Hey Silver Bugs! Be Cool, Honey Bunny

By Dominique de Kevelioc de Bailleul

As silver stackers await Fed Chairman Ben Bernanke speech at Jackson Hole, the German high court ruling on the constitutionality of funding the ESF, the Sept. FOMC meeting, the likely invasion of Syria, and this year’s expected October surprise, it may be time for a little advice, especially to newcomers of the silver market.

What ever happens to the price of silver in the coming months, just be cool, Honey Bunny.

The day will come when silver stackers witness what happens to the plans of evil men, who arrogantly attempt to steal from the righteous, wage war in their name, and even rob their small-town restaurants.

And that day will come when the righteous live to bask in the glory of the great silver liberation and seek vengeance on said small-restaurant robbers.  So, whatever happens from now until the November election, be cool, Honey Bunny, be cool.

During the final scene of the movie, Pulp Fiction, Jules explains:

Jules: . . . You read the Bible?

Pumpkin: Not regularly.

Jules: Well there’s this passage I got memorized—Ezekiel 25:17.

“The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men. Blessed is he who, in the name of charity and good will, shepherds the weak through the valley of the darkness. For he is truly his brother’s keeper and the finder of lost children. And I will strike down upon thee with great vengeance and furious anger those who attempt to poison and destroy my brothers. And you will know I am the Lord when I lay my vengeance upon you.”

I been sayin’ that shit for years. And if you heard it, that meant your ass. I never gave much thought to what it meant. I just thought it was some cold-blooded shit to say to a motherf**** before I popped a cap in his ass.

But I saw some shit this mornin’ that made me think twice. See, now I’m thinkin’: maybe it means you’re the evil man. And I’m the righteous man. And Mr. 9mm here, he’s the shepherd protecting my righteous ass in the valley of darkness. Or it could mean you’re the righteous man and I’m the shepherd and it’s the world that’s evil and selfish. And I’d like that.

But that shit ain’t the truth. The truth is you’re the weak. And I’m the tyranny of evil men. But I’m tryin’, Ringo. I’m tryin’ real hard to be the shepherd.

Whether you succumb to the temptations of becoming the tyranny of evil men, or not, or truly become a shepherd, remember to hold on to that silver, stack that silver, and guard that silver.

It is Bernanke who is the weak one; he’s the one who sweats.  And that’s the undeniable truth.

But, the silver stacker . . . he’s cool, very cool—like Fonzie.

Fed to Crash Markets Before Launching QE3

By Dominique de Kevelioc de Bailleul

Desperate to print Wiemar-style to fight off the most viscous Kondratiev Winter on record, Federal Reserve Chairman Ben Bernanke may not satisfy ‘inflation trade’ onlookers at the close of his Jackson Hole speech scheduled Friday.  He may, instead, merely allow months of anticipatory front-running of stocks do the work of propping up asset prices for him.

And if investors don’t get the ‘all-systems go’ at Jackson Hole, there’s always the FOMC meeting of Sept. 12 & 13 to get the good news.  That’s when market volatility could move off the charts, maybe extreme volatility to the downside, according some Wall Street analysts.

“With the equity market pricing in a significant chance of QE3, stock prices are no longer as useful a signal to Fed officials. Should the Fed disappoint at its September policy meeting, the risk of a stock sell-off is high,” Bank of America Merrill Lynch analysts wrote in a note to clients, Aug. 21.

“Some in the markets think that the Fed effectively targets equity prices, meaning that to predict Fed policy, one merely needs to track the U.S. stock market,” the analysts add.  “There is a curious circularity to this view, however: the Fed will not launch QE3 so long as stock prices are high, yet the stock market is high because it anticipates QE3.”

The old adage on the Street, ‘buy the rumor, sell the fact’, may be at play here. But if Bernanke plays too-hard-to-get with investors in the coming weeks, a nasty fall could be in store for the Fed chief—a fall that could outright overwhelm the NY Fed’s PPT and result in a stock market plunge akin to the Crash of 1987.  Maybe.

The chart of the S&P 500, Spanish IBEX 35 and Chinese SSEC shows the gaping chasm between U.S. stocks and two indexes represented by two economies with, again, divergent outlooks.  Spain’s fiscal outlook in coming years isn’t much different from the federal budget outlook for the U.S., while the Chinese $3 trillion war chest of reserves couldn’t be in a better relative position to survive the righting of the bogus ‘World is Flat’ global agenda.

Would Bernanke risk a market meltdown that snaps the notion of an eternal ‘Bernanke put’?  Is he that confident that the remaining holdouts of an obviously rigged market will plunge the world economy into the anticipated financial Armageddon—before a U.S. presidential election?

The answer may be a shocking, even cockamamy—YES and YES!  And it may not be that much of a risk.  A surprise ‘not yet’ to further money printing at Jackson Hole and the FOMC meeting could be forthcoming.

Consider the geopolitics in the Middle East, and contemplate the dire political tug-o-war between Israel’s Prime Minister Benjamin Netanyahu and U.S. President Barrack Obama regarding Iran.  Netanyahu insists military action against Iran be taken before the U.S. election in November, while Obama remains adamant that the issue surrounding Iran must wait until after the election—a stand which probably infuriates the warmongering neocons and bankers, who have since put their stock on Republican candidate for president Mitt Romney as their next bankster puppet.

