Gold to Pop $1,000+ During Global Banking Emergency

By Dominique de Kevelioc de Bailleul

Waiting for the rally in gold to begin?  Don’t.  Global policymakers plan to institute the vital element of surprise to trap unsuspecting investors into bearing viscous currency devaluations.

As reported by King World News’ Anonymous London Trader, the 515 tons of paper gold dumped onto Chinese buyers of the ‘physical’ within an hour before, and during, Fed Chairman Ben Bernanke’s testimony to Congress illustrates the desperate nature of central banks to dupe the public into complacency and inaction to an epic global financial crisis in progress.

The thinking goes: if the gold price isn’t making a bullish pattern on the charts, then there’s no need to buy it right now.

Veteran money manager John Hathaway of Tocqueville Asset Management proffers in a letter to clients a scenario in which investors could be waiting for a scheduled bus that never will arrive—a financial mistake that could be the biggest of their lives.

Under a scenario whereby policymakers refuse to preempt a global crisis via some form of a Bretton Woods II (to include the emergence of some form of a gold standard as its pillar), “a new round of QE will most likely be triggered by emergency conditions in the financial markets and be seen as both an act of desperation and a tacit admission by policy makers that they really have no answers,” Hathaway stated in his letter.  “In such a moment, we would not be surprised by a leap in the gold price approaching several hundred and possibly thousands of dollars an ounce in too short a period for significant capital to enter.” [Emphasis added]

As the crisis takes shape, overnight fascist-like policies will become less surreptitious and more overt during the escalation of bank failures and failed sovereign debt auctions.  A tipping point will be reached when investors begin witnessing frequent and wild fluctuations in currencies, bond and equities markets.  Emergency actions will be taken akin to the Lehman meltdown but on a much larger scale.  By then, everyone will know the bus isn’t coming.  No gold will be offered.

Remarkably, institutional money manager, like Hathaway, believe politics of austerity will trump the power of central banks to deal with a crisis that has no solution other than to debase currencies further to ward off repercussions more severe than public reaction to cutbacks on government transfer payments.

And when that critical moment of awareness that the talk of austerity is just that, talk, Hathaway told KWN in a separate interview this week, investors will become alarmed “at the readiness of policy makers to resort to radical, ad hoc measures to buy time” and stated in his letter to clients a day later, “My feeling is the absence of QE is priced into gold here.”

The surreal complacency by institutional and private investors to the imminent dangers of a chaotic event, which could take gold to monstrous heights, as Hathaway suggests, is glaringly apparent when compared with a recent announcement from OANDA fxTrade that trade restrictions will be in force—an omen of things to come globally.

As reported by zerohedge.com:

Due to the extreme volatility some market analysts foresee could result in the coming days, OANDA fxTrade will not accept any trading activity from 6:00 AM EST until approximately 3:00 PM EST, on Sunday, June 17, 2012. OANDA believes the convergence of a major market event during off-market hours represents a potential trading risk and has taken this rare step to protect traders from excessive rate fluctuations.

And while some professional currency traders brace for an ‘event’, zerohedge also reports that the Fed has become blatant in its monetization of 30-year bonds.  The big reset may not wait until Jim Roger’s post-election nightmare scenario.

“The Fed has just bought $2 billion in 30 year bonds just two hours before the Treasury sells $13 billion in 30 year paper,” penned Tyler Durden, Thursday.  “The ponzi has become so glaring they don’t even care to hide it any longer.”

Few buyers in the 30-year Treasury market could turn into no buyers at any time if the contagion of Europe quickly spreads to the US during a force majeure in the gold market.

“The life expectancy of faith based currencies is, in our opinion, quite short,” stated Hathaway.  “Whatever path the loss of faith takes is impossible to know, but the result will undoubtedly, in our opinion, be the permanent re-pricing of gold in terms of defunct paper currencies.”

And the emergency and permanent backstop to a collapse of the global financial system can only come from the repricing of gold, which according to Goldmoney’s James Turk, would come in around $10,000+ per ounce at the time of a rest back to a Bretton Woods II.  That scenario, coupled with global currency controls could happen overnight through emergency measures crafted to trap as many dollar-holders as possible.  China is aware of this and has pushed its gold accumulation into overdrive as recent Hong Kong gold export statistics to China go hyperbolic.

Jim Rogers: I’m telling you, the economy is going to be bad next year

By Dominique de Kevelioc de Bailleul

Commodities investor extraordinaire Jim Rogers of Rogers Holdings strongly suggests battening down the hatches, because the global economy is headed for the rocks, taking stocks with it.  To protect wealth from a deepening of the mostly Western side of the global depression, the 69-year-old Rogers is long oil, gold and other tangibles to front-run the predictable response by central banks of further money printing.  He is short equities.

