GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Disaster Scenarios
* Intro Golden Nuggets
* China Disturbs Global Finance
* Major Cracks in Gold Fortress
* COMEX Gold Default Nears
* Gold Demand Exponential in China
* Gold Shortage Seen in Backwardation
* USEconomy Still in Dire Straits




HAT TRICK LETTER
Issue #114
Jim Willie CB, 
“the Golden Jackass”
22 September 2013

 

AUGUST REPORT ERRATA:

In August Gold & Currency Report: After hitting HSBC for 6445 ounces (6.45 metric tons) on one day, they hit Scotia Mocatta for 20,189 ounces (20.2 metric tons) the next day. Wrong, not metric tons, as the math aint that simple. For kilograms to metric tons, it is easy. The large ounce counts are correct though. Apologies for the brain cramp. In September Money War Report: Karen Hudes is the former lawyer at the World Bank, and also an economist by training. The ultimate stock ownership is DTCC, not DPCC (fat finger). The Lars Schall video features apparently a Johnny Cash song clip (probably a pleasant improvement). Gotta say, such a great many details to have all correct, a flurry of information every month to process. Working hard to be correct on content and forecasts, but my mistakes will be admitted, hoped few in number.

QUOTES ON GOLD

"Once all is said and done, the real Price of Gold will rule royally, while the COMEX Gold Price will become irrelevant. It is safe assume that its price in today's $$$ terms will go to anywhere from $12,500 to $35,000 per ounce, and the ratio of Au to Ag will go to 20 to 1 in time. Time window [that so many people request] for the Paradigm Shift surge to happen is probably 6 months to 36 months, but could be longer if the constant obstructions occur like with the G20 Meetings and with extended life granted by added layers of derivative incendiaries and worthless newly designed toxic bonds [see Draghi Bonds]. However, it is irrelevant to speculate when exactly this correction will occur. More important is that such a correction will eventually have to happen by default, and a grand reset will occur. Coming is a day of reckoning and popular awakening to the real facts of life with the value of asset prices, which should come with the financial tectonics in movement, currency debasement in slow motion and current devaluation in quantum shocks like seen in Venezuela. Someone once said 'HELL IS TRUTH SEEN TO LATE.' " ~ The Voice

"War is required to sustain the USDollar and USTreasury debt. Never before in history has it been so clear that the US currency is defended by military force. The completed pipelines from Iran to the Mediterranean Sea could potential bring a quick end to the Petro-Dollar, and also assure that Western Europe turns its back commercially on the United States. The NatGas Coop run by Gazprom will be the noose wrapped around the USD neck, and the toilet plunger for OPEC, possibly for the Saudi regime. The Gazprom vassals will be legion in Europe, operating as captured pawns to the King in the Kremlin." ~ Jackass

"Those Arab leaders who tried to uncouple from the Petro-Dollar system and go it alone by selling their oil in [for instance] Euros paid a heavy price and are not around anymore. Saddam Hussein of Iraq planned to do it and instead ended up swinging from a rope. Colonel Gaddafi of Libya tried it too and came to a grisly end. When the Axis decides it wants to bring down a state that is either belligerent towards Israel or is threatening to go off the Petro-Dollar, it foments revolution in the country by supporting dissident factions and sending in mercenaries, with the aim of creating a civil war and toppling the government." ~ Clive Maund (he refers to Axis Powers of the United States, United Kingdom, and Israel, but the Jackass calls the same trio the Axis of Fascism more accurately)

"Think of the currencies jumping up and down on pogo sticks inside a room and there are cries of glee, as one currency is up on the day and cries, 'WHEE, I AM STRONGER THAN YOU.' Stand back a little and the room is in fact an elevator that is going down, but within the room there is no sensation of falling. Stand back a bit further and it can be seen that the elevator is on the Titanic." ~ Tony Hayes (true of all major currencies, also known by the Competing Currency War, the race to the bottom, or the swirl in the FOREX toilet bowl)

"Unfortunately, it seems that news about the fixing of trillion dollar markets has become mundane. First there was the bombshell last year that the London Interbank Offered Rate (LIBOR) was being unfairly manipulated, then there was the announcement that the Commodities Futures Trading Commission (CFTC) was investigating the possible rigging of the interest rate swap rate. And in mid-April this year, the European Union announced that it was investigating possible price manipulation in the $165 trillion physical oil market. That is three price fixing scandals in the last 18 months, all involving trillion dollar markets. The combined impact of all these markets on consumers, businesses, and governments is staggering and has far reaching implications." ~ David Franklin of Sprott Asset Mgmt (every major financial market is corrupted, including USTreasury Bonds and S&P500 stock index, the EuroBonds, the Japanese Govt Bonds, the FOREX, the crude oil market, the worst corrupted being USTBonds and Gold)

"The price inflation is low. We can afford to be patient with tapering." ~ James Bullard (Fed Governor of StLouis, one of the sharper of the blind men and women on the Fed Board, who cannot notice rising cost structure and the vastly distorted USTreasury Bond market)

## DISASTER SCENARIOS

◄$$$ THE USFED IS TRAPPED. IT HAS TWO LOUSY ALTERNATIVES, TO CONTINUE QE BOND PURCHASES OR TO TAPER QE VOLUME. BOTH RESULT IN TOTAL WRECKAGE AND SYSTEMIC FAILURE. CONTINUATION IS A SLOW DEATH. TAPERING IS A QUICK DEATH. THEY WILL CHOOSE THE SLOW DEATH, AND DENY THE CAPITAL DESTRUCTION EFFECTS ALL THE WAY TO AN ECONOMIC DEPRESSION. $$$

Back in 2009, the Jackass was loud and vocal about the USFed being stuck with no Exit Strategy. At that time, they were trying to extricate themselves from the ZIRP corner, the zero bound interest rate. My forecast was for its continuation almost forever, since damage to the USEconomy would be quick, and rising borrowing costs to the USGovt would be intolerable. The point was made that the longer ZIRP is in place, the more likely it would be permanent, since a huge amount of bond purchases were being made, all to suffer big losses in a backup of rates. In 2011, the USFed began the QE initiatives marked by bond monetization. The QE program itself was a correct Jackass forecast, denied openly by the USFed for months. The point was made that buyers of USTBond issuance would vanish, and the USEconomy would not generate indigenous wealth to save in USTBonds. In 2012, the Jackass was loud and vocal about the USFed being stuck with no Exit Strategy from that destructive disastrous monetary policy also. Both forecasts came true. The FOMC meetings and recent Bernanke speech highlight their plight, no options, no exit, no relief, stuck with destructive monetary policy which cannot be halted or even reduced. In fact, QE to Infinity will be ramped up, with double the volume of USTBond purchases. The foreign nations will diversify out of their USTBonds held in reserve, and foreign corporations will dump outright USTBonds, in what will become the grandest vote of no confidence toward US-UK bankers in modern history.

The alternatives are truly horrendous. Plan A, being implemented. The USFed can continue QE and its heavy volume bond monetization. Doing so will sustain the rise in the cost structures, including food prices. As a result, the national economies suffer capital destruction, a direct (but unrecognized) consequence of shrinking profit margins and shrinking disposable household income. The mainstream news and bank leadership insists on calling it stimulus, when it is the exact opposite. It is the most powerful force to destroy capital in modern world history. The fierce recessions are assured to continue, the incomes fall, store liquidations to persist, systemic failure assured. The United States eventually will be faced with hot money exits in a very unique new development. The United States will be eventually shunned and the USDollar rejected, as global alternative to the US$-based trade will develop until a formal launch next year in 2014. However, the US will continue its usual path of creating (boogeymen) enemies, creating new wars, blasting the propaganda networks, but deny being the cause of the broad wreckage. The destruction of the US system will not come from fast rising rates, but instead from accelerating capital destruction, job cuts, recession identified as depression. In this Plan A scenario being adopted and embraced, the USFed will be compelled to amplify its QE bond buying volume, to lie about it, but it will be caught in the lies. The United States and the USFed will be blamed for the climax of collapses, which will occur gradually. The United States will rapidly be shunned, the USDollar rejected, and the US declared a global pariah.

Plan B, tested with Taper Talk tested, not to be done. The USFed could taper QE and reduce sharply the bond monetization. The results would be felt very quickly and suddenly, like what was seen in July and August. It was painful and shocking, but revealed the deep dependence upon the USFed easy money spigot, from the financial market perspective (quickly) and the economic perspective (more slowly). The financial markets would suffer incredible declines bordering on historical events like a sequence of Black Mondays (1987) and post-Lehman crashes (2008). The surprising direct effect from a strong tapering of QE would be something never seen before in the United States history. It would cause very well publicized hot money moves out of the US financial market in addition to the emerging markets. The global tightening would make for a global catastrophe. The investors in USTreasury Bonds would rapidly vacate the arena, since bond yields would rise quickly, putting strain on the interest rate derivative control levers to the point that the rate swaps could not prevent the rates from going up out of control. The big US banks would unwind their leveraged USTBond carry trade, and suffer outsized losses. The rapid rise in rates would deliver a well recognized death blow to corporate paper flow, the US housing market, the US car market, and put an end to student loans. The national USEconomy would suffer from higher interest rates, the fierce recession continue. A systemic failure would result within 12 to 18 months. The United States and the USFed would be blamed for the climax of collapses, which would occur rapidly. The United States would rapidly be shunned, the USDollar rejected, and the US declared a global pariah. Same outcome, faster pace.

The USFed is desperately trying to balance two horrible destructive options. The look of frustration and defeat is apparent on outgoing Chairman Bernanke's face in press conferences. He realizes finally that his Doctoral Thesis is disproved by experiment, by his own hand at the USFed control panel. Yet the bankers must appear to be in control. They must defend the USDollar and USTBond, along with major paper currencies. They must defend the franchise central bank system. They must buy time to escape with their lives before they are forced to vanish, either willingly or by order.

◄$$$ THE BIS EX-CHIEF ECONOMIST WARNED IT IS WORSE THIS TIME AROUND, FIVE YEARS AFTER LEHMAN. NO SOLUTION HAS BEEN PURSUED. GRANDIOSE HYPER MONETARY INFLATION IS FIRMLY IN PLACE. GREAT CAPITAL DAMAGE TO ECONOMIES HAS OCCURRED. RISK FACTORS ARE MUCH WORSE THAN BEFORE. $$$

William White is former chief economist at Bank For Intl Settlements. He gave stern warning, "All the previous imbalances are still there. Total public and private debt levels are 30% higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle. This looks like to me like 2007 all over again, but even worse." Many worse conditions are obvious. The support of big banks has made the system more twisted and contorted. The refusal to liquidate the big insolvent Western banks is a sign of extraordinary weakness, as the traditional time-honored capital method of plowing under with liquidation to enable the next healthy chapter has been prevented every step of the way. The ongoing endless QE bond monetization actually kills capital slowly and inexorably. The economies suffer as a result in profound ways. The ongoing endless zero bound interest rate distorts all asset markets without exception. Worse, it smothers the economies from inadequate income to sustain itself in the entire pension systems and the entire baseline banking systems that rely on a spread trade for honest income to grease the system. It grinds.

New risks are present in force, not in the picture five years ago. The share of leveraged loans or extreme forms of credit risk, used by the poorest corporate borrowers, has soared to an all-time high of 45%. That is a full 10% higher than at the peak of the crisis in 2007. The grand systemic risk is for disorder to set in, for elements to suffer breakage, for liquidity to vanish, for stress levels to be too great, and for illusions to be accepted. See the Zero Hedge article (CLICK HERE).

The hunt for yield in a zero percent environment has lured investors en masse into high risk instruments. The phenomenon is typical of the broadly accepted exuberance that opens the gates to the next global financial crisis. The BIS actually forewarned the 2007-2008 crisis correctly (like the Jackass, whisper). Their central banker protegees actually caused it. White judged that after the Lehman failure, the five years have largely been wasted. The global system finds itself even more unbalanced, having run out of lifelines. White concluded, saying "The ultimate driver for the whole world is the US interest rate. As this goes up, there will be fallout for everybody. The trigger could be Fed tapering, but there are a lot of things that can go wrong. I very am worried that Abenomics could go awry in Japan, and Europe remains exceedingly vulnerable to outside shocks." The BIS has been harshly critical of Bank of England Governor Mark Carney and the Euro Central Bank chief Mario Draghi. Their reliance upon forward guidance and open mouth policy, holding down long-term rates by rhetoric alone had essentially failed. Good communications cannot steer markets. Its limitations run up against the reality of insolvency and broadly wrecked capital.

Ambrose Evans-Pritchard pointed out the frightening new risk factors. Syndicated lending is way up, while covenant protection is way down. It actually mimics the situation with big banks. Their derivative risks are way up, while loss reserves are way down. Ambrose wrote, "A trend favouring riskier lending was also evident in the syndicated loans market. A concrete manifestation was the growing popularity of leveraged loans, which are extended to low-rated, highly leveraged borrowers paying spreads above a certain threshold. The share of these loans in total new signings reached 45% by mid-2013, 30 percentage points above the trough during the crisis and 10 percentage points above the pre-crisis peak. Market commentary attributed part of this increase to renewed investor demand for collateral loan obligations, which furthered a shift of negotiating power to borrowers. Thus, just as leveraged loans were gaining in importance, a declining portion of the new issuance volume featured creditor protection in the form of covenants." See the UK Telegraph article (CLICK HERE).

