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.

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.

Gold Market Hysteria/Propaganda Approaches Wartime Pitch

Reminiscent of the gloom and doom articles of October 2008 regarding the gold price, a sudden spate of anti-gold propaganda and short-term bearish calls for the yellow metal have hit the Web.  Sentiment in New York and London must be nearing a tipping-point level toward another capitulation of selling.

As of Tuesday in early afternoon trading in NY, gold stands at $1,556.73, trading below $1,600 for four straight trading days.  Reports of aggressive Asian buying of physical metal continue to stream in.

Because gold has not ‘decoupled’ from the equities market as speculated by some, another post-Lehman swan dive in the gold price is now expected by many influential and savvy investors and money managers, which, if that scenario materializes, the gold price could result in another incredible buying opportunity—a gift from the money Gods, if you will.

And the Fed would welcome the collapse, as well, as Bernanke desperately needs political cover of falling oil and precious metals prices to once again hasten more money printing to pay for trillion$ in U.S. budget deficits.

Charles Nedder of Nedder Research told Jim Puplava’s Financial Sense Newshour he anticipates a drop in gold to a cycle-low target price of $1,359 (approximately the 40-month MA) before rallying once again.

Since his call of July 2011 on Bloomberg Television, FX Concepts John Taylor hasn’t retracted his $1,000 gold target for 2012, and more specifically by the close of the month of May—this month.

Marc Faber still awaits a buying opportunity at gold prices closer to $1,300 than Taylor’s more draconian $1,000 target.

Jim Rogers posited a scenario for $1,000 gold in an interview with Business Insider, Tuesday, when he said that either a mass dumping of European gold to re-liquefy European banks would most likely slam the gold market, or a gold import ban in India would surely trigger wholesale selling of the precious metal.

Each of these four men view a drop in the gold price as a nice entry point for the remainder of the gold market.

However, there are those who just don’t ‘get it’ (or don’t want to get it): Jon Nadler, Dennis Gartman and NYU professor Nouriel Roubini—the private sector trio who have slithered into mainstream media with their typical nonsensical analysis and entertaining chatter—especially Roubini, who hilariously stated on his Twitter account, Monday, “Gold bugs are hiding deep in their gold caves pondering why gold isn’t rallying in spite of the sharp spike in risk-off sentiment.”

Look out for those ‘preppers’ who live in caves, according to the bizarre world of the Great Roubini.

And then, of course, the three-man love fest of Warren Buffett, Charlie Munger and Bill Gates have blessed us with their obviously staged performances, warning and ridiculing investors out of their gold positions, or for even considering gold as a hedge against financial collapse, currency debasement or dangerous geopolitical events.  The rational for staying with paper money contributed by these three men all read like a child’s play—intentionally spoken in a dumb-down 6th-grade language level for Mr. and Mrs. Front Porch to echo chamber with their relatives and friends.

Munger went as far as likening gold investors to Nazi-era Jews who sought refuge from persecution.

Buffett calls it, just a hunk of metal, despite 5,000 years of historical evidence that support the contrary.

And Gates, who looked like a fish out of water in his interview with CNBC’s Becky Quick, couldn’t (or wouldn’t) come up with anything intelligible to say about the subject of gold.  Because Gates is a famous billionaire, the Front Porches must then surmise that Gates is also an authority on the subject of money and anything else he may talk about.

Would Becky Quick care to interview Jim Grant of Ron Paul in the same format and at the same time of day?  Maybe Quick will cut to the chase, settle the subject once and for all, by interviewing Paris Hilton or Justin Beaver.  How about a 30-second public service announcement, starring Obama and Michael Jordan, tilted, “Just say ‘no’ to gold.”

Of the half-a-dozen cracked eggs, Jon Nadler, Dennis Gartman, Nouriel Roubini, Warren Buffett, Charlie Munger and Bill Gates, would any one of them make their points loud and clear that investors should kick gold to the curb by taking on Peter Grandich’s bet of $1 million that gold will reach $2,000 before it reaches $1,000?