“If stocks collapsed around the world I would have to buy a lot more stocks,” he told CNBC, Wednesday.  “I would buy stocks again, but I don’t see that happening. I’m telling you, the economy is going to be bad next year. Why buy stocks in the face of something like that?”

Rogers’ gloomy assessment of the future reconciles with the data out of Europe, the U.S. and China—which, taken together, these economies represent approximately 60 percent of global GDP.

In Europe, the sovereign debt crisis accelerates, from relatively paltry numbers needed for a Greece bailout, to gargantuan bailout packages recently proposed for Spain—amounts so large that the ECB emergency bailout fund will be wiped out completely in a matter of weeks.  Then again, there is Greece; it teeters on leaving the eurozone all together, according to EU member of parliament Nigel Farage.

“There’s an impending looming disaster . . . . 100 billion (euro) is put up for the Spanish banking system, and twenty percent of that money has to come from Italy,” said Farage on the floor of EU parliament this week.  “Under the deal, the Italians have to lend to the Spanish banks at three percent.  But to get that money, they have to borrow on the market at seven percent.  It’s genius, isn’t it?

“Any banking analyst will tell you that 100 billion (euro”) doesn’t solve the problem,” Farage added.  “It would be more like 400 billion (euro).  The real elephant in the room is, once Greece leaves, the ECB, the European Central Bank, is bust. . . It has 444 billion euros worth of exposure to the bailed out countries.”  The Euro Titanic has now hit the iceberg, and sadly there simply is not enough lifeboats.”

Jim Rogers agrees.

“What they’re [European Parliament] doing is they’re making this situation worse,” he said in Wednesday’s CNBC interview.  “What I see happening is more and more bailouts . . . the debt is up to the ceiling. The recession is going to be worse. This is not going to be fun.”

Rogers has said in an earlier interview with NewsMax that he knows the economic statistics coming out of Washington are jury-rigged in an effort to bolster the dollar in the wake of the euro woes, and also suggested that after the U.S. elections in November, the EU sovereign debt collapse will move to the U.S.—and that’s the time when the global panic may begin in earnest.

“ . . . this year is going to look good and feel good, because Mr. Obama is going to give out a lot of good information,” Rogers said in a NewsMax interview of nearly two weeks ago (BE article).  “It may be manipulated information, but he’s going to put out a lot of good information.  He’s going to spend a lot of money; he’s going to print a lot of money to get us through the election . . . So if you are not worried about 2013, please — get worried.”

And the signs of a U.S. economic collapse to pair up with Europe’s breakup riddle throughout the monthly data, according to Charles Biderman, CEO of TrimTabs.  Biderman reported as early as March that he saw massive discrepancies in the job data released by the U.S. Department of Labor for the months of January and February, alone.  As the Labor Department reported approximately 350,000 jobs added, Biderman calculated approximately 3 million loss for the two combined months.

Biderman, too, believes the day of reckoning is coming for stocks.

“How can stock markets be this high if the real economy is barely growing?” Biderman stated in his latest video, posted on zerohedge.com.

After the election, the truth cannot be withheld from the casual observers of the markets regarding the phantom statistics not jibing with reality.  It’s then, Rogers believes, the global sell off in stocks will catch up with investors who are long the U.S. recovery story.  In fact, Rogers is so convinced of the bubble in stocks popping in the coming months that he’s short equities.

“I’m not advocating because I’m short, but I’m short because I think there are going to be more problems in the world economy in the next year or two,” he said on Wednesday.  “That’s how you protect yourself in times like this.”

Global Financial System, a “Dead End of Historic Proportions”

By Dominique de Kevelioc de Bailleul

As the S&P rallies on any particular day while the ongoing sovereign debt crisis plays out in Europe, American traders could be seriously misinterpreting the meaning behind any move higher in U.S. stocks, and conversely, the deceptively less-than-spectacular move higher in gold that traders have come to expect during the heat of the sovereign debt crisis now reaching panic levels.

As recently revealed data from the Census and Statistics Department of the Hong Kong government, the Chinese have escalated purchases of gold bullion through its Hong Kong proxy.   In addition to the record-breaking gold import data, Beijing has maintained a standing order to its gold producers to desist from supplying the gold market outside of China.  All of that should ring alarm bells loudly to anyone paying attention to the stealth stampede into gold—physical gold—and that it’s very likely that some nasty global devaluation of paper assets is being hatched in the not-so-distant future.

