China “liquidating” U.S. Treasuries

Watch the U.S. Treasury market closely, because a next leg down in the collapse of the dollar (in real terms) will begin in earnest when the number of indirect buyers begin trotting away from the auctions.

From now until 2015, it appears that Beijing will be pulling the plug on the dollar.

In a great piece posted on zerohedge.com today, the author, Brandon Smith of Alt Market, alerts readers to a recent change in tone in its “unofficial” communiques regarding China’s plans for its estimated $2.2 trillion dollar reserves.

“We would like to buy stakes in Boeing, Intel and Apple, and maybe we should invest in these types of companies in a proactive way,” David Daokui Li, Director of the Center for China in the World Economy (CCWE), told attendees of the World Economic Forum held in Dalian, People’s Republic of China. (NYSE: BA) (NASDAQ: INTC) (NASDAQ: AAPL)

To affect this move, Beijing intends to “liquidate more of its holdings of Treasuries” once the U.S. Treasury market “stabilizes,” Smith added.

So there you have it—Beijing feels Apple stock offers better value than the sovereign debt of the world’s primary reserve currency.  Li’s comments suggest Beijing’s outlook for the U.S. dollar is so bad that buying stock in a company, that Warren Buffett won’t touch because he can’t wrap his mind around the tech giant’s perceived moat, holds more value in the long run.

Smith points out that China’s biggest concern presently stems from the effects of rapidly growing inflation on food and energy prices in China, which have been estimated to be running at more than 12% (official figures are grossly understated)—thanks to the Fed’s QEx’s.

And because Beijing cannot export inflation back to the West through its renminbi currency (not fully convertible in large quantities), the people of China have been taking the hit, badly—which bothers China’s leadership greatly given the long history of domestic tensions exploding into political upheavals and simultaneous civil wars throughout the country’s provinces during times of financial hardships.

“With harsh inflation continuing unabated, eventually, the Asian nation will be forced to enact abrupt policies,” Smith wrote.  “This will likely take the form of a strong Yuan valuation, or a “floating” of the yuan. A sizable increase in the value of the Chinese currency is the ONLY way that the government will be able to combat rising prices.”

Up until now, the timing of Beijing’s exit out of the U.S. dollar has been very murky.  Many analysts suggest that China cannot exit from the dollar without hurting itself in the process, a theory that lacks any credible evidence.  But again, the one-man firestorm of information lays out the plan quite clearly for anyone willing to notice amongst the noise out of Europe.

“It is quite possible for China to realize yuan convertibility by 2015,” Li told an audience at a trade fair in China’s southeastern city of Xiamen last Friday.  “I believe there should be big progress.”  It should be noted that Beijing has denied that a timetable for an “orderly” exit out of the U.S. dollar exists, but as long as China’s political leaders allow David Daokui Li to keep talking, the information he presents serves as Beijing’s way of telegraphing the markets.

Dow Theory Richard Russell’s sage advice

As the wearying action in Europe takes a brief intermission, Dow Theory Letters Richard Russell was busy penning his 12 Commandments for surviving the upcoming “bad times.”  For those who think we’re already in the midst of the worst, well, that mantra of a “new normal” thrown about by the big names of finance is today’s euphemism for bigger trouble is a comin’.

For years, the “Dean of newsletter writers”, as KWN’s Eric King refers to the 87-year-old Richard Russell (Sage of La Jolla), has written extensively about a troubled and dangerous world he witnessed as a child during the Great Depression, and later, as a very young man who fought in the European theater of WWII.  Given all his experience, a surf to a synopsis of Russell’s recent letter to investors, outlining his 12 Commandments for the survival of the coming financial storm makes for a good quick read.

Not unlike the 10 Commandments of the Bible, the King Richard version, backed by more than 60 years of financial wisdom, can also be condensed into a cheat sheet of 10, plus two more, to make it an even dozen.

The bottom line to Russell’s advice, especially for baby boomers, is to start acting like their parents (or grandparents) once acted.  In other words, no frivolous spending and make do with what you got.  There’s a very good reason for the huge cash balances piling high on balance sheets of the Fortune 500 companies, as the executives of job creation and wealth know very well that the Keynesian magic of yesteryear when governments filling the income gap with stimulus is done.

And let’s no forget about the bullion expert Jim Sinclair of JSMineset, who has repeatedly warned his readers, “This is it!”, referring to the inevitable von Mises crack-up boom phase coming to U.S.

