GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Golden Potpourri
* USDollar & Currencies at the Brink
* Gold Gains Global Acceptance
* Gold Consolidates Before Next Breakout
* Europe Prepares For More Defaults


HAT TRICK LETTER
Issue #80
Jim Willie CB, 
“the Golden Jackass”
21 November 2010

"The price of crude oil is sure to collapse after this OPEC embargo exercise. It will never manage to rise above $10 per barrel again." ~ Milton Friedman (1974, celebrated premier American economist, Nobel Prize winner, ideological high priest, a monetary fool)

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance." ~ President James Madison (1810)

"The USDollar has become more important than the United States itself."
~ Guido Mantega (Brazilian Finance Minister)

"Powerful players demanding delivery of gold physical bullion they have paid for is a tougher ruse to sell to the public. That is the killer trigger against the corrupt gold cartel." ~ Rob Kirby

"There have now been 25 lawsuits filed against JPMorgan for manipulating the price of silver. JPM and silver manipulation have become synonymous." ~ Bill Murphy of GATA

"The chorus of complaints about the Fed and their adoption of QE is the backfire of the market of perceptual economics. You have so many convinced that the economy is recovering but not really that fast, and there is no inflation anywhere. Then why in the world is Bernanke going to a $600 billion project which is a rescue plan that comes up during a period of crisis?"
~ Jim Sinclair

"Bernanke is fighting a collapsing building with a lit gasoline firehose. It will burn bright as it collapses into the sub-basement next. The foundation beams are being squeezed with profit margins vanishing from rising costs, which he calls growth. Few realized several months ago that Gold was a monetary trade, not a deflation trade, as many made that critical error. Gold is not a commodity but rather money." ~ Jackass

GOLDEN POTPOURRI

◄See the Special Report entitled "Extreme High Risk of QE Fallout " for the November Hat Trick Letter. The G-20 Meeting in South Korea was a humiliation for the United States. Foreign heads of state refused to support any initiative from the USGovt, like to force the Chinese Yuan currency higher. The ministers took their lead from China. The baton is being passed. China downgraded United States credit, an open insult before the G-20 meeting. Most of the nations in attendance were extremely angry over the US Federal Reserve plan on debt monetization in its second round. At a select gathering of bankers at Jekyll Island, USFed Chairman Bernanke incorrectly invoked the Friedman principles in defending the QE2 decision, ignoring the direct price effect. Bernanke was shown disrespect by his elders. New money does not cure an insolvent banking system or insolvent households. No sterilization of QE2 is in the plan. My forecast is the hollowing out of the USEconomy from a massive cost drain without export benefit, compounded by income erosion. Elsewhere, Rubin warned that QE2 marks dangerous territory, carries risk of bond market implosion, with trigger for a USTreasury rout the raising the USGovt debt ceiling soon. Obtuse Bernanke forecasts that QE2 will create up to a million new jobs, even though QE1 produced none. Rubin's criticism of QE2 means the Obama Economic Team has a split from the USFed!!

The solution to the USEconomy and financial structure is long past available with the loss of the national gold inventory. USDollar collateral, returned industry, and smaller USGovt are the cornerstones to a solution, with numerous eliminated agencies. The EuroZone will eventually join the USFed with another QE program, again to fund the PIIGS sovereign debt. Black Swan author Nassim Taleb harshly criticized the USFed as incompetent, as they improperly assess risk, calling it insurance. The Bank of Japan offered details on its next mammoth QE program, which will include monetizing their stock market. John Embry guarantees hyper-inflation in the United States, a big decline in standard of living, and a continued short squeeze to overrun the shorts at the COMEX silver market. Knight Research forecasts an end to the emerging economy expansion and the start of a new dangerous era, 'Game Over' as they call it. They blame the central bank monetization programs and the resulting hot money flow. Case in point is Brazil, which is facing difficult problems. Nations that seek survival must abandon the USDollar in bank reserves and trade. However, by lifting interest rates and bond yields in reaction, Brazil slows the credit flow internally while attracting even more foreign hot money.

◄$$$ USFED IS A MONEY LAUNDERING SCHEME, TO GIVE BIG USBANKS MONEY FROM A PRINTING PRESS SO THEY CAN BUY USGOVT DEBT SECURITIES IN A CIRCULAR GAME. THE BIG BANKS LEND MONEY TO PEOPLE TO BUY THINGS THEY CANNOT AFFORD. THEN THE BANKS TAKE THEIR HOMES. ALSO, A SATURDAY NIGHT LIVE SKIT ON N.B.C. TELEVISION DID A WICKED PARODY OF THE G-20 MEETING AND THE RUINED RELATIONS WITH CHINA. $$$

See a cartoon on the absurdity of the US financial situation, with extremely solid cogent points expressed by an informed fellow and a interrogative lady. It reveals the tangled spiral of insanity, from an Austrian sound money perspective. See the brief YouTube clip (CLICK HERE). It will make you laugh while you cry. As if that is not enough, check out a shocking parody by Saturday Night Live. Its bold mock of the strained relations between heads of state of the United States and China are hilarious. The Jackass busted over in deep laughter, during the actual aired telecast. Imagine the Chinese prime minister with lipstick bent over in the position, expressing his sense of betrayal. See the Road to Roota brief video clip (CLICK HERE).

◄$$$ THE PAULSON FUND DUMPED BIG USBANK STOCKS EN MASSE. CONSIDER THIS INSIDER TO BE ACTING ON PRIVILEGED INFORMATION OF BIG USBANK PLUNGE TO THE DEPTHS, FIGHTING FOR SURVIVAL. $$$

The Paulson fund submitted 13F form on September 30th, with total long stock holdings reported at $22.9 billion, the same as June 30th. Paulson dumped nearly 20% of his Bank of America and Citigroup shares, and unloaded 11% of Wells Fargo and Capital One shares. He unloaded his entire 1.1 million Goldman Sachs position. This all took place before BofA fell from $13.2/share to a low of $11.1, now around $12. Recall that a year ago he had a price target of $30 for BofA in 2012, now abandoned. Paulson has turned sour on financials, which puts the future of the Recovery Fund in doubt. The Paulson fund left mostly intact the entire gold mining stock exposure, and maintained the large position in GLD (corrupt exchange traded fund) at $4 billion. See the Zero Hedge article (CLICK HERE).

◄$$$ TOTAL MAJOR GOVT DEBT IS OUT OF CONTROL. THE I.M.F. ESTIMATED THAT 2011 DEBT WILL TOTAL AROUND $10.2 TRILLION. WHILE THE JAPANESE DEBT FINANCE NEEDS ARE ALMOST AS HUGE AS THE UNITED STATES, THEIR PERCENTAGE OF G.D.P. IS MORE THAN DOUBLE THE AMERICAN. MORE FUTURE SHOCK WAVES ARE TO COME IN THE SOVEREIGN DEBT ARENA. $$$

In early November the Intl Monetary Fund reported the total estimated borrowing requirements of key governments in 2011. The shocker is the total will amount to around $10.2 trillion, an rise of 7% from 2010. Worse, the total is over 27% of the annual GDP of the developed economies. The next challenge is rollover events from maturity, as de-leverage seems a dreamy goal. Deficit control and debt management strictures are mere items in speech headlines, not part of reality. Prepare for more rounds of severe financial turbulence. The United States has lost its sovereign independence, a Jackass warning from 2005 to 2008. Its credit dependence upon China has blossomed to trade war and currency war. The US leaders and population do not realize that China will gradually become its master. See the harsh glimpse into the 2030 future with very real prospects, in a short YouTube video (CLICK HERE).

◄$$$ FOREIGN CENTRAL BANKS HAVE DUMPED HUGE AMOUNTS OF USAGENCY MORTGAGE BONDS. ALSO, OF THE USTREASURYS THEY HOLD, THE MAJORITY ARE LONG-TERM. THEY HAVE SHED THE NEAR 0% SHORT-TERM USTBONDS AT TOP PRICES. THEIR 10-YEAR AND 30-YEAR USTBOND PORTFOLIOS WILL RIDE THE TURBULENT WAVES FOR NOW. $$$

The Treasury Investment Capital update revealed that in September, foreign central banks dumped the largest amount of USAgency Mortgage Bonds on record. The shocker in the TIC Report was with the USAgencys, the security most at risk due to the recognized massive fraud perpetuated in the mortgage foreclosure processes, tarnished by the bogus MERS title database and the Robo-signers of forged documents. Primary central banks (and their appendages) dumped a massive $31.4 billion in USAgencys, a record dating back to when the TIC data began reporting in 1978. They might be aware of the potential worthlessness of the mortgage bonds. This was offset by USAgency purchases by other foreigners of $23 billion, which is more likely USFed offshore illicit firms acting as proxy in the monetization scheme. The dump by central bankers gathered the most attention. The PIMCO titans and other large mortgage bond investment funds must take the news with urgent alarm.

The Chinese owned $883.5 billion in USTreasurys in September, a $15 billion increase from August. The USFed surpassed their total last week to command the grandest position in USTBonds, the biggest bagholder of its own bubble asset. Japan added $28.4 billion in USTreasury holdings to a total of $865 billion, not so surprisingly since they are attempting to bring down their Japanese Yen currency and thus buttress their export industry. The broke United Kingdom moderated its torrid pace of accumulating USGovt debt, adding only $10.7 billion to bring is total to $459 billion. The UKGovt is the parental arm of the USFed that hides the monetization with convenient bookkeeping, which takes political heat off the USFed. If only the USGovt and people knew how much the USFed monetizes the USGovt debt!! See the Zero Hedge article (CLICK HERE).

◄$$$ THE PRESTIGIOUS CATO INSTITUTE SUGGESTED THE USFED BE ABOLISHED. IT ACCUSED THE PRIVATE FIRM OF FAILING ITS MISSION, IN PARTICULAR WITH INFLATION. $$$

George Selgin of the Cato Institute believes the US Federal Reserve must be abolished. He wrote, "The Federal Reserve System has not lived up to its original promise. Since [its inception], it has tended to err on the side of inflation, allowing the purchasing power of the US dollar to deteriorate considerably. That deterioration has not been compensated for, to any substantial degree, by enhanced stability of real output. Finally, the Fed cannot be credited with having reduced the frequency of banking panics or with having wielded its last resort lending powers responsibly. Its record strongly suggests that the Federal Reserve's problems go well beyond those of having lacked good administrators. Although it has manifested itself in different ways during different decades, the Fed's failure has been chronic. The problems appear to reside with the institution, and not with particular personalities who have been placed in charge of it. Hence the record would not be likely to improve substantially even with complete turnover in the Board of Governors. The only real hope for a better monetary system lies in regime change." They sidestep all matters pertaining to a string of wrong economic and financial forecasts, the criminal syndicate aiding and abetting of Wall Street in bond fraud, and its overseeing of narcotics money laundering from the security agencies. Still, the CATO comments are damning. See the Zero Hedge article with working paper presentation (CLICK HERE). When the Jackass visited the venerable Kurt Richebacher in August 2003 in France, he confided that two institutes in the United States were of high caliber in excellence, the Levy and the CATO Institutes.

◄$$$ CALIFORNIA MUNICIPAL BONDS COULD BE THE TRIGGER THAT CAUSES A ROUT IN US$-BASED BOND MARKET. WHAT THE SUBPRIME MORTGAGES WERE TO THE FINANCIAL MARKET IN 2007, THE MUNIS MIGHT BE IN 2011. MOST STATE FINANCES ARE IN RUINS. THE ROUT IN MUNIS HAS ITS ROOTS IN CALIFORNIA. $$$

The California municipal bonds are being crushed, with almost daily selling attacks. The outlook has fast turned frightening. For two consecutive weeks, California bonds have faced price drubbings after a powerful 10% decline in the second week of November. The story was featured in this month's Macro Economic Report. The flagship PIMCO California Municipal Income Fund continues to hurtle downward. Images of the European sovereign debt in the land of PIIGS is conjured up, due to the speed of the collapse. The state of California had at least $12 billion in fresh auctions last week. The European landscape has numerous member nation, where most of the southern nations are in deep trouble. The American landscape has numerous member states, three quarters in deep trouble. The parallels are easy. Watch also New York, New Jersey, Illinois, and Florida, whose finances are all broken and whose muni bonds are soon to be in tatters. See the Business Insider article (CLICK HERE). My view is that the muni bond market will extend the mortgage bond cracks, eventually to reach the USTreasury Bond complex.

◄$$$ RON PAUL WILL MOUNT ANOTHER ATTACK AGAINST THE USFED INDEPENDENCE WITH A FORCED AUDIT BY THE USCONGRESS. THE FINANCIAL REGULATORY BILL PASSED IN THE SUMMER MIGHT HAVE BUILT UP PRESSURE FOR A BACKLASH WITH TEETH AFTER THE REPUBLICAN SWING FROM THE MID-TERM ELECTIONS. $$$

The irrepressible Congressman Ron Paul continues to challenge the USFed authority. He vows another campaign to produce an independent audit of the USFed. He has been emboldened by the mid-term election outcome. He will pursue the head post of the House Financial Policy Subcommittee. He will be aided by his son, the newly elected Senator from Kentucky. He said, "I think the Fed is way too independent. They just should not have this power. Up until recently it has been modest but now it is totally out of control." Paul is currently the top Republican on the House of Representatives subcommittee that oversees domestic monetary policy. The recently passed Financial Regulatory Bill was a travesty, having started out as an initiative to limit the powers of the USFed and to force its submission to an independent audit. After bank lobbyists sunk their funds into the movement, they ended up writing most of the legislation in a typical episode of US legislation. The result was more power bestowed upon the USFed to dispense policy and decide on which big banks should be liquidated, with an audit averted. Beware their enemies and obstacles and whistle blowers, for targeted liquidation. The giant headache at the USFed continues with the new Congress. See the Global Economic Analysis article (CLICK HERE). Ron Paul will have assistance in a new formidable group to challenge the USFed. They are Spencer Bachus, Darrell Issa, and Paul Ryan.