 

## INTRO GOLD NUGGETS

◄$$$ THE BRICS INTERNET CABLE HAS REACHED THE CRITICAL STAGE. IT IS UNDER CONSTRUCTION, IN ITS FINAL PHASE OF IMPLEMENTATION. AN INDEPENDENT NETWORK IS DESIRED, IN DEFIANCE OF THE US-CENTRIC CURRENT INTERNET. IT WILL CONNECT THE BRICS NATIONS IN A RUDIMENTARY CABLE CONNECTION. IT WILL ENABLE DEVELOPMENT AND SPECIAL PROJECTS. EXPECT GOLD TRADE SETTLEMENT TO BE BUILT ATOP THIS NETWORK. $$$

Brazil is acting with force and defiance. President Dilma Rousseff announced with pride the creation of a world internet system independent from the United States and Britain. A recent summit with the US was canceled, due to NSA spying. The US isolation continues. An historic step has been achieved in the planned rudimentary construction of the alternative infrastructure by means of a high tech cable that touches seaport locations of each BRICS nation. The BRICS cable from Vladivostock (Russia)  to Shantou (China) to Chennai (India)  to Cape Town (South Africa) to Fortaleza (Brazil) is being built, currently in its final phase of implementation. Its extension to Miami (USA) is not clear on purpose. While not for broad information and news articles and chat rooms and database entries, it is a start which will serve as a communication network at first. The greater part of the BRICS project is not yet known by the broader public. Expect it to be the backbone of Gold Trade Settlement and Central Bank operations in the accumulation of Gold bullion. It is told that international investors are jumping onboard this unprecedented real economy opportunity. It has happened. Brazil has led the project on the public relations front. President Dilma Rousseff has ordered a series of measures aimed at greater Brazilian online independence and security following revelations that the USGovt National Security Agency intercepted her communications, hacked into the state owned Petrobras oil database, and spied on Brazilians who entrusted their personal data to US tech companies such as Facebook and Google.

Some details on the cable and the BRICS nations should be known. The BRICS Cable will stretch 34,000 km (=54.5k miles), run at 12.8 terabit/second capacity, and employ two fiber pair within a fiber optic cable system. The five BRICS nations comprise 45% of the global population and 25% of the global GDP. Together, they expand their native economies by an amount greater than the size of the California Economy, the expansion roughly matching the Italian Economy size every year. Italy is the #8 GDP in the world. If a nation, California would rank #9. An interconnection with regional and other continental cable systems in Asia, Africa, and South America is planned for improved global coverage. Immediate access is planned to 21 African countries, for access to the BRICS economies in trade. The projected date for ready service is the second half of 2015. The group has made clear its intentions to invest in infrastructure, going beyond railways, highways, and port facilities. The cable is the  greatest BRICS strategic investment and is expected to enhance technology sharing, boost trade, and facilitate financial transactions. Think manage the Gold Trade Settlement and conversion of USTBonds to Gold bullion. The BRICS nations are exploring political and military cooperation as well. See the Global Research article (CLICK HERE), the BRICS Post article (CLICK HERE), and the BRICS cable video primer (CLICK HERE). As footnote, the US-originated internet began as DARPANET, a military research network connecting to universities. The BRICS Cable has began to enhance trade, but will definitely enable the alternative to the USDollar.

◄$$$ GREECE MUST STAY IN THE EUROZONE BECAUSE OF NATGAS PIPELINES. THE EUROPEAN UNION IS VERY DEPENDENT ON RUSSIAN GAS (GAZPROM) AND THE UNION IS ANGRY OVER THE SETUP. IN REACTION, THE EUROZONE LEADERS ARE PURSUING THE CONSTRUCTION OF THE TRANS-ADREATIC PIPELINE (TAP). $$$

The European Union has conducted its hidden attack against Gazprom, using the Cyprus banks. It was not successful last March. Due to dependence upon natural gas, Greece must remain in the EuroZone in order to continue the gas supply. As an alternative, the Trans-Adriatic Pipeline is being planned. The TAP is to be funded by BP (20%), Socar (20%), Statoil (20%), Fluxys (16%), Total (10%), E.ON (9%) and Axpo (5%). British Petroleum is the global pariah and syndicate tool. Socar is the state oil company of the Azerbaijan Republic. Statoil is the Norwegian multi-national oil & gas company. Fluxys is a Belgium-based company involved in natural gas transmission. Total is a French multi-national energy firm. E.ON is a British integrated power & gas company, and Axpo is a Swiss-based energy utility. The TAPipeline runs through Turkey, Greece, Albania, then crosses the Adriatic Sea into Italy. The gas would originate from Azerbeidjan, specifically the the Shah Deniz II. Conclude that the European Union is willing to fight Gazprom, in an uphill struggle. See the German Nachrichten article (CLICK HERE) written in German.

◄$$$ RUSSIA SEEKS TO PRIVATIZE ICON FIRMS IN GREECE. RUSSIA WILL TAKE A MAJOR STAKE IN A RAILROAD AND GAS COMPANY. A HIDDEN ENCROACHMENT IS EVIDENT IF VIEWED WITH A PIPELINE LENS. THE CYPRUS FIREWALL HAS BEEN JUMPED BY TOURISM, COMMERCE, AND A PUSH TOWARD ACQUISITIONS. $$$

Russian investors are pursuing deals to help cash strapped Greece to privatize its economy, and to raise heaps of cash. They must pay off huge debt. Russian Railways RZD seeks to take a 100% stake in TRAINOSE (Greek Railroads). TRAINOSE transports 15 million passengers and 4.5 million tons of freight annually, and posted EUR 148.2 million in revenue. In June, it was valued at a mere EUR 30 million. Furthermore, Gazprom has renewed talks with state owned gas company DEPA. In July, Greece failed to discharge its national gas company DEPA in a sale. Russian Gazprom backed out of buying DEPA at the last minute, citing concerns over the its financial stability. The talks have resumed with the company, the price surely having softened. Russia plays a patient brand of chess, in maneuvers that eclipse the TAPipeline alternative.

Investment in Greece is a pet project for Valentina Matviyenko, the Speaker of the upper house of Russia's Parliament (called the Duma). She has traveled with a group of Russian investors looking to acquire a segment of the Greek privatization. The Greek Govt hopes to raise EUR 19 billion, in order to reduce its debt. Greece has received over EUR 240 billion since 2010 from Troika lenders (the EU Commission, the Euro Central Bank, and the Intl Monetary Fund). The Troika are vipers, agents for the big banks. With Russian investments in Greek railways, Greece would become integrated into the Eurasian transportation network. Think Eurasian Trade Zone. As ex-mayor of St Petersburg, Matviyenko seeks to facilitate further economic cooperation between Russia and Greece. They have long had close economic ties mainly through tourism. In 2012, a surprising 1.2 million Russians visited Greece. Russians are known for their lavish spending habits abroad, as Russian tourists spend on average 1000 Euros on shopping and entertainment. The two countries are working to lift travel visa restrictions. Greece is also home to a robust Russian diaspora, with nearly 300,000 Russian nationals residing in the sunny climes off the coast. See the Russia Today news article (CLICK HERE).

◄$$$ THE RUSSIAN RUBLE CURRENCY HAS MADE A DEBUT ON PAYPAL, AS EAST MEETS WEST ONLINE. PAYPAL WILL PROVIDE INTEGRITY FOR CROSS BORDER COMMERCE. $$$

The world's biggest electronic payment system PayPal has started operating in Russian Rubles, enabling internet purchases and money transfers for about a million Russians. In year 2012, the volume of transactions in the country surpassed $1 billion. As of September 17th, net surfers in Russia can now connect with the 164 million buyers and sellers online, such as from the popular eBay international auction site. Growth in the e-commerce market has arrived. The PayPal deal also gives Russians more security in their online shopping, as it acts as an insurer for eBay. In the event the seller is a fraud or the product is lost in the mail, PayPal returns money to the buyer. See the Russia Today news article (CLICK HERE). This is not a gold alternative like BitCoin, but the story demonstrates how the East is joining the global market, with connective vines. Today PayPal, tomorrow broader peer-to-peer commercial transactions, and the day after tomorrow Gold Trade Settlement.

◄$$$ A BIG SHAKEUP HAS COME TO THE DOWN JONES INDUSTRIAL INDEX LINEUP. GOLDMAN SACHS IN, VISA IN, NIKE IN, WHEREAS BANK OF AMERICA OUT, HEWLETT-PACKARD OUT, AND ALCOA OUT. THE DJIA INDEX IS A HIGHLY WATCHED AND REPORTED ANACHRONISM LOADED WITH SYMBLOLIC MEANING AND MESMERIZING POWER, BUT TOTALLY USELESS. $$$

Given the radical changes in market caps for some of the biggest US companies, a change has come again in the Dow Jones Industrial lineup of stocks. Investment bank Goldman Sachs Group, credit card company VISA, and footwear maker Nike will join the blue chip Dow Jones Industrial Average. The biggest shake-up for the 30-stock average in nearly a decade is in progress. The three companies will replace Bank of America (dead bank walking, but very active in narco money laundering), Hewlett Packard (challenged by Asian PC makers and the shift to hand held smart devices), and Alcoa (struggling in a chronic global recession). The three exiting mangey dogs have each taken big tumbles in share prices and thus market capitalization. They exert less pull on the price weighted index. The changes will be effective on September 23th. Bear in mind that very little money is indexed to the DJIA performance in investment funds, unlike the broader S&P500 which has tied to it the cash SPDR and futures contracts. Many critics consider the DJIA index's equal price weighting to be stupid, as opposed to the Dow Composite and Nasdaq Composite which are weighted by market caps. The DJIA index remains far more observed and reported, like a symbolic national financial flagship with power to captivate the sheeple. If people only knew how much it was propped by the USDept Treasury, and kept aloft by Flash Trading at Wall Street firms.

Google and Apple were considered for inclusion, along with a few other names. They were passed over because of high share prices, perhaps too volatile or sexy. Alcoa had been targeted for elimination for a long time, since its market cap of $8.5 billion is the lowest in the DJIA history. The last big change was in April 2004, when American Intl Group, Pfizer, and Verizon replaced AT&T, Eastman Kodak, and Intl Paper. A snappy analyst comment came in response. "The big (symbolic) news out of Wall Street today is this: Three of the 30 members of the Dow Jones industrial average are changing. Alcoa, Hewlett-Packard, and Bank of America are out. Nike, Visa, and Goldman Sachs are in. It is tempting to use this occasion as an opportunity to examine the symbolism of what this says about Corporate America, and the global economy. Aluminum (Alcoa) is out! Athletic wear is in! Down with plain old conventional banking! Up with fancy high finance investment banks. But in reality, it really only shows the utter uselessness of the Dow Jones Industrial Average for measuring anything. It is an accident of history that the Dow is the most widely cited measure of how the overall stock market is doing, and a bad accident."Worse, the DJIA stock index is actually regarded as a forward indicator for the USEconomy. It has been forecasting a recovery for four years incorrectly. See the Huffington Post article (CLICK HERE).

◄$$$ THE NASDAQ SHUTDOWN SIGNALS SOME BIG EVENT NEAR. EITHER A PLANNED ATTACK OR A HIGH FREQUENCY ALGO TRADE SNAFU FROM LACK OF PUBLIC PAPER INFLOWS (AKA SHEEP) IS ON THE HORIZON. MANY SUSPICIOUS REASONS COULD BE CITED. SOME KIND OF TEST WAS BEING CONDUCTED. $$$

Mysteriously, NASDAQ shut down for three hours on a recent day. CNBC went crazy, rushing to explain the normalcy perceived. Lesser known were other breakdowns, as Google, The New York Times website, the Microsoft Outlook website, and the Amazon website all went down for anywhere from five minutes to a couple of hours each. The Microsoft outage lasted for days. Consultant experts are quick to inform that all of these companies have redundant systems. The odds of all of them going down sequentially in the past several days is astronomical. When Maria Bartiromo of CNBC blurted out a question to one guest, asking if this was some sort of test, the subject was quickly changed. Events like this do not happen in a normally functioning system. In the Jackass view, it was like a cyberspace equivalent of the Boston door-to-door searches in April. Perhaps the Flash Trading algorithms went awry on NASDAQ, forcing a seizure since the system lacked sufficient dumb money from the public as lubricant fodder, called rudely 'Incoming Paper' by Wall Street heartless professionals. Perhaps some NSA sweeps were ordered for Google. Perhaps some NSA downloads were done for Microsoft. A test was conducted, either to crash the system for control purposes or to check public reaction to a market blackout. Of course, some coordinated hacking could have taken place, either by China or Langley. Their motives are identical, as in disruption.

◄$$$ THE BALTIC DRY INDEX IS MAKING A STRONG REBOUND, FOR LESS THAN CLEAR REASONS. THE SUPPLY OF SHIPS MIGHT HAVE BEEN REDUCED, BUT HIGH PROFILE BANKRUPTCIES LIE AHEAD. MANY FLEETS OF SHIPS SIT IDLE. THE PRICE RECOVERY IN THE SHIPPING PRICE INDEX IS VERY MISLEADING AND NOT INDICATIVE OF VIGOR. $$$

The Baltic Dry Index has three consecutive weeks of jumps up. It is about to make a 12-month high. Rumors abound that a large group of older vessels has been removed from fleets, thus cutting back on supply in the shipping market and firming up the its prices. The Jackass has a fun quip. Of course, plenty of ships are needed to transport all the hot money from emerging markets, pushing demand up in a compensation for all the capital destruction and global recession. Not much demand around the globe is evident. The Voice pitched in with a reminder that the entire sea shipping industry is in deep trouble. Germany and Denmark have both very substantial capacities that sit idle. Many bankruptcies of very prominent firms will soon be seen. EuroRaj pitched in also, informing that HSH Landesbank (based in Hamburg Germany) is deeply exposed in shipping loans, as are some large Scandinavian banks. In early 2012, China was busy trying to corner this market with new super-sized vessels. When the Panama Canal expansion is completed in a couple years, the new Chinese giant vessels will fit and pass through. As footnote, notice that the Baltic Dry Index has surged at the same time that the crude oil (West Texas) price has made a rather decent move from $93/barrel at end June to $110 then back toward $105. So the BDI move might be a crude oil tailwind, and nothing more.