Chief Investment Officer of Sprott Asset Management’s $10 billion investment pool told King World News that he agrees with KWN’s earlier interview with money manager Egon von Greyerz, who said, “There is no solution” to the European debt crisis.  Central banks are preparing for a “massive worldwide package” of “money printing” to devalue currencies on a global scale.  Paper assets will lose significant value against gold, according to Greyerz.

“The only way they can do that [to prevent an immediate Armageddon financial collapse] is with exactly what Egon (von Greyerz) suggested, and that is with a massive, global bailout,” Embry told KWN.  “I think it’s absolutely essential that the listeners be aware of the depth of the problem, and not listen to the mainstream media which glosses over everything and tells you to be in the conventional assets and that everything is going to work out fine.”

In fact, to illustrate Embry’s suggestion to nix any mainstream media coverage for financial advice at this critical period, hours earlier to his interview with KWN, mainstream news outlet Yahoo Finance prominently placed an article titled, “Gold is 15% to 20% Overvalued: Jack Ablin” on its front page, which featuring a video interview with Harris Bank’s Jack Ablin.  And as the title of the Yahoo article stated, Ablin believes the price of gold is 15 percent to 20 percent too high, though when asked to clarify his reasoning in the Breakout interview, he wouldn’t (or couldn’t) offer any metric to make his point.  But Yahoo ran with the story anyway.

Interestingly, nearly three years earlier, on Sept. 18, 2009, when gold traded at approximately $1,000, Ablin admitted in a CNBC interview that he has no experience offering a fair value for the yellow metal.  Instead, he recommended that investors stay with paper assets and that gold is a “psychological” investment that cannot be valued.

“I’ve never been able to get my arms around gold,” Ablin told Maria Bartiromo.  “I think there are so many psychological factors which weigh on the price movement of gold that people like me, who generally like to look at the numbers, can’t come up with anything significant.”

But today, Ablin is confident that gold is overpriced at today’s level, though talk among the leadership of the EU regarding capital controls for the countries of Greece, Spain and Italy rippled through the gold market as he spoke.

As Ablin pitches stocks, those who can get their “arms around gold” suggest following the Chinese and other holders of unwanted U.S. dollars by accumulating gold bullion.

“Reuters reported today that EU officials are discussing capital controls,” Goldmoney’s James Turk told King World News, Monday.  “The central planners want control of your money, which is another good reason to own physical metal instead of paper.”

As capital controls for the people of Europe are proposed by political leadership in Brussels, the Chinese, Russians, Indians, Iranians and a half-dozen other Eastern nations that hold dollars are dumping them as expediently as possible without markedly disrupting the price—a ploy which comes with the help of JP Morgan’s paper price manipulation scheme.

“China has purchased hundreds of tons of gold in the last couple of months,” the KWN anonymous London trader told Eric King on the day of Fed Chairman Ben Bernanke’s testimony to Congress.  “China is not disclosing what their true reserves are.  Russia is delaying disclosure and so is Iran.  We saw record gold imports of over 100 tons through Hong Kong to China in April, as reported by the mainstream media, but what has been reported is just the tip of the iceberg.”

And to keep the unsophisticated investor off guard and ignorant of the undercurrents dramatically playing out globally in the gold market, JP Morgan has held headline ‘paper’ gold prices to range-bound levels while sophisticated central banks of Asia accumulate gold on ‘the hush’—a truly convenient arrangement for holders of the lion’s share of dollars.   And throwing in an Ablin interview once in a while to distract the average investor away from the real prize, gold, the Fed can surreptitiously devalue the dollar that much longer.

The scheme aids the Chinese, Russians and Iranians, but hurts middle-class America.

“One full hour before Bernanke’s testimony, the bullion banks started selling,” Anonymous continued.  “Over the next 4 hours, the bullion banks sold the equivalent of 515 metric tons of paper gold.  This was in just 4 hours, and again, the selling started one hour before Bernanke’s testimony.”

Anonymous goes on to say that an astounding 515 tons of ‘paper’ gold were sold within a four-hour period, giving Eastern buyers of the physical metal an enormous amount of tonnage at cheap prices.  “. . . this action did create tremendous supply for the Eastern buyers to lock in the spot price of gold.  This will patiently be converted to physical in the coming weeks,” (s)he said.

That activity behind the scenes within the gold market is a clear sign to 40-year veteran of the markets Robert Fitzwilson of Portola Group that the financial system is in the throes of an epic event.