And the white-hot ambitious, some say, narcissistic, Romney won’t be taking any chances leading up to what is expected to be a close election, if recent polls serve as a guide.  He may need a little help from a financial catastrophe to convince enough voters that they may have to believe in a different kind of change.

But first, Romney must take the pledge—for the record.

Jul. 29, he told a gathering of Israelis in Jerusalem:

“We serve the same cause and we provoke the same hatreds in the same enemies of civilization. It is my firm conviction that the security of Israel is in the vital national security interests of the United States . . .

“Israel and America are, in many respects, reflections of one another.  We both believe in democracy, in the right of every people to select their leaders, and choose their nation’s course. We both believe in the rule of law, knowing that in its absence, willful men will be inclined to oppress the weak. We both believe that our rights are universal, granted not by our government, but by our creator.”

Later in the speech, Romney spoke the magical words that signaled the Netanyahu regime that he, not Obama, is your man.

Stopping Iran from acquiring nuclear weapons “must be our highest national security priority” and “we must use any and all measures” to destroy that capability.

“Containment is not an option,” Romney added.

And because “both men [Obama and Netanyahu] share a deep dislike and distrust of each other,” writes Anshel Pfeffer of the leftist Israeli newspaper Haaretz, the Israeli and Anglo-American mutually aligned partnership in the petrodollar wars must not be jeopardized by a Commander and Chief not willing to do what’s necessary, in the eyes of the neocons, of course.

Therefore, Obama must go, leaving the banking cartel’s lead man at the Fed, Bernanke, to continue manipulating the markets, but this time, to the downside to throw the game for Romney and the neocons at this critical moment (for Israel) in the Middle East.  Bernanke can always come in with a bazooka money blast and ‘make things better’ for Wall Street while putting that one last lid on the gold price (maybe) before the out-of-control launch of the yellow metal truly begins during the first year of a Romney first term.

“If the S&P drops 150 or 200 points, you can be sure that there will be more QE, not only QE3 but QE4 and so forth,” Swiss money manager Marc Faber tells GoldSeek Radio this past weekend.

But, not to worry. QE is coming, but a little politics comes first to nail down decades-long geopolitical strategy in the oil patch concerning a much bigger war between the U.S., Russia and China regarding the U.S. dollar and the gold price.

Though Faber doesn’t speculate on the upcoming Fed actions, he does state “it’s premature to say that this a genuine breakout” in gold and silver, and I “say that with great confidence.”

Silver to Breakout Amid Odd Forecast—Ben Davies

By Dominique de Kevelioc de Bailleul

“We’re trend ready, Eric.  I think it’s a prescient time to come on the show,” Hinde Capital CEO Ben Davies begins his interview with King World News (KWN), referring to a resumption of the upward trend in the gold market.  But, where gold goes, silver follows at a ‘double-time’ pace—at least.

Davies proprietary model for pricing silver suggests to him a move higher of 25 percent, citing reasons of a slight upturn in the U.S. economy, the return of easy-credit European politicians from vacation, and, possibly, truth in the rumor that Spain will ask the ECB for a bailout during the weekend, ending Aug. 19.

On the news of a Spanish capitulation, alone, silver prices could move higher this week, according to Davies.

Though Davies doesn’t expound upon his ‘odd’ thesis of U.S. growth next year, or even suggest where that growth will come from, he does expect, however, more monetary accommodation by central banks to buoy silver prices—an expectation echoed by currency and monetary policy expect Jim Rickards, who, so far, has been on the money with his prediction of ECB easing ahead of the Fed.  Now, it’s the Fed’s turn, according to Rickards.

Incidentally, Rickards anticipates Fed Chairman Ben Bernanke to announce further QE at the annual central bankers meeting at Jackson Hole, Wyoming in early September.  He tweeted, Sunday, that recent weakness in the Chinese renminbi against the dollar weighs more heavily with the Fed than U.S. jobs and GDP, and that downdraft in the Chinese currency, beginning from the first days of May, will push Bernanke to make the long-awaited QE announcement at Jackson Hole.

Moreover, it turns out the rumor that Spain would ask for a bailout, that Davies alludes to, is fact-based, in part.  The Wall Street Journal reports, Sunday, Spain’s Finance Minister Luis de Guindos “would like to see the European Central Bank commit to massive, open-ended sovereign-debt purchases” before Spain asks for a new bailout from the central bank—a request that former Goldman Sachs operative Mario Draghi would only be too happy to accommodate.

However, Spain and the other nations which make up the PIIGS will await Germany’s high-court ruling on whether an exception to Germany’s constitution will be granted on behalf of the ECB and its sovereign debt purchases.  That critical ruling is scheduled for Sept. 12.

Back to Davies.

When asked by KWN host Eric King about the short-term prospects for the silver price, Davies didn’t hang his hat on the central-banker-easing mantra as the primary reason for his anticipation of higher silver prices.  Instead, Davies emphasizes a disconnect between elevated equities prices and depressed silver prices as his reasoning for silver to play catch up.

