Dollar Reaches “Pre-Avalanche Moment”; Gold $7,000, Jim Rickards

By Dominique de Kevelioc de Bailleul

Speaking with Max Keiser’s On the Edge, Currency Wars author Jim Rickards says, the collapse of Lehman Brothers and the Fed’s response to the crisis convinced China to no longer trust the United States and the dollar-based reserve scheme.

In the past, the thinking among the world’s central banks focused upon the dollar as an anchor for relative valuations of other currencies trading against it.  That was a bad idea, according to Rickards.

“We trust the United States to maintain the value of the dollar, so we’ll anchor it [other currencies] to the dollar,” he says.  “That trust was misplaced, beginning, really, around 2010.

“The United Sates decided, as a matter of policy, to trash the dollar.  The Chinese made one enormous blunder; they actually trusted the United States to the tune of $3 trillion of assets to maintain the value of the dollar.

“China’s learning the hard way that you really can’t trust the United States anymore.”

After that breach of trust, following the Fed completed round of its first QE program, it became clear to the Chinese, according to Rickards, that the Fed intends to devalue the world’s reserve currency and the $3 trillion of U.S. paper it bought as the mechanism of maintaining a competitively cheap yuan against the dollar.

“The Chinese, you know, they don’t want to be the suckers at the poker table.  the United States put enormous pressure on China to allow the yuan to appreciate a little bit against the dollar, which it did in 2011.”

Since then, evidence shows the PRC has responding to the Fed through drastically stepping up central bank gold stock at the PBC.  But, in the meantime, the race to the bottom of the currency graveyard for the world’s major currencies will continue until that fateful day, when the global system is forced into a ‘big reset’ to another currency regime.

“These things [global currency devaluations] can go on, as I’ve show, historically, for 10 or 15 years,” says Rickards.

“Nobody wins.  All get is, either, global inflation or contraction of world trade if the currency wars turn into trade wars,” he adds.  At some point, “the system breaks down.”

But, “we’re some years away from that.  These currency wars will continue,” he says.

When Keiser likens last week’s Fed QE3 announcement to a “pre-avalanche moment” for the dollar, Rickards agrees.

Yes, “we are in a pre-avalanche moment, Max,” he says.  QE3 is a “suicide mission for the dollar.”

All you “have to do is look down the road and envision a Fed balance sheet that has, perhaps, $5 trillion of base money, up from about $3 trillion, today.  That’s sort of where we’re heading,” he adds.

So, China’s race to stockpile gold, in earnest, is on, according to Rickards.  China needs to acquire more gold reserves to earn a place at the Bank of International Settlements (BIS) table at the time when a new global currency regime is negotiated.

China wants the yuan to be included within the new global currency, necessitating an appreciable increase in the PRC’s gold hoard of an estimated 2,000 tons.  No gold, no inclusion.

“We don’t know exactly how much they have, but China is the largest gold importer in the world,” Rickards explains.  “They are the largest gold producer in the world.  Their mines are producing 300 tons a year, that is by far the largest in the world  Where are that 300 tons going?  Some of it’s going for domestic purchases, but a lot of it is going to the central bank.”

“To just look at the U.S. in the eye, they actually need 4,000 tons,” he says.

“This is just going to put upward pressure on gold prices for years to come, and my estimate is it will get to $7,000 an ounce, not next year, not immediately, but sooner than later.  That’s my target price for gold.”

Gold Bears Will Be Shanghaied

By Dominique de Kevelioc de Bailleul

Gold bears expecting the ‘gold bubble’ to pop must be smoking that funny stuff left over from the two opium wars of the mid-1800s between the British and China.  Today’s war with China finds the Son of Britain attempting a variation of the same colonialist trick by forcing, this time, funny money onto the Chinese.

Not only is Uncle Shunyuan not falling for Uncle Sam’s modern-day sharecropper scheme of purchasing real goods with counterfeit money, Americans will soon wake up to the realization that, in addition to their jobs being sent to China, their wealth, too, has set sail for the Middle Kingdom.

Those soon-to-be worthless dollars promised by Uncle Sam to retirees to pay for their golden years are being traded in for gold at an alarming rate in China.  Soon, even the gold bears will have to admit they’ve been Shanghaied.

“China’s underlying financial policy is to sideline the U.S. dollar and build its domestic metals inventories, notably of gold and silver and using these to replace its huge dollar surpluses while prices are cheap,” Silver-Coin-Investor.com’s Dr. Jeff Lewis stated in a recent article, China’s move into gold and silver part of global monetary plan.

Lewis goes on to state that irrespective of China’s economy experiencing a proverbial soft or hard landing, Beijing’s near “panic” to acquire as much of the yellow metal as a means of protecting its monstrous reserves—and to protect its citizens from a collapsing 21st century colonialist empire behaving like a cornered rat—is, by far, a more pertinent issue to China’s long-term strategic goals.

“China mined a total of 355 tons, which was by far the largest amount of gold mined for any country,” Stephen Leeb told King World News, Tuesday.  “And yet they are still buying every single available ounce they can get in the open market.

