Jim Rogers & Peter Schiff Agree, U.S. Treasury Crisis in 2013

Commodities guru Jim Rogers and Euro Pacific Capital CEO Peter Schiff have recently gone on the record that the next harrowing event in the ongoing global financial crisis will most likely take place after the presidential election, with the crisis in Europe spreading to Japan and the U.S. Treasury market sometime in 2013.

In recent weeks, the 69-year-old Rogers has said politics and the natural downside of the ‘business cycle’ will determine the timing of the next big drop in most financial assets. Sign-up for my 100% FREE Alerts

“This is an election year in the United States, as you well know, and there are something like 40 to 45 elections over the next 12 months, including France, U.S., Germany,” Rogers told Opalesque Radio.  “So we have a lot of elections, a lot of politicians who want to be re-elected.  So there’s going to be a lot of good news.

Rogers added, however, historical data show that the ebb and flow of business activity suggest to him that the rebound from the crushing lows of corporate profits, stock prices and GDP during the 2008-9 economic and financial collapse has run their course.

As negligible as the rebound of the economy has been, with GDP still not back to the peak of $13.1 trillion for 2008, the time has come for the next leg down, according to him.

“The overall situation is getting much worse because the debt is going through the roof for all of us,” he continued. “You should be worried about 2013, 2014, but overall, 2012 won’t look so bad.

“In America, we’ve had an economic slowdown, or recession, every 4 to 6 years since the beginning of the Republic.  So you can do the addition, by 2013 or 2014 we’re going to have another . . . we’re overdue for another recession.  And if it comes, the markets are anticipating that . . .”

Within the context of the so-called two-year ‘recovery’ that still has yielded less U.S. GDP for 2011 than was achieved for 2008, along with higher overall debt at the federal level, the downside to the U.S. dollar, and by implication a U.S. Treasuries sell off, could be severe, Rogers has said in previous interviews.  He still holds to that thesis.

“There’s going to be more currency turmoil in the next year or two. . . as these imbalances are sorted out,” he concluded.

Though Rogers didn’t mention his short position of U.S. Treasuries during the Opalesque interview, he did announce earlier in the year that he has taken a short position on U.S. Treasuries debt, citing limitations to the upside in prices (lower rates) while the Fed maintains its dominate position as the ‘buyer of last resort’, and due to waning demand, to outright decreased holdings, from foreign buyers.

Echoing Rogers’ outlook of the U.S. Treasury market is Peter Schiff.  In a telephone interview with financial publication Forbes, he said ultra-loose monetary policy at the Federal Reserve only serves to exacerbate the snap back to the imbalances Rogers spoken about in the Opalesque Radio interview.

“The more you delay it, the bigger it will be,” Schiff told Forbes, Tuesday, “so we need to raise interest rates during the recession to confront the inefficiencies.”

“We consume more than we produce and we borrow abroad, but we are never going to be able to pay them back,” Schiff continued, a conclusion that appears to have been drawn as well by the nations responsible for driving global growth for more than a decade, the BRICS.

Heads of state from the nations of Brazil, Russia, India, China and South Africa signed an agreement in New Delhi, Thursday, making way for a credit facility as a means of extending credit between the five-nation block in their own currencies, thereby bypassing the U.S. dollar for international trade.

The fourth BRICS summit is the latest in a rapid trend by developing nations to disengage from the dollar/euro reserve currency protocol.  In addition to the agreement, the five-nation block also called for reforms to the World Bank and International Monetary fund (IMF).

Since as early as 2000, Schiff has warned that the world’s producers of goods and raw materials will one day stop extending credit to the debtor nations as the debt levels become unserviceable.  That means it’s inevitable that the U.S. dollar falls further and interest rates rise to reflect the added risk of holding U.S. Treasuries.

At that time, few in mainstream media (MSM) took Schiff seriously, while some scorned him, when he warned of a dollar collapse.  But today, he has been partially vindicated.  Gold has risen sharply against the two reserve currencies, the U.S. dollar and euros, since 2000.

However, contrary to what Schiff’s pundits now say, the worst has not passed; there’s much more currency debasing to come, including a U.S. Treasury market collapse.

“All of the people who were 100% wrong [back in ‘08] are saying that everything’s okay [now],” Schiff said.  “I am telling them they didn’t solve the problem and are making it so much worse.”

According to Schiff, the U.S. Treasury market is set for a big fall in 2013, and he expects to be right once again. Sign-up for my 100% FREE Alerts

Bernanke with ABC’s Diane Sawyer; Do You See What I See?

ABC news released a video on its site of Diane Sawyer’s interview with Federal Reserve Chairman Ben Bernanke, aired on Tuesday.  Aside from the light moments of the conversation with the veteran journalist of 60-Minutes fame, Bernanke appeared obviously strained, tired and defeated in response to Sawyer’s pointed questions regarding U.S. jobs, the economy and inflation.

A look at the written transcript of the interview reveals nothing newsworthy from Bernanke.  However, after watching the Q&A, the viewer should come away with a sense that Bernanke knows he’s lost control—a sense that market forces and politics have become too strong at this juncture of the Kondratiev cycle to avert a catastrophe.  He also knows he’s lost credibility with the international financial community. Sign-up for my 100% FREE Alerts

Watch the Diane Sawyer interview, then contrast Bernanke’s tenor with his demeanor during his Dec. 6, 2010 interview on CBS News 60-Minutes, when he assured the world of his ability to halt inflation within 15 minutes if inflation appeared to run out of control.