He also suggests that U.S. economic growth will add to the several known catalysts to a substantial move higher in the silver price, a shocking departure from the 2013 Armageddon scenario advanced by Jim Rogers, Marc Faber, Peter Schiff and a legion of well-informed, talented and ‘unencumbered’ market handicappers, including, too, economist John Williams of ShadowStats, who would take grand exception to Davies’ U.S. economic forecast.

Flying in the face of Davies’ forecast of economic growth comes an American Petroleum Institute (API) article which reports global fuel deliveries for all products dropping through the floor—not a good sign.

From API:

Demand for gasoline, the most widely used petroleum product, dropped 3.8% from a year earlier, to 8.624 million barrels a day, the lowest July level since 1997. Gasoline use in the heart of the peak summer driving season was 2.2% lower than in June. January-July gasoline demand averaged 1.1% below a year earlier, at 8.671 million barrels a day, the API said.

Kerosine-based jet fuel use fell 0.8% in July from a year ago, to 1.455 million barrels a day, while demand for heavy residual fuel, used in power plants and industrial burners, dropped 7.1% year-on-year, to 294,000 barrels a day.

Production of all four major products–gasoline, distillate, jet fuel and residual fuel–was greater than demand for those products. As a result, petroleum imports decreased and exports increased. Total imports of crude and refined products fell by 9.6% to average 10.4 million barrels a day in July. Exports of refined products increased 11.1% to a record high for July of 3.244 million barrels a day, and year-to-date exports were up 14% compared with the same period in 2011.

Refineries operated at 92.7% of capacity in July, the second month in a row above 90%.

Crude oil production rose 13.6% year on year in July to 6.225 million barrels a day, the highest July level since 1998. Year-to-date output averaged near the July level and was up 11.9% from the same period in 2011.

Nonetheless, Davies likes silver, in the short-term.

“Silver is the ugly duckling at the moment.  Isn’t it?  It’s definitely performing very badly, and I think it’s tantamount to the same as gold,” says Davies.  “But I think I would err slightly on the side of more silver bullish.

“I think that with recent equity and S&P 500 performance, I think that the strong correlation there and optimism for growth, and, actually, our analysis is actually [sic] for a pick-up in U.S. growth in nine months time.  So the overlay there, for us, is that silver could perform well here.”

Davies’ timing for a move high in the silver price pretty much sacks up with Goldmoney’s James Turk and other frequent guests of KWN.  It’s a breakout any day in both gold and silver, they say, with silver expected to catapult quickly and close the 57-to-one ratio of the two metals.

“I think we’re threatening to make a move here and it could come in the next few weeks if not sooner,” proffers Davies.

“Optically [chart], I’m looking for the low-to-mid-30′s, and that is as far as our trend system will take us in the interim—in the short term, I should say.”

His target for gold of $1750 and silver of $33-$35 equates to a gold:silver ratio of between 50 and 53.

MF Global: Beta Test For Bank Holiday & Martial Law

By Dominique de Kevelioc de Bailleul

On the heals of the Department of Justice’s determination of no wrongdoing in the case of Goldman Sachs’ contribution to the kickoff of the financial meltdown in 2008, writer and researcher Susanne Posel tells the SGT Report that the bizarre overnight bankruptcy of MF Global of Oct. 31, 2011, was a beta test for the final, grand theft planned by the banking cartel.

Nearly 10 months later, no charges have been levied against the mastermind of the theft of $1.2 billion, former CEO of Goldman Sachs Jon Corzine.  No charges appear to be forthcoming, either.

The Corzine incident was a beta test implemented by the banking cartel to measure the extent of public and Congressional reaction to overt theft of customer funds, according to Posel.

Through a Deutche Bank informant, she says the banks intend to steal as much of clients money as possible to cover bad bets made following the enactment of the Gramm–Leach–Bliley Act (GLB) of 1999, a piece of legislation passed by Congress which rendered the separation between commercial banks and investment banks covered under the  Glass-Steagall Act of 1932 null and void.

GLB was spearheaded by the then-Secretary of Treasury and former Goldman Sachs CEO Robert Rubin during the Clinton administration.

“They know the collapse is coming,” says Posel. “So they are preparing for it.”

Posel says the collapse of the financial system of 2008, with the abrupt bankruptcy of Lehman Brothers, sparked a currency war between the European Union and the United States over which currency would be left standing and who would hold the underlying assets or tax base of citizens from which to tap revenue.

“In 2008, we should have collapsed,” says Posel.  “We should have gone the way of Greece.  The only reason why we didn’t was because the global elite and banking cartels put it off on the eurozone and [to] collapse the eurozone in order to gain sovereign debt.”

That additional sovereign debt would then compel governments responsible for paying the debt to raise taxes upon its citizens, cut recipient benefits and confiscate property in a government-sanctioned transfer of underlying real wealth to bankers away from the citizenry.  In that way, not repaying bankers via taxes levied by the middleman of government now becomes a criminal offense, not a civil matter between bank and customer.

In the case of Europe, Greece is the weak link.  Greece was sold mortgage-back securities (MBS) from American broker-dealers, which were then attacked through wholesale selling of the securities, creating the kickoff to the euro crisis that began in March 2009.

