Strike on Iran, a Green Light from Washington

Reports of the USS Enterprise aircraft carrier battle group setting course to join battle groups USS Lincoln and Vinson in the Arabian Sea and today’s back-to-back announcements regarding the complete termination of Iran’s financial transactions through SWIFT, as well as the announced joint agreement between the U.S. and the UK to release strategic oil reserves into the oil market spells war with Iran. Sign-up for my 100% FREE Alerts

After 30 years of various sanctions and hostile rhetoric aimed at Iran, for the U.S. to turn back now, it would have to admit defeat, thus sending a powerful signal that U.S. dollar hegemony is imminently unraveling.  Allowing Iran to make the rules concerning payment for its oil will surely embolden other oil producers to follow in step—a step other OPEC members would gladly take if it meant ridding themselves of the hopelessly inadequate U.S. dollar as recompense.

William R. Clark, author of Petrodollar Warfare: Oil, Iraq and the Future of the Dollar, cites an anonymous source during research for his book.  In his essay of 2003, titled, Revisited — The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth, Clark penned:

The Federal Reserve’s greatest nightmare is that OPEC will switch its international transactions from a dollar standard to a euro standard. Iraq actually made this switch in Nov. 2000 (when the euro was worth around 82 cents), and has actually made off like a bandit considering the dollar’s steady depreciation against the euro. (Note: the dollar declined 17% against the euro in 2002.)

The real reason the Bush administration wants a puppet government in Iraq — or more importantly, the reason why the corporate-military-industrial network conglomerate wants a puppet government in Iraq — is so that it will revert back to a dollar standard and stay that way. (While also hoping to veto any wider OPEC momentum towards the euro, especially from Iran — the 2nd largest OPEC producer who is actively discussing a switch to euros for its oil exports).

Iran has stopped discussing accepting euros for its oil, but has instead leapfrogged to a more egregious policy of now accepting yen, rials, rubles, renminbi and gold in exchange for its crude.  In fact, the Iranians went a step further in January, as to intentionally insult the U.S., by making the announcement that included a gratuitous statement that the policy change in Tehran was suggested by the Russians.

Within days of the shocking Iranian communique, Russia Today reported that India had agreed to pay with gold for Iranian oil.  Then, reports of Japan, Korean and China discussing or making similar arrangements began hitting the news wires.

“India has reportedly agreed to pay Tehran in gold for the oil it buys, in a move aimed at protecting Delhi from U.S.-sanctions targeting countries who trade with Iran,” RT reported.  “China, another buyer of Iranian oil, may follow Delhi’s lead.”

Moreover, Russia and China followed through with vetoes against Iranian sanction at the United Nations Security Council vote, which elicited a strong response from U.S. Ambassador to the UN, Susan Rice.  Japan and other nations also expressed opposition to U.S. aggression towards Iran now that oil supplies are targeted.

As to the timetable for an Iranian attack, it’s been suggested that domestic politics have played a role within the Obama administration to, not only enhance his re-election chances, but to aid the Federal Reserve in its dilemma, as well.

Further so-called ‘quantitative easing’ and the ramifications of inflation has not gone unnoticed by the American people, aided by the popularity of presidential candidate as well as the most threatening opponent of the Fed, Congressman Ron Paul of Texas.  Paul has also gained support from voters with his message of returning American troops and closing U.S. military bases worldwide.

“The U.S. government will likely not raise on this busted flush because Ron Paul’s success in the primaries, despite the concerted efforts of the corporate media, the GOP, and Israel, has sent a clear and unambiguous message to the status quo that starting yet another war for Israel is going to cost incumbents their jobs come November,” influential blogger Michael Rivera of WhatReallyHappned.com wrote in a Jan. 16 post.
Now, two months later, that the Republican primaries have moved past Super Tuesday, with establishment candidate Mitt Romney of Massachusetts garnering a significant lead in the delegate count, conjuring up a scapegoat for the expected rise in oil prices following an attack on Iran serves as a neat and direct connection between a closing of the Straits of Hormuz and soaring gas prices.

A geopolitical event of that magnitude will provide a narrative for the Fed, whose  remarkably low interest rates though direct purchases of U.S. Treasuries must continue.  Otherwise, higher interest payments on $15 trillion of U.S. debt will blow out an already massive budget deficit.  The dollar would fall.  But a shock-and-awe war with Iran, a proxy war with Russia and China, the dollar may actually gain strength in a timeout from the risk-on trade and flight out of the U.S. dollar.

Following last week’s FOMC meeting and Fed Chairman Ben Bernanke Congressional mildly hawkish testimony, not surprisingly, the interest rate on the U.S. 10-year Treasury has suddenly shot up 30 basis points within three days, smashing through key technical levels and rising rapidly.  Traders of sovereign paper wonder who will buy the new U.S. debt issuance if the Fed doesn’t intervene with more primary dealer direct purchases, a point famously made last year by PIMCO’s Bill Gross.

“U.S. Treasuries extended their rout on Thursday, with the 10-year yield hitting a fresh 4 1/2 month high . . . ,” Reuters reported on Thursday.  “The 10-year yield has broken above key technical level of 200-day moving average, at 2.25 percent on Thursday, for the first time since July.”  Each percentage point of U.S. Treasury interest adds approximately $150 billion to the U.S. budget deficit—a deficit that has already been projected to shrink for fiscal 2013.