◄$$$ THE HONG KONG DOLLAR IS SOON TO BE PHASED OUT. THE SEMI-INDEPENDENT NATION WILL SOON USE THE CHINESE YUAN. A DECISION HAS BEEN MADE, AND THE MONEY FLOW CONFIRMS IT. THE RECKLESS USFED MONETARY POLICY HAS FORCED THE HONG KONG HAND AT A TIME WHEN CHINESE YUAN DEPOSITS IN HKBANKS HAVE GROWN FAST. $$$

A banker source with strong Chinese and Arab connections informs that the decision has been made final. The Hong Kong Dollar will be removed from usage, in favor of the Chinese Yuan currency. The timing is not certain, as it will occur at an optimal time in the future. Greg Weldon simultaneously confirms something is awry, as big Chinese money is moving into Hong Kong. He reminds of a 70% collapse in the HKDollar in the early 1980 decade, followed by the subsequent linkage to the USDollar in 2003. In the last three decades, the HKDollar has not deviated from the path of the USDollar by more than 2%. Enter the present day problems. The increasing reckless debasement of the USDollar by the USGovt and the broader domestic usage of the Chinese Yuan currency has dictated urgent change. The HKEconomy must avoid grand disruption caused by the loosely tethered USFed and its exported chaos from its desperate monetary policy. Weldon notes that Renminbi (people's money of China, formally called the Yuan) time deposits held in Hong Kong banks rose by 14.6% on a monthly basis. This marked the third consecutive month of 10% expansion, and the sixth out of the last seven months. Since September 2009, the RMB deposits in Hong Kong have soared by 91.16 billion Yuan, which registers at a 157% annual expansion on a nominal basis (not adjusted for FX changes). They are attempting to offset the USFed actions. Given the large shift in Hong Kong bank deposits, expect a decision by the Peoples Bank of China to allow the Yuan currency to appreciate versus the USDollar. Furthermore, it is only a matter of time until Hong Kong makes the switch to the Yuan itself. Weldon finds it compelling to expect a switch from their peg to the USDollar, soon to be announced to the Chinese Yuan. Expect an all-out adoption of the Yuan itself in Hong Kong. See the Weldon Online article (CLICK HERE).

◄$$$ A DEEP SOURCE WITHIN THE EUROPEAN BANKING COMMUNITY SHARED HIS VIEWPOINT ON THE NEXT CHAPTER UNFOLDING IN THE GLOBAL ARENA. A GRAND POWER STRUGGLE IS WELL UNDERWAY. THE ANGLOS ARE ON THE DEFENSIVE, AFTER BOTH FINANCIAL BREAKDOWN AND PROFOUND BOND FRAUD. THE REST OF THE WORLD PURSUES A STABLE ALTERNATIVE STRUCTURE. A MELTDOWN COMES, WITH A LIKELY SOLUTION AS PART OF A GRAND PARADIGM SHIFT WITH MILITARY THREAT OVERTONES HIDDEN FROM VIEW. $$$

The same man who warned in August 2008 about a severe breakdown, shakeup, and nationalization among US financial firms, has shared a viewpoint. It was unsolicited, motivated by the imminent shock waves to soon arrive. He has strong gold market connections as well. Keep in mind as preface a Jackass theme for two years, a grand Paradigm Shift of power moving East from the broken bankrupt West to the industrialized wealthy East. The military overtones are disturbing. When such clashes occur, they are downplayed and fade away, with reversion to the War on Terrorism, a tired fabricated theme. An EMP weapon acts like a sudden burst of radiation harmless to humans, but which totally fries all electronic circuitry like in weapons, aircraft, missiles, computers, telecom equipment, cars, and more (even radios, TVs, washing machines). Something very sudden and extremely sweeping might be on the horizon to displace the US & UK tagteam of financial hegemony. My belief is that the USDollar will be abruptly removed from its privileged perch, no longer the assumed bank reserve in foreign lands, no longer the medium of exchange for crude oil purchases. If so, then the USEconomy will be compelled to pay much higher interest rates to finance its debt, while at the same time trade decaying USDollars to obtain the necessary currency to pay for its imports, including crude oil from OPEC and domestic electronics from Asia. The end result would be high interest rates and high price inflation in the USEconomy, as in an Inflationary Depression. That would qualify as a ticket to the Third World.

The sage European wrote, "There is much bigger game playing out. What we shall see from here on forward can be called 'Financial Self Defense' against the violent USDollar. This includes the final and fatal shot to stop the predator. The consequences of such a kill shot will be less brutal in its consequences than to allow the predator to continues with its violent intrusion and rape. The ironic aspect is that the people commissioned with killing the US$ have a much higher concern for the well being of the average American Joe than the criminals inside the Inner Beltway of WashingtonDC, Wall Street, and the City of London. I have been informed that there is an contingency in place to deal with the aftermath of the North American meltdown [think Receivership Commission Tribunal]. Decision makers outside the United States give the average American more credit for being able to take care of affairs then the US Federal government. The guys in DC/ Wall Street/ The City boast mediocre financial IQ's, if truth be known. It will be crucial to pick up on the flash event that will trigger the tipping point. The last flash point on the geopolitical stage was when the Russians foiled the US/Israeli planned military action against Iran, with attempted staging ground out of Georgia in West Asia. It broke the US Military's back for legitimacy, and castrated NATO for an allied force, as well as isolated a certain Middle East allied community, even neutralizing its high command down to non-commissioned officers. Much of this has been kept out of the Western media, the US and Europe alike. The Structure and the System are already dysfunctional, ready to keel over. The opportunities for those who see what is coming are mind boggling, and so is the devastation for those who do not. It will happen very suddenly and with incredible force. The US Military just found out that Electro-Magnetic Pulse weapons are in position to freeze and blind them in a blink of an eye, on the opposite side of the fences. They have been made aware recently by a joint demonstration exercise executed by the Russians and Chinese." Most Americans are unaware how predatory the USGovt and USTreasury Bond and USDollar are to foreign nations.

◄$$$ THE GERMANS KNOW HOW TO CONDUCT A PROTEST. THEY BLOCKED A NUCLEAR WASTE DELIVERY EFFECTIVELY. THE GERMANS AND FRENCH ARE PLANNING FOR A BANK RUN ATTACK ON DECEMBER 7TH. THE MOVEMENT HAS GATHERED SPEED, AS A FEW MOVEMENTS GATHER FORCES. $$$

The Gorleben nuclear waste depository has been a site for anti-nuclear protest for 30 years. On a recent weekend 30,000 people descended on the north German site that stores the toxic waste. They wish to halt the transport of highly toxic nuclear waste into the Gorleben facility. The official policy is on again, off again. In 2001, the German Govt announced a phase-out of nuclear power under a Green Party coalition. But this autumn, the conservative government led by Chancellor Merkel announced it would extend the lifespan of nuclear reactor usage. The Federal Office for Radiation Protection estimates the decision to extend nuclear reactor lifespans will generate an extra 17,200 tons of heavy metal with its attendant heat generating, radioactive waste by 2040. The Castor transport of nuclear waste containers from France has sparked loud protests, with tens of thousands of activists blocking its path. Opponents and supporters live side by side in the idyllic countryside. See the Spiegel articles (CLICK HERE and HERE).

Onto a second protest. The French want to break the big cold banks by withdrawing mountains of money on December 7th. Ironically, that is Pearl Harbor Day in the United States. French activists call for a Europe-wide action, with joint account termination on December 7th. A grand withdrawal of cash is anticipated from bank accounts. The demonstrations on French streets makes for good photo clips, but the real power lies in the hands of international banks and corporations. The Bank Run Day protest has spread like a wildfire to Italy, Germany, the Netherlands, United Kingdom, and Greece. The nations are gripped in a climate of extremely unpopular austerity, aiding the emotion of protest. The lack of organization among the US population gave the US banking system a reprieve. In Europe things are different, where banks are more reliant upon lending operations. The Stuttgart21 movement that started at a railway station has gradually morphed into an anti-nuclear movement at Gorleben, possibly to shift tracks and find another nucleus in an anti-bank movement. Klaus Abberger works at the Munich Institute for Economic Research. He believes the Stop Banque campaign might turn into a serious nightmare scenario for the German banking system. A run on cash within an fractional banking system can cause major problems, independent of whether it is healthy. Obviously, the coordinated protest action requires many tens of thousands of participants to make big withdrawals. The national governments typically jumps into the fray, when a bank is insolvent or cannot satisfy withdrawal demands. See the Zero Hedge article (CLICK HERE), the Conspirazzi article (CLICK HERE), or the Before It's News article (CLICK HERE). So far 17 thousand European citizens have signed up with pledged support for the bank action day of protest. The Bank Mutiny Day has an unusual popular supporter in Eric Cantona of the Manchester United soccer football team. Many downplay the potential reach of this movement. An icon in both in England and France, Cantona was agitating followers to undertake a bloodless revolution against French banks. He urged, "We do not pick up weapons to kill people, to start the revolution. The system revolves around the banks. It is based on the power of the banks. So it must be destroyed starting with the banks. Withdraw money from the banks." A subset of his colorful speech is given here. See the Zero Hedge article (CLICK HERE).

USDOLLAR & CURRENCIES ON THE BRINK

◄$$$ THE DEATH OF THE USDOLLAR IS WELL ALONG, THE OUTCOME ASSURED, THE PATH NOT. THE AMERICAN DREAM GOES WITH IT. MANY INDISPUTABLE SIGNS ARE EVIDENT. NOTE HOW IMPATIENCE, DEFIANCE, DISGUST, AND SELF-PRESERVATION MOTIVATE GLOBAL PLAYERS IN RESISTING THE USDOLLAR. $$$

The global financial crisis has turned into a Competing Currency War. Its primary victim will not be from the emerging economies, but the USDollar itself. The United States financial system is coming apart at the seams.  The era of flourishing trade and unprecedented prosperity from stable major currencies is coming to an end. Witness the Paradigm Shift without recognition of its transformation. The USFed has set off rounds of competitive devaluations across the globe that will precipitate a global currency crisis, soon to become open financial warfare. Economies will become victims. At risk is not so much the demise of the USDollar, but all fiat currencies, made clear in a European fishbowl with a succession of sovereign debt crises. Nations seek a competitive advantage when they also face severe threats to their debt structures, which support the major currencies. The entire global financial system is being shaken and stirred. The United States cannot run a $500 billion annual trade deficit and a $1.4 trillion federal deficit, and keep the endless war costs funded each year indefinitely. Such imbalances have broken the global financial system, in their third year. The world has lost faith in the USDollar, and its stewards in the US Federal Reserve. The USFed cannot effectively solve the stagnant toxic insolvency by round after round of $1 trillion in monetary printing, shoving it into the system. Next on stage is an all-out currency war with nation after nation competitively devaluing their currencies, fighting the unstoppable price inflation impact, incurring capital destruction in insidious fashion. The primary effect will be a relentless rise in the cost structure without corresponding income growth, in the USEconomy and other industrialized economies. The major economic squeeze on profit will spawn massive new unemployment, the unintended unforeseen consequence.

Many strong signals abound, collectively to give warning of the potential or assured death of the USDollar as the global financial crisis hurtles along. It was guaranteed to end in crisis with the global property bubble and linked debt. The subprime mortgage problem in the summer 2007 has gone total and global in all bond arenas. The USDollar has abused its role. The Wall Street maestros have exploited it in bond fraud. The USMilitary relies upon it to finance endless war. Witness the many signals of severe times for the USDollar to retain its catbird seat as global reserve currency. 1) The leading Chinese credit rating agency downgraded USGovt debt in reaction to the QE2 details. 2) Top finance officials from China, Russia, Germany, Brazil, and many other countries are expressing anger at the USFed and USGovt. 3) Very high sovereign debt levels in Ireland, Portugal, and Spain are raising fears of renewed European crisis. 4) Investors are flocking to precious metals as disillusion and distrust set in with paper currencies. 5) Almost every major commodity has risen in price in 2010, putting significant inflationary pressure on emerging and industrialized economies across the globe. 6) For at least the next eight months, the USFed will be monetizing USGovt debt. 7) A top Citibank official stated publicly that global central banks will soon start dumping USDollars in response. 8) The Japanese Govt intervened in the foreign exchange market to no avail, a waste of $12 billion. 9) Supposedly stable economies have attempted to manipulate currency rates in 2010, like the Swiss National Bank, which lost $15 billion dollars trying to halt the rapid rise of the Swiss Franc. 10) World Bank President Robert Zoellick proposed that gold should be used as an indicator to help set foreign exchange rates. 11) Financial problems for the USGovt will grow worse. In order to repay maturing bonds and finance the budget deficit, it will have to borrow $4.2 trillion to cover the debt over the next year. The risk is for the USFed to monetize most of it, since foreign creditors are fed up with both reckless policy and grand fraud. This is hyper-inflation. See the Prison Planet article (CLICK HERE), and for more background the Ambrose Evans-Pritchard article on the UK Telegraph (CLICK HERE).

◄$$$ CITIGROUP EXPECTS A BIG USDOLLAR DECLINE. INSTEAD, ALL MAJOR CURRENCIES WILL DECLINE VERSUS THE COST STRUCTURE LED BY COMMODITIES. GOLD AND CRUDE OIL WILL PREVAIL, ESPECIALLY GOLD. $$$

Citigroup's Steven Englander believes the QE2 will have a sharp impact on the USDollar. He wrote, "Net net we see this as allowing for further USDollar drop, but drift rather than precipitous." The main question is whether the USFed control over the Euro Central Bank via currency swaps and asset guarantees will be sufficient leverage to allow it to destroy the USDollar with impunity and send the Euro currency exchange rate to a level of 1.60 or higher. Europe must respond, or risk losing large segments of its export industry. Foreign central banks will retaliate. A great currency war will be wrapped around a trade war, using a hostile ribbon of words. See the Zero Hedge article (CLICK HERE).

My September call for an eerie calm for the US$ DX index between 78 and 84 was close. Instead, the spotlight on the wrecked Euro currency came late. The greatest support for the USDollar comes from the flight from the broken Euro currency, as sovereign debt concerns have begun again. They will burn in a raging fire for the next few months, with a near-term climax being the Spanish Govt debt threat of default. Madrid has put off any constructive engagement with debt, banks, economy, and budget consistently. An ominous signal was given in early October of a bearish crossover on the moving averages, shown in green circle. Focus on the major currencies will be diverted if the eerie calm range can be maintained. My forecast is for the 76-84 range to hold. However, the fracturing monetary system will have its important canary be the Gold & Silver prices. The currencies might enjoy some absence of attention if they fall together. All major currencies are being debased in unison, thus the eerie calm. Powerful price inflation comes!! The Competing Currency War is well underway, all tethered to fall together.