Hedge fund manager John Paulson was possibly implicated as the short-seller of the mortgage-back securities held by Greece in a hearing between Congress and the ‘Fab Four’ traders at Goldman Sachs.  During testimony, Paulson was revealed as the man who sat with other Goldman Sachs employees when a handpicked basket of overpriced mortgage-back securities was created, including those MBS’s sold to Greece.  Paulson shorted the basket of MBS’s and profited approximately $3.7 billion.

No criminal charges have been filed against Paulson, the employees of Goldman Sachs who created the basket of securities, or any of Goldman’s Fab Four.

But there is more, according to Posel.  China needs assurances that it gets paid, as well.

“They’re extracting wealth so that the only thing the governments will have left to give them [Chinese] is the actual land that they [Americans] own,” says Posel.

Goldman Sachs was first to deploy the banker scheme of extracting funds from public coffers.  In addition to paying interest on $1.1 trillion of U.S. Treasuries held by the Chinese, the banking system and the U.S. dollar were saved through pushing the problem of global insolvency onto the Eurozone nations.

“In 2008, when Hank Paulson went to the Congress and said that they had to bail out the banks for $700 billion or martial law would be declared, they weren’t lying,” says Posel.

Goldman Sachs CEO Henry Paulson’s extortion of a $700 billion TARP bill from Congress with the threat of martial law was essentially a classic bait-and-switch scheme.  Americans were told that the unprecedented appropriation was earmarked for a jobs and economic stimulus program.  Instead, the money was redirected to the “too big to fail” banks, with subsequent hearings between Congress and Federal Reserve Chairman Ben Bernanke yielding no disclosure as to which banks received the money under TARP.

In Congressional testimony, Bernanke stated he will not disclose the recipients of TARP, unless Congress orders him to do so, because to disclose the recipients of the appropriated funds may trigger a bank run on those institutions.  No such order from Congress has been passed.

And the mechanism for foreclosing properties that were backed by mortgage securities was immediately deployed, as in the ubiquitous ‘robo-signing’ incidences that appeared months later.

The final coup planned by the bankers involves a bit of deception, a false-flag attack blamed on China, Russia or Iran, maybe, in which the Federal Reserve will initiate a ‘bank holiday’ on a Friday due to a computer ‘virus’ which allegedly threatens the banking system, according to Posel.

Posel’s informant told her that the banks would open on the following Monday.  At that time, declaration of martial law by the U.S. president comes next, presumably as a result of massive civil unrest due to a dollar devaluation or another event blamed on the perpetrator of the virus.  But the overarching reason for martial law is to protect the banks from an angry public, according to her.

“If you hear about this in the news, you have 72 hours to do whatever you plan to do before the collapse,” says Posel.

BIG NUKE Imminent in Precious Metals

By Dominique de Kevelioc de Bailleul

Something very big is most likely about to be dropped in the global financial markets within a few weeks—like a nuke exploding—and those holding precious metals stand to be the big winners—especially silver investors, who could make a small fortune in a very short period of time.

Here’s the overwhelming evidence of something very big coming soon to the financial markets:

“. . . evidence points to an upside break for both gold and silver, which is not dissimilar to our Silver – The Coming Bullet – August 2010 ‘Trend Ready’ state,” Hinde Capital CEO Ben Davies told King World News on Aug. 9.

Davies’ report turned out to be a prescient piece of work, as the silver price went truly ‘bananas’—as GATA’s Bill Murphy likes to refer to big PM moves—making its bullet move from the $17.50 mark of August 2010, ending at nearly the $50 print at the end of April 2011, for a 185 percent move within nine months!

Davies’ observations echo trader Dan Norcini’s.  Norcini tells readers of JSMineset that a big Asian buyer has ratcheted up the floor in the gold mark in $20 increments.  Davies sees the very same buyer incrementally scooping up gold in a signature consistent with a very large buyer of the past, a buyer who appears to know beforehand of the Fed’s every move—a point suggested in a previous BE article, titled, Rigged Gold Market, a Secret Payoff to China.

“We want to state there has been a strong buyer in the gold market these past few months,” stated Davies.  “Also we want to reiterate the buyer in the room is Asian and has been stepping up their buy order, 1545, 1575 now 1600?”

More evidence.

The signature of that big Asian buyer has demonstrated in the past that, he is either a brilliant tea-leaf reader or he’s ‘connected’ to the Fed, with the latter more likely during an atmosphere of blatant, draconian, widespread and sanctioned fraud in all markets.

“It is reminiscent to me of the very same buyer(s) who soaked up U.S. 10 year bonds at 4.85% in June 2004 when the Fed didn’t cut rates from 1% to 0.75% as was widely expected,” Davies explained.  “By end of 2004 rates were at 4.25% but 10 year yields had rallied back to 4.00%.”

There’s more.

Either signals from media and the inner banking cartel of the past two weeks have been deliberately staged to dupe even the most savvy precious metals investors (outside the criminal cartel, such as a Jim Sinclair) into a crushing disappointment of no additional QE from the Fed will be forethcoming, or the recent series of smoke rings indeed signals an imminent and massive rally to new highs in gold and silver prices.