“ . . . gold has become increasingly important and China has encouraged its citizenry to buy gold,” added the author of Red Alert: How China’s Growing Prosperity Threatens the American Way of Life.  “With the stock market already frustrating people in China, the Chinese, interestingly, will not want gold to be added to that list of frustrations for their investing public.”

As a reminder of a WikiLeaks cable released last year, published by its Aussie founder Julian Assange (a traitor, of course—or stooge?), the Chinese are quite aware of the dollar’s role for maintaining the neoconservative goal of complete global U.S. hegemony; and with Russia’s help, along with the other motivated members of the BRICS nations, Uncle Sam’s meddling, threatening, extorting, bribing and swindling ways with its ‘partners’ in the The-World-is-Flat nonsense, the U.S. will assuredly near its MF Global sudden death moment—but on China’s timetable, at the very latest.

US embassy cable – 09BEIJING1134

MEDIA REACTION: U.S.-CHINA-JAPAN RELATIONS, U.S. POLICY, CHINA’S GOLD RESERVES

3. CHINA’S GOLD RESERVES

“China increases its gold reserves in order to kill two birds with one stone”

“The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): “According to China’s National Foreign Exchanges Administration China ‘s gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar’s role as the international reserve currency. China’s increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB.[emphasis added]

Back to Leeb, who believes the Chinese won’t delay its “frantic” accumulation of gold by finessing better gold prices.  Instead, Beijing has surreptitiously established a floor under the gold market in the mid-$1,500 area, as it catches as much falling metal from the pockets of the upside-down logic of the gold bears, who still believe (conveniently serving as useful idiots to the Chinese) the safety trade remains with the U.S. dollar.  Beijing has high hopes for U.S. investors to remain ‘stoned’ for as long as possible.

“In the past, if the Chinese could step out of the way and let gold tumble in price so they could purchase it cheaper they would,” said Leeb.  “Right now I think they just don’t want to add to their citizen’s frustrations with key markets, gold being one of them.  If I’m right, then the Chinese will continue to support the price of this metal.”

Sprott Asset Management Chief Investment Strategist John Embry, another regular of King World News, agreed with Leeb.  In Embry’s interview with Eric King, Tuesday, he intimated that the Fed must allow the gold price to rise very soon to stop a Charles de Gaulle run on the gold market by the Chinese.

Embry also echoes Goldmoney’s James Turk’s daredevil prediction that August will be the month the Chinese will be stopped from buying “cheap” gold due to apparent shortages of the physical metal seen coming.  The theory goes: higher prices create marginally higher supplies.

“We are moving toward a fundamental shortage of gold, and I believe it may start as soon as next month,” Embry proffered.  “I think the bottom is being put in right now . . .

“But this action is all just building a massive base in gold.  I think the big issue going forward is this growing shortage of available physical gold.  I strongly believe one of the reasons for the shortage is a lot of it is headed East. [emphasis added].

“The last four or five months of the year gold should challenge and easily take out its all-time high.”

Syria Could Crash the U.S. Dollar

By Dominique de Kevelioc de Bailleul

While incessant and escalating incidences of blatant assaults upon the Bill of Rights of the American people riddle the pages of the full spectrum of media, it is now not a matter of, will a state of emergence message by the president be made, it is a matter of when the event happens and what triggered the historical act.  No doubt, a collapsed U.S. dollar or a nuclear blast on American soil rank high on the list of probably catalysts for an emergency call to martial law by a sitting president.

One or both of these doomsday catalysts for a U.S. lock down took a giant leap forward in France, Friday. Cold War-like comments made at the “Friends of Syria” conference in Paris by U.S. Secretary of State Hillary Clinton toward Russia and China strongly suggest that a showdown between the former Cold War rivals, now to include China, is on.  The prize: oil—and by implications the future of the U.S. petrodollar standard and the American way of life.

“I don’t think Russia and China believe they are paying any price at all – nothing at all – for standing up on behalf of the Assad regime,” Clinton told an audience comprised of delegations from more than 60 nations.  “The only way that will change is if every nation represented here directly and urgently makes it clear that Russia and China will pay a price . . .”

Auspiciously, delegations from Moscow and Beijing did not attend the meeting.

The U.S. Secretary of State went on to accuse Russia, China and Iran of supporting Syria’s Assad regime economically and militarily, and called upon other nations to comply with UN sanctions levied upon Syria—sanctions which would also include refusing oil shipments from Syria’s vital economic support and trusted ally, Iran.  But for continued sanctions against Syria to be effective, “much will remain dependent on persuading the two reluctant powers [Russia and China] to pressure Assad into action [of peaceful regime change in Syria],” according to Canada’s CBCNews.

Though, Russia and China have already agreed to a peaceful resolution to the Syrian civil war, signing off on the Security Council plan drafted by former-UN Secretary-General Kofi Annan, it’s more likely that Moscow and Beijing are playing politics of cooperation to buy more time for the Assad regime.  Russia and China do not want regime change in yet another Middle Eastern country for a host of economic and political reasons, of which, the primary one is to stop the U.S. from controlling the region’s oil supplies to Russia’s ally and co-founding member of the Shanghai Cooperation Organization (SCO), China.