If you can manage to complete step one of Russell’s advice, that is, squirreling away as much money and resources as you can in preparation of the K-wave Winter, the acorn thieves will, as sure as the sun will come up in the morning, try to ingratiate themselves into taking some of your stash.  Wall Street, working with its clever advertising buddies, are masterful at this art form.

“Real estate never goes down.”  Remember that one?  “Stick with stocks for the long haul.”  How have stocks performed overall since 2000?  Was that advice meaningful from 1968 to 1982?  “The recovery is here” is another favorite.  According to John Williams of Shadowstats.com, there’s never been a recovery.

“Buy stocks on the dips.”  You get the picture.

And for additional laughs, read the quotes of the officialdom back during the Great Depression.  We expect public officials to lie and scrape in front of the electorate, but take careful note of what the alleged masters of business were saying as well during the 1930s.  As you read the quotes from the titans of those days, Warren Buffett may come to mind.  Will that one-trick pony from Nebraska still be around to see the historic climb in the price of gold as well as the impoverishing real rate of return on his paper empire crumble in the coming decade?  Will anyone remember how he was bailed out along with the banks, Fannie and Freddie, GM and a bunch of broker-dealers?

Which brings us to Russell’s thesis of where to front run the coming financial devastation yet to come.  He, unlike the Orifice of Omaha, has suggested for more than a decade that holding gold is the way to go to protect from a Ponzi-like debt scheme gone horribly wrong.  In fact, Russell told his subscribers he holds a personal record amount of gold in his portfolio, with the rest of his stash held in very short-term Treasuries—in other words, cash he expects won’t be lost to an outright default, only a loss in purchasing power.  But his gold has hedged that cash very, very well for some years now.

Marc Faber: Gold “probably cheaper than when it was $300”

As the debate moves from how high the gold price can go to whether the precious metal has become too expensive at $1,830, Marc Faber, editor of the Gloom Boom Doom Report, said the ultimate world’s reserve currency is “dirt cheap.”

Speaking with Newsmax’s MoneyNews.com, the eclectic Swiss money manager, who has called Thailand his home for more than 20 years, believes the gold price should be put into a context of its relative value against rapid devaluations of the world’s primary reserve currencies—the U.S. dollar, euro, yen, and British pound—and, now, the Swiss franc, following the SNB decision last week to peg the franc to the declining euro.

“In fact, I could make an analysis to show that the price of gold today is probably cheaper than when it was $300 per ounce based on the increase in government debt, based on the increase in monetary base in the United States and based on the expansion of wealth in Asia,” Faber explained.

Spot gold reached a high of $1,923.70 per ounce on September 6, whose price has since pulled back to the $1,800-$1,850 trading range following the SNB announcement that the franc, de facto, will no longer become a refuge of the currency.

Nearly 18 months earlier on April 26, 2010, Faber told Newsmax he won’t give up his gold as long as the stewards of the U.S. dollar remain in power—as gold’s price in terms of dollars should increase commensurate with its rate of debasement, which, he said, has been at an alarmingly high rate since the collapse of Lehman Brothers in September 2008.

“I own my gold and I will never sell it, especially when I see clowns like Ben Bernanke, Larry Summers, Tim Geithner,” Faber had said.  At the time of that interview, gold closed at $1,151.10 on the COMEX, a 59% rise to today’s price of $1,830.

Today, Faber remains very cautious, recommending to his clients and followers to hedge bets on the outcome of what he calls a “failed Keynesian policy” among governments and central bankers worldwide.  On many previous interviews around the world, he has stated he speculates that U.S. equities have topped this year, emerging markets appear vulnerable to a shock, and U.S. bonds remain in a massive bubble that someday will “end badly.”

How badly?

On Feb. 27, 2011, Faber conducted an interview with Colorado-based precious metals dealer McAlvany Financial Group, and said, “I think we are all doomed. I think what will happen is that we are in the midst of a kind of a crack-up boom [a term coined by famed Austrian economist Ludwig von Mises] that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it.”

Gold Market hit by Chinese Bailout PSYOP; $2,000 Gold “in 45 days,” says James Turk

The latest dirty trick to save global markets from nature’s healthy forces of ejecting the garbage came, as they usually do, out of the blue during Monday’s afternoon session in NY from none only than the Financial Times (FT), who reported that unnamed sources told the London financial journal that meetings with Italian officialdom and Chinese “white knights” were scheduled to discuss Italy’s scrumptious debt deal.

