GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Introductory Update
* Financial Market Perspectives
* Gold Market Breakdown is Nigh
* USDollar at Precipice, Gold on Verge
* Oil Market Turns Upside Down


HAT TRICK LETTER
Issue #68
Jim Willie CB, 
“the Golden Jackass”
22 November 2009

"There is a sense that in some very defined and critical way, the dollar and the US have lost their way. The US has borrowed so much from foreigners. They have a rising budget deficit and few ways to bring it under control that investors see as viable. Those are things that affect the value of a currency." -- Stephen King, chief economist at HSBC

"Risk appetite remains intact overall. The Federal Reserve is likely to be among the last to exit. That means the dollar will stay under pressure to be sold in exchange for higher yielding currencies." -- Tokai Tokyo Securities

"The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots. The bankers went anew to grab the riches. I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it to systematically corrupt civilization." -- German Chancellor Otto von Bismark (after the Lincoln assassination)

INTRODUCTORY UPDATE

◄$$$ FOR A CHILLING BUT REALISTIC SCENARIO, CHECK OUT HOW THE DOLLAR MIGHT DIE. IT IS A REALISTIC ACCOUNT THAT IS EXTREMELY CONSISTENT WITH MY VIEW, AND WITH THE PROSPECTS DESCRIBED TO ME FOR ALMOST A YEAR BY CONNECTED FOLKS. GOLD HALTED AT 1500 AND SILVER HALTED AT 80, EACH READY TO ZOOM MUCH HIGHER, EXCEPT THAT THE COMEX AND OTHER EXCHANGES WERE HALTED. $$$

Check out "The Day the Dollar Died" by John Galt (CLICK HERE), a fictional scenario that is rooted in reality, with very reasonable directions. The panic hits next February 22nd. The price of gold & silver based on equilibrium of supply & demand remain unknown for days. Their last known prices are $1500 and $80 per oz, as the metals exchanges shut down. The COMEX reacts to being unable to fill the flood of buy orders, following a $200 move in gold and a $40 move in silver on the previous day. The Euro currency moves toward 200, the Canadian$ over 130, the Aussie$ at 140. The crippled giants Citigroup and Bank of America are nationalized, after a staggering overnight loss to each in the hundreds of billion$. This follows a USTreasury auction failure with chain reaction afterwards, replete with foreign creditor deep resentment and anger. Foreign economies and markets, one by one, begin to refuse USDollars. Closer to home within the United States, the supply chain lacks inventory, no cash in ATMachines, empty shelves in stores and supermarkets, canceled airline flights, bank accounts not quoted, unresponsive internet webpages, stock markets plunging, life savings decimated, as chaos grows. The next challenge: to convert coin to potato. In other words, to begin cashing in on extremely profitable precious metal investments that saved personal wealth, and purchasing life's necessities like milk, bread, eggs, and a chicken sandwich. No need for a movie, since reality overwhelms art.

ME: Bear in mind that the US-UK tagteam is devious and very inventive in their manipulative interventions. They know how to buy time, but they are surely running out of time. The date in my view for the full blown crisis climax will be after February, probably more like June or mid-summer 2010 for a serious breakdown. For certain, the process has begun and is not stoppable.

◄$$$ See the new Hat Trick Letter Special Report entitled "Global Paradigm Shift Reverberates" for November. Bankers in charge of their central banks now have a new forum. The G-20 Meeting, with its near monthly assembly, has successfully displaced the G-8 Meeting. China has won its way. Worse, the US & UK bankers have tended to be ignored at the larger forum so far, a nasty twist in rebuke for past sins. Implications to the USDollar are huge, as neglect translates into permission to find its true value. That value might be far lower than market mavens anticipate, since Third World fundamentals stare the Americans in the face. To be sure, the power base is in the process of shifting East. The wealth lies in the East, as does the industrial base, in addition to cheaper labor. The Global Paradigm Shift involves a grand movement away from the USDollar, and at the same time a reduction in American and British financial standing and power. Risks lie ahead for the Chinese to manage their mass apparatus where far too many US$-based instruments can easily gum up the works. They must manage bubbles from a decade of trading their factory output for potentially toxic US$-based bonds. The Beijing leaders seem willing to sacrifice some loss in the staggering horde of wealth for greater global power. The process is well along.

◄$$$ See the new Hat Trick Letter Special Report entitled "Gold Industry Prospects & Major Miners" for November. South African mining costs are set to jump markedly, certain to reduce output further. The marxist SAGovt plans to impose an electricity tariff increase of 45% per year over the next three years. Mining firm executives describe a gradual crippling of the South African gold industry, with marginal mines shut down. An end to the glory days comes. Worse, independent researchers estimate the South African gold reserves to be 80% less than the figures posted by their government. National output is on a strong decline, worsened by taxes, contamination, and regulations. John Paulson plans a new gold fund, to be seeded by $250 million of his own money. The Central Fund of Canada expanded its stock issuance from 11.0 to 15.5 million shares, and successfully raised $230 million. They will busily buy gold and silver, tilted as usual 55% to gold as dictated in the fund. Investment demand in gold has seen burgeoning growth, while supply is on the decline. Fred Hickey describes investment demand as wagging the yellow dog's tail. Chinese gold and retail jewelry sales are expected to reach $38 billion this year. The Indian Govt gold purchase of 200 tonnes from the IMF is not what it seems. In fact, no official gold story is remotely truthful in recent years. The USGS reports data that indicate the USGovt shipped 2900 tonnes of 'Component Gold' in a single year amidst stone silence in response. This is evidence of closed out official gold short transactions from yesteryear, the USGovt paying gold back from official loans but hiding its trail. Furthermore, the global mine output is 8000 tonnes lower than early 2007, direct proof of my gold inelastic supply argument.

Barrick Gold is replete with perenniel liars. They took another huge loss, but only one third of hedges were closed out, as they wasted away $5.1 billion in new funds that further dilute their stock equity. They remain institutional darlings, evidence of corruption in the investment banker community. They claim they could not find gold supply, when they ran out of funds. Barrick President Aaron Regent extols the prospects of the gold industry. Cited are shortage of gold, declining mine output, lower ore grades, and mention of 'Peak Gold.' He must be unaware of Barrick's eventual death throes. He acknowledges their black eye from hedge book losses, but they will never end. China might soon pursue Newmont for direct acquisition, the object of stubborn rumors. The political leaders must first clear the path for such a giant maneuver, since Newmont output might be steered to Chinese vaults. The takeover could be instrumental in acquiring a raft of smaller gold mining firms, using Newmont stock as currency. Could China be assaying Newmont? Risks come with any acquisition, since the largest mining firms are typically targets of extortion by the somewhat rogue nations. A few foreign governments have used ploys such as income tax violations, environmental issues over contamination like with mine runoff, and labor treatment in extortion. See the Zarafshan-Newmont joint venture in Uzbekistan, that resulted in forced sale to the Uzbek Govt.

◄$$$ THE OBAMA TRIP TO ASIA RESULTED IN ALMOST NOTHING POSITIVE. SOME POLITICAL ANALYSTS DEEMED THE ASIAN HEAD OF STATE TRIP THE BIGGEST FAILURE FOR A US PRESIDENT IN ALMOST A GENERATION. THE UNITED STATES HAS NO CARDS TO PLAY AT THE TABLE ANYMORE, TRAGICALLY. ITS MILITARY IS RESENTED ALMOST AS MUCH AS ITS BANKER FRAUD. $$$

Meetings between US President Obama and Chinese Premier Wen Jiabao accomplished nothing on currency and trade issues. The principal gain from the talks was Obama's conciliatory tone that won some praise from the Chinese state media. The debtor nation guilty of global fraud should be humble and respectful to the creditor nation. US officials made frequent reference to 'Global Headline Issues' over which little progress was made. A steady stream of disharmony could be read between the lines. In addition to lack of progress on Chinese Yuan link to the USDollar, the two sides failed to reach agreement on the majority of Obama's agenda. These included Afghanistan (which Beijing sees as a pointless war, perhaps blind to the narcotics motive) and Iran (where Bejing has huge energy project commitments). See the Financial Times article (CLICK HERE).

President Obama and Chinese President Hu Jintao concluded their formal meetings in Beijing, filled with promises of increased cooperation but no progress. The thorny issues remain ongoing friction over currency matters, trade, and human rights. Obama platitudes included, "The relationship between the US & China has never been more important to our collective future." Hu promised work to ease trade frictions. He said, "[The two countries] need to oppose and reject protectionism in all its manifestations." The USGovt has responded, if not catered, to calls for action against China from the USCongress, unions, the farm lobby, and various manufacturers. Obama has responded lately by imposing duties on car tires and steel pipes imported from China, obediently. See the Bloomberg article (CLICK HERE).

Chinese leaders accuse the USGovt of protectionism. The USGovt leaders accuse China of Yuan currency exploitation. On safer topics, some constructive collaboration might come on agriculture, global health issues, and counter-terrorism, even student exchanges and military cooperation. The direction of trade is horrendous, and exposes the US weakness, with a certain outcome toward isolation of the United States. It is a lopsided US-China trading relationship. The US trade deficit with China is $165.8 billion in the first nine months of 2009. China has been pursuing a series of trade agreements throughout Asia, a clear indication that it does not see a strong economic player in a future US partner. The first pockshot at Obama on the trip upon arrival came from the Chinese Commerce ministry. It criticized the USGovt for protectionism and reduced openness. That office cited 10 separate trade actions imposed against Beijing just this year, and criticized continuing USGovt restrictions on high-tech exports to China.

The Beijing leaders have embarked on a new tack, expressing deep concern about the vast US budget and the falling USDollar, items closer to the heart of the ruinous US condition. The Chinese bank leaders are critical of the US$ depreciation and the ultra-low interest rates, blamed for asset bubbles in stocks and property markets, thus putting at risk the global economic recovery. The Beijing cadre must realize that these are consequences of having a financial foundation intimately linked to the USDollar, and engaging in trade with the United States. LINK OR FLOAT, BUT GET OFF THE FENCE! Lame denials were given by US Commerce Secretary Gary Locke on protectionism. Laughable denials were given by US Trade Rep Ron Kirk, who claimed the United States had the most open markets in the world. The American pursuit of changes to Yuan controls are futile and off the mark. The trade imbalance has many roots to the 10-fold differential in labor costs. A Yuan upward lift of 100% would accomplish little to remove labor arbitrage from the trade formula, but it would snuff out a raft of Chinese exporters. The USGovt demonstrates a profound shocking ignorance of economic matters, after encouraging gigantic US corporate investment in China early in this decade, in the famed 'Low Cost Solutions.' It failed, precisely as forecasted in the Hat Trick Letter. The American leaders appear as stupid as they do weak, in addition to being corrupt. See the Business Week article (CLICK HERE).