◄$$$ PRINCE BANDAR STILL ALIVE. KING ABDULLAH STILL ALIVE. THESE REMAIN EXTREMELY IMPORTANT CLAIMS, OR QUESTIONS. THE GLUE FOR SAUDI POWER WITHIN THE REGIME IS IN THE BALANCE. EVEN IF ALIVE, A WEAKER PAIR PUTS THE SAUDI REGIME AT RISK. $$$

The indication was that Bandar had been murdered via assassination last September 2012, as retaliation for direct involvement in Assad family bombing deaths in the Syrian civil war that the US-paid mercenaries started. The indication was that Abdullah had died from widespread organ death back in March, following a serious back surgery. Many are the questions for the inquisitive Jackass mind. How many brothers does Bandar have? How many half-brothers does Bandar have? Who could replace Bandar in his security head post? Could a brother or half-brother be serving as the double for Bandar now? The report heard indicated Bandar had been murdered, but perhaps he recovered after a lengthy convalescence. Also, how many body doubles did King Abdullah have? A source indicates he has several at work regularly. The Saudis are playing a highly dangerous game, attempting to kill key leading figures in Damascus Syria with impunity. Violent intercession has a way of hitting back home. Expect more targeted reciprocities against Saudi leaders for the murder plots done to foment regime change in Syria.

Less the issue of half-brothers for Abdullah, since they are much more in the spotlight, offering challenge for position to the throne. The Saudis are famous for using old photographs to fabricate a new story for the press, the Jackass witness to a few fakes. They could have graduated to producing a double for real-life scenes and meetings. The hard part would be for the other party to keep the secret, if discovered. The Voice reported a month ago that his security contacts verified King Abdullah had indeed visited a North African nation in talks concerning Egypt. Hence, alive. Or perhaps an excellent well-versed double? A Hat Trick Letter subscriber with direct experience inside Saudi Arabia offered testimony that Bandar had actually survived the violent assassination attempt, in a very close brush with death. The details are in the next story.

◄$$$ HYPOCRISY IN SAUDI ARABIA. EXCESS FOR THE ROYALS. THE NATIVES AWARE AND ANGRY. THE REGIME IS DOOMED TO COLLAPSE. THE ROYALS ARE CERTAIN TO SCATTER WITH STOLEN WEALTH. TIME RUNNING OUT. $$$

DanielW is a Hat Trick Letter subscriber with three years recent experience as a hospital consultant in a few Saudi locations. He currently is living in the Andes region of South America enjoying the more serene life next to the jungle. Here is his personal experience shared on the nation, the royals, the tense atmosphere, and Prince Bandar.

"These Saudi devils are so devious there is no telling if Abdullah is really dead or just a desert vegetable. But certainly Abdullah is not long for this world, soon to die off, and the nation will fall apart quickly, as you forecasted. The fact that he has multiple doubles is well known in Saudi. People know the king was never going to recover from multiple defibrillations and multiple organ failure, no chance. The problem is that all of my Saudi friends from the consulting post (big city in the West) know that Abdullah holds everything together there. Most do not know this, but he used to be illiterate, could not read a word. He preferred to spend his time with the bedouins in the desert than with his backbiting family in Riyadh. He is the last in the line that has any credibility whatsoever, and all tribal factions know it. The tribes are extremely powerful in the nation, and their loyalties are first with the tribes. Without Abdullah, order will break down and everyone knows it. All have begun planning for it. As most intelligent people are aware, the whole Saudi Royal Family rule is a hoax perpetrated by the West. When they fall, chaos will ensue. These royals are barbarians who use their money to perpetrate the greatest sins against Islam, and tremendous vast thefts of natural resource wealth. Eventually, as the regime collapse grows much worse as in everyday breakdown, the Saudi family will be out of there quickly, safely removed in their palaces around the world while their people starve. They will abscond with hundreds of $billions to Los Angeles, Spain, and Switzerland. Increasingly, they are relocating to South America. Curiously, they prefer the non-Moslem nations.

I worked once at the royal hospital in a big Western Saudi city. The number of princes and princesses who showed up drunk and on exotic drugs was really impressive. In the VIP wing, a separate area of the hospital for the royals, they kept two sets of charts. One was the official medical chart and the other was a chart off the books that documented the drugs, prostitutes (inside the hospital), and other nefarious activities as they actually occurred. The nurses there had some wild stories to tell! I left because I could not stand the totalitarian state, nor the hypocrisy. It was easy to see the writing on the wall. All my Saudis friends there could see it as well. Other foreign consultants I know, with many more years of experience, hold the same view. Time is running out in Saudi Arabia, just as you have stated. The point for me, with this experience of mine, is that your Jackass analysis is spot on when it comes to the house of Saudi collapsing, and soon."

Coincidentally, Daniel was nearby when Bandar Bush was hospitalized, or so it seemed, very likely to be the real deal. His personal account follows. "Many months ago, before I left Saudi Arabia, Prince Bandar was in our hospital while everyone was saying he was dead. When I double checked on his condition, he was extremely messed up. Not sure what the problem was, but he was intubated (auto-breathing apparatus). One time Abdullah came to visit, as is the custom. We never saw such a show of force, with helicopters, special forces, the works. The comments from the locals was that the regime must really be rattled for this kind of security to be imposed. My friend from Finland was there, and he said it was complete pandemonium. It is hard to know for sure, but Bandar was supposedly in our hospital after the reports came out that he was dead. I spoke with nurses who were caring for him, and they thought it was really him. But who knows? He was in terrible condition, on life support for days. Now he is negotiating with Russia in typical Bandar fashion. So maybe he survived."

## CHINA DISTURBS GLOBAL FINANCE

◄$$$ CHINA HAS EMERGED IN INDUSTRY AND AMERICAN BUSINESS. THE ASIAN NATION IS SNATCHING AMERICAN COMPANIES IN A WILD SHOPPING SPREE. THEY MUST HAVE BEEN GIVEN A LICENSE, POSSIBLY FROM VAST USTBOND OWNERSHIP AS THREATENED WEAPON. WITH INDUSTRIAL MIGHT AND GROWTH, SO DOES MILITARY PRESENCE AND GEOPOLITICAL INFLUENCE. CHINA IS FAST BECOMING A GLOBAL LEADER. THE OMNIPRESENT DEPENDENCE UPON CHINESE PRODUCTION IS ON THE RISE. $$$

Accumulated wealth has a privilege of shopping for businesses. With $trillions of dollars in hand, the Chinese are only beginning to exercise their economic muscle. The United States is full of ailing struggling companies seeking a buyout or a partner. In the future China will employ millions of American workers and dominate thousands of small communities all over the United States. In fact, Chinese acquisition of US businesses set an historical record last year. The buyouts are on pace to shatter that record this year. A distinction should be noted. Often not much difference can be detected between the Chinese Govt and some major Chinese corporations. In 2011, a ripe 43% of all profits in China were produced by companies in which their own Chinese Govt had a controlling interest. The Chinese Army Corp is well known to fabricate counterfeit Microsoft software, other brand software, movies, books, and music with no copyright fees paid.

Consider the Smithfield Foods acquisition. It is the largest pork producer and processor in the world, with facilities in 26 US states, employing tens of thousands of Americans.  It directly owns 460 farms and has supply contracts with 2100 others. A Chinese company has bought Smithfield Foods for $ 4.7 billion. Henceforth, the Chinese will become the most important employer in dozens of rural communities all over America. They can redirect pork packaged output to China if they decide to do so. Last year a Chinese company acquired AMC Entertainment for $2.6 billion to purchase. It is one of the largest movie theater chains in the United States. Now the Chinese company controls more movie ticket sales than anyone else in the world. They can block certain themes in movies if they decide to do so. In addition to acquisitions, China is creating what Michael Snyder calls economic beachheads to expand its economic power. For example, Golden Dragon Precise Copper Tube Group recently broke ground for construction of a $100 million plant in Thomasville Alabama. Many local residents will be happy to have jobs. One more community to become heavily dependent on the Chinese juggernaut.

China has kept focus in acquiring energy resources in the United States, to complement their global strategy, in particular in Africa. For example, China is actively involved in coal mining in the mountains of Tennessee. Guizhou Gouchuang Energy Holdings Group spent $616 million to acquire Triple H Coal in Jacksboro Tennessee. At inception, not much news. But suddenly a movement in Tennessee is trying to halt the Chinese demolition of their mountains for removal of coal. The scattered Chinese companies have set their sights on Detroit, where they are investing in American businesses and new vehicle technology. They are selling an assorted list from seat belts to shock absorbers in retail stores. They are even hiring experienced engineers and designers in an effort to grab the talent and expertise of domestic automakers and their suppliers. If you recently purchased an American-made vehicle, expect it to contain many Chinese parts inside it. In the 1990 decade, the trend was for Japanese components. A transition is in progress. Industry analysts struggle to estimate how many Chinese suppliers operate in the United States.

The trade and commercial data behind China is impressive, if not staggering, and supports the claim that a new superpower has emerged. In fact, as industrial might rises, so does military presence and geopolitical clout. As the US industrial might has fallen, its military might will be reduced and geopolitical strength challenged in ways never seen before. The USGovt is already being challenged for lies about the Iraq War, the Syrian conflict, and about 911 from both Russia & China. Watch the Snowden files be released to fortify the challenge, using US official sources, not propaganda.

On the basis of import and export volume, China is the #1 trading nation in the world. The US trade deficit over the past decade with China has reached $2.3 trillion. China is in possession of more foreign currency reserves than any other nation. China has the largest new car market in the entire world, and produces twice as many automobiles versus the United States. After being bailed out by the USGovt, General Motors finds itself involved in eleven joint ventures with Chinese companies. China is the #1 gold producer in the world. China is in aggregate the leading manufacturer of goods in the entire world. China consumes more energy consumer than the United States. Amazingly, China uses more cement than the rest of the world combined. China is the #1 producer of wind and solar power in the world. China produces three times as much coal and eleven times as much steel than the United States. China produces more than 90% of the global supply of rare earth elements, critical for cell phones, green energy installations, even missiles. In fact, China is the #1 supplier of components critical to the operation of national defense systems. In a matter of a year, China is expected to become #1 in published scientific research articles. Some nasty strange data as footnotes. The uniforms for the 2012 US Summer Olympic team were made in China. Of the artificial Christmas trees, China produces 85% of those sold the world over. And in celebration of 911, the new World Trade Center tower in New York is to include glass imported from China. Thanks to Michael Snyder for an excellent review.

◄$$$ RUSSIA ANNOUNCED PLANS TO SELL CRUDE OIL IN YUAN CURRENCY TO CHINA, ALL IT WANTS, ALL IT NEEDS. THE STORY IS A LITTLE CONFUSING SINCE IT MENTIONS CHINESE OIL SALES. THE HINTED NEW DEVELOPMENT (A BIG ONE) IS THAT CHINA WILL SET UP A YUAN PAYMENT SYSTEM FOR CRUDE OIL SALES BY THIRD PARTIES, IN WHAT WOULD BE A DIRECT CHALLENGE TO THE USDOLLAR. THE KEY QUESTION IS WHETHER ON A GLOBAL BASIS, CHINA WILL PAY FOR PURCHASED CRUDE OIL IN YUAN CURRENCY, LIKE WITH SAUDI ARABIA, IRAN, AND OTHER PERSIAN GULF OIL SUPPLIERS. $$$

China does not sell crude oil. It does produce oil, but consumes all it produces. In fact, the Middle Kingdom is a massive net oil importer. On a giant scale, it buys oil on the world market. The graphic below shows all the nations that supply China, dominated by Persian Gulf nations. The news story headline is misleading, as though China will alter the Petro-Dollar standard by selling gobs of crude oil in Yuan currency. Step back and review the facts. China has net oil imports of around 6 million barrels per day. By next year it will surpass the United States in net importation. China therefore pays for oil, and does not sell oil. The jist of the news story is that China will pay Russia in Yuan currency for crude oil purchases. The bigger question is whether China will pay Iran and the Persian Gulf pillars like Saudi Arabia and Oman in Yuan currency. The Jackass belief is emphatically yes for Saudi oil and probably yes for Omani oil. Doing so would and will change the geopolitical dynamics of the Gulf region, giving the United States a firm message that China challenges the USDollar in billboard terms.