In a previous BE article titled, Imminent Silver Price Explosion, the piece noted two banking cartel media mouthpieces have been running interference for Ben Bernanke for a launching of a bazooka QE.

From the BE article:

Jon Hilsenrath of the Wall Street Journal, the man who the straight-shooting Stephen Roach of Morgan Stanley calls the real chairman of the Fed, wrote . . .

This [Hilsenrath's list of economic and inflation metrics] is ammunition for Fed officials who want to act right away to spur growth. Not only is growth subpar, and the job market stuck in the mud, inflation is also running below the Fed’s long-run goals.

Moreover, as mentioned in the same article, the second media mouthpiece of the gold cartel, Greg Ip of Economist—the very same publication that, James Turk had clearly demonstrated in his article of several years ago, was behind a disinformation campaign for the gold cartel throughout nearly two decades—wrote in his piece for Economist (written from the point of view of hindsight) that the ECB will need to debase the euro by following the Fed’s program of debasing the U.S. dollar.  In the opinion of the European banking masters, debasing is the right thing to do—and do it fast.

Side note: From the content of the two articles, it appears that Jim Sinclair’s thesis of “QE to Infinity” may include, not one, but two currencies, the dollar and euro, which, together, comprise 89 percent of global reserves.  That gives institutional money nowhere to hide, adding a big boost in octane to the gold market.

As the evidence mounts, regular guest of KWN, Egon von Greyerz of Switzerland-based Matterhorn Asset Management suggests that the cocktail for something big in the precious metals market awaits the Bernanke match lighter.   The 40-year veteran, von Greyerz, predicts a double or triple in the gold price by the close of 2013, leading the list of KWN’s brightest and most experienced prognosticators of the PM market.

“ . . . my target on gold of $3,500 to $5,000 over the next 12 to 18 months, and then over $10,000 in 3 years.” von Greyerz told KWN late last month.  Though James Turk of Goldmoney agrees with von Greyerz that a big rally is afoot, Turk hasn’t announced a target for this next move in the gold price—not yet, anyway.

And, just in.

Another mouthpiece for the gold cartel, Financial Times, published to subscribers its latest disinformation article.  Many FT readers, presumably, have never heard of James Turk, Ben Davies or Jim Sinclair—or 40-year veteran of the metals markets, Bill Haynes, who told KWN Thursday:

“One of the writers started trashing gold in the Financial Times [Wednesday].  He said it’s time to sell your gold and send the kids to college, buy an automobile or take a vacation because this bubble is over.”

Echoing sentiments of James Turk and Eric Sprott as well as zerohedge’s repeated reference to FT’s blatant and disgraceful disinformation campaign against its upper-middle class subscribers, added, “Eric, this is the type of nonsense we see in the mainstream media when a bottom is being put in, and the Financial Times has been one of the greatest contrarian indicators for the gold market.

“I also find it interesting that this is the week the big buyers are making a statement with their physical gold and silver purchases,” Haynes added.  “They are doing their buying right into the face of this ridiculous nonsense coming out of the Financial Times.”

Precisely.  Investors who read King World News most likely don’t subscribe to the Financial Times for its commentary of the precious metals market.  And those who do subscribe to FT are those the Fed are most frightened of.  Mr. and Mrs. Bourgeoisie Money Bags are the next in line to threaten the Fed’s “inflation expectations” powder keg—a fatal moment it wishes to forestall as long as possible.

During the past few weeks, there’s been too much anti-gold propaganda waged at one time, while a known big Asian and heavily suspected Fed insider has been quietly (to the general investor public) accumulating gold at marginally higher and higher price levels.  Something big is afoot.

And to top this litany of wink-winks and nod-nods, the ultimate political hack of Wall Street, U.S. Senator Charles “Chuck” Schumer (D-NY), chastised (or signaled?) Fed Chairman Bernanke during a hearing of mid-July, “The Fed is the only game in town… You have to take whatever actions are necessary to ensure a strong recovery . . . Get to work, Mr. Chairman,” Schumer said forcefully.

To remind investors of Schumer’s well-know connection to the banking industry, Zerohedge posted an article from OpenSecrets.org that showed Schumer receiving $4.8 million in total from 20 Wall Street firms.

In conclusion, we see the establishment media mouthpieces very active, a super-key politician mouthing publicly at the Fed, and a suspected Fed insider from Asia scooping all the metal it can get, all deployed to enrich those who are either privy to, or can read the tealeaves, for a front-running a monstrous move in gold and silver—at the expense, of course, of the American public.

As Trends Research Institute Founder Gerald Celente has repeatedly said, “The rot is at the top”; “We’re being financially raped”; and “It’s a gangster government” between the Gambinos and Genoveses.”

Events of the past week have become obvious—too obvious, maybe?  Or is Celente correct when he says the banking cartel acts if it doesn’t care what people may think about it and who it hurts?  It appears that the big money is betting the Fed drops the nuke.