◄$$$ WORLD BANK ZOELLICK ADVOCATED MORE GOLD USAGE, WITH THE IMPLICATION OF A GOLD MONETARY STANDARD NEEDED AS ANCHOR. HE BACKTRACKED ON HIS ASTUTE COMMENT WHEN IT WAS PROPERLY RECOGNIZED AND ECHOED. THE ESSENCE OF CURRENCY WAR IS THAT GOLD EMERGES THE WINNER, UNAVOIDABLY. JIM GRANT JOINED CHORUS DEMANDING A RETURN TO THE GOLD STANDARD. THE USFED IS OCCUPIED BY INTELLIGENT APOLOGISTS WHO PUMP OUT NONSENSE. $$$

A timely targeted condemnation for the Competing Currency War came from a US financial fortress outpost, the World Bank. An Op-Ed piece in the Financial Times by Robert Zoellick called the system of floating currencies established by the 1971 Bretton Woods II system broken. He recommended a search for a new international system of commerce. "It should also consider employing gold as an international reference point of market expectations about inflation, deflation, and future currency values." Without being specific, he described an implicit return to the gold standard. Such a grand step would halt the monetary debasement so eagerly pursued. Zoellick made the shocking comment only three days after the USFed provided details on its cancerous QE2, a loud insult. Recall the IMF, its American brother in hegemony, has been pushing for a more sweeping usage of the SDR, a basket of the major currencies, for global commerce and reserve banking. See the Zero Hedge article (CLICK HERE) or the Reuters article (CLICK HERE). Obviously, the JPMorgan and Goldman Sachs brass are giving Zoellick a rebuke over his idea. Within a week, Zoellick retracted his gold standard suggestion, looked stupid in doing so, and offered some mealy mouth excuse about being misinterpreted. He was not misinterpreted, but rather called down. The IMF and World Bank have been badly discredited as CIA camps exploited by banker hitmen.

Jim Grant summarizes his salvo, as he stated "Let the economists gasp: The classical gold standard, the one that was in place from 1880 to 1914, is what the world needs now. In its utility, economy and elegance, there has never been a monetary system like it." The past record is impressive. National currencies used to be backed by gold. One could exchange it for shiny coins freely. Borders were open and money traveled easily to wherever it was treated well. In gold standard countries, government budgets were mainly balanced. Central banks had the single public function of exchanging gold for paper or else paper for gold. The investment banks were held in check for bond fraud and counterfeit. The current USDollar is not even valid under the US Constitution, which used to hold power to to coin money, to regulate its value, and to fix the standard of weights and measures. For most of 200 years, the USDollar was defined as a weight of metal. The pure paper era did not begin until 1971, with the cancer of fiat currencies. The US Federal Reserve, created in 1913, used not to manage the USEconomy until after 1971. Its function would not be recognizable to the men who voted it into existence. Today, the USFed employs hundreds of PhD mandarins morons and heretics, who pump out meaningless abstruce research, the financial equivalent of mating habits of drosophila molonagaster (fruit flies). Apparently, it beats counting USDollars and weighing gold bullion bars, maintaining serial codes, and conducting shipments. See the Zero Hedge article for some historical bearing on heresy and nonsense (CLICK HERE).

◄$$$ WAR IS ONE PRIMARY ROOT OF THE U.S. SYSTEMIC FAILURE. THE NATION ACTIVELY CHOSE WAR OVER INDUSTRY, AND STILL DOES. THE RESULTING TURN TO ASSET BUBBLES RELIANCE FOR WEALTH GENERATION OPENED THE DOOR TO MASSIVE SYSTEMIC FRAUD, LED BY WALL STREET AND THE DEFENSE CONTRACTORS. THE USECONOMY HAS BECOME BANKRUPT. $$$

Few if any American economists recognize that the US love affair with war is responsible for the huge rise in USGovt deficits in the late 1960 decade, and later in lost industry. Refer to the Vietnam War, a watershed event. Half of the $12 trillion in USGovt debt is derived from war spending, hardly defensive. The nation has preferred a military defense complex consistently instead of a revival of basic industry. The US leaders felt compelled to create enemy after enemy, as the US became both dependent on and in love with waging war. The nation has relied upon a series of justified celebrated asset bubbles for wealth generation instead. The outcome is the wreckage of the USEconomy, the insolvency of the US financial sector, and impoverishment of the American people. With the costs due for military aggression, US price inflation rose dangerously in the 1970 and 1980 decades, as did wage inflation to match it, often legislated. That set the stage for the United States to be uncompetitive in the labor market. The United States went to ruin, but not Germany. Then came the clean economy, the environmental movement, and financial engineering, which produced a sequence of asset bubb les.

The death blow for the US was the rise of China for industrial investment with the aid of vast Western investment, the globalization coup de grace. A large remainder of US legitimate income would be replaced by debt. The dependence upon asset bubbles grew acute in the 2000 decade. Greenspan became the official Pied Piper and High Priest Apologist. The entire USEconomic expansion since 2002 was phony and dependent upon a housing bubble & and its supporting mortgage bubble to finance it. The great unraveling began with the subprime mortgages, followed by the death of the US banking industry, and finally the capital destruction from the acidic throes of Quantitative Easing. But the origin of many problems in the United States come from a love affair and predilection for war in lieu of industry. The socialism measures like Medicare and ample pensions contributed as icing on a flat cake. The bankers take the heat nowadays with national angst, but warmongers are equally responsible.

◄$$$ LONG-TERM THE USDOLLAR LOOKS ON A PRECIPICE FOR AN IMPORTANT MAJOR DECLINE BELOW CRITICAL SUPPORT. MANY BELIEVE THE I.M.F. BASKET WILL SUPPLANT THE USDOLLAR FOR GLOBAL TRADE. BUT IF ENACTED, A FALSE STABILITY WILL HAVE BEEN IMPOSED, A DELAY IN THE EXECUTION. $$$

The revaluation of the Special Drawing Rights should occur around the end of 2010. It is composed of a valuation basket of currencies that is adjusted every five years. A recent change was decided in IMF voting power that has given more weight to the emerging nations (BRIC). Others favor a broader basket that includes gold and silver. No plans have been forthcoming to change the valuation basket of the DX USDollar index though. It is obviously out of date as the Euro still composes over 57% of its makeup. A decline in the USDollar to below 70 would serve as a billboard event of the USEconomy entering hyper-inflationary ground. One should recall an Axiom of Sound Money: a paper currency or a collection of paper currencies cannot replace a global monetary system with a paper global reserve currency. A group of fiat paper currencies is no more stable than its flagship leader, or its damaged components. Only gold can replace the USDollar.

◄$$$ THE GOLD CARTEL MUST SUSTAIN THE NAKED SHORTING PRACTICE IN DEFENSE OF THE USDOLLAR. THEY HAVE MANY TOOLS, ALL UGLY ILLICIT AND ILLEGAL. IF THEY STOP THE DEFENSE, THE GOLD & SILVER PRICE WOULD RISE BY DOUBLE OR TRIPLE IMMEDIATELY. DISINFORMATION SUPPORTS THE GOLD CARTEL'S STOCK & TRADE. $$$

JS Kim of SmartKnowledge Pte Ltd surmised in May 2010 about the impact of price suppression. He wrote, "If US regulators stepped in and said Goldman Sachs, HSBC, and JPMorgan could not participate in the gold and silver futures market for three weeks, I really think you would see the gold and silver price more than double in that time." The Big Four also include Bank of America and Citigroup, as HSBC is of British decent. Price suppression can be reversed, but only with official cooperation, in relaxation. After CFTC Commissioner Bart Chilton released an official statement in which he stated, "there have been repeated attempts to influence prices in the silver markets," the next seven trading days saw the price of silver rise an astounding 11.9%! Central bankers have had a more difficult time suppressing the price of gold and silver. They can engineer short-term corrections in those markets, but their power is fading fast. Any selloff in gold & silver invites massive physical purchases, their Achilles Heel. Global players are out for blood after exported multi-$trillion bond fraud and suppression of foreign creditor gold accounts. The gold & silver war is a major part of the currency war!!

Goldman Sachs typically issued public statements the exact opposite of their internal strategy. In September 2009, Goldman Sachs made the statement, "On a relative basis, we believe gold equities will underperform other cyclical equities. We believe the price of gold is likely to be rangebound for the following reasons. One of the key drivers, its defensive status, is no longer attractive given the backdrop of a recovery in the global economy. The US dollar, another key driver, has dropped 13% from its recent high, which is largely priced in, in our view. We forecast the price of gold in 2010E to be US$964/oz." That means estimated in 2010. No recovery, no US$ stability, and wrong on gold price by 40%. Deliberate disinformation by Goldman Sachs about gold plays a critical role in suppressing gold prices. Mainstream investigative journalism is largely dead in the US and UK, where press network control is tight. The best objective financial journalism is found on internet websites. Five groups in the US control 90% of all media, as in television, radio, and newspapers. The Rockefellers once thanked Time Magazine for its silence about some of their financial initiatives, an important element in meeting their financial objectives. See the Zero Hedge article (CLICK HERE).

Catherine Fitts wrote privately, in a discussion of the coordinated Big Four bank stranglehold of the gold price. She wrote, "There are more than a few other firms authorized to act as agents for the Exchange Stabilization Fund. To get that type of effect [double of gold price], you would need to bar the Fund and its agents. If regulators barred just Goldman Sachs, HSBC, and JPMorgan from any type of participation in the gold & silver markets (futures, mining stocks, and releasing deliberate disinformation), gold & silver prices would double in less than three weeks as gold/silver would be relatively free to reach their free market prices." An experience gold trader contact pitched in, warning that the Paradigm Shift emerging from a USDollar revolt is underway. It will strike in hidden fashion without notice. He wrote, "A very valid point about the ESFund. However, there is a totally independent platform emerging that will cut the established guys off at the gold source, at the refinery and at the screen, and they know it. They are trapped. The exits have been nailed shut and they will be shot like fish in a bowl. If the big banks were barred from activity altogether, the gold price would quintuple within days, guaranteed." He referred to the gold supply chain, as the corrupt metals exchanges in New York and London are being denied access to gold supply from the mining firms gradually. This is a natural response, since in a capitalist system the mine output wants not so much the highest price, but a fair price.

It should be disconcerting to note that Goldman Sachs analyst David Greely recently published a report on gold calling for a $1650 gold target. He wrote, "We expect that gold prices will continue to rise over the next 12 months to our $1650 per ounce target, as US monetary policy remains accommodative and US real interest rates remain low. Further, the Federal Reserve's return to Quantitative Easing and the movement of gold prices to these new record highs could spark renewed investor demand for gold, which has been remarkably subdued in recent months. This represents upside risk to both our forecasts and to gold prices." Most GSax public statements regarding gold are diametrically opposite to their exerted influence on the markets involved. One must wonder if GSax is flipping its position. Doing so would entail dumping their short futures position on the USGovt bagholder department, an easy task with much precedent.

◄$$$ RON PAUL WANTS TO PUT THE USDOLLAR ON THE GOLD STANDARD. HE HAS NOT THOUGHT THE IMPLEMENTATION PORTION. IT WOULD CAUSE CHAOS, NATIONAL DEPLETION, AND COLONIZATION. IT IS TOO LATE TO IMPOSE SUCH A SOLUTION. NEXT IS USTREASURY DEFAULT AND BANKRUPTCY RECEIVERSHIP AFTER THE CHAPTER MARRED BY HYPER-INFLATION AND CAPITAL DISINTEGRATION. $$$

Maverick US House Representative Ron Paul wants the USDollar backed by gold & silver. He also wants an independent audit of the USTreasury gold reserves. He intends to use his power if he takes control of the congressional subcommittee that oversees domestic monetary policy in January. He objects to the USFed's monolith of power, held independently, gone out of control. He does not address their crime syndicate and narcotics role. To date the USCongress has acted like a subservient lapdog and paid harlot. Paul said, "Eventually we are going to have monetary reform. I do not believe the dollar can be the reserve standard of the world [much longer]. With a lot of new members coming and the problems getting worse rather better, there is going to be a lot more people who are going to be looking for answers." Although the USFed is credited with averting a meltdown during the 2008 financial crisis, a grassroots outrage over the bank bailouts and double barreled USFed debt monetization has ignited opposition. The United States will see monetary reform, but after hyper-inflation takes its toll. The resolution will see creditors across from a conference table.

Although Paul espouses a Sound Money plan, if enacted, it would lead to indescribable chaos from forfeiture of assets converted to gold in order to pay for debts, followed by a massive colonization. The Ron Paul plans are not well thought out. They seem amateurish and grandiose, although of genuine heart. Ron Paul is an idealist, while the Jackass is a pragmatic realist. The magnitude of the US debt situation is 100 times beyond repairable without a debt default, a huge restructure, and dissolution of the USGovt, later managed by a group of regional tribunals. Imagine having to buy crude oil and Asian electronics with USDollars under a gold standard. The task would be enabled only after sale of assets and purchase of gold to conduct the transactions. If the USGovt did not print money to pay for the gold, it would be compelled to sell assets. Imagine farmland, port facilities, commercial buildings, mining properties, oil & gas fields, and much more. (By the way, the USGovt is in talks to sell portions of national parks.) In a few years, foreign entities would own the entire nation. If monetary inflation paid the bills, then the USDollar would fall by 50% to 70% in two years and hyper-inflation would grip the national economy. Since incomes would fall with rampant unemployment, a systemic failure would result. SUCH IS THE EFFECT OF THE GOLD STANDARD AT THIS LATE JUNCTURE!! The time is way way too late to conceive of such a solution during the implosion phase. The opportunity for a gold standard was conceivable not later than the 1980 decade.

◄$$$ A CONVERSATION WITH A GOLD BANKER REVEALED MANY MAJOR CHANGES, PART OF THE PARADIGM SHIFT THAT AMERICANS ARE CLUELESS ABOUT. THE NEW NORDIC EURO CURRENCY IS STILL ON TRACK. THE CHINESE HAVE MADE BIG INROADS IN BOTH EUROPE AND THE PERSIAN GULF. TREMENDOUS DISRUPTION IS COMING TO EUROPE. THE CHINESE ARE FASHIONING A GIGANTIC DOLLAR SWAP WINDOW TO LAUNDER EXCESS USTREASURYS. $$$

A lengthy conversation took place a couple weeks ago, worth a summary. Significant developments are in progress that address the important Paradigm Shift in global finance with certain geopolitical implications. Let the major points be summarized without quotes from my notes in a valuable world tour glimpse, with gratitude. The European gold banker started by stating that the Euro currency was condemned as a dead entity in April 2009. He was in attendance at a meeting on German soil with bankers, finance sub-ministers, and others. For the umpteenth time, he said Germany will see its death unless the New Nordic Euro currency is launched, with a gold component. They must break away from the US$-Euro-Pound-Yen currency system. Therefore, no endless commitment to the current Euro or its links to the USDollar will be maintained. In September, the Jackass must have misinterpreted one of his comments, when a failed Nordic Euro initiative was incorrectly heard. He simply mentioned its complications with a broad multi-lateral cooperation required. My misunderstanding, mea culpa! He claimed the new gold-backed Nordic Euro currency is on course and is urgently being planned with timing on or near June 2011. It will include Germany, Netherlands, Austria, Belgium, Luxembourg, and Finland. He showed disrespect for Belgium, the EU center, pretenders to power, when the true power resides in Germany and is delegated. The conversion to the new currency will be made easier by virtue of the EuroBond markings inherent to individual nations.