The Russia & China oil payment deal must be taken in context. China imports 50% more oil from Venezuela than Russia, and over 150% more oil from the Saudis than Russia. Its oil import from Angola (never in the news) is as great as from Venezuela. Until the vast oil pipelines are completed in the next two to three years, the Russians will remain a small-time oil supplier to China. The biggest question is whether China will distribute Yuan currency to Saudi, Iran, Venezuela, Angola, Oman, and Sudan. Expect they will do exactly that, and challenge the Petro-Dollar in their own bilateral trade contract agreeements. Curiously, China has twin motives. They wish to break the global practice of using USDollars in kneejerk manner for oil payments. But they also wish to dump their USTreasury Bonds in larger volume. They will dump plenty of USTBonds in payment, when the Russian pipelines are finished and flowing. Perhaps they are eagerly awaiting the opportunity to dump the USTBonds directly for Gold bullion. They might be waiting to use the BRICS Bank for exactly that purpose. The unclear implication or hinted indication is that China will facilitate oil sales completed in Yuan currency, in transactions conducted by third parties. This would be truly significant and a call to arms against the USDollar. Time will tell to clarify such a disruptive extra feature. See the Examiner article (CLICK HERE).

Bill Holter added some perspective, but misses that China is a big oil purchaser with an array of foreign supplying nations. He wrote, "One other backdrop which has gotten almost no Western press at all is the energy deal recently concluded between Russia and China. In fact, I did not hear anything about this deal last week at all. It purportedly occurred on Sept 6th. Basically, Russia is offering as much energy as China needs, while China has logistically set up a payments system that would allow oil and gas to be purchased using Yuan as payment. This has HUGE ramifications as potential demand of Persian Gulf oil could diminish and demand for USDollars will definitely drop, at a time that demand is already dropping as illustrated yesterday by the TIC report showing the fourth month in a row of capital outflows." The comment does not factor in the July TIC data, which showed a rise, the first in a long spell. The conclusion that Holter adds is that China might begin to purchase less crude oil from the Saudis and Oman, if Russia ramps up the supply line. Such a diversion would reduce the USDollars that flow into the Persian Gulf. A rampup will be difficult. Without completed pipelines, they will need sherpas and yaks to transport it to Chinese destinations. The region lacks railways and even good highways.

For more completeness, check out the graphic on Chinese oil production. They had about 4000 barrels per day in production in year 2010, with some growth trend showing. Hard data is hard to come by. The biggest growth has been in off-shore output, up 121% from 2004 to 2010. The conflicts over islands is both for ocean passageways and off-shore energy rights. See the China Oil Trader website (CLICK HERE)

## MAJOR CRACKS IN GOLD FORTRESS

◄$$$ ANDREW MAGUIRE DESCRIBED IN SEQUENTIAL DETAIL HOW THE COMEX AND LBMA ARE GRADUALLY WORKING TOWARD A GOLD CASH MARKET. THE BULLION BANKS ARE THE PREDOMINANT SUPPLIER TO THE MARKET, BUT THEY ARE BEING DRAINED. THE BUYERS APPRECIATE THE DISCOUNTED PRICE AT THE COMEX WINDOW. CENTRAL BANKS ARE NO LONGER PUTTING UP GOLD IN SUPPLY. PRESSURE IS ENTIRELY ON BULLION BANKS. EVENTUALLY THE GUARANTEE GIVEN BY CENTRAL BANKS TO THE BULLION BANKS WILL BE RENEGED UPON, AND FINALLY SETTLED IN CASH. THOSE WITH BULLION BANK ACCOUNTS WILL BE FORCIBLY REDEEMED. THEN THE GOLD PRICE WILL GO BALLISTIC UPWARD, AS THE COMEX IS UNMASKED AS EMPTY IN ITS GOLD INVENTORY. $$$

Several months ago, Anne Barnhardt provided the internal dynamics for the gold futures market to lose its integrity in the wake of MF-Global. London metals trader Andrew Maguire has provided a crystal clear update on how the USFed, the London Bullion Market Assn, the COMEX, and the bullion banks are on the edge of disaster. A transition is late in the breakdown stages for a COMEX conversion into a cash market. The central banks are no longer providing gold supply. The pressure is acute on bullion banks, those private institutions where the ultra-wealthy store gold bullion in private accounts and vast wealth is stored in inventory to meet market requirements. These bullion banks have been lending central banks gold, with lease markers which will very soon be reneged upon, settled in cash. A veritable daisy chain is about to break in full view, the evidence of tremendous strain being the 85-cent backwardation in the Gold contract column. The corrupt link in the chain described by Maguire is that the bullion banks might be taking Allocated Gold Account bars to provide to the COMEX via the central bank intermediaries. If so, the ultra-wealthy will attack the COMEX officials with their own private armies and large men wearing black suits, fitting no identifiable description. The starting gun for the Gold stampede is weeks or a couple months away. It is physical shortage and criminal fraud on private accounts that will pull the trigger. See the King World News interview (CLICK HERE) dated September 16th. Here is the long quote by Maguire, best absorbed in full.

"The downside for the central banks is that short-term interventions have further emptied the physical vaults (once) again. It is coming out of unallocated bullion bank inventories (at the COMEX). The central banks may be leasing out gold, but it is not leaving their vaults (at this time). The liability rests on a daisy chain of bullion banks. So it will be the bullion banks who are going to be cash settled by the central banks, leaving physical buyers on the sidelines.

The Fed is so desperate to defend the USDollar against gold in the foreign exchange markets, that we are moving ever closer to an inevitable LBMA default, with a cash bailout of the bullion banks. Wholesale demand in London remains well over elevated [historic levels]. It has been in sovereign size this week. Any dip under $1300 would again bring in large central bank buying. The paper market discounting may have bought the Fed a little time, and allowed the bullion banks to get further net long in the futures markets, but it has exacerbated the physical tightness. On two days this week, we saw cash gold trading 85 cents in backwardation to December. That says it all to me.

In the foreign exchange gold markets, it is essentially being used by the Fed and the Bank for Intl Settlements (BIS) as a way of propping up the USDollar. The result of that is, of course, discounted gold prices. People turning up at the London Fix and saying, 'THANK YOU VERY MUCH, I WILL TAKE THAT PHYSICAL GOLD AT THIS DISCOUNTED PRICE.' Of course that is a problem. But as I also mentioned, there is no physical actually leaving these central banks anymore. Whereas before, some years ago, we used to actually see physical metal that was leased coming into the marketplace to be sold by the bullion banks. Now, what the bullion banks are doing is taking a paper shuffle. They are getting a guarantee from the central banks to take physical gold out of their unallocated accounts, which are already stretched to the limit. They have to provide that into the physical marketplace in order to meet demand.

We do get the Bank of England fly wheeling any shortfalls in physical delivery on a day-to-day basis. But obviously this is all, ultimately, falling on the bullion banks. That is why it is going to result in a cash settlement. What is going to happen is the central banks will turn around one morning, or evening, and say, 'THAT IS IT, WE ARE GOING TO SETTLE THE BULLION BANKS FOR CASH.' It is just an electronic keystroke. What does it cost, a few billion dollars to bail them out on a cash basis? What it will mean is anyone sitting with what they think is physical gold in an account is going to wake up the next morning, having been cash settled the night before, as the bullion banks will have been settled on that basis. It will not even be called a default because technically the bullion banks can settle for cash. Then gold will take off and gold will gap up $100 or $200 or more."

◄$$$ THE SPDR GOLD TRUST (GLD EXCHANGE TRADED FUND) HAS OPENLY DENIED INVESTORS THEIR GOLD TOWARD METAL REDEMPTIONS, EVEN IF QUALIFIED. OBSERVE THE SMOKING GUN. THE COMEX IS BEING SUPPLIED ON A DEDICATED EXCLUSIVE BASIS BY THE CORRUPT GLD FUND. THE CONTRACT CLAIMS VERSUS THE WAREHOUSE INVENTORY IS AT 55:1 RATIO. ALL MAIN MOVING PARTS TO THE COMEX MACHINERY ARE BROKEN AND EXPOSED. $$$

Grant Williams is portfolio manager of the Vulpes Precious Metals Fund, out of Singapore. He described in clear terms the extreme leverage in the gold market, and the blatant raids on the SPDR Gold Trust, also known as the GLD exchange traded fund. The GLD fund is being exposed as the dedicated COMEX supplier, the removals on a daily basis at GLD inventories almost exactly equaling the infusion to COMEX inventories to meet delivery demands. The latest scandalous news is that qualified investors meeting all contract requirements in the GLD fund are denied access to their accounts via redemption, despite the contract stipulation. That is how desperate the COMEX is, outright fraud in the open with contract violations for GLD accounts. At the same time, the COMEX denies delivery to gold futures contract holders, more contract violations. Both sides COMEX & GLD Fund are in egregious contract violation. Something will break very soon, such as well-heeled teams of attorneys filing landmark lawsuits with great publicity. See the King World News interview (CLICK HERE) of Grant Williams, whose statement follows.

"We are up around 55 now, [on the physical claims per ounce of gold that exists]. We have seen the gold being drained out of the COMEX almost non-stop this year, certainly since the Bundesbank repatriation request. So to see the claims mounting is no real surprise. It has not had any noticeable effect just yet, but it really is a spring that is continually being coiled. At some point it is going to snap back. When it does, with all of these disparate claims on each ounce of gold, there is going to be some fireworks [in the Gold price], no doubt about it. It is tough to see how this is going to gradually work its way back to normal. It is hard to see big piles of gold come creeping slowly back into these COMEX warehouses, and thereby alleviating the situation. There are a lot of people that are not going to get their gold." See the graphic for fast decline in COMEX gold inventory, against fast rising COMEX gold contract claims. A breaking point is near.

Williams continued. "The Exchange Traded Fund is the preferred vehicle for most casual investors investors in gold. They like to buy the ETF, believing it is as good as owning gold, but unfortunately, when push comes to shove, it really is not. The mechanism of the way the ETF works means that unless you own it in significant quantities, you do not have anything like a claim on the real underlying asset. There are even stories about plenty of people who have actually tried to take significant amounts of ETF shares and exchange them for the physical metal, and been told that they cannot have the gold. Yes, investors are being turned down [on redemption of gold at the GLD Fund]. The minimum basket of shares you need now is roughly $14 million worth. I have certainly heard stories of people who have taken that kind of size redemption requests to the custodians, and been told that they cannot have the gold."

◄$$$ PETER LASSONDE EXPECTS THE GOLD PRICE TO GO BALLISTIC, SINCE THE EUROPEAN ECONOMIES ARE IN FAST DECLINE. THEIR GOVERNMENT DEFICITS ARE OUT OF CONTROL. THE BOND MARKETS WILL EVENTUALLY TURN HOSTILE FOR FUNDING THE DEFICITS. THEN GOLD WILL CATCH UP TO THE EXPANSION OF MONEY. $$$

Pierre Lassonde is one the greatest company builders in the history of the mining sector. He is former President of Newmont Mining, past Chairman of the World Gold Council, and current Chairman of Franco Nevada. Lassonde is one of the wealthiest and most respected individuals in the gold world. He believes the Gold & Silver prices will go ballistic, after the European Bond market shuts the door on the governments seeking to finance their debt.

Lassonde said, "Europe was a bit of an eye-opener for me this summer because everywhere I went, Spain, Poland, England, and France, I asked the shop owners and the taxi drivers, 'HOW IS BUSINESS?' This was just to get a feel for what is going on." What he heard was uniformly negative, with the downward trajectory accelerating in every place he visited. He expects that France, Spain, and Italy are far too big to bail out. They will be turned down by the bond market. A wall will be hit. We are close to the big events.

Lassonde concluded, "At some point in the next two years, you are going to have major, major issues. Their bond markets are going to back up big time. They are going to say to these countries, 'ENOUGH IS ENOUGH. WE ARE NOT LENDING [YOU MONEY] ANY MORE.' Then what are they going to do? If the Germans decide not to devalue, are they just going to go bankrupt? The more I see what is going on in Europe, the more I like Gold. That is the bottom line. At the end of the day, when you look at the money printing being done around the world (about 15%+ per year versus the growth in the physical gold asset which is about 1.5% per year) you have to think that over a period of 5 to 10 years, it is going to catch up with the Gold price big time. That is why I like gold." Rest assured, that the payoff will come far less than five more years. All systems are breaking. New platforms are being constructed. Motivation in the East has never been greater. See the King World News interview (CLICK HERE).

◄$$$ A CANADIAN BILLIONAIRE PREDICTS THE END OF THE DOLLAR AS RESERVE CURRENCY. HE WARNS IT WILL GET UGLY, AS THE WORLD REJECTS THE USDOLLAR. HE FIND THE CURRENT FINANCIAL CRISIS INTRACTIBLE, WITH NO SOLUTIONS ON THE TABLE, EITHER IN THE UNITED STATES OR EUROPE. HE POINTS OUT HOW EVERY SINGLE MAJOR NATION IS PRINTING MONEY TO DEAL WITH THE PROBLEM, WHICH IS NO SOLUTION AT ALL. IT WILL EVENTUALLY CAUSE HORRENDOUS PRICE INFLATION, THE HEDGE FOR WHICH IS HARD ASSETS, IN PARTICULAR GOLD. $$$

Canadian billionaire Ned Goodman offered a history lesson. Back in the 1970s, Kissinger and Nixon forced the creation of the USD as the world's defacto reserve currency through oil, in a complicated deal with the Saudis. They accepted only USDollars in payment, and they recycled surpluses into USTreasury Bonds. The Petro-Dollar defacto standard was born. Goodman finds the present course as unsustainable, whereby the rest of the world will turn its back on the USDollar. With China & Russia agreeing on non-USD swap terms for energy, followed by other nations, the giant cracks in the Petro-Dollar foundation are starting to show. He sees intractible problems and never ending crisis. He urges protection from price inflation which will eventually arrive with a slam, and with unclear ferocity. Goodman suggests an investment strategy should be a pre-emptive strike against that risk. Buying hard assets is crucial as we head into a period of stagflation or even high inflation.

