David Einhorn Slams Ice Cream Cone in Warren Buffett’s Face

By Dominique de Kevelioc de Bailleul

“Let blockheads read what blockheads wrote,” Warren Buffett once said.

The man who loves being photographed with his favorite prop, an ice cream cone, also said this about gold:

Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

Since the earth is a place for humans, those unique creatures of the cosmos who have sought gold for 5,000 years, and who’ve eaten Warren Buffett’s See’s peanut brittle more recently, what Buffett’s hypothetical Martians have to do with making his case against owning gold is telling, as well as nonsensical and manipulative, strongly suggesting that people who buy gold are foolish and are laughed at by Buffett’s imaginary Martians.

He’s right; fiat currency isn’t dug out of the ground; it’s printed, created out of thin air, everywhere, and that same Martian would wonder why it has any value at all to us silly humans.  And what value is there in See’s peanut brittle other than people like to eat it.

Gold has no utility?  Who categorized gold as an investment in a power company or auto firm?  Indians of India find spiritual value in owning gold, for one thing, and there’s about a billion of them, at last count.  Why do Indians like gold?  Why do people like sunsets?  Many people don’t like See’s peanut brittle, but they like gold and sunsets.  Maybe Buffett is truly different from the majority of the human race.

In a great post by David Cohen on DeclineOfTheEmpire.com, titled, Sociopaths in America,he writes:

 . . . some proportion of the population is “sick” and there’s nothing you can do about it. However, a Decent Society uses a multitude of checks & balances to rein in conscienceless people, to prevent them from running amuck. But in America, the most dangerous inmates are now running the asylum. These elaborate controls on immoral (unethical) behavior have been lifted. (This is often called deregulation or regulatory capture.) The corrupt politicians have rewritten the laws in such a way as to make it legal to rip people off. There is no longer any fear of punishment. 

Sociopaths can run wild—

ñTrue sociopaths have no conscience—none.

ñThey make life a game

ñThey get their kicks from kicking others, from manipulating, and most of all from WINNING.

And Warren Buffett surely hates to lose, according to his own words.

The first rule is not to lose. The second rule is not to forget the first rule.

He also refers to his life’s adventure as a game—again, according to his own words.

If past history was all there was to the game, the richest people would be librarians.

The game.  How many people call life a game with a straight face?

Back to Buffett’s argument against owning gold.

You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all — not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?

Instead of Martians, Buffett now talks about cubes, an irrelevant and manipulative obfuscation of thought.  How many Hope Diamonds can fit in the trunk of his car?

Or this, from Greenlight’s Capital Fund Manager David Einhorn, who wrote in a recent report to investors:

The debate around currencies, cash, and cash equivalents continues. Over the last few years, we have come to doubt whether cash will serve as a good store of value. If you wrapped up all the $100 bills in circulation, it would form a cube about 74 feet per side. If you stacked the money seven feet high, you could store it in a warehouse roughly the size of a football field. The value of all that cash would be about a trillion dollars. In a hundred years, that money will have produced nothing. In a thousand years, it is likely that the cash will either be worthless or worth very little. It will not pay you interest or dividends and it won’t grow earnings, though you could burn it for heat. You’d have to pay someone to guard it. You could fondle the money. Alternatively, you could take every U.S. note in circulation, lay them end to end, and cover the entire 116 square miles of Omaha, Nebraska. Of course, if you managed to assemble all that money into your own private stash, the Federal Reserve could simply order more to be printed for the rest of us.

Einhorn knows quite well the system is rigged against investors, those Warren Buffett suckers who must lose for him to win.  Buffett’s original empire of insurance companies, by definition, are rigged to profit the ‘deep pockets’ at the expense of the ‘scared money’ with no pockets, if things don’t work out.  But Buffett wouldn’t understand that; he gets bailed out from his corrupt political friends when he doesn’t take out his insurance: GOLD.  Insurance is for suckers, not for vampires who view life as a “game”.

Another Buffett quote:

Only when the tide goes out do you discover who’s been swimming naked.

If he had not cared what a Martian would think of him, he would not have lost three-quarters of his fortune in realterms, that’s right, in terms of gold—real money! —a currency that he and his Martian friend don’t seem to ‘get’.

Why would someone pay a quarter of a billion dollars for the Hope Diamond?  Answer: Because they want it.

Essentially, Buffett shows a huge blind spot in his understanding of the wholeness of the human race.  But he insists on telling us how foolish we all are for owning gold, the Hope Diamond and holding spiritual beliefs, beliefs that are no less noble than his—in fact, more noble in many cases.  He never talks about human feelings other than the feelings of fear and greed, but he talks about value, cold cash, critical journalists, Martians and cubes.

He once said, “Value is what you get.”  Is this some kind of riddle?  Is value only derived from cash flow?  If so, why didn’t he speak up about overvaluations of the housing market?  But he wants to talk endlessly (through he’s lately enlisted his  sidekicks Munger and Gates into the fray) about the overvaluation of gold.  And he should have know better, too.  Munger talked about persecuted Jews, and Gates couldn’t come up with anything intelligible to say about gold.