Probably not.  Each would have to clear it with the powers who have commanded them to play Lord Haw-Haw or Tokyo Rose.  The U.S. is engaged in a currency, resources and geopolitical war, and Uncle Sam wants Americans to voluntarily throw themselves under the bus for a precious few oligarchs and political degenerates who have infested traditional American culture.

Smart Money Banking Big on Gold & Silver Prices to Soar

Short positions positioned by the smart money stand at the lowest level since the start of gold’s near-double in price and silver’s near-triple price surge of 2009.

In the most recent release of the Commitment of Traders (COT) report, the data show commercial traders now expect gold and silver to stop falling.  But more to the point, historical data suggest that when commercial traders, the ‘smart money’, cuts back on their short positions to low levels on a relative basis, precious metals prices have risen, and sometimes, and most recently, in a violently manner.  Sign-up for my 100% FREE Alerts

For week ending Apr. 24, 2012, gold market commercial traders reduced their short position to 316,231 contracts, an amount not seen since gold’s historic breakout above the $1,000 mark in Sept. 2009.  Gold, then, proceeded to rally 92 percent throughout a 23-month rampage, as traders fled to the metal during the Federal Reserve’s ‘Quantitative Easing’ policies of QEI, QEII and ‘Operation Twist’.

Silver prices, after struggling below the $15 level in 2009, broke out to the upside to test the $20 mark in Aug. 2010 for a 33 percent gain, before surging through $20 in Sept. 2010 on its way to a continuation of a breathtaking 232 percent rally from the initial breakout above $15.

“ . . . large commercial traders have greatly cut back their short positions in gold and especially in silver,” global precious metals specialists GoldCore wrote in an open letter to traders.  “This has often been a sign of a bottom and suggests that they do not expect gold and silver to fall much further.”

GoldCore went on to state that, for the week ending Apr. 2012, COT data show that speculators (dumb money) have reduced their net long positions to 107,600 contracts, a meager amount not registered at the CFTC since Jan. 2009.  At that time, gold and silver traded calmly at $900 and $12.50, respectively.  Then came the fallout of the Lehman collapse and QE announcements from the Fed that followed.  That’s when the fireworks began.

As Europe teeters on the brink of a Lehman collapse “times 1,000”, a threatening financial Armageddon of proportions never witnessed in modern times, expectations for more QE to match the magnitude of a Lehman-times-1,000 event grow each day, according to precious metals expert Keith Barron.

“Spain is in a tremendous amount of trouble right now.  They have had a lot of their major banks downgraded,” Barron told King World News, Monday.  “The country’s debt has been downgraded, yet again . . .

“The unemployment rate is now almost one in four people, it’s just over 24%.  If this place was in South America, they would be verging on revolution right now . . .  Maybe that’s coming.

“Greece is certainly not out of the woods.  We know that Portugal is in big trouble too.  The fear is that things are going to start spreading to Italy, that’s the big shoe to drop….”

And that shoe could make investors of precious metals rich, according to legendary newsletter writer Richard Russell of Dow Theory Letters.  He said the rich have been buying precious metals in preparation of the collapse of the Europe Union—and by extension the United States, as the two largest economies of the world have never, and will not, decouple from each other—a point grossly underplayed by mainstream media financial programming.

In essence, Europe’s $16 trillion economy will in the end mostly likely serve up to be the United States’ PIIGS.  As far back as the Greatest of Depressions, the 1873-1896 Depression, the Panic of 1907, the mini-Depression of 1921, and the Great Depression of the 1930s, Europe and the US have always collapse together after mutual economic prosperity and asset-price inflation.

That historical context may easily explain the urgency by the Fed to egregiously open currency swap lines with Europe to the tune of more than $500 billion and fund the International Monetary Fund in a backdoor bailout plan for Spain, Portugal, Italy, and again, Greece—providing concrete evidence to support Jim Sinclair’s “QE to infinity” mantra.

