“Market Shock” Coming This Fall: UK Telegraph Sources

By Dominique de Bailleul

“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” an unnamed source at a major European bank told the U.K Telegraph, Friday.

With the fear of, yet, more war—especially with Iran, a likely spark for WWIII —liquidity-trapped central bankers, political squabbling within German and between eurozone members over the fate of the euro, solid evidence of a global economic catastrophe lurking, and a nasty U.S. presidential election between two grotesque candidates nearing, any hopes of consumer spending or capital formation to come to the aid of an insolvent banking system has already been thoroughly discounted in the price of the bank stocks.

And of course, it was the smart money skipping town during the two-year-long phony ‘rebound’, leaving the inevitable ‘act II’ of despair to the retail investor and captured institutionals as the usual bag holders.

“A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way,” according to the Telegraph journalists, Harry Wilson and Philip Aldrick.

Contrary to the paid cheerleaders of U.S. economy, no one is in the mood to commit to anything productive or able to consume the products (if he could) during the most tumultuous times since the Great Depression, leaving the middleman, the banks, with nothing to do.

“The problem is a shortage of liquidity – that is what is causing the problems with the banks.  It feels exactly as it felt in 2008,” a senior London-based banker told the Telegraph.

Whether the problem is a shortage of liquidity or an abundance of banks with an overabundance of bad assets, several very big banks are on the brink of failure—again.  And all the banker insiders know who is who, and who isn’t going to make it unless the money printing and bailouts increase more rapidly—and soon.

This time, the world’s no. 1, 5 and 10 ranked European banks (by assets) are in trouble, with combined assets totaling $7.6 trillion.

“Credit default swaps (CDS’s) on the bonds of Royal Bank of Scotland (no. 10), BNP Paribas (no. 5), Deutsche Bank (no. 1) and Intesa Sanpaolo, among others, flashed warning signals on Wednesday,” stated the Telegraph.

The article goes on to quote that the CDS rates on RBS paper reached record highs, Wednesday, surpassing the spike premium paid during the height of the global financial meltdown of October 2008.

So, ‘act II’ of the global financial crisis is about to begin, just as George Soros had warned.  According to Soros’ SEC 13-F (ending Jun, 30), the billionaire insider reported selling all of his fund’s banking sector shares, and showed his appetite for holding gold increased markedly.

Therefore, the question doesn’t appear to be whether the Fed will be there to save the U.S. banking system (it will), the question is whether the ECB will be allowed to copycat the Fed.  We’ll know on Sept. 12, when the German high court rules on the constitutionality of participating further in eurozone bailouts.

And a further question is: when will the central banks overtly announce more easing?  Will the ECB (assuming Germany somehow gives it the green light) and the Fed wait for something to ‘break’ before acting, or will the central bankers preempt the inevitable collapse?

We’ll find out in September and/or October.  In the meantime, there are always the black and gray swans of war (or something out of the blue) to further complicate any expectation of a direction to these markets.

Source: UK Telegraph

Get Your Money Out of Morgan Stanley—Fast!

By Dominique de Kevelioc de Bailleul

With the stock price of Morgan Stanley (NYSE: MS) inches from its Armageddon lows of Oct. 2008, whispers of the imminent overnight collapse of this U.S. broker-dealer begin to surface.  Client funds, again, are at risk.

“I’m hearing rumors that another major financial house is going to implode,” says TruNews host Rick Wiles.  In fact, the name I’ve been given is Morgan Stanley . . .

“It’s going to be put on the sacrificial alter by the financial elite.”

Beyond the evidence of a teetering stock price—Morgan Stanley’s troubles may never go away—leading to bankruptcy, if traders can glean anything from the financial activities of front-running insider George Soros, the man who warned in Jun. 2010 that the global financial crisis has entered “act II.”

According to Soros’ 13-F filing (ending Jun. 30) with the SEC, the billionaire financier reported that his fund sold nearly all shares of JP Morgan, Goldman Sachs and Citigroup—not paring back his holdings of financials, but completely dumping them.

And, as if to yell that the F.I.R.E economy is, indeed, on fire, the 82-year-old Soros also reports loading up on gold—adding a bit of poetry to Charlie Munger’s bizarre comment (1) in reference to investors who seek out gold in times of trouble.