And another one-liner from Buffett:

There are 309 million people out there that are trying to improve their lot in life. And we’ve got a system that allows them to do it.

But then he said:

The rich are always going to say that, you know, just give us more money and we’ll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on.

Yeah, ‘Blockhead of Omaha’, the American public is “catching on.”  And kudos to Greenlight Capital’s David Einhorn for his critique (the ice-cream-cone slam to the Buffett face) and very generous and charitable giving at such a young age.  And it’s unlikely, too, Einhorn will disown his granddaughter, if he ever receives one in the future.

“Important” – Get Out of Stocks, Says Richard Russell

By Dominique de Kevelioc de Bailleul

Octogenarian and 53-year financial markets veteran from Loyola, California, Richard Russell, announced it’s time to get out of stocks—pronto!  The market expects a Greek exit of the EMU and further trouble from the other PIIGS, according to him.

In his latest missive, the venerable Russell stated that the 80-year old Dow Theory market-timing indicator he has plied throughout his newsletter writing career has triggered another “textbook bear signal” and advised his subscribers to avoid the stock market at this time.

“IMPORTANT — Dow Theory — The D-J industrial Average recorded a high of 13,279.32 on May 1, 2012,” Russell began his latest addition of Dow Theory Letters.  “This Dow high was not confirmed by the Transports.  The two averages then turned down and broke below their April lows.  This action confirmed that a primary bear market is in progress — it was a textbook bear signal.”

Russell’s remarks come off the heels of another respected market watcher Marc Faber of the Gloom Boom Doom Report, who told CNBC, Friday, he’s “100 percent” confident of a global recession next year.

Considering stocks discount expectations of the future—with recent signs of a feeble economic recovery rolling over once again—the rally in stocks from the March 2009 lows could be an echo of a similar bear market rally of 1935-7, during the Great Depression.  But by the second quarter of 1937, the rally fizzled out and stocks sold off sharply, taking the Dow down approximately 50 percent from the rebound rally high.

“This bear market will be deeper and longer than most people think,” Russell said in a Mar. 29, 2009 speech at a banquet in his honor. “People got optimistic too quick” about stocks, and added, “none of the characteristics of a major bottom” are in place for a major bear market bottom.

Though dividend-paying stocks exceed US Treasury yields, the ‘manhandling’ of exceedingly low artificial rates by the Fed has induced investors to take on inflation risk by buying stocks, which, at the moment, washes out after inflation to a negative real rate of return from dividends paid.

Moreover, many analysts suggest that much of the rally in U.S. stocks during 2011 came mostly from investors fleeing the euro.  Bank runs in Europe, especially in Greece and Spain, end up in mattresses and the U.S. stock market.  But as investors witness the alleged decoupling between Europe and the U.S. that never will be, stocks won’t be the place to be to preserve wealth, after inflation.

“I believe that the bear signal is telling us that Greece will default, to be followed by Spain, and the whole Eurozone may then fall apart,” Russell stated in his letter of last week.  “I consider the April-May action to be a continuation of a primary bear market that started on October 9, 2007, with the Dow at 14,164.53.  We are now dealing with the latter part of the primary bear market that began in 2007.”

Russell’s recommendation today hasn’t changed from his March 2009 speech, when he said, “Stay on the sidelines,” in cash or gold.  The gold market rally won’t end in a whimper; it will end as all bull markets end: in a “speculative explosion.”

Peter Schiff’s Latest Comments About Gold and Gold Stocks

With the dismal performance of gold stocks testing the patience of even hardcore gold bugs, Euro Pacific Capital CEO Peter Schiff believes investors should not panic and sell, but hold on, the bottom in the gold mining stocks is probably in.

And if the bottom is not in, hold on anyway.

“We could see another 10% pop in a week or two in the mining shares,” Schiff told King World News on May 23.  “There’s a very good chance that the bottom is in, especially if we can get a rally in gold.”

At this time, it may be worth repeating a famous quote from economist John Maynard Keynes: “The market can stay irrational longer than you can stay solvent.”  On the way up and on the way down, markets can mis-price assets to ridiculous levels for longer periods of time than appears rational.  Today, it’s the U.S. dollar, U.S. Treasury market and gold, which have been mis-priced for so long.

“Right now the U.S. dollar has been rising because of worries about Europe, but the dollar is sicker than the euro,” Schiff said.  “So both currencies should be falling against gold and gold should be taking off here.”

To put into better context how “sick” the U.S. dollar really is, consider an article penned by USA Today journalist Dennis Cauchon, who outlined in his May 23rd piece the horrific fiscal shortfalls in Washington—a fiscal debacle so large that economist John Williams of ShadowStats.com expects hyperinflation in America some time in 2014 as global investors might eventually witness 100 percent Fed monetization of fresh U.S. Treasury debt.