Notice in the Dec. 6 interview the power and confidence in his voice and posture as he confronts the question regarding the future risks to inflation from the $600 billion “quantitative easing” program embarked upon by the Fed’s QEI program in 2010.

In contrast, in his March 2012 interview, there’s an obvious lack of any noticeable confidence to any statement he makes about key points of the financial crisis, jobs or inflation.

The most telling part to Bernanke’s presentation during the ABC News appearance came late in the interview, when he was reminded by Sawyer of the statement he made on the Dec. 6 interview with 60-minutes regarding his ability to stop inflation as a result of the Fed’s expanding balance sheet.

DIANE SAWYER: You said at one point in an– in 60 Minutes interview awhile back that you felt you could control it 100%. [emphasis added]

BEN BERNANKE: No, I didn’t say that. What I– the question was– did we have confidence in the tools that we have to unwind the large balance sheet increases for example that we’ve done. And– and I– I do have 100% confidence that when the time comes to unwind– the actions we’ve taken– that we would be able to do that.

Yes, he did say that!  And he said it forcibly and in a manner intended to instill confidence with the public in the Fed’s ability to control consumer prices as a potential consequence of its ‘quantitative easing’ program.

Bernanke responds to journalist Scott Pelley during the Dec. 2010 on 60-Minutes:

SCOTT PELLEY: Can you act quickly enough to prevent inflation from getting out of control?

BEN BERNANKE: We can raise interest rates in 15 minutes if we have to . . .

SCOTT PELLEY: You have what degree of confidence in your ability to control this?

BEN BERNANKE: 100%

Maybe Bernanke isn’t so sure, after all.

Back to Sawyer.  When asked if he would accept another term as Fed Chairman, Bernanke appeared somewhat flatfooted.  He came across as if to say, “I want out.  I’m tired, and this thing isn’t working.”

DIANE SAWYER: So if– a president, whoever it is in 2014 asks you to stay–

CHAIRMAN BERNANKE: Well–

DIANE SAWYER:—would you think about it?

CHAIRMAN BERNANKE: –I’ll– I’ll– I’ll think about anything, but– basically– it’s just– too hypothetical at this point. Sign-up for my 100% FREE Alerts

Obama’s Devious Plan to Crush Gasoline Prices

In an election year reminiscent of George H. W. Bush’s 1992, recent polls reveal President Obama’s sudden drop in approval ratings can be directly tied to the economy, but more precisely, to gasoline prices.

Three polls conducted in March show the President dropping sharply among those who approve of his performance, with the NY Times/CBS News poll registering the lowest and most dismal 41 percent approval rating. Sign-up for my 100% FREE Alerts

Details of the three surveys strongly suggest that Americans, though still upset about the lack of well-paying jobs, are most angry about rising gas prices—which have risen to levels hovering $4.00 in many states.

Republican consultant Mike Murphy told Bloomberg News that on top of a stalled U.S. economy and disappointing jobs picture, gas prices are destroying an already-tight family budget.

“I think the President suffers from a lack of public confidence in his economic leadership,” Murphy stated in an email. “Any bad economic news, in this case soaring gas prices, triggers a fast decline in his numbers. He lacks any reserve of support on economic issues to fall back on. This is a definite sign of political vulnerability.”

Not unlike the Operation Desert Storm of 1990, oil prices are expected to rise sharply if the U.S. executes a military strike on Iran, which would then not surprisingly lead to even greater economic woes for a troubled U.S. economy.  Some have even suggested that a spike in the price of oil to the $150 – $200 per barrel level this year could finish the U.S. economy, leading to a dollar crisis.

Economists strongly believe that escalating gasoline prices pushed the U.S. economy into recession in 1991, torpedoing any chance of a second term for George H. W. Bush.  Undoubtedly, the politically battered Obama doesn’t intend to make the same mistake.

—Obama’s plan to crush gasoline prices in time for the Fourth-of-July weekend

On Mar. 24, not-for-profit International Movement for a Just World reported that preliminary U.S. government data show a 25 percent jump in oil imports from Saudi Arabia, “the highest level since mid-2008.”

“The White House has been scrambling for options to bring down gasoline prices — at a seasonal record high — during an election year, after concerns over an Iranian supply disruption launched benchmark Brent crude to over $120 a barrel not seen since the record price run of 2008,” according to the article’s authors Matthew Robinson and Jonathan Sau.

“Washington has urged ally Saudi Arabia to cover potential shortages when new U.S. and European Union sanctions are expected to reduce Iranian oil exports from July,” Robinson and Sau added.  “The Obama administration has considered releasing strategic oil inventories, potentially as part of a bilateral deal with Britain.”

How much oil the U.S. ultimately intends to stockpile cannot be known, yet.  But, so far, the number of barrels in play appears to be rather significant, which, ironically, makes a strong case for U.S. stockpiling contributing to the recent rally in WTIC above the $105 level, a level that could be unwound at more fortuitous time for the President.

Robert Fitzwilson, founder of boutique investment firm The Portola Group told King World News on Tuesday that, quietly, the U.S. is importing millions of barrels of oil in addition to its regular shipments from Saudi Arabia.

Fitzwilson speculates that the additional imported barrels could be used in the event that the Strait of Hormuz is closed during a military strike on Iran, or could be used to prepare for sanctions imposed on Iran to fully shut out the nation’s three-million barrels per day of production come the July 1 deadline for Iran’s customers to make other arrangements.