Well, Soros’ act II has yet to crescendo to its tragic end, but “when a major global player with direct ties to the White House, Wall Street, and the banking system starts off-loading stocks and starts stacking gold, it suggests a very serious market move is set to happen,” says blogger Mac Slavo.

Adding to the speculation of a Morgan Stanley collapse, Bloomberg coincidentally pens an article on Aug. 23—the following day of the TruNews broadcast—in which the author Bradley Keoun recounts the dark days of Morgan Stanley at the height of act I of the financial crisis in 2008.

“At the peak of Morgan Stanley’s Fed borrowings, on Sept. 29, 2008, the firm reported that liquidity was ‘strong,’ without mentioning how dependent its cash stores had become on the government lifeline. . .” states Keoun.

“Neither Morgan Stanley nor its competitors in prime brokerage – Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Citigroup and Credit Suisse Group AG – disclose the size of their hedge-fund balances, leaving shareholders dependent on regulators who previously failed to rein in the risks. [Emphasis added]

But here’s where strong advice from Trends Research Institute founder Gerald Celente and former commodities broker Ann Barnhardt should be heeded.  Both consumer-friendly analysts implore investors and savers, alike, to withdraw from the financial system, warning that allocated brokerage accounts are not truly allocated. (2)

Bloomberg’s Keoun goes on to quote a former Financial Accounting Standard Board (F.A.S.B) member Adam Hurwich, who states, “It [Morgan Stanley's balance sheet] remains a black box,” referring to Morgan’s disclosure of whether allocated accounts at the firm have been re-hypothicated.

Regulators were asleep at the switch in the cases of MF Global and PFG Best, both filing bankruptcy post 2008, taking customer funds with them to the financial grave.  Why not Morgan Stanley?

“They don’t give you the information to be able to decipher whether they have changed anything,” adds Hurwich.

“Prime brokerage was presumed to be a pretty secure business, where the funding was not actually part of the liquidity of the bank,” Bloomberg quotes Frank Suozzo, president of FXS Capital LLC. “So if clients pulled their money out, the view was that money had not been lent out, so the cash would have been sitting there able to hand over. It turns out that that was not entirely correct.”

As the financial community found out in the case of MF Global, “prime brokers were able to reuse clients’ assets to raise cash for their own activities,” according to the financial crisis commission report, published Jan. 2011.

That’s a big red flag for investors to close their accounts with their brokerage firm—fast, especially accounts held at Morgan Stanley.

Why an establishment cheerleader such as Michael Bloomberg would allow an article which serves to remind investors of Morgan Stanley’s financial problems at this time may lend some credence to Rick Wile’s sources, who hear chatter about the impending doom of Morgan Stanley.

Like financial systems that could not be saved in the past, the banks must be then consolidated—that done, of course, after the bankruptcy, where the small investor gets wiped out and the ‘system’ acquires the remaining performing assets of the carcass.

The timing of the Bloomberg article is no coincidence.  Michael Bloomberg is only doing his part for the global banking cartel by tipping off that Morgan Stanley is ready for the “sacrificial alter.”  Get your money out.

(1) In early May, Munger told CNBC, “I think gold is a great thing to sow in to your garments if you’re a Jewish family in Vienna in 1939, but I think civilized people don’t buy gold.”  George Soros is a Jew, living in Hungary during the rise of the Third Reich.

(2) You can’t trust anybody and the entire system is collapsing.  What’s the takeaway from this?  It’s to make sure you have every penny in your pocket. —Gerald Celente, after losing 20 percent of his allocated brokerage account with MF Global.

“If you don’t understand what ‘get the hell out’ means, there’s not much I can do for you.” —Ann Barnhardt, after reviewing an appeals court ruling in the case of Sentinal Management Group, ruling that clients funds can be used to settle secured loans initiated through the banking industry.

Jim Rogers: Get Out of Stocks; Buy Gold, Silver and Agriculture

Wall Street’s old guard of economists tell us the U.S. economy is recovering.  However, famed commodities trader Jim Rogers disagrees.  In fact, Rogers is betting the U.S. economy tanks in the “foreseeable future” and suggests investors stay away from stocks and buy gold, silver and agriculture commodities, instead.