Under the Generally Accepted Accounting Principles (GAAP) rules of reporting financial disclosures, “the [U.S. budget] deficit was $5 trillion last year under those rules,” stated Cauchon.  “The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government’s books.”

Whether investors are aware of the fraudulent U.S. Office of Management and Budget (OMB) accounting, or not, the reality of millions of baby boomers retiring each year and the growing budget deficits that come with an aging population will reach an inflection point, whereby investors of all stripes come to expect money printing as a way of life and begin trotting, then running, to gold and the gold shares in an effort to protect from a Greece-like financial collapse.

And the quick-fix to Washington deficits through Fed ‘stimulus’ and the higher tax receipts that result from a U.S. “bubble economy” has finally reached that ‘Minsky Moment’, according to Schiff.  After trillions of dollars of Fed stimulus since 2009, the economy just isn’t responding like it had for nearly 70 years of Fed intervention—a prediction made by 20th century economists Hyman Minsky and Ludwig von Mises, among others, of the ramifications of chronic central bank money supply injections.

“The market is just rolling over, as it’s coming to grips with the fact that the fantasy they believed in is just that: fantasy,” Schiff said in an earlier KWN interview of May 18th, referring to the recently reported poor economic numbers from Washington and private sources.  “It’s not reality.”

Schiff went on to say that gold—and by extension gold shares—will rise “as investors realize that QE3 [quantitative easing] is coming, because the Fed has already said that.  If the economy needs it, it’s going to get it.  And the economy is addicted to it [stimulus].  I mean, this economy needs QE like a heroin addict needs another fix.”

Back to the May 23rd interview:  Schiff suggested that the relative strength of the HUI index of mining shares to the gold price so far this week indicates to him a bottom is in and a buying opportunity is at hand.   As far as the gold mining shares, “we could have a pretty serious up-move in the gold stocks in a very short period of time.”

Fukushima, Washington Hides ‘Black Swan’ of Economic Collapse

As the sovereign debt crisis in Europe dominates media coverage of both financial and main street news, Washington’s deliberate cover up of a far more serious threat to the global economy stemming from the continuing crisis at Japan’s Fukushima nuclear power plant (beginning on Mar. 11, 2011) is now seeping out more rapidly from sources outside the captured and complicit mainstream news outlets.

“You can’t stop the truth from leaking out about Fukushima, and [President] Obama actually came out with a statement at the start of this disaster and said that their nuclear experts did not feel that harmful levels of radiation would reach our shores,” Nuked Radio hostChristina Consolo told TruNews.

Due to increasing reports of nuclear contamination found in pollen across the U.S. West Coast, babies with elevated becquerel levels of nearly 10 times normal (presumably from mother’s milk), and a statistically unusual number of children with flu-like symptoms who won’t respond to conventional medical protocol, the truth about Fukushima could easily break out into a national panic significant enough to trigger an economic collapse of the U.S. economy and dollar, according to Consolo.

That’s “what we found from Freedom of Information Act requests . . . transmissions between the U.S. government, the Chinese, the Russians and the Japanese from the beginning of the disaster until now, and that includes NRC (National Regulatory Commission) transcripts of phone calls,” Consolo explained.

“They were well aware of high the levels were, and that they were coming over here,” she added.  “In fact, infants in California were exposed to 40,000 becquerels (symbol Bq: the human body has 4,400 Bq, on average, from decaying potassium) of iodine 131—that causes thyroid cancer—from Mar. 17 to the beginning of April.”

And the threat to U.S. national security as well as the implications to the global economy a nuclear contamination multiple-times more devastating than Chernobyl poses to America may have been the impetus for President Obama’s rapid-fire signing of the Executive Orders of the National Defense Authorization Act (NDAA) in January and the National Defense Resources Preparedness Act (NDRPA) in March, possibly suggesting that President Obama’s motives for these pair of politically catastrophic actions (during an election year) were, in a sense, mischaracterized as a executive branch power grab by media instead of an unpredictable dialogue that could trigger an immediate crisis of panic if the rational for an obvious abrogation (suspension) of the Constitution were made public.

In essence, complaints that an Executive Order of the magnitude of the NDAA going much beyond an old-standing EO exception to the rights granted the American people by the U.S. Constitution (only in times of nuclear war can the U.S. Constitution be suspended) may be surprisingly unreasonable, if, in fact, Fukushima’s nuclear radiation contaminating U.S. soil was indeed the reason for such a politically inflammatory act by a sitting U.S. president.  The debate, then, would be: do the American people still have the right to know if that right would include the likelihood a dangerous and unpredictable level of panic?

“And there was an actual letter that came from the FDA (Food and Drug Administration) telling physicians in California not to put people on potassium iodide (KI),” Consolo continued.  “And the only thing that I can draw from that is they didn’t want to panic people; they didn’t want them to know how bad the situation is.  But the problem is that the situation is ongoing.

From the U.S. FDA Web site.