“Saudi Arabia is suddenly sending 22 million barrels to the United States.  Why did they do that?” Fitzwilson asked rhetorically.

“Are they trying to get paid for it before there is some sort of eruption in the Middle-East?  Is the U.S. stockpiling oil ahead of war?”

Maybe not.

Contrary to a growing consensus, war with Iran, if it actually happens, may not be executed until after the U.S. elections.  With the Fed expected to formally announce additional purchases of Treasuries and Agency debt in the coming months, a double-whammy response to the oil price from further dollar debasement and a war with Iran would usher a new president in as fast as President Bill Clinton was swept into the presidency in 1992.

A scenario, the one proffered by commodities guru Jim Rogers, of a relatively calm 2012 commodities market, with economic Armageddon reaching the U.S. in 2013, would make much more sense for a sitting president than an obvious $6 gasoline kiss of death during an election year.

“This is an election year in the United States, and a lot of politicians want to be re-elected,” Rogers told Opalesque Radio on Mar. 22.

“You should worry about 2013, you should be very worried about 2014, but this year, more or less, is not going to be so bad,” he added.

As expectations for record gasoline prices slated for this summer abound, President Obama, not only wants to continue talking about high energy prices during the campaign year, so he says, but he may also want to control the dialogue of gasoline prices with the American people all the way up to the Fourth-of-July weekend, at which time he simultaneously floods the oil market with the U.S. oil stockpile and makes peaceful overtures with Iran.

The Rogers scenario of a relatively quiet commodities market for 2012 just makes more political sense, assuming, of course, a Nassim Taleb Black Swan doesn’t spoil the plan.

Unlike the relatively thin gold market, whereby naked short selling can push the price of gold down during lulls in overseas trading, the oil market is much too big and deep for JP Morgan’s manipulation tactics to have any meaningful effect on the price.

Instead, that’s where the quiet stockpiling of oil can be then dump to trigger stop-loss orders in the futures pits, squashing the oil price with the physical commodity in conjunction with an orchestrated temporary cooling of tensions in the Middle East.  Gasoline prices will follow the oil price down.

Then . . . the coast will be clear for the disaster of 2013. Sign-up for my 100% FREE Alerts

Attention Silver Bugs: Get Back into the Pool—NOW!

Insiders to Fed Chairman Ben Bernanke’s speech, delivered at a gathering of the National Association of Business Economics, popped silver futures higher by more than 60 cents within minutes of the NY open on Monday.  In his speech, Bernanke has finally admitted that more QE is needed, and his needed excuse is: fight stubbornly high unemployment.

The recent alleged decline (see ShadowStats.com) in the unemployment rate reflects a “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009,” he said to attendees in Arlington Virginia. “To the extent that this reversal has been completed, further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.”  Sign-up for my 100% FREE Alerts

“Continued accommodative policies!”  Translation: Attention silver bugs!  Get back into the pool—NOW!

While the FOMC is now stacked with nine doves to Bernanke’s 10-person committee, with Richmond Governor Jeffrey Lacker playing the sole bad cop in his role of providing the occasional head fake for those traders who don’t quite grasp the Fed’s communique con game, yet, there’s nothing stopping the Fed from its mission to monetize crushing levels of U.S. Treasury debt (save a long-shot Ron Paul win in November, of course).

To that point, on Friday, Gabelli & Company’s Caesar Bryan warned precious metals investors of the Fed’s ability (and a complicit media) to sway sentiment among the uninformed momentum traders who routinely push the silver market to massive extremes on the way up and on the way down.

“What we’ve seen is some optimism surrounding the U.S. economy,” Bryan told King World News. “This has led to people now thinking that the Federal Reserve can stop expanding their balance sheet and indeed begin to withdrawal some of their stimulus.

“So there’s been a pretty big change [due to Fed and media propaganda] in the last six weeks.  However, I think it’s important for investors to understand these mood swings can be pretty quick and violent.”

Bryan goes on to tell KWN that, though the Fed talks a tough game, it cannot stop expanding its balance sheet without imploding the entire global financial system—a point still not grasped by the majority of investors holding sovereign and corporate debt as well as money market accounts.

“There is real pressure for the central bank to continue to buy at the long end of the bond market to prevent long-term interest rates from rising,” Bryan said.  “So don’t be surprised in the next couple of months when psychology shifts back to people thinking the Fed will remain active.”

In retrospect, those “next couple of months,” according to Bryan, turned out to be only a couple of days.

But if investors can take to heart 50-year veteran Jim Sinclair’s macro outlook for gold (by extension, silver), long and drawn-out declines in the silver price provide excellent entry points for newcomers and accumulators, or ‘stackers’.

According to Sinclair, the Fed had already set course to monetize debt and devalue the US dollar following the collapse of Lehman Brothers in 2009, no matter what Bernanke may say about unemployment, the economy or anything else.

Moreover, geopolitical considerations regarding Iran and the White House’s decision to cut Iran from SWIFT only serves to hasten the dollar’s decline.

On Saturday, Sinclair posted on his Web site JSMineset.com:

The major financial weakness in the U.S. is the level of the U.S. dollar due to sundering use in international contract settlement [accelerated by cutting Iran from SWIFT], the clear and present trend of substituting both the Yuan and Euro as international settlement currencies, and the lack of true economic buyers in the U.S. long bond market.

History will record this decision at this time as a major factor in the final move to financial unwind in the West.