Richard Russell sees it that same way as Sinclair—mutual destruction on both sides of the Atlantic and central banker policy response to match.

“Technically, both the US and Europe are dead broke, and their GDPs would have to run wild on the upside to make the debt to GDP ratio more acceptable,” Russell penned in his daily commentary to investors of last week. “How will it all end?

“It will end with the central banks churning out junk fiat inflation-adjusted ‘money’ in order to service the debts.  Meanwhile, the precious metals and other tangibles are being bought up by millionaires and billionaires as they await their turns to feast on the remnants.”

But unlike the Great Depression of the 30s, Russell sees Fed Chairman Ben Bernanke and other central bankers from the G-6 nations inflating in an effort to avoid systemic price deflation—a scenario which Bernanke vowed will never happen under his watch.

“During the Depression [of the 1930s] wealthy individuals husbanded their dollars, and later got rich buying the battered remains of the Jazz Age of the twenties,” Russell ended his piece.  “It may not be that easy and cut and dried this time around.  This time history may not Rhyme.

In other words, don’t count of a Bernanke-led Fed to withhold the monetary spigots of ever-more money printing.  The smart money is banking big on it.  Sign-up for my 100% FREE Alerts

Insiders Tell Jim Sinclair, $17 Trillion in QE Coming

No matter how the Fed tries to manipulate the markets through its orchestrated communiques, more ‘quantitative easing’ is coming, says ‘Mr. Gold’ Jim Sinclair.  And this time, $17 trillion more of Sinclair’s mantra “QE to infinity” is a done deal, according to him. Sign-up for my 100% FREE Alerts

How does he know?

“How does anyone know an answer to a question?  By being told.  By having sources,” Sinclair revealed to King World News, Friday.  “I’m half a century in the business.  I’ve constantly kept up my contacts in a very unique and focused way.  Quantitative easing was made clear to me, prior to Bernanke’s speech to the Washington group, prior to quantitative easing.”

The 50-year-plus veteran of the gold market first came to use the term “QE to infinity” back as early as the summer of 2009, suggesting he knew all along that the Fed had finally reach a liquidity trap and that it was inflate or die from then on.

Nearly three years later, there’s been no chink in that assessment, as evidenced by the Fed’s subsequent QE2 program, bogus currency swaps schemes as well as the most recent backdoor bailout of Europe through the Troika earlier this year.

“The next step in the formula is the fatigue of Asia in supporting bad Western monetary habits and QE to infinity to protect the long term 28 year up-trend line in the 30 year U.S. Treasury bond market,” he said in a Jul. 2, 2009 post.

A look at a 20-year chart of the 30-year Treasury reveals the trend line Sinclair had spoken of.  Investors seeking clues to the dollars next major move could find in the chart of the 30-year bond.

Both the MACD and Slow STO indicate intermediate-term technical topping in the 30-year bond, and the trend line has held ever since the Jul. 2009 post.

As far as the outlook for the gold market, Sinclair is as bullish on gold as he’s as sure of more QE from the Fed.

The battle, he said, for the Fed is to fight the rise in the gold price for as long as possible prior to the next formal announcement of further Fed expansion of its balance sheet.  A move through “$1,764 and they [Fed] lose control.  That begins the move which is exponential.

“It’s a formidable challenge (keeping gold below $1,800).  The true range of gold is $1,700 to $2,111, but these guys are going to try to fight it like nobody’s business.”

However, the fight will be lost and the breakout above the $1,700 to $2,111 range is inevitable following the next QE announcement by the Fed on the way to trillions more.  That, Mr. gold has no doubt.