The United States Food and Drug Administration (FDA) recommends that all children internally contaminated with (or likely to be internally contaminated with) radioactive iodine take KI, unless they have known allergies to iodine. Children from newborn to 18 years of age are the most sensitive to the potentially harmful effects of radioactive iodine.

Consolo also noted that the Environmental Protection Agency (EPA) suddenly stopped testing rainwater, soil and milk for contamination two weeks following the disaster. But private tests conducted after the EPA stopped its testing, including ones performed by the University of California at Berkeley, in particular, reported “in November, that the levels of cesium in cow’s milk are actually 150 percent higher than they were in April of last year,” she paraphrased.

Consolo intimated that the EPA stopped testing because its reports would eventually become available to the public through the inevitable Freedom of Information requests, giving rise to the speculation for the stoppage among many others in the nuclear community as a possible reason for the EPA’s withdrawal and the progressively worsening data it would need to conceal through time.

“Those reactors are steaming constantly. . . They’re dumping nine tons of water on each reactor and spent fuel pool all day long and that water is going into the ocean.” Consolo continued.  “Our storms are generated out of this huge radiation slick off the coast of Japan and this all gets rained out over the West coast of Canada and the United States.”

She goes on to say that rumblings within the nuclear safety community include strong recommendations for enacting the protocol of evacuation of Tokyo and other major cities of Japan.  With a total population of approximately 35 million people affected by an evacuation within the world’s third-largest economy, the already-highly-fragile global economy would immediately drop to free fall as currency and bond traders would predictably sell their holdings at any price to get out of the way of a total collapse of the financial system.

“There are a lot of people who have left Tokyo and they’ve moved with their children and one spouse has stayed behind to work,” Consolo said.

“We’re talking about an end to a nation,” TruNews host Rick Wiles interjected.

“Yeah, which I think is part of the reason, like I said from a global economic prospective is, why it’s not being talked about,” Consolo continued.  “It’s a very serious situation that’s going to have very serious ramifications for Japan” and the world.

Full interview and suggestions for protection from nuclear radiation, from TruNews Radio.

Silver Price, a Complete Joke; Look at the Chart!

The silver price has dropped to such low levels that, a year from now, traders will wonder why they didn’t buy some at such great prices.  And if the price isn’t much higher a year from now, it must have been that politicians and central banks suddenly got religion and stopped debasing currencies.

But how likely is that?  Who wants to be in an official capacity when the Bastille is being stormed by people all over Europe in one massive European Spring?  Scarey stuff, indeed.

According to the silver chart, the price has approached very close to a meaningful support level of $26.15.  A plunge below $26.15 most likely can only mean one thing: a John Taylor (of FX Concepts) scenario of complete financial Armageddon in Europe, riots, government overthrows in countries not typically in the radar of Western news, or maybe revolution in Greece, for example.  Under that scenario, the gold price might hit $1,000, according to Taylor.

A collapsed euro would temporarily soar the dollar until investors jump ship from the greenback following the short-term knee-jerk reaction.  Then the focus on the dollar begins, and the financial metrics aren’t any better in America.

Sounds too speculative?

Consider, in 1873, when the German property market collapsed and Austria demonetized silver, the ripple effect in the US was devastating.  The 1873-1878 Depression in the U.S. and Europe was worse than the Depression of the 1930s, though very few analysts refer to that period as a comparison to today’s financial crisis; that period was too long ago.

In 1907, the banking system collapse in the U.S. following the failure of the Knickerbocker Trust Company caused stock market crashes in Europe, with Rome and Paris taking the biggest hit of approximately 50 percent drops in their major indices.

In 1921, financial turmoil post-WWI devastated both the U.S. and Europe, as well, but the Depression at that time was very short lived—approximately 18 months.

Then, the Depression of the 1930s.  Ditto, both side of the Atlantic were crushed for more than a decade.  Then, WWII came and went.  The U.S. dollar was chosen as the world’s new reserve currency of the because the U.S. was the last man standing following the devastation of Europe.

Since the 1930s, recessions and currency problems have affected the U.S. and Europe like Siamese twins.  Both sides of the Atlantic have been linked for centuries; and the suggestion that some how the U.S. won’t crater from a European debacle is just pure nonsense.  As Europe goes, so goes the U.S.

Globalization is not a new concept; it’s very old.

Therefore, the Fed, ECB, the BOE, SNB and the BOJ can be counted on to work together to re-inflate when the time is right.  Each knows the others are dependent upon the group.  And that time to re-inflate is about right now.

According to the silver chart, this summer central banks will intervene, if not earlier and between FOMC meetings. That’s the time silver will most likely begin its journey to $50, and beyond.  Patience and a long-term horizon is needed to outlast the day when markets have had enough with the broken monetary system and flee paper en masse.  We’re not there, yet. However, time is on the side of silver investors.  Hang in there and continue stacking.