France is begging openly not to be excluded, not to be lumped with the Club Med pool of failed nations. They are offering nuclear protection to Germany, but Berlin does not place much value on such protection. Germany only regards a nuclear protection to be of value "if the US stages another false flag attack, this time on Europe." The continent is far more aware than the US populace about self-inflicted terrorism. France is in an unusual position, since it needs the stimulus of currency devaluation, but it seeks continued prestige and avoided shame. Germany is slamming the brakes with overt and hidden initiatives, since the financial situation has spun so far out of control that it has turned into a national security risk for Berlin and Europe as a whole. Berlin and the Bundesbank are bracing for the collapse of Deutsche Bank in the certain event of Bank of America and other US mega banks imploding. This is considered a certainty in banking circles, not if but rather when. A grand dis-union movement has begun that cannot be stopped. Once the cataclysmic events begin, the rules of engagement will change overnight regarding economics, banking, trade, politics, and legal prosecution. People who have had the illusion to command powerful resources, banks included, will find themselves stripped naked with no means to regain influence. The Intl Court of Justice in the Hague will go into overdrive, with a non-stop schedule to start processing the criminals in banking and politics. The Axis of Evil was a diversion, created by the Anglo American Axis of Fraud & Deceit. [The Jackass has referred loosely to the United States, England, and Israel as the Axis of Fascism.]

In a passing remark, he said the Hong Kong Dollar will be soon phased out, with conversion to the Yuan currency. The decision has been finalized, but the transition will be done at the optimal time as they see fit. He turned next to China. For the last couple years, China has used an obscure financial facility in Prague Czech Republic to convert USDollars to Euros, but it lacked great volume. China has built a Greek Dollar Swap Window as described recently in the Hat Trick Letter documents, for greater conversion volume. The window has enabled full EU commercial participation for China, assured trade, and blocked damaging trade protection that the US pursues. They will do the same with Portugal and Spain very soon that was done with Greek Govt debt, in an expansion of the Dollar Swap Window. They purchase discounted sovereign bonds that the EU member nations and the Eruo Central Bank are unwilling to touch. He said directly, "The motive for China will be to enable much greater volume to launder USTreasury Bonds." They will actively convert USTreasurys in extreme volume to Euros, more than is required to rescue the PIIGS sovereign debt. Spain has a GDP triple the size of Greece, but Portugal's is two-thirds the size of Greece. The great toehold nation of Greece is critical for the Chinese to exploit, since it enables trade with Turkey and the entire Middle East, and access to those markets. The marginal focus for China in Africa are the nations of Kenya, Ghana, and Sierra Leone, where abundant natural resources will be made available. China has had a presence in Nigeria for several years. The Chinese are building a constructive global trade network while the United States has built a war machine network.

A big challenge comes to the Chinese Communist Party from basic economic growth and progress. Domestic demand inside China must continue and be developed, but overall progress undercuts the party's standing and power. They must alter their path from an export emphasis to one where they grow the domestic economy. The Chinese Military is still in place, just like the Russian Military was for decades. The Chinese Military remains the fixed backbone of the Chinese Govt still. With all matters Chinese, trade dominates in foreign deals, discussions, relationships, and partnerships. In numerous past examples in various nations that conduct important trade, no Chinese Military personnel are observable in the trade partner zones. This is important, since in his view China is not a hostile or aggressive nation, even in the financial realm. See Brazil, Canada, Panama, and Africa for examples of no soldiers present, unlike the US rivals who place troops in 170 foreign nations on countless military bases. In Africa, the Chinese have built local communities (apartments, schools, hospitals, roads, social centers) in addition to infrastructure. In Mexico and Canada, the Chinese control the deep water ports, their unseen strategic advantage. In the United Arab Emirates (like Dubai, Abu Dhabi, etc) the Chinese have built countless shopping centers and malls. They are set up to sell export items from China in retail stores and chains and outlets. The Chinese have established over 200 distribution warehouses across the UAE and Persian Gulf nations. They have been buying companies in the Gulf for at least three years in very heavy volume. The UAE is a staging area for Chinese distribution to Africa. Their goal is to promote African trade, to stabilize the region, and to improve the quality of life. China is the Protectorate in the Persian Gulf outside of Saudi Arabia.

The biggest surprise to me in the conversation was that the new Nordic Euro is still on track. It is designed to have a gold component, and probably a crude oil component later. Either Germany must force Southern Europe to revert to old native currencies, or Germany must move to a totally new currency like the New Nordic Euro. Reversion for wounded nations would occur ONLY with a debt writedown and restructure, complete with the shame, a jump in the bond yield for future debt securitized, and disrupted commercial trade channels. The other important item to me was confirmation of China extending to buy Spanish Govt debt next. In my view Spain is the key in the PIIGS parade of broken financial structures, since it is large and in no way even remotely has its broken condition been dealt with. When its debt approaches default a la Greece, the impact will be an order of magnitude greater. In the October Hat Trick Letter, the extension to Spain was my forecast on the Dollar Swap Window. It is coming. The entire set of PIIGS nations will be targeted, with China the buyer of last resort, granting leverage strategically and an open window tactically. Somehow the Jackass misinterpreted some of his comments about the Euro two months ago, my error. No problem admitting an error, not proud here, just want to be accurate.

An astute Irish friend and colleague, with ten years of London experience pitched in with some excellent points from his perch in Zurich. He said, "So the PIIGS will be left to go down the can and thereafter be at the mercy of the Chinese. There are so many ghost towns in these countries that could facilitate the incoming Chinese [in colonies.] When Germany pulls the plug by introducing the Nordic Euro, it will cause a lot of animosity towards them. Tensions once again will come to Europe just like when the British came off the gold standard in the 1930's, which in turn lead to the second world war." Germany will proclaim self-preservation as motive, and emerge as a global financial leader in structural engineering. Whereas the US Federal Reserve has been the global leader in corruption, fraud, and hegemony, Germany will become the global leader in constructive monetary design and mutually beneficial financial trade mechanisms.


GOLD GAINS GLOBAL ACCEPTANCE

◄$$$ NINE BASIC REASONS WHY GOLD WILL CONTINUE ITS POWERFUL BULL RUN. INSOLVENCY AND DIVERSIFICATION OF RESERVES DOMINATE THE MOTIVES, AS SENTIMENT HAS CHANGED AND HOSTILITY IS EVERPRESENT AMONG FOREIGN ENTITIES. $$$

Dundee Wealth Economics offered justification why the gold bull market will continue, along with the continued powerful short cover squeeze at the London LBMA metals exchange. A deadly gold & silver short covering death spiral is in progress. It might be taking a brief vacation for a few days to recharge and reload. Canadian money manager Dundee Wealth lists nine detailed reasons why the bull market in gold will continue with gusto. 1) Global fiscal and monetary reflation: PIIGS, US, UK. 2) Global imbalances: the USDollar must decline. 3) Global FX reserves are excessive: diversification must occur. 4) Central bank attitudes to gold: now positive. 5) Gold bubble nonsense: room to rise. 6) Mine supply is flat: peak gold is here. 7) Investment demand: new strong uptrend. 8) Commodity price cycle: new bull run. 9) Geopolitical environment: positive since filled with crisis and conflict. See the Zero Hedge article (CLICK HERE) which includes a PDF presentation. Nothing will stop this bull for a few more years during the ongoing sequence of perfect storms, and more importantly, during reactions having no intention of remedy and every motive to retain USGovt power by the broken bankers. It translates into an unprecedented waste of money, thus grand debasement.

◄$$$ THE S.L.V. FUND HAS SEEN AN ENORMOUS JUMP IN THE BULLION METAL HELD IN THE FUND. THE RISE HAS ACCOMPANIED THE SILVER PRICE. ONE CAN NEVER KNOW TO WHAT EXTENT JPMORGAN MANAGEMENT ENGAGES IN MASSIVE LEASING WITHOUT REMOVAL. DEMAND FOR PHYSICAL SILVER HAS RESPONDED WITH GUSTO IN THE FACE OF A LOWER PRICE, THE OPPOSITE EFFECT OF THE LEVERAGED FUTURES PAPER PRICE, WHICH IS NOT SILVER. $$$

Massive positive money flow has been coming into the silver Exchange Traded Fund managed by JPMorgan as custodian in London, with symbol SLV. On November 9th, the day of the big $2 silver price decline, the SLV fund reported adding a huge 352.29 tonnes of new allocated silver bars held in trust. That amounted to 11.3 million ounces, or 11,300 Good Delivery Bars. The total SLV fund silver inventory reported at the ultra-secure vault the size of a soccer field is 344.6 million ounces, 344,600 such bars, or 10,718.3 metric tonnes. Much stronger buying pressure than selling pressure for SLV shares was seen during the dip for physical silver metal, not a panic exodus. In the first three trading days of last week, the SLV fund reported an addition of 522.61 tonnes, further evidence of buying the discounted price. The volatile day saw the largest one-day increase in silver for SLV since December 31st of 2007, when the trust reported a 616.94 tonne increase.

Huge physical demand is tightening a noose around JPMorgan's throat, who can easily lease the metal immediately for sale in a neutralizing effect. Except for the SLV fund's first week, its launch in April 2006, no other one-day addition comes close. The next largest was a 260.36-tonne increase recorded June 1st of 2009. The total opposite effect is seen in the paper futures contract arena. The margin calls result in shedding positions, but theirs is not silver. They held paper silver, a very different animal, using leverage which turns against them. My mental image is much like a cocaine addict. The red dotted line is climbing fast, the physical silver held in inventory. Of course, it might be leased out and sold, perhaps even without removal from the storage facility. JPMorgan is about as corrupt as the day is long on a hot Mississippi summer day in August. Been there, age 5 and 6 years, remember it well.

◄$$$ THE SPROTT SILVER FUND HAS LAUNCHED. THE FUND HAS BOUGHT 6.5 MOZ SILVER AT $25.82 PER OZ. THIS IS THE BEGINNING OF A JUGGERNAUT, AN HONEST PHYSICAL FUND. LEGITIMATE INVESTORS SHOULD HOPE THAT IT DRAINS INVESTOR FUNDS FROM THE CORRUPT S.L.V. FUND RUN BY JPMORGAN. IT WILL SURELY DIVERT THE SUPPLY CHAIN TO THE COMEX, SINCE MINING FIRMS WILL SUPPLY SPROTT DIRECTLY. SOME INITIAL BLOCKS APPEAR TO HAVE SPRUNG UP FOR ACCESS TO THE SHARES BY BROKERAGE HOUSES. GOLDMAN SACHS IS ACCUMULATING PHYSICAL SILVER!! $$$

Sprott will be in the hunt eventually for 20.4 million oz of silver. As an initial salvo, Sprott has added 6.5 million ounces of silver to its trust, it is estimated. The average price of $25.82 per ounce came with a 1.2% premium over that day's spot price. Given his strong relationships with major Canadian mining outfits, Sprott will cut deals with them. In doing so, the purchase offtake which will cause massive headaches for the bankers, who must supply silver to satisfy the COMEX. Their supply chain will be diverted. The symbol of the Sprott fund is 'PSLV' as in physical silver, a direct slap at the corrupt SLV run by JPMorgan. Jesse of the Cafe Americain has surmised that Sprott books the silver when it makes the acquisition deal, but the actual silver is not delivered to their vaults for some weeks while the market gathers the bullion together to make shipment. The intrigue will be in determining where the silver supply comes from, since the paper game is pervasive, since the metals exchange levels fluctuate daily, and fractional reserves are the norm. Almost all large purchases are consummated with a premium paid to secure the actual unencumbered bullion. Fees go to middlemen suppliers and facilitators, in honest brokering. Jesse passed word that Goldman Sachs is accumulating bullion, despite its prominent role on the short paper side. Big players like GSax will strangle the metals shorts and ruthlessly, but when the time is right. My view is that the Big Four US banks plan to dump their underwater losing positions, drowning in loyalty to the USGovt bagholder taxpayers, at a later date. They have to some extent been gathering the precious metal, as they better than others know the USTreasury Bonds with USDollar markings are doomed. See the Cafe Americain article (CLICK HERE). Also, see the Form F-1 for the Sprott Physical Silver ETF on the Edgar files (CLICK HERE).

A Hat Trick Letter subscriber reported to me that his Edward Jones brokerage firm blocked purchase of a PSLV stock investment. They said they could assist in an SLV investment instead. This might be the start of an ugly pattern to ostracize the Sprott fund among the brethren of brokerage houses large and small. DaveR from Illinois is pursuing the Sprott PSLV still. He wants his shares. He wrote, "Just a quick heads-up notice. I have an IRA with Edward Jones here in Illinois. I called my broker last Friday to purchase units of the Sprott physical silver fund (PSLV). Edward Jones refused to initiate the trade, blocking investment to Sprott's PSLV fund. They will allow me to get into GLD or SLV, but are using the premium & discount to Net Asset Value with Sprott's PSLV and also PHYS as an explanation to deny access to the Sprott funds!! I have contacted Sprott Asset Management to inform them of this development. I am continuing to pressure my Edward Jones broker to rectify this most egregious blatant attempt to choose and pick winners versus losers in the ongoing charade. Edward Jones is a minor house. But if the majors also block the Sprott PSLV fund, it will have problems in the United States. Do not expect Wall Street assistance with the Sprott battering ram. I have repeatedly attempted to have my Edward Jones broker to get me into PSLV, so far to no avail. My broker is frustrated with the E-Jones corporate stance refusing to allow investors into a fund that trades in USA markets. I can SELL my current position in PHYS (the Sprott gold fund) but cannot buy it back!! E-Jones allowed me to purchase units of PHYS a few months back. Now they have banned investment in both PSLV and PHYS." A different subscriber reported to me that his Fidelity brokerage account had no trouble buying a batch of PSLV shares for Sprott physical silver. So Jones might be isolated.

◄$$$ THE USMINT IS ON TRACK TO SETTING A RECORD IN NOVEMBER FOR SILVER EAGLE COINS. DEMAND IS RAMPING UP WITH PRICE. $$$

According to the USMint, sales of one-ounce American Eagle silver coins are headed for the record setting month. The May total has not only been passed, but the incomplete November total is already the highest in 2010. A record 3,775,000 silver coins have been sold this month, compared with 3,636,500 in May. The USMint said 62,500 ounces of gold Eagles have been sold in November. The coin sales continue at an feverish pace despite the nearly 10% premium paid over spot. So far the USMint has not run out yet, even though they must purchase in the open market. They might have an arrangement with some corrupt firm like Barrick with political ties. It is refreshing to know that instead of buying paper certficates promising that presumed purchases of gold is held by the DTCC, Americans are once again going straight into physical. See the Zero Hedge article (CLICK HERE) and the USMint website to verify the data (CLICK HERE). The full month extrapolation is conservative, since data is lagged in time.

