climax with the desperate margin hikes. They hope to produce silver bullion from leveraged players caught long, forced out on margin calls. Over the course of the first week in May, he said the following:

"It is not about prices going up and down. It is about purchasing power and debasement of the USDollar. The US$ is cratering and metal automatically re-prices itself. Precious metals are money. Money is a medium of exchange, a store of value, a measure of value, and a standard of value. FIAT is not money. People are clueless to the most basic facts. People discuss when the system will implode. Well, the system already collapsed but no one seems to comprehend it. The initial collapse occurred with the Lehman Brother implosion, which ruined the entire upper echelon of the US banking system. While the US has been contaminated and radiated by Fukishima from Japan, people talk about Libya, Syria, and the other hellholes where the CIA/MI6 stage diversions. They distract from the core truth of values. The Silver price is firmly on a path that will take it past $200 (two hundred) in today's US$ terms. The timing depends on when people realize the US$ and Euro are hand in hand, rushing to go over the cliff in a collective suicide. Bernanke and the other central bankers are the Dr Kovorkians of the monetary systems, who unwittingly destroy the currencies.

"The pricing of metal in paper fiat, whether Dollar, Euro, Yen, Pound, actually is irrelevant when it comes to purchasing power preservation aspects and assessment. By the end of the day only metal is real money, since it is the only denominated currency that will be and is a medium of exchange, a standard of value, a measure of value, and a store of value. Precious metal will be the core of the new monetary system that emerges. FIAT is not money since it only is a medium of exchange and completely lacks the three other components that are required to be present to make money money. The world financial system as we know has already died. The dead body simply has not turned cold and rotted yet. We shall have a very limited time to adapt to preserve assets. We have a brief and closing time window to convert vast amounts of worthless FIAT into hard assets. That time window is defined by the time the current system's dead body is cooling down before the real rotting sets in. The destruction of perceived wealth, which was never real wealth, has already reached cataclysmic proportions. If prime assets retain 30% of their current value, I would be surprised. Once we unhinge and make the fractional reserve banking a thing of the past, re-introduce developed barter and counter-trade systems by utilizing 21st century technology that controls the settlement process, we shall very quickly regain economic and political stability worldwide. This is so because there will be no more power center such as Wall Street or the City of London being able to choke the system and drive people into poverty.

"The current power structure inside the United States, dominated by the banker elite, is irrelevant since these people do not matter any longer. They have outlived their usefulness and will be discarded or bypassed. The system they require to allow for their misdeeds is falling by the wayside. The Anglo/American Axis is a mega-Madoff Ponzi scheme. Not that the others stepping into the void are better, only to be revealed in a decade or more time. They are different and have longer, deeper, and much more sophisticated cultures. There is an invisible battle over Europe going on right now that will set the tone and stage for things to come." The last comments are most poignant. China will become the global bankers. They might reveal strongarm tactics, undue influence, and hidden aggression, but only after a decade of much more honest brokering of monetary power and wealth in impact. But the big prize is Europe, since after it aligns with Russia and China, the United States will be left in the cold. The US will be forced to bid down the USDollar in order to purchase imported supplies. The USGovt and USMilitary have violated numerous NATO treaties, with consequences sure to come. NATO airbases are routinely used to ship narcotics by the USMilitary and security agencies. See the Eastern Europe missile system aimed at Russia. See soldier coffins returning to the US loaded with heroin. See the midnight shipments aside from inspections.

◄$$$ THE INHERENT DEMAND DESTRUCTION ARGUMENT AVOIDS THE USDOLLAR EFFECT FOR LIFTING THE COST STRUCTURE. THE COMMODITY RISE WAS FALSELY ATTRIBUTED TO GROWING DEMAND, EVEN A USECONOMIC RECOVERY IN PROGRESS. IT WAS FROM THE DECLINING USDOLLAR. THE EMPTY DEMAND ARGUMENT MUST BE REFUTED AND DONE AWAY WITH. $$$

The mainstream press & media are losing the information war, but they won a brief battle by ambush. For the last several months, during the extreme unprecedented magnifed USDollar debasement through debt monetization and widespread insolvency at the highest levels, they have been promoting the deceptive incorrect story that the commodity bull run has been attributed to many factors. 1) Strong demand from the emerging nations, 2) rising demand from the recovering USEconomy, 3) disruptions in the Arab world, and 4) trade conflicts with China. Curiously, during many interview of guest analysts, fund managers, and otherwise intelligent people, the added factor of accelerated USDollar supply by the USFed is mentioned. The press ignores the factor in response, never offers follow-up, and never leads with it as a relevant driver for higher commodity prices. They focus almost entirely on higher demand and supply interruptions. The entire world is well aware of the connection that links food & energy prices with the endless USFed initiatives to cover toxic bonds and unwanted bonds, relying upon pure monetary inflation. Refer to mortgage bonds and USTreasury Bonds. The last thing US financial wags wish to do is to give greater emphasis to the ruin of the USDollar via unbridled monetary inflation and deficits, which would be better described as Third World economics. Witness the fast rising cost structure forced by higher commodity prices, from energy to metals to foodstuffs, in the face of a global economic slowdown through the entire Western world. The story is one of systemic failure. One must acknowledge that higher commodity prices and higher cost structure have a big negative dampening effect on the global economy, in particular the USEconomy since commodites are listed in US$ price terms. The feedback loop is clear. That in no way addresses the systematic ruin of money, the grand debasement of the USDollar, and the corresponding reaction in the rising Gold & Silver prices. The precious metals are not priced according to USEconomic strength, but rather to monetary system ruin and USDollar discredit. Precious metals are not in a bubble, but rather the USTreasury Bond market is. Herculean efforts are required to sustain the USTBond bubble, an exercise in hyper monetary inflation.

The bizarre irony is that one of the main triggers for the commodity market selloff in the first week of May was the story (false, in my view) that the USFed would begin to tighten. The story is that Quantitative Easing will end in June after a rip-roaring success, even that the USFed will gradually push up interest rates later in the 2011 year. Neither is true or remotely likely. The extreme irony lies in not admitting that USFed monetary inflation was responsible for the rise in commodity prices, yet the USFed withdrawal and tightening was responsible for the fall in commodity prices. Their lies and deceptions are easy to uncover and reveal to all. The QE will continue in full hidden fashion, and even go global with the Euro Central Bank, the Bank of England, and the Bank of Japan all involved. The East will continue to sell USTBonds and the West will continue to monetize them with freshly printed valueless money, mere paper with ink showing dead presidents with ornate etchings. The major theme later this year will be the coordinated Hidden Global QE to prevent a Western financial system breakdown. Obviously, QE will continue since very few foreign creditors will buy USTBonds any longer. The USFed buys over 80% of USGovt debt, whether new debt or rollover debt. The QE must continue and expand globally, since legitimate demand does not exist to accept the debt supply. The USFed cannot halt the monetary inflation to the extreme, since doing so would result in a USTreasury Bond default, a USGovt shutdown, a US Stock market collapse, and a USEconomic implosion. They will in fact expand their QE and attempt to promulgate the deceptions to the opposite. They must cover the endless gargantuan USGovt debts and rollovers. They must cover more big US bank losses, as credit assets continue in an acidic meltdown. They must cover state & municipal bond failures, ready to default despite all protestations. They must cover more US home equity loss indirectly through upcoming home loan relief programs, again administered through the guilty banks. Notice the heavy debt monetization done by the USFed, in their Permanent Open Market Operations.

The Deflationists have begun to awaken, even Rick Ackerman. He is a bright guy, with great skill in chart analysis, but a horrendous blind economist. He awakens, let us celebrate. He is the King Deflationist Knucklehead and Mike Shedlock is the village idiot in his clan. They focus unduly on demand, demand, and demand, ignoring or failing to comprehend the monetary effect on the cost structure in an utterly laughable public display. The Deflationists have been wrong on crude oil and gold prices, in fact the entire commodity basket, for two full years without apology. They bought the recovery story and attributed higher commodity prices to the recovery, like idiots. Lower demand is a zero factor in falling commodity prices here in the past two weeks. It is all about the Euro kicked down, the COMEX margin requirement hikes, the pulled credit from hedge funds by Wall Street, even some temporary rapprochement between the US & China. The Deflationist nitwits are like guys fixated on a single television at a massive retail display of a great many televisions, each trained on a different channel. They insist on watchiing only one television and only one channel, ignoring and missing all other channels.

◄$$$ INVESTMENTS IN RARE EARTH METALS IS NOT THE SURE THING. THE PROFITS WILL BE IN THE MIDDLE RUN. ANY CONCLUSION WILL NOT REALIZE THE GREAT SUCCESS PROMISED. TRANSFER YOUR INVESTMENT POSITIONS FROM RARE EARTHS TO SILVER, AND SOME IN GOLD. THE RARE EARTH PURVEYORS HAVE NO PLATFORM FOR SETTLEMENT AND NO PIPELINE OF SUPPLY. IT IS A RUSE. SILVER IS THE REAL DEAL WITH A HUGE PAYDAY FOR INVESTORS AND A DEATH KNELL FOR THE SYSTEM. $$$

A movement has been growing to invest in Rare Earth Metals. Many investors have done extremely well. The game is a vacant building with hawking salesmen doing a brisk trade out front but nothing inside. Investors would do well to cash in, liquidate positions, and transfer to Silver investments, even Gold. The managers of some Rare Earth Metal (REM) funds claim they will be able to sell to retail entities when the time comes. But they will not be able to. An expert in the mining field has shared that REM is a ruse without the necessary connections in order to finish the last mile or last kilometer. He cited three reasons. 1) They will have no logistics for shipments. 2) They have no settlement platform for securities. 3) They have access to the products at the source. As a confirmation, inquire with the managing funds, how they operate and who lends them the power to enforce their operations. The answer is that Russia & China do not play with the Western Boyz.

The bottom line is written in big letters, TO STAY IN GOLD & SILVER, where demand overwhelms supply, and where silver supply is fast vanishing. The mining expert said, "The rare earth metal is a game where the minimum required to play is EUR 100 million a pop. If you do not have EUR 500 million loaded and ready to be put down, don't even think about it. People telling you otherwise do not know what they are talking about." The suspicious promoters of these REM baskets have assembled conferences with high income and wealthy people. No futures market exists for these metals, led by indium, hafnium, gallium, bismuth, tantalum, and tellurium. Some promoters from Switzerland offer a physically stored basket of these, complete with rather large mark-up in price. They pay typically 14% over wholesale but claim they will be able to sell them to others at retail prices when the time comes. The time might come, but the higher available price to clear with ready buyers does not exist. Stick with the most unique and widely demanded metal on the planet that has a broad market, millions of customers, and an established market whose corruption is being stripped away, revealing multiples in higher prices, SILVER.

US FEDERAL RESERVE UNDER PRESSURE

◄$$$ THE USFED IS SELLING PUT OPTIONS ON USTREASURY BONDS, A BULLISH LEVERAGED RECKLESS MANEUVER. THEIR DESPERATION IS GROWING TO MAINTAIN THE USTBOND ASSET BUBBLE. THE GREENSPAN PUT TERM HAS BECOME A BERNANKE PUT REALITY. THE USFED IS ATTEMPTING TO PUT A LID ON THE LONG-TERM RATES DURING A TIME OF EXTREME DEBT SUPPLY AND EXTREME DEBT MONETIZATION. THE INTERVENTION ON USTBONDS IS BROAD, DEEP, AND RELIES UPON SEVERAL POWERFUL DEVICES. CONTROL OF THE GIANT ASSET BUBBLE TURNED DESPERATELY RECKLESS. $$$


The US Federal Reserve is selling put options on USTreasury Bonds in an effort to drive down bond yields. The bold leverage is an extraordinary tactic during a bond siege, with no precedent in the modern history of central banking. The maneuever represents yet another gigantic intervention in the bond market. The action complements Interest Rate Swaps used to keep long-term rates down from more controllable short-term rates (Fed Funds), and complements the egregious USTreasury Bond monetization from basic purchases funded by monetary printing. The insult icing on the corrupted toxic cake is monetized Treasury Investment Protection Securities (TIPS). The TIPS are intended to offer a bond yield as a reliable hedge against actual price inflation. So the USFed and USDept Treasury are engaged in grotesque broad integrated interventions to control the largest paper asset bubble in the world, USTreasury Bonds. They realize that the hyper inflation funding is eventually going to be insufficient, and that all asset bubbles require an acceleration of funds to maintain a constant price level (bond yield). Their devices serve as thick layers to the castle walls during attack.

A put option is a contract that profits from a falling USTBond principal value. So it profits from rising long-term bond yields. By selling such a put option contract, they will profit if bond principal do NOT fall in value, which corresponds to bond yields NOT rising. As they sell, they collect money from the buyers who face total loss if USTBonds remain stable, in a shameful captured income source. Since they control the Printing Pre$$ from which debt monetization is managed, they can assure that the bonds hold their value, even if they must accelerate the debt purchases and monetary expansion. The USFed maneuver has two important messages. First, they are collecting illicit income from a rigged casino table. They control monetary growth devoted to the bond purchases. Second, they are interfering once again in a supposedly free market. In fact, no markets in the United States or in US$ denomination are free anymore, as all are interfered, some to the extreme. The put options deployed fit into a mosaic of QE, Interest Rate Swaps, and TIPS purchases to produce a staggering corruption of the USTreasury Bond market. Some market analysts will point to the Bernanke put option as a solid seal of assurance for the USTBond itself, one that demonstrates its viability and stability. Other more enlightened analysts will point to the maneuver as one more layer of bond market wreckage and infestation by human heavy hands, that undermine to the extreme its integrity, and cast a dark syndicate shadow on the central banks, whose prestige has vanished in the wake of the global financial crisis and exposed multi-$trillion bond fraud. It is a toxic seal of doom. See the YouTube videe (CLICK HERE) by Eric deCarbonnel. He conducted excellent research from the USFed's own minutes that the syndicate command center is manipulating the USGovt bond market using derivatives. Their usage of put options on US sovereign debt is a mechanism by which USTBonds are insured against default by the USGovt itself. The practice is not insurance at all but rather a fraud.