Gold Alert: “This has happened only 5 times in the last 100 years”

Investors seeking an entry point to add to gold (and silver) positions or to initiate positions—as a strategy to balance portfolios to the risks of the coming turbulent re-balancing of the global monetary system—should consider a macro indicator that has served money managers and gold investors well for the past century.  And right now that indicator tells us gold is cheap.

In an interview with Goldmoney Chairman James Turk, money manager Adam Fleming of Fleming Family & Partners suggested that, when gold shares stray too far in price from the price of bullion, gold becomes remarkably cheap on a relative basis—or, a buy—a buying opportunity that emerges once per generation, on average.

“I think it’s very likely that we have [reached a bottom in the gold price],” Fleming told Turk.  He believes the experiment in fiat currencies not connected with precious metals of the past 30 years is becoming “unwound.”

“The reason why I believe gold is bottoming here, is because the gold shares are trading at two standard deviations to the gold price, and this has happened only five times in the last hundred years,” Fleming continued.

“In the crash of 2008, in 2000, 1980, in . . . way back in 1950s and in the 30s, he added.  “So I think we’re at an extraordinary inflection point with both gold and gold shares, providing really unusual opportunities.”

Leonard Melman of the Melman Report agrees with Fleming and provides a context in which investors can measure the magnitude of the extreme disconnect between the prices of gold and the gold shares at this time.

“In mid-2008, gold was about $900/oz and the Philadelphia Gold and Silver Stock Index (XAU) was 205,” Melman told The Gold Report. “Now with gold just under $1,600/oz, the XAU is 147. So, while gold has almost doubled, the major mining shares have dropped by an average of about 40%, and many of the junior shares have fallen by more.”

Fleming’s observation of this recent phenomenon comes off the heels of comments made within a week by three other market pros, Euro Pacific Capital President Peter Schiff, Founder and Managing Partner of Matterhorn Asset Management AG & GoldSwitzerland Egon von Greyerz and Hinde Capital CEO Ben Davies—all of whom believe the selling in the precious metals market is overdone and opportunities to enter the market have materialized dramatically during the nine-month price consolidation of the bullion price.

“Gold is oversold,” Euro Pacific’s Schiff told King World News (KWN) on May 17.  “ . . . as the market digests the weakening economy and the lower market, then you start to get the optimism for the release, the fix, which is QE3. So I think QE3 puts a floor (somewhere) beneath the market.”

The next day, Hinde’s Davies reported a “big seller” had dumped a lot of gold, overwhelming strong demand.  But the big seller has stopped liquidating, according to Davies in his interview with KWN on May 18, and he expects a rally in the gold price from the lows of last week, as well.

“The sell-off in gold is reminiscent of the 2008 deleveraging process, but it is more similar in dynamics to 2012 when a notable fund manager had to sell his gold/ ETF holdings,” said Davies.  “There were buyers of course, seller and buyer volumes must match.  But the need to sell overwhelmed the need to buy.

“Gold buyers picked up some bargains then, and they will now. . . I particularly would like to be long gold now.”

On May 22, Matterhorn’s von Greyerz told KWN the physical market is extremely tight—so tight, in fact, that one of his clients discovered that the Swiss bank, with whom he entrusted his ‘allocated’ gold account, scrambled to find bullion in a manner reminiscent of the MF Global scandal to satisfy the client’s request for shipment of his gold to another location.  “It’s absolutely amazing” what has happened, said von Greyerz.

And von Greyerz, too, sees gold soaring from the oversold lows of last week.

“I think we did make a low last week [in the gold price], and I think we are now going to see the rebound,” von Greyerz told KWN.  “And once we get started—and that may take a few days—but I think we can see fast moves here.  I feel pretty confident that we have seen the end of the correction and the next move up will be a big move. There’s no question about it. . . All the dominoes are down ready for gold to take off.”

Swiss Bank Copies MF Global Fraud, Averts Disaster

When James Turk, Marc Faber, Eric Sprott and Gerald Celente say get your gold out of the hands of bankers, each one of these men isn’t hyping the gold trade.

Consider Switzerland, a nation which relies on customer trust of its banking system for a substantial portion of its Gross Domestic Product (GDP), and which holds approximately 28 percent of all funds held outside of the jurisdiction of the funds’ origins (The Boston Consulting Group Global Wealth 2009), committing a fraudulent disclosure of a highly sensitive financial product.  That’s what happened to a well-heeled customer of an unnamed Swiss bank charged with storing the customer’s physical gold bullion, according to Egon von Greyerz, founder of Switzerland’s Matterhorn Asset Management.

“We are stressing to investors to take their gold out of the banking system, not only because there are runs on banks that will continue, but the risk of being in the banking system is major,” von Greyerz told King World News.  “So you should take the additional step of not just owning physical gold, but also owning it outside of the banking system.

“We (just) had an example of a client moving a substantial amount (of gold) from a Swiss bank to our vaults, and we found out the bank didn’t have the gold. This was supposed to be allocated gold, but the bank didn’t have it.  We didn’t understand why there was a delay (in our vaults receiving the gold), but eventually we found out why there was a delay (the bank didn’t have the gold).  It’s absolutely amazing, but not surprising.”