With Ron Paul marginalized, for now; a Fed that desperately needs an excuse for further monetary easing (Bernanke will say that high oil prices threatens the alleged recovery of the U.S. economy); a diversion from the connection between easy money and higher energy prices; and the political support an incumbent president typically receives during a ‘justifiable’ war against a ‘rogue’ nation, the White House will most likely strike Iran and gamble on a jump start to WWIII. Sign-up for my 100% FREE Alerts

What Happened to the Anonymous London Trader’s Intel?

As the silver price breaks below $32, precious metals investors will soon see whether KWN’s mysterious London trader is correct, or not, about the Chinese exercising “massive accumulation” orders “on dips” below $33.

“The Chinese are doing the exact same thing in the silver market that they are doing in the gold market, massive accumulation on dips,” Anonymous told KWN’s Eric King in a Mar. 8 interview. Sign-up for my 100% FREE Alerts

Whether the paper market holds somewhere near $33 isn’t relevant to the long-term holders of silver, it’s timing the purchases along with the elephant buyer in Beijing that has traders wondering about Anonymous.  It would, however, be nice to know that someone with access to the same internal data as JP Morgan could be indeed a blessing to the ‘good guys’ in the war to free the public from the tyranny of the banking cartel.

“The physical silver orders that were just filled have been waiting since February 16th,” Anonymous continued.  “Those orders near the $33 level were filled in huge size on Tuesday.  These long-term accumulators are buying every dip.  There were some fills at $34, but some very large orders were filled near $33.”

Below, is a chart of silver, using monthly data and Richard Russell’s favorite moving average parameters for the precious metals of 20 and 40 months.

According to the chart, silver’s 20-month MA stands at $32.71, a price consistent with expected levels of buy orders.  So, Anonymous’ intelligence appears to square with the charts.

Anonymous also pointed out in his Mar. 8 interview, as well as in previous interviews that, the Chinese have embarked on a substantial buying spree in both precious metals, gold and silver.  That, too, jibes with Leeb Capital Management’s Stephen Leeb’s contention.

Leeb, the author of Red Alert: How China’s Growing Prosperity Threatens the American Way of Life, has passionately advised silver investors to accumulate the white metal along with the Chinese, who view silver as vital to Beijing’s plans for transforming the People’s Republic into a heavy user of alternative energy in the post-Peak Oil era.

According to Leeb, the Chinese are “frantic” about stockpiling silver, as alternative energy products such as windmills and solar panels cannot be manufactured without it.  Silver is a “vital” commodity to the Chinese (and others seeking to wean off fossil fuels), according to Leeb.

There is no economically viable substitute for silver in applications that require the most efficient electrical conductivity and heat transfer properties.

Back to Anonymous, who said in the KWN Mar. 8 interview, “The Chinese are doing the exact same thing in the silver market that they are doing in the gold market, massive accumulation on dips.”

Whether the Chinese have suddenly pulled their buy orders below the $33 level (presumably to seek successful buy orders at lower prices), or not, Anonymous puts the silver trade into prospective for the long-term investor.

“As long as we stay under $34, there is going to be constant accumulation,”  Anonymous continued.  “What does it matter if you buy silver at $32 or $38, when it is going to go multiples higher from these levels?  The Chinese know this and that is why they are accumulating in size.”

Leeb agreed, and stated in a Jan. 31 interview on KWN, “I think the outlook for silver, both as an industrial metal and certainly as a monetary metal, is as bright as it can possibly be.  I’m sticking with my target of at least $100.  But I tell you, Eric, it will happen this year.  We are definitely headed for triple-digit silver in the not-too-distant future.”

Both Anonymous and Leeb recommend buying silver, monthly, weekly, or anytime cash becomes available.  But the point is: keep buying on significant pullbacks. Sign-up for my 100% FREE Alerts

That’s Right! By 2017, You’ll Need Gold to Buy Silver

What seems unimaginable today, but in the near future it will take gold, not dollars, to buy an even more precious metal—silver, according to economist and best-selling author of investment books Stephen Leeb.

“Silver, it’s more than precious; it’s a critical, vital metal,” Leeb told King World News during the weekend.  “You cannot run the world without it as the world stands today.” Sign-up for my 100% FREE Alerts

Leeb continued to explain that China has been stockpiling resources, not because of current demand, per se, but because of Beijing’s stated plan to roll out huge alternative energy infrastructure projects throughout China.  And these projects will require China-size quantities of various metals to fulfill its national objective of becoming less dependent on Middle East oil.

“The Chinese are frantic about building out renewable energies.  Frantic, because they see the peak in oil.  Frantic, because they see next decade peak in coal,” Leeb continued.  “So what are you going to replace coal and other hydrocarbons with, if not wind and nuclear . . . you’re going to need all of the above in massive concentrations.”

The World Gold Council (WGC) data for 2010 back up Leeb’s analysis.  According to the WGC, after being a net exporter of approximately 3,500 tons of silver in 2009, China has become a net importer of silver.  In 2010, the WGC reported China suddenly became a net importer of 3,500 tons of silver.  And that abrupt turnaround is just for starters, according to Leeb.

“Their [China] stated goal is: they want 15 percent of all energy consumption in the country, and I don’t mean just electricity,” Leeb explained.  “I mean cars, et cetera, all of it, to be on renewables by 2020.  I think their goal is more like 25 percent by the early 20s.”

To accomplish that ambitious goal for a nation of 1.2 billion Chinese, it will require staggering tonnages of copper, nickel, silver and other base and rare earth metals.