This Oddball Indicator Has Gold Bugs Salivating

By Dominique de Kevelioc de Bailleul

Gold bugs salivate at the turbo-bullish implications of this recent discovery by two economists of an oddball indicator that investors can compare with the U.S. Commerce Department’s jury-rigged GDP number.

Recent guest interviews on King World News (KWN) that suggest a huge short squeeze in the gold market is about to begin a massive rally in the yellow metal got a boost Thursday from a couple of economists’ and their analysis of garbage.

According to economists Michael McDonough and Carl Riccadonna, of the 21 categories of items shipped by rail, which aid economists in their forecasts of GDP, the amount of waste hauled away demonstrates the highest correlation (82%) to domestic output.  Makes sense.  As the U.S. produces, it throws away, too.

Well, the verdict is in on the amount of crap carried off on Warren Buffett’s rail-cars. Waste cargo is down, way down.

And it’s tanking fast.  It appears that delaying getting back into the gold trade may cost traders, as the news media echo chamber prepares to suddenly and simultaneously begin parroting that a ‘Double-Dip’ Recession or Depression is back in the U.S.—and from the looks of the chart, below, it’s likely to be another 2008 economic cliff-dive, as well.

As CNBC and Bloomberg continue to promote hope. there’s little doubt now among professional traders that the coy Ben Bernanke has already crafted his QE speech and readied it to be deployed at a moment’s notice.  Gold’s close above $1,600 tips the hand of savvy traders front-running a Fed capitulation to use the printing presses more aggressively.

“I would say that from now on, any economic number being released which is showing an improvement [in the U.S.] is probably either a fluke or a phony figure,” Matterhorn Asset Management’s Egon von Greyerz told KWN on Friday.

“We are not going to see growth in the next few months or even the next few years,” he continued.  “If you look at the U.S., home sales are down 8%, durable orders are down, and debt is continuing to increase.”

Despite global-wide GDP statistics that show small growth, which von Greyerz said are “phony” numbers, better evidence suggests that the entire global economy has accelerated to the downside, therefore, prompting the need for Chairman Bernanke to accelerate asset purchases at the Fed—with this next announcement possibly including outright buying of stocks on the open market.  Yes, the Fed is legally able to by U.S. equities.

With the Germany’s Bundesbank still “resistant” to the idea of bond purchases to match Fed policy of monetizing U.S. Treasuries, according to UBS’s Art Cashin, the U.S. dollar may become the next focus of the dormant bond vigilantes, as rates on the 10-year Treasury note reached a record low 1.39 percent this week, a rate lower than even the Fed’s massaged GDP deflator of 2.1 percent.

Liquidity, then, appears to not be the motivation behind more Fed QE, if we can take Bernanke’s word for central bank intervention “if needed” to allegedly increase employment.  Cashin believes the Fed is attempting to hide its monetization of U.S. sovereign debt by constantly talking about jobs and economic growth as reasons for central bank intervention.

“By standards, the amount of liquidity that’s around the globe should be hyperinflationary,” Cashin told KWN on Friday, with the dollar most likely leading the way down against gold during the next QE program expected by the Fed.

“The real time bomb here is that large short position in the euro,” said Cashin, suggesting that the dollar’s next major move is decidedly down.  Gold is poised to soar in response.

Jim Rickards: Reveals Fed Blueprint, Gold $5,000

By Dominique de Kevelioc de Bailleul

Speaking with Russia Today Wednesday, best-selling author of Currency Wars Jim Rickards said Fed Chairman Ben Bernanke is drawing up a blueprint for more ‘QE’, and he expects the gold price to jump three to five times within three to five years as a result of the currency war heating up between the U.S., Europe and China.

However, in addition to his forecast for gold, Rickards also laid out Bernanke’s plan for the timing of the next round of ‘stimulus’ and the signs to watch for—and in a desperate last-ditch effort to yank scared money out of hiding, the Fed has the legal authority to buy equities, which is all good for the gold price, according to Rickards.

“I kinda expect something [QE] in August, September.  But whether it’s then or after the election in January, you can see it coming,”  Rickards told RT’s Lauren Lyster.

Rickards continued to state that the Fed’s tacit mission—implied from the FOMC’s ‘Operation Twist II’ announcement, Wednesday—is to incentivize investor cash to leave low-yielding interest-bearing accounts and to enter the stock market in the hopes of reigniting economic activity and speculation since lost in part due to the Flash Crash of May 6, 2010.

“The Fed wants them [broker dealers] to buy stocks, wants them to buy mortgages; it’s just more market manipulation,” he explained.  “It’s forcing investors to buy other riskier assets, and that will pump up asset prices such as stocks and housing. . . It’s all about getting asset prices up.”

Rickards’ thesis for his expectation of a Fed QE announcement out of the July/August 31-1 or September 12-13 meeting is predicated on the probability of an European Central Bank policy move of lowering overnight interest rates by 25 basis points on July 5.  As Italy and Spain bond yields blow out to near-capitulation levels of six and seven percent, respectively, the ECB needs a “bazooka” to lower rates again to keep the Ponzi scheme of debt from collapsing.