He concluded, “If we’ve done over $17 trillion already, do you think we won’t do another $17 trillion?  Of course we will.” Sign-up for my 100% FREE Alerts

Dennis Gartman is a Fraud—in Yen Terms

In his typical pompous, weak-chinned facade, alleged gold expert Dennis Gartman has declared that the decade-long bull market in gold is dead—again—and again.  He penned in his newsletter, Gartman Letter:

“ . . . in retrospect it does appear that gold has not been in a bull market but has indeed been in a bear market” since peaking at $1,920 in August 2011. Sign-up for my 100% FREE Alerts

“Since then,” he continued “each new interim low has been lower and each new interim high has followed. How, we ask, had we missed that fact!”

Apparently, Gartman misses a lot of facts, but he doesn’t miss an appearance on CNBC to drum up more suckers to his newsletter.  He figures since investors don’t bother with due diligence on stock recommendations, they won’t research Gartman’s most-abysmal track record either.  See chart, below.

In keeping with the CNBC’s Steve Liesman cadre of phony economic theorists and Fed sycophants, Gartman reminds his fellow bourgeoisie that he should never be mistaken for a dreaded gold bug proletariat, nor should anyone even think for a moment that he could actually be a closet ‘prepper.’

“I don’t like being long of gold. I don’t like the gold bugs,” he said, affirming his allegiance to CNBC producers.  “I’m not a believer that the world is coming to an end.”

“Nonetheless the trend in gold in all sorts of currencies, whether in dollar terms, euro terms, yen terms, has been…from the lower left to the upper right,” he stated, contradicting his previous assessment that gold’s chart pattern indicates a bear market in the precious metal.

Gartman, a gold bug?  No.  Mr. Gartman is a sophisticated man, with all of his teeth and education to prove he is no rube who owns at least a shotgun.  Moreover, he sports a beard to match Bernanke’s and Krugman’s—the Smith Brothers trio of the Church of Keynes.

“They genuflect in gold’s direction; we merely acknowledge that it exists as a trading vehicle and nothing more. There are times to be bullish, and times to be bearish … to every season, as Ecclesiastes tells us,” stated Gartman.

However, Gartman neglected to quote Deuteronomy, Genesis and Revelations, all of which tell us that he is as full of bull as Bernanke and Krugman are.

Deuteronomy 23:19  Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury.

Genesis 2:12 And the gold of that land is good: there is bdellium and the onyx stone.

Rev 3:18 I counsel thee to buy of me gold tried in the fire, that thou mayest be rich; and white raiment, that thou mayest be clothed, and that the shame of thy nakedness do not appear; and anoint thine eyes with eyesalve, that thou mayest see.


Ultimately, when the dollar collapses and gold can’t be pried loose from the public at $5,000 per ounce (400,000, in yen terms), Gartman can be expected to start quoting Romans 13 in his newsletter. Sign-up for my 100% FREE Alerts

Bernanke to Engineer a ‘Shock & Awe’ to Save the Fed

After nearly 100 years of manipulating and fixing the cost of money, the Federal Reserve is now threatened with the prospect of a groundswell revolution by the people against its privileged role as the alleged institution of providing the world’s banks stability as well as the savior from occasional Black Swan bank runs and collapses.  Sign-up for my 100% FREE Alerts

That nonsense, that central banks offer financial stability, has been debunked ad nauseam by many who know a thing or two about the inherent evils of central banking, including G. Edward Griffin, Lew Rockwell and Congressman Ron Paul, three men of many more who serve as today’s teachers of the nature of money and credit.  For decades, these men have warned us of central bank power and the reasoning behind the clauses of the Constitution regarding the nation’s money.  Few listened.

However, for the first time since its inception in 1913, the majority of Americans now know that the Fed is not really a government agency or department of the federal government, at all, and that the Fed, itself, contributes to banking instability and the disparity of wealth.  Today, many listen to a tale of deceit, treachery and even treason behind the Federal Reserve Act of 1913.