"In the 1930s, everyone wanted USDollars, backed by silver. The world is totally upside down right now. It is completely crazy. I am keen on anything that is going to live with higher inflationary numbers, because I cannot see the world getting out of the problems that it is in. I am more bullish on gold now than I have ever been. The world is totally upside down right now. It is completely crazy. I do not know of another time when every country in the world was printing money. I do not wait for inflation. It is hard to call. But it is impossible for me to see the US getting out of trouble without printing more money. It is also impossible to see how Europe survives in the form that it is in. You look around the world and you say: 'WE ARE GOING TO HAVE TO HAVE SOME INFLATION.' I want to own assets that are inflation proof. Miners of precious metals are dirt cheap. I am on anything that is going to live with higher inflationary numbers, because I cannot see the world getting out of the problems that it is in." Although repetitive, his message is clear. The problems are too difficult to solve within the current framework and more importantly, within the current mindset that brings bogus solutions to the table. Price inflation will not arrive from money printing. It will arrive from USDollar rejection. See the Zero Hedge article (CLICK HERE) and the Business Financial Post article (CLICK HERE).

◄$$$ GOLD IN RUPEES HAS REPEATEDLY BEEN MAKING NEW ALL-TIME HIGHS. IT IS THE TRUE INFLATION HEDGE, OR BETTER DESCRIBED, THE TRUE CURRENCY DEBASEMENT HEDGE. $$$

The illiterate indian farmer has trumped the bankers through centuries and will continue to do so again and again. True wealth is preserved and transferred only via Gold. The lesson is as old as the hills. No amount of Indian Govt obstruction, rules changes, or import taxes can stop the upward price movement in Gold as denominated in Indian Rupee currency. The American klutzes thought their homes were the perfect inflation hedge. Not so, as home equity has evaporated. The true hedge is Gold, always has been Gold, and always will be Gold. See the Zero Hedge article (CLICK HERE).

◄$$$ THE GERMAN GOLD ACCOUNT IN NEW YORK REMAINS A STERN FOCUS OF ATTENTION. IT IS A MAGNIFICENT FRAUD ABOUT TO BE EXPOSED AND BLOWN WIDE OPEN. THE GOLD MARKET IS COLLAPSING IN YEAR 2013, FOLLOWING THE GERMAN REPATRIATION DEMAND. THE GERMANS STARTED THE COURSE THAT HAS RESULTED IN EXTREME DISTRESS, OPEN CONTRACT FRAUD, AND VACANT VAULTS. THE TURNING POINT WILL LEAD TO A COMEX DEFAULT AND SHUTDOWN FOR GOLD TRADE. $$$

The world is losing trust in the USDollar as a safe haven, the USTreasury Bond being dumped openly. A major turning point occurred after Germany's Bundesbank demanded the repatriation of a large portion of its official gold account held at the New York Fed. Many nations are concerned that assets in official allocated accounts at the New York Fed are not secure or have been vacated through unauthorized leasing. The Germans were infuriated when the USFed guards did not permit a delegation from the German Parliament to examine their own assets properly in September 2012. Peter Boehringer, the founder and chairman of German Precious Metal Assn, has led a movement that supports the gold repatriation. See the YouTube video (CLICK HERE) for this historical turning point event.

◄$$$ PRIVATE ASIAN GOLD VAULTS ARE UNDER CONSTRUCTION. THE ASIAN LOCATIONS HAVE BEEN PREPARED FOR TWO YEARS. THEY MUST BE IN A POSITION TO SECURELY HOLD A TREMENDOUS VOLUME OF GOLD IN THE BIGGEST WEALTH TRANSFER IN HUMAN HISTORY. $$$

The reference is dated in February 2012, but the information validates much of the recent news about truly vast quantities of metal moving to Asia. The movement coincides with the construction and opening of new vaults. The wealthy cannot buy physical gold bars it if they cannot store them securely. Several new vault facilities are opening for business. The private vault services would not build these vaults if they did not have a few parties pushing them to do it, guaranteeing them large bullion deposits. Their construction confirms the flow of metal from the West to the East. To be sure, no entities are building this magnitude of capacity in North America. The message is clear. Wealth is moving from West to East, the largest transfer of wealth in human history. Banks are not trusted to hold great assets, as these are privately run vaults. The very wealthy might have been waiting for these vaults to be built, in order to make huge physical purchases. All the vaults are not yet completely constructed in Asia. The gold purchases in the near future will drive prices through the roof when these vaults are completed. As footnote, the Hong Kong Airport vault capacity is around ten times what the press reports. Expect Hong Kong to become a giant global banking center with vast gold trade. See the Bloomberg article from early 2012 (CLICK HERE).

## COMEX GOLD DEFAULT NEARS

◄$$$ COMEX IS A DEFAULT RISK AS GOLD INVENTORIES HAVE PLUMMETED 36%. THE RISK IS RISING FOR A RAID BY FOREIGN ENTITIES, INCULDING FOREIGN CENTRAL BANKS. THE POTENTIAL EXISTS FOR MANY TYPES OF ASSAULTS ON THE GOLD PRICE TO LIFT IT SHARPLY. $$$

Pressures remain acute while backwardation in the Gold price continues, against a backdrop of plummeting COMEX inventories. The possibility of a COMEX default cannot be ruled out. If sovereign central banks decide to ramp up Gold reserves toward currency fortification, as in possible capital allocations, then the official market inventory will be grossly inadequate. The sharp decline suffered in emerging market currencies in recent weeks will lead to an eventual increase in central bank demand for gold. Nations of the world must buttress and support devaluing paper currencies, then prepare for Gold Trade Settlement. COMEX gold inventories are down from 11.059 million ounces at the start of the year to 665 thousand ounces at recent count. The current inventory is worth just over $9 billion at current prices. A raid by a group of billionaire hands or a single powerful creditor nation state with large foreign exchange reserves could corner the COMEX gold market and cause a default. Russia might conduct such a secret raid, perhaps with China in league. As of June, together the two superpowers hold $4.0 trillion in FOREX reserves, China holding seven times as much between the duo. By comparison, Japan owns $1.19 trillion in reserves, by end July. The potential for a nasty raid to slam the vile Anglo bankers is a real and growing possibility.

Three possibilities arise. The first is a bold raid executed by the Asian powers, who no longer tolerate New York and London corruption in matters of banking and currencies and bonds. They could corner the bullion markets by demanding delivery, to break the tight deadly grip maintained by COMEX and LBMA. The second is a formal diversification plan for several national banking systems, primarily the G-20 nations led by the BRICS nations, away from USTreasury Bonds and toward Gold bullion in order to stabilize their banks and shore up their sagging domestic currencies. The third is an announced conversion of USTreasury Bonds to Gold bullion by the BRICS Bank, to begin the infrastructure projects, to assure the emergency funds devoted to dealing with crises, and to pave the way for Gold Trade Settlement. The conversion could be justified as requirement for future stability for BRICS nations in the face of a persistent sovereign bond crisis with unfettered deficits. They already have a hot money exodus problem. Any of these routes could produce a massive market short squeeze that pushes the Gold price to $2500/oz and Silver price to $140/oz. These are the calculated inflation adjusted high marks by certain parties with an eye on recent history. See the Zero Hedge article (CLICK HERE).

◄$$$ NEW PROPAGANDA IS FABRICATED AGAINST GOLD, REGULARLY TOLD, EASILY DISMISSED. THE POPULACE IS BEGINNING TO COMPREHEND THE NATURE OF THE ENDLESS SELF-SERVING FINANCIAL PROPAGANDA. $$$

Many are the propaganda misleading messages about Gold. To contradict them is easy as pie. Gold does not need to pay a yield, since it is money that does not suffer devaluation from debt writedowns. Besides, futures contract option call writing does produce an income but puts the metal position at risk of being called away, but at a desirable higher price (not a punitive low price like at COMEX). Furthermore, the argument of not paying a yield should be more emphasized on the flagship USTreasury Bills of short-term and mid-term maturities. The ultra-low USTreasury yields are an embarrassment. The latest klaptrapp is that the relaxation of Syrian tensions takes away the Gold bid. What nonsense! The hidden war motive is to prevent the gas pipelines from killing the USDollar as a consequence from sharply lower future energy trade settlement in USDollars. A sunset on the Petro-Dollar would lift the Gold price by double or triple. The Syrian pipeline port has the potential to strangle the Petro-Dollar and to introduce the NatGas Coop that eclipses OPEC (a tired body of weak partners and utter liars). Many other factors will push up gold, but the above are bold deceptions recently promulgated.

◄$$$ COMEX REGISTERED GOLD CONTINUES TO PLUMMET, DOWN TO 665K OZ GOLD. MEMBERS MUST DISTRUST JPMORGUEN DEEPLY. THEY ARE EITHER REMOVING THEIR ELIGIBLE GOLD, OR REFUSING TO PUT IT AMONG THE REGISTERED STOCK. PRESSURES FOR A DEFAULT ARE RISING EVERY MONTH WITHOUT RESPITE. $$$

The data continues to be shocking on the COMEX gold drainage. The inventory was 2.25 million oz at the beginning of year 2013. It fluctuated around 2.7 million oz early in early 2013, with a move toward 3.0 moz in the early months of the year. Then after the highly controversial and deeply destabilizing events of April, the gold inventory levels have fallen severely. Refer to the COMEX Registered Warehouse gold in their official vaults. By Registered is meant available to meet delivery, in full satisfaction of strict requirements for form, weight, and purity. The present level of 0.665 moz marked on September 10th means a 77 to 78% decline has occurred this year. Bear in mind that the declines occurred following the German Govt repatriation request. The plummet is a major wake-up call for a COMEX default, or whatever they call a forced cash redemption to bullion bank suppliers. They are being drained and lied to, holding a fistfull of gold certificates that are in the process of being forcibly redeemed at cash.

◄$$$ SCOTIA MOCATTA MADE A DREADFUL DECISION SEVERAL MONTHS AGO TO PROVIDE ITS GOLD TO THE COMEX MARKET FOR SATISFACTION OF DELIVERIES. IT WILL BE OFFERED TO THE SATANIC ALTAR OF WALL STREET BANKERS. THE EAGER SUSPECT MIGHT WONDER IF THE BULLION BANK IS SETTING A TRAP FOR JPMORGUEN AND THE COMEX IT WORKS WITH. $$$

One must wonder what threat Scotia Mocatta received in order to make available its ample gold supply to the COMEX for vaporization. Perhaps a bribe to its executives. Maybe a threat to render violence. Their partnership assures the once venerable bullion bank will die with the rest as a result. Scotia Mocatta is considered the most dominant bullion bank in Canada, acquired by Bank of Nova Scotia in 1997. Perhaps the BNS crew might exact some revenge on JPM with revelations on their activity, once they are a more integral part of the operations. Perhaps they will assist in some clients to file lawsuits or press for prosecution at a later date for contract fraud. Time will tell, since Mocatta once was extremely highly regarded. Some informed Canadian friends told me a few years ago that Mocatta would never hook up with the New York bankers. They did, with full commitment. Another very informed colleague with former Wall Street firm experience pitched in. He claims these bankers are all part of a vile cabal, and occasionally a family member is called upon to play a required role, even if a painful demand. They might possibly be deeper involved with Barrick and a host of other mining firms, with huge loans related to gold & silver output, among other items. Refer to the dubious Evergreen contracts, where Barrick sold gold contracts with no legal requirement to supply the bullion metal in future years. Think pure price suppression.

The Voice added some details, with some unexpected hunting analogies. He wrote, "The Gold & Silver owned by the Bank of Nova Scotia will be taken away from them with a push of only one button, or better the squeeze of one trigger. When hunting big game you never approach the animal once you fired your shot, even if you see the beast having gone down once having receive the shot. You remain in waiting at a safe distance until you can be safe that the blood has filled the beast's lungs, totally incapacitating it. That can take hours. If you approach the beast too early, it could rise up and engage in a death struggle that sets free forces that no one can control. Hunting is an art only a very few really master, and pulling the trigger at the right time takes nerves of steel. There is no room for error, since errors on that level can be fatal. There are old and bold hunters. But there are no old bold hunters. An incredibly smart and intelligent apprentice is working with me in training to learn the skills of this kind of hunting. He constantly asks me 'WHY DON'T YOU PULL THE TRIGGER NOW'. Once I do pull the trigger, he will know why that was the perfect moment for the perfect shot. As a hunter, you will never want to become the hunted. Those who pull such triggers must be careful not to become the hunted. There is a 2001 movie called "Enemy at the Gates" with Jude Law and Ed Harris. Its about a Russian sharpshooter and a German sharpshooter pitted against each other in Stalingrad. The final scene is very telling." The hunted became the hunter and won.

In the case of hunting the bank cartel, the disabled bankers being hunted must be permitted to feel their wounds, and let the deep damage set in, apparently for a few years. Time is taking a horrible toll on them. They have turned against each other, all of them, which cannot be reported in the press, and which is difficult to discern from alternative sources.