◄$$$ GOLD BAR DEMAND IS SKYROCKETING THIS YEAR, NO LET UP IN THE TREND. NOT ONLY IS A DRAIN TAKING PLACE AT THE METALS EXCHANGES, WHERE FRACTIONAL METHODS ARE USED, BUT DISTRUST HAS GROWN FOR SOME BULLION BANKS. INVESTORS WANT POSSESSION, A NOTED CHANGE. $$$

Many factors work together to produce greater gold bar demand. Renewed inflation concerns, a weakening USDollar, a gradual bust of the entire European Union, a threat to the Euro currency (a separate problem), and allegations of manipulation in the silver market have motivated investors wealthy and ordinary to pursue physical gold. They prefer it to gold derivative investments. With controversy and scattered fraud accusations, legitimate in my view, investing in gold through exchange traded funds has been challenged, even regarded as risk-filled. They crave physical gold. Consider Iain Tait, partner at adviser London & Capital. He received requests from separate trustees in Jersey and Guernsey for physical diamonds and gold bars last week. He said, "There is the feeling that ETFs are the home of the speculator, while bars and real diamonds are the domain of wealthy families trying to protect themselves." The lawsuit filed against global banks JPMorgan and HSBC by investors in the United States, over an alleged conspiracy to manipulate the market for silver futures, has done damage to the image of the gold derivatives industry, according to wealth managers like Tait. Ned Naylor-Leyland, partner at Cheviot Asset Mgmt also in London, believes a lack of trust in banks as well as suspicions of counter-party risk are growing problems. He said, "I hear Swiss banks are turning out their vaults for clients wanting to take home their gold. Trust is wearing thin."

Some investors show disgust that gold ETFunds can contain other financial products, such as swaps or derivatives, arousing suspicion of heavy leasing, the quintessential corruption. Angus Murray heads Castlestone Mgmt in London. He said, "Physical gold is simply metal without any other financial product or structure. My clients want to own an unleveraged real asset." There is always the intellectually corrupt and vacant crowd that defends the complex fabric of gold derivative funds, even calling the gold market subject to a bubble. Money is never a bubble, NEVER!! Even the hack cartel analyst let it slip this spring, when Jeffrey Christian of the lackey tool CPM Group admitted that one hundred times more gold and silver changes hands in futures contracts than is held in physical form. According to the World Gold Council, global demand for gold bars climbed by over 30% between 2Q2009 and the second quarter this year, while demand for gold ETFunds and similar products rocketed 414%. That growth figure speaks to success in duping investors to buy the fraud-ridden gold derivative funds. They are the province of the ignorant, the duped trusting types, and the lazy. See the E-Financial News article (CLICK HERE).

◄$$$ DE-REGULATION IN CHINA MIGHT PERMIT MUCH BRODER GOLD OWNERSHIP. THAT WOULD UNLEASH HUGE DEMAND AND PRESSURE THE ANGLO BANKERS. CHINESE DEMAND HAS BEEN STRONG FOR YEARS, SOON TO REACH A HIGHER GEAR. WITH DOMESTIC MINE OUTPUT NOT EXPECTED TO GROW MUCH NEXT YEAR, CHINA WILL TAP THE GLOBAL MARKET, PUSHING UP THE GOLD PRICE. $$$

Deregulation is coming to China in the gold market. The nation has already been the site of tremendous private demand, whose volume easily offset European central bank sales. The Chinese gold demand in 2010 will be a consensus estimated 500 tonnes. It will rise by as much as 20% in the year 2011, enough to surpass India as the top consumer in the next three years. Demand is forecasted to rise to around 600 tonnes in 2011, according to a Reuters survey of five analysts. Recent Chinese Govt restrictions imposed on property investment and speculation in other markets has resulted in more money going into gold and jewelry, which seems a calculated policy by the crafty government officials in Beijing. Gold will not burn their citizens in a bubble bust. Jewelry demand has risen by an average of 7% annually in steady fashion. Investment demand for gold in China has surged by 60% in 2009 to 150 tonnes. In the largest Asian gold bullion trading centre, Hong Kong shows exports from the region to the mainland in the first eight months of the year were double those for all of 2009, pointing to surging appetite on the mainland. On an annualiz ed basis, China is on course to import 118 tonnes of gold through Hong Kong.

The Chinese Govt has plans to liberalize the rules for gold ownership even further, which will boost imports in order to satisfy investor demand. The Middle Kingdom is the #1 consumer of industrial base metals, #2 consumer of crude oil, and in a few short years will be #1 in the gold market as well. Their central bank fills its gold vaults and builds reserves from its domestic mining industry, the largest in the world. That balance is soon to change. Chinese gold mine output in the first eight months of 2010 rose by 8.85% from a year earlier to 218.0 tonnes, as per the Ministry of Industry & Info Technology. Zhu of Jingyi Futures in Shanghai expects domestic production will unlikely grow much next year, resulting in an import surge. Hence Chinese investors will enter the world market to quench their gold demand, adding to global price pressure. The Peoples Bank of China announced in August a relaxation of gold rules, a prelude to broader reform of financial markets pertaining to bonds and currencies. Banks would be permitted to export and import more gold in a program to drive the development of their market in the precious metal. Regard this as a direct assault on the COMEX in New York and LBMA in London, since huge physical gold demand will turn to a  staggering high level. The PBOC wants to draw gold tonnage into their country without disrupting market equilibrium unduly, as it diversifies more of its burgeoning $2.6 trillion in FOREX reserves. See the Share Net article (CLICK HERE).

◄$$$ THE G.L.D. GOLD EXCHANGE TRADED FUND IS GRADUALLY BEING EXPOSED AS A COLOSSAL FRAUD. ITS NET ASSET VALUE FROM GOLD DEPOSITS STANDS AT A PALTRY 96.7 PER SHARE, BEHIND ON METAL INVENTORY PACE. THE LACK OF BUYING SINCE JUNE 2010 IS A SMOKING GUN OF ITS CORRUPT MANAGEMENT. THE H.S.B.C. PROTECTORS HAVE DECIDED TO DOUBLE THEIR PAID SALARY. $$$

The fraud-ridden GLD exchange traded fund is behind on buying gold bullion, as in 200 tonnes of actual gold. The gold price has risen markedly. The GLD fund has enjoyed brisk share sales. The money is being pocketed as cash, not metal, in a violation of its prospectus, an indirect form of naked shorting. No legal enforcement exists anywhere. At the end of the first November week, the biggest holders of gold, the GLD ETF held 1294 tonnes, an amount virtually unchanged over five months. Their actual gold holdings peaked at 1320 tonnes on June 29th, and have flatlined ever since. It does not coincide in any way with either price of share activity. Call it a smoking gun!! The trust has Net Asset Value per GLD share in gold at an all time low of 97.67. It should be 100. It is long overdue in metal replenishment. The obvious effect of purchasing the requisite 200 tonnes would be a huge lift in the gold price. A hack apologist came forth to explain the discrepancy and irregularity. He put forth some incorrect ignorant notions. He claimed that GLD never accumulates unless there is a secondary share offering, clearly not true. No secondary offerings have taken place. Shares match purchases, since not a closed end fund. The GLD is a tracking fund instead. Some minor deviation below 100 in the NAV is expected from management expenses. See the Business Investor article (CLICK HERE).

As is gradually becoming clear, the GLD fund is not about physical gold but rather control of the gold price from heavy leasing and midnight cooperation with the LBMA futures market. My theory is that GLD has continued its leasing of metal inventory, but now has resorted to stealing investor funds. They routinely turn around and supply gold bullion to the embattled LBMA to prevent defaults at the metals exchange. Recall that HSBC is one of the two banks recently charged with a class action lawsuit for precious metal price manipulation, including RICO racketeering charges. See the Zero Hedge article (CLICK HERE).

GLD can be charged with NAKED SELLING of GLD shares. It receives funds from investors. It does not purchase gold bullion. It is that simple. They are not held to any SEC high standard. Jesse of the Cafe Americain explained the Net Asset Value concept. He wrote, "GLD is supposed to be about 1/10 the price of gold, so it should have about 1/10 of an ounce of gold per unit of the ETF. It currently has .097666 ounces of gold per unit according to the link below." Thus the 97.666% NAV. Check the actual data on the SPDR website (CLICK HERE). In return for serving the banking syndicate so faithfully, the infamous custodian HSBC to the paper GLD vaults will receive a doubling of banker salaries, according to SkyNews. They probably reason that times are tough and they serve the system well, only to keep pace with RBS and other rival insolvent banks. See the Zero Hedge article (CLICK HERE). When a criminal soon is going out of business, the tendency is to steal anything not nailed to the floor.

◄$$$ A SERIES OF CLASS ACTION LAWSUITS AGAINST JPMORGAN ON SILVER MANIPULATION HAS BEGUN. SOME CLAIM R.I.C.O. RACKETEERING ELEMENTS. THE ASSAULT ON THE CASTLE FORTRESS CONTINUES, SURE TO EMBOLDEN INVESTORS FURTHER. WATCH FOR EARLY SETTLEMENTS TO STOP THE FLOW OF INFORMATION AND FOR POSSIBLE INVOCATION OF NATIONAL SECURITY, A TYPICAL SYNDICATE MANEUVER. $$$

My primary desire in these cases is for the discovery process to make progress, to unleash a flood of information on evidence of deep criminality. Watch for USGovt agency roadblocks on cooperation in the investigation process, in resistance against prosecutors armed with subpoenas and wiretaps. Expect the mainstream media to ignore the entire story or to dismiss it as nonsense. JPMorgan Chase and HSBC Securities face charges of manipulating the market for silver futures and options in violation of federal commodities and racketeering laws, according to a a string of up to 25 lawsuits filed. Most are filed in New York. One lead lawsuit was filed on behalf of Carl Loeb, an independent investor in silver futures and options, by Hagens Berman Sobol Shapiro LLP, a class action and complex litigation firm in Seattle. They charge violations of the Commmodity Exchange Act and the Racketeering Influenced & Corrupt Organizations (RICO) Act. They allege that the two banks colluded to manipulate the silver futures market in the first half of 2008 by amassing huge short positions in silver futures contracts. Their prejudiced motive was to force silver prices down, without any intention to fill the mountain of orders. By not supplying the silver bullion product, the contracts were illegal naked shorts. They could not fill the orders without open market purchases, which would have forced the contracts into steep losses.

Steve Berman is co-counsel and managing partner at the Hagens Berman firm. He said, "The practice of naked short selling has long been a serious issue on Wall Street. What we know about the scope and intent of JPMorgan and HSBC's actions in this short selling scheme dwarfs any other similar attempt to manipulate a commodities market. We believe that JPMorgan and HSBC's scheme was carefully conceived and coordinated to maximize their profits at the expense of innocent investors who believed that they were trading in a market free from manipulation." Details were given in the filed complaint. JPMorgan amassed a huge short position in silver futures and options, the result of its March 2008 acquisition of broken investment bank Bear Stearns. Witness the motive for killing Bear Stearns!! By August 2008, JPMorgan and London-based HSBC controlled more than 85% of the commercial net short position in silver futures contracts. The two syndicate titans allegedly then secretly coordinated enormous naked sales of silver futures contracts on the COMEX, as in no silver metal posted as collateral (a requirement). They used a variety of methods to coordinate their manipulation of the market for silver futures contracts, signaling to other participants when to flood the COMEX market with short positions, which forced down the price of silver futures and options contracts. After years of such signals, the tactic is well understood.

The suit describes two crash events engineered by JPMorgan and HSBC, one in March 2008, a second in February 2010, after the two titans had completed the buildup in their large short positions. Both tactical ploys succeeded in generating a silver price crash, replete with ill-gotten windfall profits. The complaint includes specific details about warnings delivered by Andrew Maguire, the independent metals trader in London, to the US Commodity Futures Trading Commission. He highlighted two dates for silver movement correctly in advance. The plaintiff attorneys have requested the court to certify the case as a class action and to enjoin JPMorgan and HSBC from continuing their alleged conspiracy and manipulation of the silver futures and options contracts market. Attorneys also demand the court to award damages and attorneys fees to the class. See the Cafe Americain article (CLICK HERE) and the Zero Hedge article (CLICK HERE).

News has fanned out across the land. As reported on PRN News Wire in an up-to-date account, "NIA exposed in Meltup that JPMorgan was short 30,000 silver contracts representing 150 million ounces of silver. This is one of the largest concentrated short positions in the history of all commodities, representing 31% of all open COMEX silver contracts." The National Inflation Assn is an intrepid group. In March, JPM was accused of profiting off silver by illegal manipulating the futures. However, since late August the silver price has risen handsomely, causing steep JPM paper losses. Investors are emboldened while the giant firm is on the defensive, even as Asian billionaires have demanded physical silver from the corrupt metals exchanges. JPM faces several lawsuits simultaneously. Two important points are in the forefront of the Jackass mind when watching these cases. Will the party in complaint settle and be bought off before the crucial discovery phase and before an open trial, like in the Blanchard case five years ago? That is the past pattern. Will JPMorgan invoke national security privileges and have the entire cases dismissed summarily by USGovt agency decree? That is what Greenspan did regularly to wiggle out of reporting on the gold account status before the USCongress. Nixon started the practice of invoking national security to cover syndicate criminal activity during the Watergate scandal. In the current case, the cover-up is equal in magnitude to the original crime, selling the USGovt gold treasure for private profit.

In all, 25 lawsuits have been filed against JPMorgan for manipulating the silver market. Tekoa DaSilva at the Contrary Investors Cafe has been pursuing the story with vigor. He cites a few other cases with the same complaint. The list grows. Kaplan Fox & Kilsheimer are teaming up with The Miller Law Firm in Michigan. Another is Peter Safirstein, of Milberg LLP in New York. Another is Jonathan Waller of Haskell & Slaughter in Birmingham Alabama. And the above cited Hagens Berman Sobol Shapiro in Seattle Washington. See an interview by DaSilva of Robert Kaplan regarding their class action case (CLICK HERE). The Jackass fed him the above pair of questions.