◄$$$ THE BANKER EMERGENCY EXERCISE CONFIRMED. IT DID INDEED OCCUR IN OCTOBER. $$$ From subscriber in the central United States. "I had told you my local Fed member bank representative knew nothing about the 'exercise' a couple of weeks ago. When I spoke to him today, he had done some more checking. It was performed on Sunday October 25th, in secret. One of those 'Need to know' things." Just who on earth does not need to know about a global exercise to recover data from a disaster??

◄$$$ GEITHNER SUDDENLY IS UNDER GREAT CONGRESSIONAL PRESSURE, EVEN URGED TO RESIGN. HE HAS BEEN LABELED PART OF THE CRISIS. HE MIGHT BE MADE THE FALL GUY FOR T.A.R.P. FRAUD, A.I.G. FRAUD, THE RETURN OF THE RECESSION, THE HOUSING BEAR MARKET, AND GOLDMAN SACHS SWEET DEALS. ALSO UNDER SEVERE SCRUTINY IS GOLDMAN SACHS ITSELF, WHICH HAS RESORTED TO TAKING DEFENSIVE MEASURES. $$$

Something is afoot, a broad cloud that has begun to cover Goldman Sachs. Catherine Austin Fitts pieced together some suspicious events, to which a couple can be added. Treasury Secy Geithner was swarmed at a Congressional hearing this week, and was subjected to unusual attacks. His resignation was demanded by one Senator. See the Business Insider video (CLICK HERE). He was put on the spot, asked what his past position was and its bearing on the banking system breakdown. Geithner tried to paint a picture that the current credit and banking system problems were the result of the previous Administration. Yet, the same Wall Street crew operated seamlessly from the past Admin to the current Admin, and Goldman Sachs was at the helm at the USDept Treasury before and now, even in the Clinton Admin. Geithner might, as Fitts suggests, could be set up to take the fall for the AIG sweetheart deal for Goldman, whereby GSax was given 100% redemption first in line on Credit Default Swap contracts held by AIG. It is called a sweetheart deal, when it was basic corruption of the process. Or Geithner could be set up to take the fall for a double dip recession, since the shoddy Stimulus Plan was largely designed, written, and lobbied by his office. In the last few weeks, a mountain of horrible news has come regarding losses at Fannie Mae, Freddie Mac, even the FHA described as the new Subprime Lender. The mortgage bust occurred under his watch at the New York Fed. Furthermore, look for a very contentious approval process in the US Senate for Ben Bernanke to continue his tenure as USFed Chairman. He has been reappointed, but not re-confirmed. Some believe that given the hostility brewing, no current figure will be approved for continued service.

The Wall Street Journal ran an article with headline of "Fear of Double Dip in Housing" that paints a bleak picture on the endless housing bear market. That has been precisely the Jackass forecast for the last two years or more. One should keep in mind that when a fall guy is removed, he knows too much. His continued walking and breathing forms a deadly threat to the syndicate. They usually remove such threats by the permanent silence process. We are not talking about exile to the Island of Elba here. We are talking about a possible imminent suicide. Tungsten Tim (name given by GATA this week) is a strong candidate to be suicided. That is a new term to describe murder framed and reported as suicide. Recall the CFO of Freddie Mac last spring was suicided in his Virginia home. He knew too much, and probably either wanted to go to the legal authorities or to resign.

Fitts continues. Furthermore, a recent Special Inspector General report addressed how Goldman Sachs benefited from its position on AIG contract redemptions. Also, it can be argued that AIG and Goldman were at the heart of the mortgage fraud. The AIG contract redemption deal is possibly connected to collateral fraud in the mortgage bond markets. Then comes the bizarre story totally out of character for a vampire firm such as Goldman Sachs. They announced a $500 million gift to small business. On their advisory board are Bob Litan and Michael Porter, who were deeply involved in the debate about the housing bubble. They are working to assemble the folks who argued in favor of small business in the 1990 decade on their team. The whole thing stinks to high heaven, and reeks of covering their paths. One can safely conclude that Goldman is scared, vulnerable, with feverish actions to defend its gates.

On November 7th, the USDept Treasury led by Geithner turned down the sale of Fannie's tax credits to Goldman and Warren Buffet of Berkshire Hathaway. We could actually be witnessing a complex sequence, whereby Goldman permits attacks on Geithner, and has him removed from his post. Then the challenge is to replace him with someone with no Goldman baggage who could cater even more effectively and boldly for Goldman. Such a deft maneuver might be too difficult to pull off, as the appointment process and Senate confirmation would be fiery and volatile, maybe explosive if yet another 'Friend of Goldman' was marched to the conference table for approval. By the way, Goldman Sachs has infiltrated the London power structure also. They are the headquarters for the syndicate.

Another voice with deep banking and international contacts added some stern but extremely valid points. He wrote, "The noose is being tightened very slowly and the point of no return has been long passed. There will be a couple of very prominent players who will be systematically dismantled and thrown to the wolves. This process was triggered many months ago when some heavy duty players from North America went to Europe and asked for political asylum and immunity in exchange for turning over incriminating and irrefutable evidence of the government perpetrated fraud, diligently executed by the Wall Street and City of London banksters. Tony Blair being the most visible casualty. He had high hopes to be handed the job of EU president on a golden platter. Then there have been a number of little helpers been taken out of circulation (like Madoff). Also they have started killing off people who are termed 'facilitators' to the bankers. There will be many more stuffed into all kind of meat grinders. It would not come as a surprise to hear one day that Tim Geithner hanged himself in his shower at home. All this is not any longer about money. It is about power and displacement of certain people who screwed things up doing 'God's Work' for the system. There is a saying in Russia. 'If you cannot walk on fresh snow without leaving tracks, you will die a lonely death.' This is all about Paradigm Change. The issues that are being dredged up and the sequence of events is nothing but a well choreographed side show. The encore will be interesting to watch when the next events are triggered. It ts such a satisfying and exhilarating moment when you are allowed to witness certain people falling onto their own swords, especially when they are looking behind to cover their backs."

My view is replete with more practical consequences of when a syndicate loses power. It tends to unleash a holy hell upon its former hosts in resentment.Will banker heads roll and bankers be found hanged at home and bankers seek asylum in foreign nations with stolen funds (like Marcos of Philippines, like Shah or Iran, like Selassie of Ethiopia)? Or will retaliation come in the form of viruses spread, and supply chains cut off, internet access jammed, curfews imposed, FEMA camps filled, vaccinations forced, and martial law ordered? Americans have no idea who controls the nation. The syndicate would prefer that the public never know of the control, frauds, wars, theft of federal funds, and destruction of the middle class, perpetrated by bankers, the extended military, the security establishment, and even presidents.

◄$$$ SEE A LETTER TO WALL STREET JOURNAL EDITOR FROM C.A.FITTS ON THE LONGSTANDING NATURE OF FANNIE MAE FRAUD. OFFICIAL STORIES TRY HARD TO PAINT A CURRENT FACADE WITH A WALL TO BLOCK PAST EXTREME CRIMINALITY. RECALL THAT FANNIE MAE WAS NATIONALIZED ONE YEAR AGO TO HIDE ITS FRAUD, TO PAY FOR ITS BLACK HOLE LOSSES WITH FEDERAL FUNDS, AND TO ELIMINATE THE POTENTIAL FOR LAWSUITS WITH FULL WALL STREET RESTITUTION. $$$ The following is a Letter to the Editors of The Wall Street Journal dated 14 November 2009. To date it has not been published, no surprise.

Ladies and Gentlemen:

Your editorial "The FHA's Bailout Warning" (CLICK HERE) states that the deterioration in The Federal Housing Administration's (FHA) financial position "is the result of the agency's plunge into high risk loans over the last two years." The current problems in the financial condition of FHA and its parent agency, the US Department of Housing & Urban Development (HUD), have older roots. For example, HUD refused to produce audited financials in fiscal 1999 as required by law and used $59.6 billion in 'Undocumentable Adjustments' to close its books. (See the Where Is The Money article if CLICK HERE). At that time the chief of staff to the Chairman for the Senate Appropriations subcommittee overseeing FHA and HUD confessed to me that the agency "was being run as a criminal enterprise." (See the Dunwalke article if CLICK HERE). Understanding FHA's current financial condition requires an investigation of what has happened to the billions that have disappeared through the agency's accounts. (See the Solari article if CLICK HERE).

-- Sincerely Yours, Catherine Austin Fitts (Former Assistant Secretary of Housing & Federal Housing Commissioner under Bush I)

◄$$$ TAIWAN & CHINA COOPERATION BUILDS. $$$ Taiwan and China are close to several agreements called WoU and ECFA, parts of which would permit direct currency exchange without the USDollar used in intermediary transactions. The arrangement is certain to have some impact on the USDollar. Thanks to subscriber Lee in Taiwan.

◄$$$ CHINA OPENS A COPPER PIPE PLANT IN MEXICO, AND CONTINUES ITS GRADUAL STRANGLE AROUND THE UNITED STATES IN LATIN AMERICA. $$$ In October, the Chinese company Golden Dragon opened a $100 million copper pipe plant in Northern Mexico. To date, it ranks as the biggest investment by a Chinese manufacturer in Mexico. The plant will bring 900 jobs. Anyone who expects factory output to be directed north to the United States is not using the thought process off the brain stem. See the China Daily article (CLICK HERE).

◄$$$ DISILLUSIONMENT AMONG AMERICANS WILL CREST WHEN THE NEXT SEVEN MILLION JOBS ARE LOST. DESPITE A ROSY G.D.P. STATISTIC, JOBS ARE CAVING IN AMIDST ECONOMIC DETERIORATION. ONE MUST BE OF TWO MINDS NOWADAYS. $$$ Charles Hugh Smith identifies the divergence between fantasy of official USGovt economic statistics and the harsh reality we live in. He expects another seven million jobs will be lost in the next couple years. He wrote, "The divergence between the reality easily observed in the real world and the heavily touted hype that 'the recession is over because GDP rose 3.5%' is growing. It is obvious that another 7 million jobs which are currently hanging by threads will be slashed in the next year or two. It is staggering that 7 million jobs lost out of 145 million (the total workers prior to the financial meltdown) has created a 10.2% unemployment rate. The numbers here do not add up that 'only' 190,000 jobs were lost in October, but then employment fell by 589,000. Huh? but the point missing is how many jobs are hanging by a thread." See the OfTwoMinds article (CLICK HERE).