Authors John Barry and Dan Ephron of a Sept. 2004 Newsweek article, titled, War-Gaming the Mullahs: The U.S. weighs the price of a pre-emptive strike explain that Syria and Iran have been targets of interest of the U.S. for quite some time, as Washington under the George W. Bush Administration had known that a day would come when the U.S. and China would bang heads for precious crude supplies in the Middle East.  Whether it’s the Obama Administration or another neocon U.S. president in control of the executive branch, the petrodollar standard must be defended in the Middle East.  The Iranian/Syrian alliance has stood in the way of total U.S. dominance in the region, but now the matter has become urgent following Iran’s announcement in Feb. 2012, that it has broken ranks in the petrodollar scheme.  It now will not accept the dollar as payment for Persian oil.

“Deep in the Pentagon, admirals and generals are updating plans for possible U.S. military action in Syria and Iran. The Defense Department unit responsible for military planning for the two troublesome countries is ‘busier than ever’, an administration official says,” according to the Newsweek authors.  “Some Bush advisers characterize the work as merely an effort to revise routine plans the Pentagon maintains for all contingencies in light of the Iraq war. More skittish bureaucrats say the updates are accompanied by a revived campaign by administration conservatives and neocons for more hard-line U.S. policies toward the countries . . .

”Even hard-liners acknowledge that given the U.S. military commitment in Iraq, a U.S. attack on either country would be an unlikely last resort; covert action of some kind is the favored route for Washington hard-liners who want regime change in Damascus and Tehran.” [emphasis added]

But according to Barry and Ephron, CIA war-games simulating military action against Iran and, by proxy, Syria, would end up very badly for the U.S.  In fact, an unidentified Pentagon source told Newsweek, “The war games were unsuccessful at preventing the conflict from escalating,” whereby the magazine concluded: “This daredevil scheme horrifies U.S. military leaders, and there’s no evidence that it has won any backers at the cabinet level.”

As U.S. policymakers watch the eurozone crumble, brace for a renewed global economic depression, and wonder where the money will come from to finance monstrous sovereign debts and deficits without a mult-trillion-dollar central bank global re-inflation scheme, desperation to make a decisive and final strategic move in the Middle East against Syria and Iran must be overwhelming—and Russia, China, Iran and Syria know it and have planned for it.

Either the U.S. dollar temporarily withstands an all-out war against the most formidable foes since the Germany-Japan-Italy axis of WWII, or it doesn’t.  But in the end, odds heavily favor an abandonment of the dollar as the world’s premier reserve currency; it’s just become too much trouble for too many nations, now.  The conditioning of the U.S. population to expect a heavy-handed government continues unchecked and unchallenged by the Congress, because internally Washington knows the dollar’s days are numbered—and it could be as close as the day of next scheduled military conflict in the Middle East.

U.S. Seeks War with China to Stiff Investors of Treasuries

By Dominique de Kevelioc de Bailleul

In Max Keiser’s Friday edition of On the Edge, veteran mainstream-journalist-gone-straight Greg Hunter of USAWatchdog.com posited an interesting endgame scenario to a failed globalist agenda of financial consolidation and economic repression—that is, start a war with China and just say ‘no’ to those evil Chinese creditors.

Under that scenario, Hunter believes the only viable U.S. option to save the so-called Western ‘elite’ from the guillotines is to start a war with China by fomenting and redirecting pubic anger away from Washington and onto the Chinese in an age-old ploy of jingoism in an effort to provide a ‘valid’ excuse for not paying on U.S. Treasuries.

“You know, you just had China and Japan, the no. 2 and no. 3 economies, getting together, saying we’re just going to change to yuan and yen,” Hunter told Max Keiser.  “We’re not going to use the dollar anymore.  You know, that’s huge.”

He added, “There’s a move underfoot not to use the U.S. dollar as the world’s reserve currency.  If things get bad enough.  I mean, there’s $12 trillion held outside the country.  I know this is blasphemy, but, hey, what’s stopping it if there’s a shutdown of the Straits of Hormuz, a $200 a barrel, $300 a barrel spike in oil, a shutting of the U.S. dollar?  What’s stopping the U.S. from just saying, you know, we’re not going to pay those Treasury debts?  China, you’re not going to get paid back.  We’re at war.”

And as a corollary to the scenario, not broached by Hunter in the interview, what would prevent the U.S. government from scapegoating Constitutionalists, Christians and the Patriot movement as un-American terrorists during the process leading up to a full-blown war?  Such a tack was used in Germany during the rise of the Third Reich.

Evidence of a build up toward that end has been reported almost daily by journalist Alex Jones of InfoWars.com, with FEMA camps at the ready, violations of Posse Comitatus gone unchallenged by Congress, and the signing of the NDAA Executive Order of Jan. 1 as the telltale steps already taken by Washington in preparation for civil unrest and possible attempts to overthrow the capitol’s two-party oligarchy, according to Jones.