◄$$$ GOLD IS NOT IN A BUBBLE. AS THE SUPPLY OF MONEY HAS SHARPLY INCREASED, THE PRICE OF GOLD RISES TO REFLECT THE DEBASEMENT OF MONEY. THE BUBBLE IS IN THE MONEY SUPPLY AND USGOVT DEBT. IT IS IMPORTANT TO PERCEIVE THE BIG PICTURE IN GOLD FROM A MONETARY ANGLE. $$$

Frank Holmes of US Global Investors is an excellent high level analyst and a superb leading fund manager. His perspectives are always valuable. He pointed out how the Standard & Poor warning on the USGovt debt outlook represented a shaking of the AAA tree, a rating that is totally undeserved. The USGovt indeed needs a plan to quickly address its debt and budget issues. The future fiscal austerity measures will likely act as a drag on the USEconomy. Holmes believes the actual spending austerity imposed will result in greater deficits, thus ensuring a third round of quantitative easing (QE3) sometime early next year. The US finds itself in a corner, governed by a liquidity trap. Downward pressure will continue on the USDollar, thus sustaining upward pressure on commodity prices. Holmes emphatically believes the bull cycle for Gold & Silver has a long way to run. Martin Murenbeeld from Dundee Wealth put the lunatic notion of a Gold Bubble in context with the following chart. In yellow, the current ten years of gold bull market pales by comparison to the Nasdaq decade (in blue) and the post-Bretton Woods gold episode in the 1970 decade. That last gold run 40 years ago was arrested by 15% Fed Funds rates administered by Paul Volcker. This Gold Bull is just entering a middle gear on its way to $5000 or more, he believes. It totally lacks the unstable spikes common to bull runs of short duration. Holmes points out a key difference is the growing affluence of the developing world, which saves in more trustworthy instruments than the USTBonds. These nations have turned to Gold as a store of wealth in unprecedented numbers, like in China and India.

The USFed Chairman, Wall Street marketing motivated analysts, and US economists have a common blind spot. The effect from money supply growth is manifested directly upon Gold. Murenbeeld provides a fascinating chart showing how much the price of Gold would have to rise so as to compensate and cover the amount of money printed since 1934. At that time Gold was revalued at $35 per ounce. Apply the arithmetic on the widely used money supply indexes. Using M1 as the cover ratio, Gold would need to more than double to $3675 per ounce to cover all paper currency and coins. If M2 is used, a broader more common measure of money, Gold would need to climb to $7931 per ounce to cover the outstanding amount of the US money supply. Therefore, the claims of a bubble are not only wrong, but fail to recognize the upcoming move in the Gold price to at least $4000 and probably $8000. Gold rises to catch up to the supply of phony money printed, and to compensate for the actual bubble in USTBonds.

Put the Gold & Silver bull markets into a greater even wider angle of perception. The price rise in Gold & Silver in the 30 years is less than a first class US postage stamp, less than a dozen eggs, less than a gallon of gasoline, much less than a new car. But the rise in precious metals prices is about 7x to 8x less than the rise in the USGovt debt burden. Thanks to the Dollar Vigilantes for the chart. A great perspective.

◄$$$ QUANTITATIVE EASING WILL CONTINUE BUT IN SECRECY, SO AS NOT TO RENDER DEADLY DAMAGE TO THE USDOLLAR. NO END IS IN SIGHT FOR USGOVT DEFICITS. EXPECT IT TO APPROACH THE $2 TRILLION MARK, FORECASTED HERE IN MID-2009 WHEN IT FIRST REACHED THE $1.5 TRILLION LEVEL. THE USFED BUYS OVER 80% OF USTBONDS FROM NEW ISSUANCE AND ROLLOVER. THE Q.E. DEBT MONETIZATION WILL CONTINUE FOR THE SIMPLE REASON THAT A USTBOND DEFAULT WOULD OCCUR OTHERWISE. FOR THE BIG HIGHWAY OF SELLERS, SEE JAPAN. $$$

Many extremely large avenues offer supply that must be covered by USFed monetary inflation, implemented as debt monetization. Refer to USGovt debts, insolvency based deficits, toxic bond redemptions, credit derivative black holes (like Fanny Mae and AIG), and basic largesse (like for Wall Street bonuses). Clearly the biggest avenue in view, unobstructed, subject to political debate, vulnerable to global blame, is the USGovt deficit. In summer 2008, it spiked toward $1.5 trillion in a shocking display of events. The propaganda, motivated by claims of repairing the US banking system, by claims of stimulating the USEconomy with near 0% rates, by claims of economic stimulus in the vapid empty Stimulus Plan, by claims of direct aid from laughable projects like the Clunker Car program and Tax Credit for home buyers, all proved totally ineffective. No essential re-industrialization of America took place, the basic requirement of bonafide recovery. The jobs creation has proved a total non-starter, a bad joke played upon the public, who must observe the $trillion welfare to the big criminal banks. The Jackass forecast in mid-2008 was for the USGovt deficits not to slide back under $1 trillion as offered by the Wall Street promoters and handlers of USGovt finance ministries, but rather to continue upward toward the $2 trillion mark in the following two to three years. That is exactly what has happened. If one honestly counts the off-budget items like warmongering and special extensions to military service contractors, the $2 trillion mark is easily breached.

So the USFed debt coverage in the euphemistic Quantitative Easing program, otherwise known as hyper monetary inflation, will continue. Pay no attention to the moving lips, squeaky voices, and deceptive words coming from the USDept Treasury, the USFed, and the USCongress. They lie. Worse, the Japanese sales of USTBonds will continue unabated as their reconstruction needs rise and as their financial rescues grow to meet acute pain. The USFed QE program will gradually morph into a Global QE. Expect very soon another hastily gathered initiative, a G-7 Meeting redux designed to coordinate massive USTBond purchases by the major central banks of the world. They might place the focus of attention on Japanese sales, but maybe not. They might mention as the marquee topics global stimulus and coordinated monetary policy, or something empty and deceptive. See the rising USGovt deficits, which are going in the wrong direction, exactly as forecasted.

◄$$$ THE TRUE BUBBLE IN THE UNITED STATES FINANCIAL SYSTEM IS DEBT, AND ITS FUEL IS  SLOWING ENOUGH TO BEGIN THE COLLAPSE. THE MECHANISMS TO EFFECTIVELY USE CREDIT ARE GRADUALLY BEING RUINED. $$$

Home equity is not available much anymore. Businesses are not expanding, except maybe overseas. So the USFed Quantitative Easing will surely continue, perhaps by another name. They must continue the debt monetization, since the innate demand is entirely inadequate to meet the burgeoning supply. The USFed might try to shrink its balance sheet and hike interest rates, but they risk a sudden meltdown in the USTBond and mortgage bonds. Furthermore, the housing market holds the USFed hostage. They must not halt the flow of printed money, during a time of slowing Money Velocity, an important topic never mentioned by US economists. To protect a gradually destroyed image of the USTreasury and the reputation of the USFed, they will do their best to conceal the QE programs, even as they go global with other major central banks. In unison, they will all purchase USTBonds. The Bernanke Fed is greatly misled. They focus on price, but not value. They fixate on several price measures to made loud claim of normalcy and stability. But they control those measures. They are agents of cancer. The credit flow has fed the great Ponzi that is the USEconomy. It requires an accelerating supply of funds in order to sustain itself. In the chart, Total Credit Market Debt covers a multitude, as in financial sector debt, government debt (federal, state, local), household debt, and corporate debt. The total debt has been growing at an exponential pace for decades!! This is a grand contradiction of claimed USEconomic growth. The R-squared of 99% means that almost all variation in total debt is explained by the exponential growth curve. The turn sideways (in red line) shows the credit engines sputtering. The USFed must continue their QE programs, justify a QE3, and feed the monster. If not, then an implosion process will begin in force. Price inflation and a declining USDollar will seem mild if the internal implosion gathers momentum. The event would confuse the Deflation advocates, who would be clueless. See an interesting YoutTube interview of one of the foremost financial analysts Chris Whalen of Institutional Risk Analytics, the topic about how money and debt built an American Dream, done by Freedomain Radio (CLICK HERE).

◄$$$ THE OTHER NATIONAL DEFICIT IS THE CURRENT ACCOUNT, WHICH IS DOMINATED BY THE TRADE GAP. AT ROUGHLY $500 BILLION PER YEAR, IT MUST BE FUNDED. A HEMORRHAGE RESULTS WITH PAYMENTS MADE TO ASIA FOR FINISHED PRODUCTS AND THE PERSIAN GULF FOR CRUDE OIL. CANADA AND MEXICO ALSO RECEIVE CASH FOR CRUDE OIL. THE BIG CHANGE IS THAT THESE NATIONS ARE DIVERSIFYING THE USDOLLARS RECEIVED, AS THEIR TOXIC NATURE IS RECOGNIZED. BLAME CHRONIC IMBALANCES AND THE Q.E. PROGRAM BY THE USFED, WHICH CAUSED AN EXODUS. $$$

The increase in the trade gap was largely due to crude oil. The March trade gap rose 6.2% to $48.2 billion, from $45.4 billion in February. The blind bat shills operating as economists were loud wrong with a median forecast of 72 economists surveyed by Bloomberg News of $47 billion, despite the rising crude oil price in front of them. A barrel of crude oil cost an average $93.76 in March. Excluding petroleum, the trade gap shrank to $16.9 billion from $20 billion in February. Imports climbed 4.9% to $220.8 billion, the highest level since August 2008, from $210.4 billion. A jump in fuel prices and increasing demand for autos and computers led the gain. Exports increased 4.6%, the biggest gain since March 1994, to $172.7 billion. Increasing demand overseas for autos, chemicals, and industrial machinery contributed to the advance. The gain reflected record sales to South and Central America, and the highest sales from the European Union since June 2008. As long as crude oil prices remain above $100 to $110 per barrel, the trade gap will remain high. It is a pyschological floor of support. Still high, the bilateral trade gap with China was reduced to $18.1 billion in March from $18.8 billion in the previous month. Despite all the talk of a cheaper USDollar, the trade gap with Europe rose to $9.0 billion from $6.9 billion, a contradiction of USGovt mouthpiece messages. And seeking hard cash reserves, Mexico directed more crude oil to the US. Its trade surplus with the US rose to $6.2 billion from $5.3 billion.

Notice how the exports would have to rise by 28% in order to close the gap. Huge increases in exports are required but will not happen since the USEconomy lacks a bigger foundation in industry, a critical mass forfeited or abandoned to Asia. The cost of commodities, led by energy products, will continue to keep pace with rising crude oil costs. The USGovt, dominated by the oil industry, has made all the crucial decisions in pushing up the crude oil price. See the shutdown of the Gulf of Mexico for oil drilling. But then again, the gulf will be expanding north in the next few years. A key point to remember is that US exporters must contend with fast rising costs, so their finished products will rise in an offset of the falling USDollar. Costs are rising faster for US industries than almost any other in the world, a point that Wall Street firms, the USGovt, US exporters, and the US media avoid mentioning, or fail to comprehend. The bigger firms that do succeed in expanding exports like Caterpillar and United Technologies have huge foreign sales that remain overseas, and are invested overseas, never to come home, the direct result of USGovt tax laws. Caterpillar shared company plans to invest $3 billion in capital spending this year, with more than half of that in the United States. We will see if these are mere words. See the Bloomberg article (CLICK HERE).

Two final points. The lower USDollar does not reduce the trade gap, despite the nonsensical drivel coming from the USGovt. Last July 2010, the US DX index stood at 84. The current DX index is 74 to 75, over 10% lower. The trade gaps are almost equal. Secondly, a continuous heavy flow of funds is being put in foreign hands. During the last year or more, they have shown a great reluctance to hold USDollars. The USFed Quantitative Easing program has been met with hot controversy, open revolt, and direct diversification of reserves. Combine with fiscal deficit by the hopeless USGovt spenders and warmongers to make a $2 trillion gap that must be funded.

◄$$$ LEAKAGE IS TAKING PLACE FROM THE ASIAN BACK DOOR. THE USECONOMY WILL IMPORT INFLATION WHICH HAS BEGUN TO ENTER FROM ASIAN CORNERS. THE DAMAGE TO THE USECONOMY WILL BE AMPLIFIED, SINCE THE RISING COST STRUCTURE WILL BE MET WITH A RISING IMPORTED PRODUCT PRICE FFECT. THE USFED WILL BE FORCED TO CONTINUE THE DEBT MONETIZATION FROM NUMEROUS CORNERS. $$$

For three decades the USEconomy has exported inflation. The rising USGovt budget deficits and rising US current account deficits were packaged into neat USTreasury Bonds, USAgency Mortgage Bonds, US Corporate Bonds, and major US stocks, and regularly purchased by foreign nations in order to balance the books of the global economy. The United States had acted like a Third World nation, running up debts, abandoning industry, spending beyond its means, ripe with consumption gone amok, even profound fraud in high places, yet its currency remained strong in the USDollar, the envy of the world. The tables and tide have turned. No longer does the United States engage in rampant monetary inflation and credit expansion, only to have foreign nations gobble it up. Foreign economies, led by their export industries, have begun to ship finished products to the USEconomy with higher price tags. The USEconomy is importing inflation, in a major reversal.