“This [financial crisis] is all going to end badly for the West” Rogers told Business Insider’s (BI) Henry Blodget.

Blodget pointed to University of Pennsylvania economist Jeremy Seigel’s interview with CNBC on Apr. 26, when Seigel suggested that “stocks are most attractive in over half a century.”

Rogers retorted, “That’s a remarkable statement . . . Maybe I should go out and short some stocks . . . I don’t think this is the most exciting time to buy stocks . . . I don’t own any stocks in the U.S.”  In some cases, Rogers has taken a step further by shorting stocks.

Moreover, as early as last week, Rogers told the Wall Street Journal he believes the economy in the U.S. will be bad enough to anticipates civil unrest across America.  Gross Domestic Product (GDP) and labor statistics painted as rosy, or improving, by Washington’s various departments don’t jibe with the real world—a complaint routinely raised by Rogers.  The economic numbers are “doctored,” according to Rogers, and he believes the statistics lately have been especially doctored due to an election year.

“I’m more worried about those kind of problems [rioting] in the U.S. and Europe; this is where social unrest is going to be worse,” Rogers told the Journal.  “I would suspect that, when economic conditions get worse here and get worse in Europe, we’re going to see . . . you’ve seen governments fail in Europe; you’ve seen countries fail in Europe. I suspect you’re going to see more of it [rioting], yes.

“We saw it in London; we’ve seen it in several countries in Europe in the last year or two.  Yes, I expect to see it here, too.  If you don’t, look out your window.”

Rogers hasn’t changed his mind since that interview with the Journal, and told BI the run-up in stocks since the March 2009 low of 666 on the S&P has exhausted itself, as the S&P typically leads the economy, not the other way around.  Investors of stocks will be profoundly disappointment in the coming couple of years, according to Rogers.

“The economy is going to be bad within the foreseeable future, and the markets look ahead,” Rogers said.  “I don’t see this as a great time to buy stocks at all.”

Rogers said he’s betting on gold, silver and agriculture commodities as the winners for the remainder of the decade as more and more investors realize they must jump ship on stocks and board the commodities bull market to preserve wealth as was the scenario of the 1970s and the bull market in tangibles a that time.

Long term, “I’m very pessimistic about the U.S. dollar,” and “it’s going the way of pound sterling when it lost its status as the world’s reserve currency . . . I own gold.”

If gold prices drop, Rogers said he’s a buyer, and he expects the bull market in gold won’t end until it, too, reaches a bubble sometime in “2019-21.”

Source: Business Insider, clip one (1) and clip two.

(1) Note:  Clip one was left out of the Business Insider’s presentation of the Rogers interview posted on its website.  Clip one more accurately reveals Rogers’ overarching thesis of the economic and investment climate for the future.  Clip two is the second half of the interview.  Henry Blodget represents the mainstream Wall Street point-of-view, but he also understands that the candid Jim Rogers draws a tremendous following of viewers.  So, it appears BI may have massaged the interview with Rogers through a method of omission.  Comments made by Rogers in clip one weigh more heavily among investors seeking a long-term strategy for their investments.  Comments made by Rogers in clip two expound on comments made in clip one.

Jim Rogers & Peter Schiff Agree, U.S. Treasury Crisis in 2013

Commodities guru Jim Rogers and Euro Pacific Capital CEO Peter Schiff have recently gone on the record that the next harrowing event in the ongoing global financial crisis will most likely take place after the presidential election, with the crisis in Europe spreading to Japan and the U.S. Treasury market sometime in 2013.

In recent weeks, the 69-year-old Rogers has said politics and the natural downside of the ‘business cycle’ will determine the timing of the next big drop in most financial assets. Sign-up for my 100% FREE Alerts

“This is an election year in the United States, as you well know, and there are something like 40 to 45 elections over the next 12 months, including France, U.S., Germany,” Rogers told Opalesque Radio.  “So we have a lot of elections, a lot of politicians who want to be re-elected.  So there’s going to be a lot of good news.

Rogers added, however, historical data show that the ebb and flow of business activity suggest to him that the rebound from the crushing lows of corporate profits, stock prices and GDP during the 2008-9 economic and financial collapse has run their course.