“Governments, economies and societies are converging on a common dead end, and it is a dead end of historic proportions,” he told KWN, and suggested that the only asset to cling to is the same asset that central banks of Asia have been furiously and quietly accumulating—GOLD.

Zerohedge: Buy. Real. Assets. NOW!

By Dominique de Kevelioc de Bailleul

“Buy. Real. Assets. Now!”  That strong suggestion, from the highly-trafficked website to which investors go for their daily dose of critical analysis of daily economic and financial events, was posted for its readers, Monday.

The spark for the advice from the folks at zerohedge to run to gold, silver, oil, among other tangibles, is directed to those new to the site who may be finally awakening to the realization that inflation, not deflation, is in our future, globally.

Zerohedge’s ‘Exhibit A’ comes from the news wires, which reported that Bank of England policymaker Adam Posen sees no way out of the global Kondrateiv Winter other than to now monetize private debt, such as small business loans, automobiles and anything connected to vital components of the British economy.

ñ  BOE’S POSEN SAYS TIME FOR CENTRAL BANKS, INCLUDING BOE, TO BUY PRIVATE ASSETS

ñ  POSEN SAYS BUYING PRIVATE-SECTOR ASSETS WOULD HELP ECONOMY

“Further asset purchases by central banks can improve the economic situation we are now in,” Posen said in London, Monday.  He added, it is “time for the major central banks, including the Bank of England, to engage in purchases of assets other than government bonds.”

Posen goes on to say in his speech that he was wrong about the UK economy, and he now believes economic activity has manifestly stalled, justifying further unconventional central bank actions to ward off an Armageddon-like financial collapse for another few days, or so.  A suggestion from a policymaker of the relatively lesser-important BOE to other central bankers that they should look to monetizing private debt decidedly moves the world that much closer to hyperinflation, as statements made by the BOE might just as well have come from the Fed, itself, as today’s central bankers no longer step out alone, but work together closely.

It appears Posen’s comments hint to another coordinated policy response among central banks to include any form of debt monetization they deem impeding credit creation and liquidity.  To minimize volatility between major currencies, monetary policy among central banks is coordinated to achieve a homogenous problem between the euro, dollar, yen and sterling, leaving investors with no meaningful  currency of choice among the big four.  There’s no question: central banks sink or swim together.

Consider, for example, the shock announcement of Nov. 30, 2011, during which six major central banks simultaneously slashed overnight rates of dollar holdings among their respective member banks.   Equities and precious metals soared, as traders fell over each other to buy ‘risk-on’ assets in huge volumes in an effort to front-run future inflationary effects.  After opening at 11,559.27, the Dow never ticked down and soared nearly 500 points to close at the high of the day’s trade of 12,045.68, for a 4.2 percent jolt higher.  Similar, or better, percentage moves to the upside were seen in the DAX, CAC, FTSE and Nikkei.  Currencies remained relatively stable in comparison.

In the case of Posen’s most recent statement, it’s most likely that such a heretical buying spree to shave further value off the world’s major fiat currencies will be conducted globally.  It appears, too, central banks are also coordinating preparatory language for the collective grand announcement—the bazooka.

Other hints of desperate measures forthcoming comes from the EU, according to Reuters.  Capital flight akin to the 1970s in Europe is expected to escalate, mostly out of the PIIGS banks, this time, and into Swiss banks, again, where monetary policymakers there have recently stated their undying resolve to prevent a spike up in the franc during the capital flight out of the PIIGS banks.

Moreover, to limit destabilizing capital movements, free movement (of human bodies) across EU member states, afforded Europeans by way of the Schengen Agreement of 1985, may be coming to an end, as memories of the 1997 Asian currency crisis saw money from SE Asia and Indonesia flooding over the boarders in suitcases into the Switzerland of Asia, Singapore.  Instead of Europeans moving unrestricted from country to country as Americans move from state to state, inspections of passport stamps and bulky suitcases will most likely reemerge, suddenly.

ñ  EU SOURCES HAVE DISCUSSED IMPOSING CAPITAL CONTROLS AS WORST CASE SCENARIO IF GREECE LEAVES EUROZONE – RTRS

ñ  IMPOSING BORDER CHECKS, LIMITING ATM WITHDRAWALS ALSO PART OF WORST-CASE SCENARIO PLANNING – EU SOURCES – RTRS

ñ  SUSPENSION OF SCHENGEN ALSO DISCUSSED

“Contingency planning is underway for a scenario under which Greece leaves,” one unnamed EU source told Reuters.  “Limited cash withdrawals from ATMs and limited movement of capital have been considered and analyzed.”