“I still expect that, probably a 25-basis-point rate cut,” Rickards speculated.  “By the way, that ECB rate cut that’s coming, that I see coming, is one of the reasons the Fed could hold off. . . The Fed says, you know, we can hold off on QE3 to August, September because the ECB is going to pick up part of the slack in the meantime. . . I do expect the ECB rates to come first.”

Rickards continued by laying out the sequence of events he sees coming out of both the tag-team efforts of the Fed and ECB, reminding viewers of RT that, through the Fed’s own admission, Bernanke and ECB President Mario Draghi talk privately about coordinating monetary policy between the two premiere central bank reserve currencies.

The ECB “didn’t want to ease ahead of the Greek election, because that makes it too easy on the Greeks,” proffered Rickards.   “Keep the pressure on.  Get the Greeks to do the right thing, which they did.  Then you get your rate cuts and you get your QE3.  That’s the sequence.”

And regarding the question of a globally coordinated interest rate cutting ‘shock and awe’ move to arrest an impending collapse, Rickards dodged the question somewhat, but said it has happened before with the wildly rising Japanese yen which followed the Fukashima tragedy.   A coordinated move between the G-8 outside of targeting one currency, as in the case of the yen last year, would be unprecedented.

Despite the drama in Europe, Rickards is bullish on the euro and expects that, not only will Greece and the other beleaguered PIIGS remain in the euro, but he “expects members to be added over time” and anticipates the next move in exchange rate between the euro and the dollar will be back up to 1.35.

Rickards also said to watch for the June 28, 29 European Summit.  “That’s when we’ll see some very big announcements, and I think positive ones,” he said.

And for the gold price, “My long-run thesis on gold hasn’t changed,” Rickards said.  “I do see it in the $5,000-$7,000 range over a kinda three-to-five-year period as confidence in paper money begins to collapse.  But that’s not something that happens overnight.  The world governments and IMF will print a lot of money before that happens.”

“This Thing is Coming Down,” Says Gerald Celente

By Dominique de Kevelioc de Bailleul

In a lively Saturday interview on King World News, Gerald Celente began by ridiculing the media’s propensity to jump from one hyped event to the next during the global financial crisis, providing a unnecessary distraction from the all-important final outlook he forecasts for investors.

“This thing [financial system] is coming down,” Celente told KWN’s Eric King.

The outcome of the Greek election is not important, according to the founder of Trends Research Institute.  What’s happening in any country is not particularly important, per se; it’s the collective symptoms of a global financial collapse that investors should focus their minds upon before considering what to do to protect their wealth.

“The entire financial system is under collapse,” Celente forcefully continued.  “It’s not about the Greeks; it’s not about the Spanish; it’s not about the Italians; it’s not about the English; it’s not about the Americans; it’s not about the Chinese; it’s about everybody.”

‘It all comes back to gold,” he said.  Celente added that he is not an investment adviser, but has repeatedly stated in the past that he likes the yellow metal for its ancient reliability as the ultimate safe-haven during times of financial crisis.

Simultaneously, vital economic statistics across the global economy show steep drops or have begun to resemble bubble-like characteristics.  Suddenly, the global economic growth story, the West-East ‘decoupling’ theory, and the global ‘muddle-through’ thesis, increasingly appear to be nothing more than well-crafted media-driven nonsense.  It’s just a media con job to keep investors back on their heels and away from critical thinking regarding their savings and wealth, according to Celente.

It was Fed Chairman Ben Bernanke and his predecessor Alan Greenspan who claim they didn’t see the housing bubble, nor the dangers of more than one quadrillion dollars of derivatives written since 1999.

In August 2010, Bernanke told attendees of the Jackson hole Summit, “For a sustained expansion to take hold, growth in private final demand — notably, consumer spending and business fixed investment — must ultimately take the lead.

“On the whole, in the United States, that critical handoff appears to be under way.”

As it turns out, nothing could have been further from the truth.  The financial crisis deepened throughout 2010 and 2011, with revelations that Greece could not pay on its gigantic sovereign debt and by implications threatened to take the eurozone with it as other EU sovereigns would be next.

In the U.S., bogus jobs reports issued by the U.S. Labor Department, which showed an economic recovery, streamed in month after month.  In essence, the data merely show a halt of an immediate economic Armageddon, not a recovery.

Back then, gold traded at $1,200.

Today, global statistics point to a deepening of an already recessionary global economy, but the media continues to spin the data to help the Fed ‘manage expectations’.

Though, not complete, below, is a list of items that support Celente’s call for an impending next leg down in the global financial crisis.

ñ A property bubble about to burst in Canada

ñ Bank runs in Greece, Spain and Italy

ñ Spain housing market to drop another 25 percent, according to S&P

ñ Netherlands reports sudden 10 percent drop in retail sales

ñ EU proposes currency controls

ñ China reports rapidly decelerating GDP, ramps up gold imports

ñ Baltic Dry Index approaches 2009 low

ñ India’s currency, the rupee, is under attack

ñ Slovenia needs a bailout

ñ Cyprus needs a bailout

ñ Egypt in the throes of civil war, again

ñ Fed overtly monetizing debt 30-year treasuries, according to zerohedge.com

ñ U.S. job market is fictitious, according to John Williams and Charles Biderman.  Real unemployment is 22 percent

ñ U.S. consumer tapped out and buying necessities with credit cards

ñ Global recession next year pegged at “100 percent” certainty, according to Marc Faber.  Jim Rogers agrees with Faber’s assessment and includes 2014 as a worse outlook

Countering misleading comments made by officialdom throughout the crisis—blatantly appearing to follow the playbook of former President of the European Council Jean-Claude Juncker, who once said, “When it becomes serious, you have to lie,” —Celente told KWN listeners to not expect the truth out of Washington or Brussels.  You must “think for yourself” and that “you’re on your own” while the global financial collapse plays out.