As negligible as the rebound of the economy has been, with GDP still not back to the peak of $13.1 trillion for 2008, the time has come for the next leg down, according to him.

“The overall situation is getting much worse because the debt is going through the roof for all of us,” he continued. “You should be worried about 2013, 2014, but overall, 2012 won’t look so bad.

“In America, we’ve had an economic slowdown, or recession, every 4 to 6 years since the beginning of the Republic.  So you can do the addition, by 2013 or 2014 we’re going to have another . . . we’re overdue for another recession.  And if it comes, the markets are anticipating that . . .”

Within the context of the so-called two-year ‘recovery’ that still has yielded less U.S. GDP for 2011 than was achieved for 2008, along with higher overall debt at the federal level, the downside to the U.S. dollar, and by implication a U.S. Treasuries sell off, could be severe, Rogers has said in previous interviews.  He still holds to that thesis.

“There’s going to be more currency turmoil in the next year or two. . . as these imbalances are sorted out,” he concluded.

Though Rogers didn’t mention his short position of U.S. Treasuries during the Opalesque interview, he did announce earlier in the year that he has taken a short position on U.S. Treasuries debt, citing limitations to the upside in prices (lower rates) while the Fed maintains its dominate position as the ‘buyer of last resort’, and due to waning demand, to outright decreased holdings, from foreign buyers.

Echoing Rogers’ outlook of the U.S. Treasury market is Peter Schiff.  In a telephone interview with financial publication Forbes, he said ultra-loose monetary policy at the Federal Reserve only serves to exacerbate the snap back to the imbalances Rogers spoken about in the Opalesque Radio interview.

“The more you delay it, the bigger it will be,” Schiff told Forbes, Tuesday, “so we need to raise interest rates during the recession to confront the inefficiencies.”

“We consume more than we produce and we borrow abroad, but we are never going to be able to pay them back,” Schiff continued, a conclusion that appears to have been drawn as well by the nations responsible for driving global growth for more than a decade, the BRICS.

Heads of state from the nations of Brazil, Russia, India, China and South Africa signed an agreement in New Delhi, Thursday, making way for a credit facility as a means of extending credit between the five-nation block in their own currencies, thereby bypassing the U.S. dollar for international trade.

The fourth BRICS summit is the latest in a rapid trend by developing nations to disengage from the dollar/euro reserve currency protocol.  In addition to the agreement, the five-nation block also called for reforms to the World Bank and International Monetary fund (IMF).

Since as early as 2000, Schiff has warned that the world’s producers of goods and raw materials will one day stop extending credit to the debtor nations as the debt levels become unserviceable.  That means it’s inevitable that the U.S. dollar falls further and interest rates rise to reflect the added risk of holding U.S. Treasuries.

At that time, few in mainstream media (MSM) took Schiff seriously, while some scorned him, when he warned of a dollar collapse.  But today, he has been partially vindicated.  Gold has risen sharply against the two reserve currencies, the U.S. dollar and euros, since 2000.

However, contrary to what Schiff’s pundits now say, the worst has not passed; there’s much more currency debasing to come, including a U.S. Treasury market collapse.

“All of the people who were 100% wrong [back in ‘08] are saying that everything’s okay [now],” Schiff said.  “I am telling them they didn’t solve the problem and are making it so much worse.”

According to Schiff, the U.S. Treasury market is set for a big fall in 2013, and he expects to be right once again. Sign-up for my 100% FREE Alerts

Persian Gulf Crisis Staged for Fed Bailout of European Banks

As Italian bank UniCredit hangs by a thread as the potential European version of a Lehman Brothers collapse, but many more times over, one has to wonder about the timing of other seemingly unrelated events in the Persian Gulf.  Sign-up for my 100% FREE Alerts

Newsletter writer Jim Willie Ph.D of the Hat Trick Letter told the Silver Doctors radio show that UniCredit is the bank to watch for its Lehman-like potential in the Eurozone.  A collapse of UniCredit most assuredly will trigger the feared financial Armageddon scenario within an economic block representing approximately 22 percent of world GDP, an event the U.S. and China do not want to happen.  For them, a European credit collapse immediately moves the crisis to the U.S. and China.