InfoWars’ Alex Jones and Kurt Nimmo penned on Dec. 6, 2011:

In 2009, the National Emergency Centers Act or HR 645was introduced in Congress. It mandates the establishment of “national emergency centers” to be located on military installations for the purpose of providing “temporary housing, medical, and humanitarian assistance to individuals and families dislocated due to an emergency or major disaster,” according to the bill.

In addition to emergencies, the legislation is designed to “meet other appropriate needs, as determined by the Secretary of Homeland Security,” an open ended mandate which many fear could mean the forced detention of American citizens in the event of widespread rioting after a national emergency or total economic collapse, as Paul Joseph Watsonnoted in January of 2009.

Moreover, evidence of the Hunter scanario can be gleaned by relentless U.S. rhetoric fired at Iran, proxy and ally of China in the Middle East.  Iran, a member of George Bush’s ‘Axis of Evil’, has been the target of Cuba-like sanctions by the U.S. since the overthrow of the Shah in 1979, with the latest action to cut the Persian state from the international SWIFT system a sign of retaliation for Iran’s new Kish oil bourse (and Iran’s refusal to accept U.S. dollars as payment for its oil), plunged the rial by 50 percent within days of the announcement.  Oil-dependent China receives 400,000 barrels per day from Iran, according to the Rhodium Group, and has agreed to pay Iran with any currency it prefers.

Reminiscent of U.S. embargo of Japan from American oil in March 1941, today, China has replaced Japan as the target of U.S. aggression through the energy market.  The Chinese have stated publicly it supports Iran and condemns the sanctions as illegal and does not intend to comply with U.S. wishes to boycott Iranian oil shipments.  China knows that in order to strengthen the yuan as a future reserve currency, it must do so by incrementally replacing the dollar with the yuan in the $3 trillion global oil market.

“We’re a huge debtor nation, the largest debtor nation in the world, the United States, and other countries are beginning to say but we want our debt in something other than dollars,” John Perkins, author of Confessions of an Economic Hitman, said in a 2008 interview for the movie Zeitgeist Addendum.   “We don’t like the dollar.  We don’t trust it, so Saddam Hussein threatened to go to what he called an oil bourse, the oil exchange where he would sell oil for something other than dollars, yen, the euro, or some other currency.  And that’s one reason we went after him, that’s one more reason.  And today, interestingly enough, Iran is doing the same thing.

“This is a huge threat to us.  I think it’s the primary reason why we’re making threats as if we’re going to attack Iran.  I don’t think it has nearly much to do with nuclear energy . . .”

Perkins went on to say in the 2008 interview that the scenario Hunter proffered in the Kaiser interview on Friday may be the likely scenario the U.S. will adopt to end the pressure on the dollar via the Treasury market, if the U.S. can use its military to force all oil transactions to be denominated in U.S. dollars.  Otherwise, there is no hope for the dollar, as the math precludes the U.S. making good on its debt.

“If Iran, in fact, does sell oil for something other than the dollar, that puts the dollar in a very weak position,” Perkins continued, “and if someone wants to bankrupt us, someone like China or Japan or one of the other big holders of our debt, they can call in our debt in euros or something else.  But they can only do that if they can buy oil in that other currency.”

Rigged Gold Market, a Secret Payoff to China

By Dominique de Kevelioc de Bailleul

As Italian and Spanish 10-year note yields breakout to ‘engine light’ levels of more than 6 and 7 percent, respectively, the China-led BRICS announced at the G-20 in Mexico an additional $95.5 billion ‘contribution’ to the IMF’s emergency bailout fund, with China signing off to $43 billion of the total package.

As renowned historian of economics Niall Ferguson put it on the eve of the Greek election, Sunday, “If there’s going to be a Lehman moment in the crisis it’s going to be next week.”  Well . . . that’s this week.

But, so far, the Lehman-like moment hasn’t arrived and won’t.

Granted, no nation gains from a sudden collapse of the eurozone.   However, China, the biggest creditor of them all, with approximately $3.2 trillion of Western fiat on its books, won’t come to the financial aid of the hopeless European Union (from its own making) without some form of collateral—or maybe a deal, instead, in which something of tangible value could be acquired very cheaply in return for its ‘altruism’.

That tangible central bank asset can only be the coveted asset, most dear as a hedge against the endgame for the dollar—gold!

Though the Fed and its high-profile cheerleaders (billionaire icons Warren Buffett, Charlie Munger and Bill Gates) poo-poo gold’s intrinsic value to dupe/contain the awesome collective purchasing power of the American and European people from entering the tiny gold market in force, the reality of its price rise against every currency for the last 12 years tells quite a different tale.

“Gold is a reserve currency, as far as the market is concerned,” Sprott Asset Management’s Eric Sprott told FinancialSense Newshour’s Jim Puplava in an Oct. 2011 interview.  Sprott went on to say that central banks and the shrewd money know the endgame for the dollar will include gold as the backbone of a new global monetary system—a system that presently finds China sorely lagging in gold reserves when compared with the core EU nations and the U.S.