The letdown of the housing report today does not support the majority view that the U.S. is gaining take off speed economically. It is not. It will not and QE will go to infinity, about that there is no question. [Emphasis added]

Of course there’s no question about QE-to-infinity, as Sinclair has suggested all along; the question really is, who will be blamed for the roaring consumer price hikes to come?  The Fed or Iran and speculators?  Sign-up for my 100% FREE Alerts

Max Keiser Tipped Off to Gold’s Next Major Move

In a recent episode of the Keiser Report, Max Keiser’s nose for bank fraud demonstrates, not only how the Fed and its 21 primary dealer network steal via insider trading throughout the U.S. central bank’s ‘Quantitative Easing (QE)’ programs, but that record purchases of Agency debt by these 21 banks of the last two months tip him off that another QE announcement is around the corner.

Keiser quotes Pento Portfolio Strategies’ Michael Pento, who told King World News on Mar. 17 that banks have purchased suspiciously high amounts of Treasuries and Agency debt during the first two months of 2012—amounts that are so large, it can only mean that the Fed’s member banks have already been told of the Fed’s next move regarding its ongoing QE activities, according to Keiser.  Sign-up for my 100% FREE Alerts

“Commercial banks have purchased $78.2 billion in Treasury and Agency debt in January and February of 2012,” Pento told KWN.  “That’s already more than the entire amount of purchases made in all of 2011 . . . “

Keiser wisely points out Pento’s observation of the Fed’s market operations and its deleterious effects upon American consumers, especially the poor, who see food and energy prices soar as a result of the Fed’s QE programs.

But the clever means by which the Fed “gifts” these 21 member banks through its camouflaged money printing operation also “telegraphs” the Fed’s next major announcement regarding QE, according to Keiser.

“The word has gone out to the hedge fund community that the next round of Quantitative Easing, they’re going to buy back this agency debt for par, for 100 cents on the dollar.  And so, it’s another gift to the banks and the hedge funds; they’re telegraphing what they’re going to do.  It’s insider trading—again—for the banks.”

Moreover, along with the financial fraud at the Fed, the media has lent a helping hand by heralding an economic recovery in the U.S. as a means for dropping the gold price so that other central banks are able to acquire the yellow metal at lucrative price points.  In its part to dupe investors, the Fed claims deflation, not inflation, should be feared, though food and energy prices have continued to move higher throughout the crisis, which began in 2008.

“So certain people are telling us that deflation is the problem and yet gas, food and import prices are all showing significant inflation,” Pento said in a KWN interview of Feb. 22.  “Oil is now trading over $105.  So right now we have the highest price for gasoline ever at this time of the year.

“Yet Bernanke is telling you there is no inflation and that deflation is a problem.”

As unsuspecting gold investors sell out their holdings in the belief of chronic media-driven deceptive communiques from the Fed, official holdings of the precious metal, on the other hand, continues to rise each year.

Financial Times of London reported:

In a note to clients this week, Credit Suisse referred to “aggressive central bank buying seen last Friday”.

The Bank for International Settlements, which acts on behalf of central banks, has been buying significant quantities of gold on the international market amid falling prices, traders said.

According to several estimates, the BIS bought 4-6 tonnes of gold, worth roughly $250m-$300m at current prices, in the over-the-counter physical market last week, with purchases particularly strong at the end of the week. The total purchases over the past three or four weeks were likely to be as much as double that, the traders added.

Central banks have definitely been looking at gold as an asset class much more closely ever since European central banks stopped selling,” a senior gold banker said. “There has been a huge interest.  Emphasis added.

Keiser told his viewers, the evidence is clear.  Gold is going higher and the central bankers are loading up before the big move higher.

Market volatility in the next two years is expected to run extremely high, a condition in which gold performs very well, according to Keiser, adding that investors should opt out of the fraudulent financial system (operated by “psychopaths”) and profit from the ongoing crisis by owning gold.

“The only way you lose [lower gold prices] is, if things go like it’s like 1955 again and Eisenhower is the president,” Keiser began an information-packed rant for which he has become famous.   “It’s the only way you lose. So unless Eisenhower is coming back to become president of the United States, gold is going higher.  That’s your risk, that Eisenhower is reanimated and stuffed and put in the White House, and it’s ‘I like Ike’ and we went backwards in time.  That’s your only risk in owning gold.”  Sign-up for my 100% FREE Alerts

Robert Prechter’s Dire Prediction for 2012

Speaking with Financial Sense Newshour’s Jim Puplava on Thursday, Robert Prechter of Elliot Wave Theory fame said he doesn’t think central banks can continue re-inflating the popped credit market bubble past Election Day.  He believes that market forces will conspire against the politicians and collapse the system before November. Sign-up for my 100% FREE Alerts

“I think the third big mania of the last dozen years is pretty much topping in 2011, 2012,” said Prechter.  “And last year, the big metals run I think ended, and this year is just kind of a double top type of echo, very similar to the 1999, 2000 highs in stocks and ’06, ’07, ’08 highs in real estate, the Dow and commodities.  So it’s another sort of two-year topping process and I think it’s very long in the tooth, and it’s probably your third and last chance to get out of traditional investments.”

The retreat of the small investor from the stock market, he said, will not turn around, suggesting that, this time is really different from previous cycle rebounds.  According to Prechter, don’t expect the sidelined cash from mom-and-pop investors to take equities higher.

“People think that the public has to see it coming before this thing ends, but I don’t think that’s going to happen.”

He points out that the market’s rebound from the low of 666 in the S&P in March 2009 was orchestrated by the Fed through unprecedented low interest rates and trillions of dollars of credit to financial institutions and hedge funds.  But, as the counter rally to the Kondratiev super cycle fades this year, the resumption of the Winter Season of the K-wave will overwhelm central banks.

