This Oddball Indicator Has Gold Bugs Salivating

By Dominique de Kevelioc de Bailleul

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

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

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

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

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

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

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

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

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

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

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

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

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

Gold Market Hysteria/Propaganda Approaches Wartime Pitch

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Finally, WSJ Reports of Suspicious Activity in Gold Market

Better late then never for a mainstream financial publication to notice what seasoned professionals of the gold market have known for decades—the gold market trades in mysterious ways.  Sign-up for my 100% FREE Alerts

“The CME Group Inc.’s Comex division recorded an unusually large transaction of 7,500 gold futures during one minute of trading at 8:31 a.m. EDT,” Wall Street Journal’s Tatyana Shumsky penned in an Apr. 30 article, titled, Gold market shakes off $1.24 billion ‘fat finger’.  “The sale took out blocks of bids as large as 84 contracts in one fell swoop and cut prices down to $1,648.80 a troy ounce. The overall transaction was worth more than $1.24 billion.”

Shumsky then writes that there is speculation among traders of a ‘fat finger’ in the market place that day—maybe a mistake, she reckons, maybe an “input error.”

Instead of calling up Bill Murphy or Chris Powell at Gold Anti-Trust Action Committee (GATA) for their take on such a peculiar trade, the gumshoe hound reported comments made by Citi traders, instead.

A ‘fat finger’, “or a Gold Finger as it might be known in the bullion market,” she quoted Citi traders in their note to clients regarding the incident.

To her credit, however, the determination of Shumsky to get to the bottom of this mystery didn’t lead her to solicit a comment from JP Morgan’s Blythe Masters.  There, Masters most likely would have replied that she was shocked, shocked at such shenanigans would ever take place at the CME establishment.

“One indicator that the transaction was a mistake was its size,” Shumsky brilliantly surmised.  “At 750,000 troy ounces, such large trades are rarely conducted amid very thin trading volumes. Monday trading was expected to be quiet as market participants in China and Japan are out on holiday and many European traders are preparing for a holidays there.”

Like a city beat reporter who daringly suggests that men showing up at a bank on a holiday to make a deposit through the back door at 3 a.m. was apparently fishy, Shumsky captured the event eloquently so that the reader could make up his own mind of the event.

“No one who has the account size and the money to trade thousands of gold contracts would do it in one transaction, that’s just stupid,” WSJ’s Barney Fife quoted a trader.  “The collateral required to purchase 7,500 contracts is about $75.9 million in cash that the trader would have deposited with his broker.”

In her dogged determination to collect varying opinions of what happened, Shumsky met up with a seasoned Wall Street pro, where she then finds the plot thickening.

“Still, not everyone agreed Monday’s slip in gold was caused by a keystroke error,” she stated.  “Chuck Retzky, director of futures sales for Mizuho Securities USA, said that silver prices suffered a similar leg down at the same time as gold, tumbling 35 cents to $30.805 a troy ounce, but other markets like Treasurys, currencies and stocks were unperturbed.”

Now that uncovered anomaly is something Jack Anderson would have offered effusive kudos to the meticulous WSJ reporter—a budding Junior Mogambo Ranger, of whom most certainly Richard Daughty would be proud.  Sign-up for my 100% FREE Alerts

Smart Money Banking Big on Gold & Silver Prices to Soar

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Warren Buffett’s Latest Insurance Con

In an article authored by famed investor Warren Buffett, titled, Warren Buffett: Why stocks beat gold and bonds, he attempts to dissuade investors from accumulating gold (again) as insurance during the ongoing financial crisis.

Cleverly riddled throughout his ‘sales pitch’ for keeping with paper assets at this time, essentially, Buffett deploys the old “Feel, Felt, Found” technique of persuasion on his readers, in the hopes of instilling confidence through his past performance, aided by his Lt. Columbo-like charm and icon status.  Sign-up for my 100% FREE Alerts

Here’s how it works:

Buffett begins his pitch against the yellow metal with, “ . . .  gold . . . currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful).”

You see, Buffett wants you to know that he knows how you feel.  He validates your fear.  But . . . now for the ‘but’.

“True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production,” he continued.  “Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.” Emphasis added.

He continued his article by guiding the reader to his understanding that others felt the same way about gold, but after they found that the Berkshire method of investing outperformed very well throughout 46 years, they turned to him, Warren Buffett, the prudential ‘oracle’, the ‘you’re in good hands’ master of money.