◄$$$ AN UPDATE ON THE DISEASE RAVAGING UKRAINE. THE DEATH COUNT IS HUGE, BUT NOW MORE IS KNOWN. IT IS A VIRUS THAT ATTACKS THE LUNGS, RESULTING IN LOST PULMONARY FUNCTION AND CONGESTIVE HEART FAILURE. $$$

The title is not only catching, but seems to be somewhat accurate. "Armageddon Has Begun" might be more true for Eastern Europe, the possible target zone for spreading a global disease. Aerial spraying was reported late in October across much of Ukraine. The article cited two stories, one the European BioWar outbreak with over a million seriously sick in just Ukraine and the second, the censoring of the entire story by the mainstream news media. Several friends of mine from the US and Canada have heard nothing of this deadly contagion. They wrote, "UPDATE: Latest Ukraine Plague figures: 1,253,558 very ill; 65,615 hospitalized in serious to critical condition. These are Ukraine only figures. The biggest story on the Planet today is the outbreak of a very serious Advanced Biological War virus in Europe. The second biggest story on the Planet is the suppression of this story for almost two weeks by the corporate owned mainstream news media." See the European Business article (CLICK HERE) for frightening details.

The Head of the Chernivtsi regional forensic bureau in Ukraine is Professor Victor Bachinsky MD, who is a coroner in the Chernivtsi region of Ukraine. He also teaches at the Dept of Anatomical Pathology & Forensic Medicine of Bukovynian State Medical Academy. His investigation and medical treatments have been documented. Based upon autopsies, he reached the conclusion that not pneumonia, but cardiopulmonary insufficiency and cardiogenic shock were the common cause of death. The virus enters directly into the lungs, where bleeding goes out of control. It is not pneumonic plague, all nonsense, and antibiotics do not help. The high mortality rate in the country is due to people going to pharmacies to get medicine instead of going to their doctors to be treated. Those with strong immune systems will survive. People with weak immune systems will succumb to the illness. A face mask gives 30% extra protection, he gauges. Bachinsky makes a strong statement: all the victims of the virus in Bukovina (22 persons aged 20 to 40 years) died not from bilateral (double) pneumonia, as previously thought, but as a result of viral distress syndrome, i.e. the total destruction of the lungs. As a pathologist, Bachinsky concludes the disease is a mixture of types of para-influenza and influenza A/H1N1. Neighboring counties like Bulgaria are suffering a spread of the virus. In Ukraine anyone resisting vaccine treatments is being arrested.

Bachinsky stated emphatically that this is not pneumonic plague, with no blackness in the lungs. Also, pneumonic plague has a very different morphology. The 60 thousand people who became sick would have resulted in 59 thousand deaths if it were the plague, he argued. This disease is a virus that attacks and destroys the lungs. This strain is very toxic, and if the immune system is weak, there is bleeding in the lungs. In the lungs, bunches of tiny moist sacs (pulmonary alveoli) accept oxygen that enters. On the surface are the capillaries, where red blood cells saturate with oxygen and through blood supply all tissues and organs in the body. Once the virus enters the lungs, hemorrhaging begins immediately in the sacs. A continuous hemorrhage results as several hours, forming a membrane resembling a plastic bag that suffocates the infected sac areas. The person breathes in oxygen, but it is not transferred to the tissues. People just gasp. The cardio-pulmonary insufficiency and cardiogenic shock then arrive, at which time people die of cardiogenic shock. By contrast, pneumonia is an inflammation of the lung tissue, easily treated with antibiotics. Antibiotics cannot help at any stage of the widespread pulmonary virus, which requires an absolutely different treatment.

An interesting comment was made by Bachinsky about abuse of antibiotics, a belief long held of mine. He said, "Antibiotics are the reason we have such a high mortality and infection rate in this country, because people go to the pharmacy, describe their symptoms to the pharmacist and ask for drugs. They buy antibiotics and take them, which lowers their immune system. As a result they become sick easily. If prescriptions were required to buy these medications, like in other countries, this would not have happened. It is the ability to buy antibiotics over the counter without a prescription which has done so much harm to the State."

The latest update regarding the virus ripping through the Ukraine shows the number of fatalities up by 17 people to 299. The increased number from the weekend includes residents of both central and eastern Ukraine. The death at 299 almost doubles the toll from a week ago when it was at 155. The latest totals are 1,364,939 Influenza/ARI, with 75,862 Hospitalized, and 299 Dead. The World Health Org has reported that the lag time between the onset of the disease and hospitalization was originally five to seven days, recently down to perhaps three days. This suggests that people are dying more or less from lack of awareness and adequate treatment. See the Health Freedom Alliance (CLICK HERE).

FINANCIAL MARKET PERSPECTIVES

◄$$$ THE U.S. STOCK MARKET INDEXES ARE DOWN BIG IN TERMS OF REAL MONEY. BASED ON GOLD VALUES, THE DOW  JONES INDUSTRIAL INDEX AND THE S&P500 STOCK INDEX HAVE DECLINED SHARPLY IN THIS DECADE, IN GOLD TERMS, LIKE OVER 80%. THUS THE U.S. STOCKS HAVE NOT KEPT PACE WITH THE SO-CALLED INFLATION HEDGE IN GOLD. $$$

The bull market in stocks this decade is all hot air, and bull cookies. Steve Sjuggerud (founder of TradeStops) makes the startling conclusion about the stock rally, bringing in reality. He wrote, "The entire rally in the DJIA from 2003 to the peak in 2008 was actually a continuous decline when priced in gold... Even the super rally in stocks over the last six months is nothing more than a very weak bounce off the bottom." He has a PhD in mathematical systems theory. He determines how many ounces of gold is required to buy the Dow Jones Industrial Average. His conclusion, "From a peak of nearly 42 ounces of gold to buy a share of the DJIA earlier this decade, we made it down to a low of almost seven ounces in March 2009. That is a decline in the 'value' of the DJIA of 83%."

◄$$$ AN UNUSUAL UNEXPLAINED EVENT OCCURRED ON THE FOREX ON OCTOBERS 27th, WHEN THE US$ DX INDEX TRADE ACTIVITY FROZE FOR THREE HOURS. RUMOR IS RIPE BUT EXPLANATIONS ARE NOWHERE. $$$ On Tuesday Oct 27th, the DXY rose to 76.23 where it remained fixed (!!) from 11:45 AM until 2:45 PM. At the time, the spot price of gold was attempting to cross above $1040 per oz. For almost three hours, the real time quotes from numerous sources kept posting the same price. It did not changed. Gold failed to mount a rally, as the DXY stayed high and unchanged for three hours straight. Perhaps the Powerz have grown that brazen. Perhaps they needed extra time to build fortifications that would hold gold down. Perhaps wider collusion was sought. Whatever the machinations, the gold price has risen beyond 1050 last week. Nowhere to be found is a description or explanation for the 3-hour frozen dollar index. It will not come either.

◄$$$ THE H.U.I. PRECIOUS MINING STOCK INDEX IS FINALLY ON THE VERGE OF A BREAKOUT. THE BULL MARKET HAS OCCURRED ALL YEAR LONG, AFTER A SHARP RECOVERY LAST AUTUMN, WHEN THE EARTH STOOD STILL. REMEMBER NOT TO USE THE GOLDMAN SACHS EXCHANGE TRADED FUND (GDX) WHICH IS THEIR TOOL TO SUPPRESS THE SECTOR. A RISE ABOVE 500 MIGHT TRIGGER A SURPRISE BACKFIRE TO GSAX CORRUPTION. $$$

Forecasting the mining stocks will be very difficult. The large cap mining firms will zoom, but not in a way to call skyrocketing. Those without hedge books will thrive like Newmont, while Barrick will wear a scarlet letter of shame and stagnate, crippled by its drain to cover that stubborn hedge book. Some surprises will come for known names, who will admit to having hidden hedge books from past acquisitions or plain lies. The mid-sized mining firms will do very well, especially if they are into production and have adequate funds. The smaller mining firms will be all over the map. Some will do very well. Some will zoom. Some will rise 10-fold or maybe even 20-fold. Some will rise on speculation of takeover by a larger firm. Some will languish amidst conditions marred by scarce funds, as they might take a buyout offer in order to enjoy the ride with a bigger firm and better funding prospects. A wave of acquisitions will identify the next stage. Medium and larger firms will use their higher stock price to go shopping and capitalize on the troublesome financial position of some other firms with good properties and competent management. Those who paint this sector with a broad brush are just plain ignorant, and do a great disservice.

◄$$$ THE BALTIC DRY INDEX HAS MORE THAN DOUBLED SINCE A SEPTEMBER LOW AND MADE A COMPLETE RECOVERY SINCE ITS DEMISE LATE LAST YEAR. $$$ The message is clear, that China, Australia, and the Persian Gulf has revived the global economy. Asia is generally leading the global economy out of the recession. Shipping rates were virtually free at the end of 2008. The bankrutpcy of some shippers and reduction of the global fleet brought a cleansing process. Watch for a continued advance in price, as the 20-week moving average is about to cross over the 50-wk MA, a bullish signal. A new source tells me that one year ago, shippers largely refused to accept USDollars in payments for shipping. The Swiss Franc has come to fill the void, now a standard for shipper payments, as the US$ is still refused.

◄$$$ GOLD INVESTMENTS AND TAX TREATMENT HAVE BEEN ALTERED TO DISCOURAGE GOLD INVESTORS. INSTEAD OF THE USUAL CAPITAL GAINS TAX RATE, THE USGOVT CLASSIFIES GOLD IN ALL FORMS TO BE COLLECTIBLES, LIKE ART WORK AND RARE BOOKS. THE NEW TAX HIKE IS ALMOST DOUBLE THE CAP GAINS RATE. $$$

Never without devious ploys to discourage gold investors, the USGovt has put in place legal tax interpretations regarding gold investments of all types. Gold in all forms is considered a collectible, not a capital asset, and profits are taxed at the 28% rate. Gold is classified in the same group as art works, rare books, antique cars, legacy coins, and memorabilia. The long-term capital gain tax rate is 15% on capital assets, available to those who hold investments for over 12 months. The dictum comes from the Internal Revenue Service (IRS), which operates like a sovereign nation within the United States. They have their own courts, own police, and own laws. They permit seizures without due process, where people are considered guilty unless proved innocent. That 15% tax claimed by the USGovt is the long-term capital gains tax rate applies to most stock or mutual fund investments, in addition to properties.