Not too surprisingly, equity markets in NY, desperate for any sign of reprieve to the inevitable death of the euro in Europe, suddenly got strong bids, reversing the overnight 3%-4% toilet flush in stocks during the European session, and proving once again the Times’ loyalty to uphold the wilderness of mirrors for yet another day.

According to our friends at zerohedge.com, the outfit that’s kept score of the number of Chinese bailout rumors launched since the beginning of the EU crisis, stated, “ . . . this is at least the 4th time that China has ‘bailed out’ Europe in 2011. We give this latest rumor a 15 minute half life.”

In addition, Zerohedge cited a report from Reuters, a news outlet that had no trouble finding a source who may know a little something or two of Chinese intentions in the Italian bond market, quoted Italian Economy Minister Giulio Tremonti on August 4 about what the Chinese told him. “We don’t understand what Europe is,” Tremonti said.  “The second point is that they say ‘if your central bank doesn’t buy your bonds, why should we buy them?’”  Zerohedgers wonder if Tremonti, too, has plans to spend more time with his family.  There’s no word from the straight shooter of a scheduled trip to NY, either.

This latest, in a four-part PSYOP, called “Operation Beat the Chinese Dead Horse,” perpetrated against the people of freegold comes on the heels of another coordinated attack on the gold market following the extended Labor Day weekend—the day the Swiss National Bank announced it will begin pegging the Swiss franc to the dying euro.  Instead of gold adding to its record high off the day’s London trading, threatening to again take JP Morgan’s shorts to the cleaners, the precious metal sold off sharply into the awaiting hands of the now-value-conscious Chinese.

Where was FT on this obvious anomaly?  Not even anonymous sources at JP Morgan could be reached for comment about this strange reaction in the gold market to a very gold-bullish news story out of Switzerland.

Goldcore, however, had this to say of gold’s mysterious sell off on that day:

“Asian traders spoke of some 4,000 lots of gold being ‘dumped’ on the COMEX and of a ‘large sell order.’ This would suggest that the sellers may not have been profit motivated and official selling may have been involved.”  GATA is right again!

And Reuter’s reported the morning of the NY open, “expectations that other central banks may step in to intervene in the currency market” may have factored into the “restraint” seen in the gold trade in London and NY.

Back to Goldcore’s take on the post-Labor Day sell off: “Given the fact that global currency wars have intensified and will likely escalate in the coming weeks, we should be mindful of peculiar and volatile short term movements that give false signals.”

“Investors and store of wealth buyers should continue to buy the dip,” it said.

And the man who knows all too well of the sanctioned criminal enterprise’s tricks in the gold market, James Turk, of Goldmoney.com, told Eric King of King World News on Monday that he wouldn’t be surprised if gold resumes its march higher in spite of central bank intervention yesterday to reinforce the phony double top on the gold chart.

“Gold is headed over $2,000 and if it doesn’t happen this month, it will probably happen in October,” he said.

Turk, one of a handful of guys who got it right on the prediction for another summer-of-1982-like bull move in the yellow metal, added, “So look at shakeouts like we have had today as yet another great opportunity to get rid of overvalued dollars, euros, pounds, etc., and trade them in for physical gold. . . Unlike debtors of all sorts, whether individuals, companies or governments, gold does not default.  This is one of the main reasons to own physical gold as the world’s financial system unravels around us.”

Silver So Critical, “Government may even Ban Public Ownership”

In an interview with GoldSeek Radio Chris Wolzcak, Dr. Steven Leeb, the co-author of the upcoming book, Red Alert: How China’s Growing Prosperity Threatens the American Way of Life, began the interview somewhat loathed in his strong recommendation for owning precious metals at this time, noting that a rise in the price of gold, especially, denotes the dollar’s expected fall from grace—which he said will turn “tragic” to citizens of “our great nation.”

As dire as the future of the U.S. economy may turn out, however, he told listeners the only way out of becoming a victim of the vicious currency war to the bottom is to hold gold.

But, when Wolzcak steered the conversation to the potential for the silver price during Leeb’s expected continuation of the precious metals rally, Leeb raised his level of enthusiasm a notch, and stated, “silver is going to triple-digits, I mean, I think there’s little doubt of it, because, you know, it’s a monetary metal with probably a longer history than gold’s.”

But here’s where the Leeb interview went beyond the overcooked reasoning behind silver’s expected rise as a hedge to the world’s currencies debasement war.  Leeb continued, “I emphasize this, [silver is] a critical . . . the best thermal conductor in the world, the best electric conductor in the world, and one of the best reflectors in the world.”