◄$$$ MAX KEISER CALLS FOR A BROAD SILVER BUYER PROGRAM TO WRECK JPMORGAN. IF EVERY SMALL INVESTOR PURCHASES JUST A FEW COINS, THE COMBINED EFFECT WOULD AGGRAVATE THE PHYSICAL SHORTAGE TO THE POINT OF BRINGING DOWN JPMORGAN. WELL, EXCEPT FOR THEIR NATIONAL SECURITY ROLE AND USGOVT SYNDICATE COVER. $$$

Max Keiser strives to produce a mini-revolution using Alex Jones and Google Hot Trends as vehicles. The idea is for everyone to buy a silver coin, or several. Doing so targets JPMorgan, whose vast fraudulent suppression tactics (including silver) prop up the fiat paper monetary system. JPM is trapped in a massive intractable silver futures contract position that will lose $billions when silver ascends to its secondary throne. Their derivative contracts have no physical silver backing, and they are defending a colossal losing position. Keiser focuses on silver because its market is very small and hence easily controlled. Conversely, the silver market is the easiest to wrest from their evil clutches if a coordinated attack can be organized. Any North American and European movement would join a group of wealthy Asian traders who are already squeezing the silver market. The plan was originally proposed by Zero Hedge contributor Mike Krieger to crash JPMorgan, as the margin calls would flood and drown the rogue titan, or at least one department. The tight silver market has nowhere enough physical metal to provide supply for JPM, thus the silver price would explode north. See the Zero Hedge article (CLICK HERE). See two motivational YouTube videos for the public buy program to gather momentum (CLICK HERE or HERE). See also the same public appeal to buy silver coins in Spain on their Oro y Finanzas website, which means Gold & Finance in spanish (CLICK HERE).

◄$$$ THE SILVER SUPPLY IS VERY TINY COMPARED TO GOLD, BUT IT HAS INDUSTRIAL APPLICATIONS WITH STRONG DEMAND. DETAILS ARE HIGHLY MOTIVATING FOR SILVER INVESTORS. EXPECT A SILVER PRICE MOVE OVER $100 EASILY. $$$

Broad silver industrial applications result in steady relentless chronic drawdown of inventory stock. A paltry supply of 1.235 billion investable ounces of silver is available in above-ground supplies. At $21 per ounce, the silver inventory is valued at $26 billion. By contrast, almost every gold ounce ever mined still exists. A huge supply of 4.586 billion investable gold ounces stands in above-ground stocks. At $1330 per ounce, the gold inventory is valued at $6 trillion. The comparison favor silver greatly, since the Gold:Silver ratio is currently 50:1, yet the total value ratio for gold is 235 times that of silver. The traditional G/S ratio has been 15:1 to 16:1 for a few centuries until the age of precious metals price suppression sponsored by the USGovt and its control team on Wall Street. The demand for silver exceeds new mine supply, and has for some time. The silver drawdown continues without respite. See the Zero Hedge article (CLICK HERE).

Check a recent Jackass public article for a brief survey of the silver market, and a discussion of the marvelous inelastic supply & demand with strong Beta volatility. The real meat pertains to the strong Alpha from gradual release from corrupt clutches of price suppression, aided by meager mine output amidst powerful investment demand. The Alpha signifies uniqueness among its commodity class, accentuated by its secondary monetary role with gold. It does not signify a lead alpha dog in a pack, but rather a statistical regression term. With gradual eventual inevitable release from illicit price controls, the silver price will vault over the $100/oz level with ease but also amazement, especially with a backdrop of seemingly infinite monetary inflation and debt monetization from the failed USFed. They will follow up their failed $1.7 trillion QE1 last year with a $900 billion QE2 certain to fail also. See the Jackass article entitled "The Silver Alpha" on Kitco (CLICK HERE).

The volatility in silver is the new wrinkle this month, which featured two individual trading days with a rise of $1.00 or more. As much as it grieves the Jackass to admit it, the chart might obey some Elliott Wave dynamics since the pure breakout into uncharted territory. The EW target might be around 31 next on leg length ratios. A simple momentum swing would take the silver price to around 30. A retest of the November low logged last week seems mandatory to give license to madmen buying the shiny white metal. Without any hesitation at all, it can be said confidently that the Asian billionaires are on a mission to kill the Anglo bankers. They are an regiment of the Silver Alpha. They are well armed and motivated. They have had some success. They smell blood. They are draining the COMEX & LBMA of physical silver, which is the more vulnerable market than gold. Expect the silver market to experience some lost control in the next several months, with a possible move toward $50/oz!! The time to realize silver dreams is near.

◄$$$ REPORTS FROM MORE THAN ONE SOURCE ATTEST THAT AN ASIAN INITIATIVE IS AFOOT TO PROMOTE A NASTY SQUEEZE IN THE SILVER MARKET. ASIAN BUYERS WILL CONTINUE TO PURCHASE THE PHYSICAL METAL UNTIL THE PAPER SHORT TITANS HAVE BEEN KILLED OFF. WITNESS A QUINTESSENTIAL BATTLE OF GOOD VERSUS EVIL, LEGITIMATE VERSUS CORRUPT, PHYSICAL VERSUS FRAUDULENT PAPER. $$$

An anonymous King World News contact out of London has confirmed a major silver market squeeze is underway, with motive. He sta ted, "Massive Asian buying is going to squeeze the shorts in the silver market. Any [downward] reactions in the price of silver will be heavily purchased, and these buyers will take delivery of physical silver." The key vulnerability to the corrupted paper silver markets, controlled by naked shorting of silver futures contracts, is physical silver bullion. Without it the corrupt market disintegrates. Despite the short-term fluctuations in the silver price, these Asian buyers smell the kill. You can be assured that their intention is to put an incredible squeeze on the silver shorts until JPMorgan becomes a paper toothless tiger. My expectation is for JPM to dump the losing silver position next to the Fannie Mae offices of the USGovt. The Asian source agreed fully with Eric Sprott that this squeeze could take the price of silver to $50 in a matter of months. Buyer sentiment levels are nowhere near typical of a top. Rick Rule recently discussed with Eric King the possibility of future supply shortages in silver, given the type of dealer activity not in the least suggestive of topping behavior. These factors are all supportive of a significant move higher in the price of silver. See the Zero Hedge article (CLICK HERE) that includes a King World News link (CLICK HERE).

◄$$$ RUSSIA ADDED TO THEIR GOLD RESERVES IN OCTOBER, NO SMALL AMOUNT. VIETNAM CITIZENS OWN GOLD, A LOT OF GOLD. THEIR GOVT DOES NOT APPROVE, BUT CANNOT STOP IT. ALSO, FEISTY IRAN HAS CONVERTED SOME RESERVES TO GOLD BULLION. $$$

The Russian Central Bank announced a 600,000 oz addition to their official gold reserves for October, now at 24.9 million troy ounces. Year-to-date, the Russians have added 4.6 million ounces of gold to their reserves. They no longer export gold mine output. They have decided that gold accumulation is a viable financial defense and attack weapon. The Chinese Govt is doing the same thing, but more in secret.

Vietnamese citizens own about 1000 metric tonnes of gold, according to the Thanh Nien newspaper. They cite the National Financial Supervisory Commission. See the Bloomberg article (CLICK HERE) with scant details. Iran is not a small nation, with almost 80 million people. Its population growth might be slowing down, given the flood of Afghan heroin directed by the USMilitary in a strategic maneuver. One of the world's top oil exporters, Iran announced it has converted $15 billion of its FOREX reserves into gold bullion, the equivalent around 340 to 350 tonnes. The previous announcement gave enough details, in a promise to convert 15% of its foreign exchange reserves into gold. They made a comment about not needing to import the metal for the next ten years. Some analysts surmise or conclude that the mystery buyer of the IMF gold in 3Q2010 was Iran. Leader Ahmadinejad (aka I'm Your Dinner Jacket, sorry) revealed that Iranian total FX reserves exceed $100 billion. The World Gold Council cited official gold holdings might need an update, since Iran does not appear the IMF list of official gold holders. With 345 tonnes, Iran would be placed in the top 15 nations on gold holdings. See the Zero Hedge article (CLICK HERE). That is a mighty pretty gold coin minted by Iran, whose national leaders might have discovered an effective retaliation strike against US & Allied opposition. The Gold role is the Achilles Heel to the USDollar.

◄$$$ GOLDMAN SACHS HAS BEEN BUYING PHYSICAL GOLD FOR A LONG TIME, USING PAPER GOLD CONTRACTS TO SHORT IT, AS THEY BUY THE METAL OFTEN AS COUNTER-PARTY. LOOK FOR THEM TO DUMP THEIR WRECKED PAPER SHORTS ON THE USGOVT AND WALK AWAY WITH A GOLD FORTUNE. RECALL THEY DENIGRATE GOLD REGULARLY, TWO FACED CRIMINALS. $$$

A King World News source out of London has confirmed that Goldman Sachs has been a major physical gold investor for years. The source stated, "Goldman Sachs has been getting long the metals for years. Goldman Sachs has essentially been acting as their own central bank, buying on dips for years to hedge their currency positions, which are being eroded through coordinated global money printing or currency debasement, which they knew would take place. They are long the metals as a hedge, and as I said, have been for many years." A reference was made to the critical level that results in a tipping point, whereby short positions would result in large scale covering. This is called a short squeeze, as big losing positions are forced to close out with purchases, and thus chase a rising price. The London source also discussed the silver shorts, saying "If silver holds for a few hours above $25.50, they (local traders who have been invited short) will just capitulate. You could see a $1 move in an hour, if there is a race for the exits. Above $25.50, the locals that are short will literally get margin calls and will have to exit their shorts. It could become disorderly on the upside. The jaws are closing on these shorts. The silver market is underpinned by everyone who is waiting in the wings to accumulate." A feedback effect also has been observed from the industrial users of silver, an element in the tipping point. They have fast lost faith in the large banks who offer a regular stream of propaganda about available silver supply. The London source said, "The industrials, when they see that there is tightness or delays in shipping, will then go out and stockpile silver so their assembly lines are not shut down. We would then be talking about potentially tens of millions of ounces required for delivery to these industrial users in a short period of time. The banks have told these industrial users for years that there is no problem with silver supplies. When these industrial users lose faith in the banks, they will move right away to secure stockpiles." So the short squeeze will be pushed by industrial buyers!!

Goldman Sachs is extremely long both gold & silver, after having caused most of the problems in the currency market with massive depletion of Fort Knox gold for lease purposes, in addition to the mortgage bond fraud chapter. It has been the Jackass firm conviction for years that hidden entities like the Carlyle Group and certain Wall Street titans like Goldman Sachs and JPMorgan are heavy private investors in precious metals. Their firms are wrecked from shorting gold & silver, but they hold vast counter-party accounts, maybe some executives in private names. However, they are experts is passing off manure, acid, toxin, and other offal to the USGovt balance sheets. They will direct their multi-$billion losing paper positions acquired in national service to the USGovt toward the USDept Treasury basement offices, all in time. The handoff will be reminiscent of the Fannie Mae & American Intl Group handoff in late 2008. Disbelievers are utter morons and the stupidest of flag wavers without a clue of the treason committed before their eyes. See the Zero Hedge article (CLICK HERE) and the King World News interview (CLICK HERE). Hats off to Eric King. Sounds like a smoking gun!!

◄$$$ THE ASIAN ASSAULT ON THE SILVER MARKET CONTINUES. MORE INSIDER SCOOP HAS BEEN MADE AVAILABLE CONCERNING THIS DEADLY BATTLE BETWEEN LEGITIMATE PHYSICAL SILVER MARKET AND THE CORRUPT ANGLO PAPER SILVER MARKET. PHYSICAL WILL WIN EASILY, BUT THE FIGHT WILL LAST A LONG WHILE. THE SKIRMISHES RESULT IN BACKFIRES TO THE PAPER MARKET MAVENS, AS THEY OFFER REPEATED DISCOUNTS TO THE ASIAN PHYSICAL SOLDIERS WHO GRAB AT THE DISCOUNTS WITH LAYERED ORDERS. THEREFORE, THE ACTIONS BY THE PAPER MAVENS WORKS TO ACCELERATE THEIR OWN DEATH. INVESTORS SHOULD HOPE FOR OCCASIONAL AMBUSHES, SO THAT THE PHYSICAL SIDE CAN RELOAD AND DRAW MUCH MORE BLOOD. WITNESS THE DEATH PATHOGENESIS OF THE SILVER PAPER MARKET. $$$

The London contact who shared with Eric King details to the inner workings of the Asian silver market attack of the Anglos in New York and London has given an update. The 

Asian buyers have been squeezing the shorts in the silver market, causing great pain as the silver price has risen 50% since late summer. After the drop in price from a brief $29 touch down to the low $25's, the elastic physical market has responded with strong demand. Keep in mind that the paper silver market is the opposite, a key point. The bizarre anomalous inelastic paper market results in more selling when the price drops, the opposite to normal. So a collision is in progress, with grand fireworks behind the scenes, not visible to the public. The battle is on, where physical always wins if demand remains vigilant and purposeful. The physical players rush to respond to the generous discount that results from the bear raids and ambushes on the paper side. The paper players cannot produce enough silver after the raids push down the paper price in order to relieve their horrible short condition. By pushing down the paper price, they must bring to the table the discounted silver at the lower price. The paper market corrupt mavens are hastening their own death. A few more rounds and the COMEX and LBMA will be totally broken. Then comes a $50 silver price suddenly, followed by a $100 price within months. The corrupt paper mavens are losing, blood on the floor. Soon their heads will roll across the exchange floor. They should be processed as Third World soccer balls with a burlap cover. The London source offered the following account in the deadly battle going on in the silver market, right after the pounce knocked the silver price down from $29 to $26. His credibility is enhanced by the jump above $26 as predicted earlier. He explains some complexity of physical versus paper in the crossed lines.

"There is an insatiable appetite for physical silver here and the shorts know it. The shorts know they are checkmated. The Asian buyers are layering in bids to take advantage of bear raids in the paper market, which have been used to shake out the weak hands. Asian buyers were able to pick up silver at a discount at the lows of yesterday. They are continuing to buy today and tomorrow. People have to remember that spot trades 24 hours a day. So as the shorts raid the market, physical buyers already have orders in to buy tonnage of silver at a time on that weakness. As I said to you the other day, the locals which were short with the banks were over-run when the price of silver stabilized just above $25.50 for a few hours. The local traders were margined out and silver moved over $1 higher later that same day. In other words, the only entities that are left short here are the Fed backed banks. Nobody in their right mind would be short here. Spot has been trading in front of futures here in London all day. We have been in backwardation all day long on the LBMA.

They (the banks) wanted to target $25.50. If they are able to do that, it will have to be achieved on a sharp, fast move down. The longer you hold the price down, the more physical they are going to give up and the lines will cross against them. The only way to get the lines to cross in their favor is a sharp move down where they quickly cover into stops from weak-handed longs. They will lose too much physical metal if they try to hold it down at those levels for an extended period of time. You have to remember, the banks are trading against their own clients, on their own books, and they know where all of the stops are. If they see a large number of stops down there, they may go and grab them like a bandit. As we close out the LBMA session, the banks are painting the tape lower here in an attempt to make the market look weak. As I said previously, the reality is that there is an insatiable demand for physical silver. If we do not get dips any time soon, the Asians will simply start to buy physical silver at higher prices. The $30 price is just going to be a small pause along the way to much higher prices. This is a fascinating battle between the paper and the physical market. This is not a market for the small players. Leave the trading to the professionals."