Reminiscent of another landmark breach of fiduciary trust in the U.S., regarding one of the Fed’s primary dealers MF Global and Gerald Celente’s gold futures account, the revelation of banking fraud has moved to Switzerland. But fortunately, the Swiss bank in question scrambled to find the gold—and was successful acquiring the bullion for its customer—this time.  Though, in the case of Celente, he still hasn’t been made whole from his missing ‘allocated’ brokerage account held at MF Global.  And the gold he contracted for delivery was credited to JP Morgan’s books, instead.

“Every financial institution is under the same kind of pressure as we see in Europe. If you think your money is safe with any of those big names, you’re making a big mistake,” Forbes Magazine quoted Celente in an InfoWars.com interview of Nov. 17, 2011, more than two weeks after MF Global’s Oct. 31 bankruptcy.

“When I say take your money out of the banks and put it under the mattress, this is not advice,” Celente said, reminding listeners of the interview that he is not a registered investment adviser.  “Personally, I buy gold coins from reputable companies. I take my money out of investment funds and I buy gold and silver. You need the three g’s — gold, guns and a get-away plan.”

Celente has stated numerous times that, not only bank cash accounts, but bullion stored within the banking system should be withdrawn and held at fee-for-service storage facilities—such as private bullion storage vaults—or home safes.

Cracks in the physical gold market can be anticipated, according to CFTC testimony from one of the gold market’s leading apologists of JP Morgan’s suspicious derivatives trading, Jeff Christian, founder of commodities consulting firm CPM Group, though Christian’s statements weren’t expressed clearly to the layman.  Note: Jeff Christian once worked for Goldman Sachs, another firm suspected of rampant fraud in the derivatives market for mortgage-back securities.

“The CFTC, when it did its most recent report on silver, used the term that we use, ‘the physical market.’ We use that term, as did the CFTC in that report, to talk about the OTC market — in other words, forwards, OTC options, physical metal, and everything else,” Christian told CFTC Chairman Gary Gensler in a Mar. 25, 2010 testimony, admitting to the Commission that the CFTC weekly reports regarding physical inventories at the COMEX includederivatives.  Emphasis added.

Gold Anti-Trust Action Committee (GATA) Director Adrian Douglas provided one of the most powerful testimonies at the CFTC hearing, when he pointed out the enormous size of paper gold in the market (led by JP Morgan’s derivative desk) and the tacit implication that physical gold allegedly held for unsuspecting clients across the globe may not exist, including gold allegedly stored in Swiss banks in alleged ‘allocated’ accounts.  In other words, there’s approximately one ounce of gold for many times more paper gold, which, if called for delivery, could force another MF Global incident anywhere in the world.

“ . . . if we look at the physical market, the LBMA, it trades 20 million ounces of gold per day on a net basis, which is $22 billion,” Douglas told the CFTC.  “That’s $5.4 trillion per year. That is half the size of the U.S. economy. If you take the gross amount, it is about 1 1/2 times the U.S. economy. That is not trading 100-percent-backed metal; it’s trading on a fractional-reserve basis.”

And, on Monday, CFTC Chairman Gary Gensler has opened another investigation into JP Morgan’s derivatives trading losses from activities its CEO Jamie Dimon initially said where executed as hedges, according to Dow Jones Newswire.  However, Bloomberg has confirmed that Dimon has since retracted his statement regarding the type of trading activities that resulted in a substantial loss.

“Commodity Futures Trading Commission Chairman Gary Gensler said the agency had opened an investigation into JP Morgan Chase’s trades, which have resulted in a more than $2 billion in losses so far, but declined to comment on the specifics of the probe,” stated Dow Jones Newswires.

The full extent of the losses and ramifications of the red ink at America’s largest Fed primary dealer to the global banking system are not yet known.  Speculation of banks calling in gold to sell it into the marketplace to remain liquid run rampant.   von Greyerz’s statement to King World News only serves to escalate nervousness among investors to run to physical bullion in the gold market.

Paul Krugman Whores for the Fed

“The conscience of a liberal” Paul Krugman once again demonstrates his role as Fed bitch.  Like a third-world young lady receiving an all-expenses-paid trip to a developed nation in return for a chance to ‘make a living’, Krugman must ‘put-out’ once in a while for the Fed syndicate who launched his stardom with the Norwegian Nobel Prize Committee.

New York Time’s latest talent hit the street with his latest summation of the outlook for the euro in an Op-Ed piece, dated May 17, titled, Apocalypse Fairly Soon.  There, he states with crocodile tears that he’s not “optimistic” about the euro’s immediate future.  It’s such a pretty currency; too bad it has AIDS.

“Suddenly, it has become easy to see how the euro — that grand, flawed experiment in monetary union without political union — could come apart at the seams. We’re not talking about a distant prospect, either,” Krugman writes. “Things could fall apart with stunning speed, in a matter of months, not years.”