Leeb expects that all metals necessary for the development of alternative energies are, not only “critical” to their production, but will become increasingly “scarce” as well.

As an example, windmills, off the coast of China, Leeb said, will require more copper and silver than is currently available—which then leads Leeb to another logical conclusion: suppliers of these valuable commodities will not accept dollars some time this decade.

“And here you revolve right back to gold.  You’re not going to be able to buy copper in three, four, five years with dollars,” he said.  “I mean, you can’t have an auction for something that’s scarce and something you can just create at will.  You’re going to have to have gold in there.”

After researching China’s economic policies and the impact on the mining industry Beijing’s stated goals will have on the marketplace, the author of Red Alert: How China’s Growing Prosperity Threatens the American Way of Life, strongly believes that silver will become the new oil due to its unique qualities critical for the production of renewable energies products, such as wind turbines and solar panels.

And because of the eventual inelastic nature of the silver price he sees for the white metal going forward, the JP Morgan manipulation scheme to cap its price is coming to an end.  Leeb confidently predicts that the silver price will touch $100 in 2012 on its way to much higher prices throughout the remainder of the decade.

“I think the outlook for silver, both as an industrial metal and certainly as a monetary metal, is as bright as it can possibly be,” Leeb said in a Jan. 31 interview with KWN.  “I’m sticking with my target of at least $100.  But I tell you, Eric [King], it will happen this year.  We are definitely headed for triple-digit silver in the not-too-distant future.” Sign-up for my 100% FREE Alerts

Lehman Act II is Now; “The World is Not Expecting This”

On Friday, it’s now official: Greece defaults.  Zerohedge called the event: The biggest debt writedown in human history.  Sign-up for my 100% FREE Alerts

Strangely, or not, there was no press conference by the ECB, no bold-letter headlines about the event.  Nothing.  There was nothing but an innocuous statement issued by the International Swaps & Derivatives Association (ISDA) on Friday, which reads:

The Determinations Committee determined that the invoking of the collective action clauses by Greece to force all holders to accept the exchange offer for existing Greek debt constituted a credit event under the 2003 ISDA Credit Derivatives Definitions.

According to the Depository Trust & Clearing Corporation’s CDS data warehouse, the total net exposure of market participants who have sold CDS credit protection on Greek sovereign debt is approximately $3.2bn as of March 2, 2012.

The net cash payout on CDS when a credit event occurs is the face amount of the CDS contract less the recovery value of the underlying obligations as determined at a CDS auction. For example, if the CDS auction showed the recovery value of debt to be (hypothetically) 25%, the aggregate amount payable would, in Greece’s case, be 75% of $3.2bn: $2.4bn.

Furthermore, statistics indicate that, on average, 70% of derivatives exposure is collateralized and the level of CDS collateralization is likely to be even higher as over 90% of CDS transactions (by numbers of trades) are collateralized. [emphasis added]

In essence, the ISDA said Greece cheated in an attempt to forestall a default on $3.2 billion of its debt.  The nation has defaulted, and now the credit default contracts issued against the debt must pay off.

However, there’s some curious verbiage of the ISDA statement that sticks out like a sore thumb.  Why would the ISDA gratuitously include the emphasized text (above) within its official statement?

The details added to the decision to declare a credit event is akin to a judge handing down a ruling, then embarking upon an explanation into the details and ramifications of the ruling, of which he cannot possibly know in advance.

Just as Fed Chairman Ben Bernanke stated confidently in early 2008 that the sub-prime mortgage crisis was “contained,” the ISDA somehow knows that the trillions of dollars in CDS’s attached to the Greek debt in question, which are not registered with its data source, DTCC, have no bearing to the total exposure of the banks and other institutions to the writedown.

In fact, we now know, what was labeled by Bernanke as a sub-prime mortgage crisis turned out to be instead the start of a full-blown real estate crash.  ALL mortgages became sub-prime and the cascading bankruptcies and bailouts ensued.

And that’s exactly what we have here, a Lehman II, according to “Mr. Gold” James Sinclair—who, incidentally, was one of a handful who said from the beginning of the ‘sub-prime’ defaults that Bernanke was downplaying a much larger problem.

“The release made by the International Swaps & Derivatives Association (ISDA), for the average Mensa member or genius, is totally incomprehensible,” Sinclair told King World News.  “The press is using the word default, but the ISDA is using the word ‘auction.’ Clearly, the amount of CDS’s outstanding is infinitely more than the $3.5 billion that is being quoted.”

Sinclair added, ““The BIS confirms, in the area of CDS’s the total outstanding is approximately $37 trillion. So I believe the reports being given about this just being a small and modest market event is false.  As a market observer and having more than 50 years in the business, the real number is at least 50% or more of the existing $37 trillion that is related to Greece.”

Of the $37 trillion reported by the Bank of International Settlements (BIS), CDS’s written on Greek debt must total into the trillions of dollars, according to Sinclair, who had also said on several occasions that the Lehman meltdown is a mere a warmup to the main event—a conclusion also drawn by George Soros and many others outside the officialdom and Wall Street complicities.

And Swiss money manager Egon von Greyerz of Matterhorn Asset Management agrees, but takes Sinclair one step further.  With the other PIIGS countries mired in a similar debt default spiral, Greece serves as a template for the other beleaguered nations, not the exception.  The market will discount equivalent debt owed by Ireland, Portugal, Spain and Italy at some point during the crisis, von Greyerz reckons.