Consider the many Exchange Traded Funds backed by gold such as the SPDR Gold Trust (GLD), the iShares Silver Trust (SLV), and the iShares COMEX Gold Trust (IAU). The precious metals ETFunds are set up as 'Grantor Trusts.' According to Barrons, ETF investors are treated as owning undivided interests in the actual metal owned by the fund. Therefore, when an investor profits from ETF shares, the tax code treats that investor as having sold a share of the metal backing the fund, the collectible item. Like other assets, if gold is sold in less than a year, the profits count as ordinary income. All arguments for gold apply to silver and platinum. See the Money Morning article (CLICK HERE). The US Constitution clearly identifies gold & silver money. So taxing it is clearly illegal. Also, the USDollar as constructed is illegal.

GOLD MARKET BREAKDOWN IS NIGH

◄$$$ A WARNING OF GREAT CHANGE COMING, AS THE PARADIGM SHIFT REMOVES THE US-UK FROM PROMINENCE. AMERICANS WILL HAVE MUCH DIFFICULTY IN ACCEPTING A NEW GLOBAL POSITION. $$$

A global consultant involved with gold trade, international consulting, and weekly contacts from several important nations offered a summary of changes coming. It is a wake-up call! He said, "The West cannot comprehend drifting towards unimportance and irrelevance. In most countries there is an absence of an entitlement mentality all Western nations have cultivated for centuries. Just imagine a German-Russian-Chinese-Japanese alliance, which will upset the global balance. Hardly anyone understands what paradigm change is all about. Natural disasters on a cataclismic scale will accelerate change and adjust perception. Nothing will stop that from happening... The BOYZ can do whatever they believe they need to do to keep their heads above water. What they do not realize is the fact that their heads are already 'acquired targets' and in the crosshairs of people who had enough of their fraud, deceit, and arrogance. It is a question of time before they will be disposed of. But that is done, professionals must be positioned to pick up the pieces. This is a complicated and very complex process. It is like a Coup d'Etat. It needs proper planning and execution."

◄$$$ THE BIGGEST GOLD CRIME STORY OF THE CENTURY MIGHT BE SOON COMING TO FULL LIGHT. EVIDENCE IS BEING ACCUMULATING THAT THE CLINTON ADMIN WITH RUBIN AT USDEPT TREASURY REPLACED PERHAPS THE ENTIRE CONTENTS OF THE FORT KNOX GOLD WITH TUNGSTEN BARS PLATED BY GOLD. CONSEQUENCES WILL BE FORTHCOMING. $$$

The salted gold bars are fasting becoming a global crime issue. Hong Kong discovered them, and now assayers are trying to authenticate most of the global gold held in banks. Entire nations are at risk for their banking systems and stated reserves. Before long the USGovt could be declared a rogue nation internationally. The following is extremely dangerous information. So the Jackass will only sketch it. A little more is known through sources, but my preference is NOT to know certain details and NOT to hold any documents as evidence, for security reasons. An office ransack by USGovt goons is not desired.

Evidence is being gathered by perhaps a dozen key gold traders with diverse connections to the gold industry. They tie the delivery systems, the authentication processes, the assayers, record keeping, bar stamps, financial firm identities, trading platforms, and pathways. Well over a million bars are suspected of being tungsten with gold plating. Not only Hong Kong, but now Europe has located phony gold bars. They are standard 400-oz bars. The dates of shipment and false markings are from the last half of the 1990 decade, during the Clinton Admin when Rubin was Treasury Secy. Rubin fully integrated Goldman Sachs into the finance ministry. The pathways of the tungsten bars are consistent with the known routes for the narcotics trade, led by Papa Bush, using Air Force Bases, certain nations, and diplomatic flight cover to avoid inspection. Bush was former CIA director, who brought the drug trade business to the security establishment more deeply as President. My belief is that Clinton was selected to provide a service to the syndicate. His choice of Rubin as Treasury Secy fits like a syndicate glove of a returned favor on order. Use your imagination to fill in the blanks. The total value of gold removed within the plot was worth over $500 billion, the US national treasure. Enough!

My view is the story is not only credible, evidence mounting, but it is the climax to the US financial collapse. In time the United States will be isolated, declared a Rogue Nation, unable to fund its debt except with monetization, whose leaders and former leaders face international prosecution. The resulting inflation will undermine the USDollar to the point that it will not be accepted on a global basis, gradually at first, broadly later. A USTreasury default will be forced, all in time. Foreign economies and financial markets will eventually restrict acceptance of the USDollar, all in time. The USEconomy will suffer extreme shortages, in all time.

Many people wonder how this plays out. Only solid conjecture can be recounted. These questions have been asked by the Jackass to numerous connected sources. Here is my best scenario, a likely path. To be sure, many directions will be a total surprise. Events behind the scenes, behind the curtains, in the back offices, in the basements, are happening at a furious pace. As a result of the discovered salted gold bars (tungsten with gold plating), almost all deliveries from the London and New York metals exchanges must pass severe scrutiny from the buyers. They are demanding fresh assay reports, whereas in the past they did not. They trust nobody in these two cities, centers of mammoth unprosecuted fraud. The assayers have also been commissioned to assist in authentication of gold bar delivery the world over from the US exchanges, and to examine gold held in vaults in scores of foreign locations. Foreign billionaires, mostly from China, are making constant demands for gold delivery. They are diversifying out of the US$ and into Gold. Never have the metals exchanges where gold is traded been under such pressure and scrutiny, including law enforcement offiicals. Refer not to the top government officials, but to special groups and district officials. The FBI, the CFTC, the US Federal Reserve, the SEC, and the USDept of Treasury are all involved in coverups, with numerous past examples as proof.

For some excellent forensic financial analysis on the fake gold project, called Operation Grand Slam, see Rob Kirby's article. It is entitled "On Doing God's Work: Gold Finger, A New Take On Operation Grand Slam With A Tungsten Twist" (CLICK HERE or CLICK HERE), dated 12 November 2009. Also, one week later see the Jackass article entitled "Zinc Dimes, Tungsten Gold & Lost Respect" (CLICK HERE). Past patterns are described for monetary fraud and banker fraud. Coverups from the past are cited, like the Goldman Sachs insider trading software whisked into the closet by the FBI. Very likely, much of the Rubin gold leased and sold for USTBond purchase was phony gold, which proffered the Decade of Stolen Prosperity. For a lighter report on the subject, without benefit of much information, see the article entitled "Tungsten as a Gold Substitute" by Mike Hewitt (CLICK HERE). The contrast in depth is notable.

Editor Note: I stand corrected on the dimes. Dimes are made out of an alloy (a mixture of metals) of 91.67% copper and 8.33% nickel (before 1965, the dime was made from 100% silver). The core is not zinc as stated in my article. The point of fraud is intact, since the dime is silver plated, and its contents are not worth 10 cents.

◄$$$ SOME QUICK NOTES ON LEGAL PROSECUTION, DELIVERY PRESSURES, AND EXPIRATION DATES. EVENTS WILL BE MOVING QUICKLY TO A CLIMAX. THE CLIMAX WILL BLOW UP IN NUMEROUS DIRECTIONS. THE SEQUENCE WILL INVOLVE MANY SURPRISES. $$$

Recall the stories back in April of a Deutsche Bank rescue by the Euro Central Bank with a very large (over one million oz gold position) central bank provision made in the nick of time to save DBank from a default, embarrassment, and maybe criminal prosecution. DBank was in trouble, and temporarily escaped it. My German sources tell that DBank is walking dead from years of working in league with the Americans and British. The pressures are mounting every couple months. The next delivery schedule is the last 8 days of November into very early December. Pressures mount for meeting delivery demands. Next March will be a climax of the breakdown, or else June. A competent source close to the stressful events at the exchanges said he cannot conceive of the game lasting beyond June. An eruption comes in breakdown. Each delivery month event includes more gold removed from the London exchange, more gold demanded from it, and more movement toward a breakdown. He said the gold is gradually being drained from London vaults, and that all demands for gold delivery were met in October, using legal force, the courts, and powerful attorneys. Not a single gold contract was settled for cash with a 25% dividend bribe. So the next events are sure to have even more pressure, with less gold supply and continued relentless demand.

To compound the stress to exchange officials, the gold futures options expiration date is Monday November 23rd. The Powerz were unable to bring the gold price down below 1100. In fact, on Thursday and Friday last week, the price closed at the high for the day, tightening the vise. The Powerz will be forced to pay out large option gains at a time when gold is in extreme shortage, a burn of their candle at both ends. The gold price typically rises with some gusto immediately after options expiry.

Delivery pressures will be enormous in December. A story has come to my desk last week, a ripe one. Details cannot be provided in full, since unknown. So it will be sketched. The illicit games by the Powerz on inadequate collateral and obstructed delivery are being met with other strongarm methods. A principal gold clearing house will not receive 250 tonnes of gold, whose supply is urgently needed to meet delivery demands at the exchanges. They had expected its arrival, and London had needed it desperately. The large shipment of gold bullion will NOT arrive at the clearing house. Influence was exerted in key ways, the deal killed, the exchanges isolated further. The players wish to be a part of the next chapter, and therefore complied to deny the London exchanges. The City will not be able to easily meet gold delivery demands. Details are not available, except to know that a huge amount of gold bullion will not be available within the supply chain. Imagine a naval blockage during the US Civil War denying food and provisions to enter ports. This is the gold war.

When the exchanges soon default, strange bogus stories will come. But law enforcement officials at lower levels will step forward and take action. Exchange officials will be led off in handcuffs, under arrest. The exchange officials arrested will be mid-level, intentionally taken into custody so that they can bring evidence to bear on the upper level exchange executives. Two decades of fraud, collusion, regulatory violations, and more are involved. Furthermore, word has come to me that in August, two dozen high level USGovt officials and Wall Street bankers approached European Union high level law enforcement and government officials to seek asylum. They offered boxes and suitcases full of evidence, documents, and data of a deep incriminating nature for many years of premeditated USGovt and Wall Street fraud. The offering was accepted. The EU cops have run with the information, continuing the investigation. Traps have been set. Trails are being monitored. Arrests are being planned. This is all in motion. The center of the law enforcement efforts is the Brussels Serious Fraud Squad, which is in charge of the case. They operate, as described to me, as a 'Bottom Up' investigative organization, not closely tied to financial market regulators. As far as known, the United States and Canada have no such independent fraud unit.

◄$$$ SOCIETE GENERAL WARNS CLIENTS OF AN UPCOMING GLOBAL FINANCIAL COLLAPSE. THEY RECOMMEND GOLD AS A SAFE HAVEN INVESTMENT. HOWEVER, THEIR ANALYSIS IS VERY SHODDY. NICE MOTIVE, BAD JUSTIFICATION. $$$

Société Générale, the giant French bank, has advised clients to be ready for a possible 'global economic collapse' in their words over the next two years. They map a strategy of defensive investments to avoid wealth destruction. SocGen advises bears to sell the US$ assets and to go short against cyclical equities such as technology, car industry, and travel to avoid being caught in the 'inherent deflationary spiral.' They expect emerging markets would not to be spared. Paradoxically, the emerging economies are more leveraged to the US growth than Wall Street itself. Farm commodities would hold up well, led by sugar, in their estimation. See the UK Telegraph article (CLICK HERE).