In the above quote, Buffett demonstrates that he doesn’t really know how investors feel about the U.S. government and Fed, or he dismisses the fear altogether, as it is the threat to his dollar-based empire.  Does he want to end the Fed and stop the madness, which is the very root of investor fear?

Polls show that the American people don’t trust the Fed, or the U.S. government.  So, Buffett asks you to trust him.

Moreover, he neglects to point out that other billionaires, central banks and ‘smart’ money don’t hold gold for its industrial and decorative utility; they feel that they should own gold because it can be used as money, whose demand for it, while currencies are actively debased, doesn’t have a limit, just as there is no limit to governments debasing currencies.  Why, then, does the Fed store 8,150 tons of gold for the U.S. Treasury?  Why did the EU ask Germany to back the EFSF with German gold? Aren’t they listening to Warren Buffett?

Though Buffett states earlier in his article, “the dollar has fallen a staggering 86% in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 did at that time,” he fails to alert the reader to the connection between the gold price and the dollar’s drop in value during the last 46 years.

Sure, the correlation is no where near a lock-step rise in the gold price as the dollar dropped in value, but gold investors understand the myriad of reasons for that—which includes central bank collusion to ‘manage’ its rise, as former Fed Chairman Paul Volker (1979-1987) laments his remissness during the dollar crisis of the 1970s.

Regarding the dollar’s 86 percent decline in value since 1965, hasn’t Buffett seen massive balance sheet expansions of the Fed, BOE, BOJ, ECB, PRC’s central bank and the SNB since the beginning of the financial crisis?  Hasn’t the Fed indicated that ZIRP could be extended into the year 2014?  What will be the extent of the latest dollar devaluation during this decade against the value of the dollar of 1965?

In essence, Buffett provides the reader with the bum’s rush into having you believe that he knows how you feel, when, in fact, he doesn’t know—or doesn’t want to address the more salient point for owning gold.  Maybe, along with the Fed, he too, is in fear of opening a can of worms to his own argument against holding the yellow metal.

His fortunes are tied to the Fed’s continuation of the dollar-debasement scheme, an old scheme from which he has profited smartly, along with the money center banks—at the public’s expense, not at his expense.

And speaking of eternity (in reference to the above Buffett quote), no one has suggested that gold accumulators hold the precious metal longer than they deem necessary, so why the talk of the long run?  Some investors will hold some gold for eternity (and should), but the point of long-term investing is a specious one for many old hands and newcomers alike to the gold market.

Moreover, gold’s track record of preserving wealth is a bit longer than Buffett’s 46 years of performance, by approximately 3,000 years.

Isn’t gold really an insurance against Buffett’s paper insurance empire, which, by the way, had to be bailed out by the taxpayer?  Gold investors didn’t need a bailout; they’re not connected to Washington.  That’s why they hold gold.

Shouldn’t Buffett know his audience (customer), an audience of many politically and financially repressed retirees who don’t have time for the long run?

Investors have been, as Jim Rogers has recently said, “forced to own real assets” while the Fed deprives retirees, especially, of a market-clearing interest rate for their savings.  Can Buffett still imagine what it must be like to live like Jim Rogers, telling it like it is, instead of pitching nonsense for his own self-centered survival and legacy?  His entire identity was saved by taxpayers, and he’s still talking the same game.

Buffett may have forgotten that it was the taxpayer who took on the roll of AIG’s reinsurance policy, not the other way around, giving true meaning to The Black Swan author Nassim Taleb’s statement, “We’re all blind to rare events and routinely fool ourselves into believing we can predict risks and rewards.”  Touché.  Buffett grossly under-priced risk, and that’s his job.

“I don’t want to spend too much time on Buffett. George Soros has 2 million times more statistical evidence that his results are not chance than Buffett does. Soros is vastly more robust,” said Taleb, in response to a question regarding Buffett’s investing performance.  “I am not saying Buffett doesn’t have skill—I’m just saying we don’t have enough evidence to say Buffett isn’t doing it by chance.”

A snapshot of financial history, between 1946 and 2008, or 62 years, could easily suggest to a statistician that Fed money creation during that period, as well as the demographic trends associated with baby boomers living out their lives staring in 1946 (through 1960), may have more to do with Buffett’s savant-ish buy-smart-and-hold investment strategy than his brilliance for assessing and quantifying ALL risk throughout his various long-term holding periods, as Taleb implies.