“So next on tap is UniCredit going bad, going bust, failing, turning to dust. And when that happens look for at least another couple Italian banks to also go bust,” Willie said.  “And when that happens look for the French banks to go bust. The three major French banks. Credit Agricole, BNP Paribas, and Societe Generale. And when that happens look for at least one or two London banks to go bust- they’re all inter-connected!”

Founder of Global Resource Investments, Rick Rule, told King World News he senses something in the wind suddenly from OPEC’s swing producer, Saudi Arabia.

“One of the major developments in the oil sector is the recently announced and official Saudi Arabian position that they were able to produce another 2 million barrels a day in case Iranian crude is shut out of the market,” Rule told KWN host Eric King. “They also stated they could identify another 500,000 to 700,000 a day, which they would be able to produce in 9 months.

“The interesting thing in that press release was the fact that the Saudis were targeting 100 U.S. dollars per barrel,” Rule continued.  “The earlier Saudi indications were $75 a barrel.  It’s fascinating that the Saudis are now interested in establishing a floor price for oil in the triple digits.”

U.S. and Russian warships cruising around the Persian Gulf, Israel pretending to be the unleashed mad dog of Washington’s strategic plans against Iran, and a lot of saber rattling—again! — from all sides, higher and higher oil prices appear to be serving as the mechanism for a worldwide tax collection effort by Washington and the Fed to bailout Europe.  And who collects the oil price tax? The Middle East.

“Aabar Investments PJS, the Abu Dhabi-based sovereign wealth fund, plans to increase its stake in UniCredit SpA to 6.5 percent through the lender’s rights offer, which would make it the bank’s biggest investor,” Bloomberg reported on Jan. 18.

That, in addition to the half-billion dollar currency swap with Europe has Fed-driven foreign policy fingerprints smeared all over artificially high oil prices.

U.S. warships raise the price of oil for its friends in the Middle East, who then help the Fed bailout European banks while providing support to the dollar.

In his essay of December 2006, titled, Hysteria Over Iran and a New Cold War with Russia: Peak Oil, Petrocurrencies and the Emerging Multi-Polar World, author William Clark explained that the Fed must somehow continue to create demand for the U.S. dollar to continue the Treasury Ponzi scheme, which may at times include the use of the U.S. military in order to continue to fund debt, deficits and military spending.  And the demand for the petrodollar is critical to maintaining artificially low interest rates, according to Clark.

What Clark may not have seen in 2006 is the dramatic collapse of the global debt Ponzi scheme.  The euro is indeed a threat to the dollar as a reserve currency, but now the euro must not be allowed to collapse overnight, a point suggested by Jim Rickards in his book, Currency Wars—a book published after the collapse Lehman Brothers of 2008.

Ironically, this leaves the Fed no choice but to bail out Europe to save the dollar, thus the UniCredit bailout scheme with the Middle East.  Surely, in future more Arab nations will pick up some of the sudden slack from China’s and Japan’s reduced exposure to Europe and the U.S. debt markets, all thanks to a windfall of higher oil revenue generated in the Middle East.

Clarke wrote in December 2006:

The petrodollar-recycling system allows the Federal Reserve to effortlessly expand global credit to enforce U.S. financial control and continue massive debt-financing to pay for U.S. military control. If petrodollar-recycling begins to break down, then financial and military control will also begin to decline. Ergo, petrodollar recycling can not be allowed to diminish as it will undermine U.S. supremacy. The major oil-producers that have expressed interest in petroeuros or a “basket of currencies” for oil transactions and thus pose the greatest threat have been Iraq (under Saddam), Iran, Venezuela and Russia. Iraq received regime change via a military invasion; Iran is the current target for economic and geostrategic reasons, Venezuela was subjected in April 2002 to an unsuccessful coup d’état with covert U.S. backing, while Russia’s political establishment remains relatively insulated from U.S. interventions. But Russia’s peripheral states are, however, subject to U.S. meddling via “color revolutions” as part of Washington’s encirclement strategy.  China remains in the background as an interested but somewhat enigmatic actor. (Bold text added)

After it became clear that European leaders weren’t going to easily come to the position of the U.S. to aggressively monetize debt with a blessing of Germany in the EU, suddenly the multi-year-long rhetorical lambasting of Iran for its nuclear enrichment plants has escalated to warships cruising the Persian Gulf–and at a time when the last thing the EU and U.S. economies need are higher oil prices.  Sign-up for my 100% FREE Alerts

Peter Schiff: Message to Gold & Silver Investors

For those losing sleep over the recent three-day plunge in gold prices, signaling an abrupt change in the fundamentals for bullion’s bull market rally, Euro Pacific Capital’s Peter Schiff said, not only have the fundamentals not changed, they’ve grown “stronger than ever!”