As Europe prepares for the end game of the global monetary system, Bloomberg reports that China’s whopping dollar and euro reserves have been fleeing into physical money at rates historically never seen before by any country.

Gold imports by mainland China from Hong Kong climbed 65 percent to a record in April, advancing for a third straight month as investors sought a hedge against financial-market turmoil and an economic slowdown. Shipments totaled 103,644.5 kilograms (103.6 metric tons) in the month from 62,913 kilograms in March, according to export data from the Census and Statistics Department of the Hong Kong government today. In the first four months, imports were 239,174 kilograms from 27,114 kilograms a year earlier, according to Bloomberg calculations. China doesn’t publish such figures.

And with gold imports into China up 782 percent for the first four months of 2012, compared with the first four months of 2011 (nearly 1,300 percent for April 2012, YoY), comments made by Wang Xinyou of Agricultural Bank of China Limited seem rather comical, when he told Bloomberg, “We can’t rule out the possibility that the central bank [of China] is buying gold.”

As data concerning exports of gold bullion from the (now) world’s largest producer of the yellow metal is zero, China’s reported stockpile of slightly more than 1,000 tons appears to be as comical as the suggestion that maybe, just maybe, the People’s Bank of China is stockpiling gold.

In defiance of the Warren Buffett and Charlie Munger duo, the Bond King, himself, Bill Gross of PIMCO, in a recent note to clients, stated this about the extent of the debt requiring some form of reconciliation:

Soaring debt/GDP ratios in previously sacrosanct AAA countries have made low cost funding increasingly a function of central banks as opposed to private market investors. Both the lower quality and lower yields of previously sacrosanct debt therefore represent a potential breaking point in our now 40-year-old global monetary system. […] As they (investors) question the value of much of the $200 trillion which comprises our current system, they move marginally elsewhere – to real assets such as land, gold and tangible things, or to cash and a figurative mattress where at least their money is readily accessible. Emphasis added.

And the screaming implications of Gross’ assessment comes by way of Eric Sprott of Sprott Asset Management, who stated in his own letter to clients, “Is the bond king recommending gold? YES, YES YES!”

And for Sprott’s recommendation regarding silver?  YES, YES, YES, and one more YES!

KWN ‘Deep Throat’ Catches Gold Cartel in Act Again; Marc Faber Changes Outlook for Gold

By Dominique de Kevelioc de Bailleul

After months of suggesting that the gold price could move down to the $1,200 level, editor of the Gloom Boom Doom Report, Marc Faber, now believes the gold market has reach the bottom range of its cycle lows.

“I’m not sure that Gold will not make a new high this year, but I think we’ve bottomed out and some gold mining shares have become very very inexpensive compared to the reserves they have,” Faber told Bloomberg Television this week.

“And I think that in the current environment where it is clear that the worse the economy becomes the more the money printers will be at work, that to own a currency whose supply can not be increased at the will of some clowns that occupy the central banks is a desirable investment,” he added.

In a Jan. 17 interview with Fox Business, Faber was unconvinced the rebound from the steep correction of 20.7 percent to $1,523.90 on Dec. 29 was over.  According to him, the spectacular and seasonally unusual summer rally of 2011, which took gold to $1,923.70 on Sept. 6, up 32.4% from the low of $1,452.60 set on May 5 (a 132 percent compounded annual rate), hadn’t flushed out all of the remaining weak hands.

“Well, I like it [gold], yes, but I think the correction is not over yet,” he said.  “I think, we had a big correction from the peak September 6 when gold hit $1,921.  We went down to around $1,522 at the end of December.  Now we’ve rebounded above $1,600.  I think we can have another leg down.”

In the months of April and May, Faber held firm about his fear of another leg down for gold, suggesting that, to be safe, investors should dollar-cost average into building a gold position for the next leg up in the ongoing bull market in precious metals.

Adding trepidation and skepticism to the gold market’s potential for cracking JP Morgan’s widely-publicized target of $2,500 for gold by the close of 2011, currency trading legend John Taylor of FX Concepts told Bloomberg as early as late spring of 2011 that he, too, like Faber, was looking for gold to drop further, giving a low as $1,000 target price for the metal, as a massive run out of gold to shore-up tier one assets would likely result from a collapse of the euro (another prediction) by late spring.  His outside target for the catastrophe in the eurozone was the close of May 2012.