In his book, The Black Swan, Taleb reminds readers of the story of Long Term Capital Management (LTCM) and its demise due to the unforeseen event of a crisis in the Thai baht in 1997.  The collapse of LTCM prompted the Fed to quickly bailout the financial system before a Lehman-like event occurred.

At the helm of LTCM were two Nobel Prize laureates who are quite familiar with the Black Swan.  In contrast, Buffett, not only ignores gold’s vital role within the financial system, he ignores his own shortcomings.  Pure hubris.

In a somewhat similar manner, Buffett’s empire was saved by TARP, and now he has the nerve to advise investors to roll the dice again on his paper promises—and just in time, too, for the European crisis to spread to the U.S. in the not-so-distant future.  Holders of gold are betting Buffett will need another bailout, but he doesn’t see that, just as he didn’t see the crisis that necessitated the first one.

“The inability to predict outliers implies the inability to predict the course of history,” Taleb wrote.  At 81-years, Buffett may not be around to pay off on his bets.  It’s been quipped, “The goal in life is to pass on while the last check you write bounces.”  Is that the Buffett personal endgame to the endgame.

“Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See’s peanut brittle,” concluded Buffett.   “In the future the U.S. population will move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.”  Emphasis added.

Correct, Mr. Oracle.  It’s that little bit about “exchange” that has people worried. With what?  Your Berkshire shares denominated in dollars, or See’s peanut brittle?  Please don’t pass off the obvious as some kind of profound wisdom.  Isn’t Buffett making the case for gold with his cute ‘See’s peanut brittle’ remark?

But the one-trick buy-and-hold aged pony doesn’t see that either, or has Buffett made his latest installment to the cabal with his latest ‘advice’ in return for a tip about the kibosh of the Keystone Pipeline?  His railroad looks like a mighty fine investment right now.

Maybe Taleb is right.  Buffett sure is one lucky guy.  Sign-up for my 100% FREE Alerts

Gold Price: Lord Haw-Haw Dennis Gartman announces “Death of a Bull”

Timing gold purchases is quite often very difficult, even for the so-called pros.  So if you think you don’t have what it takes to trade among the best, don’t feel bad, even the ‘pros’ get it wrong.  Sign-up for my 100% FREE Alerts

Taking Virginia-based economist and publisher of the Gartman Letter, Dennis Gartman, for example.  His track record for forecasting gold prices is so bad that he’s become known as the latest contrary indicator—a ‘professional’ punter, if you will.

Moreover, it’s been suggested that the reason for Gartman’s subscription base is to get fast-track knowledge of Gartman’s trade so that a trader can take the other side.

Just last week, Gartman told Bloomberg News, “we are out of gold” as of Monday (Dec. 12) and “the beginnings of a real bear market, and the death of a bull.”

Sounds dreadful, doesn’t it?  So what should gold holders do?  Well, let’s see how the advice of the gold market’s Lord Haw-Haw panned out for investors during previous corrective phases—which, by the way, are those very times when buying gold makes more sense in a secular bull market.

“I feared the whole financial system was coming to a halt, and you need a little gold in that case,” Gartman told Bloomberg News on Nov. 3, 2008.  “I doubt it will anymore. But it sure felt like it a month ago. There’s no value in gold now.”  (See chart, below.)

Three weeks later, on Nov. 25, Gartman didn’t change his mind; he got more bearish when he should have been a raving bull!

“We are short of gold,” he said in a Bloomberg interview. “We shall always sell rallies such as these that retrace as classically as this market has.”

As the market continued to rally, Gartman became ever more aloof, stating on November 16, 2009 that there was, indeed, “a gold bubble” and anyone thinking otherwise is “naive.”

Apparently, ‘Mr. Gold’ James Sinclair of JSMineset hasn’t been a long-term subscriber to the Gartman Letter.  Eight weeks earlier, Sinclair saw gold for what it is: a hedge against currency devaluations.

“The carry trade has dropped the dollar as a currency of choice,” Sinclair told Bloomberg Radio in a Oct. 7, 2009.  “Gold is competition to currencies,” and added that he expects gold to reach $1,650 per ounce by the first quarter of 2011.  Sinclair was off by five months, as gold soared during the summer of 2011, reaching his $1,650 price target in August.

Back to Gartman:

Somewhere between the dates Nov. 16, 2009 and May 18, 2010, Gartman became to think, maybe, it was he who was naïve about the gold market, jumped back into the “bubble” at some point during the six-month period, then proclaimed to Reuters on May, 18, 2010, “We want out and are heading for the sidelines.”