In his Sept. 26 Schiff Report, he stated, “In fact, the recent price declines simply adds further support for, I believe, the decision to buy gold and silver.”

Schiff echoes sentiments of $10 billion Sprott Asset Manager’s Eric Sprott, who recently reported on King World News that his firm had been stripped clean of every once of physical silver in his vaults—ranging from small orders for 10-ounce bars to multimillion dollar orders from very wealthy individuals and institution buyers.

Schiff, who’s been recommending bullion for more than a decade, said severe drops in gold and silver are mere par for the course, and that new investors should not get discouraged by these massive drops, but should, instead, buy more metal if they’re in position to do so.  And for those believing the train has left the station without you, Schiff said, it “has turned around and come back, giving you a chance to get on board.”

Harkening back to the Lehman collapse and subsequent financial crisis, which centered on the U.S., gold and silver prices plunged into a death spiral—along with stocks, commodities and overseas currencies.  Gold plunged more than 35% from its recent high, at that time, of more than $1,000 per ounce, to as low as $680.  Silver, on the other hand, got a glimpse of an end-of-the-world scenario when its price fell from more than $20 to $8.50 in days—a nearly 60% decline from the previous high.

But as we know, gold prices went on to reach new highs, nearly trebling from its crash low of 2009 to then trade as high as $1,930 as late as a few weeks ago, while the silver price soared during that same time period to a nearly six-bagger price of $49.85—all within only 26 months.

So, as long as Marc Faber’s most pessimistic of his calls (as well as John Taylor’s call) for the gold price reaching, possibly, $1,000 per ounce, this most recent swan dive drop in the metals is child’s play in comparison.

“There is an old expression in the stock market, that bull markets take the stairs up, but the elevator down,” Schiff continued.  But the precious metals’ decline this time didn’t take the elevator down, “they just fell down the shaft.”

From greed to fear, the bull market has twisted, said Schiff.  Others may tell you, we told you so; we warned you, but Schiff said to expect such comments, pointing out that such talk creates fear and doubt.  “That’s what builds a bull market; it’s built on fear; it climbs that proverbial Wall of Worry.”

So what created the big drop in prices?  Schiff said leveraged speculators were “being forced to sell.”  Stops were triggered and margin calls were raised, creating a virtuous cycle of more and more sellers, triggering more and more stops, and creating panic among the weak holders.  On the other hand, physical buyers don’t have the problems of brokers asking for more money to hold positions, he said.

“I think the catalyst that started this sell off was the announcement by Ben Bernanke that the U.S. economy faced even more significant downside risks than he believed,” Schiff explained. “Well, the reason why we’re buying our gold and silver is precisely because the U.S. economy is much worse than the Fed chairman believes, or would readily admit.”

Schiff suggested that acknowledgment by the Fed of the terrible fundamentals in the U.S. economy means “more government stimulus; it means more money printing, more quantitative easing.”

Schiff believes Bernanke is playing coy with markets—for now, and with an election coming up Helicopter Ben will come to the rescue once again.  “At the end of the day, Bernanke will do the only thing he knows, which is to print more money.”

“That’s why we’re buying gold.”

WikiLeaks drops Bombshell on Gold Market; GATA right again!

With an avalanche of ever-tantalizing news stories and upcoming nail-biting scheduled officialdom events in both Europe and the U.S. all hitting the gold market at once in September, discerning the story that could propel some distance from Jim Sinclair’s exosphere target of $1,764 in the gold price weighs heavily in favor of the WikiLeaks story and its potential explosive impact on the price of gold from today $1,900 print to Sinclair’s ultimate target of $12,000+.