◄$$$ THE SUPPLY LINE FOR THE SHANGHAI GOLD EXCHANGE (SGE) IS A SUSTAINED MYSTERY. ONE CAN ONLY SPECULATE AS TO ITS MANY SOURCES. SOME US-BASED BILLIONAIRES MIGHT BE FORCED TO COUGH UP GOLD, FINDING ITS WAY TO SHANGHAI. THE SGE SHOWS EXTREMELY BRISK MOVEMENT OF GOLD, UNLIKE THE PAPER MACHE NEW YORK MILLS. WATCH AS SHANGHAI EMERGES AS A COMPLETE BANKING CENTER FOR THE NEXT CHAPTER DIRECTED BY GOLD TRADE SETTLEMENT. COMEX BY CONTRAST WILL BECOME A CASH & CARRY MARKET. $$$

Gold Delivery data shows movement at the Shanghai Gold Exchange vaults has been brisk, the contract delivery being the norm much more so than in New York or London where paper rules in the rollover of futures contracts. The latest report shows still considerable gold in movement off the ramps. The gold delivered for week ending September 6th had a total of 46.5 tons. The cumulative deliveries for 2013 come to 1545.8 tons. This is a grand eclipse of the COMEX, the paper fraud factory, the tail that controls the golden dog. Not for much longer. See the Gold Miner Pulse article (CLICK HERE) and the Bloomberg article (CLICK HERE).

EuroRaj provided his conjecture on the source of the Shanghai Gold Exchange, for its gold supply. It is doing a brisk business. It is moving a lot of gold bars. His experience with India, Turkey, and Iran sheds some light on Shanghai. He believes their gold sources have multiple avenues that include 1) Mine supply, 2) Scrap and jewelry from the developed world (US, UK, PIIGS of Southern Europe), 3) Unallocated gold accounts and Exchange Traded Funds, 4) Fraudulent seizures possibly from Allocated Gold accounts, 5) People like Buffett, Gates, and other connected (compromised) US billionaires being forced to sell at the fringe. They are the people who are forced to step in to keep the charade going, invited by the syndicate to do their part in return for past favors. Buffet sold his soul to the devils in numerous instances, like providing HSBC with the 130 million oz silver hoard to launch the SLV ETFund, like buying a position in Goldman Sachs at a low point, like denigrating gold regularly. Gates is a snake who makes the Windows operating system easy for the NSA to plant gateways (pun here) for hacking. Gates has earned his bones with the genocide crowd at the banker cabal by funding research for a special killer virus that enters the human body through the sweat glands, a unique bioweapon. It is being tested in Africa. The source of information was my USMilitary guy with USGovt security agency connections. The Fort Dietrich Bioweapons Lab is a fertile site for killer viruses.

If Shanghai has to claim its role as a top tier trade and finance oriented center like New York City or London, it has a prime requisite to serve as the major Gold trading center as well. The Chinese and Hong Kong partners are laying the foundation of this maturation via the Shanghai Gold exchange. The evolution of Shanghai makes sense in the new context of gold trade settlement. The complete HK model for banks, refineries, vaulting services, intermediary functions, and more might provide the model that must be copied by other nations (major trade partners) in order to participate in trade in the next chapter. It will be exciting to watch as it emerges, with regular ambushes, disruptions, threats, and even feigned wars. For a good review of the Shanghai Free Trade Zone and comparisons to Hong Kong, along with foreign direct investment, see the Asia Times article (CLICK HERE). For an interesting article on local color concerning Shanghai gold, see the Cafe Americain article by Jesse (CLICK HERE).

◄$$$ SHANGHAI HAS ECLIPSED NEW YORK IN GOLD DELIVERY, TO THE POINT THAT NEW YORK IS AN EMBARRASSMENT. THE UNITED STATES BANKERS DO NOT DEAL IN GOLD. THEY DEAL IN CONTRACTS THAT ARE EASY INSTRUMENTS OF FRAUD. THE INFLUENCE OF CHINA ON THE GOLD PRICE IS COMING INTO VIEW THROUGH THE SHANGHAI SITE, WHERE GOLD CONTRACT DELIVERY IS THE NORM, NOT EXCEPTION. $$$

A display of actual quantities of delivered physical gold from contracts based at the COMEX versus the Shanghai Gold Exchange (SGE) reveals the massive fraud, upside down paper market, and dying influence of the New York criminal crowd. The chart is just for year 2013, when Shanghai was ramping up. The SGE is making formal secure deliveries at over nine times the COMEX volume on average in 2013. The principal source of gold supply is from Hong Kong imports. Already this year, China has exceeded its total take in 2011, which was a robust 430.61 metric tons. Based upon annual gold mined in China and their imports (from Hong Kong alone), over 7000 metric tons of gold now securely sit in China. Much of the total gold implicitly backs the Chinese Yuan, supports faith in the Chinese financial system, enables effective bank rescues, and will pave the way for a gold-backed Yuan currency. In March, the Peoples Bank of China reminded the world that its plans to increase gold reserves will elevate gold prices, a tease statement. The Chinese Govt actively supports the public purchase of gold (and savings) since it improves the nation's security from the ground up. They save in gold. They spend in Yuan. As time passes, the dominance of the Shanghai Gold Exchange will drive out the hooligans and fraud kings from the COMEX temple. See the Gold Silver article (CLICK HERE).

◄$$$ THE SHANGHAI GOLD EXCHANGE IS SEEING A STAGGERING OUTFLOW OF SILVER BARS. THE PHENOMENON IS OCCURRING DESPITE A SLIGHT RISE IN THE SILVER PRICE, AN UNUSUAL EVENT. $$$

Since mid-August, silver stocks at the Shanghai Exchange have continued to decline rapidly. The drainage has accelerated since the mid-April COMEX ambush, which will go down in history as a key event in the death of the gold cartel stranglehold ironically. On April 12th, the SGE silver inventory was 1123 tons. By August 9th, it had fallen to only 509.4 tons, a massive 55% decline in less than four months. The drain has continued in recent weeks. An additional 50 tons have been carted off from the exchange, the silver inventory down to 458.5 tons. SRS Rocco concludes, "So, in less than five months, nearly 60% of the silver has been drained from the Shanghai Exchange. Some analysts have stated that during declining silver prices, it is normal for silver to be drained from the metals exchange. However, since August 9th, the price of silver has risen from the $19 range to over $24 per ounce presently. But the silver inventory continues to decline." The continued drain of SGE silver persists while the silver price has risen, but in the last couple weeks, it has fallen back. Expect the drain to continue, since any price under $30/oz is seen as a ridiculous bargain worth exploiting.

Furthermore, JPMorguen made a huge transfer of silver on Sept 5th from its Registered to its Eligible inventories, taking advantage of several raids from Scotia Mocatta vaults. Mocatta must feel violated, mugged, and raped in this one-side partnership. JPMorguen increased its Eligible Silver inventories from 20.2 million oz to 30.2 moz in six weeks, a hefty 50% rise. See the SRD Rocco article (CLICK HERE).

◄$$$ THE ROYAL CANADIAN MINT INTRODUCED A $20 SILVER COIN FOR USAGE IN CIRCULATION, BUT WITH ONLY 1/4 OUNCE WEIGHT. BEAR IN MIND IT IS STILL AN OVERVALUED SLUG, WHOSE METAL MAKEUP HAS INTEGRITY. $$$

The coin is believed to weigh 7 grams, a quarter ounce. The coin functions with declared value of $20 in currency, which is what it costs to purchase. It is an interesting way to hold cash, with debatable merit. It is a slug, but a first rate slug. If the silver price rises four-fold, then the silver coin will reach its inherent value. The motive by the Canadian Govt might be to divert the large outflow of silver by diluting the demand by a ripe 75% amount (the designed fraud). If the masses switch from Maple Leafs coins to these new overvalued quality slugs, the monetary demand will be diverted from the ongoing drain on metals.

◄$$$ SOUTH AFRICA GOLD OUTPUT HAS RISEN IN JULY FOR THE FIRST TIME IN 27 MONTHS. SOME LABOR DISCORD HAS BEEN SETTLED WITH NEW UNION AGREEMENTS. TOUGH PRESSURES REMAIN, LED BY THE LOW GOLD PRICE AND HIGHER PRODUCTION COSTS. $$$

South Africa is the world's sixth largest gold producer and has the biggest known reserves of platinum and chrome. For decades it was the #1 global leader in gold output, but no more. For several years, problems with the national electricity grid followed by a new industry tax caused incredible problems. Output fell. In the last couple years, labor discord and even violence at mining projects have greatly affected mine operations. Labor problems that started at platinum mines in August last year spread to producers of gold, iron ore, chrome, and coal, costing almost 15 billion Rand (=US$1.5 bn) in lost output.  Early this month, three of four unions at the seven largest gold companies in the country signed a wage agreement after a three day strike that ended September 6th. The July data is encouraging, an upswing finally. Output of bullion climbed 0.9% from a year earlier, according to Statistics South Africa. Total mining production rose by 0.6% in July, year over year, after dropping by 5.4% a month earlier. Output of platinum group metal gained by 4.3% from a year earlier. The Nedbank economists expect total mining output to remain weak, harmed by low official gold prices, labor strikes, and higher production costs. See the Bloomberg article (CLICK HERE).

## GOLD DEMAND EXPONENTIAL IN CHINA

◄$$$ CHINA IMPORTED AN IMPRESSIVE 116.4 TONS OF GOLD IN JULY. THE EXPONENTIAL RISE CONTINUES UNABATED IN 2013. CHINA IS THE ASIAN JUGGERNAUT ON GOLD DEMAND, AND THE PRIMARY ENGINE FOR DEMAND IN THE ENTIRE WORLD. THEIR DEMAND APPROACHES HALF OF GLOBAL MINING OUTPUT. $$$

The accompanying chart is the most visible demonstration of truly powerful Gold demand. It is causing a global Paradigm Shift, and finishing the job of wrecking the corrupt banking and currency system. It all must be swept away, and only can be done with a powerful sequence of strokes, combined with construction of alternative platforms. Other nations contribute significantly, but nothing like China through the Hong Kong window. China imported through Hong Kong another robust load totaling 116.4 tons of physical gold in July of 2013. Their demand comes after the 517.92 tons of gold imports in the first six completed months of this year. In total, from January through July of this year, China imported a staggering  633.94 tons of physical gold. The country is indeed on its way to reach 1000 tons of imports over the whole year, as forecasted by the World Gold Council in their Q2 report.

Put the figure into perspective. The global gold mine output in 2012 was on the order of 2750 tons. The SPDR Gold Trust (aka GLD Fund) had 919 tons at last count, but has been fast dwindling. Hence China alone has imported two thirds of GLD inventory in the first seven months of this year. In fact, July recorded their second largest gold import in a single month since the start of this bull market in 2001. Bloomberg reported that net imports, after deducting flows from China into Hong Kong, were 113 metric tons, up from 101 tons a month earlier. Mainland buyers purchased 129 tons in July, including scrap, compared to 113 tons in June. Data was released by the Hong Kong Census & Statistics Dept. The chart is courtesy of Sharelynx, often shown on the Hat Trick Letter with gratitude. The exponential growth is a steady trait. See the Bloomberg article (CLICK HERE).

◄$$$ MOST OF HONG KONG GOLD IMPORTS COME FROM SWITZERLAND AND ENGLAND. THE MINING CENTERS OF AUSTRALIA AND SOUTH AFRICA ARE ALSO SIGNIFICANT. THE DATA IS ASTONISHING. A GIANT SUPPLY CHAIN HAS BEEN ESTABLISHED, WHICH BEGINS IN ENGLAND, GOES TO SWITZERLAND FOR REFINING (RECAST BARS), THEN FINDS ITS WAY TO HONG KONG. $$$

The Financial Times of London reported another astonishing factoid, that UK gold shipments this year to Switzerland have increased nearly 10 times when compared to the same period last year. Through the first six months of 2013, the UK has sent 798 tons of gold to Swiss refineries, compared to 83 tons for the first six months of 2012. In the month of May alone, 240 tons were exported. Contrast the 798 tons sent from the UK to Swiss refiners in the first six months, against a total 1018 tons of UK gold exports up to the end of July 2013, almost the entirety (6mo vs 7mo). The figure is both large when viewed versus the Bank of England (BOE) gold hoard, and versus the global mine output. The nation of England and the United Kingdom generally does not mine gold in any volume. The exported gold must be coming from another source. Speculation is strong that the gold that feeds historical physical demand around the world is Exchange Traded Fund inventories held in London. A shocking 650 tons of ETFund gold has been sold this year. Some controversy and possible lawsuits could arrive later, when investors again realize they own gold certificates and worthless gold claims, not gold bars. It will be fun to observe their wrath and legal action. Furthermore, according to information released by the BOE itself, a staggering amount of 1300 tons has disappeared from their own vaults between February and June of this year. Some book entries might be the culprit however, long their nefarious deceptive practice.

Therefore strong evidence suggests that an unprecedented volume of gold is on the move from London. The destination is well known. Most of these gold exports are being sent to Swiss refineries. To be sure, much of their activity is for recast of gold bars, to conceal the fact that they are improperly acquired from Allocated Gold Accounts. Buyers want no evidence in a trail. The Voice repeats his monthly refrain that over 40,000 tons are missing from such accounts. This factor will be a major reason why the price of gold will surpass $5000/oz with relative ease, along with the establishment of gold trade settlement by the Eastern core of nations. Four of the world's largest and most prestigious gold refiners, Metalor, Pamp, Argor-Heraeus, and Valcambi, are located in Switzerland, with a long history and tradition of excellence. The Swiss refineries process an estimated 70% of the world's gold supply. A steady stream of reports suggest that these refineries are working around the clock at full capacity to handle the enormous gold flow. They have strong transport capability also.