◄$$$ SMALLCAP MINING STOCKS REMAIN TREACHEROUS BUT WITH TREMENDOUS UPSIDE POTENTIAL FOR MANY OF THE BEST FIRMS. THE TIDE APPEARS TO BE TURNING AFTER THREE YEARS OF DARK CLOUDS AND HEADWINDS, AND LIKELY CORRUPTED WEIGHT. $$$

Since 2007, the mining stock sector has endured great challenges and difficulties. Its dark clouds covered the financing opportunities, as cash became scarce. Its headwinds forced great strain from rising costs of essential materials and fuel. With the gold breakout above $1400, the bright sun might have begun to shine on the sector, especially the juniors with less than microcap valuations. One can more safely forecast plenty of 10 and 20 baggers among the junior mining stocks. The biggest mining stocks are not the best, since growth will not come easily. Also, some of the biggest are also in league with the financial centers in hidden scummy relationships, leftovers from the government sponsored forward selling schemes. A new chapter of gold fever is at the threshold. Some headwinds are likely to remain. The entire mining operation cost structure should rise in lockstep with any USDollar decline, led by oil but also by materials like cement, lumber, and steel. Big questions linger. Which miners will run out of money? Which will have their properties stolen by foreign governments? Which diluted their stock into oblivion with extra issuances in the last few years just to survive? Which are crippled by naked shorts, that favorite pastime in Vancouver and Toronto, especially Canaccord? Will the two investment bank centers be revealed to be just as crooked criminally corrupt as Wall Street? They are equally corrupt in my book, thus my preference for physical metal since early 2008. The superstar investors and blue ribbon major funds probably invest in the companies they knows inside out. Most retail investors lack access to the reliable internal information.

Other investors can play the less risky route and invest in physical gold, silver, even platinum, with no management risk, no corrupt investment banker risk, no dilution risk, no jurisdiction risk. They must stay clear of the corrupt GLD and SLV funds which are certain to end up in court with shareholder lawsuits and low priced redemptions. The recent November breakout above 530 has been successfully defended in retest. With the bullish cyclical crossover, another assault comes. Look for new highs to be established before year end, as momentum is accelerating, with target 610 on a momentum swing. Notice both rising moving averages.

GOLD CONSOLIDATES BEFORE NEXT BREAKOUT

◄$$$ GOLD IS ACCUSED OF BEING IN A PRICE BUBBLE, AN ABSURD CONCEPT SINCE IT IS MONEY. GOLD IS DENIGRATED AS HAVING INSUFFICIENT BULLION SUPPLY IN ORDER TO QUALIFY AS A MONETARY STANDARD, ANOTHER NAIVE CONCEPT. $$$

A couple preface arguments for the price section. Gold can never be in a bubble, since it is money. It can enjoy a huge robust rally, even an overdone rally, when asset bubbles retreat. In the last few years, gold has ridden the wave of the busted housing & mortgage bubble. Since 2009, gold has ridden the wave from a vast migration retreat laden with fear and trepidation, from a much larger bubble, the entire monetary system built upon sovereign debt. THE ENTIRE MONETARY SYSTEM IS A RECOGNIZED BROKEN BUBBLE, IN EARLY STAGES. The second point is that gold can easily satisfy the backbone requirements of the global monetary system. If major currencies are reinforced by a 2% or 3% gold cover clause, as in convertible redeemable in said percentages, then gold could fulfill the need. Also, if gold were to be repriced at a minimum of $10 thousand per ounce, the entire formulas change. Gold could then easily satisfy the collateral needs for the global monetary system, especially in combination with the 2% cover clause. Arguments used against gold are typically from corrupted offices, compromised thought, and small minds.

My favorite uttered stupidity is that gold serves no purpose and earns no yield income. Then neither does a home's cement foundation. Then a ship sloshing around in occasional stormy seas would find no value in firm ballast. The entire Western world banking system could have used a massive gold ballast since the 1990 decade. Instead, the entire banking system is insolvent and in ruins. Lastly, gold earns a very real yield in the form of sold option calls. Warren Buffett proved that point in 2006, when he followed Hank Greenberg's advice earning income off his 129 million ounces of silver. He lost the silver bullion, but earned the call premium, forced into sale as the price rose above $8/oz. He lied and told his investors that he sold too early. He was called away from his position after selling options to purchase. To admit he was called away with sold option premium would reveal the income source. He understands only little about gold or silver.

Nothing can stop the Gold juggernaut during the escalating currency war, a crucial lethal aspect of the monetary system breakdown. When Europe endorses their own QE2, then the US, EU, and Japan will all have their currency debasement in place. December and January are every bit as strong months as September, with November a rest month. The strong trend will continue, reach new highs for the precious metals, and gathering worldwide attention. Both will head upward with steady power into January, and in the process sound more alarms, largely to be ignored. A simple momentum swing should take it toward the $1500 level by January. The mainstream will make the odd message that gold is giving a false warning, and responds only to high government debt, which aid packages and monetization are dealing effectively with. The system finds a way to paint a picture of being in control, and only later awaken to the price inflation fever.

◄$$$ THE NUMBER OF USDOLLARS IN CIRCULATION PER OUNCE OF GOLD HELD BY THE USGOVT IN RESERVE IS A STAGGERING $3700. WIDEN THE DEFINITION OF MONEY IN CIRCULATION TO LIFT IT TO $54,000 PER OUNCE GOLD IN RESERVE. NEXT FACTOR IN THE REALITY THAT THE USGOVT DOES NOT HAVE ANY GOLD IN RESERVE. IT WAS ALL LEASED BY WALL STREET AND SOLD, REPLACED BY PAPER CERTIFICATES AND DEEP STORAGE LEDGER ITEMS (UNMINED ORE). GOLD HAS A LONG WAY TO GO, AT LEAST TO $5000/OZ. $$$

The volume of USDollars in circulation per ounce of USGovt gold in reserve is $3700, a very encouraging fact. Go further. As suggested by James Turk, add the M3 money supply from checking accounts and money market funds, thus capturing the entirety USDdollars in circulation, the total stock. That total of paper currency plus deposit currency within the banking system comes to $53,957 in circulation for every one ounce of gold. One must put a few dozen asterisks next to the gold reserves in the calculation, since assumed is the USGovt actual possession of all that gold it claims to own. The lesson to walk away with is that at a price under $2000/oz, gold is still ridiculously under-valued. Even at $5000/oz the gold price will be under-valued. My favorite argument to present to common folk met in restaurants or sports bars or in living room gatherings is that the USGovt will be creating a mountain of new USDollars in order to deal with the numerous economic, banking, housing, and currency problems. However, since the economic brain trust is half corrupt and half stupid, most of the new money will be wasted. The gold price must rise with each chapter of corrupted stupidity in the supposed attempts to revitalize the system. No reform comes, only further squanders.

The truth is worse, that the USGovt under direction by Wall Street and the Pentagon are not even trying to reform and repair the system. They refuse to liquidate the dead banks. They refuse to permit the housing prices to find a bottom 20% to 30% lower. They refuse to kick Goldman Sachs out of the USDept Treasury. They refuse to end the war to monopolize narcotics with the phony terrorism billboard. So most aid packages are disguised banker welfare like TARP1 and QE1. The clunker car program was a huge waste with zero payback. The economic stimulus package was a mere state budget gap plug. Further squander is found in stolen $1.5 trillion Fannie Mae funds and mislaid $2.2 trillion Pentagon appropriations, even the missing $50 billion Iraq Reconstruction Funds. The 180-degree twist in the Financial Regulatory Bill was the last straw, proof that the system cannot fix itself, since the big banks wrote the legislation. This gold bull is still very young. Prepare for a 10-fold to 15-fold rise in the gold price versus its base of $400 in the mid-1990 decade. See the progression in the volume of USDollars per ounce gold reserves in the USGovt, then factor in that the USGovt actually has none. A paltry insignificant gold supply is being guarded by cadets at West Point, the USArmy Academy. The young boys are guarding a nearly empty room, in training for fighting probably the next pointless war. Naysayers on the gold bull have been wrong every step of the way, loaded with shallow insults like ignorant hecklers on the side of the yellow brick road on the path to financial freedom.

◄$$$ GOLD HAS SHINED VERSUS OTHER INVESTMENT CLASSES AND ALL MAJOR CURRENCIES OVER THE LAST DECADE. IT HAS YET TO EARN RESPECT, WHICH IS A BIG BULLISH INDICATOR. LET IT REMAIN A SHUNNED ASSET. $$$

Gold has risen 80% versus the USDollar, 70% versus the Euro, 78% versus the British Pound, 72% versus the Japanese Yen, and 70% versus the Canadian Dollar in the last ten years. That is an extremely impressive record. The Gold gains are 70x better than the commodity index generally, almost 15x better than the USTreasurys, and 350x better than the comatose Dow Jones Industrial index (kept aloft by high frequency trading freaks on Wall Street) in the last ten years. In my view, Gold does not need an endorsement from the hack nazi press corps, the criminal syndicate on Wall Street, or any prima donna running about as a premier private investor. Its record needs no establishment acknowledgment whatsoever!!

◄$$$ GOLD COMMITMENT OF TRADERS SHOWS THE LARGE COMMERCIALS WALKED INTO A BUZZSAW FOR HEAVY PAPER LOSSES. THEY INCREASED THEIR POSITIONS RIGHT BEFORE THE STRONG MOVE IN GOLD FROM $1200 TO $1400 PER OZ. JUSTICE WAS SERVED ON THE MARKET FLOOR. $$$

Check the gold Commitment of Traders. The backdrop was a substantial rise in the gold price over a one-week period, an amount over a $35 per ounce to almost $1400. Also, the Open Interest (total number of futures contract positions on the table) increased by a hefty 32,383 contracts to a new record of 650,764 contracts. Only when a large COT commitment is present do significant moves up or down occur, much like a growing electric potential before a lightning bolt. In a recent report for November 9th, the large commercials increased their combined net short position (LCNS) by over 14k contracts or 5.2%, thus showing 291k contracts net short. They then engineered the pulldown ambush in the gold market, taking the gold price down to $1335/oz. It is simply not low enough to let the large commercials off the hook, and relieve their deeply short position. Their efforts are too little too late. Their net short position remains near record territory. We will find out next week how much they covered to reduce the risk of such a huge open interest. Word is out that over 98% of it is in the red, in losses. Notice the still high blue series while the red (rose, magenta) has been climbing. The Powerz did not cover short positions to push up the gold price, but rather added to short positions while gold was rising. They increased their deadly short positions. Lastly, Harvey Organ reported massive gold & silver metal withdrawals from registered accounts at the metals exchanges on November 8th. Something nasty is brewing, as extremely big delivery demands are being met.

◄$$$ TUESDAY NOVEMBER 9TH SAW A POWERFUL GOLD & SILVER PRICE DOWNDRAFT. THE COMEX RAISED THE SILVER MARGIN REQUIREMENT IN A BLAND INSIPID ATTEMPT TO SLOW A RAGING BULL MARKET AMIDST A BROKEN GLOBAL MONETARY SYSTEM. ONE WEEK LATER THEY RAISED THE MARGIN FOR BOTH MONETARY METALS. THE PRICE DOWNDRAFT CONTINUED. BUT SOME CALMER WINDS IN EUROPE ENABLED PRECIOUS METALS PRICES TO RECOVER. SILVER SNAPPED BACK MUCH MORE THAN GOLD. $$$

The Chicago Mercantile Exchange raised the margin requirements for silver on November 9th. It was highly motivated. They want to prevent a blowout upside move in silver past $30 before Christmas, and to relieve some of the massive bloodletting by the Big Four US banks. They are losing large amounts of money on their outsized paper shorts, for gold too. Unlike gold & silver, no margin hikes were doled out for soybeans, corn, sugar, or cotton despite their notable price gains. The message is clear, that desperation has set in relative to precisous metals, as conditions are breaking down badly. The CME sent out a memo raising the margin maintenance requirements for silver futures by up to 29%, from $5000 to $6500 per contract. Initial positions have a slightly higher margin. It is their right, being the market maker. Let not their absent silver inventory deter the corrupt cartel captains from attempting to control the demand for the shiny white beautiful metal. Less than two weeks later, the CME raised the silver margin maintenance requirement another 11.5% to $7250 in a sign of desperation. They also raised the gold margin, but only by 6% from $4251 to $4500 in a symbolic gesture. The CME motives is less about risk mitigation concerns and more driven by the desire to kill or subdue the bull market movement. The investment world will regroup and deliver a few hundred more small knife cuts before Christmas. Just when the European woes focused on Ireland, and a rescue aid package seemed in the offing, the silver price jumped upward by $2.00 on a single day, November 18th. The Powerz cannot halt the silver juggernaut, which will see $30/oz by January. If a double hike in the silver margin is the best they have, then they are truly dead hollow shells!! See the Zero Hedge article (CLICK HERE).

Ignoramuses compare today to 1980 when the Hunt Brothers tried to corner the silver market. Today the demand is global, diverse, and motivated by the very gradual disintegration of the monetary system as sovereign bonds that support the major currencies are in deep trouble the world over. The consensus actions toward Quantitative Easing, also known as hyper monetary inflation, have boosted demand for gold & silver monumentally in a natural offset. Dozens of nations and billions of people around the world are slowly awakening to the grand deception and crumbly foundation that make up fiat currencies. They are losing money in supposedly safe government bonds, a trend without precedent. Most of Southern European nations will declare debt default within two years. Foreign central banks are attempting to diversify their oversized US$-based reserves without causing a run on the USDollar. Gold is gradually being seen as part of the solution, at least in private wealth preservation.