Though the European financial crisis soap opera moves from Greece and Portugal to, now, Italy and Germany, shifting temporarily away from France, with Belgium’s dirty laundry on deck in case there’s a lull in the action, the WikiLeaks release of a U.S. State Department internal cables on the subject of Beijing’s plan for undermining the U.S. dollar through the gold market even trumps the Israel/Turkey potential gray-swan military conflict brewing in the Mediterranean (could ex-CIA operative Robert Baer be right about an Israeli attack in the region by the fall?).

The leaked State Department U.S. embassy cable – 09BEIJING1134, published by WikiLeaks exposes both the clandestine operations at the Fed/Treasury as well as reveals who’s been sleeping with the enemy.

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 United States 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 toward reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the renminbi.

And now we all know that Beijing knows of the gold suppression scheme, and that Washington knows that Beijing knows of the scheme.  So what does that mean for the gold price?

Zerohedge wrote:

Wondering why gold at $1,850 is cheap, or why gold at double that price will also be cheap, or, frankly, at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar’s reserve status. Putting that into dollar terms is, therefore, impractical at best and illogical at worst. We have a suspicion that the following cable from the U.S. embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24-karat pool.

So, out of the raft of news coming out from across the globe, the WikiLeaks story trumps them all.  And, of course, you won’t see this breaking story run on CNBC.

And now for the story behind the story.  A score between GATA and Jeff Christian of CPM Group needs to be settled once and for all.

Now that this smoking gun evidence of the gold suppression scheme has been entered atop an already sky-high stack, thanks to WikiLeaks, can there now be any doubt left as to who has been spewing filthy misinformation (some say malicious lies) between the combatants of a two-year-long battle between former Goldman Sachs gang member Jeff Christian of CPM Group and Bill Murphy and Chris Powell of Gold Anti-Trust Action Committee (GATA) surrounding GATA’s accusations that the COMEX has been the center of a gold price suppression scheme—a scheme which in still in progress?

But if you’ve already been following GATA’s Yeoman’s work of exposing the gold cartel’s borderline-treasonous gold suppression scheme in addition to exposing the cartel’s no. 1 apologist Jeff Christian for his errant ways, this weekend’s leaked cable should come as no real surprise—which brings us to the question of Christian’s credibility as a gold market analyst and, maybe, ultimately, of his character.

If Christian has positioned himself as an authority on the gold and silver market, how did he not draw the conclusion that something fishy was (still is) going on in the gold futures market between two banks which held monstrous-size paper short positions?  With the pile of evidence backing GATA, coming from so many credible and official sources, we wonder whether Christian had ever heard of the term Occam’s razor?  Or does he suffer from the dreaded “normalcy bias”?  Can he, truly, be that naïve?

Are we to believe that Christian actually could be waiting for an admission of guilt by a pack of sociopath white-collar criminals, or is he that unsophisticated or incompetent? or worse?

Read his Caine Mutiny’s Lt. Tom Keefer testimony at the CFTC hearing of March 2010.

Christian’s sophomoric assumptions on several key issues discussed at the CFTC hearing smacks of either a serious case of Dennis Gartman-itis, or demonstrates the dangers of relying upon the judgment of a public-school graduate deficient in his knowledge of basic ancient and medieval philosophy.  The principle of Occam’s razor, in this case, points to serious questions to Christian’s loyalty to the gold community, its hard-money advocates and the U.S. Constitution itself.

But don’t be surprised if Christian is still asked to appear on Bloomberg or CNBC as a gold “expert” who stands ready to offer his advice for protecting your money.

However, to gain insight into the core issues surrounding gold (and silver) and the reasons why its price must be suppressed by the Fed, GATA’s Web site, www.gata.org, offers the explanations as well as provides a treasure trove of information to help you navigate the ongoing collapse of the West’s fiat currencies.

Marc Faber turns “Ultra-Bearish”; what to do now?

After calling for a bear market in stocks two weeks ago, the publisher and editor of the Gloom Boom Doom Report Marc Faber has become more bearish on the outlook for the world’s financial markets by the minute.

Even the bull, Barton Biggs, who said stocks are at a bottom when the Dow was closer to 11,000 than 10,000, equivocated on his bullish stance on Bloomberg, yesterday.  So, even the bulls are questioning their logic of stock valuations during the solvency crisis in Europe and the contagion it will most assuredly spread to U.S. and Asian markets.