“And as a result, silver is a critic ingredient in solar panels. . . so silver is critical to making the transition to renewable energy . . . in computers . . . it’s critical in many, many areas,” he added.  “So silver has the potential to truly go exponential.”

Leeb builds a compelling case for owning silver by citing China’s plan to spend up to $1 trillion in renewable energy projects each year for the foreseeable future, which will destroy replenishing stocks from mining and recycling activities.  He then surmises that alarms will trip in Washington to a point of near panic level.

And World Gold Council data back Leeb up. The WGC reported China imported 3,500 tons of silver in 2010, and that’s in addition to India’s growing demand (and China’s) for the metal as an alternative to gold’s demand as an inflation hedge.  Further increases of silver imports, not only into China, but into India, too, could choke silver supplies a lot faster than people now think.

“I mean, once the Chinese build out their solar energy, and they haven’t up to this point, but they will, they’ll start accumulating silver, added Leeb.  “In fact, I wouldn’t be surprise right now if they weren’t accumulating a lot of silver.”

“And my prediction is that silver will go high enough, and if we recognize it’s so critical, that the government may even ban public ownership of it, like the government banned public ownership of gold during the Depression,” Leeb continued.  “I think, well, silver over $100 per ounce—I almost think it’s inevitable, that silver hits three digits to be honest with you.”

And it gets better for the silver junkies.  Leeb said, though the price of silver has soared nearly ten-fold during the bull market, mining activity during the decade-long run has been abysmally low, because, he said, silver has begun to move into the category of rare-earths.

And because of the powerful mismatch between expected world supplies and demand for gold’s kissing cousin, silver will become increasingly more rare, according to Leeb.  The Chinese, he speculates, “know they’re going to need more than there is to build out their solar energy.”  As crazy as the fundamentals sound for the outlook for silver, he said, “It’s documentable.”

Jim Sinclair applies Chaos Theory to Gold Price; Krugman loses Sleep

As a growing sense of a world about to turn upside down at any minute—and pretty hard, too—one has to wonder if much of the extreme political, social and economic events coming at us all at once from across the globe tie to the natural forces of a world desperately disentangling itself from the gross unfairness of a global economic model, its political systems contrived to enforce it, and the side-effects of its once-willing participants seeking justice through a the use of a new model now that the old one no longer works from them.

Those studied in such matters have already made the connection between the post-Bretton Woods era and today’s payback.  In fact, many have predicted the inevitable turmoil—but the sense (the underlying connection not yet made by many) that the world is about to change radically has finally begun to take hold of the mainstream, where it really matters.

“Markets usually do a pretty good job of coping with problems one at a time,” Oaktree’s Howard Marks wrote in a note to clients.  “When one arises, analysts analyze and investors reach conclusions and calmly adjust their portfolios. But when there’s a confluence of negative events, the markets can become overwhelmed and lose their cool. Things that might be tolerable individually combine into an unfathomable mess whose extent and ramifications seem beyond analysis.”

Isn’t what Mark describes a manifestation of a complex global financial model taking on a life of its own, as discussed in Nassim Taleb’s book, The Black Swan, which was inspired, in part, from Benoit Mandelbrot’s Chaos Theory?

But unlike the surprise fall of the Soviet Union in 1989, the collapse of the U.S. and Europe, along with the two regions’ 88% lock on global currency reserves, has, so far, played out in a most cruel and slow death.  But maybe that’s about to change.

According to JSMineset’s Jim Sinclair, the notion that the gold price has strayed too far from its 200-day moving average neglects to factor in Mandelbrot’s theories of the unpredictable nature of complex modeling outcomes.  Sinclair has said that the gold price has now moved into the “geometric phase,” taking a page from Mandelbrot’s work and applying it to the gold price.  If the $1,764 hold this year, Sinclair may also have his timing correct for the geometric phase, as well.

How many fat-tailed correlation plots of historical Treasury yields, money supply levels, debt-to-GDP ratios and a plethora of other broken relationships to the norm need demonstrating before other gold experts wake up to realize that the “new normal” mantra spewed on financial programs is the latest misdiagnosis of a condition that seeks to explain a malady that’s anything but normal.

But when feigned explanations for the rapid advance of the gold price from none other than the Sigmund Freud of economics, Paul Krugman, comes popping out in an early-morning exercise of free association during a bout of unexplained insomnia, you really know that overdue canary (U.S. economy) is never coming back out of that mine hole.