As central banks of the West and some large hedge funds liquidated gold for reasons of liquidity throughout the first half of 2012, the Chinese (and other nations of the East), meanwhile, were buyers at the $1,600 level and at intervals of $10 lower in a reverse pyramid buying scheme, according to King World News anonymous source of London.

“They [Eastern countries] are averaging in at the fixes, as well as during the declines,” Anonymous told KWN on Apr. 5.  “On top of that, there are bids for hundreds of tons of physical gold starting at the $1,610 level and below.”

Immediately following the interview with Anonymous, King World New’s website underwent an unrelenting ‘denial of service’ attack by unknown computer operatives.  Though an earlier incident involving an attack on KWN’s servers following another Anonymous interview could not be traced, speculation was rife that JP Morgan (or someone affiliated with the gold cartel’s kingpin) was responsible for the mischief, as well as recollections of Andrew Maguire’s near-fatal attack by a maniacal automobile driver immediately following Maguire’s visit to the CFTC were aired and written.

And in breaking news on Friday, KWN released another interview by Anonymous, who issued an account of the most recent attack on the gold market by the JP Morgan-led cartel.  This time, the attack took place one hour prior to Fed Chairman Ben Bernanke’s testimony to Congress earlier in the week.  The attack was viscous, monstrous and blatantly obvious, according to him (her).

“What happened yesterday in the gold market was very interesting,” Anonymous told KWN’s Eric King.  “One full hour before Bernanke’s testimony, the bullion banks started selling.  Over the next 4 hours, the bullion banks sold the equivalent of 515 metric tons of paper gold.  This was in just 4 hours, and again, the selling started one hour before Bernanke’s testimony.”

Anonymous goes on to say that “Eastern buyers” were waiting with open arms once again to lock in more physical deliveries at lower prices orchestrated by the cartel.

Anonymous added, “The selling went on for another 3 hours after the Fed Chairman began to speak, and as I said, over 515 metric tons of paper gold was sold.  During this entire takedown, there was zero physical gold available for sale in the market.  However, this action did create tremendous supply for the Eastern buyers to lock in the spot price of gold.”

Full account of the incident from KWN here.

The attack appeared coordinated and by the usual suspects, according to Anonymous.  That large client, referred to by JP Morgan’s gold market specialist Blythe Masters in a CNBC interview of Apr. 5, most likely is the Fed (or another agent), itself, according to many analysts close to the ongoing story.

“A large wave of selling entered the paper gold market and traders saw the price of gold drop $40 in a matter of minutes,” Anonymous added.  “So the action was orchestrated by the Fed, and Fed-speak was used to assist in the takedown.

“The real question here is, how could an entity begin selling such a massive amount of paper gold when there hadn’t been any news (starting to sell before Bernanke’s testimony)?”

Onlookers to the KWN/Anonymous/JP Morgan saga await the next cyber attack upon KWN’s servers.

Expect Surprise Global QE3 to Shock Markets

By Dominique de Kevelioc de Bailleul

No hints from the Fed about QE3 is the latest ‘bad’ news coming out of  Bernanke’s testimony to Congress this week.  Gold sells off.

But Mike Krieger, a regularly featured contributor to zerohedge.com, stated he senses the Fed’s preparatory language to markets before formally announcing policy changes is now null and void.

“I have no idea why anyone is making a big deal about The Bernank’s testimony to Congress today,” Krieger began his article.  “There was no way he was going to come out with anything meaningful. . . In fact, I am 100% certain that The Bernank merely wants to toe the line as carefully as possible and at the same time get some nice propaganda out there to the sheeple.”

Krieger goes on to state he expects “a massive wave of liquidity” from the Fed, but doesn’t expect the U.S. central bank to pull the trigger at the conclusion of the next meeting scheduled later this month, though many analysts believe making a formal announcement during the summer months before the fall election will camouflage enough the Fed’s role in aiding incumbent parties with easy money as a way to boost asset prices and mood of the electorate going into November.

In short, Krieger believes Washington no longer cares about its once-clandestine strong-arm tactics becoming exposed to the world; the Washington ‘elite’ “don’t care” anymore, according to him.

“Maybe in times past [Washington 'elites' cared], when the power structure was a bit more reserved and less blatant about their corruption and manipulations,” Krieger continued.  “They don’t hide that stuff anymore.  The “elites” in America today are simply gangsters.  We have already been officially christened as a Banana Republic.”

No banker has been prosecuted for malfeasance since the crisis began approximately four years ago, lending much credence to Krieger’s seemingly outrageous but arguably correct summation.