“Central banks and governments have managed to try to shore up all of the bad debt, or at least a lot of the bad debt, in the world,” Prechcter said.  “Now that’s working because the cycle turned up in 2009, so you’ve got enough optimism so that investment bankers and hedge funds and speculators are availing themselves this free credit and leveraging it up 30 times <chuckles> and buying the stock market.

“So while there’s plenty of liquidity becoming a narrower and narrower expression in terms of where investment people have decided to put that liquidity to work, the seven-and-a-quarter year cycle, which bottomed in 2009, tops in 2012, it bottoms in 2016.  It may take its sweet time topping out as it did in ’06, ’07 and ’08, and again, in 2000, which held up virtually all year before it turned down.  But the ultimate conclusion for all this, I think, lies ahead, and we’ve not solved any of the debt problems.”

Prechter also cited that optimism is too high when matched up with the underlying fundamentals and an unresolved financial crisis.  With trillions pumped into the financial system from all of the G-8 nation central banks, GDP, trade and employment show no signs of a robust economic recovery.  That, he said, shows the powerful effects of debt destruction and deflationary pressures that come with a Kondratiev Winter.

“The first problem is that things are looking good,” Prechter explained.  “How did they look in the first quarter of 2009?  They were scaring economists to death, and now you’re seeing articles that everything is okay, we’re out of the woods, everything is great.  When’s the best time to buy, and the best time to not get involved?

“One would think, after a three year recovery that the economy would be just roaring along, interest rates would be back to normal, trade would be ballooning, everyone would be employed.  We have the opposite situation despite all of the inflationary credit that’s been created by the central banks, despite all the spending by government, we still have an extremely sluggish economy.”

With the counter-trend rebound within a grander trend of deflationary collapse nearing its end, the next downturn of the economy will make bailing out sovereign nations nearly impossible, both in terms of the mathematics and politics, according to Prechter.

“As far as Greece is concerned, I think that’s a central bank failure,” he continued.  “Somehow the media, or investors, decided that was just fine and the problem was resolved.  But what happened was, Greece defaulted on $100 billion worth of debt.

“Despite three years of recovery, where they couldn’t defend $100 billion worth of Greece’s IOUs.  And Greece still owes 260 billion euros worth.  How many people think they’re going to pay that off?  So there are plenty more defaults to come.   And one can only imagine how they will be flooding out once the trend turns down, social mood and the financial markets and the collateral starts to shrink even more.  That’s going to be the time when the defaults really flooding in.”

Prechter believes that conventional economic thought doesn’t take into account the behavioral characteristics of market participants during the Winter period of the Super Cycle.  After confidence in the economy wanes for as long as it has since 2008, investors may stay on the sidelines a lot longer than most people now believe.

“Well, this is what the economic theorists such as the Keynesians and monetarists never planned for, that is, changes in human behavior, changes in mass psychology,” said Prechter.

“You not only have misery in Greece, you have near rebellion.  People are angry, they’re taking to the streets, and as you pointed out, there are largest percentage who are unemployed,” he added.  “They have nothing better to do.  The higher that unemployment figure goes in Greece, the more people that will be available to be out in the streets rioting, and throwing politicians out of office and changing how they they’re doing things.”

He added, that in Germany, the will of the German people for additional bailouts won’t be there, leave future expiring debt with no political solution similar to the one executed with Greece.  The public has grown tired of bailouts.

“Eight percent of the populous was against this last bailout.  I think it would be nearly impossible for Germany to pull off yet another bailout of Greece,” Prechter explained.  “I think at this point they’re past the point of no return politically.  I don’t think they can do another one.

“They’re doing everything they can as technocrats to stop it, yet the best they can do is tread water.  The S&P is no better than it was 13 years ago. I think once this last cycle rolls over, I think the whole system is gonna implode, and that’s why you want to make sure that you’re not laden in your portfolio with risky debt instruments or the traditional investments such as stocks, commodities and real estate.”

Unlike many analysts who believe the Fed must continue to “print or die,” Prechter remains as one of the few analysts who claims that the Fed and other central bankers will have to cut short the printing presses for political reasons.

“It’s a weird limbo situation . . .,” said Prechter.  “The ultimate resolution I don’t think is going to be runaway inflation on the upside . . . I think it’s going to be a deflationary implosion.”

He added, “What I think is going to happen is it’s going to come soon that most people are thinking.  They say. ‘Okay, the Fed will keep everything up until Election Day.  We don’t have to worry until the end of the year.  Everything’s fine.  At least we have another year.  I don’t really believe that.”  “I don’t think it can hold up much longer at all.” Sign-up for my 100% FREE Alerts

Where Gerald Celente Puts His Own Money

Trends Research Institute Founder Gerald Celente forecasts a pop in the much-heralded U.S. recovery.  The U.S. consumer cannot continue to borrow and lead the U.S. out of its economic woes, he added.  The consumer bubble, he said, is about to pop, “soon.”  And as protection from the next popped bubble, he favors gold.