According to IMF data of 2010, China is way behind, though estimates of China’s real gold reserves reach as high as much as more than 3,000 tons—a still meager amount considering China’s deep central bank reserves.

China, 1,054 tons, 1.8 percent of reserves

United States, 8,133.5 tons, 76.6 percent of reserves

Germany, 3,396.3 tons, 73.7 percent of reserves

France, 2,435 tons, 71.8 percent of reserves

Netherlands, 612.5 tons, 61.9 percent of reserves

Italy, 2,435.8 tons, 73.4 percent of reserves

Spain, 281.6 tons, or 39.2 percent of reserves

Portugal, 382.5 tons, or 89.2 percent of reserves

Greece, 111.7 tons, or 81.3 percent of reserves

And here’s how JP Morgan’s gold suppression scheme works for the Chinese but not the American people (or Europeans).

A rising gold price, or better still, a soaring gold price crashes the dollar (all G-8 currencies) and China’s $3.2 trillion of reserves.  No one wins under that dire scenario except those holding privately-held gold—the castigated tiny group referred to as ‘preppers’.

Moreover, an overt announcement issued by the West to transfer gold to settle payment (the scheme devised under Bretton Woods) after multiple decades of trade deficits would not work either, as years of artificially low gold prices would create immediate and furious front-running by the market, thereby drastically reducing the number of gold-tons China would receive for its fiat, and causing rapid runaway inflation, globally.

Additionally, public outcry of the overt and sudden transfer of wealth from the West to the East would be political suicide to those in power at the time.  For example, the protests among the overall prosperous German people at the thought of Germany pledging its gold to back the EFSF last year was fierce and has caused its president Angela Merkel dearly in the polls.

Therefore, the solution is to covertly transfer gold to China through the LBMA, the Comex or any backdoor available to Western central banks in a gradual manner.  JP Morgan’s trading desk is the mechanism, while the CFTC pretends to investigate the gold manipulation matter to delay further the day of reckoning.

On Mar. 8, Jim Sinclair brilliantly observed that Western central banks know the jig is up for any hope of maintaining the current financial system and plan to prop-up a seriously listing global economic ship for as long as possible before the inevitable revaluation of gold is announced.  In the meantime, China stockpiles gold in preparation of a new gold-backed monetary regime.

“So their [central banks] efforts, in my opinion, are not to depress the price of gold, but to prevent gold from rising into the area where it becomes ballistic,” Sinclair told King World News (KWN).

Sinclair continued by stating that gold will continue to rise enough to prevent a force majeure in the gold market, but the plan by the Fed is for gold to rise in an orderly and stealth manner for as long as possible in the hopes of preventing another post-Plaza Accord (1986) stock market crash of 1987, or an Asian currency crisis of 1997.

“The major players in this game of power need stability for as long as possible,”  Portola Group founder Robert Fitzwilson told KWN, Mar. 19.  “Stability, in this case, is defined as the absence of chaos and absolute panic.”

Commenting on the enlarged pledge by the BRICS out of the G-20 meeting in Mexico, Monday, the US-centric IMF President Christine Laggard told reporters the additional contributions by the BRICS demonstrate “the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability.”

She added, “Countries large and small have rallied to our call for action, and more may join. I salute them and their commitment to multilateralism.”

Multilateralism.  Code word for a globally coordinated agenda, which must include a reconciliation of global imbalances and a revaluations of the world’s reserve currencies to achieve that alleged “global financial stability”.

As Western powers dupe its constituencies into holding dollars and euros throughout the crisis, the Chinese have been given red-carpet access to cheap gold through JP Morgan’s price suppression scheme.  As the Chinese buy huge quantities of the yellow metal, JP Morgan helps ‘paint the tape’ for the ‘punters’ and inexperienced money managers, alike, who look for trends to buy into as a momentum trade.  No trend in gold has emerged for nearly one year, giving China that much time to accumulate the gold it needs before the Big Reset.

“Why would the West give China that gold at discounted prices?” KWN’s Anonymous London Trader asks, rhetorically.   “Yes, the bullion banks act on behalf of the central banks to manipulate the price, they act as agents, but the central banks and their agents are also aware that the Chinese are building up their gold reserves. This is the bigger picture which the gold bears do not understand.”

Correct.  But the bears will fully understand the “bigger picture” when the time comes after the Chinese have accumulated enough gold during an orderly bull market in the yellow metal.

U.S. political leaders have outsourced American jobs to China throughout the past two decades, given military technology to China during the Clinton Administration, and now prepare the Chinese for a new global monetary regime at the expense of the American people.  It’s all about “multilateralism,” as globalist Christine Laggard refers to the BRICS’ generosity—and she “salutes them.”

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.

GLD ETF Raid Imminent as China Flushes JP Morgan of Physical

Sources close to newsletter writer Jim Willie of the Hat Trick Letter tell him the Chinese are finally putting an end to the Fed-sponsored JP Morgan’s gold manipulation scheme—but not until the Eastern juggernaut strips every ounce of physical gold in a brilliant Sun Tzu maneuver against the Comex gold cartel.