So, with that pretension with the American people and the larger global community out of the way, market manipulation through every means possible, including an obvious connection between the Fed and election year politics dispensed with (and consistent with more troubling trends in America, such as the blatant suspension of the Constitution and blatant disregard for law and order among those in power), the Fed can do what it wants and when it wants to do it.

In this case, a last minute surprise QE announcement from the Fed to shock markets back into stock market rally mode must drive as much capital out of banks and mattresses as possible to condition the investor public that money must be ‘put to work’ and that shorting the market will be punished.  And there is some evidence of the ploy working, according to the Wall street Journal.

“As late as the early 1980s, Fed officials had always believed that the less that the public knew about what the Fed was trying to do, the better,” Greg Robb of the WSJ wrote in an article of Apr. 4, 2011.  “Surprise announcements were considered the most effective tool of monetary policy.”

Krieger writes, “ . . . if the market heads into the Fed meeting at current levels it runs the risk of being disappointed.  If this is combined with continued economic weakness then the real set up happens between the June meeting and the August one.  It is in that interim period that the market could throw another one of its hissy fits and beg for more liquidity.” [emphasis added by zerohedge.com or Mike Krieger]

Marc Faber of the Gloom Boom Doom Report agreed.

“I think the market will have difficulties to move up strongly unless we have a massive QE3,” Faber told Bloomberg’s Betty Lui, May 14.  “If it moves and makes a high above 1,422, the second half of the year could witness a crash, like in 1987.”

Though gold dropped approximately $40, Thursday, the fall in price may have given accumulators of the yellow metal better prices on the way to record highs.  The markets await the Fed to finally pull the trigger on more easing.  The emergency meeting of the G-7 may have been the meeting in which other central bankers will jump on board with the Fed in a shock-and-awe global easing spectacle—which has been a prediction made by several gold market analysts and as far back as the couple of years from the onset of the crisis.

Jim Rogers’ Most Dire Warning, “Please Get Worried”

In his most serious demeanor of recent memory, Jim Rogers of Roger Holdings said the U.S. economy is in for a very rough sledding akin to other major crises since the beginning of the republic.  In fact, the 69-year-old veteran of the commodities markets said even he is “worried.”

When asked by Newsmax’s Kathleen Walter about the state of the U.S. economy, Rogers said he’s not particularly concerned about 2012; it’s an election year, after all.  But after the election, in 2013 and 2014, “it’s coming again” —that slowdown expected by many analysts to lead to a sovereign debt crisis in the U.S., much like what has afflicted Greece.

“. . . this year is going to look good and feel good, because Mr. Obama is going to give out a lot of good information,” Rogers said.  “It may be manipulated information, but he’s going to put out a lot of good information.  He’s going to spend a lot of money; he’s going to print a lot of money to get us through the election.”

But post-election, conditions will change, the data will change, and the financial turmoil that the markets have already enduring will accelerate appreciably, according to Rogers.

“Be very worried about 2013 and be very worried about 2014, because that’s when the next slowdown comes,” Rogers stated.  “In 2002 we had a recession and in 2008, it was worse because the debt was so much higher.”

He added, “The next time is going to be even worse because the debt is so staggeringly high now. So if you are not worried about 2013, please — get worried.”

“Staggeringly high” U.S. sovereign debt, to which Rogers alluded, is projected by most economists to top $16 trillion for fiscal 2012, and the rate of deterioration has soared dramatically since the global financial crisis began in 2008.  The U.S. budget deficit for fiscal 2012 is expected to reach $1.6 trillion, or more, up drastically from $438 billion at the end of fiscal year 2008, and up 10-fold, or $162 billion, from 2007.

Rogers’ dire warning comes off the heals of Marc Faber’s May 25th comments, of which, he said the probability of a U.S. downturn next year is “100 percent.”

Because both men have earned reputations for candid and measured language regarding forecasts, investors have weighted their assessments of the future for the economy and investments quite heavily.

During the U.S. collapse, stocks will drop and currency markets will be in turmoil, according to Rogers. However, like a tsunami, the tide back into the U.S. dollar could be strong during the worst of the collapse, as it had been during the kickoff to the crisis with the fall of Lehman Brothers (from USDX 72 to 88), but the epicenter of a global currency crisis will come back to the shores of the U.S.

That’s the time when interest rates on U.S. sovereign debt could skyrocket, leading to a flight of the U.S. dollar and financial Armageddon predicted by some notable and respected analysts and economists.

Taking into account that 61 percent of global central bank reserves are held in U.S. dollars (28 percent held in euros), the extent of the damage to living standards in the U.S. and across the globe could be dramatic and sudden, according to Euro Pacific Capital CEO Peter Schiff and ShadowStats economist John Williams.