Import prices rose 2.2% in April. Tempered by a moderation in energy and foodstuff prices, the price trend remains up. Overall import prices increased for a seventh consecutive month, according to the USDept Labor, following a 2.6% increase in March. Of course, as usual, the rise was greater than the economist consensus of a 1.8% rise. Excluding crude oil, import prices were up 0.6% after rising 0.4% the prior month. In the 12 months to April, import prices rose 11.1% overall and 4.3% excluding crude oil. The overall rise reflected a 7.2% increase in imported petroleum prices, which followed a 9.8% rise in March. Imported food prices increased 1.8%, slowing consideably after a 4.2% rise in March. Food products, feed stocks (livestock), and beverages prices advanced 1.8% in April after a 4.2% rise in March. The April increase was driven substantially by a 22.8% leap in coffee prices. Sugar has also been a big contributor. Wal-Mart has warned of higher prices to hit very soon, coming from Asian suppliers.

The entire supply chain of input channels is affected. The price index for non-fuel industrial supplies & materials rose 1.7% in April following a 2.0% rise. Both increases were led by higher chemical and unfinished metals prices, which increased 2.4% and 1.7% respectively in April. The rise in chemical prices was powered by a hefty 6.6% advance in plastics prices. The largest contributors to the rise in unfinished metals prices were gold and other precious metals. Expect the import price index to rise in the next several months in a steady upward march, as China and Japan send export products to the US shores with a higher price tag. They will pass along higher costs. It will not be associated with crude oil, but rather a wide array of higher prices, from industrial metal to cotton to processing costs. See the News Daily article (CLICK HERE) and the Economic Policy Journal article (CLICK HERE).

USDOLLAR ENJOYS A REPRIEVE

◄$$$ USDOLLAR BOUNCE WAS DESPERATELY NEEDED AND SOUGHT. A BIG TRIGGER FOR THE BOUNCE WAS THE EURO CENTRAL BANK DECISION NOT TO HIKE RATES A SECOND TIME. THE USGOVT, USFED, AND WALL STREET NEEDED URGENTLY TO PRODUCE A REBOUND IN THE USDOLLAR, A CORRECTION IN THE COMMODITIES GENERALLY, AND A PRICE PULLBACK IN SILVER IN PARTICULAR. THE QUANTITATIVE EASING HAS CAUSED MAJOR PROBLEMS. THE NASTY RISE IN GLOBAL COST STRUCTURE HAS CAUSED MAJOR PROBLEMS. THE LOSS IN GLOBAL BANK RESERVES HAS CAUSED MAJOR PROBLEMS. THE ABSENCE OF COMEX SILVER HAS CAUSED MAJOR PROBLEMS. THE USDOLLAR BOUNCE MUST BE WATCHED FOR FOLLOW THROUGH. $$$

So the USFed decided to give emphasis to the story of QE2 ending. They do not bother to explain where 75% to 80% of USTreasury Bond purchases would come from, since foreigners are largely out of the game. The USFed decided also to promulgate the story of an interest rate hike later this year, in a return to normalcy. The Europeans created some distance from the Americans in hiking rates last month, but not this month. The hike was small at 25 basis points in April. The symbolic importance was enormous. The USFed is under extreme criticism internationally for its gigantic debt monetization programs that probably will not end this year or next year. The impact to global commodity prices, in particular food & energy, is directly noticed and curiously denied. The USFed in the process looks inept, reckless, and callous. The entire cost structure has risen, extended to industrial metals, cotton, coffee, sugar, scrap, and more. Foreign creditors have been so busy in diversifying away from US$-based assets, in particular the USTBonds, that they have not been able to justify additional purchases. That would be counter-productive and contradictory. Some nations have been pushed into the corner as a result of rising domestic currencies. They have responded at times by purchasing USTBonds in order to arrest their own rising currencies, or placing restrictions like Brazil. They protect their export industries. As the USDollar has fallen in value, their foreign reserves have declined in value. Foreigners are angry that the USFed has made unilateral decisions to write down their FOREX reserves without dialog, permission, or agreement. Lastly, the COMEX has been settling Gold futures contracts with GLD shares. COMEX has been settling Silver futures contracts with coerced cash settlement, even offering a 25% cash vig to induce the decision. These are default actions without proper publicity.

An extremely urgent situation arose, whereby the COMEX had very minimal silver in inventory, but a huge stack of silver futures contracts standing waiting for May delivery. So a USDollar bounce was orchestrated out of utter and total desperation. The cartel, the syndicate, the Boyz, they bought a little time. The Euro Central Bank cooperated. George Soros cooperated. The COMEX cooperated. Regulators cooperated, by continuing their campaign against speculators. Wall Street cooperated in the most hidden vicious fashion, using their ugly weapon. They pulled credit on the hedge funds while naked shorting the futures contracts. They targeted their clients on stop limits. They forced margin calls with a series of at least five big silver margin calls. They even raised the crude oil margin requirement. The US political and banking leaders needed to bring down the cost structure and reduce the speculative fervor, in their view. None of those in power acknowledge the ruin of the USTreasury Bond integrity, the ruin of the USDollar as a fiat drenched papyrus raft, the ruin of the USFed and central bank franchise system, the ruin of the COMEX exchange, and the ruin of the Regulator legitimacy. Witness the death throes and extreme desperation of the managers of the syndicate's broken ship. They have managed to impose a correction in crude oil and the precious metals, and to enable by force a rebound in the USDollar. They have succeeded in turning attention to the almost equally broken Euro currency, whose resumed decline will be perceived as a USDollar recovery, which has actually exposed a Gold rally in Europe.

The US$ DX index must be seen in terms of the pendulum swings with respect to the Euro currency. On the down slope is the brunt effect of the Quantitative Easing, aka hyper monetary inflation, which slams the USDollar for its wanton debasement. On the up slope is the beneficial effect coming from the European sovereign debt problems. However, a big difference between 2011 and early 2010 is evident, a huge financial market change. In 2010, the European sovereign debt market has adjusted significantly, an under-statement. No Southern European nation has a bond yield remotely close to Germany's Bund. The European sovereign bond market has taken the heat off the Euro currency, rendered a medium of exchange for distinctly different bond values and bond yields. Despite all the horrendous news coming out of Europe this calendar year in 2011, the Euro currency had risen from 130 to 148. The rise was made possible by the differentiated government bond market, which conducted debt writedowns from market action, moving 10-year yields up huge. Like Greece at 15.4%, like Ireland over 10%, like Portugal at 9.2%, like Italy at 10.6%, like Spain at 5.25%, like Belgium at 4.2% (much grace given), versus the German Bund at a little over 3%. In no way does Spain deserve such low bond yields. The Euro currency is no longer vulnerable to writedowns since the bond market already does the duty and completes the task.

◄$$$ THE USGOVT IS A ROGUE ENTITY THAT FLAUNTS THE LAW IN COUNTLESS WAYS. THE NEXT MIGHT BE EXCEEDING THE LEGAL DEBT LIMIT. THE INTEGRITY OF THE USGOVT FINANCES HAS SUFFERED MAJOR DAMAGE, FROM $TRILLION DEFICITS, UNCHECKED SPENDING PATTERNS, ENDLESS WAR COSTS, CONTROL BY THE WALL STREET SYNDICATE, AND NATIONALIZATION OF CORRUPT BLACK HOLES. A CROWNING BLOW MIGHT BE EXCEEDING THE DEBT LIMIT. $$$

As of May 10th, the legally set USGovt debt limit has not been surpassed. Some analysts have argued that under looser definitions, the limit has already been exceeded illegally. The official debt tally is within $16 billion of the limit set by the USCongress. Bear in mind that USTreasury auctions continue, including more last week that has not yet settled. If the debt limit is run over roughshod, during the dark din of useless debate over $38 billion in spending cuts, then the USTreasury Bond and USDollar will be smeared globally. The USCongress has no appetite to make spending cuts, even after they agree to make spending cuts. No $38 billion in cuts were realized, only agreed without follow through. The political lines have been drawn. The debt limit will not be raised unless and until huge spending cuts are made final in legislation, holding the USDollar hostage. The cuts are not likely anytime soon. Meanwhile, the debt level creeps up rapidly. Watch for a negative global response, or a grand distraction like Europe fracturing all over again, a development easy to orchestrate.

US observers with a perceptible eye and a conscience must wonder how the United States is regarded by the rest of the world, in plain financial terms extending from responsibility and legitimate business partnership. A sense of horror comes from the realization that the US has become a rogue nation, both in financial fraud and military aggression. Its involvement in a global monopoly on narcotics is gradually becoming known. The shattered integrity started with Enron, then Fannie Mae, then broadly across Wall Street in mortgage bond fraud, then Madoff, then TARP, even $50 billion missing from the Iraq Reconstruction Fund that the sitting president justified as lost in the fog of war. The full spectrum dominance has turned very ugly, and the world has noticed. The Nobel Peace Prize was perhaps the crowning event in a coronation ceremony for the financial narco syndicate that has seized control of the USGovt and Western financial institutions. The world is watching. Its perception of criminality is one factor for the USDollar revolt and diversification from the USTreasurys.

◄$$$ MERK POINTS OUT THE EURO IS MUCH LESS IN CRISIS THAN THE USDOLLAR. AS THE US DX INDEX FALLS FROM INSOLVENCY AND MONETARY INFLATION, THE EURO CORRESPONDINGLY RISES. THE PRESSURE ON THE EUROPEAN NATIONS FROM CORROSIVE FINANCES IS PLAYED OUT IN THEIR SOVEREIGN BOND MARKET, WHERE BOND YIELDS HAVE RISEN AMONG P.I.G.S. NATIONS TO A GREAT DEGREE. THE USTREASURY BOND MARKET IS LEVITATED BY MONETARY INFLATION DIRECTED AT USFED DEBT PURCHASES. THE EUROZONE IS MUCH MORE STABLE, AND THE USDOLLAR IN MUCH MORE GRAVE DANGER. $$$

Axel Merk is an outstanding currency and financial analyst. He makes comparisons between the weak Euro currency and the ruined USDollar currency. The following are his points, almost all excellent. Since the European Union has no central treasury, it continues to rely upon member nation actions. Its shared Euro currency is a fault, an anomaly that cannot stand. Peripheral nation debt refinancing issues surely are full of strife and chaos. The debt distress should be primarily priced into the spreads of EuroZone bonds, as in Greek Govt bond yields versus the German Bund yeild, but not the Euro currency itself. Indeed, the USFed under Chairman Bernanke is on a path that embraces a weaker currency as a monetary policy tool to help address the current state of the USEconomy. The EuroZone is on the other side of that trade, a factor largely overlooked. Currencies at times appear to be a zero sum game. The Euro has risen because it compares better to the broken toxic USDollar. Due to reduced liquidity opportunities, in year 2010 a trade placed against the EuroZone for all its deeply rooted problems was easier to do against the Euro currency than the peripheral nation sovereign bonds. When the Euro reached the 118 low point level, the trade wa no  longer safe. Fast forward to today, and the Euro is stronger while the individual sovereign debt securities are all much weaker. Merks puts it well, saying "The one language policymakers understand is that of the bond market. A wonderful dialogue has been playing out, encouraging policymakers to engage in real reform. Often minority governments have made extremely tough decisions. Ultimately, it us up to each country to implement their respective reforms. Political realities will cause many to fall short of promises, resulting in more bond market encouragement."

Debt default is an option within EuroZone nations in the PIGS pen. Any country may default on its debt. Government debt refinance might be impossible afterwards, putting forward the default option. Attracting funds from sky high bond yields like Greece, at over 20% last week, is one avenue. Sometimes even very high yields do not attract sufficient funds to overcome the challenges of a big debt rollover. Any country considering a debt default must be willing and able to accept the consequences, which is an overnight eradication of the primary deficit and elimination from future credit access. Greece has chosen to postpone debt restructuring until more reform has been implemented or attempted. Big banks across Europe and England have had time to prepare for a Greek default. They have unloaded securities to the Euro Central Bank, buyer of last resort just like with the USFed for toxic mortgage bonds. The EuroCB is deeply insolvent also. As long as the EuroCB or IMF offers money, regardless of terms, it has been accepted. Terms mean nothing when facing a default. Merk makes entirely incorrect statements about Spain possessing an assertive approach to overhauling its banking system. Spain has in fact permitted lunatic high credit asset valuations on bank balance sheets, delayed liquidations and asset writedowns, dragged its feet politically to the extreme, and faces a gigantic airpocket when reality strikes. He claims Spain has a real economy and ample resources. Its economy has been nearly destroyed by the housing bubble much like Florida, Arizona, Las Vegas, and Southern California. The fallout impact has been reduced credit and deeply insolvent banks without any meaningful liquidations. Its economy is on the verge of enduring strong downward momentum. A central activity is demolition of excess homes, far from productive.

Merk is very realistic about the US proligate ways and chronic lack of discipline. He concludes, "In the United States, the day investors come to accept the reality that inflation, rather than fiscal discipline, is the path of least political resistance, may be the day the bond market will not be as forgiving. Unlike the EuroZone, where consumers stopped spending and started saving a decade ago, the highly indebted US consumer may not be able to stomach higher interest rates. The large US current account deficit also makes the dollar more vulnerable to a misbehaving bond market than the EuroZone. In the medium term, we are far more concerned about risks to the US dollar than those posed by the Greek drama to the Euro." See the Financial Times article (CLICK HERE). The USDollar might experience occasional burps of strength, but they will be surrounded by periods of staggering weakness. The US$ is dying.