For more on this point, read Peter Schiff’s article, The Last Haven Standing

“The conscience of a liberal” still can’t find a conscience, it appears, and may explain his insomnia.

“Yes, it’s 4:30 a.m. where I am,” Krugman began his post.  “I found myself wide awake, thinking about gold prices. You got a problem with that?”

No, hard-money advocates don’t have a problem with that, Krugman.  But apparently, you have one.

Ever since Jim Sinclair, James Turk, Peter Schiff, James “Mr.” Dines and Richard Russell began losing sleep, too, over the inevitable fate of the U.S. dollar—back in 1999—readers rightfully discerned the authenticity and motive of these fountainheads of money theory by taking action to protect themselves from a debauched dollar way back then—and have since been sleeping very well.  And by the way, anyone who seeks to communicate with made-for-Princeton deterministic graphs, not only shows a lack of understanding of the possible applications of Chaos theory to global markets, but demonstrates an unwillingness to communicate to others outside of the Church’s cryptic language, too.  Maybe that’s a good thing.  Go back to sleep.

Peter Schiff: get Gold, U.S. Economy will “never recover”

Euro Pacific Capital CEO Peter Schiff said the telltale signs of another leg down to the phantom U.S. economic recovery has begun to emerge more clearly of late, capitulating the next layer of investors who now get the thesis of Schiff’s earlier warnings before everyone rushes to the precious metals counter—a la January 1980.

Further underscoring the Schiff thesis, the Swiss National Bank announced Tuesday its intentions to intervene in the Forex and halt the relentless rise of the franc at the 1.20 level against the euro, effectively slamming yet another door on the fingers of investors seeking capital preservation away from the coordinated U.S. dollar-euro debasement scheme.

Only days before the SNB announcement, Schiff stated in his Friday article, “The SNB even recently threatened to peg the franc to the euro.  It’s as if survivors on one of the Titanic’s lifeboats were so confused and bewildered that they began tying their boat to the sinking behemoth out of a desire for a ‘stable relationship.’”

Many astute investors who frequent zerohedge.com believe the SNB may be preparing for another swoon in the euro.  And the timing of such a move down against the dollar just prior to the FOMC meeting scheduled for Sept. 20-21 would be most fortuitous for the Fed in its scheme with chief tag-team partner the ECB to see-saw the two dominant reserve currencies to oblivion.

And with a little help from U.S. plant at the IMF, Christine Lagarde (another fortuitous appointment to replace euro-centric Dominique Strauss-Kahn), who has wasted no time publicly contradicting ECB chief Jean-Claude “Tricky” Trichet’s clean bill of health diagnosis of the state of European bank capital levels, it now appears the rigged game between the euro and dollar plays on in earnest.

With the latest SNB move, central planners on both sides of the Atlantic have now enjoined the Swiss into the growing globalist cabal, enslaving those holders of Swiss francs too daft or trapped to flee to the freedom inherent of gold.  Some wonder whether the Swiss decision to formally un-peg its currency to gold at the time of the launch of the euro in 1999 foreshadowed a conspiracy of a one-world reserve currency to follow at a later time.  Tuesday’s uncharacteristic action by the SNB to debase the franc so overtly only serves to fan those flames further.

Schiff, former candidate for U.S. Senate from Connecticut, pointed out on The Schiff Report that in addition to the ever-growing strong fundamentals for a higher gold price (especially now that the Swiss have joined the central bankers’ crack den), he believes a high-profile sentiment reading has just turned to a buy signal for accumulating gold now.

Schiff surmises that PIMCO Co-CEO Bill Gross’ recent flip-flop on the outlook for U.S. Treasuries—to, now, move higher in price (yield lower), from his earlier call for a top in Treasuries of 2.7% – 3.0% yields on the 10-year note during the late spring of 2011, could be a buy signal for gold and correspondingly a signal to sell U.S. Treasuries.  In other words, Schiff thinks the long-awaited pop in U.S. sovereign debt is imminent.

“This [Bill Gross' revised call] may be one of the biggest capitulations ever, which could be a sign that the bond bubble is about to burst,” Schiff chuckled.  Back in May-June, Schiff added, Gross believed that the U.S. economy was on the mend, “and thought a recovering U.S. economy would mean higher rates, which is why he wanted out of Treasuries.”