Greece’s less-than-two-percent weighting of the eurozone is equivalent to the weighting of the impact of America’s state of Maryland upon the U.S. dollar, so the fallout of a Greenback in free-fall, globally, has no precedent, no yardstick and no shape, giving rise to the notion that the purpose of FEMA facilities built throughout the U.S. during the past decade has been the result of preparations for a Greek-like moment of global financial history, with riotous crowds and mayhem on American soil 100 times more problematic than that of Greece’s.

“It’s just going to be turmoil. Everybody’s going to be worried, including me,” Rogers said.

Nobel Laureate Says Globe Headed for Financial “Breakdown” and “Radicalism”

By Dominique de Kevelioc de Bailleul

The world is in the midst of a complete global economic “breakdown,” according to Nobel Laureate economist Paul Krugman, with the implications of political “radicalism” quickly brewing in Europe and the United States.

“We are living through a time where we face an enormous economic challenge,” Krugman told Russia Today (RT). “We are facing — obviously — the worst challenge in 80 years and we are totally mucking up the response.”

Traders of German Bunds and U.S. Treasuries agree and have sold PIIGS paper for other paper higher up on the food chain.

As a result, rates on Bunds and Treasuries have reached record-low levels Wednesday of 1.59 and 1.23 percent, respectively—levels that Dan Norcini of Jim Sinclair’s JSMineset.com said signals a Lehman-times-10 event around the corner.  With Spain’s 10-year note spread higher by 520 basis points more than the yield on 10-year Bunds, a near-record level as well as depositors decidedly motioning into a trotting bank run on Spanish banks, Europe is again on the slippery slope to doom.

Krugman blames policymakers for the impending crash, fearing a replay of Nazi Germany as a result of a radical drop in standards of living on both sides of the Atlantic due to Germany’s refusal to inflate the euro.

“We’re doing a terrible job. We’re failing to deal with it,” Krugman added.  “All of the people, the respectable people, the serious people, have made a total hash of this. That is a recipe for radicalism. It is a recipe for breakdown.”

Forcing nations to swallow austerity contributed greatly to the rise of the Third Reich following severe reparations exacted upon Germany post-WWI—a mistake Krugman doesn’t forthrightly say in the RT interview, but may be inferred by his Jewishness, gleaned through numerous posts on his NYTimes Web blog and attributed to his notorious allegiance to a failed monetary system under intense fire from people of all nations affected by the crisis.

For the first time since the creation of the Fed, for example, the majority of Americans now understand that the Fed is not a public institution, but an independent one.  “End the Fed” is almost as common a slogan today as “End the War in Vietnam” was during the presidency of Richard Nixon (1969-1975).

In Europe, at the tip of the spear between the Brussels globalists (by the American proxy, the Fed) and the people of Europe is Germany, where the political heat of rising nationalism and scapegoating of Arab and Turk immigrants, in particular, has emerged and reported by international press.

“No other religion in Europe makes so many demands. No immigrant group other than Muslims is so strongly connected with claims on the welfare state and crime,” best-selling author, former German politician and Bundesbank board member, Thilo Sarrazin, stated in German cultural quarterly Lettre Internationat of Sept. 2009.  “No group emphasizes their differences so strongly in public, especially through women’s clothing. In no other religion is the transition to violence, dictatorship and terrorism so fluid.”

And, May 21, 2012, Israel Business published a Reuters article about Sarrazin’s newly released book, Europe Doesn’t Need the Euro, within which, he argued that Germany is being blackmailed by the EU to bailout the PIIGS to make further reparations for WWII.

Germany’s globalists “are driven by that very German reflex, that we can only finally atone for the Holocaust and World War II when we have put all our interests and money into European hands,” he stated in his book.

Germany’s initial bailout of Greece shows Germany’s “susceptibility to blackmail”, Sarrazin wrote, suggesting that crimes committed by the Nazi Party will be asked to be repeatedly atoned.

“This politics is turning Germany into a hostage of all those in the euro zone who may in the future, for whatever reason, need help,” he stated.

Krugman believes the West may have reached a tipping point, not only in the sovereign debt crisis, but in the social order, as well.

“There are a lot of ugly forces being unleashed in our societies on both sides of the Atlantic because our economic policy has been such a dismal failure, because we are refusing to listen to the lessons of history,” he told RT.  “We may look back at this thirty years from now and say, ‘That is when it all fell apart.’ And by all, I don’t just mean the economy.”