Krugman knows quite well that a failed euro spells a hastened demise of an equally failed U.S. dollar, as every John who attempts a trysts with the American competition soon finds out he’s been ‘had’ by a ladyboy, posing as the real thing.

“Realistically, the only way to provide such an environment [of hope for Spain and Italy] would be for the central bank to drop its obsession with price stability, to accept and indeed encourage several years of 3 percent or 4 percent inflation in Europe (and more than that in Germany),” Krugman offers as a solution to the euro crisis—a solution of bondage to 300 million Europeans who seek to make an honest living without selling their bodies on the streets to pay a bunch of banker pimps.

But Krugman’s pitch is a devious one, in that, he seeks, not only a solution of collectivized inflation, but a solution that gives the Fed room to inflict the same monetary policies across the Atlantic in the U.S.  If Europe will debase the euro, the U.S. will, too, in a see-saw trading range between the world’s two most important reserve currencies.

In essence, the coke-head economist prescribes a theft of capital, savings and income from the virtuous so that the racketeering can survive another day—maybe decades—on both continents, representing nearly half of the world’s GDP.

But Krugman claims he has a “conscience,” that lovely tart who promises to “love you long time” kind of conscience.

From dictionary.com:

conscience: the inner sense of what is right or wrong in one’s conduct or motives, impelling one toward right action.

“Think of it this way:” Krugman continues.  “Failure of the euro would amount to a huge defeat for the broader European project, the attempt to bring peace, prosperity and democracy to a continent with a terrible history.”

Democracy?  Tell that to Greece’s and Italy’s technocratic-led governments.

Prosperity?  Krugman’s neo-Ricardian model, infected with a common currency is, not only complicating a half-baked theoretical frame work for trade, it’s un-Democratic to say the very least—which brings us to his envisioned “peace” for the eurozone.

Maybe, if the Nurse Ratched approach of forcing an economic version of ‘busing’ in the eurozone could be rethought and untangled from the project’s real flaw (a common currency crossing sovereign borders), a more natural solution may emerge—like a Bretton Woods II.

A discussion along those lines, between Paul Krugman and former Bundesbank chairman Axel Weber, would provide some hands-on research work to fully-bake a sequel to Krugman’s book, Geography and Trade.  Maybe then Krugman might discover that people cannot be cookie-cut into formation to suit a global agenda, which is doomed to fail miserably for the same reasons a mutual understanding between Weber and a Woodrow Wilson School radical cannot be forged.

‘Mr. Gold’ on Gold: Toughen Up! Forge Ahead!

As an apparent gesture to lend a helping hand to Sprott Asset Management John Embry’s call for seasoned gold professionals to coach rosy-cheeked newcomers through the treacheries of the gold market, as witnessed so far this month, Mr. Gold, Jim Sinclair, posted an Open Letter for the weak-of-heart among his flock to ignore mainstream media, stare down that empty-chambered pistol of the Fed, and “forge ahead.”

“Please make an effort to stay balanced. Greed is a condition of lack of balance similar to fear,” the 40-year gold market veteran Sinclair stated in his Open Letter of May 16.  “Fear is being fanned from within the gold community as much or more than from outside. When people who know gold is seriously under priced talk temporary bear, they kick good people when they are down.”

Echoing Embry’s comments in an interview with King World News (KWN) on May 15, Sinclair directed the reader’s attention to the heart of the financial crisis—the more than $1 quadrillion worth of derivatives, armed and ready to explode anywhere, and at any time.  And sure enough, the most likely culprit of reckless trading of those synthetic time bombs (by assets held), JP Morgan, last week began warning the bank’s stockholders of a $2 billion loss from its “hedging” activities for the current quarter.

And not surprisingly, this week, Bloomberg reports the loss estimate at the nation’s largest bank now stands at $3 billion—creeping higher over time—which has become a familiar pattern among the banks of, first, low-balling the initial announcements, then ratcheting up to the true losses incrementally by the time of quarterly reporting.

Bloomberg’s Dawn Kopecki said on Bloomberg Television’s ‘Inside Track‘ that JP Morgan’s initial estimate of a $2 billion loss from its European mortgage bonds trading represents only the “tip of the iceberg,” and that Jamie Dimon’s characterization of the trades as a “hedges” is a lie.  Under FASB rules, the loss is the result of a gamble, not a hedge, and Dimon knows it.  Therefore, can shareholders trust Dimon’s estimate of the total trading loss?

“The problems of OTC derivative just brought into the headlines by Morgan is alive and well, guaranteeing QE to infinity,” Sinclair continued—as he again reminds his flock of the JSMineset.com mantra: “QE to infinity.”  And as the banks trade in wild speculation in an attempt to dig themselves out of the derivatives hole, Dimon and his banking cohorts know the Fed will bail them out if they lose the bets.

And again, it appears Sinclair is correct.  The “QE to Infinity” works like a charm.