Three likely reasons why gold from UK vaults is being sent to Switzerland. First, they have the capacity to transform the massive volume of standardized and globally recognized London Good Delivery 400-ounce bars into the smaller bullion products. The Asian buyers prefer the 1-kilo bar (32.15 ounces). Second, unprecedented Asian demand where buyers want the gold recast in a size, style, and brand distinct to Asian desires.  Third, gold owners are rapidly losing faith in the London gold market. A growing body of evidence indicates impropriety and criminal activity in the London vaults. Traditional clients such as wealthy individuals, institutions, and governments are leaving the London gold bank sector, transferring their gold holdings into private vaults that have no exposure to the paper gold financial system. The risks associated with the ETFunds, the futures contract market, and bullion bank gold leasing operations combine to put all physical gold assets at great risk. The paper claims on gold ounces outnumber available physical ounces by over a 50 to 1 ratio. The Jackass belief is that vaulted accounts in North America and Europe are also at risk, with no respect for law or contract.

The dishoarding by ETF gold, the discrepancies in the BOE books, and UK gold export volumes to Switzerland represent strong evidence that London gold is being vacated. In all, 22 other countries have exported an aggregate 135 tons to Hong Kong. Check out the pie chart showing the breakdown of where Hong Kong gold imports came from during the first 6 months of the year and their respective percentages of the total. RJ Wilcox of Gold Miners Weekly arrives at 807 tons of gold imported to Hong Kong in the first six months of 2013. See the 24hrGold article by RJ Wilcox (CLICK HERE). See the Koos Jansenn article (CLICK HERE).

◄$$$ INDIA SILVER IMPORTS HAVE DOUBLED OR TRIPLED COMPARED TO RECENT YEAR BASELINES, IN RESPONSE TO OBSTACLES TO IMPORT GOLD BY THE INDIAN GOVT AND CENTRAL BANK. THE GOLD DUTY AND BANK RESTRICTIONS HAVE LED INVESTORS TO SILVER. $$$

Silver imports to India up for the first half of 2013 were 3145 tons, equal to 101 million ounces. The volume is staggering. For 18 months, the trend had been about 200 tons on the monthly level with wilder fluctuations in the two years before. In January 2013, their Reserve Bank of India raised gold's import duty from 4% to 6%, then in June to 8% and in August to 10%. Another rule went into effect on July 22nd, which made it mandatory for shippers to set aside 20% of shipments for re-export. All these policy restrictions have led to more smuggling across the borders while silver imports are exploding as alternative. In June official gold import fell sharply down to 44 tons from 165 tons in May, a 73% monthly sequential decline and a 20% decline from May of 2012. On the cultural front, keep in mind the festival season in India runs from August to October, followed by the wedding season from November to December. Year to date, India officially imported 631 tons of gold.

The import duty on gold was raised because gold import was causing the Indian Current Account to balloon. Silver import do not have an import duty imposed. Not surprisingly, the reaction byIndians was to buy silver instead of gold, in much larger volume. Silver import in June was 702 tons, down from 891 tons in May. Year to date silver imports stand at an incredibly strong 3145 tons. This is a massive figure. See the Koos Jansen article (CLICK HERE).

◄$$$ US-BASED SILVER COIN SALES TOPPED WHAT INVESTORS BOUGHT IN ALL OF 2012. INVESTORS ARE BUYING AT A RECORD PACE. DEMAND ACCELERATES BECAUSE OF THE MANIPULATED PRICE, OFFERING SILVER AT A SILLY LOW PRICE, DISCOUNTED BY CORRUPTION. $$$

Sales of American Eagle silver coins by the USMint so far this year surpassed the total for all of 2012, as investors continue to take advantage of the price discount. If the COMEX and their JPMorguen leader (capo dei capi) wish to suppress the Silver Price, then they must live with the consequences of severe rapid drainage of inventory supplies from amplified demand at discount price. Shortage and default lie directly ahead. To date, 33.75 million ounces of the silver coins have been sold in 2013, compared with 33.74 million in 12 months last year. A rough 50% rise has come in demand. In January, sales reached an all-time high of 7.498 million ounces, and averaged 3.65 million a month since that outlier month. The silver demand cannot be contained, without an ultimate default. It grows from all the manipulation, not despite it. Witness basic science that shoves a hot poker up the banker asses. They are running out of inventory, running out of credibility, running out of clients, running out of allies (see Syria), running out of USDollar support, and running out of time. See the Bloomberg article (CLICK HERE).

## GOLD SHORTAGE SEEN IN BACKWARDATION

◄$$$ CONFUSION IN THE GOLD MARKET IS COMING. THE GOLD PRICE WILL GO DARK. ABSENT GOLD INVENTORY WILL DICTATE NO GOLD FUTURES CONTRACT AT THE COMEX. THE GOLD PRICE WILL EMERGE AS AN AVERAGE OF 6 TO 8 KEY GOLD TRADE CENTERS GLOBALLY. A NEW GOLD PRICE WILL BE REPORTED LIKE LIBOR, WITH AN AVERAGE POSTED. THE GOLD PRICE WILL RISE IN QUANTUM JUMPS, WITH A CLIMAX PLATEAU AT LEAST $7000/OZ WHEN THE GOLD TRADE STANDARD RETURNS. THE UNITED STATES WILL STUBBORNLY NOT JOIN THE EASTERN INITIATIVE UNTIL VERY LATE. GREAT DAMAGE WILL BE DONE TO THE USECONOMY. $$$

Best to refer once again to the projected sequence to unfold, described in several pages in the Money War Report. The section is entitled "USDollar Death Throes" and the lead story comes complete with road signs. It is worth a second read in my opinion. Much time was taken to write the projected sequence that will unfold invariably. It covers several fronts on the global financial war, errrr crisis.

◄$$$ SUPPLY & DEMAND ANALYSIS GOLD & SILVER HAS THE MOST RELEVANCE WHEN FOCUSED ON INVESTMENT DEMAND IN THE TANGIBLE WORLD, BUT ON BACKWARDIZED BASIS IN THE CONTRACT WORLD. THE PRESSURES FROM ONGOING BACKWARDATION INDICATE A GOLD SHORTAGE WHICH IS GROWING WORSE. $$$

Gold and Silver are monetary metals. Their price dynamics are not so much a function of inventory turns per production cycle. G&S are stored as financial ballast during the diverse persistent nasty financial crisis that the Hat Trick Letter prefers to call the Money War, the battle to preserve the USDollar and fiat currency regime. Gold and Silver prices are unstable because of the magnificent collapse of the USDollar and its supporting cast of ruined currencies. Conventional techniques like basic supply and demand do not suffice. Over the ages, the key component responsible for sustained surges in their prices has been investment demand, driven by avoidance of damaged paper currencies. It is always the same story, just a different decade and different background. Everyone on the planet is a potential agent for demand at the right price. The COMEX & LBMA criminal operators have been presenting the precious metals at deep discount.

Much analysis is focused on central bank issuance of new money, purchases for gold reserve increments by sovereign wealth funds and even central banks, and futures contract Commitment of Traders. The COMEX vaults and Exchange Traded Fund vaults are better indicators of system distress, since their inventories are the crux of the market, their marginal element. These are all valid components, but the most important is always investment demand, which includes minted coin demand. The Jackass has found the technical analysis of price charts to be the least indicative of future prices, since a revolution is in progress that is being resisted fiercely by the banker cabal. It controls central banks, government finance ministries, and USTreasury Bond prices with powerful derivatives. The downward pressure from naked shorting of Gold & Silver is the dominant factor in supppressing their prices, illicit illegal corrupt methods to sell metal with no delivery intented. All such practices result in jail time, except for the bankers at work. The illegal downward pressure is commensurate with the perceived threat to abandon the fiat currency system led by the USDollar as global reserve currency.

A different approach is to examine the fundamentals of supply and demand, as applied to the crux of the market itself. An extremely relevant indicator is the spread between the spot market gold price and the futures market gold price, called the basis. Precious metals are not commodities. No waiting period for harvest must be endured. The metals are not perishable. Some might oxidize (like iron) over of time, but not Gold & Silver, which are special. The mine output has no season, but demand does like for the Christmas season in the West and the wedding season in India. The biggest and most important signal of market distress from shortage is the basis turning negative, identified by the spot price being above the futures price. This case has a technical term, called backwardation. When the spread is not small, it screams scarcity. It usually means the metal is being pulled out of warehouses and brought to market for profitable sale, to meet the shortage and to relieve the distress. The process drains the background supply in inventories, and aggravates the backwardation in price. As more background supply is yanked out, its future price falls further. As more front window supply is bought, its spot price rises higher. The backwardation is the exact opposite of a normal situation with higher futures prices, called contango. In contango, the future basis spread defines the carry cost. The slick feature of backwardation is that with negative carry cost, all available supplies are drained, and FAST.

If a huge legitimate hoard of supply comes to market to relieve the shortage, the spot market price would fall. In the case of Gold & Silver, no such rescue hoards are coming forward, month after month. The shortage is turning acute, especially since the COMEX & LBMA criminal elite lords are pushing the official prices down. They wish to escape their mountain of shorted futures contracts, and call a Force Majeure to nullify contracts. This obscene motive will continue to distort the market, and lead to unspeakable shortages that will shut down the COMEX itself. That is the desired outcome, the desired goal. When the COMEX is out of the picture in price determination, often called price discovery, the Gold & Silver prices will be free to rise without limit and find their true value. The queer side to the backwardation is the distrust of the system. Owners of gold become reluctant during crisis, when banks are insolvent hollow silos, when sovereign bond foundations are tainted, when currencies are phony paper, when central banks debase money, even when money is not sound. One should always recall that legal tender does not define money, and the present day money has a debt foundation, which is utter heresy.

Chronic backwardation in gold is a sign that the regime of paper money based on the dollar is coming to an end. It is irredeemable, meaning it cannot be taken to a window for redemption in gold, not even partially so. When backwardation in the gold price (negative basis) becomes permanent, then fireworks will fly since gold will no longer be offered in exchange for dollars or any other cousin fiat paper currency within the regime. There would be no gold price, hence paper money would be worthless. The backwardation condition means a process is underway toward withdrawing the gold bid on the USDollar, in the wider sense. The phenomenon is not easily detected by people within the Dome of the Dollar, who are instructed to view Gold as a commodity. The mainstream press leads the public astray improperly and ignorantly. The guidance is not so ignorant as corrupt, since they wish for the public to remain ignorant sheeple. The shortages confirmed by a backwardized gold price make a powerful motive to buy gold and to hold it. The phenomenon of temporary backwardation might not herald the end of the USDollar just yet, but it is a sign of cancer in the core of the system. The distrust is spreading within the system, from bonds to bullion banks where metal bars are stored. The gold bars are quickly disappearing in the bullion banks, angering very wealthy people.

The gold market backwardation has crept into three successive contracts for gold simultaneously, namely August, October, and December. The August month has rolled, but the big problem for the bank cabal lies with December, during the powerful demand month. A bizarre anomaly occurs during modern day crises, especially true during late 2008. The USDollar is the currency needed by debtors worldwide to service their debts, and to settle wrecked derivatives. When debtors are squeezed under pressure, they scramble to obtain USDollars, which strengthens. It is reflected in a lower gold price. The USFed rushes to provide huge Dollar Swaps which help to push the gold price down more, precisely during the crisis. See the Zero Hedge article by Monetary Metals (CLICK HERE) for a fine discussion of basis and carry and backwardation and related factors.

◄$$$ INDIAN GOLD DEALERS REPORT DIRE SHORTAGE OF GOLD, WHICH IS TRADING AT $1800 PER OUNCE ON A COMPARATIVE FOOTING BEFORE THE RUPEE CURRENCY DEVALUATION. COMPLETE CHAOS HAS HIT THIS IMPORTANT MARKET IN INDIA. SMALL FACTORIES AND WORKSHOPS ARE SHUTTING DOWN, WHILE WORKERS ACROSS THE ENTIRE SUPPLY CHAIN EXTENDING DOWN TO RETAIL ARE LOSING THEIR JOBS. TREMENDOUS DAMAGE HAS HIT THE INDIAN ECONOMY. THE JOB CUTS AND COMPANY CUTBACKS ARE WIDESPREAD AND SIGNIFICANT. DEMAND FOR GOLD ITEMS IS STRONG, BUT THE ECONOMIC DAMAGE WILL EVENTUALLY SOFTEN GOLD DEMAND AND ITS PRICE. $$$

Bull Market Thinking interviewed Vishal Vyas, head of operations at the top bullion dealer in India, Pushpak Bullions Pvt Ltd. His account (dated August 23rd) of the gold market inside India is astounding and alarming but encouraging. He said, "On the street level, I have see many of the small factories and workshops becoming non-operative over the last two weeks because they do not have any gold to process. Secondly, I also see gold coming in from illegal channels in the market, which is not good. Since import duties have risen, the gold price in the Indian market is the same as it was when gold was $1800 per oz. When $1800 gold was in the market, it was 31,500 Rupees per 10 grams of gold. Today gold is below $1400 per oz, and the price is the same at 31,500 Rupees per 10 grams of gold."

Indian families continue to buy gold, despite the elevated pricing and increasing trade controls and bank restrictions. It is a traditional form of savings common in the country and in many Asian nations. They have a shared distrust for paper currencies. Vishal said, "[The people buy Gold in] small quantities every month or maybe every couple of months or alternate months. They put 20% or 30% of their savings every month into gold. When they get perks or added benefits from their commercial or professional careers, they have start investing 20% to 30% of that too." See the Bull Market Thinking interview (CLICK HERE).