SocGen believes gold is very very cheap. First, they believe the USGovt figures on gold holdings. The USGovt owns very little if any gold, having sold it long ago. Second, they use the amount of currency in circulation for their calculation. The total debt in force might be more suitable for valuing gold. They write, "So one way to value gold, therefore, is to ask at what gold price the value of outstanding central bank paper would be completely backed by gold. The US owns nearly 263 million troy ounces of gold (the world's biggest holder) while the Fed's monetary base is $1.7 trillion. So the price of gold at which the US dollars would be fully gold-backed is currently around $6300." See the Zero Hedge article (CLICK HERE).

USDOLLAR AT PRECIPICE, GOLD ON VERGE

◄$$$ THE USDOLLAR DECLINE IS PERMITTED ACROSS THE GLOBE, SINCE IT LEADS TO RISING STOCKS IN OTHER NATIONS. THEY PERMIT IT ON CONDITION OF U.S. AND E.U. STOCKS RISING SIMULTANEOUSLY OUTSIDE THE UNITED STATES. HIDDEN IS THE LOST PURCHASING POWER FOR AMERICANS INSIDE THE BORDERS. $$$

Niall Ferguson has coined a term to describe the global stock markets, extended to financial markets. He calls it the 'Chimerica' to describe a megalith sovereign, joined at the hip. The existence of the beast depends on the smaller players not defecting, and remaining in tow forever. The significant other nations tolerate the connection since their other stock markets enjoy a lift from the falling USDollar. Those markets benefit from the tailwind positive effects of a rising S&P stock index in the US, even though their true value might not warrant such lifts, pushing numerous bubbles. The significant other nations observe (with a certain glee) how the pain is shifting from ongoing adjustments to the industrialized nations. Ferguson offers some humor (think sexual lubricant), as he said "Some very critical thoughts on why Europe and Japan are more than happy to be on the receiving end of the K-Y in the currency department, so long as their markets obtain the benefit of the appreciating S&P. One thing many pundits forget is that while the S&P indexed for the drop in the dollar is flat, global markets, especially the Eurozone, follow American equities tick for tick, indexed in domestic currencies." The impact is actually magnified, as he points out, when the foreign currency rises in addition to the stock asset appreciation. He stresses how the USDollar depreciation is impaling the US middle class, from the recent 10% loss in purchasing power. Few Americans probably realize the rising costs, especially if they believe the US press networks and USGovt propaganda about tame price inflation. Thus the G-20 finance ministers permit the systematic decline in the US$ index. See the Zero Hedge article (CLICK HERE).

◄$$$ GOLD LEADS THE CURRENCIES, CLEARLY NOW. FOR THE LAST TWO WEEKS, THE EURO HAS FOUND RESISTANCE AT 150 A FEW TIMES. GOLD CONTINUES TO MARCH HIGHER. ONE CAN SAY THAT THE CURRENCIES ARE ROTATING IN THEIR WEAK SISTER ROUTINE. THEREFORE, GOLD IN EURO TERMS IS RISING TOWARD A BREAKOUT. $$$

The US$ DX index is over 50% weighted to the Euro currency. It is an absurd index, but it is the only one with significance in trading volume and usage. A rotation is underway. The Euro remains somewhat safely below the 160 level touched in April 2008 and in July 2008. All manner of resistance has sprung from the official EuroCB sources and US accomplices to keep the Euro from another breakout. The 150 level is being defended with vigor. A bullish triangle pattern has formed since October, whose upside breakout probably will come soon enough. An upside breakout from the pattern would take the Euro to 154-155. Clearly, the European bankers wish to prevent the Euro rise to undercut the significant German export trade, or any other EU export trade like some French and Italian exports. The powerful rebuff over a year ago occurred when the Euro Central Bank embarked on a determined campaign to bring down the official interest rate from the 4.0% neighborhood. Their rate cuts were anticipated by the Hat Trick Letter, but at the same time not truly desired by the EuroCB bankers. They were compelled to follow the destructive monetary policy by the American inflation-obsessed idiotic banker corps. They realized that lower rates would again produce new bubbles and later lead to similar problems, even a second wave of credit crisis. But they protected their export trade. So the gold price in Euro terms rises, as money remains very cheap at 1.0% across Europe. The Euro is the primary beneficiary of defection from the USDollar, given its huge liquidity, greater continental integrity, and respect shown it. Some ask why lines surrounding chart patterns like the one below do not strictly honor the touch points. That is because they are not perfect, and never will be perfect. My pattern is intended to be meaningful and predictive.

◄$$$ GOLD RESISTS A CORRECTION. WHEN IT DOES CORRECT, THE BOUTS ARE BRIEF WITH STRONG RECOVERY. GOLD ALSO RISES WITH USDOLLAR BOUNCES. THIS IS A DEFINITIVE CONFIRMATION OF AN EXTREMELY POWERFUL BULL MARKET. PUNDITS AND ANALYSTS HAVE DISCOVERED THE BULL AND DEBATE IT. THEY REMAIN SOMEWHAT CONFUSED. IF THEY SHORT GOLD, THEY WILL BE CRUSHED. $$$

The recent daily price action comes when November options expiration is nigh, as in Monday Nov 23rd, the anniversary of the JFKennedy assassination. Deep wounds come to the Powerz, who could not push gold down late last week. They face horrible painful losses from option traders, since the price could not be forced to 1100 or below. The key to the gold rise now is that it makes price advances even when the USDollar manages to enjoy a little bounce. In other words, gold is rising during minor Euro weakness!! We might be witnessing a shift in the importance of the Euro in identifying gold strength. The steady overbought condition is confusing the pundits and so-called expert analysts. They expect a sharp correction. They might comprehend some of the factors pushing up gold, but surely not as many as Hat Trick Letter folks. Some more adept analysts say a perfect storm has hit, positive for gold. They are correct. Regardless, gold should succumb to some selloffs, corrections, and profitaking. But like in the first few days of November, expect the recoveries to be rapid. This is not just a perfect storm, but rather a generational event where the entire global financial structure is enduring a very powerful Paradigm Shift.

Gold has hit my 1130 mid-term target. It endured a little correction at 1120, which might have been the pivot point. Who knows? One cannot be too certain about the corrections here. As the USEconomy deals with the threat of a double-dip recession, further explosion of home foreclosures, and new commercial mortgage losses, no recovery is in sight. That is, except of course in the strange world of fanciful doctored USGovt statistics. A correction here is very possible. Yet, one must remain clear that the Chinese control the situation. If a drop in the gold price comes, it will be mainly due to the Chinese taking their hand off the bid. They hold the spearhead for de-throning the USDollar, and they have discovered the lever how to do it... WITH GOLD. Their attacks to demand gold from London will serve the break the US-UK criminal defense of the USDollar via the gold market. Notice the back-to-back bull hammers on the last two days of this week. This is bullish. They are characterized by intraday action below the open and close prices, which are strong. They cannot keep gold down. The attackers of gold are losing heavily.

The strong gold price showing last week is even more significant when one considers that the November gold futures option expiration occurs on Monday the 23rd. So the Powerz were unable to conduct their usual tricks, to pull down the gold price in order to wreck many of the long option calls in gold. The usual tricks involve usage of free USGovt paper money, heavy short contracts placed without collateral, and regulatory negligence to permit its illegal activity, concentrated in 4 or 5 big banks. Next week could be explosive, more so to break the backs of the Gold Cartel and to force even more depletion of their scarce gold inventory. The price of gold will take care of itself. In fact, my expectation is for a separation of the paper gold price from the physical gold price, enough to discredit the paper gold market altogether. The Street Track GLD exchange traded fund will be another casualty, eventually trading at a 40% discount to the gold price. Anyone who continues to hold the GLD shares out of basic ignorance, acute laziness, or misplaced trust will face losses and will not enjoy the golden ride. Clearly, the gold price is making extended gains. It just might make some gigantic strides toward the next real clear visible goal of 1300 before the end of year. Big moves in gold could be coming!

◄$$$ GOLD IN OTHER CURRENCIES IS ON THE VERGE OF BROAD BREAKOUTS. THEY WILL GARNER WIDESPREAD ATTENTION, SINCE GLOBAL CONFIRMATION OF THE GOLD BULL IN US$ COMES. $$$

The gold price in Euro terms has yet to break out to sweet highs like with the USDollar. Three scenarios are possible (maybe more). First, the unlikely one where the Euro remains subdued, and stays under 150 with central bankers in control. Give it a 20% likelihood. In this case, the Gold price in Euros would break out toward its 920 target. Hedging against a weak global currency system would push the gold price. All paper currencies would be dubious. Second, the more likely one where the Euro breaks out toward its 155 target, and continues to run upward, perhaps eventually much higher, like to 180 or even to 200. Give it a 60% likelihood. In this case, the Gold price in Euros would be subdued, in a similar fashion to what is seen with the Gold-Aussie price. Third, a potential direction where the Euro rises in a controlled fashion, but gold explodes in price. Give it a 20% likelihood. In this case, the Gold price in Euros would advance but not as much as in US$ terms. My best forecast is that we see the third scenario initially, but migrate to the second scenario as the full blown monetary crisis strikes.

The Gold price in other currencies is a mix. However, its price in British Pounds and in Canadian Dollars seems very similar to that in Euros. The scenarios might not play out in the same manner though, since the Euro stands as the best candidate to receive urgent demand from a collapsing crisis strewn USDollar. The British Pound is very likely to be trashed, since its fundamentals are wretched, and it owns little natural resources. So the Gold-Pound price is likely to zoom, like in US$ terms. The Canadian Dollar is very likely to hold strong, like the Aussie$. So the Gold-Loonie price is likely to be dampened. In fact, the Gold-Aus$ price is likely to remain dampened, especially since their central bank has embarked on a sane reasonable interest rate policy path. The oddball is clearly the Gold-Yen price. It strongly resembles the Silver price for now. As the Yen Carry Trade reverses further, and as the USDollar weakens further, even with a Dollar Carry Trade handoff, the Yen is likely to gain strength. This will frustrate the Japanese Govt, whose export trade stands at risk. So the Gold-Yen price is likely to remain dampened.