“Financial conditions are today worse than they were prior to the crisis in 2008,” Faber told MarketWatch earlier this week. “The fiscal deficits have exploded and the political system [in both the U.S. and Europe] has become completely dysfunctional.”

“Dysfunctional” may be the best word to describe revolving bailouts and further debt creation by the world’s Western debtors, certainly as far as creditors are concerned.  And the biggest creditor of them all, China, has repeatedly expressed outraged at the handling of the sovereign debt crisis in Europe and the U.S., voicing at times their concerns publicly of the future purchasing power of its $2 trillion of dollar-denominated assets.

No too surprisingly, the Chinese have opted to skip-out of the annual meeting of central bankers at Jackson Hole, Wyoming, slated for August 27, according to a Reuters report, released Friday.

“China will skip next week’s annual conference of central bankers in Jackson Hole, Wyoming,” according to Reuters.  But the news agency couldn’t get a comment from Beijing as to the reason for the no show, it stated.

“It’s a suicidal investment to own 10-year or 30-year U.S. Treasurys,” Faber said of U.S. paper, adding that “U.S. government bonds are junk bonds.”

If Beijing, who holds $2 trillion in dollar-denominated assets, is upset with the West’s devaluation of the future purchasing power of those paper assets, Faber’s point that if U.S. paper is indeed junk, than the preservation of capital should be priority one to every investor during these troubling times, leaving capital appreciation for a later time when central bankers finally must give up on the debt pyramid scheme, and stop the race to the bottom in the currency devaluation war.

For now, Faber’s recommends the safest of all financial vehicles, gold, taking a page from history as his guide for investors to survive the coming catastrophic endgame to this financial crisis.

“Physical gold in a safe deposit box is the safest,” Faber added. “Forget about huge capital gains. I would look at capital preservation. I want to preserve my capital.

Jim Rogers: Take refuge in Real Assets and Gold

Speaking with The Economic Times of India, Commodities King Jim Rogers, of Rogers Holdings, said he’s betting on gold as he expects Europe’s member nations  to receive downgrades of its sovereign debt.  However, the U.S.-born 68-year-old Singapore resident is not adding to his position in the yellow metal at this time.

“Governments all over the world are debasing currency; yesterday, the U.S. Federal Reserve said it will continue to debase their currency. The more the governments will debase paper currency, people will take refuge in real assets, and gold is one of them,” he said.

Rogers has continuously stated that Federal Reserve’s policy to maintain low interest rates has pushed food and energy prices in emerging countries much higher as a percent of personal income than their counterparts’ incomes in the developed world, and that will continue, in his opinion.

As Asians flee to protect their savings from higher food and energy prices, many have taken refuge into gold.  According to UK-based gold consultants GFMS, China, alone, is expected to import 400 metric tons of the yellow metal—and that’s on top of China central bank’s enormous apatite for the yellow metal.

The world’s financial community now awaits the next shoe to drop in the continuing saga in Europe, now that the budget drama out of Washington has been knocked off center stage.  The turmoil in the Italian bond market has prompted the ECB to step in to buy Italian sovereign debt for the fourth straight day in its effort to prevent another collapse in another much bigger member of the EU.  Asian buyers expect the ECB to continue debasing the euro through another wave of money printing, leading to new rounds of food and energy price rises down the road.

And, as the bond vigilantes move from one debt market to the next, with rumors of impending attacks on French bonds swirling, Rogers is looking ahead to the UK and its atrocious debt loads as a likely target in the future.

“The U.S. has been downgraded, and countries like the UK that have very high debt will have to be downgraded too,” said Rogers. You can’t have the UK as triple ‘A’ and the U.S. as not a triple ‘A’.”

Like many on the Street, Rogers wonders why Moody’s and S&P have not mentioned the UK for possible downgrade.

“You need to be asking S&P or Moody’s why they haven’t got around doing that. I don’t think, the European countries deserve their rates,” he continued.

Irrespective of the timing of the inevitable calamitous events in Europe, Rogers expects the global financial crisis to roll along from one nation to the next, with each of its populations running to gold as a place to store savings during the latest stage of the global meltdown.