◄$$$ THE EURO CENTRAL BANK RELIEVED PRESSURE ON THE USDOLLAR BY INDICATING NO RATE HIKE AT THE NEXT MEETING. THE USDOLLAR RESPONDED VERY WELL, IGNITING A RALLY OVER 3%. BUT HIGHER PRICES WILL RESULT, ALONG WITH A POSSIBLE GOLD PRICE BREAKOUT. DISTRESS IN PORTUGAL AND GREECE CONTINUE. GREEK GOVT DEBT SUFFERED A BROAD DOWNGRADE, AND TALK OF BOTH BANK LIQUIDATIONS AND A FORCED GREEK EXIT FROM THE COMMON EURO CURRENCY HAVE INCREASED. THE COMPROMISE COULD BE A GREEK DEBT RESTRUCTURE. PRESSURE FOR PORTUGAL TO SELL SOME GOLD BULLION HAS COME, BUT A FIGHT OF BUYERS COULD ENSUE. THE CHINESE WORK IN THE BACKGROUND, USING THEIR LEVERAGE. A BAILOUT OF SPANISH DEBT AND THEIR BANKS IS NEXT ON THE AGENDA, AS SPAIN REMAINS THE BIG ENCHALADA IN THE EUROZONE. THEIR SITUATION FESTERS WITHOUT ANY SEMBLANCE OF TOUGH DECISIONS MADE. THE NEW NORDIC EURO IS ON TRACK, BACKED BY A GOLD COMPONENT. $$$

Since the beginning of year 2011, the Euro currency has risen from 130 to 148, and in the last two weeks fallen back toward the 140 level. The Euro turndown occurred as a direct result of the Euro Central Bank indicating not to hike interest rates a second time at the next official meeting. Speculators had pushed the Euro upward with gusto, sensing a USDollar death spiral not visible from inside the US Dome of Perception. The US, Europe, and Japan are taking turns in lifting the other currencies in the grand Competing Currency War. The solid signal of no EuroCB rate hike helped turn the USDollar upward from the perilous support at the 73 level, were it was staring at the abyss. Brussels and their German directors provided the impetus in relief. Active efforts are complemented by market efforts. Distress in Greece and Portugal over sovereign debt, amply publicized, worked to push down the Euro exchange rate at the same time. The EuroZone economy is harmed by a rising Euro currency. German exports are at risk, and have been protected by the monetary decision. More rate hikes should be anticipated by the EuroCB later this year. The EuroZone price inflation is still rising, kept down actually by a higher Euro exchange rate. So the lower Euro will work to lift price inflation, even as the adjustable rates will rise and render damage to banks like in Spain burdened by a mountain of mortgage loans on the books. Slow growth or flat growth is the norm. The Euro Central Bank is under great pressure. Bailout out nations of Greece, Portugal, and Ireland have suffered massive bond yield increases, the Greek's over 20%, which have resulted in old bonds to lose up to half their value. More bailouts are in progress. The IMF is to share in the heavy losses. Trichet was stubborn and defiant, referring to future rate hikes but without debt restructure. Meanwhile, the Gold price in Euros is on the verge of a major breakout above the 1075 Euro mark. The Europeans bowed to US pressure, during a time when USGovt deficits are alarmingly high, and the budget deliberations seem fruitless. The Americans argue endlessly over $38 billion, when the deficit exceeds $1500 billion. As a team, the two major branches fail the reality test.

The insolvent European big banks must be purged and liquidated in an orderly manner, according to Timo Soini writing in the Wall Street Journal Europe. The True Finn party leader was aggressive and almost hostile in his words, describing the banks as suffering from gangrene, both public and private. He urged amputations to save the body. He called the repairable potential of the sovereign debt condition in Greece, Ireland, and Portugal a grand lie, whose official version takes the people of Europe for idiots. In a remarkable display, the Wall Street Journal edited, censored, and republished the article, scrubbing all negative comments by Soini. He must have ruffled some important bankers who do not favor liquidation and prefer to mold the citizenry into placid idiots.

Ratings agency Standard & Poors suggested far more radical measures would be required to make the Greek Govt debt of 327 billion Euros (=US$470 billion) sustainable. They expect the principal value of their sovereign bonds to fall between 50% and 70% to bring them in line with an equilibrium. S&P downgraded the Greek credit rating to B, further into junk territory. The Euro slid to its lowest level in three weeks against the USDollar, down to 141. Moodys Investor Service threatened to downgrade Greece by several notches, placing the Athens B1 sovereign rating on review. Fitch Ratings still gives Greece at BB+ rating with a negative outlook. Curiously, open denials have come from the EU Commission regarding an exit from the Euro currency by Greece. Denials, when they increase in regularity, indicate a certainty, since otherwise not on the table at all. The official denials by the Greek Govt, when viewed in sequence, must be regarded as confirmation. Their rising bond yields give a good indication of how rapidly the restored Greek Drachma currency will be devaluated. The range of 30% to 50% makes sense, which means an expected crippling compound devaluation of their debt, that would reduce their bond yields somewhat in the process. A Greek Govt debt restructure would be very thorny. Rumors are thick, as anonymous sources indicate that the European Union and the Intl Monetary Fund are ready to agree to a restructuring of Greek debt, the German newspaper Die Welt reported. The story discussed in the open is that together with the German Govt, they are calling for a lengthening of terms on Greek state bonds. The publication mentioned the word restructuring, not rescheduling though. A Greek Govt bond default is virtually assured, as Germany pushes them over the edge. They are fed up with the entire southern rim of bankrupt European nations, and the ongoing welfare in an unwanted broken adopted setup.

Bob Chapman is reporting that the bankers involved have undertaken to bypass the Greek President and are trying to bribe the Greek Cabinet to win passage by the House of legislation to collateralize the loans so that the bankers can later confiscate the Greek assets en masse. Every interview the Jackass has seen of a Greek banker or Parliament member or agency official has seemed like of an imbecile, delusional clowns on television. Deepcaster is calling for an official Greek default following an official IMF with the EuroCB in Athens, resulting in a bond writedown between 30% and 70%. Such an event would be tumultuous in the financial arenas, and likely trigger an pan-European banking crisis. The Wall Street bankers might actually push for such a steered outcome, since it would delay the USDollar collapse, and even arrest the fast rising Gold & Silver prices. For certain, the Competing Currency War is in full blossom, the effect of weakening non-US$ currencies to help prevent an upside jailbreak in the Gold price. The entire world is buying Gold as a hedge against the USDollar, Euro, and Pound. The Western currencies are walking dead that lack all semblance of function. All major fiat paper currencies are dying in full view.

Portugal is being pushed to sell Gold bullion and other important crown jewel assets. The official reason is to close the budget gap. Pressure came from Germany's governing coalition, clearly at the behest of German bankers. Look more deeply to see China demanding some redemption of sovereign debt already purchased, looking to close the loop. A minor conflict of interest might ensue, as German bankers lust for the Portuguese gold bullion. The possible buyers were mentioned as the Bundesbank and the EuroCB. Interestingly, an article appeared in the Times of London two weeks ago, suggesting that the Portuguese Gold reserves be used to fund their bailout. The Lisbon reserves are valued at $20.5 billion. The mainstream media prefers to call the Portuguese bond support a Chinese investment to restore confidence. The reality is more like Chinese investment to lay the groundword in commerce and finance. They wish to ensure acceptance of Chinese industrial output, which would fill the European malls in a direct capture initiative. They seek to secure a marketplace for their finished goods. They wish to secure central bank Gold in an end-around maneuver, purchased with discounted sovereign bonds, in an indirect capture initiative. The words commercial colonization fit better then restored confidence.

Spain is the big mudslide waiting to happen, where nothing has been resolved on the accounting side, absolutely nothing. Its banks are in suspended animation from permitted accounting laxity. Its economy is deteriorating, a slow but accelerating slide. The big enchalada of Europe is Spain. Its required bailout will push Europe past the tipping point. Maybe with Spain and Italy together in a bailout, the tipping point will be reached. Ironically, as Europe descends into chaos from defaults and bank failures, the US and London banks will catch the contagion. The Competing Currency War assures mutually destruction. Incredibly, the main players push their competitors to topple them in distraction from domestic strife, while they are all bound together by the same fiat currency system, the rope used to fashion a water-logged papyrus raft. In the midst of complementary chaos in Europe, the gold-backed New Nordic Euro currency remains on track. Its timing is not clear though. The plan called for a June launch. The objective is to jettison the PIGS nations and separate from the same Euro that the PIGS nations refuse to separate from. Implementation has enormous obstacles, both structural and political, not to mention military, since it is a Dollar Killer. A solid source from European banking circles said, "The Latin countries are being sold off to China, which will probably assume more of the debt and convert it into hard assets. If you would only know what really goes on behind the curtain. Regarding the New Nordic Euro, the Finns only carry the ball. They are an integral part of the Northern Euro. They are a converter between Russia and the smaller Western countries. The Finns are extremely sophisticated tacticians and operators. They have demonstrated more backbone and common sense in the EU than pretty much anyone else."

GLOBAL ATTACK ON USDOLLAR

◄$$$ CONVERGENCE OF FOUR MAJOR EVENTS IS APACE. THEY WILL CONTINUE TO CAUSE GREAT DISRUPTION IN GLOBAL FINANCE AND COMMERCE. THEY ALL INVOLVE A REVOLT AGAINST THE USDOLLAR. VERY LARGE TRADE SYSTEMS ARE IN PROGRESS OF ESTABLISHMENT AND DEVELOPMENT. IN MOST CASES, THEY CUT OUT THE UNITED STATES FROM THE CORE, AND FORCE THEM TO THE FRINGE. $$$

Four important events and developments are in progress.

1)      Introduction of New Nordic Euro, a currency for Central Europe usage that cuts out the crippled insolvent Southern European nations known as the PIGS. They have been beneficiaries to $300 to $400 billion per year of German generosity. The PIGS nations refuse to revert to their older native currencies every bit as much as the European bankers refuse to permit defaults by the PIGS nations on their debt or major writedowns.

2)      The supposed end of QE2. The USFed has no intention of ending the heavy debt monetization. Instead, they are prepared to lie and deceive, to continue the bond purchases in more secrecy, even to extend the purchases to a Global QE that includes buying all that Japan sells during its natural and economic crisis. The Japan woes have only begun.

3)      An Arab announcement that heralds an end to exclusive US$ payments for oil, which would bury the Petro-Dollar after almost 40 years since the 1973 Embargo. However, the Arabs must tread lightly and play the delicate game, since large arms purchases from US defense contractors continue without end, even increase.

4)      A Russia-Europe Accord for trade settled outside the USDollar. Russia is the source of tremendous natural resources, and the site of a complete turnaround in financial wealth development. They are making stronger ties with Europe, in particular Germany.

Over the last couple weeks, mention has been made with an important global consultant contact about four major events that are converging on June. He is directly involved in important decisions that involve the Arab royals and Russian officials. Provided is a rough sketch according to my interpretations. The Arab side is confusing, since some arms deals by the Saudis are in progress, while the Moslem tyrants are in de-stabilization mode. The Arab royals plan for a transition to security protection provided by China & Russia. With a shed US protectorate, the Petro-Dollar would be cast aside. In managing the transition, they play a delicate game of balance. They wish to abandon the exclusive US$ arrangement for crude oil sales. However, doing so would enrage the USGovt and unleash the USMilitary, and surely cancel the arms sale deals. My belief is that the Saudis will soon announce a provisional facility to pay for crude oil in non-US$ terms in order to accommodate their many customers who have chosen to diversify reserves. That would deflect the blame onto their customers in clever style. Various intriguing exchanges have taken place with the man with Middle East connections within a global consulting firm. He has described in loose terms a Dollar Kill Switch to be deployed, which has been under construction for over a year. It must have a Petro-Dollar paper tag li

nked to it. What follows is his response to my request for elaboration on the Arabs and Russians.

"The Arabs are tacticians and in that they are masters. What they do not control is the larger developments that are unfolding globally. China has forced them to establish an oil bank with mega-terminals being built in China. The current project under consideration, just one of five, is to cost approximately $25 billion. The Chinese will allow the Arabs to set up mega-tank farms where they can hold vast amounts of crude, build refineries, and run petro-chemical projects to supply the Chinese market. The Americans do not play a role in this. Nothing they can do will stop these projects from being implemented. As for the Russians, they are also settling 80% of their trade in a kind of barter system that was beefed up from the days of the COMECON. It is expected to expand." The Council for Mutual Economic Assistance (19491991) was an economic organization comprised of the countries of the Eastern Bloc along with a number of communist states elsewhere in the world. The COMECON was the Eastern Bloc reply to the formation of the Organization for European Economic Cooperation in Western Europe.