Now Gartman tells us gold is done.  Finished.  The Fed is done bailing out banks on both sides of the Atlantic and a deflationary collapse is coming.

Apparently, others, too, have noticed Gartman’s poor record of calling bull market tops.  Didn’t Marc Faber make reference to these misguided souls in his interview with Financial Sense Newshour?  See BER article, Marc Faber Fears Gold Confiscation.


“In August 2011, Gartman said that gold was the biggest bubble of our lifetime. Inconsistently, only last week, Gartman said on CNBC that he is ‘long gold’ and has been for ‘six or seven months’,” zerohedge’s ‘Tyler Durden’ wrote.

“Gartman’s short term calls on gold and silver have been wrong more often than not in recent years. He tends to turn bearish after gold has already experienced a correction and is close to bottoming.

“Those wishing to diversify and add gold to their portfolio will use his call as a contrarian signal that we may be getting close to a low in this most recent sell off. Our advice is to ignore gurus, price predictions and noise – up and down – and focus on the real fundamentals driving the gold market.”

The obvious question, therefore, is: Why subscribe to the Gartman Letter while others steeped in the gold market have gotten it right?  One doesn’t have to pay for some good advice.  Just point your browser to King World News and listen to Eric King’s interviews with the gold market’s real McCoys, or read James Sinclair’s blog.  Sign-up for my 100% FREE Alerts

Wow! China Gold Imports Spike 4,000% y-o-y

UK-based International Business Times reports China’s gold imports spiking 50 percent in October from September, and soaring 4,000 percent from October of a year ago, to an all-time single-month record high of 85.7 tons.  Sign-up for my 100% FREE Alerts

Though India’s anticipated record gold imports of a 1,000 tons this year could slow due to signs of slowing jewelry demand from a recent 20.3 percent crash in the rupee, since August, investors can no doubt count on China to, not only take over the gold market slack, but soon-to-dominate the New York-London gold cartel

As a reminder to evolving drama in the gold market, WikiLeaks exposed China’s plan to break from its sadistic recycling of trade surpluses into U.S. Treasuries, a shift in strategy by Beijing that’s prompted other Asian nations to follow suit.  See BER article, WikiLeaks Drops Bombshell on gold Market, GATA right again!

Source: U.S. embassy cable – 09BEIJING1134

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 the promotion of the “internationalization” of the renminbi has noticeably accelerated this year.  On a year-over-year basis, the amount and rate of increase of gold purchases by the People’s Republic of China is no less impressive than the $3.2 trillion of foreign reserves slated to be deployed by Beijing.

IB Times quotes Credit Suisse analysts Thomas Kendall, who sees “Chinese imports of the yellow metal hitting 470-490 tonnes for the full year, up from last year’s 245 tonnes,” a near-double spike in volume anticipated at the close of 2011.

And it appears that the Chinese are patient when accumulating gold, outside of its steady purchases from its own China-based mining industry, buying on opportunistic dips created by periodic hedge funds selling.  In fact, the notorious sell offs in the gold market plays into the hands of the masters of Sun Tzu (1), as September’s swoon from one large hedge fund manager provided attractive prices for Beijing’s rapid gold accumulation program.

“Analysts said the [gold] buying, led by emerging market central banks intent on diversifying their growing foreign exchange reserves, helped explain gold’s rebound from a low of $1,534 a troy in September as large hedge funds such as Paulson & Co were forced to sell some gold to cover losses elsewhere,” stated the Financial Times of London on Nov. 17.

After dominating the world economy in production and exports of the past two decades, Beijing’s next Mao-like ‘Great Leap Forward’ enlists 100s of million of China’s middle class in a joint venture with its central bank to now wrest control of the gold market away from New York and London.

As the world witnessed the powerful rise of China, post Tiananmen Square, the power of 1.3 billion Chinese, encouraged and mobilized by a centrally-commanded political structure to achieve an objective vital to its national security can produce awesome results.  As the WikiLeaks cable exposes, today, Beijing is out to break the gold cartel with its awesome population might.

Since 2002, after lifting the 53-year ban on gold ownership under Mao Zedong, the Chinese have eagerly scooped up gold coins and jewelry at rapid rates, to numbers which now rival India’s colossal demand for the yellow metal.

Forbes Magazine reported in March, “Believe it or not Ripley! The People’s Bank of China (PBOC) recommended yesterday that 1 billion Chinese consider buying gold as a hedge against inflation and to preserve values in a world where currencies can fall. . . . Wow! Be like the Fed telling you to buy oil stocks or crude oil futures due to expectation higher gasoline prices this summer.”