“Well the reason he now wants back in,” Schiff continued, “despite the fact that the yields are even lower (1.97% 10-year note) and the prices are higher than when he got out, is because now he is convinced that there is no recovery and so he wants to be in bonds.”

Schiff wrote in a piece on Friday, entitled The Last Haven Standing, “No longer is the U.S. dollar the default shelter; instead, gold, the Swiss franc, and the Japanese yen are the preferred assets.”

Well, we can eliminate the Swiss franc, now.  And, as far as the BOJ is concerned, it, too, suffers from its own “Swiss problem,” with the yen being repatriated back from two decades of overseas flight into higher-yielding assets, in response to a rebuilding effort following the two-punch disaster of an earthquake and tsunami earlier this year.  The reverse in yen flow could last a few years longer, some analysts have suggested.  The BOJ has established a ceiling of 74-76 yen against the dollar since the tsunami and reported in August it would take further measures to stem the rise in the yen.

Therefore, investors are now left with record-low yields in the U.S. Treasury market and dollar-induced inflation still in the pipeline from QE2, QE2.5 and possibly more at the conclusion of the FOMC meeting of Sept. 21, at the earliest.  For nearly a decade, Schiff’s ultimate point has been: Why wait to watch the last man standing in this phony currency war fall to the relentless punishment of the world’s true reserve currency, gold?

WikiLeaks drops Bombshell on Gold Market; GATA right again!

With an avalanche of ever-tantalizing news stories and upcoming nail-biting scheduled officialdom events in both Europe and the U.S. all hitting the gold market at once in September, discerning the story that could propel some distance from Jim Sinclair’s exosphere target of $1,764 in the gold price weighs heavily in favor of the WikiLeaks story and its potential explosive impact on the price of gold from today $1,900 print to Sinclair’s ultimate target of $12,000+.

Though the European financial crisis soap opera moves from Greece and Portugal to, now, Italy and Germany, shifting temporarily away from France, with Belgium’s dirty laundry on deck in case there’s a lull in the action, the WikiLeaks release of a U.S. State Department internal cables on the subject of Beijing’s plan for undermining the U.S. dollar through the gold market even trumps the Israel/Turkey potential gray-swan military conflict brewing in the Mediterranean (could ex-CIA operative Robert Baer be right about an Israeli attack in the region by the fall?).

The leaked State Department U.S. embassy cable – 09BEIJING1134, published by WikiLeaks exposes both the clandestine operations at the Fed/Treasury as well as reveals who’s been sleeping with the enemy.

According to China’s National Foreign Exchanges Administration, China’s gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the United States and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar’s role as the international reserve currency. China’s increased gold reserves will thus act as a model and lead other countries toward reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the renminbi.

And now we all know that Beijing knows of the gold suppression scheme, and that Washington knows that Beijing knows of the scheme.  So what does that mean for the gold price?

Zerohedge wrote:

Wondering why gold at $1,850 is cheap, or why gold at double that price will also be cheap, or, frankly, at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar’s reserve status. Putting that into dollar terms is, therefore, impractical at best and illogical at worst. We have a suspicion that the following cable from the U.S. embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24-karat pool.

So, out of the raft of news coming out from across the globe, the WikiLeaks story trumps them all.  And, of course, you won’t see this breaking story run on CNBC.

And now for the story behind the story.  A score between GATA and Jeff Christian of CPM Group needs to be settled once and for all.

Now that this smoking gun evidence of the gold suppression scheme has been entered atop an already sky-high stack, thanks to WikiLeaks, can there now be any doubt left as to who has been spewing filthy misinformation (some say malicious lies) between the combatants of a two-year-long battle between former Goldman Sachs gang member Jeff Christian of CPM Group and Bill Murphy and Chris Powell of Gold Anti-Trust Action Committee (GATA) surrounding GATA’s accusations that the COMEX has been the center of a gold price suppression scheme—a scheme which in still in progress?

But if you’ve already been following GATA’s Yeoman’s work of exposing the gold cartel’s borderline-treasonous gold suppression scheme in addition to exposing the cartel’s no. 1 apologist Jeff Christian for his errant ways, this weekend’s leaked cable should come as no real surprise—which brings us to the question of Christian’s credibility as a gold market analyst and, maybe, ultimately, of his character.

If Christian has positioned himself as an authority on the gold and silver market, how did he not draw the conclusion that something fishy was (still is) going on in the gold futures market between two banks which held monstrous-size paper short positions?  With the pile of evidence backing GATA, coming from so many credible and official sources, we wonder whether Christian had ever heard of the term Occam’s razor?  Or does he suffer from the dreaded “normalcy bias”?  Can he, truly, be that naïve?