“Look what’s going on in the United States.  Interest rates are near zero,” Celente told King World News host Eric King on Monday.   “Does anyone need a calculator to figure this one out?  Go back to [year] 2000; the market crashes, the NASDAQ.  Remember the high-flying NASDAQ market, with all of those high-tech stocks that weren’t worth anything.  What happened?  Well, we went into a recession, but then 9-11 happened.  Then Greenspan began to lower interest rate to 46-year lows.  As a result we had the real estate bubble and that great speculative bubble that burst in 2008.” Sign-up for my 100% FREE Alerts

Agreeing with many economists, Celente stated that due to artificially low interest rates policy by the Federal Reserve under former Chairman Alan Greenspan, starting as far back as 1987 in response to the stock market crash, the Fed has created an illusion of prosperity through easy money and asset price bubbles throughout Greenspan’s tenure as its principal policymaker.

The last bubble before the final meltdown of the financial system was the real estate bubble—which, historically, has been the most dangerous consumer-driven bubble of them all.  Now that bubble has been popped.

Where to now for the Fed?  Celente said the Fed has engineered yet more bubbles, and the next bubble to pop is in consumer spending.

“Look at what they’re doing now?  Interest rate are near-zero,” Celente continued.  “What does it mean?  Hey, you see the economy is picking up. Oh it is?  Oh yeah, retail sales went up.  How come?  Couldn’t be because consumers are now putting more debt on their credit cards.  Could it?  Well, that’s exactly right, because in the last four months consumer debt climbed at the fastest rate in 10 years.  They’ve created another Ponzi scheme by keeping interest rates at all-time lows.  They’re building another bubble.”

While Wall Street points to successively positive retail sales as evidence of a U.S. recovery, Celente doesn’t see it that way.  In reality, he said, consumers are spending money they don’t have, using credit cards for even the most basics of survival.  According to him, the reason that consumer debt has soared at a rate not seen in a decade comes from consumers using plastic to buy many of life’s basic necessities, not because Americans has suddenly become more optimistic.

“So where the loans . . . so why are they borrowing?” asked rhetorically.  “Well they’re borrowing to buy cars; they’re borrowing to go out and eat; they’re borrowing to go to college, to education; they’re borrowing to go shopping; they’re borrowing just to keep their heads above water.  So all they’re doing is creating another bubble.  The first one was the real estate bubble.  This one’s the consumer bubble, and it’s going to burst soon.”

Celente, who always prefaces his discussion about investments with a disclaimer that he is not a registered financial adviser, said he holds a significant amount of his assets in gold, though has has also said in previous interviews that he has included silver among his investment holdings.

“I’m 80 percent invested in gold.  I continue to buy gold.  I believe gold prices are being manipulated downward, so that people will not dump out of these worthless currencies,” he said.  “Look what’s going on.  The European Central Bank dumped in well over a trillion euros to bailout the failing banks throughout Europe.  They don’t have any money, and now they can borrow all they want at very low interest rates, around 1 percent.”

As the financial media paints a picture of economic recovery and a strong dollar, Celente cautions investors to view the relative strength of the U.S. dollar against the euro as nothing more than a deception on the part of the Fed, Treasury and traditional media.  Don’t believe many of the Wall street economists who suggest that the dollar is strong, Celente advised.  Both currencies, he said, are dropping against tangibles, such as commodities and precious metals—and will continue to do so.

“It [easy money from central banks] only works for so long, and that’s why I believe in gold,” he concluded.  “And that’s why I believe they’re driving down the price.  Oh the euro is weakening and the dollar is gaining strength.  Yeah, I just jumped out of the Lusitania and took board on the Titanic.  A weak euro doesn’t make a strong dollar.” Sign-up for my 100% FREE Alerts

Worried About $6 gas? Try $8

With oil prices remaining stubbornly above the $100 per barrel mark for WTIC, calls for $6 gas in the U.S. as a consequence of an attack on Iran may turn out to be a rather conservative, maybe even a low-ball estimate.

According to Bloomberg, the average price paid at the pump has recently jumped above $4, again, with the charts suggesting a breakout to test the all-time high of $4.50 set in May 2011 is pennies away.  And the month of March still has more than a week left. Sign-up for my 100% FREE Alerts

“Bloomberg’s U.S. Average Gasoline price index, we are now back above $4 per gallon for the first time since May 2011,” Zerohedge.com reported.  “We also note that the average price for a gallon of gas across the EU is inching ever closer to the $10 mark.”

Loose monetary policies among G-8 member nations, Peak Oil, and Persian Gulf tension—which have now begun escalating to the highest threat of military action since the 1980-88 Iran/Iraq War—have conspired to lift gas prices to levels which may appear high, today.   But $105 WTIC and $4 gasoline may, in retrospect, turn to fading memories of the ‘good old days’ some economists speculate.

In late February, economist, author and money manager Stephen Leeb told King World News he expects a record gas price this summer.  The author of Red Alert said the oil market has entered the perfect storm.

“March is now on the way, and we are seeing very high prices for gasoline at the pump,” Leeb told KWN in a Feb. 22 interview.  “ . . . we are continuing to see higher prices for gasoline and it may even hit record highs.  In fact, I think they will hit record highs and we will see a minimum of $6 per gallon gasoline in the United States this summer.”

Leeb cites China’s decision to loosen monetary policy as well as tight oil supplies in the oil patch as the basis for his expectations.

But a military conflict with Iran could throw Leeb’s $6 price target far off the mark, as approximately 17 percent of the world’s oil supply could be shut out for, not a matter of weeks as the Pentagon has estimated, but months, according to Caitlin Talmadge, fellow at the John M. Olin Institute for Strategic Studies at Harvard University.