 

 

◄$$$ ADRIAN DOUGLAS LOVES SILVER PROSPECTS. ME TOO. $$$ Central banks sell gold in large volumes, but own no silver. Industry consumes large volumes of silver, but almost no gold. The dirty little secret on Wall Street is that they fear the silver release in price to the heavens much more than gold, because they have even less silver at their disposal than gold. Their losses in silver will be extraordinary. President Theodore Roosevelt built the six billion ounce silver stockpile under the USGovt aegis. It is gone, used by the USMint and USMilitary. Prospects for its rebuild are nil. Only the Chinese has wonderful prospects for an ample supply, since they have built a stockpile. The United States plans for nothing. See the Adrian Douglas video that touts silver, which he believes is more rare than gold. He expects the silver price to explode. See the YouTube video clip (CLICK HERE).

◄$$$ THE CHINESE RECOGNIZE THE DOLLAR CARRY TRADE HAS THE POTENTIAL TO SEND THE US$ TO GREATER DEPTHS. THEY HAVE AN EYE ON THE WORLD OUTSIDE THE UNITED STATES, WHEREAS AMERICAN BANKERS HAVE MUCH MORE TUNNEL VISION BASED UPON A LOCAL U.S. PERSPECTIVE. CHINESE BANKERS PLACE BLAME ON GLOBAL ASSET BUBBLES SQUARELY ON THE USFED AND ITS 0% RATE, WHICH IT REPEATS. $$$

As backdrop, China is indeed permitting its Yuan currency to rise, although slowly. Under Premier Wen Jiabao, the Beijing bankers have sold Yuan and bought USDollars. The policy has kept the nation's currency fixed around 6.83 per dollar since July 2008, where it lies now. Past years have seen gains, as the Yuan had appreciated 21% in the previous three years. Zhao Qingming is a Beijing analyst at China Construction Bank Corp. Zhao pointed to low borrowing costs in the United States as having spurred a carry trade with some currencies, in particular the Australian Dollar after their recent interest rate increases. Zhao said, "The carry trades will further drive down the dollar's value and fuel commodity prices. The dollar's depreciation has also caused excessive liquidity in the global markets. The dollar's devaluation has the biggest influence on China among emerging market economies. China has a huge amount of investments in dollar assets; their safety is threatened." Such perspectives motivate diversification and revolt.

China's banking regulation chief joined those from Hong Kong in blaming the USFed excessive accommodation in interest rates for fueling speculative capital flows that tend typically to ignite asset price inflation. Donald Tsang, the chief executive of Hong Kong, stated that the USFed's near 0% rate policy risks sparking the next financial crisis. The low rates earlier this decade triggered the crisis, and their return should result in the same outcome, a blind spot to US bankers but not to Chinese bankers. Liu Mingkang is chairman of the China Banking Regulatory Commission. He said, "The continuous depreciation in the dollar, and the USGovt's indication that, in order to resume growth and maintain public confidence, it basically will not raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation. [Current monetary conditions] have seriously affected global asset prices, fueled speculation in stock & property markets, and created new, real, and insurmountable risks to the recovery of the global economy, especially emerging market economies." Liu spoke at the Intl Finance Forum.

Dan Norcini is a competent gold analyst and professional commodity trader, with ties to Jim Sinclair on the JSMineset website. He commented on the building conflict with China. He suspects an eventual eruption, if not a trade war, then an attack of the USTreasurys or of gold at the Metal Exchanges. He wrote, "For the Chinese to go out of their way to formally rebuke the US ruling elites and monetary officials about the commodity bubble that is occurring courtesy of the collapsing US Dollar, is quite remarkable given their penchant for etiquette and tact. One can easily discern just how irritated not only China, but all of Asia is with the US. At some point, this tension is going to erupt in a much larger way. Heaven help us all when it does because it will be marked by a period of soaring interest rates as a buyer's strike occurs in the USTreasury market. The middle class will be the victims in all of this, as they find themselves unable to keep up with the rapid increases in the cost of living."

◄$$$ THE DOLLAR CARRY TRADE BUST FORETOLD PREMATURELY BY NOURIEL ROUBINI. MY BELIEF IS THAT HE HAS SOLD OUT TO THE SYNDICATE, AND HAS LOST HIS EDGE. HE IGNORES THE EXTREME RISKS FROM THE DOLLAR CARRY TRADE, AND ITS GATHERING POWER. THE INEVITABLE BUST OF THE CARRY TRADE MIGHT COME, BUT IN A FEW YEARS. IT HAS NOWHERE NEARLY RUN ITS COURSE. THE RISE IN COMMODITY PRICES AFFECTS COSTS ONLY IN THE UNITED STATES. THE REST OF THE WORLD SEES A SUPPLY COST DISCOUNT WHEN THEIR CURRENCIES RISE. $$$

Roubini claims "The Mother of all carry trades faces an inevitable bust" and offers his arguments. Let's review them, since they are weak. My belief is Roubini has been paid off by Wall Street, since his tune has changed completely to a 'Company Man.' He points to unwarranted rise in US stock prices. Implied is that the cheap USDollar is fueling investment flow into stocks. It is actually Wall Street firms doing the USGovt bidding, using the Dollar Carry Trade (DCT) and the 'free' money available at near 0% to do the bidding. Sure, but the share prices can come down without a direct rise in the USDollar, since foreigners are eager to sell at higher levels. He points out how the USFed has contributed to a situation where risk perception is distorted, and less valuable assets enjoy the ride from the DCT. But the USFed is mainly buying USTreasurys, mortgage backed securities, and Fannie Mae bonds. They form the rising platform to aid all assets, or the supported platform, from Valuation Models. They strive to make the world safer, supposedly. He points out the bubbles. He wrote, "While this policy feeds the global asset bubble, it is also feeding a new US asset bubble. Easy money, quantitative easing, credit easing, and massive inflows of capital into the US via an accumulation of FOREX reserves by foreign central banks makes US fiscal deficits easier to fund and feeds the US equity and credit bubble." Then he makes an absurd comment that the weaker USDollar might lead to greater growth within the USEconomy. The higher foreign realized profits for corporations is actually an inducement for firms to abandon further the US shores, an accelerant to the USEconomic decay process. The easy money and weaker US$ will lead to additional capital destruction, continued job cuts, more foreclosures, higher cost structure throughout, and an endless recession. No debt cleansing process has been permitted for the banks, which remain crippled giants occupying space, obstructing the credit process. Their function of capital formation is gone, which he does not notice.

He makes an excellent point about damage to foreign financial structural foundations. He wrote, "The reckless US policy that is feeding these carry trades is forcing other countries to follow its easy monetary policy. Near-zero policy rates and quantitative easing were already in place in the UK, Eurozone, Japan, Sweden, and other advanced economies, but the dollar weakness is making this global monetary easing worse. Central banks in Asia and Latin America are worried about dollar weakness and are aggressively intervening to stop excessive currency appreciation. This is keeping short-term rates lower than is desirable. Central banks may also be forced to lower interest rates through domestic open market operations." However, the damage done to foreign financial systems will induce them to cut off connections to the USDollar, to embrace alternatives, to push toward deeper Chinese Yuan associations, and to refuse the US$ for commercial payments. The foreign effect will result in pressure to isolate the US$ and to de-throne it from the global reserve currency perch. Roubini does not detect the revolt, due to inflict horrible continued damage to the US foundations.

Roubini assumes the US$ will remain in place. He anticipates a coordinated global asset bust event, the biggest ever. He made four very naive points. He wrote, "If factors lead the dollar to reverse and suddenly appreciate, as was seen in previous reversals, such as the Yen-funded carry trade, the leveraged carry trade will have to be suddenly closed as investors cover their dollar shorts. A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated collapse of all those risky assets (equities, commodities, emerging market asset classes and credit instruments)."

Roubini claims the US$ cannot fall to zero in valuation. A 30% decline would be extremely destructive. A 50% decline would lead to a calamity. The US$ DX index will surely have its counter-trend bounces. It is a great leap to assume that the bounces will collectively mount to more than minor short cover rallies. The last three months have been notably dotted by weak bounces of short duration and exaggerated expected magnitudes. The US$ decline is orderly, in fact, as the United States is led to the Third World by its crippled bloated grotesquely overvalued currency. One should suspect China is managing the US$ decline, with a blind eye given by Wall Street, which embraces the Dollar Carry Trade. He claims the USFed cannot continue to expand its balance sheet forever. Really? Who thought they could lift it to $2 trillion? Just like extending its 0% official rate policy, the balance sheet must expand, if they are to prevent a collapse of the USEconomy and US financial system. Banks generate new toxic bonds every month. They are the buyers of last resort for worthless toxic assets and provide credit to the system, but discourage big banks to lend and extend credit. He claims the USFed might be surprised by a burst of economic growth, taken off guard, and be forced to hike rates suddenly. Just where will growth come from during job cuts, home foreclosures, rapacious damage to commercial property, rising costs, and increasingly shocked consumers without collateral, while the ranks of negative home equity continue upward???

Roubini's last point concerns the risks of a double dip recession, and a flight from risk trades, meaning reversal of the Dollar Carry Trades generally. The free 0% money will next feed the USTreasury Bond bubble perhaps, if stocks shed value. Actually, the USEconomy never exited its recession, still ongoing. The risk is more acute within the US financial markets, whose investors gradually will realize the recession is still there, and gathering intensity. US stock markets might decline and suffer a crash, but foreign stock markets are more likely to merely endure normal corrections. He concludes correctly that "But the longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash. The Fed and other policymakers seem unaware of the monster bubble they are creating. The longer they remain blind, the harder the markets will fall." He must not be aware of the Yen Carry Trade, and its duration for two decades.

The USFed has instead, not within Roubini's perception, reflated the foreign economies, not the USEconomy. The USFed is destroying US capital, discouraging saving, encouraging the last breath of consumption, increasing the US cost structure, leading a flight for US business expansion abroad, and redeeming the criminal fraud continually. The lack of big bank liquidation, lack of bond fraud prosecution, lack of business regulation strictures, and lack of business tax reduction renders the USFed accommodation as likely to continue the flow of funds into totally unproductive enterprise. The USGovt and USFed policies actually accelerate the USEconomic deterioration. Worse, the Dollar Carry Trade is precisely the leveraged device that will lead to a USDollar monetary crisis and a USTreasury Bond default. It will strip the US of its global reserve currency. The USFed has become the most inept central bank on the planet. They manage inflation, but it has turned against the august corrupt institution. Roubini seems unaware of far too much. and See the Financial Times article (CLICK HERE).