Are we to believe that Christian actually could be waiting for an admission of guilt by a pack of sociopath white-collar criminals, or is he that unsophisticated or incompetent? or worse?

Read his Caine Mutiny’s Lt. Tom Keefer testimony at the CFTC hearing of March 2010.

Christian’s sophomoric assumptions on several key issues discussed at the CFTC hearing smacks of either a serious case of Dennis Gartman-itis, or demonstrates the dangers of relying upon the judgment of a public-school graduate deficient in his knowledge of basic ancient and medieval philosophy.  The principle of Occam’s razor, in this case, points to serious questions to Christian’s loyalty to the gold community, its hard-money advocates and the U.S. Constitution itself.

But don’t be surprised if Christian is still asked to appear on Bloomberg or CNBC as a gold “expert” who stands ready to offer his advice for protecting your money.

However, to gain insight into the core issues surrounding gold (and silver) and the reasons why its price must be suppressed by the Fed, GATA’s Web site, www.gata.org, offers the explanations as well as provides a treasure trove of information to help you navigate the ongoing collapse of the West’s fiat currencies.

On Gold: Team Sinclair-Turk 1, Marc Faber 0

Unless the gold price tumbles $400 in response to a surprise 500,000 rise in the Labor Department’s Non-farm Payroll Report, scheduled to be released prior to the NY open today, it appears the team of James Sinclair and James Turk have won the gold in the fight to be right on the move in gold this summer.

On June 23, as gold settled at $1,511, Sinclair stated, “Be prepared for covert QE between July 1st and late August when stimulation goes wild.  Be prepared for gold to take out $1,650 on the upside as magnets at $12,544 come into play.”

At that time, the gold community opined that Sinclair’s multi-year $1,650 gold price prediction may not be reached this year, after all.  Not only was the Sinclair call a gutsy one in the wake of 30+ years of seasonal data which suggested otherwise, it showed a man who’s willing to put his reputation on the line for the greater good of the investment community.  He sells nothing on his Web site, takes calls from anyone seeking his advice at all hours of the day—gratis, and doesn’t grumble or seek credit for his deeds.

And the other man of the gold medal team, James Turk, a man whose knowledge base and, more importantly, integrity, within the global bullion community, had said repeatedly the move in gold during the summer of 2011 will emulate the 50 percent move in the precious metal during the summer of 1982—the time of the Mexican peso devaluation.  He warned traders in June to hold gold during strength, not sell into the seasonal low period as is the custom.

James Turk is founder of bullion storage service GoldMoney.com.

On June 14, Turk told King World News to expect the unexpected in the price of gold during the summer’s intermission period of June-August.

“Everything is all set for new record high prices in both metals this summer, which is going to surprise a lot of people,” he said.  “I just think that people don’t really understand what can happen this summer.  We’ve spoken before about the summer of 1982 when the gold price rose 50% from June to September, propelled back then by the Mexican debt default.”

Turk added, “This summer, you could see a move higher in gold and silver that literally shakes the world.”
And shake the world they did.

For the first time in the infomercial CNBC’s 20-year history, the echo chamber of Wall Street’s tread-worn stock hucksters such as the likes of Morgan Stanley’s David Darst, decided it’s best to hedge its bet against plunging into the credibility abyss along side Morgan Stanley, or worse, Standard & Poor’s, by finally covering gold’s 11-year rally and by beginning to admit that the world may not be flat after all.

Gold’s emergence as a bona fide asset at CNBC is especially telling, as the duped legion of Lord Haw-Haws for the 40-year “in-crowd” intellectual dictatorship presently ruled by economist icons Paul Krugman, Ben Bernanke, Alan Krueger and other pseudo intellectuals at Princeton’s Woodrow Wilson School appear to sense that these despicable frauds will soon be exposed as a two-bit pack of 15th century shamans—at the very least!

And it could turn out that the year 2011 will be seen as the turning point of tyrannical rule of the U.S. dollar, in smaller part, in Libya and Egypt, but in a much more meaningful way in the fall of the evilest of empires of them all, The Fed—and just maybe a mass movement back to the principles of the U.S. Constitution is underway.

Jim Sinclair and James Turk are due some credit for their parts in exposing the most ruthless of tyrannies, The Fed, over the many years, and luckily have been afforded a mic now that the decade-long bull rally in gold has made their points illustrative.