◄$$$ THE KILL SWITCH FOR THE US HEGEMONY LIES WITH THE PETRO-DOLLAR. IT HAS ENABLED ABUSE, PRIVILEGE, AND DOMINANCE. GLOBAL FINANCIAL SYSTEMS ARE BUILT UPON USTBILLS AND USTBONDS. SAUDI RICHES ARE PROTECTED BY USMILITARY FORCES. THE ENTIRE WORLD HAS PAID FOR THE ELEVATED UNJUSTIFIED AMERICAN STANDARD OF LIVING FOUNDED UPON EXTERNAL CREDIT, NOT WORK OR SAVINGS. THE SYSTEM IS READY TO COME TO AN END, AND WITH IT, A RIDE TO THE THIRD WORLD. $$$

As the monetary system breakdown continues in full force, led by the historical ruin of sovereign debt amidst insolvency and flooded supply, the Kill Switch in my view is the gradual or sudden abandonment of the Petro-Dollar defacto standard. If the Saudis begin to accept non-US$ payment for crude oil shipments, the global foundation in support of the USDollar will suffer accelerated fracture. It is doubtful the Saudis will refuse US$ payments, since they do not wish to be attacked directly or surreptitiously by the USMilitary in their uneasy alliance. The global financial system is structured with USTBonds as the primary asset held. The financial makeup reflects the required US$ settlement for crude oil transactions. In fact, the settlement of most trade, whether industrial metals, cotton, foodstuffs, lumber or cement, unless otherwise agreed upon and stipulated, the settlement is done in US$ terms. So entire nations stack up US$ assets for commodity purchase and trade settlement. A significant 65% to 70% of global trade is settled in US$ terms. The exceptions of bilateral swap agreements like between China & Brazil, between China & Russia, and between Iran & India. Such alliances are growing in volume as the global revolt against the USDollar is full apace. The breakdown of the Petro-Dollar system in my view is the largest threat for a very large, very sudden, very deadly shock to the USDollar. It could come with a surprise to the syndicate in charge of the USGovt. It is a planned event, which has been preceded by security protection accords struck by the Saudis with China, and also Russia. The topic was analyzed last month with Saudis searching for a new protector in their region.

Since the 1970 decade, against a backdrop of absent fiscal discipline, the United States pursued a position of dominance if not hegemony power. They instituted the Petro-Dollar system, endorsed by the Saudis who steer the OPEC cartel. The system has enabled the Saudis to seize its national treasures in crude oil, while the US earned the privilege to run up credit balances that were forced upon the world. The rest of the nations in the global community had to collect USTBonds in order to purchase crude oil. The alliance has been almost criminal. A double-edged benefit has been granted the US. Export nations have preferred and sought out US markets from which to earn US$ credits. The same nations store vast sums of reserve assets in USTBonds within their banking systems. The practical effect of having oil priced in US$ terms has meant that the United States owns free rein to abuse the privilege. They have printed money willy nilly with reckless irresponsibility, knowing the printed money would be accepted to purchase crude oil, later to be stored by the oil producers in the same US$ denomination. The USGovt has had a gauranteed bound obligated buyer of its debt, which grew out of control.

In May 2009, the Saudis announced a warning that the exclusive US$ payments for crude oil would be phased out. They gave 2016 as the target year, a nonsensical date. My rebuttal date was two to three years for the beginning of phaseout. That phase is about to begin, by all indications. Despite the stated simplicity of this arrangement of USDollars for oil, the system is actually highly complex with many moving parts. Its complexity prevents the Petro-Dollar system from being properly understood by the American public. They take it for granted, but worse, do not actually have the concept within their entire zone of perception. Mention of it in US circles draws blank stares. It is part of the air they breathe within the Dome of American Perceptions that misses much of what occurs in the world. Even worse, the Petro-Dollar system has permitted the USMilitary to extend its wars beyond the Saudi protection role, to Iraq in oil confiscation, to Afghanistan in a vertically integration industry toward heroin production, even using Baghdad banks as clearing houses for narcotic money transfers. The Petro-Dollar has actually enabled the syndicate to flourish in its USGovt agency control.

The Petro-Dollar system came into being in the early 1970's after the Bretton Woods collapse, an in response to the highly disruptive Arab Oil Embargo of 1973. In a series of highly secret meetings, the USGovt represented by Secretary of State Henry Kissinger and the Saudi King Fahd made a powerful agreement. According to the agreement, the USGovt offered military protection for the Saudi oil fields. In return, the Saudis agreed to price all of their oil sales in USDollars and to invest huge surplus oil proceeds into USTreasury Bills. By 1975, all member nations of OPEC had agreed to price their oil in USDollars and to hold their surplus oil proceeds in USGovt debt securities as well. Kissinger later referred to the system as Petro-Dollar recycling, and the system was born. Little is written about the back-stabbing that took place in the next several years, as USFed Chairman Volcker hiked interest rates toward 15% in order to arrest the consequent price inflation that came from the four-fold increase in crude oil costs that filtered through the USEconomy. It was a massive shock, the worst and most sudden in US history. Arabs suddenly lost 30% to 40% on their recycled funds. What has begun in a cost shock with QE, the grand broad and sweeping cost increases from a debased USDollar due to unchecked debt monetization, is the biggest shock since 1973. The United States maintains a major military presence across the Persian Gulf region, which only later has been matched by a Chinese commercial presence with tight protectorate promises that collide with the US promises.

Jerry Robinson of FTM Daily summarized. He wrote, "Obviously, the Petro-Dollar system was a brilliant political and economic move on the part of US strategists. Washington, knowing that the demand curve for oil would increase dramatically with time, positioned the Dollar as the primary medium of exchange for all oil transactions. This single move created a growing international demand for both the USDollar and US debt, all at the expense of oil producing nations." It is about to end, the details unclear, the outcome certain. The resulting impact from lost oil sales in US$ terms will shock the USEconomy, and in my view, serve as the ticket to the Third World. See the Robinson article entitled "Meet the System That Will Collapse the USDollar" on Financial Sense (CLICK HERE). In fairness to Robinson, he defines the system much better than he describes the ramifications and sequence of events for its imminent end.

◄$$$ WHETHER OVERTLY AWARE LIKE THE CHINESE, OR INDIRECTLY FROM LACK OF OPTIONS, THE MOST IMMEDIATE USDOLLAR KILL SWITCH LIES WITHIN THE UNITED STATES ITSELF. THE MECHANISM IS NOT A DEVICE, BUT RATHER AN INTERNAL CANCER WITH ROOTS IN THE INSOLVENT USBANKING SYSTEM. ITS CORE METASTASIS LIES IN THE USFED CENTRAL BANK. $$$

A great banker source added his keen perspective to the American financial condition from his German perch. He has extensive relationships with the Euro Central Bank and many US financial firms. This time his comments had a political overtone that struck a nerve. My probing note invited a response and it came. My point was that the external switch had a Petro-Dollar label to be pulled by key foreign nations. A refusal of the USDollar payment for crude oil would lead to a global rejection of the USDollar for trade settlement. It would have a sudden shock impact tending toward a catastrophe. If not refusal, then sharing of settlement with non-US$ would render similar deep permanent damage better described as crippling the USDollar. The Robinson thesis laid out above is very consistent with my long-held viewpoint. Here is what the German banker wrote in reply. He refers to the Neocons and the Narco Barons and the Wall Street bankers that form what he calls the micro-minority, based upon past notes and exchanges.

"In my many dealings, the $$$ issue is a very controversal issue being discussed and debated hotly within the very inner circle. There are those who want to pull the plug and then deal with the aftermath, meaning that the financial markets will sort out the impact from such a massacre. Then there are those who prefer a controlled demolition such as you see when they take down a building in a densely populated inner city area. All appear to have decided that the $$$ has outlived its evil usefulness. What many serious people find incomprehensible is that the United States, a young modern country with the best Constitution & Bill of Rights, would allow itself to be destroyed by its own leaders. But then the foolish Americans allowed a micro-minority of people who have their loyalties elsewhere to highjack their contry, drain it, and finally abandon the host. This would lead me to the conclusion that the $$$ kill is to be seen as a mercy kill to put a country now built on fraud, deceit, and war crimes out of its misery. The $$$ and America does not need any outside help to be undone. They do a great job at committing suicide all by themselves. To answer your question. The US$ kill switch is the US Federal Reserve. It is the circumstances they created and cannot control any longer that will make them fall onto that switch. The big event in crescendo will be internal."

◄$$$ THE PIMCO SHORT POSITION AGAINST THE USTREASURY BONDS GROWS TO A RECORD LEVEL. BILL GROSS EXPECTS A RISE IN LONG-TERM BOND YIELDS. HIS ABANDONMENT MATCHES THE GLOBAL REJECTION BY FOREIGN CREDITORS. HE EXPECTS A BOND SCARE INCIDENT OR PRICE INFLATION EPISODE, MAYBE BOTH. THE GLOBAL ATTACK ON THE USTREASURY BOND HAS A PLAYER INSIDE THE UNITED STATES, A BIG PLAYER, ONCE A VERY LOYAL PARTICIPANT. $$$

Bill Gross and his PIMCO Total Return Fund manage $240 billion in funds. The PIMCO weighted exposure to USTreasury Bonds reached a staggering 23% short position in a huge bet that bond yields will rise. Whether from an intentional planned orchestrated scare of the market by the USFed in order to win political approval of continued QE (debt monetization), or from the USTBond market breaking loose of corrupt controls by JPMorgan et al, the PIMCO team has seen fit to bet against the USGovt and their embattled debt security. The only buyer of significance of the USTBond is the USFed, reportedly purchasing at least 80% of all new issuance and maturing rollover. Furthermore, Gross sees few viable valued vehicles, as the fund's cash balance surged to an unprecedented $89.1 billion. This is an indication of bond market broad distress. As reported in the Hat Trick Letter over the past few months, the USTBond position had dwindled, then turned negative, and now has turned heavily negative. The Total Return Fund increased mortgage bond holdings to $57.8 billion. Gross reduced high yield junk bonds by $2.1 billion. The only two securities which saw a token increase was in Non-US developed markets (to $14.4 billion) and Emerging Markets (to $26.5 billion). Yet the biggest shocker is the fast rising cash position, which is 37% of all assets.

My guess is that Gross anticipates a bond rout as the USFed tries to scare the markets for QE3 approval, but it goes out of control to scare the USFed and USDept Treasury in backfire instead. In such a rout, the USFed portfolio would suffer additional losses, like another $200 to $400 billion. The other simpler explanation is that Gross expects a price inflation episode to rattle the USTreasury complex. The PIMCO exposure to debt with under 5-year maturity at 83% is a really high. He is guarding against price inflation and a harsh effect on long-term bond yields. He is not expecting a deflationary collapse either, given his bond duration exposure. If so, it would be flipped upside down. Observe the USTBond short position (blue arrow) and cash position (green arrow). See the Zero Hedge article (CLICK HERE).

BATTLEGROUND OF PRECIOUS METALS

◄$$$ FUNDAMENTAL WRECKAGE REMAINS UNCHANGED AND DIRE. THE UNDERLYING FORCES THAT CATAPULTED GOLD & SILVER TO NEW HIGHS ARE INTACT, EVEN WORSENING BY THE WEEK. NO SOLUTIONS ARE IN PLACE. NO MEANINGFUL USGOVT SPENDING REDUCTIONS. NO RESTRUCTURE HAS OCCURRED WITH BIG USBANKS. HACK SOLUTIONS PERSIST ON THE CANCEROUS PATH OF MONETARY INFLATION WITHOUT LIMIT. THE RUIN OF MONEY PLAGUES THE WORLD. THE KEY FACTOR DRIVING GOLD IS SURELY THE RUIN OF MONEY, BUT ONGOING IS A NEGATIVE REAL COST OF MONEY. $$$

Jason Hamlin provided an excellent passage that addresses some key points. He wrote, "The big question now becomes 'How Low Can Silver Go?' The fundamental situation, supply shortages, surging investment demand, and central bank buying [of USTreasury Bonds], sustained record low interest rates, out of control spending, record deficits, government debts, and the US dollar falling off a cliff, all seem to suggest that the correction will be short-lived. None of these situations have materially improved in the past week and I do not see any of them miraculously turning the corner anytime soon. The Fed might slowly raise rates later this year, but they would have to rise to above the true inflation rate to have any serious impact on Gold & Silver. Neither political party seems serious about addressing the budget crisis or reducing our bloated military budget. They continue to bicker about cutting a few $million here or there from National Public Radio or Planned Parenthood for ideological reasons. Whether they cut $30 billion or $38 billion, it is still just a fraction of our annual budget deficit of $1.5 trillion." Notice the principal driver at the start of the Gold bull market in 2002, the prevailing interest rates below the actual inflation rate, called negative real rates. That principal driver remains in full force, actually growing even more powerful. In my estimation, the real inflation adjusted interest rate is minus 6% or minus 9%. In a sense money is free to invest in Gold & Silver. Consider that long-term USTBond yields are 3% and the Shadow Govt Statistic CPI is 9% or 10%. The Fed Fund rate is close to 0%. See the Kitco article entitled "How Low Can Silver Go" by Hamlin (CLICK HERE). The USFed has its foot stuck on the monetary accelerator, with ultra-fast money growth, very slow money velocity, and near 0% rate of interest, the worst of all worlds. This is the USFed's nightmare.

◄$$$ CENTRAL BANKS ARE BUYING GOLD, WITH MEXICO AND RUSSIA LEADING THE WAY. BE SURE OF BIG SECRETIVE GOLD BUYS BY RUSSIA AND CHINA IN THE MIDST OF THE GLOBAL MONEY WARS. $$$

The Mexicans led the global central banks in gold bullion accumulation in 1Q2011, in a stunning move which they announced was done "in line with prudent diversification principles of reserves management." Other nations followed suit in smaller volumes, like Russia and Thailand. Just as important, zero official sales occurred. The Chinese are a big question mark, acting more in secrecy given the trade war flaring up badly with the hooligans at the USDept Treasury. Private word informs me that their official gold holdings are at least 5-times the stated 1054 tonnes disclosed. One of the key gold buyers for the Chinese is a Hat Trick Letter contact. They will continue accumulating gold, the next data update for which will come in 2015. They and the Russians are secretive about gold holdings in reserve, both believing the state secret is essential in combating the USDollar hegemony and its criminal defense.