◄$$$ LEGENDARY INVESTOR AND WORLD TRAVELER JIM ROGERS DISPUTES ROUBINI. HIS DISAGREEMENT CENTERED UPON COMMENTS ON COMMODITY AND GOLD BUBBLES. FOREIGN STOCK MARKETS ARE INTIMATELY LINKED TO COMMODITIES. ROGERS IDENTIFIES ONE BUBBLE CONSISTENT WITH MY VIEW, USTREASURY BONDS. WEST OF MIDAS LETTER OFFERS AN EXCELLENT REBUTTAL IN MORE DETAIL, WHILE ERIC SPROTT EXPLAINS WHY THE GOLD BULL IS STILL YOUNG, SINCE THE USGOVT IS TRAPPED. $$$

Independent Jim Rogers (of former Quantum Fund fame) believes Roubini is wrong on bubbles in gold and foreign stock markets. He regards many commodities to still be down from record highs and equity markets nowhere near the brink of collapse. Rogers forecasts the price of gold will double to at least $2000 an ounce in the next decade. Rogers said he is not buying stocks now, since valued unjustifiably high, although he may buy more gold. He countered Roubini's arguments of widespread asset bubbles by saying Chinese stocks, sugar, silver, coffee, cotton have all dropped from their historical highs by at least 50%. Rogers agreed with Roubini that the dollar's decline was encouraging  investors to buy more commodities and assets. He commented generally about asset bubbles, in particular the run in gold. Rogers said the only bubble he sees in the entire Western world now is in USTreasury Bonds. "I cannot conceive of lending money to the United States for 30 years," he said. Ouch!!! This historic bubble has been the topic of Hat Trick Letter discussion. The USTBond is the biggest bubble since the housing bubble and mortgage finance bubble. The USTBond bubble is a direct handoff of the gassy gas.

Rogers in folksy style said, "What bubble? It is clear Mr Roubini has not done his homework, yet again. It is not a bubble if something is up 100% this year, but down 70% from its high. That is not a bubble. That is a good year. That is a great year. Maybe it is too high for this year, but that is not a bubble. I suspect gold is going to go over $2000 some time in the bull market, but depending on what happens in the world, it could go much, much higher. The old high, back in 1980 adjusted for inflation, would be over $2000 now, just to get back to the old high. So we will certainly get there some time in the next decade. Right now, everybody including me is pessimistic on the US dollar. That usually leads to a rally, whatever the asset is, and I would just suspect it is going to happen again this time." See the Bloomberg article (CLICK HERE).

The idea of gold being a bubble is ludicrous. Supply is limited and finite for new finds, but fixed and visible for old forms. Governments are avidly selling gold, and the IMF is acting as broker for sales. James West of the Midas Letter dismisses many vacant arguments. He writes, "The price performance of gold recently has all sorts of armchair economists waxing philosophical on the idea that this is the advent of a price 'bubble.' While certainly everyone has and is entitled to their opinion, there are other features of humanity that we all possess, and much like many opinions, are best obscured from view. [Refer to human hind quarter and orifice.] Declaring that gold is in a 'bubble' demonstrates complete ignorance of or disregard for the fundamental drivers of the almost ten year ascent of gold. And saying that the price is forming a bubble implies that, like the real estate bubble, the tech bubble, and the tulip bubble, the price must necessarily 'pop' and return to a sustainable long term average... Technology, real estate, and tulips, on the other hand, are consumed and replaced. Technology becomes obsolete, homes wear out, tulips die and are reborn each spring. Gold? Gold goes nowhere. Gold stays put. Gold is passed from generation to generation in last wills and as heirloom collectors items. Gold is recognized as a store of value that is not temporary. The only way to diminish that is through government interference, such as the various legislative actions that have historically capped gold's value at a fixed price, or if for some reason, humanity decided to abandon its greedy predisposition to hoard value against future financial calamity...

No. The bubble we are immersed in at present is the currency bubble. Led by the disingenuous United States, the world has temporarily forgotten that despite the fact it is possible to print currency easily and with abandon, the laws of supply and demand will definitely re-assert themselves in due course. And that is what we are seeing now with the gold price. The confidence in a dollar printed on paper being able to obtain a dollar's worth of merchandise is fading with every Treasury auction. The popular perception is growing that gold is indeed a monetary standard, and a store of value that can be trusted in both turbulent and stable economic conditions. There is nothing on the economic horizon that can change this. We are in the period of descent for the American empire and its feeble dollar. The nation is bankrupt, morally and economically. It can no longer bamboozle the world into accepting its counterfeit currency in exchange for trade." See the Kitco article entitled "Gold Price is No Bubble" (CLICK HERE).

Eric Sprott, founder of Sprott Asset Mgmt, explains why the USGovt is trapped. It must continue to produce easy money to cover its mammoth deficits. It cannot conceivably restrict money flows and reverse course, since the USEconomy is so weak and banks are insolvent. Besides, the USGovt must purchase its debt with printing press money out of necessity, a policy firmly in place. Unknown avenues come when people turn their backs on existing currencies, out of distrust. He expects the IMF basket to include perhaps gold, silver, and even crude oil, since they contain value. He does not rule out the possibility of hyper-inflation occurring. See the interview transcription on GoldSeek website, featuring "Eric Sprott: Gold Momentum's Picking Up Dramatically" (CLICK HERE).

◄$$$ RICKARDS DECLARES EASY $2000 GOLD TARGET NEXT YEAR, BASED UPON A MONEY SUPPLY ARGUMENT. WORSE, IN ORDER TO OFFSET THE HUGE MONETARY GROWTH IF AND WHEN GOLD JOINS THE MONEY CIRCLE FOR FOUNDATIONAL STABILITY PURPOSES, AT LEAST A $4000 GOLD PRICE MAKE SENSE. $$$

Last week, Jim Rickards of Omnis Research remarked that the United States and China are devaluing their currencies against each other in a game of chicken. But the centerpiece of his interview pertained to gold. He expects the gold price should easily reach $2000 per ounce in 2010. He leans on the argument of basic Supply & Demand, as a flood of USDollars has entered the system. He went further to use the extreme growth in US$ money supply (monetary aggregate), which will eventually need a stronger basis than just the fiat promise. If and when gold should start being considered money again in his words, by that he meant gold was openly used within banking systems to anchor their currencies and ensure stability so as to avert collapse, a much greater gold price would come. In such a development with gold joining the monetary foundation, it would have to rise to between $4000 and $11,000 in order to support the big increase in the world's money supply. See the CNBC interview (CLICK HERE). By the way, as Chris Powell of the Gold Anti-Trust Action committee says, Rickards states precisely the case that GATA has been making for several years.

◄$$$ A USDOLLAR COLLAPSE IS BEING FORETOLD BY A GOLD RISE, SURE TO TURN INTO A MONETARY PANIC WITHIN MONTHS. THE GOLD RISE IS NOT TELLING OF PRICE INFLATION, BUT RATHER WARNING OF A FULL BLOWN MONETARY CRISIS. THAT MEANS CURRENCIES HAVE DUBIOUS VALUE, AND BANKS ARE TO BE BROKEN FURTHER. $$$

The USDollar Panic will begin in early 2010. Its collapse is already underway. The weight of gold around its neck will drag it into the depths. Eric deCarbonnel wrote, "The dollar's gentle decline will not continue forever. Within a few months, the dollar's slow collapse will turn into a dollar panic. Individuals, companies, and governments will all try to get rid of their dollars at the same time by buying foreign currencies, precious metals (gold/silver), and hard assets (commodities, real estates, artwork, etc). It will be vicious and ugly." An interested weblog reader comment made a great point with "This rise in price of gold is only the effect of people preparing for the currency collapse. It is not the actual currency collapse. The currency collapse is coming really soon, like January 2010." See the Market Skeptics article (CLICK HERE). It provides a stream of articles and publicity for the gold run and the enthusiasm that builds. Eric overlooks how the Dollar Carry Trade will drag the US$ into the depths also, aided by Wall Street itself since profitable. Also, an event comes where several important USTreasury creditors will demand bond redemption for a significant amount of their holdings, like 20% to 25%, and do so simultaneously. The USGovt solution might be monetizing their debt securities, which will send the USDollar into a powerful tailspin.

◄$$$ THE CONSENUS ATTITUDE TOWARD DECLINING USDOLLAR EXHIBITS VERY SHALLOW COMPREHENSION IN THE FINANCIAL PRESS. THE ANALYSIS IS OFTEN LIKE FROM A BELOW AVERAGE HIGH SCHOOL STUDENT. $$$

The title of a Washington Post article read "Decline in USDollar's value helps the United States but threatens competitors" but it is misleading, shallow, typical, and misses the extreme alarms going off. Here are his main points made. The declining USDollar aids a USEconomic recovery but harms the rebounds underway in Europe and Japan. The Competing Currency War is the cause of friction, in pursuit of a weaker currency to lift exports. The USGovt has diluted the US$ by printing money and adopting near 0% interest rates. The US$ is down over 40% against the South African Rand and Australian dollar in twelve months. Brazil has instituted capital controls to protect from even greater Real currency gains. European Union officials call the US$ decline a disaster. Some see the US$ decline as protectionist. The basic economic truth is that the United States financial situation is dire and growing worse. The falling US$ encourages investment in oil, gold, and stocks. The risk remains of a full blown run on the US$ that could force the USFed to suddenly raise interest rates, dealing a potentially severe blow to the US recovery. Wow! A mixture of obvious, shallow, and grand omissions, full of wishful thinking. See the Washington Post article (CLICK HERE).

My reaction and rebuttal. The US is not so much engaged in protectionism, but rather self-mutilation of capital and self-destruction of its banking system unwittingly. The movement toward commodities should be seen as a flight (hedge) from the collapsing US$, not merely investment. The USFed cannot raise interest rates, any more than it can halt the monetized debt and easy money flow. No recognition is given for the trapped situation the USFed finds itself, without an Exit Strategy (except for a trap door to the Third World). To hike interest rates would lead to economic collapse. No mention of how the Competing Currency War is generally destructive of the global monetary system, as the currencies themselves kill each other. Not a single mention of rising US commodity costs causing a rise therefore in the entire US cost structure. No mention of reduced credit supply from unwilling foreign creditors from investment decline, and therefore a meteoric rise in dependence upon monetary press, leading down the path to hyper-inflation. No mention of lost privilege from the global reserve currency, and the lost credit card with no balance limit, leading to pure monetization of debt. No mention of the heightened risk of freshly printed money that the world eventually will refuse to accept for tangible goods. No mention of Third World billboard risks from rising costs, lack of credit, and gross economic decay. No mention of dwindling interest in US stocks by foreign investors. If a professor, the Jackass would give a 'B minus' grade on that article summarizing the beleaguered clownbuck. Yet again, this level of economic analysis and reporting is typical in the United States.