Talmadge stated in her article, entitled, Closing Time: Assessing the Iranian Threat to the Strait of Hormuz, Iran possess the capabilities of mining the Strait of Hormuz with nearly 1,000 mines or more, as well as achieving the capacity to attack U.S. mine countermeasure (MCM) ships with land-based, anti-ship cruise missiles (ASCAMs).

According to Talmadge, before the U.S. could embark on a dangerous mine-clearing mission, it first must conduct an aerial “hunt” for Iran’s ASCAMs, a hunt which “could add days, weeks, or even months” in addition to the time needed to clear the Strait.

“Iran possesses a larger stockpile of missiles and mines ten times as powerful as those used in the tanker wars of the 1980s, the last period of sustained naval conflict in the gulf,” she explained.  “If Iran managed to lay even a relatively small number of these mines in the strait, the United States certainly would act to clear the area. But the experience of past mine-warfare campaigns suggests that it could take many weeks, even months, to restore the full flow of commerce, and more time still for the oil markets to be convinced that stability had returned.”

CEO of Sprott Assett Management USA Rick Rule told KWN on Tuesday that he believes an attack on Iran could take oil to levels beyond $150 per barrel WTIC, much beyond.  According to Rule, “there is virtually no limit to the upside for oil prices. The oil price could easily double.”

Moreover, oil trading above $200 per barrel could easily take gasoline to $8 in the U.S., as a panic to secure already-tight global supplies could shock the American people into another significant downturn in the U.S. economy, more Fed monetary stimulus in response to the crisis, as well as technical support at much higher oil prices, irrespective of the eventual opening of the Strait of Hormuz possibly months into the future.

Insurers of carriers of crude may take an additional time period before becoming comfortable writing insurance on the oil tankers within the region.

In that grim scenario, Leeb said in his Feb. 22 KWN interview, “This could turn into really tough times.”

And added, “Because the economy will be struggling in that environment, we could see QE3 in the midst of already record high gasoline prices.  Now that will be wildly inflationary.” Sign-up for my 100% FREE Alerts

Marc Faber: Where to Hide Your Gold

Fearful of desperate governments taking desperate actions during the coming currency crisis, Gloom Boom Doom editor and publisher Marc Faber advises investors to keep gold holdings outside the reach of potential confiscators.

Speaking with Chris Martenson last week, Faber believes that central bankers will print money at any sign of a credit contraction or drop in economic activity.  Money printing, Faber said, is a strong reason behind rising oil prices, slowing economic activity especially in those countries that import it.  Sign-up for my 100% FREE Alerts

The virtuous circle of money printing, higher oil prices, slower economic activity and more printing won’t stop, according to him.   Moreover, Faber speculates that, at some point, the money printing must stop and the financial system will become a catastrophe.

As the system begins to savage financial institutions in the U.S. and Europe, too many investors will experience what customers of MF Global experienced late last year.  In response, these investors will most likely then turn to gold.  But, in doing so, they will also come under threat of confiscation by governments desperate to save the system.

“As you know, we had MF Global.  What did the clients get?  Less than what they had at the company,” Faber told Martenson.  “And I think eventually the financial system will be an MF Global, where you don’t get your money back from the banks and the investment banks and from the mutual funds and so forth and so on.  And so I think everybody has to think to himself: how do I protect myself against the Black Swan event?”

In the past, several Fed Governors have suggested that the Fed should unwind, or at the least, level its balance sheet at the first sign of accelerating consumer price inflation.  Faber said that any talk along those lines by the Fed should not be taken seriously.  According to him, no matter what the Fed says, it cannot reverse the credit-based Ponzi scheme without collapsing the system.

“I think the money printing will go on, unless the Fed would come up and say, we’re no long going to print any money; the monetary base will remain steady,” said Faber.  “And even in that case I wouldn’t believe them.”

Martenson, who lost his $50 “placeholder” account with MF Global, asked Faber to speak on the subject of safe gold storage.

“Where is anything safe?  I mean, I think in a safe deposit box is relatively safe, but maybe not in a safe deposit box in the U.S.,” said Faber.  “If you look at the MF Global case, it seems—I don’t know for sure—but it seems some people got their money, but not others.  This is a very disturbing thing to happen in the financial system.  And when I see this, I think we have to be very prudent, so I would hold a safe deposit box outside the U.S..

“Now the question is: how is it to hold a safe deposit box with a bank if the bank closes down.  And this happens,” Faber continued.  “You can also hold safe deposit boxes in duty-free stores, warehouses at airports around the world.  In Switzerland we have them; in Singapore we have them, and so forth.  So that’s a possibility.”

Since the start of the financial crisis in 2008, Faber has said that, because the global economy is credit addicted, more and more investors over time will move into gold and equities as a means of preserving capital.  But there will come a day when central bankers cannot sell further debt issuance to rollover the ever-increasing mountain of debt.  That’s when governments will turn to gold and seek to acquire it by any means, including confiscation.

“One day there will be a credit collapse, but I think we aren’t yet there.  Before it happens they’re going to print,” Faber told Financial Sense Newshour’s Jim Puplava in early December.  “And when printing as it has done in the last 12 years in the U.S. leads to discontent populations, because when you print money then only a few players in the economy that benefit, not the majority of households.

“Populist political leaders vying for votes from the masses will opt to score easy points with the 90 percent have-nots at the expense of the haves, with draconian taxes on assets such as gold and silver held by the haves, not just through taxes on capital gains, but maybe even through a wealth tax on the holdings.

“This is what the tyranny of the masses can do,” he said.  Sign-up for my 100% FREE Alerts

Source: Transcript at ChrisMartenson.com; audio interview is here.