“It’s not just the $200 billion, we are talking about consequences for the other countries in southern Europe, Italy, Spain and Portugal,” von Greyerz told Eric King of KWN.  “So, if the Greek deal collapses, the ECB will have to come up with a package of over $1 trillion euros just to ring fence the rest of Europe.

“Then, on top of that you would have all of the CDS’s and that’s another few trillion euros because then it would be a proper default.”

von Greyerz continued, intimating that the next QE will most likely total into the the multiple of trillions of dollars, not the more modest hundreds of billion of dollars injected into the banking system in previous central bank operations (not including the Fed’s covert currency swaps window scheme) between the Fed and ECB.

“Of course, the U.S. would also be involved through a lot of the CDS’s and there will be a few trillion dollars the U.S. will need to come in and support,” von Greyerz said.  “So, whether the money printing starts this week or whether it starts in a few weeks time, it will start.”

Echoing Sinclair’s long-time assertion that central banks will undertake “QE to infinity” as a significant portion of approximately $700 trillion of tier-three assets (BIS statistics) default in a similar manner to Greece, von Greyerz stated, “Hyperinflation is very likely to happen. . . I’m absolutely convinced we will be right.  The world is not expecting this.” Sign-up for my 100% FREE Alerts

Gerald Celente: Nightmare “Schemed” to Cover Up America Collapse

Trends Research Institute founder Gerald Celente predicts that a war with Iran is scheduled to cover up the next leg down to the financial collapse of the U.S. and political upheaval a collapse engenders.

“I’ve been in this business now since 1980, and I’m always marveled at the schemes undreamed of that they come up with,” Celente told GoldSeek Radio host Chris Waltzek.  “So, when things should collapse, they often don’t, because they come up with another scheme.  So, here’s the scheme undreamed of that I believe is going to be America’s worst nightmare, and that’s war with Iran. Sign-up for my 100% FREE Alerts

“The drums keep beating; the chick-hawks keep screeching; and America and Israel keep getting closer to a conflict with Iran.  And it’s all tied in with Syria as well,” Celente added, alluding to a reciprocating defense agreement between Iran and Syria.

Celente continued the discussion with Waltzek by making the eerie parallel between today’s economic depression, social unrest and geopolitics with those of the Great Depression, which began with the Crash of 1929 and ended following the conclusion of WWII.

Pressure on Washington to quell the threat of Communism as an alternative to a failed central bank controlled ‘capitalist’ system in the U.S. of the 1930′s has reemerged, but with the threat to the status quo coming this time, not from the potential of a viable Communist movement, but instead coming from the rapidly growing Constitutionalists and End-the-Fed movement led by Republican congressman and 2012 presidential candidate Ron Paul.

Making this point for the Keynesians, famed big-government liberal economist and Nobel prize laureate Paul Krugman—who is no fan of Congressman Paul—stated in a NY Times Op-ed piece on Dec. 11, 2011, titled Depression and Democracy, “On the political as on the economic front it’s important not to fall into the ‘not as bad as’ trap. High unemployment isn’t O.K. just because it hasn’t hit 1933 levels; ominous political trends shouldn’t be dismissed just because there’s no Hitler in sight.”

Moreover, Krugman in the past has argued that the U.S. needs some big outside event (even joking about an alien invasion from space) to foster the need for further federal deficit spending and renewed consumer consumption, which he believes was the catalyst for ending the Great Depression—a suggestion with which Paul and Austrian economists vehemently disagree.

Therefore, Washington must dream up another scheme to redirect attention away from an oligarch enriched by the Federal Reserve System and wars, according to Celente.

History is replete with examples of nations, once divided, reversing course to unite behind a president in times of war.  Celente believes that this time is no different and that Iran will serve as Krugman’s Hitler for Washington’s political purposes.

“We’re saying right now that a war with Iran is going to be the beginning of World War III,” said Celente, and added “but what it will do, Chris, it will certainly get the people’s mind off the failing economy, just as it did during the Great Depression and the lead up to World War II.” Sign-up for my 100% FREE Alerts

“Not Owning Gold is a Form of Insanity,” Says Broker to the Queen

If those words sounds familiar, that’s because you may have read it somewhere on the Web some time in January of 2011.  “Not owning gold is a form of insanity,” Robin Griffiths of Cazenove Capital (believed to be the private broker for the British royal family) told CNBC on Jan. 11. “It may even show unhealthy masochistic tendencies, which might need medical attention.”

Though Griffith’s apparent flare for offering up salacious soundbites for financial journalists, his diagnosis directed at investors who worry whether their financial future is intact, yet, don’t hold a meaningful portion of their wealth in gold may not have wandered too far from making a valid point, especially considering that since January 2011 the world’s unresolved issues have only mounted rapidly in quantity and severity. Sign-up for my 100% FREE Alerts

Consider the news of just the past two weeks, alone, and never mind the events that have shaped the world’s radical change in public consciousness since the fall of Lehman Brothers in 2009.  Griffith’s seemingly flippant remark of more than a year ago appears more and more worthy of repeating as the endgame to the crisis unfolds.

On the Feb. 29, the European Central Bank announced a massive QE program in the amount of $712 billion for approximately 800 European banks—a move so audacious that Mr. Gold, Jim Sinclair, felt compelled to alert investors of the troubling event, underscoring the desperate manner by which the announcement was obviously camouflaged, obfuscated and provisioned in the hopes of not triggering a panic into the gold market.

“Today does qualify as one of the biggest injections of liquidity into the system in the history of the system,” Sinclair told King World News.  “Today was a cover-up by the U.S. Federal Reserve and by the mainstream media of one of the largest injections of liquidity into the system that has ever occurred.”