According to the World Gold Council, total gold demand in the PRoC will reach 750 tons in 2011.  In the third quarter, consumer demand for the precious metal continued to soar, led by a 24 percent increase in demand of 60.2 tons of gold bars and coins, from last year’s third quarter total of 48.5 tons, while demand for jewelry rose 13 percent.

Front-running China’s demand

Frank Holmes, contributing editor for Forbes Magazine penned an article, today, titled, Central Bank Appetite And The Monetary Case For $10,000 Gold.  Holmes sees what the Chinese see: a tsunami of money creation coming out of the U.S. and the ECB, whose combined currencies comprise approximately 88 percent of all central bank reserves.

In the Forbes article, he quotes long-time friend and founder of Goldcorp’s Silver Wheaton, Frank Giustra:

The bottom line is that the money needed to bail out Europe and to fund America’s spiraling debt and future unfunded obligations is in the tens of trillions. IT DOES NOT EXIST.

It has to be created by printing money in massive quantities, and despite all the rhetoric you will hear against such policies, in the end it’s the path of least resistance. Printing money is an invisible tax on savings, much easier to initiate, than, say, raising taxes or cutting back on services and entitlements.

Under the Holmes scenario, which, incidentally, has become an ever-increasingly common conclusion, drawn by many well-respected analysts, the gold price could move as high as $10,000 per ounce in coming years.  That means: the dollar and euro are expected to erode significantly in purchasing power during that time period.

As far as the question: when is a good time to buy gold?  Stephen Leeb, author of Red Alert: How China’s Growing Prosperity Threatens the American Way of Life, has researched China and its strategic initiatives for the coming 20 years.  According to him, just jump in and wait, because a few hundred dollars here, or there, won’t amount to much in the long run.

“So how low gold will go here is literally meaningless,” Leeb told King World News on Monday.  “My advice to investors is don’t try to catch a bottom and be a hero.  It could happen any time.  It could be happening as we speak, it could be happening today.  But it’s really irrelevant.  Let’s say gold is at $3000, $4,000 or $5,000 in three or four years, which I think is very, very likely–are you really even going to remember that it went to $1,650 or $1,550?  No.”

(1) From Wiki: The book was first translated into the French language in 1772 by French Jesuit Jean Joseph Marie Amiot, and into English by British officer Everard Ferguson Calthrop in 1905. Leaders as diverse as Mao Zedong, General Vo Nguyen Giap, Baron Antoine-Henri Jomini, GeneralDouglas MacArthur, Napoleon, and leaders of Imperial Japan have drawn inspiration from the work. The Art of War has also been applied to business and managerial strategies.

Marc Faber Fears Gold Confiscation

Aside from the cherished and entertaining Faberisms deployed from time to time in his fight to preserve the truth in front of television audiences controlled by a media-based establishment propaganda machine, Marc Faber also demonstrates why he’s the go-to man for clarity and thoughtful insights in the midst of today’s Orwellian headache.

Speaking with FinancialSense Newshour’s (FSN) James Puplava on Wednesday, Faber, the editor and publisher of the Gloom Boom Doom Report discusses a range of topics, from geopolitics, to freedom and tyranny, to his concerns of people living in an age of central bank monetary cannons gone completely rogue.  He also touched on one of his favorite asset classes, gold, and the third-rail subject of interest to every gold bug: government confiscation.  Sign-up for my 100% FREE Alerts

Note: James Puplava’s Web site is loaded with some of the most informative interviews from the brightest minds assembled on the Internet.  See its audio archived interviews.

As far as how high the price of gold can go, it depends upon who has control of the printing presses, according to Faber.  Right now, he said, the power hungry in Washington won’t let gold bugs down, as each sign of a lurking systemic collapse or stock market meltdown has been propped up by the Fed.

“If I could show you a picture of Mr. Ben Bernanke and Mr. Obama, then I would have to say that the upside is unlimited,” said Faber.

And the downside risk to gold rests on the shoulders of central bankers, as well, as the Fed, and now the ECB, will go to any length to feed the global financial system with creative and backdoor credit expansion mechanisms.

“In my view the downside exists if money printing by government is insufficient to revive or maintain credit growth at this level and you have a credit collapse,” he said, and also noted that competing asset classes would most likely fall more, thus retaining gold holders purchasing power during a bona fide deflationary collapse.