With the cartel levered as much as an estimated 100-to-one in the gold market, JP Morgan is trapped into a game it cannot win in the end.  As normal market forces seek higher prices to quell demand, JP Morgan’s price suppression activities only serve to hasten the day when the gold price will be set free—but on China’s timetable and at a level of gold stock the Eastern giant feels comfortable stripping before crushing the hold of the G-8 and the menacing U.S. dollar standard from which China wishes to extricate itself.

“My firm belief is that a fair equitable gold price will come only after the price goes dark in the normal traditional paper dominated channels,” Willie began his update of the gold market in a piece posted on GoldSeek.com, suggesting that, at some point, the price quoted at the Comex will be revealed as merely a camouflaged official price-fixing mechanism to throw off traders into thinking rallies and plunges in the price of gold are part of a normal price discovery process.

In other words, instead of Treasury announcing on a periodic basis a new pegged price for gold under a broken Bretton Woods configuration, the U.S. can lever dollar against ridiculously low gold reserves to match the dismally low dollar reserves against assets held on the books of Fed member banks via JP Morgan’s gold manipulation scheme.

The customer(s) of JP Morgan that Blythe Masters had referred to in an interview with CNBC is, accounting for the lion’s share in terms of dollar volume, the Fed itself—which makes sense in that JP Morgan is one of the owners of the Fed (contrary to the obfuscation presented on the Fed’s Web site).

“We store significant amounts of commodities, for instance silver [gold for instance], on behalf of customers. We operate vaults in New York City, in Singapore and in London. Often when customers have that metal stored in our facilities they hedge it on a forward basis through JPMorgan, which in turn hedges in the commodities market,” Masters told CNBC on Apr. 5. Emphasis added to text.

“If you see only the hedges and our activity in the futures market but you aren’t aware of the underlying client position that we’re hedging, then it would suggest inaccurately that we’re running a large directional position,” she added. “In fact that’s not the case at all. We have offsetting positions. We have no stake in whether prices rise or decline.”

At a ratio of approximately 100-to-one of paper “hedges” against physical gold, the only customer who would be large enough to cover such a bet for JP Morgan would be a printing press—the Fed.

Back to Willie.  He goes on to say in his article that the “Eastern coalition” has been stripping JP Morgan of physical gold at intervals of $10 in a “reverse pyramid,” or higher amounts of buy orders as the price drops.  As the Chinese lay a net of buy orders of physical during the massive de-leveraging process conducted by the European banks, the gold sold by the EU in an effort to remain liquid shifts from the West to East at fire sale prices made possible by JP Morgan’s paper shorts throughout the gold bull market.

“The gold price will not rise until the Eastern Coalition has had their fill in a Western diet rich in gold,” Willie stated.  “ . . . In the process of de-leveraging, the cartel is losing their gold bullion. They are vulnerable, made worse by their insolvency, aggravated by their lack of liquidity. The paper gold price is imploding, but not the physical price.”

Willie’s intelligence of renewed aggressive Eastern alliance gold buying—as well as the just-released news flash from Reuters of Vladimir Putin’s decision to skip the G-8 summit—appear to dovetail at this time with geopolitical events concerning Iran.  Though Russia is a member of the G-8, China is not.  Escalating aggression by the U.S. against Iran has pushed Iranian allies China and Russia into a formidable alliance against America and may explain Russia’s abstention from the meeting in a show of allegiance with China against their mutual enemy in battle for another gold—black gold—oil.

If the U.S. can secure Iranian oil, China loses its leverage in the currency war and its timetable for the renminbi to be elevated as a world’s reserve currency—which the Russians would benefit as well, as the ruble would be elevated (and included in the proposed SDR with the renminbi) as dollars leave the oil market through bilateral trade agreements forged by anti-American forces, globally.

Gold market insiders sense that, as Willie reports, China and its Eastern partners have a window of opportunity before the U.S. presidential election and/or a Fed announcement of more QE to accumulate as much gold as possible before the gold price moves higher to relieve the massive physical buying at the hands of the Chinese.

But it appears the U.S. could buy more time in the event of a gold raid by the Chinese (akin to Europe’s raid on U.S. gold during the late 1960s) as a force majeure in the gold market would collapse the dollar and the means of funding U.S. military operations against Iran and countless other operations hostile to China and Russia.  That physical gold, not available to JP Morgan, would need to come from the confiscation of private gold assets, such as those held for the Barclay GLD ETF.

“Unfortunately, the Eastern gold raids waged against the Western gold cartel might be satisfied with gold bullion pulled from the back door of the GLD exchange traded fund. As the Eastern Coalition observes the de-leverage process and swoops to exploit the insolvent condition compounded by lack of liquidity, the demands made on cartel member gold reserves might come from the GLD fund itself,” Willie speculated.