Sinclair continued to explain that, in essence, the Fed has embarked on a course as the buyer-of-last-resort to, not only the U.S. debt market, but Europe’s equally-sized debt market, as well.  In total, the U.S. dollar and euro represent approximately 88 percent of central bank currency reserves (excluding gold reserves).  These reserves have been debased at a staggering rate, with no end in site.

“This money flows, in order, through these entities—Federal Reserve to the IMF; IMF to the ECB; ECB to the member banks.  This is pure QE on a global scale,” he said.

On Thursday, following the decision by the ECB to maintain its member bank rate at one percent, reporters ask ECB president Mario Draghi about contingency plans for the euro in the event of a Troika failure in dealing with the European sovereign debt crisis.  Draghi said, pointedly, “We have no Plan B. Having a Plan B means to admit defeat.”

Translation: The ECB will print, print and print more money (or get it in a circuitous way from the Fed)—or die.

Again, on Thursday, in response to the ECB’s latest $712 billion injection of capital into the European banking system, former ECB executive member Juergen Stark told the Frankfurter Allgemeine “. . . the balance sheet of the euro system, isn’t only gigantic in size but also shocking in quality.”

In total, the ECB’s balance sheet now stands at more than (euro)3 trillion, or nearly one-third larger than the Fed’s ‘official’ balance sheet, with more to come, according to some prominent analysts.

On March 8, German newspaper BILD ran with a story about the rumblings in Germany regarding the status of its 3,401 tons of gold reserves.  A growing mistrust of the United States as the custodian of Germany’s gold has reached critical mass, according to BILD sources.  Many Germans wonder if they’ll get their gold back.

According to the article, German politicians are feeling heat from a growing concern among the German people regarding the euro and Germany’s financial obligations to a failed euro experiment.  Germans wants an audit of its gold and repatriation to Frankfurt in the event of a euro collapse and an emergency reinstatement of a gold-backed deutsche mark.

When elected member of the Bundestag, Phillip Missfelder, made an inquiry of the Bundesbank as to why Germany’s gold was not audited in 2010 as required by law, the Bundesbank’s response sent chills throughout Germany’s fiscally conservative electorate.

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

On the heals of the BILD article comes another article about a country and a people known for prudent fiscal behavior: the Swiss.  They, too, have come to the realization that the euro is sinking and that a Swiss franc peg to the euro will take the franc down with it.  They want their gold.

Zerohedge posted on Thursday:

“Gold Initiative”: A Swiss Initiative to Secure the Swiss National Bank’s Gold Reserves initiative, launched recently by four members of the Swiss parliament, the Swiss people should have a right to vote on 3 simple things: i) keeping the Swiss gold physically in Switzerland; ii) forbidding the SNB from selling any more of its gold reserves, and iii) the SNB has to hold at least 20% of its assets in gold.

Contrary to propaganda spewed by the Fed, U.S. media and America’s unofficial spokesman and cheerleader for a broken Bretton Woods scheme, Warren Buffett, in the end, it all comes down to the gold.  How much.  Where it is?

And if the two countries known for their level-headed approach and reputation for maintaining a strong currency are now lurching for the gold, it’s most likely that other Western countries will follow suit—and quickly.

While the news turns from the latest scheme to bailout Greece, to gold, why then would an investor put off acquiring a 3,000-year-old, tried-and-true asset that holds value under the most dire of financial and geopolitical circumstances—such real-time textbook examples of profound currency debauchery from each G-7 nation, imminent war and political upheaval?

Obvious to a long-awakened bunch, crunch time approaches, and, as Swiss economist and money manager Marc Faber has said in the recent past, it’s also time for each investor to become “your own central bank.”  And if investors cannot or will not see the consequences and market reaction to bizarre policy actions taken by the stewards of 88 percent of the world’s reserve currencies, Cazenove Capital’s Robin Griffiths’ characterization of “masochistic” investors knowingly taking no action in response to this abomination won’t seem so sensationalist after all. Sign-up for my 100% FREE Alerts

German Bundesbank’s “Incredible Gold Scandal”

“The incredible gold scandal,” the German newspaper BILD began its article about the disposition of Germany’s mysterious gold holdings following the collapse of Lehman Brothers in 2009.

Growing pressure from the German people and politicians exerted upon its central bank, the Bundesbank, to audit the nation’s gold reserves intensifies, running parallel with escalating anxieties felt by German taxpayers for more than two years leading up to Greece’s to-big-to-pay $18 billion interest payment deadline of March 20, 2012.  Sign-up for my 100% FREE Alerts

Everyone knows that Greece doesn’t have the money, and the big money has bet that Greece will have to officially default on the 20th, as evidenced by the one-year Greek bill, which topped 1,100 percent this week.  Hedge fund managers have spoken: Greece is done with the euro.

Now it becomes a scramble for the gold.

Considering the ominous Greek sovereign debt backdrop, a suspicious Germany now wants to know where its gold is stored, as the last audit made in 2007 clearly indicates that the Bundesbank skipped its 2010 audit.

Just as pressure has been applied on the Fed by U.S .Rep. Ron Paul to agree to an audit of U.S. Treasury gold held at Ft. Knox and West Point, Germany may have to break the rules, too, by stonewalling the country’s elected representatives on the matter of its gold reserves.