What should investors do? Eric King asked Celente.

“Speaking for myself . . . You [referring to Eric King] know me,” Celente stated.  “I’ve always made it clear; I only put my money in gold and in silver,” and added, “And a friend of mine, to me, the best strategy that I’ve heard.  And again, I do not give financial advice.  His strategy is, every month he buys gold and silver.  Every month he buys gold and silver with the extra money he has.  Every month.

“It’s a brilliant strategy. . . I’m in gold for the long term.  I’m not getting out of gold, and I continue to invest in it when I can.”

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.

IT’S OFFICIAL: Keynes was Wrong—A Response to Henry Blodget

Yahoo Finance contributor Henry Blodget has, for now, taken the position that Paul Krugman and the Keynesians have it right, austerity doesn’t work.

Look at Greece; it’s austerity plan has kicked off an economic death spiral there.  Lower government spending reduces GDP, which reduces tax revenue, which requires further spending cut, and so on.  To right the problem requires government spending on projects designed to foster economic growth through investment, say the Keynesians. Sign-up for my 100% FREE Alerts

All sides of the economic debate agree on one thing, that is, avoiding the ‘liquidity trap’ in the first place, because, ultimately, someone has to pay during the Kondratiev Winter.  The question, then, becomes a political one, not an economic one.  Who pays?

“In the aftermath of a massive debt binge like the one we went on from 1980-2007, when the private sector collapses and then retreats to lick its wounds and deleverage,” stated Blodget, “the best way to help the economy work its way out of its hole is for the government to spend like crazy.

“Or, rather, if not the ‘best way,’ at least the least-worst way.”

Because the amount of debt from the private sector and government sector has reach levels which strangle economic growth, job creation and real incomes, adding more debt to a system that desperately wants to deleverage is natural behavior among its participants.  Therefore adding direct injections of money into a delevering economy will more likely cause consumer-price inflation and worsen the most important driver of aggregate demand, rising real income.

Economist Hyman Minsky stated in 1982:

Stable growth is inconsistent with the manner in which investment is determined in an economy in which debt-financed ownership of capital assets exists, and the extent to which such debt financing can be carried is market determined. It follows that the fundamental instability of a capitalist economy is upward. The tendency to transform doing well into a speculative investment boom is the basic instability in a capitalist economy.

In other words, participants during an asset boom period of the Kondratiev cycle were tricked into believing wealth could be created through ever-rising stock and real estate prices, driven by debt.  However, following nearly four years of the Winter period on the K-wave and declining asset prices, participants no long have the appetite for speculation (as they now see it for what it always was) and risk.  Those who took on too much got burned.  The mood has changed.

Naturally, the behavior of the consumer/investor has markedly changed, and all media propaganda leveled at consumers don’t square with their personal experience.  Confidence has been lost and the attempt to ‘trick’ the consumer to increase spending without gains in real income growth (further eroded by rising CPI) only serves to infuriate them, increasing the level of distrust for the system.

“Hyman Minsky (1977) and Charles Kindleberger (1978) have in several places argued for the inherent instability of the financial system but in doing so have had to depart from the assumption of rational economic behaviour …,” Fed Chairman Ben Bernanke wrote in 2000.  “I do not deny the possible importance of irrationality in economic life; however it seems that the best research strategy is to push the rationality postulate as far as it will go.”

Getting back to Blodget.  Further debt won’t ‘solve’ the problem of the tremendous forces of the Kondratiev Winter, but adding debt can impede the process of righting debt levels to match GDP.  How the two reconcile at a more sustainable level is in the hands of the Fed and foreign creditors.  Will savers be punished by the process of debasing the currency, or will debt be cleansed from the system through default or debt jubilee?

In other words, will savers and pensioners be punished by low interest rates and high inflation (for all), or will the lenders accept the loss and reward savers for their prudence?  Real or nominal GDP must decline to match the destruction of debt cleansing from the system.

There is only one other alternative, however, to the undeniable process.  War.  Napoleon and Hitler attempted that route.  Could that be the out for the Fed?

And for Blodget to argue that WWII and the massive government spending to fund the war lifted the U.S. out of the Great Depression is a specious one.  Could we consider that following the conclusion of WWII, the United States was the only significant industrial power not to have had its infrastructure and manufacture capacity destroyed by bombs?

Additionally, in 1944, the U.S. dollar became the world’s reserve currency.  Trade conducted in a currency issued by the only surviving industrial economy open for business on Day 1 of a peacetime economy lifted the U.S out of the Great Depression—despite the debt. Sign-up for my 100% FREE Alerts