And for the runner up to this inconsequential sideshow “bet” among raging gold bulls, Marc Faber, he is, indeed, not only the most entertaining money manager of the planet, he’s woken up more people to gold as the ultimate form of money than both Sinclair and Turk over the past several years through his made-for-television personality and cover of his Swiss-national status.  Americans can’t get away with making fun of the dollar like a Swiss can.  Ask U.S.-born Peter Schiff, another one who’s gotten it right.

These three man have gotten the overall trend in gold right for a decade, which is really all that investors need to know.  Long-term investors of gold did equally well irrespective of the hard-money advocate you follow.

Peter Schiff on Gold Confiscation; sees Gold Rush coming, slams former Goldman Sachs’ Dennis Gartman

In the latest of his regular appearances on Goldseek Radio, Peter Schiff takes on the question of the possibility of the U.S. government instituting a 1933-style gold confiscation against the American people—a tactic that crosses the minds of holders of gold who fear a desperate government will deploy desperate measures in the event of a Fed failure to save America from a serious collapse in the U.S. dollar.

First, Schiff clarified the event surrounding FDR’s Executive Order 1602, signed into law on April 5, 1933, which required U.S. citizens to deliver to the Federal Reserve all but a small quantity (more than 5 ounces) of gold held by them in exchange for $20.67 per troy ounce.

Contrary to myth, Exec. Order 1602, he said, didn’t include the threat of law enforcement knocking on doors and “ransacking” homes.  Instead, citizens quietly  volunteered to deliver their gold to their nearest Fed facility on their own.  There was no rough stuff from the Feds.

The word, confiscation, as it has typically been termed to describe Exec. Order 1602 is really somewhat of a misnomer, according to Schiff.  Even though penalties for not complying with the Order included stiff financial penalties, imprisonment, or both, it was not considered a realistic threat.  At that time, Americans typically rallied around the president during times of trouble, and were more likely to sacrifice for the good of the nation.

Today, a cynical populous would most likely take another Exec. Order 1602 as a sign that the dollar was imminently in trouble, therefore most likely affecting an opposite reaction by the American people and global participants; the rush into gold would be fierce, and probably would be the trigger that collapses the greenback.

Other stories of banks allowing Treasury officials across the nation access to privately held safe deposit boxes are just another twist to the mythology.

From Wikipedia:

In fact, safe deposit boxes held by individuals were not forcibly searched or seized under the order, and the few prosecutions that occurred in the 1930s for gold hoarding were executed under different statutes. One of the few such cases occurred in 1936 when the safe deposit box of Zelik Josefowitz, who was not a U.S. citizen, containing over 10,000 troy ounces (310 kg) of gold was seized with a search warrant as part of a tax evasion prosecution.  In 1933 approximately 500 tonnes of gold were turned in to the Treasury “voluntarily” at the exchange rate of $20.67 per troy ounce.

Though another FDR-style confiscation wouldn’t work today, Schiff said, it’s not something gold investors should ultimately fear today.  In fact, the government’s mission to devaluing the dollar has never been easier, he said.

“The reason we had confiscation in 1933 was because we were on a gold standard,” Schiff explained.  “And Roosevelt wanted to devalue the dollar, but he couldn’t do that unless he took everybody’s gold first.  Well, we’re not on the gold standard any more.  We’re devaluing the dollar every day.  Ben Bernanke just runs them off the printing presses.  That’s what Quantitative Easing is.  The government can devalue the dollar without confiscating gold.”

On the state of the gold market, Schiff senses a big move up in the price of gold is imminent and scoffs at the notion that gold is in a bubble.  He said the opposite is true.

“I think the bull market is about to go into, or has just entered into a brand new phase that’s going to see even more profits made, particularly in the mining sector,” Schiff stated.

And, on the subject of the publisher of The Gartman Letter, Dennis Gartman, Schiff slammed the “sheep-in-wolves’-clothing” (as many in the gold industry refer to him) and former Goldman Sachs analyst, chiding Gartman for gold bubble talk as pure “nonsense.”

Schiff explained that for gold to be in a bubble, more than just talk of a bubble in the gold market would lend credence to the idea.   Gold will enter a bubble phase when those talking about a bubble in gold, now, eventually become holders of gold themselves.  But by then, he added, they won’t see the bubble in gold.  That’s when a discussion on the subject of a gold bubble would make more sense to Schiff.