A global consultant with strong experience in Asia and the Middle East offered a perspective with warning. He shared some research points from his source inside India. The consultancy follows India very closely for strategic issues that most people do not even know about or totally neglect. What follows is his account, my edits with appreciation. The Gold price keeps rising in India, but it has more to do with the INRupee decline, in addition to the new 10% customs duty and the premium paid to acquire physical gold by jewellers. Some investment demand exists, but it is not a big factor at all. Such demand was much higher by investors until about a year ago. Many rich people do not understand what gold means even in advanced countries. On the flip side, India is entering into a huge unemployment mess in the middle class and poor class, which will play havoc with gold demand, even more broadbased demand for everything. The tragic evidence of this is the massive rise in the farmer suicides rate. It is now one suicide per 37 minutes, as per a United Nations report, higher than a couple of years ago and growing (due to urbanization). Banks have a hiring freeze just like the government offices, and they will start cutting jobs next year. India's recession story remains on course to worsen, which will cause further job losses and slow growth due to slow demand. Higher interest rates are going to be a bad omen in the months ahead, which have already started rising since last week. Gold will be the least of India's problems. A perfect storm will hit!

The research report shared a couple dozen stories of economic distress as appendix. Space does not permit a complete rendition, so take a summary. Dell plans to fire 1000 workers in India. Gold jewelers fired 500,000 people in June 2013 alone. The National TV channel fired about 300 to 400 recently. Across corporate India there have been major layoffs amidst a gloomy job market. Siemens started laying off workers in June 2013. The banks entered the job cut act. UBS, Morgan Stanley, Credit Suisse, Barclays, RBS, ABN AMRO, HSBC, and SocGen have been laying off in India for months now. Motorola closed its website in India and fired many workers in the process. Maruti, Tata, and Mahindra carmakers are firing hundreds of workers. Indian car sales are declining rapidly, hurting profits as well as jobs. From shipping and oil companies to jewelry and gold companies, businesses are struggling along with all the airlines. The stock valuations for many big companies are way down, some over 80% like Gitanjali Gems (jeweler), Varun Shipping, and Gokuldas (exporter). These job cuts will suppress gold demand, and eventually soften the price appreciation. The damage to the economy will cause a perfect storm in India.

## USECONOMY STILL IN DIRE STRAITS

◄$$$ NO USECONOMIC RECOVERY IS EVIDENT. THE LABOR MARKET CONTINUES ITS HISTORIC DECLINE. AMERICANS ARE PARTICIPATING IN THE WORKFORCE AT THE LOWEST LEVEL IN 35 YEARS. THE MEASURED PARTICIPATION RATE IS AT 63.2% ONLY. A DEPRESSION IS OBVIOUS. $$$

The US citizen work force is participating in the workforce at the lowest level in 35 years, according to USGovt data recently released. Lackluster job growth fails to offset the legions of people who have quit looking for work. According to the USDept Labor, the USEconomy added a disappointing 169,000 jobs in August. In addition, the government lowered its estimate of the number of jobs created in June and July by 74,000 positions. They talk of a grinding pace in the recovery which has hollowed out the workforce. The official USGovt data showed that only 63.2% of working age Americans have a job or are looking for one, the lowest proportion since 1978. Nearly 90 million people are now considered out of the labor force, up 1.7 million from August 2012. Then factor in the distortions. The Birth Death Model adds fictitious jobs in the popular Non-Farm Payroll count. The validity of the count has been shattered by most every competent analyst, including the Jackass (bold claim of competence). The statistic to focus on is the Labor Participation rate, working its way down to the 60% level. The nation is taking on Third World characterstics, part of the long confirmation process for the 2008 Jackass forecast of falling into the Third World. The 2008 presidential election also fit into the 3W framework, as does the profound corruption in the USGovt finances and banking sector, as does the choice of war (destruction) over economic development (construction), as does massive federal deficits, as does the blockheaded economic counsel, as does the deeply distorted press networks, as does the shredding of the Constitution punctuated by a never ending list of executive decrees. See the Washington Post article (CLICK HERE).

◄$$$ CONSTRUCTION SPENDING IS STUCK IN A QUAGMIRE. ON AN INFLATION ADJUSTED BASIS, THE USECONOMY HAS NOT EMERGED FROM THE 2008 CRISIS PLUNGE IN THIS SECTOR. $$$

Construction is a key infrastructure element to any economy, including that of the United States. In the recent past, it has been distorted by a diversion that focused unduly on the housing market, primarily single family homes. The diversion has been reversed and somewhat removed, since housing is stuck in a depression. The Construction spending increase in July was insignificant; the entrenched pattern continues. Although the general trend has been minimally to the upside since 2011, monthly changes have been minor or trifling. The plunge that started in 2006 hit bottom in 2011, only to rise like a beaten man crawling. The total value of construction put in place in the USEconomy during July 2013 was $900.8 billion, in nominal terms with seasonal adjustment only, not inflation adjusted, but annualized. That means a monthly amount was treated to remove the seasonal swings, then multiplied by 12 to arrive at an annual type of steady estimate. The increase over the similarly treated June data was 0.6% only, which was revised at $895.7 billion. On an annual growth basis, July 2013 construction spending was up year-to-year by a statistically significant 5.2%, versus a revised June annual gain of 4.7%. The public project contribution included a 0.3% monthly decline (reference to government). The July increase on the purely private side was at 0.9%.

Adjusted for Producer Price Inflation, the new construction inflation index tracked, the aggregate real spending in July 2013 was up by 0.6% month-to-month, versus an unchanged monthly level in June, while year-to-year growth in spending was 3.1% in July 2013, versus 3.1% in June. Bear in mind the PPI inflation is also skewed like the Consumer Price Inflation index. Therefore, the more realistic inflation adjustment would turn all gains into annual contractions. The parallel is that proper CPI calculations would render the Gross Domestic Product to be saddled by negative growth for five to six years running. The inflation adjustment to GDP is not done properly. The USEconomy is stuck in a deep recession. Construction spending has generally continued at a low level of stagnation since early 2011, visible in the accompanying excellent graph. Thanks to John Williams at Shadow Govt Statistics for the fine work.

◄$$$ HIGHER INTEREST RATES ARE CLEARLY HAVING AN EFFECT ON HOUSING AND MORTGAGES. LONG-TERM MORTGAGE RATES HAVE MOVED UP TO THE 4.4% TO 4.5% RANGE. THE METROPOLITAN WASHINGTON DC AREA APPEARS TO BE SUFFERING THE WORST EFFECTS. A SURGE OF HOMES IN THE CAPITAL REGION ARE UP FOR SALE. USGOVT CUTS AND USMILITARY CUTS ARE BEING ACUTELY FELT. $$$

A Hat Trick Letter client has a brother who works on refinanced mortgage deals in Boston. Here is his account of conditions, his words, my edits. At their office, 11 out of 20 workers have been laid off in a recent two week period. The count could be down to only two or three workers within several more weeks. New home purchases have slowed dramatically. Layoffs in that department have hit as well. A sudden surge has come to the Baltimore, Washington DC, and Northern Virginia area, as people have wanted to move. That area sticks out as anomaly, with a great many homes for sale. There is some reported panic, that a multitude must move. Thought process amongst his neighbors is they will never be able to sell their houses for more than what today's prices offer. Also, the gasoline prices broke above $3.50 per gallon. The visible reaction is a notable traffic slowdown on the roads. All signs point to severe economic distress in one of the best economic regions in the United States generally, the Greater DC metropolitan area. The client is passing on evidence of localized effects to the USGovt spending cuts, called sequestered cuts. They have not been very large, but the effect to date has been amplified and noticeable. At the same time, home mortgage rates touched 4.5% in recent weeks, with a slight pullback last week. The threat of a tapered USFed bond monetization purchase program coincides with the USGovt job cuts, including USMilitary. The ripple effect touches the private sector in support of both the government and military.

◄$$$ DETROIT COULD FORCE MUNICIPAL BONDS TO TAKE A WRITEDOWN, RESULTING IN OUTSIZED BONDHOLDER LOSSES. FORMAL TREATMENT OF THE CITY BOND IS IN THE PROCESS OF REVISION. THE RESULT COULD BE BIG DEBT WRITEDOWNS FOR INVESTORS. THE CHANGES COULD SPREAD TO MUNI BOND INVESTORS NATIONWIDE. BIG CHANGES ARE COMING. $$$

Fitch warned that if a judge accepts a certain approach to city bankruptcy submission, every other municipal bond in the country could be put on notice for important changes, with risk of deep debt writedowns and investor  losses. Kevyn Orr is the emergency manager in Detroit, who has submitted a new version in a bankruptcy filing. Here is how it works. Orr is attempting to treat the city's unlimited tax general obligation bonds (called ULTGO) as totally unsecured debt. That means they are eligible for large debt writedowns. Investors holding these bonds are in line to lose a big slice on the dollar off the original amount owed, often called haircuts. To avoid an enormous haircut, Orr has been trying to raise revenue through taxes, as required by the inherent bond features.

However, Fitch says the sums levied to date will be grossly inadequate, resulting in an inevitable default by the city on the debt at its next service payment date on October 1st. The radical development is that ULTGO bonds are customarily treated as slightly less unsecured than limited tax general obligations (called LTGO). If it is confirmed in bankruptcy, it will lead the debt rating agency Fitch to rethink the distinctions made on debt securities that are supported by tax revenue within Michigan and nationally. See the Business Insider article (CLICK HERE). The entire state and city bonds, the general Municipal Bond space, is about to suffer a massive endless skein of bankruptcies and debt writedowns, and loss of favorable treatment. The event is long overdue, anticipated for a couple years.

◄$$$ THE BIG SMASH OF OBAMACARE WILL CONTINUE TO RENDER GREAT HARM TO THE USECONOMY. THE BENEFITS WILL BE NEGLIGIBLE, BUT THE COSTS WILL BE MUCH MORE JOB CUTS. $$$

The effects of ObamaCare have been well covered and documented for months, with an occasional update in the Hat Trick Letter. Several months ago, the HTLetter featured on the ground accounts from different types of employers. The added worker tax endured by employers has motivated them into taking action. The outcome is extremely detrimental to the USEconomy. Worker hours are being cut, in order to put them into part-time status. Other jobs are being eliminated, to step aside from the tax imposition. Many communities are in shock as a result. To be sure, Barack Obama never worked a day in his life at a mainstream job with actual profit & loss responsibilities. He has zero experience in the real world economy. The Obama Admin has under 5% of its members (by certain organization estimates) with any business experience. The norm for Presidential Admins is more like 30% to 50% with business experience. The nation is driven by charisma and absurd promises made in campaigns, followed by a deeply corrupted vote process. The effects of ObamaCare will be profound and lasting if fully installed. See the DC Clothes Line article (CLICK HERE).

◄$$$ A US-HOUSE VOTE SUCCEEDED TO DEFUND OBAMACARE. COMING NEXT IS A PRIME SHOWDOWN OVER SHUTDOWN OF NATIONAL HEALTH CARE IN THE US-SENATE, WHERE OPPOSITION IS MUCH LESS. THE PAINFUL EFFECTS ARE UNDER SCRUTINY WITH MORE ANALYSIS, AND BECOMING MORE KNOWN, APART FROM THE PARTISAN POLITICS. THE FATE OF OBAMACARE IS NOT CLEAR. $$$

Against the wishes of the White House and the Senate, the House of Representatives passed a stopgap funding bill last week. It calls for the shutdown of the entire USGovt unless Democrats agree to defund President Barack Obama's pet project, the new health care program. The House voted 230 to 189 to pass the measure that would block funding. The block also covers the USGovt in a wider funding proposal. It is political hard ball, high pressure tactics, played out to the extreme. The US House has a Republican majority. The US Senate has a Democrat majority, the party of Obama. The Congressional Democrats have called the bill unacceptable, while the Republicans have insisted their new hostile challenging bill does nothing to shutter the federal government. It will supposedly keep the lights on. The interesting new twist in this challenge is the bypass of official established appropriations (setting up funds in approved manner) for the USGovt operations.

Republicans wish to block the Affordable Care Act, as ObamaCare is formally known. They foresee devastating effects from ObamaCare upon the USEconomy. In a sense, this is nothing new. The vote marked the 42nd time that the House Republican conference has attempted to wreck ObamaCare. In the past four years during the Obama Admin, the Senate has ignored almost everything the House has pushed for, supporting almost nothing, producing a deadlock. However, this time the bill proposed to hold the USGovt operational funding as hostage. Democrat House Minority Leader Nancy Pelosi has offered sharp criticism, talking about a reverse of all the progress her initiatives has made. It is unsure her contributions to the USEconomy amount to more than a small hill of beans. The fate of ObamaCare is still not known. Clearly, its economic effects are being evaluated in a more impartial and expert manner in the last few months. The USEconomy cannot endure a great shock. See the Huffington Post article (CLICK HERE).

It appears that ObamaCare might be put forth as a referendum to reject Obama as leader. The Jackass final comment is that Obama was selected (by the banker cabal) to be elected (by massive vote fraud) in order to wreck the USEconomy, to impose martial law in a police state, and to assure the USDollar death. This is mostly scripted. Fortunately, his foreign policy destruction is in the process of being blocked. The most clear result of the Obama Admin is the growing isolation of the nation in the global community, which is featured by direct opposition by enemies of the US and alienation by its allies. The game will be played out as global rejection of the USDollar and diverstiture of the USTreasury Bond.

## THANKS

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