“A clear breach of the law,” top Bilanzrechtler Prof. Jörg Baetge told BILD. “At least every three years to control counts the bars are made. [Google translation]”

When Germany’s controversial member of the Bundestag, Phillip Missfelder, inquired into the reason for the missed audit by the Bundesbank, the 32-year-old  chairman of the Junge Union received a series of Fed-like responses from Germany’s central bank.

“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]”

A skipped audit, and now, peculiar responses from one of the most respected central banks, regarding the world’s second-largest sovereign gold stockpile (after the United States) has gold bugs wondering if German gold has been essentially held hostage at the NY Fed to prevent another explosive run in the gold price.

Coincidentally, or not, some traders suspect that Venezuela’s Hugo Chavez’s repatriation of 99 tons of gold from London vaults created a nearly 25 percent jump in price during the un-seasonal summer rally in gold of last year.

But in the case of Germany’s 3,401 tons, of which approximately 60 percent (2,000 tons) is rumored to be stored outside of Frankfurt, a potential move in the gold price from an unwind of 20 times more potentially re-hypothicated gold (levered as much as 100:1) could take out gold $5,000, $10,000, $20,000 or more, easily, if Germany insisted that its gold (possibly rehypothicated) be returned to its own vaults.

A leveraged gold market of approximately 100:1 would, in effect, translate to 200,000 tons (2,000 x 100) removed from the gold market (or any fraction of that amount).  That cannot happen without a total and immediate implosion of the world’s Western fiat currencies (in terms of gold).  It’s too much gold to unwind and continue on the facade of viable Western fiat currencies.

Therefore, German gold moving back to Germany won’t happen.  London’s scramble to find 99 tons for Chavez is one thing; finding as much as 2,000 tons to ship to Frankfurt is quite another.

Missfelder told BILD, “It may be that is the gold assets of the German apparently violate any applicable accounting law.  This is a case for Parliament.  I call for a clear view. [Google translation]”

Aside from the heat that Germany has taken for more than two years in its fight against pledging its country’s people as collateral for Greek fiscal profligacy, Germany has another, even bigger problem.  That is: how to repatriate German gold without destroying all hope of keeping the post-Bretton Woods fantasy alive.

Will Germany ultimately take the big hit at the endgame of dollar hegemony?

Author of Currency Wars, Jim Rickards, believes that German gold has, de facto, been confiscated, already.  If any mention from the officialdom in Berlin that it seeks to repatriate its gold reserves could force Washington’s hand to refuse the request and confiscate the up-to 2,000 tons of gold held at the NY Fed.

“ . . . as I’ve described in the book Currency Wars, if the U.S. gets into extreme distress, and there’s a collapse in the dollar, I have no doubt that in an emergency basis the U.S. will basically confiscate all the gold in their possession,” Rickards told King World News in mid-November.  “Then they will convert it to back up a new gold based U.S. dollar as plan B or some way to stop the crisis.”

Rickards continued, “So it’s a political question for Germany as to whether they want their gold back, but sometimes you don’t ask questions if you don’t think you are going to like the answer.  It would be interesting if Germany demanded that gold be shipped to Frankfurt or Berlin what the U.S. would say.”  Sign-up for my 100% FREE Alerts

Hey Silver Bugs, Start Buying!

As silver continues to slide from Wednesday’s mini massacre, with today’s trade already dropping silver below its 20-month moving average of $32.74, accumulators of the white metal should immediately begin scaling into the metal in preparation for the next assault on $50, according to precious metals bulls.

The brightest minds of the bullion markets agree that a coordinated take down of the PM complex was orchestrated in advance of an upcoming big event—or two.  James Sinclair, Goldmoney’s James Turk and Sprott Asset Management’s Eric Sprott agree that central banks were behind Wednesday’s assault. Sign-up for my 100% FREE Alerts

Moreover, many within the PM community, as well as those outside of the relatively small bullion market clique, believe that the recent rally from last December’s lows foreshadows something big anticipated this year.

Marc Faber of the Gloom Boom Doom Report and Jim Rogers of Rogers Holdings place strong odds that Iran will be attacked—but, by whom and when, are unclear.  But an attack is “almost inevitable,” Faber told Reuters on Tuesday.

Two weeks ago, Rogers told India-based Economic Times an attack on Iran is “madness” on the part of the U.S. or Israel, as a threat to the world’s fifth-largest oil by the West (or allies) would most likely escalate a confrontation with Iranian allies, Russia and China.  Crazy? Yes, “but it looks like it will” happen, he said.

Though Iran’s threat to close the Strait of Hormuz could soar oil to $200, taking already-disintegrating Western economies down harder, still, both Faber and Rogers believe that the Fed and ECB would then be forced to openly announce more ‘quantitative easing’—though Rogers has said on several occasions that the Fed hasn’t stopped QE2.

“Say war breaks out in the Middle East or anywhere else, (Fed chairman) Mr Bernanke will just print even more money.  They have no option; they haven’t got the money to finance a war,” said Faber.

Roger’s hasn’t offered a plausible reason for the U.S. (or Israel) to attempt a geopolitical move against Iran so outrageous as to characterize it by him as “madness.”

But Faber does proffer a strong enough motive to make sense of such a bizarre plan—a plan that threatens to draw two Asian nuclear powers in defense of Iran.

“The Americans and the Western powers know very well they cannot contain China economically, but one way to contain China is to switch on and switch off the oil tap from the Middle East,” Faber said.