Here’s the problem for the Fed: After two rounds of so-called ‘quantitative easing’ and soaring food and energy prices as a result soon after, how does the Fed survive, politically, as it prepares for even greater amounts of money printing required to re-inflate the burst Ponzi scheme?

“ . . . we need to consider that the Fed is now so politically toxic that Ben Bernanke is literally going on the campaign trail to attempt to convince the American people that the Fed is an honest and helpful organization,” Phoenix Capital Research’s Graham Summers penned in a recent essay for GoldSeek.com.  “Put another way, there is NO CHANCE the Fed can announce a large-scale monetary policy unless a massive crisis hits and stocks fall at least 15%.”

Gloom Boom Doom Report editor and publisher Marc Faber agrees with Summers’ assessment of the colossal size of the Fed’s next round of QE planned for this year.  In previous interviews, he, too, has outlined the political dilemma facing the Fed.

“It [QE3] would have to be very significant to boost all asset prices including homes, stocks, bonds and commodities…Much larger [than QE1 and QE2],” Faber told CNBC, Monday, in response to a question asking for his outlook for more Fed intervention.

Back to Summers.  “ . . . if the Fed were to announce a new policy it would have to be MASSIVE, as in more than $2 trillion in scope,” he added.  “Remember, the $600 billion spent during QE 2 barely bought three months of improved economic data in the US and that was a pre-emptive move by the Fed (the system wasn’t collapsing at the time).”

As far as the palliative effects to the economy during the Fed’s previous two QEs, Summers stated they were negligible.  But the $600 billion QE2 program did bring on some serious food and energy price increases, instead.  In fact, the Fed (as well as other central banks which followed the Fed in money printing) created enough consumer price inflation to trigger civil unrest in Tunisia, Egypt, Libya and a dozen other nations across the globe, including the US with its OWS movement.

So, during an election year, the Fed simultaneously must engage in QE3 to prevent a collapse of the US Treasury market while at the same time contain commodities prices from rising too high.  A Fed failure could easily take Obama down in a George H. W. Bush-esque second-term attempt fiasco of 1992, as well as drive the final nail in the coffin of the Fed, gladly delivered by a legion of Congressman Ron Paul supporters and others hostile to Bernanke and his colleagues.

“This is an election year.  And I’m so sorry to say this Jim, but I expect somewhere down the road we’re going to see some type of drop in energy prices,” Brian Pretti, Managing Editor at ContraryInvestor.com, told Financial Sense Newshour, Tuesday.  “How that’s engineered, how that comes to pass, I really don’t know.” [emphasis added]

Pretti goes on to say that the previous attempts to jawbone commodities prices down, especially within the energy markets, have failed, including Saudi press conferences which were orchestrated to collapse prices at the behest of the White House and the Fed.  The oil market has simply ignored the The House of Saud’s gesture, according to him.

And Pretti isn’t the only one who notices the tightrope the Fed must navigate from now until November—as well as going forward after the election.  The Fed may even come under more attack after the election.

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

News of that bilateral agreement between the US and the UK failed to drop oil prices significantly.  The markets aren’t buying what the politicians are selling.  WTI Crude still trades above $100 without an announcement by the Fed regarding a QE3.  Though Pretti is convinced a QE3 announcement is on the way in time for the 2012 presidential election, but not if it means higher oil prices from today’s elevated levels.

“You know Mr. Bernanke is sitting on the advisory board of Mr. Gross and friends down at PIMCO,” Pretti said.  “You know, Bill came out a little while ago and said we’re going to see the FOMC announce [QE3] in the April meeting.  And I said, you know, you’ve got to be kidding me—not at oil at a $100 and change and Brent even higher.”

Within that context, then, how does Bernanke print what is estimated to be $2 trillion more dollars to service the grand Ponzi scheme under threat of collapse, while at the same time deliver somewhat reasonable commodities prices going into the political season?