The World Gold Council reported Mexico acquired 93.3 tons. The Banco de Mexico acquisition of gold was motivated by a need to diversify its rapidly expanding foreign reserves, which increased from approximately $75 billion to $120 billion in the four years through 1Q2011. Higher crude oil prices are having an effect, as their economy slows from open warfare with the drug cartels. Additionally, Thailand increase in its gold reserves of 9.3 tonnes in March, raising its total gold holdings to 108.9 tonnes. They gathered 15 tonnes of gold in July 2011. Lastly, Russia continued its additions of gold in reserves, adding 22.5 tonnes between January and March. Russia is the 8th largest holder of gold by nation. The total among all central banks was a net purchase of 126.9 tonnes of gold bullion in Q1. See the Zero Hedge article (CLICK HERE).

◄$$$ SOROS IS A SPOKESMAN FOR THE CABAL. HE PLAYS THE PUBLIC AGAINST HIS BOOK, INDUCING PEOPLE TO BUY FROM HIM AND SELL TO HIM. HIS TRACK RECORD BEARS THIS OUT. HE USES THE GOLDMAN SACHS METHOD OF EXPLOITING HIS CLIENTS AND THOSE WHO ACCEPT HIS DUPLICITOUS ANALYSIS. BUFFET AND SOROS ARE VILE COUSINS OF AN EVIL SEED. $$$

George Soros is scum. He is part of the cabal who earned his stripes by becoming a billionaire. In the late 1970s he opposed successfully the Bank of England during a big battle for Pound currency devaluation. After achieving great wealth and conducting philanthropy, he was inducted into the cabal, probably at the price of his soul. Throughout the entire bull market, he has consistently come forward to make the wrong public statement about Gold on a regular basis. The Soros calls have been short-term correct and long-term wrong every step of the way, with few exceptions, to the profit of his fund, whose positions he consistently lies about. At the end of April, rumors circulated widely, fully reported by the eager obedient malleable financial press, that the Soros Fund Mgmt has been selling their Gold & Silver ETF holdings. Two things stick out. He gives credibility to the horrendously corrupt GLD gold fund and the equally corrupt SLV silver fund. They short precious metals routinely. Also, the press instantly latches onto the story of his abandonment of Gold for whatever stated reason, often flimsy. Soros last year called Gold an asset bubble with the competence and rigor of a C-student in high (secondary) school. Further investigation has at times found contradictions with the Soros statements that lack official confirmation in any SEC filings. An intrepid blogger who has chosen to go nameless did some good research. He wanted to check the Soros history of either talking his book or serving as shill for his bankster friends, who always invite him to Davos for economic summits to rub shoulders with the elite. Soros, who routinely spends big money in US political arenas, has direct association to more than 30 mainstream news outlets,  including the New York Times, Washington Post, the Associated Press, NBC. and ABC. So his deceitful messages in the Gold market are immediately picked up from orders on high. The US media is the most corrupted in the industrialized Western world. See the Media Research Center article (CLICK HERE).

On 20 December 2010, Soros went public and called Gold a bubble, when it was at the $1384 price. It rose $180 further before the recent highs. The dutiful financial press did no research. If they had, they would have noticed that the Soros Fund was not reducing its GLD holdings as the press reported. He earlier repeated his propaganda Gold bubble statement on 15 September 2010, saying that record Gold prices could soon reverse and disappoint the bulls. Earlier still, on 1 March 2010, he showed his true hand. A full 14 months ago in March 2010, Soros actually found himself in an awkward position when it was revealed that he doubled his long bullish Gold bet in a market that he openly called an asset bubble. On 28 January 2010, Soros had called Gold the ultimate bubble in his words, to the incestuous Davos banker crowd. By mid-February 2010, some reliable internet sources like the UK Independent and even the more fringe Motley Fool reported that Soros neglected to mention that he had been buying Gold while calling it in a bubble, a grand deception.

In late January 2010, both Soros and Prechter announced incorrectly that the Gold bubble was ripe to burst. The Gold price rose from $1100 to $1560, almost 50% in the next 16 months. The shills could not have been more incorrect and deceitful, but they continued to appear as valued financial network guests. The Gold price had declined in a mild correction following the Dubai credit bust, settling from a $1180 weekly high to a $1080 weekly low following two months of correction. The timing and public betrayal is important in the January and February 2010 time frame. That was the time when Gold first surpassed the $1000 level with conviction, as the financial crisis spread to the Persian Gulf, when Greek Govt debt was in the news to tarnish Europe, and the global nature of the debt crisis was becoming clear. Soros attempted to toss water on the entire growing perception that Gold was a bonafide safe haven asset, at a time when the entire fiat monetary system was showing signs of crumbling, when the entire central bank franchise system was being called into question, when the big bank rescues were being unmasked as elite welfare, when big US bank liquidations were avoided from the road to a legitimate recovery. Soros acted as a liar to his own investment book and a willing soldier to betray the public in service to the elite. He is a whore!! Let's hope Soros is not on the Gold train on its trip to $2000. We don't need him.

Soros is also called into action as the Go-To Guy in the words of the anonymous blogger, whenever a move by the cabal needs some media leverage. The same is true with Warren Buffet and Charlie Munger of Berkshire Hathaway. These men aspire to climb in the financial syndicate, do their favors, and earn their points, Soros willingly and Buffet perhaps passively. They arrive on cue before the well coordinated precious metal smackdowns. Buffet said on a publicized CNBC interview that Gold is no truck of investment value. A stupid comment, given that Buffet rode the Silver truck from 2001 to 2004 before his accident. He lied to shareholders, claiming his 130 million ounce silver position was sold too early at $7.50. Actually, he had a giant Silver position hedged with a sold option call, guided by his friend Hank Greenberg. But the Silver price rose too fast for Buffet to nimbly manage, and he was called away and was forced to sell his entire Silver hoard at $7.50, when the current price almost reached $9.0/oz. That is a better story (a lie) to tell shareholders than being called away, since it would have revealed another Buffet lie. He has long claimed that Gold does not earn a yield, a dead asset. Actually selling option calls is a highly lucrative investment, often earning between 8% and 12% per month for Silver, less for Gold. The truth finally came out. The JPMorgan Chase team acquired and seized the entire Buffet silver position, and launched the corrupt SLV Silver Trust, an exchange traded fund. Buffet serves the elite well. Soros serves the elite well. The Jackass is grateful to the anonymous blogger for the brief record compiled the Soros in recent years.

◄$$$ THE CARTEL HAS SHORT GOLD POSITIONS AND LONG CRUDE OIL POSITIONS. THEY WISH TO SEE HIGHER ENERGY PRICES AND STABLE GOLD PRICES. THEY WILL ACHIEVE NEITHER. THEIR LOSSES IN GOLD ARE SOMEWHAT OFFSET BY THE RISING OIL PRICES. NEVER OVERLOOK THAT THE POLITICAL POWER STRUCTURE HAS FIRM ROOTS FROM BIG OIL, MADE SOLID BY THE BUSH ADMINISTRATIONS, THE SECOND OF WHICH HAD CHENEY AS A POPWERFUL RASPUTIN FIGURE. $$$

Sabotage and shutdown of the Gulf of Mexico helped the crude oil price increase. Banned Alaskan drilling in the pristine wildlife centers also helped the crude oil price. The Alaskan deposits are an order of magnitude greater than reported in the US lapdog press. So has de-stabilizing Arab regimes helped the crude oil price. The turmoil in Libya is often cited by the press & media as a direct factor on higher oil prices, as was the temporary blockage of the Suez Canal months earlier. While blame goes to Arabs, profit or offset goes to the Wall Street syndicate. Meanwhile CIA and MI6 activity continues the de-stabilization process. Obama and his handlers who steered his selection and election have massive green energy investments that are also profiting. They are based in solar and wind power which require a higher crude oil price. However, the offsets of long energy contracts held against short gold futures contracts are far too inadequate to relieve the cartel of pain. See the opposing pathways of two important commodities, a rising silver with a flat crude oil, followed by a fast falling silver with a stable then rising crude oil.

George is a veteran of the COMEX war games, a colleague. He made some comments about the offsetting sides of the commodity arena, the favored versus the enemy. He wrote, "The really comical part is anyone thinking that margin increases have any impact on the Boyz. They coincidentally are massively short metal, and tend to be massively long oil. They engineer short interludes to screw the sheep, to book profits, and to re-enter at lower prices. They not only print or borrow copious amounts of fiat money at zero rates, but they need only put up a letter of credit with themselves to cover the margin [in self-dealing]. You can laugh out loud. So next you will see the justification of silver margin increases. We did see it in crude oil, but it did not have any impact. But with oil, they will not force five increases. The Boyz self-interest is always served. You can bank on that spin eventually coming out, whether it is from Administration, the CME, or the CFTC, or just the talking heads on the financial networks who are little more than extensions of the White House acting as unofficial spokesmen."

◄$$$ THE WAR IN LIBYA HAS A GOLD ELEMENT WITH A SPLASH OF WEALTH SEIZURE. RUMORS PERSIST THAT QADDAFI WAS PLANNING A GOLD DINAR CURRENCY FOR NORTH AFRICAN USAGE. HIS PUNISHMENT IS SEIZED $95 BILLION IN ASSETS HELD IN FOREIGN ACCOUNTS. WITNESS A CLEAR MOTIVE FOR WAR. $$$

Muammar Qaddafi has a plan, according to some accounts, not verified by any source of mine. The golden plan was bombed away by coalition forces, led by the USMilitary and its questionable NATO support. The European effort, as in aerial sorties, was far less in volume than reported in the US press, which chose to disguise the almost all-American campaign. The published reports cite the motives for the attacks against Qaddafi as aligned to protect civilians, while others cite perserving crude oil supply after a scare over the Suez Canal. The tyrant is a beast to be sure, deserving of a public hanging, but the intrigue is in the true battle waged. Some analysts are convinced the intervention in Libya was all about a Qaddafi plan to introduce the Gold Dinar, a single African currency backed by Gold. He upset the Western bankers who rely upon the USDollar and other fiat currencies, to maintain global power, to sustain a standard of living off the work of other nations, and to accumulate steered wealth from corrupt devices.

On the Libyan front, consider a quote from Manlio Dinucci. He wrote (in translation from Italian), "US and European ruling circles focused on these funds, so that before carrying out a military attack on Libya to get their hands on its energy wealth, they took over the Libyan sovereign wealth funds. Facilitating this operation is the representative of the Libyan Investment Authority, Mohamed Layas himself, as revealed in a cable published by WikiLeaks. On January 20th, Layas informed the US ambassador in Tripoli that LIA had deposited $32 billion in US banks. Five weeks later, on February 28th, the USTreasury froze these accounts. According to official statements, this is the largest sum ever blocked in the United States, which Washington held in trust for the future of Libya. It will in fact serve as an injection of capital into the US economy, which is more and more in debt. A few days later, the European Union froze around 45 billion Euros of Libyan funds." So US$32B + 45B Euros = US$95 billion.

Not only debt monetization and hyper inflation keep the US and Western system going, but basic theft of tyrant's funds. One must wonder if destabilization of tyrant rule has a hidden ulterior motive of confiscation. The news media carefully avoids this confiscation topic and the central bank role in the heated war. Somehow, the Egyptian funds pilfered by Hosni Mubarak have escaped confiscation. My howls of laughter were heard when Bloomberg News reported that Mubarak had accumulated almost $60 billion over 30 years of dictatorial rule from prudent savings, in their words. The reporter did not even break a smile. The legal stealing rights among national leaders is epidemic, and includes the United States and England, the center of the Global Axis of Fascism.

SILVER WAR A FOCAL POINT

◄$$$ THE ARGUMENT FOR EVENTUAL RESUMPTION OF THE SILVER BULL IS ASSURED. ALL THE FUNDAMENTALS REMAIN FIRMLY IN PLACE. MONETARY INFLATION IS TO BE CONSTANT, SINCE THE MONETARY SYSTEM CONTINUES TO FRACTURE. THE RUIN OF SOVEREIGN DEBT IS THE KEY. THE COMEX SHOWED UTTER DESPERATION SINCE SILVER INVENTORY WAS INADEQUATE TO MEET MAY DELIVERY REQUIREMENTS. WHAT HAPPENED WAS AN EPISODE THAT DEMONSTRATED A DEFAULTED MARKET. $$$

The Silver bull market will resume after consolidation, since the fundamentals remain firmly in place. The utter obvious nature of the $50 silver price target made a correction easy, helped along by some big US bank covered short positions to push up the price into a climax. Talk of a USFed tightening of interest rates and end of Quantitative Easing represented the deception. Neither will happen. Press coverage of the syndicate harlot George Soros aided the selloff, who claimed he was selling. His pronouncements since 2010 have been a total deception. Even the relatively small sales by the Sprott Trust to remove its premium in share price for its silver fund was an important factor. The $50 target was lit up like a statue on the hill visible at great distances. Ben Davies of Hinde Capital forecasted a $50 price target but also a rapid selloff to the $35 level, and it happened close to his scenario. Last week he announced he was a buyer at the current prices as the new highs will be registered in several weeks. My expectation was for a sudden selloff correction that would frighten a lot of people. The main damage was done to speculators who insist on converting investment vehicles into a casino device, loaded with leverage and huge potential. The next stage will have fewer of them. However, the big factor involved in the silver selloff was the repeated hikes in COMEX margin requirements on futures contracts. It was blatant, but it is the privilege of the syndicate to control the rules. No regulatory oversight is remotely at work for position limits or lack of posted collateral.