Thursday, Bloomberg reports the Fed Minutes of the April FOMC Meeting, which revealed that several Governors said further money printing will be forthcoming if the U.S. economy stalls or if “downside risks to the forecast became great enough,” signaling to traders in its typical obfuscatory language that the Fed fears an exploding derivatives market and that the European solvency crisis will take down the financial system in another Lehman-like swan dive.  It’s ready to open the money spigots.

“You must make your decision in present time, neither fearful or greed-ful of the future,” Sinclair said.  “Look at every factor of gold and list them as bullish or bearish.”

One of the many of the gold market’s bullish factors comes out of Asia, where GoldCore executive director Mark O’Byrne told Bloomberg the appetite has not waned during the entire decade-long gold bull market.

“There has been significant buying particularly out of Asia in recent days,” said O’Byrne.  “In Hong Kong and Singapore there have been reports of tightness in the marketplace and premiums have remained robust on gold buyers of those markets.

“So, this has been a pattern we’ve seen for the past 10 years—that the Asian markets seem to be a little bit more price sensitive and they tend to buy . . a little bit more savvy on their buying, and they tend to buy on the price dips as we’ve seen in the past 10 years.”

Given the 10 years of professional gold buying out of Hong Kong (China’s supplier of overseas gold) and Singapore on significant pullbacks, Sinclair told KWN on April 2 that the only remedy for the amateur jitters is to . . . well . . .  “toughen up” and trust that “everything that you are doing you are doing for good, right and logical reasons.”   That’s what Asian professional buyers are doing.

Billionaire George Soros Spikes Gold Position; Yahoo Says Gold in Bear Market

On the day GoldCore reports George Soros’ nearly quadrupled his holdings of the SPDR Gold Trust GLD in his latest SEC filing, Yahoo posts a front page article titled, Gold Tumbles Into Bear Market on Concern Greece May Leave Euro.

As the latest example of media working with Washington to bamboozle the public, the reader of the Yahoo piece won’t find an amplification of its salacious headline.  On the other hand, gold specialist firm GoldCore reports on the same day that global insider George Soros told the SEC he raised his stake in GLD, dramatically.

“Billionaire investor George Soros significantly increased his shares in the SPDR Gold Trust in the first quarter. Soros Fund Management nearly quadrupled its investment in the largest exchange-traded gold fund (GLD) to 319,550 shares – compared with 85,450 shares at the end of the fourth quarter,” stated gold market consulting firm GoldCore in an open letter to the public.

In addition to its hit-and-run article title, Yahoo slyly touches on a significant talking point of the Fed’s tactic of conditioning the uninformed investor into eschewing the only lifeboat available to most middle class investors during the global financial crisis—gold—by seducing the reader into believing that the U.S. dollar is a safe haven and that gold is merely another commodity vulnerable to terrible economic prospects.

Yahoo quotes a Fed primary dealer UBS in an interview with a primary outlet for Fed propaganda—Bloomberg Television:

“It’s a risk-off environment,” Peter Hickson, head of commodities research at UBS AG, said in a Bloomberg Television interview. “People are concerned about liquidity and they’re going to take security in the U.S. dollar.”

Former George Soros partner of the famed Quantum Fund, Jim Rogers, has repeated stated that the knee-jerk reaction by institutions and amateur investors to run to the dollar during this particular and protracted crisis is “the wrong thing to do”, as running away from the euro into another “flawed currency”, the dollar, will turn out to be financial suicide when the trade is over.  Rogers is staunch gold bull.

But speculators will take the trade for a short-term profit, according to Rogers, while long-term investors should view the quirk of madness in the gold market as an opportunity to buy gold at lower prices.  The Chinese and other Asian investors certainly have been, scaling into gold all the way down during the correction in the yellow metal.

“Right now, the gold market is in the middle of a battle between the paper traders and the holders of physical metal,” Goldmoney’s James Turk told King World News (KWN), Tuesday.  “We are seeing huge Chinese import stats for physical gold and robust demand elsewhere for physical metal.”

But Yahoo won’t lead with a headline about massive Chinese buying of gold or that gold futures (and silver futures) have slipped once again into backwardation, a market condition which implies heavy physical buying of the metal as the virtual paper market sells off.

“Do not listen to the propaganda and the mainstream media, and do not be spooked by market action because the manipulative activity in the markets right now is so extreme that the market prices are telling nothing about reality,” Sprott Asset Management’s Chief Investment Strategist John Embry told KWN on the same day as the Turk interview.

“I think it’s important at this time that people who’ve been around a long time and have a pretty good grasp of what’s unfolding should express their views to the public, just to counteract the propaganda that they’re receiving from mainstream media.  It’s tough enough without being lied to all the time,” he added.

With more than four decades of working the markets under his belt, Embry closes the KWN interview by advising nervous gold investors to “stick with your positions and you’ll be fine” in the end.  Stop reading comments by media and financial institution surrogates of the Fed, and stay the course.