Some ‘shock and awe’ event to knock down commodities prices must be in the works to accommodate the Fed’s next QE announcement.  It’s unlikely Obama can win in November with oil prices at $150+ and gold at $2,100, and moving higher, while the Fed props up the US Treasury market with a colossal expansion of its balance sheet and soaring commodities prices.

Somehow the Fed must look like a hero by saving the economy, again, if it’s possible to replay another Lehman and get the credit for saving the global financial system.  But what will be the ‘shock and awe’ event that could provide cover for the Fed?  Sign-up for my 100% FREE Alerts

Silver Bugs: Toughen Up & Hang Tight

In his latest comments on King World News, Trader Dan Norcini of Jim Sinclair’s JSMineset.com makes a great point—a point which may turn out to be the most critical to newcomers of the silver market.  Volatility has been tremendous lately in all commodities markets. But in the silver market, volatility is the norm.

Bottom line for silver investors: if volatility scares you, get over it, or get out!  Sign-up for my 100% FREE Alerts

Unless you’re in this thing for the long haul, trade AAPL or some other stock, because the Fed is intentionally creating volatility in the commodities markets to keep wimps, amateur traders the uninformed out of the silver market.  In fact, Bernanke would like to punish traders.

“We have tremendous whipsaw action in commodities.  It’s so wild right now in terms of the trading swings. . . ,” Norcini told King World News, Friday.

“In my opinion, the Fed and the Working Group on Financial Markets have been actively manipulating key markets.  The Fed has been doing this manipulation in an attempt to push investors back into the stock market and out of commodities and hard assets.”

If you’re new to the silver market because due diligence brought you to the precious metal, stick to the buy side, first of all.  Second, don’t be a fool and trade it.  You must exhibit discipline.  And third, stop waiting for wonderful prices!  Anything below $50 is a wonderful price, if your research has told you anything.

As a suggestion, Google “Stephen Leeb site: kingworldnews.com” or go to FinancialSense.com and listen to Leeb’s past three interviews.  You feel good at buying silver at $30, $40 or $50.  So, at $32, silver, according to Leeb, is a joke.

Back to Norciini: “The Working Group on Financial Markets (aka Plunge Protection Team—PPT) then goes in and starts putting heavy pressure on key commodities, which triggers a cascade of sell orders,” Norcini added.

So the point is: unless you’re privy to the PPT’s next attack, stop trading silver!  The Max Keiser Casino Gulag is stacked against the trader in the silver market.

Norciini rightfully points out as well that, part of the Fed’s plan of incrementally capping commodities prices is to make the markets very volatile for the 90 percent of the public who can’t take the heat—the wimps, if you will.  If you’re looking for another smooth ride from a lifeboat off this sinking Titanic, too bad, there’s is none.

“The Fed is literally undercutting the value of the dollar and they are causing a lot of repercussions around the globe. . . ,” Norcici continued.  “The other countries are not run by fools and they understand the destructive policies of the Fed.”

Norcini makes another good point:  Mom and pop investors have traditionally played the fool.  Nation states with lots of capital move money into extended macro trends, and so should you.  As prices fall, sovereign wealth funds go to work by accumulating what they want.  Copy the flows of the big money and you’ll be carried along for the ride, not whipsawed.

And finally, if you’ve listened to Jim Sinclair for any length of time, you should be laughing each time the Fed threatens to stop its so-called ‘quantitative easing’ or Bernanke suggests that the U.S. economy is on the mend, which would then preclude further money printing.

When the aforementioned wimps panic out of the silver market because they continue to play the mom-and-pop fool to Bernanke’s lies and deceit, you better be buying with the Chinese on the pullbacks.

The only troubling decision to be made in the silver market is when to ultimately sell your stash, if it all.  Buying the metal and holding it should be a very easy thing to do.  Sign-up for my 100% FREE Alerts

Max Keiser Tipped Off to Gold’s Next Major Move

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

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

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

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

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

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

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

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

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

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

Financial Times of London reported:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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