Comparisons to the Hunt Brother days continue, as pure disinformation. They tried to corner the paper silver market, and were tossed into the swamp by simple rules changes on margin requirements, the same tactic. Today, the silver market is a story of absent metal supply and tremendous physical demand from China, both its government funds and its citizenry, which is encouraged to participate. They need little push, since price inflation is all the rage. THIS IS WHAT A PRELIMINARY COMEX DEFAULT EVENT LOOKS LIKE. The COMEX did so in a manner that openly displayed to the world their desperation. JPMorgan produced some significant silver bullion from the margin hike tactics, forcing many speculators to forfeit their physical silver held as collateral. They bought another month or two. With the COMEX running bone dry of silver in inventory, unable to meet the stack of May delivery notices, they needed to act. People continually ask when the great breakdown will occur. It began in September 2008. They continually ask when the COMEX will go down in flames, complete with controversy and lawsuits and prosecution and flames. The first two weeks of May are precisely such an event in preliminary manner, the uglier following events to come, with full assurance.

A Silver market recovery and resumption is guaranteed, with much higher highs to come. Only a economist shill or Wall Street marketer or USGovt official would stand up to declare the silver bull as ended. All the dynamics that led to the tremendous price rise in silver from the 18 level to the upper 40 levels are intact, firmly in place, and growing worse by the month. Some (briefly the Jackass too) thought a V-shape recovery was in the making from a low near 41. That would have been a 3/8-ths retracement from the 28-30 level, roughly on napkin calculations. But the COMEX series of margin hikes, together with hidden but powerful Wall Street attacks against hedge funds, combined to send the silver price in the futures market down to where it had briefly a 32 handle. It seems the 34-35 area has offered great support. Both Davies and Eric Sprott announced they are buying at these corrective low levels. Also, the Asians remain robust buyers. A quick review of the major factors should serve as a fine reminder that the bull market in precious metals, and silver in particular, is here to stay, is powerful in its foundation, is global in nature, and will intensify. Consider the many factors, most of which grow worse, and are in no way addressed whatsoever during the 25% to 30% correction in the silver price. At 35, it stands at almost 100% higher than its stable 18 price last August.

The major factors behind the Silver bull market remain intact. The price is driven by:

  • The ruin of global sovereign debt whose bonds are losing integrity. Bond yields are rising except for the sickest nation fiscally (United States) and the healthiest nation (Germany). In general sovereign debt serves as the paper foundation for the global monetary system. It is crumbling, a process that showed its first major cracks with Greece 18 months ago. Gold & Silver are used as reserve assets in response to the broken monetary system.
  • The imminent fracture of sovereign debt in Greece, Ireland, and Portugal continues apace. Other nations so far untouched and unscathed by the debt crisis, like Spain and Italy, are next to topple. These two nations will cause major shock waves, and European bank failures. Gold & Silver are used as safe haven assets in response to the deeply distressed sovereign debt securities that face severe writedowns, no longer secure.
  • USGovt deficits continue upward in frightening fashion. No meaningful spending cuts have come. No end to sacred war spending has come. Hands off the Social Security, Medicare, and handsome USGovt pensions. The annual fiscal deficit will probably reach $2 trillion before any substantial reform takes place. Gold & Silver are used as nemesis last resort assets in response to the insolvency behind the global reserve currency in the USDollar, whose basis is the USTreasury Bond.
  • The US housing market is doomed, broken, and will not recover in the foreseeable future. The grand immovable obstacle is the huge bank inventory of seized homes. The shadow inventory prevents any semblance of price recovery. The USEconomy was doomed when its dependence upon the housing & mortgage finance markets was established. During the grueling relentless decline, the USEconomy will not produce adequate tax revenue. The chronic high USGovt deficits will be kept high by the deteriorating economic condition, made worse by the cost structure. Both rising commodity prices and shortfall in revenues assure the burgeoning USGovt debt. Gold & Silver rise in response to exploding debt and the associated risk.
  • The US Federal Reserve is nowhere near finished with its Quantitative Easing initiatives. Tremendous supply must be covered by actual demand, which is entirely inadequate. The USFed monetization process will continue since 80% of USTreasury Bill and USTBond demand comes from the Printing Pre$$. To fill the void, the USFed debt monetization machinery will compensate. Gold & Silver respond to the monetization process, also known as hyper inflation, an exercise in extreme currency debasement.
  • The USTreasury Bond complex is a grand asset bubble supported by direct hyper inflation in the debt monetization process run by the USFed. The risk of debt default is rising. The debt rating agencies provide as much warning as the syndicate will permit. The path underway leads to a debt default. Gold & Silver anticipate a USTBond debt default, which will be disguised in all likelihood and called a debt restructure.
  • The Japanese Yen must be regularly rescued from its unwanted rise. The Japanese Govt and financial firms are desperate to raise funds from sources besides pure monetary printing, which is heavy inflation. The upcoming trade deficit will aggravate the need to sell assets. Expect more coordinated central bank programs like the April G-7 Meeting to buy the USTBonds that Japan seeks to sell. Better described as Global QE, the debt monetization will go global but much more hidden. Gold & Silver smell the global face of the hyper monetary inflation in the form of central bank debt purchases.
  • Price inflation within the USEconomy has been rising alarmingly in the last several months, with no abatement. The direct impact of USFed monetization is a lower USDollar, which results in higher material costs across the entire spectrum. The gasoline and food prices will not come down much at all. The next source of price inflation will be imported from Asian finished products. They are passing along their higher costs. Gold & Silver respond to price inflation as much as the crumbling monetary system.
  • The IMF basket reserve currency concept has so far fallen on its face. They wish to fix the major currency exchange rates and thus stabilize the USDollar. Instead, they are proving that a basket of ruined currencies cannot float in stable fashion with tied together. Gold & Silver respond to the desperate attempts to extend the life of the broken monetary system.
  • Aggregator continental baskets of currencies are going to spring up to bypass and avoid the USDollar. Global trade is already using bilateral swap facilities between nations, usually with China as one nation. The process of removing the USDollar from global trade settlement is well along. The crowning blow will be the Saudis announcing acceptance of non-US$ payment for crude oil. They need a new formal security protector beforehand. They have it in China. Gold & Silver will respond to the demotion of the USDollar as trade settlement medium of exchange, since it signals the end of the Petro-Dollar defacto standard, a linchpin for the USDollar as global reserve currency. Without settlement, no need exists for entire banking systems to be founded upon the USDollar.
  • The Chinese are directly targeting Silver, motivated by the betrayal by the USGovt in the lease agreement as part of the Most Favored Nation agreement in 1999. The Chinese are busily replacing the silver stockpile that the Wall Street syndicate refused to pay back.
  • The US trade gap is not coming down in response to a lower USDollar. The best case for demonstration is the bilateral trade deficit with Europe. The March bilateral deficit was higher than February, despite the Euro currency having risen to the 140 level. The USGovt fiscal deficit combines with the trade deficit to make a gigantic hemorrhage to be financed, either from bonds or basic monetary inflation. Gold & Silver rise in reponse to the hemorrhage, noticing that total deficit indicate the potential for systemic failure.
  • The COMEX has been settling Silver futures contracts in cash since December. The non-disclosure agreements are signed to ensure no publicity of the 25% cash bonus paid. This is a technical default and fraud, the sale of silver metal without the metal.
  • A huge chronic silver deficit of demand exceeding supply has persisted for 10 to 15 years. The mining firms cannot respond to recently higher prices and bring new supply to market quickly enough. The silver scrap market has been exhausted. It brought a load of scrap to market, encouraged by high price. Gold & Silver respond to basic Supply & Demand dynamics, despite the regular systemic interference.
  • The next global financial structure will be centered upon Gold & Silver, with a large component in crude oil as well. Its structure and implementation are well along, never reported by the US press. It will act as the culmination of the Global Paradigm Shift.

The Silver market is preparing the stage for a run toward 80 to 100 per ounce price. A new foundation must be built. Its base could be at 35, where the 100-day moving average is almost exactly equal to the 20-week moving average. More touches of 35 could come, testing support again and again in May and June. The 35 level offers technical support also from the market turns in late February and mid-March. In the next round, the silver train will not rely upon as many momentum jockeys addicted to leverage. It will attract a different army of participants, more cautious in nature. Those who believe that 50 is the top, just like in 1980, are shallow thinkers without the strong perceptions of the big picture. They fail to notice how everything is broken and monetary inflation will become infinite. They view the market through a narrow lens. In the month of April and the early part of May, the world witnessed the early death throes of the COMEX. In the process, great pressures are forming that will result in a divergence between the paper silver price (metals exchange price discovery) and the physical silver price (market reality where large orders clear). The difference in corrupt SLV fund premium (negative) from the legitimate Sprott fund premium (positive) highlights the upcoming divergence in markets.

◄$$$ SUCKER TACTICS ARE WIDELY USED IN THE SILVER MARKET. GAMES ARE PLAYED WITH INVENTORY ON BOTH SIDES. THE INVENTORY FIGURES ARE ALMOST NEVER CORRECT. $$$

Larry Edelson pitched in with a great summary of the hidden inventory that springs up to knock down the silver market. It is used with other markets as well. He wrote, "The charlatans in the silver market are big inside speculators who routinely take delivery of the nearby silver futures contract, in physical form. But instead of keeping it stored in official warehouses, where the movement of silver is reported publicly, they move it offshore, to places like Switzerland and London, and into warehouses where the holdings do not have to be reported. They do this over a period of time, draining official reporting warehouses of silver to make it look like there is a massive silver shortage. Then, as silver prices start to rise, the little guy gets sucked into the rally. This charade keeps going until the silver price action goes parabolic and the average investor is jumping into it with both feet. Next, the charlatans who have removed silver from reporting inventories then begin to dump the silver back on the market, all over the world, in London, Singapore, Zurich. This starts a cascade of selling and liquidation, slamming the unknowing, innocent investor. All along, this operation, a giant market manipulation, is aided and abetted by silver dealers, who make their living selling you silver ingots, bars and coins. They cannot sell silver unless it is going up. And most recently, by investment banks that do nothing but deny that they are building up massive short positions to take advantage of the inevitable crash that will come. As usual, the most inexperienced and naive of investors are last in, and lose everything when deploying leverage."

A similar game is played with crude oil stored in tanker ships off ports. When the crude oil price fell from $140 to $40 two years ago, vast supply was hidden at sea, if that is possible. They were observable by aircraft easily. Then again, but also, much of COMEX metal inventory is phantom on the supply side. Often it is not available, falsely listed, leased and gone. Many savvy analysts believe 20 to 30 thousand tons do not exist in the official COMEX inventory, a phantom phony baseline. The moral of the story is inventory figures are wrong on high side and low side.

◄$$$ SILVER DOES NOT HAVE EXTREME SPECULATIVE FERVOR ASSOCIATED WITH THE CURRENT RUNUP. IT IS ACTUALLY ORDERLY. THOSE INVESTORS WHO PUSHED UP THE SILVER PRICE ARE IN A POSITION TO RELOAD AND DO IT AGAIN. THEY ARE NOT SITTING DUCKS FOR MORE ATTACKS, ONLY TO PUSH THE SILVER PRICE LOWER. SEE THE OPEN INTEREST, A KEY INDICATOR. $$$

Bill Murphy of the Gold Anti-Trust Action group is a solid analyst with a strong background of experience. He is a warrior fighting the good fight. He has been following the global money wars for several years. Murphy points out how the silver market has exhausted itself, and could be ready for a redux reload repeat of the its bull run. The key is the Open Interest (OI), the total number of futures contracts outstanding, pending delivery, rollover, sale, or margin call closure. If the OI were still relatively high, not much lower than where it was at the peak $49 price, then further declines would be possible. The cartel could target them for leveraged liquidation. But the Silver Open Interest has declined significantly. The same bullish players who held long silver positions in the paper silver market are in a position to reload and push the price up all over again. Obviously, many were hurt by the sudden decline. The quick nimble were stopped out on the way down, ready to fight another day, as they say in the pits. They will wait for the right signals to re-enter. A double bottom successful re-test might be what speculative investors were looking for, which came last week at the $34 price. Check the final comment, that the large shorts have also exited, closing out their losing positions on the way up and closing out their profitable positions from the successful illicit ambush. In other words, the game can start all over again, just like it did at the $18-$21 price. This is precisely how the silver price will run toward $80 in the next several months, maybe by year end, or within the next twelve months.

Murphy wrote from his LeMetropole Cafe, "The silver open interest number is a stunner. The OI fell a steep 5219 contracts to 124,235, which puts it at the low of its range of recent months and years even. Think of it. Three years ago the silver open interest, with silver around $21 per ounce, was a little over 170,000 contracts. Now, the price of silver is not far from doubling the $21 level, yet the open interest is off some 50,000 contracts. What does that mean? Most obviously, it means that despite the incredible rise in the price of silver, speculative interest has actually waned considerably. That sort of dichotomy may be unprecedented in market history and is incredibly bullish for future prices, as more than likely they will come back in on the long side to propel prices higher. The small open interest number also so means that many commercials have run for the hills and no longer want any part of the short side of this market." These expert comments are extremely bullish, extremely bullish for silver. The entire bull game in silver can be repeated, and will be repeated.