OIL MARKET TURNS UPSIDE DOWN

◄$$$ SAUDIS DROP THE CRUDE OIL W.T.I.C. CONTRACT, THUS CUTTING THE CORD TO US-BASED PAPER PUSHING CONTROL BULLIES. THE CHANGE IS AN IMPORTANT PRE-REQUISITE TO KILLING THE PETRO-DOLLAR DEFACTO STANDARD. DEFIANCE BY SAUDIS GROWS, AS THEY EMBRACE RUSSIA FOR MILITARY PROTECTION. THE WESTERN PRESS TOTALLY MINIMIZES THE ENDED CONTRACT AND ITS IMPORTANCE. $$$

The Saudis have made the bold move to drop the West Texas Intermediate Crude oil contract. They no longer will fulfill the back end of the WTIC contract with crude oil delivery. The Saudis will no longer use the WTIC oil contract as the benchmark for pricing its oil, thus dealing a formidable blow to the New York Mercantile Exchange. The move cuts the cord of brutal illicit control by the United States for crude oil delivered from Saudi sources. The decision by the world's biggest oil exporter will encourage other producers to abandon the benchmark, ending the dominance of the most heavily traded oil futures contract. The disconnect isolates the American lords of the paper realm. The WTIC is the main contract traded on NYMEX. The move reveals the growing discontent of Riyadh and its US refinery customers for gross interference in the crude oil pricing. The move to $150 per barrel in mid-2008, its precipitous decline in 2009, and general usage as a blunt weapon by the US has caused a powerful response in rejection.

From January onward, Saudi Arabia will base the price of oil for its US customers on a new index developed by Argus, a oil pricing company located in London. The Argus Sour Crude Index will track the price in the physical market from a basket of US Gulf Coast crudes, including Mars, Poseidon, and Southern Green Canyon. Argus said the change in policy reflected the "increased importance of the US Gulf coast sour crude market, in which both production and trading activity was rising sharply." Saudi Arabia has priced its oil using WTI since 1994. The price was based on quotes from the physical market which were compiled by Platts. Oil companies then covered their exposure to WTI using the futures market on NYMEX.

Reaction among analysts is a combination of apology and avoidance of the entire manipulation factor. Paul Horsnell is head of commodities research at Barclays Capital. He viewed the Saudi decision as a reflection of a 'wider discontent' from its customers in the US about WTI contract price performance. He did not directly cite grotesque Wall Street manipulation, attacks against US hedge funds holding crude oil contracts, and release from the USGovt Strategic Petroleum Reserve. Edward Morse is chief economist at LCM Commodities in New York. He said, "It is a recognition by large players that WTI sometimes does not reflect the true value of crude oil in the waterborne market." What an under-statement that avoids mention of the above abuses cited. Bob Levin is managing director of market research at the CME Group that owns the NYMEX. He threatens that the exchange was ready to move with the market. He said, "We plan to introduce a cash settled futures contract tracking the new Argus index." Regard the NYMEX encroachment as a loud threat that Wall Street will attempt to continue its control of Saudi oil, while offered the visible front of conducting risk hedge capability to Argus. See the Financial Times article (CLICK HERE).

Rob Kirby wrote an important article last September with details highlighting now the USGovt had a dorect hand in the collapse of the crude oil price in 2008, using swaps of physical crude from the Strategic Petroleum Reserve, and Mexican collusion. He wrote the following.

"China is but one example whose voice, as America's largest creditor, cannot be ignored. Their recognition of Ponzi paper markets has led to their repudiation of the market rigging game. The unspoken, yet imminent, extension of this logic is ultimately the repudiation of USDollar hegemony, as all strategic commodities currently settle in USDollars. A failure on this level would have catastrophic implications with America being unable to conduct international trade. Additionally, unilateral termination of losing derivatives positions could precipitate a seismic paper avalanche that could overwhelm the global banking system." Chris Powell of GATA added a great indictment. It follows. The ongoing surreptitious 'management' of strategic commodity prices by the USGovt and its Wall Street agents needs to be exposed for what it really is, UNFAIR TRADE & AN ABUSE OF PRIVILEGE. These practices have resulted in a litany of unsustainable, unfair, and damaging outcomes in many markets with results that favor privileged colonialist insiders at the expense of the common good and global economy consumers. See the Financial Sense article entitled "Crude Reality" (CLICK HERE).

◄$$$ THE I.E.A. INCREASED ITS GLOBAL CRUDE OIL DEMAND ESTIMATES, BASED UPON ECONOMIC GROWTH IN POCKETS. PERHAPS NEXT THEY WILL REDUCE THEIR PUBLISHED INVENTORY ON CRUDE OIL, WHICH IS LIKELY FAR HIGHER THAN ACTUAL LEVELS, A FICTION. $$$

The Intl Energy Agency cites surging demand for crude oil in China and also in Saudi Arabia. The Saudis are attempting to become a bigger regional petroleum product producer, like gasoline and diesel. The IEA even detects a growing trend in the United States. The IEA revised higher its view of global oil demand for 2009 and 2010 therefore. The Chinese growth is linked directly to infrastructure spending from Chinese Govt stimulus. China is in a position to stimulate until the cows come home, with a staggering war chest. The Saudi demand is also linked with greater power generation demands rather than industrial production alone. For the first time since 2Q2008, the IEA is forecasting quarterly demand rising in Q4 of this year. It raised its 2009 forecast by 210k barrels to 84.8 million barrels per day, and raised its 2010 forecast by 140k barrels to 86.2 million barrels per day. The combined lift is only 0.4% on next year's forecast, not much, but a positive amount. See the Market Watch article (CLICK HERE).

◄$$$ MATT SIMMONS ON KING WORLD DISPUTES THE HIGH INVENTORY SUPPLY DATA FOR THE ENERGY MARKET, MORE FALSIFIED USGOVT STATISTICS WITH EASY MOTIVE TO SEE. $$$

The energy agencies in residence within the United States are notorious for collusion with the USGovt. The Energy Info Admin posts very unreliable data. The French-based Intl Energy Agency is even more corrupt in its data, since actually funded by the USGovt for its operations. For the last several months, the huge energy inventory data has been used for Wall Street propaganda, with intention to push down the crude oil price, or try to do so. Reports of loaded vessels at sea, sitting at ports, have circulated. The reality might be a large swath of empty vessels, since the shipping industry is in big trouble, many firms having exited the business. Matt Simmons, the world renown expert in crude oil and energy generally, disputes the data and repeats the Peak Oil argument. Many older fields are depleting at alarming rates. The Mexican Cantarell is in such a rapid decline, that Mexico is on schedule to be a net importer of oil before the end of 2010. Such a development would disrupt North American politics to the extreme. More accurately, it would result in Mexico becoming a failed state. The nation is in chaos already. See to the King World interview (CLICK HERE).

◄$$$ TURKEY DROPS THE USDOLLAR AND EURO CURRENCY USAGE IN TRADE WITH IRAN, RUSSIA & CHINA. SLOWLY THE USDOLLAR IS BEING SHUNNED, AFTER LOST CONFIDENCE IN ITS FUTURE VALUE AND ITS MANAGEMENT. $$$

Turkey has decided to use the national currencies in trade with Iran, Russia, and China. The move ends Turkish dependence on the USDollar and the Euro as transaction currencies for about 20% of its commodity turnover. Turkey had already switched to settlements in national currencies with Russia amid weakening confidence in the USDollar as the world's major reserve currency. The decision was clearly discussed last February during a visit to Moscow by Turkish President Abdullah Gul. The Turkish premier Milliyet Erdogan told a Turkish-Iranian business forum recently that the countries had prepared a legal framework for transition to settlements in national currencies. He was quoted as saying, "We have adopted a necessary legislative act and are prepared for the transition." Turkish trade with Russia, Iran, and China exceeds $65 billion annually. Russia is Turkey's largest trade partner with over half that figure, at $38 billion in commodity trade posted last year.

Furthermore, Russian Prime Minister Vladimir Putin said in mid-October that Russia was ready to consider using the Russian and Chinese national currencies instead of the USDollar in bilateral oil & gas trade. The grand-daddy announcement of all on trade for currency occurred in early October, when the UK Independent newspaper reported that Russian officials had held secret meetings with Arab states, China, Japan, and France on discontinued usage of the USDollar in international oil trade. My sources tell that Germany acts as the chief counselor and organizer for not only Petro-Dollar termination but also gold bullion recovery from custodial accounts in London and New York. The transition away from US$-based crude oil sales represents the grand shock, the end of the Petro-Dollar Era. It will essentially kill the USDollar as the global reserve currency from the transaction settlement side. These decisions by Turkey, Iran, Russia, and China should be viewed as a prelude to the end of energy trade in US$ settlement. The countries involved are reportedly seeking to switch toward a basket of currencies that includes the Euro, Japanese Yen, Chinese Yuan, Gold, and a new unified currency of leading Arab oil producing countries. The proposed IMF basket of currencies is such a mix. See the Ria Novosti article (CLICK HERE).

◄$$$ THE IRANIAN OIL BOURSE HAS FINALLY BEEN INAUGURATED, WITH PETROLEUM PRODUCT TRANSACTIONS PRIMARILY IN THE EURO AND IRANIAN RIAL CURRENCY. MORE FLOW NOT IN USDOLLARS. $$$

On October 27th, the Iranian Oil Bourse was inaugurated on the Persian Gulf island of Kish. It will operate as a venue to export oil and petrochemical products. Adel Nejad-Salim is the National Petrochemical Company Managing Director. He said in the inaugural ceremony that all petrochemical products will be offered on the market, on a gradual introduction schedule. The oil bourse is intended as an exchange market for petroleum, natural gas, and petrochemicals in various currencies. The transactions will be completed primarily the Euro and Iranian Rial currencies, and a basket of other major currencies. The Iranian Cabinet long ago in 2004 approved the creation of the oil bourse in two stages, initially for crude and then for oil byproducts transactions. Iran owns the world's second largest natural gas reserves and third largest oil reserves. See the Zawya article (CLICK HERE). When Saddam Hussein began to sell crude oil in Euro currency, he started a process that led to invasion, annexation, and his death. Iran must see the world as a different place, with the United States in a weaker position. Past threats of computer viruses sent to Kish were acknowledged and reported in the first year of the Hat Trick Letter. The new bourse bears watching for snags and glitches, if not sabotage.

Thanks to the following for charts StockCharts,  Financial Times,  Wall Street Journal,  Northern Trust,  Business Week,  CIBC Bank,  Merrill Lynch,  Shadow Govt Statistics.