He added, “The cartel simply shorts the GLD stock, entitling themselves to vast truckloads of GLD gold bars in illicit grabs. The tracks are covered by altered bar lists, whose track record is so abysmal and faulty that new covered tracks are easily made. The GLD fund is destined for a day like Madoff and Corzine before the Congress, but with far more lawsuits. Given the vast conduits between Europe and the United States, any event triggered on the continent will extend quickly to the U.S. and UK.”

Gold traders should realize that Willie’s analysis strikes at the heart of the U.S. dollar, taking Jim Rickard’s thesis to a much deeper and poignant level—a level that Rickards will not dare to go.

In fact, Rickards told TruNews radio that investors of gold will be disappointed by a probably confiscatory tax of “90 percent” on gold held by American citizens, leaving that Rickards comment to beg the question: then where do Americans go to flee the dollar?

The answer is still—GOLD!—and the corollary? Store it outside the jurisdiction of the U.S. and away from a criminal Washington hell bent to sacrifice every American in its effort to achieve its objectives.  But Rickards, the DoD consultant, won’t tell you that, which suggests to anyone who listens to him that it is futile to protect yourself from a fascist U.S. government intent on sacrificing a nation’s privately-held treasure for its globalist agenda.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cuban Missile Crisis, the Sequel; $3,000 Gold Possible

In what appears as swift retaliation by Iran against U.S.-led economic sanctions imposed on the Persian Gulf state, suddenly Iran says it will no longer accept the U.S. dollar as payment for its oil shipments to India, Japan and China.

In addition, bilateral trade between Iran and Russia will break from the dollar for settlement in favor of Iranian rial and Russian rubles, according to Iran’s state-run Fars news agency.  Sign-up for my 100% FREE Alerts

But unlike a similarly bold move taken on Oct. 30, 2000, (effective Nov. 6) by Saddam Hussein to rid Iraq of the U.S. dollar as payment for Iraqi oil, Iran asserts the new arrangement to drop the dollar was Russia’s idea.

“The proposal to switch to the ruble and the rial was raised by Russian President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad, in Astana, Kazakhstan, of the Shanghai Cooperation Organization,” according to Bloomberg.

So, is the U.S. about to embark on another Iraq, or is the situation with Iran more akin to an October 1962 Cuban Missile Crisis with Cuba’s big brother, Russia?

Amazingly, or not (media ignored the euro-for-Iraqi-oil story, too), since the bombshell Iranian announcement, only a handful of news outlets of the West covered the dollar-dumping announcement of this vital story.  Of course, though, zerohedge.com (and PrisonPlanet.com’s posting of the zerohedge post) was one of these handful, providing adequate sourcing and commentary of the breaking news about Iran/Russia from China-based ChinaDaily.com.cn.

Most of the usual suspects of traditional media, however, have drawn attention to the threat of a closing of the Strait of Hormuz, instead—an important issue, no doubt, but its no longer news at this point in the crisis and certainly doesn’t compete with the latest development regarding the trashing of the Greenback from a member of OPEC on the same day Russia lays anchor in Syria to the north of Israel.

According to China Daily, “Russian warships patrolling the eastern Mediterranean Sea have docked at Russia’s naval supply facility in the Syrian port of Tartus, the private Addounia TV reported Saturday.

“Governor of Tartus Imad Naddaf received the ships’ leaders and expressed appreciation to Russia’s support for Syria, the report said.

“Russia’s state-owned Itar-Tass news agency quoted a source from the Russian Navy as saying that ‘It is planned that the port of Tartus will be visited by a big anti-submarine ship of the Northern Fleet Admiral Chabanenko and an escort ship Yaroslav Mudry.

So, it appears that the Iranians are a lot more prepared to deal with the U.S. than its neighbor to the West was, Iraq.

And for those familiar with the most likely reason for the attack on Iraq may also be familiar with William R. Clark, author of Petrodollar Warfare: Oil, Iraq and the Future of the Dollar.  Of course, ‘weapons of mass destruction’ was merely a sophomoric ruse in the call to war with Iraq.  So what was the reason?

In his book, Clark makes a case for a world that will most probably include a future riddled with war in the Middle East, as the U.S. takes preemptive measures to secure—not only oil—but more importantly, to assure a continuation of dollar hegemony in global trade as a means of preventing a Greenback collapse as a medium of exchange and value.

As a preface to his book, Clark posited an essay in January 2003, titled, Revisited — The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken TruthIn the essay, Clark cites an anonymous source who told him the NY Fed (through the Treasury ESF) ultimately dictates foreign policy via the U.S. dollar, and that any threat to the artificial support of the dollar must illicit an immediate response at the NSA level.

After reading Clark’s essay, anonymous, or not, the source appears to be a very, very good one.

According to anonymous:

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

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

Saddam sealed his fate when he decided to switch to the euro in late 2000 (and later converted his $10 billion reserve fund at the U.N. to euros) — at that point, another manufactured Gulf War become inevitable under Bush II. Only the most extreme circumstances could possibly stop that now and I strongly doubt anything can — short of Saddam getting replaced with a pliant regime.