The lesser-discussed issue in the Middle East, which, by proxy, would most likely draw Russia and China into a military confrontation with the West, revolves around Syria and its known reciprocal defense treaty with Iran.  An attack on Syria equates to an attack on Iran—which brings back again the likelihood of Russia and China as defenders of Syria.

Last week at the United Nations, Russia and China vetoed proposed sanctions by Europe and the U.S. against Syria.

“Some countries submitted a draft resolution to blindly impose pressure and even threatened sanctions against Syria. This would not help to ease the situation,” Chinese foreign ministry spokesman Ma Zhaoxu said, according to Agence France-Presse (AFP)

Russia’s envoy to the United Nations, Vitaly Churkin, said the UN draft was “based on a philosophy of confrontation,” and added that sanctions imposed on Syria were “unacceptable” to Russia.

In response to the veto from Security Council members, Russia and China, American Ambassador Susan Rice said she is “disgusted” at Russia and China’s decision to veto the UN resolution to sanction Syria.

Russia’s Churkin struck back.  “Unfortunately, some of our colleagues choose to make rather bizarre interpretations of the Russian proposals,” said the Russian UN Ambassador.

After last week’s war of words between the U.S., Russia and China over the U.S. Security Council vetoes, Faber cannot help but to believe that the next step could include unilateral action by the U.S. in the region.

He told Reuters, “I happen to think the Middle East will go up in flames,” and added, “You have to be in precious metals and equities . . .”

On Friday, Faber told The Gold Report, “If you don’t own any gold, I would start buying some right away . . . ” Sign-up for my 100% FREE Alerts

Buy Gold “Right Away” Says Marc Faber

By Dominique de Kevelioc de Bailleul

In an exclusive interview with The Gold Report, the editor and publisher of the Gloom Boom Doom Report Marc Faber says about his personal gold holdings: it represents the “biggest position in my life,” adding that investors who don’t own any gold should start buying “right away.”

Prior to the Nasdaq bubble, Marc Faber had advised that investors should begin accumulating gold as a hedge against central bank money printing and the asset bubbles it creates. Sign-up for my 100% FREE Alerts

Without saying so, directly, Faber disagrees strongly with Warren Buffett’s recent and controversial negative assessment of gold as an asset.  Faber has stated on numerous occasions that investors who own no gold take on enormous risk, including debt defaults and/or currency devaluations, as central banks of the G-7 seek to simultaneously devalue its respective currencies.  He believes those risks remain alive and well.

“If you don’t own any gold, I would start buying some right away, keeping in mind that it could go down,” states Faber.

But the 40-year veteran Swiss economist and investment adviser also warns investors to expect extreme volatility in the gold market during the remainder of the global sovereign debt crisis—a crisis that could continue for as long as the remainder of the decade.

As central banks of creditor nations continue to accumulate gold as a hedge against money printing from central banks of debtor nations, bullion prices should continue to rise over time, according to Faber.

But, as investors witnessed in 2009, gold can fall sharply during periods of global market volatility and hedge fund redemption, as gold becomes the most liquid asset in times of a liquidity crunch and elevated counter-party risk—a feature unique to gold, but dismissed or under-appreciated by Buffett.

Therefore, as the global banking system teeters, investors can expect future gold prices to move up or down as much as $400, sometimes within a very short period of time (maybe, in one day), according to 40-year gold market veteran Jim Sinclair.

However, as a long-term accumulator of gold, Faber looks at panic selling in the gold market as an opportunity to buy more bullion at lower prices—a viewpoint shared with his American friend Jim Rogers of Rogers Holdings, who, on numerous occasions has recommended buying gold, silver and commodities during steep sell offs and market panic.

“The possibility of the gold price going down doesn’t disturb me,” says Faber.  “Every bull market has corrections,” adding that investors who own no gold today should immediately begin to incrementally allocate no more than a total of 25 percent of their portfolio holdings in gold—that is, if investors seek to mirror Faber’s own portfolio allocation strategy.

As far as the debate whether gold is in a bubble, Faber doesn’t hold to that thesis.  He, on several occasions, has said the signs of a bubble in the gold market aren’t there.  So few investors hold any gold, never mind raving about it as a road to riches, as was the case of the Nasdaq and real estate.

“No, gold is not in a bubble. It wasn’t in a bubble in 1973, either, but it still corrected by 40% then,” says Faber, referring to the negative sentiment at that time in the gold market after the price sank to nearly $100, from a record high of $200.

Following gold’s nearly six-fold increase to $200, from the official price of $35 in 1971, so-called market “experts” had believed that the gold bull was done.  It should be noted, however, that “Mr. Gold” Jim Sinclair was not among the gold bears of 1973.  Sinclair remained bullish until near the market peak of Jan. 1980.

Today, Sinclair expects gold to surpass $10,000 before the bull market in the precious metal is over.

Faber agrees.  “I don’t believe gold is anywhere near a bubble phase,” he says, squarely contradicting famed economist Nouriel Roubini’s call for a gold bubble pop after the yellow metal retreated to the $1525 level, from a record $1,922 per ounce of Sept. 2011.

Following Roubini’s provocative Tweet on Dec. 14, “Where is 2,000?” a fierce debate between Peter Grandich of the Grandich Letter and Jon Nadler of Kitco ensued.   The gold bull Grandich, who bet Nadler $1 million that gold will reach $2,100 before it reaches $1,000, has still not received a response from the gold bear Nadler.

Following gold’s steep correction from its all-time high of $1,922 in September 2011, Faber told CNBC, “We’re now close to bottoming at $1,500, and if that doesn’t hold it could bottom to between $1,100-1,200.”