◄$$$ ERIC SPROTT CAUSED SOME CONTROVERSY WHEN HE ANNOUNCED THE SALE OF SOME SILVER BULLION IN EXCHANGE FOR SILVER MINING SHARES. IN DOING SO, THE FUND ERASED MUCH OF ITS HEFTY PREMIUM. THE FUND REMAINS FULLY COMMITTED TO SILVER AS AN INVESTMENT. THE FUND SHARE PRICE WILL REBUILD ITS PREMIUM IN TIME. $$$

Investors knew the risk when they paid a premium for their original PSLV shares. The Sprott Silver Trust now has mining shares to fortify its portfolio, which will force upward the share price in time. If the Sprott fund is valued at parity to the spot silver price, then the mining shares are given zero value, a situation that will correct itself. So Eric Sprott grabbed mining shares for free, or he spent the premium that will be replaced, depending upon one's viewpoint. The sales of Silver Trust shares took place in late April when the silver price peaked. Maybe that contributed to the silver price correction, but the COMEX sequence of margin hikes was the bigger reason, along with news of Soros selling or at least talking down silver. Sprott sold a total of 1.6 million trust units, whose proceeds were worth about C$34 million in Canada. See the Globe & Mail article (CLICK HERE). Sprott has been criticized for conning silver investors with a premium that was erased. Instead, he acted shrewdly to grab free silver mining shares that fortify the fund. The premium will return since the mining shares are not of zero value, which is what the market gives them as a component to the fund share value.

◄$$$ WATCH THE S.L.V. DISCOUNT TO SPOT SILVER. DURING THE SILVER PRICE DECLINE, VERY STRANGE INDICATIONS EMERGED FROM THE JPMORGAN FUND LADEN WITH DEEP CORRUPTION. THE DISCOUNT TO NET ASSET VALUE SHOT UP TO 10%. IT HAS SINCE SETTLED DOWN UNDER 2%, AS THE AMBUSH PRODUCED SILVER METAL AND HELPED THE MORGUE MANAGE THE FUND. A BIG NEGATIVE PREMIUM WILL SOMEDAY POINT TO THE FINAL CLIMAX FOR THE S.L.V. FUND IN MY VIEW, WHEN IT SHUTS DOWN. $$$

The SLV exchange traded fund has been in the spotlight. At one point in the first week of May, it was trading at 32.0 per share, fully 10% below its inherent $38.2 net asset value of supposed inventory held. Gaping arbitrage opportunities have been presented within the corrupt high volume SLV product. That could have been one JPMorgan objective, to exploit the gap. These artificial ETFund mechanics could be intended to enable exploitation as part of the fund's design. At one point during the paper silver price swoon, after COMEX silver fell to a fresh low price, a ripe 250 thousand ounces were suddenly reclassified from Registered to Eligible, and a ripe 444 thousand ounces were withdrawn. This is highly suspicious and probably illegal activity, done with impunity, as always. See the Zero Hedge article (CLICK HERE). Two big reasons help to explain why the SLV fund by JPMorgan has a negative premium. First, they avoid some vault fees and management fees and insurance fees by not owning the silver bullion metal in inventory than reported officially. This is basic fraud, charging for a service when far less metal is stored in inventory than their books cite in accounting reports. Second, in all likelihood, JPMorgan uses SLV shares to short silver, in a criminal abuse that betrays their investors and aids the cartel. The lending of SLV shares is all over the metals market. They are also used to satisfy COMEX short futures contracts. The negative premium comes from lending then selling the abused SLV shares. The SLV exchange traded fund dilutes its own shares in order to sell silver and suppress its price, a criminal practice.

Aaron Krowne, colleague and friend, made some excellent comments with respect to the SLV fund and the negative premium that exposes a prima facie to fraud. He compared it to the higher positive premium paid for honest funds like the one managed by Eric Sprott, loaded with integrity and actual bullion in inventory. It is available upon demand. Krowne wrote, "The high premium has come up numerous times in the management of various Sprott funds and I do not see anything suspicious in it. Bullion funds such as Sprott and a few others naturally trade with a higher premium because they actually (1) have all the metal they present themselves as having, and (2) do not create new shares through shorting to continuously meet demand for new shares. The practice which is equivalent to betting against your own customers in illicit fashion. Essentially a high demand closed end fund will always have a higher premium than a derivatives-based ETF. Furthermore, Sprott has far from divested himself of bullion. His actions of providing a sale by taking from the house stock of shares actually is beneficial to the market by allowing others to obtain the shares prior to a secondary offering. I understand that Sprott took the money from the sale and went into mining shares, which shows he is not at all getting out of silver. He is making an exchange of low risk for higher risk, at potentially higher reward, which is certainly his perogative as a mining industry insider. One cannot (and should not) expect the same modus operandi to be followed by most PSLV clients." Well stated!! By the small Sprott sale of PSLV shares, he actually introduced some healthy liquidity of tradeable shares into the market. It was a shrewd maneuver in all respects. He bought the mining shares for free, in my view, which will be evident when the NAV premium returns.

ASIA UNITES WHILE JAPAN REELS

◄$$$ THE JAPANESE YEN CURRENCY RETURNED TO 125 ONCE AGAIN, AS THE JAPANESE ECONOMY SLIDES INTO A POWERFUL RECESSION. JAPANESE INDUSTRIAL PRODUCTION HAS FALTERED BADLY BY 15%, IN OBVIOUS EXPECTED FASHION. TOYOTA SALES HAVE PLUNGED BY OVER 50%. THE BANK OF JAPAN HAS RESPONDED BY EXPANDING ITS BALANCE SHEET IN HUGE SUPPORT FOR THE URGENT FINANCIAL NEEDS. THEY WILL SELL FOREIGN ASSETS QUICKLY, IN ORDER TO AVOID PRICE INFLATION, AN UNWANTED EFFECT. $$$

Forecasts are fast being slashed on Japanese growth. Factory output fell 15.3% since February, the biggest drop since data began in 1953. Household spending fell 8.5% from a year earlier. The Bank of Japan admitted that more stimulus is to come in mid-year. Major corporations have delayed earnings forecasts, as they busily assess the extreme damage and disruption to business. The supply chains are expected to recover, but more time will be needed than the official statements. The Bank of Japan kept on hold its asset purchase program at 10 trillion Yen (=US$122 billion). The BOJ also kept the benchmark interest rate at a range of 0% to 0.1% which has stood for almost 20 years. It is a trap from which nations do not exit in the fiat currency world. The United States is no different, but refuses to learn the basic lesson. BOJ Governor Masaaki Shirakawa has signaled his steady opposition to more aggressive stimulus, such as direct financing (monetization) of government debt, citing the risk of triggering price inflation.

The nation's Big 3 carmakers (Toyota, Honda, Nissan) reported an absolute frightening 51% plunge in March production. Japan's exports dropped in March for the first time since November 2009.  Toyota hopes to normalize its production in Japan from July. Instability in the power supply has had a direct impact on corporate production plans, the result of a series of electric power cuts. If not out altogether, electricity service has been rationed by means of rolling blackouts. Standard & Poor downgraded its outlook for the Japanese Govt debt rating, adding insult to injury. S&P cutting the outlook on the AA- credit rating to negative from stable. Japan has the world's largest public debt burden among industrialized nations, the result of chronic 0% rates which cannot stimulate the economy. The paradox is a giant blind spot to Keynesian economists, highlighting the trap. See the Bloomberg article (CLICK HERE). The nation continues to suffer from countless after shocks and additional smaller earthquakes. Geologists are watching its sponge-like crust as it is slowly crushed. The bizarre fact of life is that Japanese cities, especially in the north, are experiencing giant cracks in city streets. The nation is sinking. See the Before It's News video (CLICK HERE). Beware if Mount Fujiyama erupts. If it does, then the spread of nuclear radiation will be matched with the threat of portions of the nation sinking into the sea.

◄$$$ THE VERY SAME FACTORS THAT FORCED THE EMERGENCY G-7 MEETING TO CAP THE YEN HAVE RETURNED. JAPAN IS SELLING US$-BASED ASSETS AGAIN, WITH LESS PUBLICITY. THE TELLTALE SIGNAL IS THE RISING YEN CURRENCY, WHICH REACHED THE 125 LEVEL AGAIN LAST WEEK. EXPECT ANOTHER GLOBAL Q.E. PROGRAM BUT DONE IN SECRECY. $$$

A high Yen exchange rate pushes their vast supply industry toward unprofitable, imposing great strain. Expect another emergency G-7 Meeting of major finance ministers, which in my view should be described as a Global QE since the major central banks will once more coordinate their actions to buy the vast tranches of USTreasury Bonds that Japan needs to sell in order to raise funds. The large Japanese financial institutions must close their finance gaps and avoid price inflation from the pure unfiltered effect without asset sales. They do not want additional woes in addition to what grotesque strain has already come. The exercise will be repeated, as the Jackass forecasted a month ago. My forecast is for a secret G-7 Meeting to agree to USTBond purchases to push down the Yen currency, but without any publicity, zero press coverage, all total secrecy. It is a development factor far bigger than any QE conducted solely by the USFed. Since coordinated the world over, call it Global QE. Look for some distortion of purpose for any suddenly convening of finance ministers. They might call it coordinated global monetary planning or some such deception. It is just another side to the Competing Currency Wars.

◄$$$ THE ASIAN R.M.U. IS ANOTHER DAGGER IN THE USDOLLAR BACK. THE ASIAN ORGANIZATION OF NATIONS INTENDS TO BYPASS THE USDOLLAR IN ITS CREDIT FUND, AND LIKELY NEXT IN FUTURE TRADE SETTLEMENT. REJECTION OF THE USDOLLAR PROCEEDS CONTINENT BY CONTINENT. UNTIL RECENTLY, ASIA HAS BEEN QUIET ON NON-US$ ALTERNATIVES, EXCEPT FOR CHINA. $$$

Preface by mentioning that China has worked vigorously to establish bilateral trade based upon currency swap facilities that depend upon their Yuan currency. They wish to avoid usage of the toxic USDollar. See bilateral deals with Brazil and with Russia, even some important projects in Iran. Until early May, the Asian nations have been quiet, seemingly content to trade in US$ terms for commerce among nations. An important accord was struck, a watershed event. They call it the RMU, for the Regional Monetary Unit. The Assn of Southeast Asian Nations (ASEAN) is a critical alliance of smaller Asian nations. They had a conference for the ASEAN+3 nations, which included China, Japan, and South Korea. The other three operate as the powerhouses that cast long shadows. The Asian alliance have been carefully studying the idea of a common currency for Asian usage, although an internal paper shows they are a long way from launching a regional currency like the Euro. The study suggested that the RMU be used for surveillance by the Asean+3 Macroeconomic Research Office (AMRO), the agency with decision power on tapping a regional fund during distress. The high level of economic integration in the region implies an RMU would enable an accelerated integration process. The Assn of Southeast Asian Nations consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The Asean+3 grouping includes China, Japan and South Korea as well.

The AMRO study concluded, "As economic integration deepens further in East Asia, it would be more beneficial to East Asian countries to adopt an exchange rate regime that collectively floats against the USDollar and the Euro while maintaining a stable intra-regional exchange rate." The official study made other significant conclusions. A common monetary unit could contribute to the development of financial and capital markets in the region. Its usage for official and private transactions would likely become more feasible as economic and financial integration deepened. It went further, claiming that RMU usage for official purposes, such as payment among member governments or credit transactions among member authorities, could support private use of the common unit. It cited reduce foreign exchange risk for individuals, businesses, and financial institutions, meaning exposure to the toxic USDollar. Political consensus would be required for other stable measures like any RMU inclusion in the budget of AMRO or other Asean+3 activities.

Practical implementation of a pan-Asian currency basket seems imminent in the current crisis filled environment, far from a thought experiment. The AMRO study suggested the exploratory usage of the RMU for private sector transactions. It will examine issuance of RMU-denominated bonds by government or multilateral institutions, preferential treatment for RMU-related operations in foreign exchange regulations, acknowledgement of the RMU for private use as a foreign currency (de-jure or de-facto), accounting and tax treatment harmonization, and support for the establishment of an RMU fund settlement system. A sense of urgency appears very evident. A transition from a theoretical to a practical monetary regime appears to have arrived. Some analysts expect that a deep plunge by the US$ DX index below the critical 70-71 level would provide the final push for the Asian finance ministers to launch the experimental RMU within months, thus ending the US financial hegemony, and setting of a chain of events that could well lead to the insolvency of the United States.

Initially the regional currency basket is planned to provide a valuable macro-economic monitoring tool. In time its use could be expanded to include official and private transactions, according to a study by a high-level research group reporting to Asian officials. Expect the Chinese Yuan to compete for global commerce and trade settlement on such a wide scale that it will become a functional global reserve currency. Also expect the Asian RMU to feature the Chinese Yuan, the Japanese Yen, and the SKorean Won, even possibly the Taiwan Dollar. A currency basket of Asian currencies could serve as a temporary platform of growth currencies that enables the continent laden with manufacturing strength to endure the global storm. Among the so-called Aggregator Currency alternatives, the Asian RMU seems the most likely to stand on its own very capably. The aggregator Euro currency is dying, weighed down by the Southern European battered broken brothers. Since the USDollar cannot be replaced so easily, the aggregators might appear during an important transition period. Look for the Asian RMU to initially monitor economies and their banking systems, then to fill the regional credit fund, and finally to be used in trade settlement. But the process will take time, and probably require more crisis to be hatched. Their aspirations are usually dismissed as long-term goals in the next decade. The wreckage of the USGovt runaway debt, USTBond bloat, USFed monetization, and USDollar decline will surely hasten the responses and defensive vehicle launches. See the Zero Hedge article (CLICK HERE). Look for China to put its weight behind the RMU instrument, along with Japan and South Korea.

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.