Big Picture Perspective: Everything else aside from the reserve currency and the Saudi/Iran oil issues (i.e. domestic political issues and international criticism) is peripheral and of marginal consequence to this administration. Further, the dollar-euro threat is powerful enough that they will rather risk much of the economic backlash in the short-term to stave off the long-term dollar crash of an OPEC transaction standard change from dollars to euros. All of this fits into the broader Great Game that encompasses Russia, India, China.  [Emphasis added]

As we know, following Iraq’s decision to dump the dollar in favor of the Euro, 14 months later U.S. President George W. Bush delivered his ‘Axis of Evil’ speech on the first State of the Union address of his presidency on Jan. 23, 2002.  Iraq, Iran and N. Korean are the nations of that axis, according to Bush.

With Iraq as the first casualty of the Great Game, that leaves Iran and N. Korea left as targets and responses from Russia and China.

Calls for $3,000 gold are everywhere.  With central banks printing money at astonishing rates without formally announcing anything about it; tensions in the Persian Gulf rivaling the Cuban Missile Crisis; and an election year that sports the most threatening presidential candidate (Congressman Ron Paul of Texas) to the ‘establishment’ since John Kennedy (or maybe as far back as Theodore Roosevelt 1900-08), it appears early on that surviving 2012 without a major event is a very long shot, indeed.  Sign-up for my 100% FREE Alerts

Related BER articles,

Gerald Celente: EU Collapses in 90 Days, Bank Holiday and War

Gerald Celente Forecast 2012, FEMA Prepares for Dollar Collapse

Marc Faber releases Gloom Boom Doom Report

Hold onto your seats, says Swiss money manager and publisher of the Gloom Boom Doom Report, Marc Faber; it’s going to be a rough ride ahead for investors.

In his latest view on the markets, the quintessential contrarian suggested in his October edition of the Gloom Boom Doom Report that the real threat to global markets is China, not the global financial crisis epicenter of Europe.

China, he stated, may be on the verge of economic collapse, stemming from the dreaded one-two punch of rapidly increased capital goods overcapacity to match significant reductions of global demand for its products.

The recent precipitous decline in the price of cooper tells Faber that China’s rapid GDP growth may have been somewhat of a mirage for a spell.  What was once thought of as a clever means for China to dump U.S. dollars in favor of ramped-up infrastructure spending in the People’s Republic, with numerous reports streaming into the West of newly-built cities erected in anticipation of millions of soon-to-come inhabitants, may, instead, result in another example of a Mao-like central planning scheme gone bust.

In 2010, at a conference in Russia, hedge fund manager Hugh Hendry of Eclectica Asset Management opined about the very same risk he had seen to the Chinese economy, quipping, at that time, “Confucius say: Though shall not invest in overcapacity.”  Hendry proceeded to warn of a surprise economic collapse in China reminiscent of Japan’s meltdown of 1989.

In recent years, massive infrastructure increased as a percent of GDP in China, while consumer spending dropped as a percent of the total output of the Chinese economy, temporarily front-loading stellar growth results that, it appears, now, are unsustainable and at risk of collapsing the Asian juggernaut.

Faber, who’s been spot on, so far, with his prediction for weaker gold prices in the short term (before a next leg up in the metal becomes a play against serial central banking mishaps), stated that this latest correction in gold may last a while longer, still—and might take the precious metal to the $1,100-$1,200 level before the bottom is reached—a la 1974-76.

“We’re now close to bottoming at $1,500, and if that doesn’t hold it could bottom to between $1,100-1,200,” Faber told CNBC’s Steve Sedgwick on Sept. 25. It appears Faber hasn’t backed off his call of the 25th.

As a backdrop to Faber’s thinking at this time, it should be noted, too, legendary currencies strategist John Taylor of FX Concepts suggested a 50% decline from the $1,900 mark was in the cards for gold.  But, more impressively, Taylor told Bloomberg during the summer months of 2011 that gold could touch $1,000 after reaching a new high of $1,900.  Eerily, Taylor made those calls when gold traded at approximately $1,500 per ounce while the gold market was about to enter the seasonally slowest months of the calendar year of July and August.

Faber suggested in his latest report to subscribers that a drop he envisions for gold to the $1,100-1,200 range would mimic the historical performance of the gold price during the 1970s.  In 1974, gold traded as high as $200, up nearly six-fold from the official $35 peg of 1971, then sold off off to $100 by 1976.

But as history shows, the damage to the dollar had already been done following the Nixon Administration’s executive order to decoupled the dollar from its gold backing in 1971.  After the 1974-76 decline of 50% in the gold price, from the $200 high of 1974, back down to $100 in 1976, the gold price never looked back, skyrocketing to $850 per ounce by January 1980—a nearly 85% compounded return during that 42-month period.

Could Faber be right again, or has he gone too with in his prediction in the wake of ongoing fat-tail moves in emerging market currencies and European sovereign bonds?  Conventional wisdom today is Europe is going down and it’s about to get uglier than the Lehman crisis ever got.  But, unlike the Lehman event, everyone’s expecting the worse outcome in Europe this time around.  Has the gold market already priced in a catastrophe in Europe, or not?  We’ll see.