EUROPE PREPARES FOR MORE DEFAULTS

◄$$$ THE ENTIRE EUROPEAN BANK EXPOSURE TO IRELAND IS LARGE, ON PAR WITH GREECE. EXPECT A QE2 ANNOUNCEMENT FOR EUROPE TO OFFSET THE US-BASED QE2. NEXT COME SPAIN AND PORTUGAL FOR BREAKDOWNS AND BANK BAILOUTS IN AN ENDLESS STREAM. RUIN WILL FIND BALANCE ACROSS THE ATLANTIC IN THE RACE TO THE BOTTOM. $$$

The broad continental exposure on combined Irish debt is enormous, equal in magnitude of the Greek Govt debt. The Emerald Isle outsized banking system has totally collapsed. The UK banks have $222 billion of exposure to Ireland, of which $42 billion is tied to the Irish wrecked banking sector. German banks have $206 billion exposure, $46 billion to Irish banks. Bring in France, Spain, and other EU countries, and total European bank exposure to Ireland surpasses $100 billion. European Union officials are preparing a 100 billion Euro rescue package for Ireland. Like the Greek version, it will be more talk than substance. The more accurate viewpoint is a rescue package comes for European banks who hold the exposed risk. Expect the money to come from the same location as the US-based QE2, the US$ Printing Press. Like with the Greek debt crisis last May, the Euro Central Bank will bail when all else fails. Like with the Greek debt bailout, it will violate the central bank's political fundamental of independence. Four months of relative calm have finally faded in Europe. The great bailouts will resume, placing strain on the Euro currency. The disintegration on the fringes of the union will continue. The next dominoes are set to fall, namely the big Spain and small Portugal. See the Free Gold Money Report (CLICK HERE). The currency market reaction is typical. The Euro sold off badly while the Irish turmoil mounted and bond yields rose. But when an EU bailout of banks holding great debt exposure seemed assured, the Euro decline was reversed. This is about banks, not nations. With each Euro decline came a corresponding fall in the Gold price. The reversal in the Euro halted the Gold fall.

◄$$$ DOMINOES IN EUROPE ARE FALLING, POWERFUL FORCES UNLEASHED. GREECE AND IRELAND ARE JUST THE OPENING ACT. ALL THE P.I.I.G.S. NATIONS ARE LINED UP FOR DEBT DEFAULTS. FRANCE COULD BE THE SURPRISE NATION TO FALTER. A UNION CLASH WITH GERMANY HAS TURNED ACUTE, AS DEBT WRITEDOWNS MIGHT SOON BE FORCED. $$$

The Spanish debt situation is equally dire and threatening. Its budget deficit is expected to be 9.3% of GDP in 2010, the second highest in the EuroZone. Its stagnant economy assures no improvement anytime soon, weighed down by a housing bust. Italy remains a mess under the radar so far. Its debt is bloated and its economy is stagnant too. In France, angry widespread protests over pension reform actions have added risk of a disrupted economy. The effect is sure to cause reduced economic activity and bigger deficits, as they cling to the most outdated and costly social system in Europe. A showdown comes on French debt too. Attention to other nations is to be pushed aside, as Portugal moves to center stage. Its heavy debt and structural deficiencies are put squarely in focus for the next bailout. Each nation has a different trigger to cause a banking system breakdown and collapse. The common Euro currency is being pulled apart. The EU banking crisis moves from country to country. Two problems persist, often called one. The union is fracturing and the currency is untenable. Each bailout is a mere bandage when restructure is needed. Thus the same problems return later, in a parallel on no solution like in the United States. See the Bloomberg article (CLICK HERE).

Germany has won agreed measures to force investors to pay for future bailouts, in a requirement that bond investors take write-offs in sovereign rescues. Chancellor Merkel has publicly clashed with Euro Central Bank President Jean-Claude Trichet over the permanent mechanism to take effect in 2013, to be drafted by mid-December. Trichet expects the change in sovereign rescue reform would undermine confidence in the banks. Euro-Zone leaders are divided over the proposal. The Irish banks have grown badly dependent upon the EuroCB. An estimated 50 billion Euros will be needed for Ireland alone. The rising Irish bond yields have forced the issue to resolution, or at least action, as they fluctuate between 550 and 650 basis points above the benchmark German Bund yields. Trichet, Jean-Claude Juncker (Luxembourg Prime Minister), and Spanish Prime Minister Zapatero have criticized the Merkel position. Juncker believes investors would be driven away from support of PIIGS debt. See the Bloomberg article (CLICK HERE).

Bear in mind that the Greek Govt debt will assuredly default. Nothing was fixed. Deficits remain in a death spiral. Austerity measures are a farce. Deputy Prime Minister Pangalos let slip that debts are often restructured, as the default option may be offered. His statement contradicts the official party line out of Greece, that debt restructure would be a disaster. Greek Govt Govt bonds run at 900 basis points above the Bund yield, even after all that supposed aid and reform.

◄$$$ EUROPE'S NEXT FOCUS AFTER IRELAND WILL BE PORTUGAL, WHICH IS SET TO COLLAPSE. THE FINANCE MINISTER OF PORTUGAL HAS OPENLY PONDERED THE EFFECT OF EXITING THE EURO MONETARY UNION (CURRENCY). $$$

The upcoming European bailout of Ireland and Portugal must include some method of Quantitative Easing (QE), or new money creation to cover debt. That will offset the strain on the USDollar from the profound monetary debasement. The EuroCB will certainly opt for using newly created money as part of the plan, as a lower Euro currency is desired. They are the buyer of last resort. The pervasive hidden activity behind bond support by banks will complicate the initiative. Austerity measures will collide with the common social nets in place. Pressure is acute for European countries to undergo debt restructuring and bailouts as part of the next round of rescue plans. The funding will be done partially with QE, but also with discounted European Govt sovereign bond purchases by China. Their Dollar Swap Windows are being formed in a string of locations across the continent. China wants broader trade ties, actually an open door to the EU Economy, which will simultaneously shut any potential for trade protectionism. Europe is grappling with new QE pressures while the US is digesting its cancerous QE fodder.

Europe is soon going to add Portugal and Ireland to its list of wards of the state. The sovereign bond market is being isolated. The EuroCB is the only buyer, kind of like the USFed for USTreasurys and USAgency Mortgage Bonds. The central bank will eventually debase its Euro currency, all in time when the political chips are in place. The periphery in the PIIGS nations is back to full breakdown mode, while Greece is hardly in the news at all anymore. Bond market assaults have spread. Portugal's finance minister Fernando Teixeira has warned that his nation will have to turn to the international community for emergency financial assistance, as the EuroZone debt crisis has spread. He made an interesting point about the effect of withdrawing from the shared Euro currency region. Teixeira said, "This has to do with the EuroZone and the stability of the EuroZone, and that is why contagion in this framework is more likely. Markets look at these economies together, because we are all in this together in the EuroZone, but probably they could look different if we were not in the EuroZone. Suppose we [Portugal] were not in the EuroZone. The risk of the contagion could be lower." The thought process is changing. Nations are pondering the advantages of discharging the Euro and reverting to their old currencies. Contagion is on their minds now, but devaluation and debt restructure will be later. Portugal has two large debt redemptions due in April and June, which must be refinanced. They would begin borrowing, tapping the markets in January in order to refinance these loans. The 2010 Portuguese Govt deficit has risen by 2.3% in year 2010, nothing on the mend. See the Zero Hedge articles (CLICK HERE and HERE).

◄$$$ CHINA EXTENDED A HAND TO ASSIST PORTUGAL, BUT WITH ULTERIOR MOTIVE THAT HAS EMERGED. THEY DUMP USTREASURYS, OBTAIN VALUED GERMAN PRODUCTS, AND ERECT A TRADE UMBRELLA. $$$

Chinese President Hu Jintao included the Portuguese capital as part of his European tour. He is building windows, not for viewing the landscape or seascape, but to dump USDollars in a designed laundry initiative to dump USTreasurys. The leader promised support to Portugal, just like with Greece. He said, "We are available to support, through concrete measures, Portuguese efforts to face the impacts caused by the international financial crisis, and deepen and broaden our economic and commercial cooperation." Colleague Craig McC added his own comment concerning trade advantages to China to be gained. He said, "First Greece and now Portugal, as China prepares to buy debt of all the PIIGS nations. Let's go one more step further still. As part of buying PIIGS sovereign debt, I would be very surprised if China did not negotiate a quid-pro-quo on trade, whereby their goods could come into the EU via the PIIGS with little or no tariffs. Lot of EU consumers would serve to pick up the slack from an American downturn. China doubles the Dollar Swap Window while keeping their factories and workers fully employed." Yes, exactly. Also, approval for the window to convert USTreasurys into Euros, winning a trade umbrella, involves an accord with Germany, the alpha dog of Europe. See the Bloomberg article (CLICK HERE). The irony is that the industrial progress in China contributed significantly to the economic morass in both Europe and the United States.

China has pledged to purchase large lots of industrial equipment, machine tools, and atutomobiles from German export firms. The informal pact would have to clear the World Trade Organization, where the United States would object. Their voice has turned into a small shrill call from the corner bushes. The important point in my view is that China will have almost doubled the potential volume of its Dollar Swap Window beyond what the Greek debt volume permits. The sovereign debt purchase enables expansion of the US$ dumper program with EU blessing and political cover. With each new nation that China aids, they will be able to dump more USTreasurys. A huge potential will come to the USTBond dump when they add Spain to their windows. Any rise in the Euro currency could be directly attributable to the Chinese great US$ dishoarding and conversion process. Another angle is that China wants Portuguese limestone, openly stated. Think cement supply and steel process.

◄$$$ THE COLLAPSE OF EUROPE HAS BEGUN, ACCORDING TO JOHN TAYLOR, THE SLIGHTLY UNORTHODOX REVERED BOND ANALYST IN THE UNITED STATES. BOTH THE UNION AND THE EURO CURRENCY SEEM ON A COURSE TO A DEAD END. RECESSION AND A FALLING EURO ARE GREAT RISKS. $$$

Taylor wrote, "The EuroZone has begun its collapse a little later than we thought. My compliments to the political prowess of the European leaders for holding things together for so long, but this is an impossible situation and the crisis is on its way. Europe must move to a full economic federation if the Euro currency is to survive. With 16 countries using the Euro and Estonia on the way, the odds of moving there are currently lower than infinitesimal. Things will change after the approaching horrible economic and political catastrophes that will wreck some of these economies and societies. Unfortunately nothing will happen before the current situation gets unbearable. This is the way of democratic politics. As all the leaders are still working toward the same goals, and no one has stepped forward to express the inchoate fears of the European populace, which should take years. By the start of next year the EuroZone will enter a recession that will test the current leadership. The Euro, which has been perceived as if it were a German Mark, has already topped and will decline until it is priced like an Italian Lira in the next few months. With Europe and the US in recession next year, commodity prices will drop again and global growth will suffer despite the out-performance of domestic Asian economies. With the policy stresses, and the risk of significant errors in judgment, international strife becomes more likely as well." What a dire view. He is not confident that investment hedges will thrive against the major currencies as funds are directed into commodities, keeping prices up. See the Zero Hedge article (CLICK HERE). Ditto for the collapse in the United States, but US economists prefer to draw attention away from the US morass.

◄$$$ GERMANY REALLY WANTS A TWO-TIERED EUROPE. CONTEMPT WITHIN GERMANY FOR USFED MONETARY POLICY IS HEIGHTENED AND VISCERAL. CRITICISM IS OPEN AND BROAD, CITING CONTRADICTIONS AND COMMON RECKLESSNESS. DEBT DEFAULT MANAGEMENT IS THE NEW THEME PUSHED BY GERMANY, A MAJOR NEW TWIST. $$$

German criticism for the USFed and its monetary policy has turned ugly, to a level never seen before. The USFed wants Americans, insolvent in homes and insecure at jobs, to borrow and spend more money. In Germany, sound money is seen as a moral principle, not just an illusive objective to dance around with propaganda and platitudes. Finance minister Wolfgang Schauble is hostile in public remarks toward the desperate monetary decisions. Schauble called USFed Chairman clueless openly, describing his policies as reckless. He ridiculed the USGovt approach to urge China and Germany to reduce their trade surpluses. Take them as signs of success and competent industrial and policy management, where the US is void. He gives his nation credit for a strong competitive industry. He cites a direct contradiction. Schauble said, "The American growth model, on the other hand, is in a deep crisis. The United States lived on borrowed money for too long, inflating its financial sector unnecessarily, and neglecting its small and mid-sized industrial companies. There is no lack of liquidity in the USEconomy, which is why I do not recognize the economic argument behind this measure." Exactly!!! Bravo!!! Both counts!!! The USFed is fighting insolvency with liquidity rather than debt restructure for a second time, after learning nothing the first time.

The open disrespect and public condemnation of the US banking leadership might seve as preliminary rumblings toward a restructure of Europe's financial foundation. Germany won most of what it wanted among the Council of Ministers when France agreed to set up a new crisis mechanism to handle future sovereign debt default episodes within the EU community. Fiscal integrity and accountability appear to have moved to second priority. First among priorities, a new twist, is a new continental code to manage the debt default process. They agreed to several features. Bond maturities will be lengthened. If and when defaults are inevitable, bond holders will suffer some capital losses. Germany is finally contemplating the managed default of EuroZone member states. At that time, the endgame will be a clear two-tier European grouping of core members designed to protect themselves from the bankrupt and sinking Southern Europe member nations. The northern states will band together under the Bundesbank wing. My sources confirm a New Northern Euro currency is being hammered out, ready for launch in June 2010. It will contain a gold component. My name for it is THE DOLLAR KILLER, due to its gold component and later plans for crude oil purchase.

◄$$$ EU BONDHOLDERS MUST BRACE FOR HEAVY LOSSES UNDER A NEW GERMAN PLAN PROPOSAL. THE BERLIN PLAN DICTATES NEW RULES ON LOSSES, SO THAT TAXPAYERS DO NOT SHOULDER THE ENTIRE PAIN. $$$

Germany is forcing the situation on bank bailouts within the European Union, whereby bond holders must take losses. The bailout fund valued at 440 billion Euros will not expire in 2013, as part of the Crisis Resolution Mechanism, on condition that credit losses are incurred more broadly. To date, sovereign bond holders had been spared at the expense of taxpayers, but no more. The fund must be anchored in EU law through changes to the Treaties in order to head off legal challenges at Germany's constitutional court. The goal is to enable an orderly insolvency of EuroZone nations and their weighty sovereign debt. Germany sees what is coming and is preparing the kitchen knives and meat cleavers. Details of the process include an extension of debt maturities, a free pass on interest payments for an indefinite period, and a suspension of bondholder rights, much like what is imposed by the IMF. A main motive for Berlin is to avoid a repeat of the 110 billion Euro bailout for Greece that permitted a shield from bank losses, saddling EuroZone taxpayers with the full cost.

The German proposals contain logical pathways. They permit struggling states to claw their way out crisis by reducing debt, but with bounds of progress. The Greek Govt bailout risks failure because it will leave the country with public debt of 150% of GDP, near the point of no return. The grand risk is for scattered boycotts of PIIGS sovereign debt at a time when the rules are being altered, with fast rising bond yields indicating the distress. These countries need markets to continue with debt securitization and ensuing bond purchases. The accord is likely to spread across the other EU member nations, since in Brussels the German central bankers in charge have already struck a deal with France, and Britain has dropped its opposition to treaty changes. Many details must be hammered out, as a complex process for debt restructure takes shape, a Chapter 13 code of sorts. The EU meeting process is often dominated by the French and German agenda and lead. See the UK Telegraph article (CLICK HERE).

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