Today, Faber isn’t ready to state the correction in gold is over.  He doesn’t know whether the Fed will wait for a another ‘deflationary’ scare to grip the market before formally announcing QE3, or will preempt the market with an inevitable announcement of more asset purchases by the US central bank.

“This year the gold price may not exceed the $1,922/oz high that we reached on Sept. 6.,” states Faber.  “Maybe it will. I’m not a prophet. I’m just telling people that I’m buying gold and holding it. I don’t speculate in gold. If you buy gold, you better understand that the price could always move to the downside.”

Instead of guessing which way the gold price will go from here, Faber believes investors with no meaningful position in gold should scale in monthly as a way of building a position.

“I have argued for the last 12 years that investors should buy a little bit of physical gold every month and put it aside without concerns about corrections,” says Faber. Sign-up for my 100% FREE Alerts

Source: The Gold Report

What Caused Silver’s Take-down?

By Dominique de Kevelioc de Bailleul

While traders watched silver take its latest (but not greatest) dive during the ongoing bull market in precious metals, the European Central Bank backdoored near-record ‘liquidity’ to hundreds of European banks.

Trained eyes of the incongruous event of sharply lower silver prices atop the backdrop of a QE announcement by the ECB on Wednesday suggests that the bank cartel was behind the attack, according to bullion market professionals. Sign-up for my 100% FREE Alerts

At one point during Wednesday’s trading, gold was down more than $100, while silver was trading down $3.  Both metals have since recovered approximately 30 percent due to bargain hunters stepping in at the sub-$1,700 and sub-$34 levels, respectively, in the gold and silver markets.

“What happened today; the news of today; the important event of the day; the substance of today; the reality of today is $712.4 billion of QE from the ECB to ECB member banks.  That’s what happened, today,” 40-year bullion market veteran James Sinclair told King World News (KWN) on Thursday.

“Mainstream media put the emphasis on Bernanke’s statement” that the struggling US housing market is looking up, suggesting to many traders that the need for further asset purchases above and beyond the present easing by the Fed may not be needed instead of the financial media leading with the much bigger story surrounding the ECB, was Sinclair’s assessment of Wednesday’s events.

The attack on the metals was well-coordinated and timed, according to Sinclair, but the assault on the silver and gold markets was also too obvious, even sophomoric.

“First you intervene via the mouth,” he said.

“Due to the modest improvement in housing, it is possible that our reliance on Quantitative Easing may not be as necessary,” Bernanke told the House Banking Committee in Washington.

Immediately following Bernanke’s statement, gold dropped $30 and silver shed $1.

“That’s intervention, if I ever saw one,” Sinclair said.

Sinclair added that the sudden drop in the metals then triggered computer algorithms to sell more ‘paper’ contracts, which then set off a chain reaction that tripped ‘stops’ under $35.

“How many listeners have even see the $712.4 billion in low-interest loans that went from the ECB to the member banks, today,” Sinclair continued.  ‘It’s there, but you’re going to have to look hard to find it.”

No top headlines from the mainstream media following the ECB announcement were found during the day’s trade on Wednesday.

The day after, after searching Google News (using the search term “ECB” within the past 24-hour), the results are not only scant, but the tone of the headlines of the ECB announcement to inject massive liquidity into the system doesn’t reflect the gravity of the event, Sinclair explained.

As of 11 a.m. EST of Thursday, Google News returns the following headlines:

Reuters: ECB cash helps offset worries over growth

Reuters: GLOBAL MARKETS—ECB cash helps offset worries over growth

Malaysia Star: ECB to pump more funds

Financial Times: Europe’s smaller banks approach ECB

Reuters: Disquiet within ECB laid bare after cash injection

Wall Street Journal: ECB Sending Euro Lower Now

A competent financial journalist from, for example, Reuters, could have led with a more compelling headline:

ECB launches record $712 billion of liquidity to 800 banks

-or-

ECB announces record QE to avert euro collapse

“Today was a coverup by the US Federal Reserve and by mainstream media of the fact that what took place in terms of fundamental reality was one of the largest injections of liquidity into the system that has ever occurred,” Sinclair asserted.

Sinclair warns amateur investors of the silver market to expect volatility and occasional take-downs of the silver price as the white metal achieves new highs throughout the course of the bull market.  No one, or entity, however powerful, can beat the market’s natural tendency for price discovery for ever, according to economic theory.

Lower prices attract more buying by professional traders, who gladly take more metal off the market at discounted prices.

If manipulated paper prices stray too far from the physical market’s street price, the banking cartel’s price suppression activities could suddenly backfire and setup a force majeure (a default or, more likely a settlement in dollars), a situation that the JP Morgan-led cartel wishes to avoid, completely.

“I am not a member of the school that believes central banks are trying to keep the price of gold from rising.  Central banks are trying to keep the price from rising violently.  Volatility is the key,” Sinclair explained in a Feb. 14 interview with KWN.  “Price is secondary to the volatility of the gold market as it challenges currency markets and creates an imperative to action.

“The attempts and activities of the central banks, in gold, are not by any matter of means to control price, as they are to control volatility.  (This is being done so they don’t have to) unmask the mechanism of what is bringing to you a new monetary system.  The mechanism is called liquidity.  Gold is liquidity.”

Sinclair strongly suggests hold physical gold until the price tops $10,000, as he has previously predicted (and updates from time to time). Sign-up for my 100% FREE Alerts