Did German Gold Bailout Europe?

Question surrounding the disposition of German gold held by the NY Fed is gaining traction with the media, both in Germany and the U.S.  Considering the secrecy of central bank operations, German gold could have served as partial collateral (or levered source) for the latest $714 billion bailout of the euro by the ECB on Feb. 29.  Sign-up for my 100% FREE Alerts

The unaudited gold may have made its way into the cash market to suppress the gold price following the announcement by the ECB to extend ‘credit’ to approximately 800 banks in the euorzone.  And the credit extended to these banks by the ECB appear to have come from the Fed’s swaps window, according to Trim Tabs.

“ . . . the Fed’s currency swaps accompany a massive expansion of the ECB’s balance sheet.  In 2011, the ECB’s balance sheet soared $947 billion, or 36%, to a record $3.5 trillion, which includes the $638 billion in low-interest loans doled out to Eurozone banks in December.”

Whether the delay to liquidate German gold was part of the deal made by the Fed and the ECB cannot be known for sure.  Laws, and in some cases, immunity from prosecution, stand in the way of any semblance of transparency at the Bundesbank, which has now become a political matter in Germany.  The Bundesbank missed its gold audit of 2010, raising a red flag with the German people.

Not auditing the nation’s gold is “a clear breach of the law,” top Bilanzrechtler Prof. Jörg Baetge told German newspaper BILD on Mar. 6. “At least every three years to control counts the bars are made. [Google translation]”

Bundestag representative, Phillip Missfelder, has discovered that suddenly the Bundesbank has taken on the attitude of the U.S. Federal Reserve.  The 32-year-old chairman of the Junge Union inquired of the German central bank regarding the matter of the unaudited gold and was stonewalled.

“I was shocked,” Missfelder told BILD.  “First they said that there was no list.  Then there were lists that are secret.  Then I was told, demands endanger the trust between alliance bank and the Fed. [Google translation]”

But some analysts wonder how the gold market can be flooded from time to time when there’s no record of any activity at the COMEX or LBMA.   While lease rates at the LBMA don’t suggest individual banks slammed the market with privately-held gold during gold’s recent weakness, one analyst and 50-year veteran of the gold market, Jim Sinclair, suggested that the Fed may be behind the mysterious inventory sale.

“. . . we all ask ourselves the question, ‘Where does the gold come from on these attempts at intervention?’” Sinclair asked rhetorically in his latest interview with King World News on Mar. 15.  “Because it’s not simply paper gold, it’s also in the cash market.  There is a concern that the gold that’s being used to intervene might not be our (U.S.) gold.”

According to the Mar. 6 BILD article, approximately 2,050 tons of gold is held outside of Germany. Where is it? and why is it not stored in Frankfurt with the remainder of the nation’s gold stockpile?  The German people want to know.

“Basically they (Germany, Switzerland and other countries) are now asking the question, where is the gold coming from? . . . ,” Sinclair continued.  “Everybody knows what’s at the Fed, other people’s gold.  The trend that we discussed a long time ago which is really turning into a modest torrent, is to take back gold.  I mean the truth is what do the Germans need the Fed to store their gold for?  Are they afraid France will invade?  It doesn’t make any sense.”

The complexity of the Maastricht Treaty as it relates to the launching of the euro on Jan. 1, 1999 as well as the serious threat the treaty poses to democratic peoples was not widely understood by the majority of Europeans at the time.  The truth, according to founder of Peterson Institute C. Fred Bergsten, is that the 17 member states which make up the euro have had their sovereignty superseded by the ECB.

“The adoption of a common currency is by far the boldest chapter of European integration,” he stated in an Opt-Ed piece for the Washington Post two days after the launch of the euro.  “Money traditionally has been an integral element of national sovereignty …and the decision by Germany and France to give up their mark and franc …represents the most dramatic voluntary surrender of sovereignty in recorded history. The European Central Bank that will manage the euro is a truly supranational institution.”

To complicate matters further, the electorate in Europe and the U.S. is unaware that many central bank chairs are also board members of the Bank of International Settlements in Basel, Switzerland—a body formed in 1930 in response, partly, to German reparations for WWI.

According to the BIS, there are 18 board members, comprising Governors of central banks from Belgium, France, Germany, Italy, the United Kingdom and the United States.

Essentially, each board member serves two masters, one domestically and one internationally.  But the protection of a central bank Governor from ‘unlawful’ acts committed under domestic law is afforded him via the BIS.  In fact, central bankers are immune from prosecution from their country of citizenship while performing BIS business.  The BIS determines if a crime was committed by one of its board members, not an elected or regulatory body.

BIS Article 14, Privileges and immunities granted to all Officials:

The Officials of the Bank, whatever their nationality, shall  (a) enjoy immunity from jurisdiction for acts accomplished in the discharge of their duties, including words spoken and writings, even after such persons have ceased to be Officials of the Bank.

In essence, the Bundesbank represents the BIS, first, Germany second.  Actions taken by the central bank in accordance with BIS wishes fall under its own set of laws in matters of central bank operations.  The Bundesbank doesn’t need to account for its operations with the German people.

Germany’s gold may have been sold and possibly played a part in the latest downdraft in the gold price.  But it appears that there’s nothing the German people can do about it, if it turns out, indeed, that the Bundesbank sold its gold.  Could that be the reason for Bundesbank President Axel Weber’s departure on Apr. 30, 2011, a full year short of his appointed term?  Sign-up for my 100% FREE Alerts