But, first, the globe will undergo roaring inflation, according to Faber, then, second, the Robert Prechter, Gary Schilling and David ‘Rosie’ Rosenberg deflationary spiral scenario will play out.

“One day there will be a credit collapse, but I think we aren’t yet there.  Before it happens they’re going to print,” Faber speculates.  “And when printing as it has done in the last 12 years in the U.S. leads to discontent populations, because when you print money then only a few players in the economy that benefit, not the majority of households.”

However, Faber warns that the gold market’s extremely volatile, a normal symptom of a fiat-backed financial system inducing the public into schizophrenia—of clinging to the familiarity of a 67-year-long financial system, moving to periods of fearing total loss at the currency graveyard—will chase investors out.

“A 30 percent correction or 40 percent correction cannot be ruled out, but as I maintain, again and again, I’m not going to go and sell my gold,” Faber said forcefully, as he explained that owning gold is should be viewed as the ultimate insurance policy to cover financial calamity, a viewpoint shared by famed Dow Theory Letters’ Richard Russell—another periodic guest of FSN.

Whether the gold price is in bubble territory, as a few prominent analysts claim, Faber doesn’t see it that way, at all.  In fact, he said, very few people own it or talk about it.  History clearly demonstrates that every bubble will suck in the very last investor before collapsing under its own weight.

Besides, the powerful propaganda machine, which endlessly repeats the party line of a system predicated on a fiat system of dollar hegemony, will not allow cheerleaders of the gold bugs to expend too much airtime away from Wall Street advertisers and obvious shills (to the trained eye) of CNBC, Bloomberg and other ‘mainstream’ media.

So far, the propaganda has only delayed the inevitable rush into gold—the next and longest stage of the bull market.

“I have one concern about gold.  I was recently on Taiwan and South Korea, at two large conferences, nobody owned any gold,” Faber said.  “Gold is owned by a minority, even in the U.S..  Most people in the U.S. have no clue what an ounce of gold is or looks like and so forth.  The same in Europe.”

But as the ‘wealthy’ begin to acquire gold, the chasm between the ‘rich’ and poor will widen substantially, not just between the 1 percent and the rest, but between the upper 10 percent and the growing-poorer middle class.  That’s when the democratic process turns ugly, morphing from a society of rights to a nation ruled by a tyrannical banana republic political dynamic.  See FSN interview, Ann Barnhardt: The Entire Futures/Options Market Has Been Destroyed by the MF Global Collapse.  Or transcript.

Populist political leaders vying for votes from the masses will opt to score easy points with the 90 percent have-nots at the expense of the haves, with draconian taxes on assets such as gold and silver held by the haves, not just through taxes on capital gains, but maybe even through a wealth tax on the holdings.

“This is what the tyranny of the masses can do,” Faber explains.

“You can make it, advertise it to the masses by just taking away from a few people, he added.  “I’m worried most about is the case of gold, not the price; that I’m not worried . . . but I’m worried about the government taking it away.”

The interview moves on to the discussion of the bull rally in gold and silver.  After 11 years of continuous gains in the price of gold, why, then, do so few investors hold the metal?

Faber explains that there remains too many deflationists holding to their thesis of a tumbling gold price, though, as Faber suggests, there has been no factual evidence to support the argument since the pop of the Nasdaq bubble of 1999.

What deflationists point to as proof of their contention, declining housing prices and stock prices, are really manifestations of inflation moving out of those asset classes into others, such as commodities, precious metals and overseas assets, of all kinds.  Inflation, Faber has stated in the past, doesn’t move all asset prices up simultaneously.

“I don’t hear about gold.  I lived through the last gold bubble between 1978 and January 1980.  The whole world, whether you were in the Middle East or in Asia or Europe or in America was trading London gold, buying and selling every day,” he recalls.  “This has not happened yet, and it hasn’t happened.  Your friends, the deflationists, have been telling people that gold will collapse to $200 an ounce for the last 10 years and that’s it was in a bubble.

“[They] said it [gold] was in a bubble at $500; they said it at $600, and they’re still maintaining it.  So a lot of people they don’t own it; they bought it and sold it again.  But in the meantime, gold has moved into sold hands.

“In my case, I’m not going to sell my gold unless I have to.  In other words, everything else is bankrupt, bond market, stock market, cash and real estate.”

Faber also points out, even though the price of gold appears to look like and quack like a bubble duck, with the price of the yellow metal sporting gains of 700 percent since the year 2000, the monetary base and credit creation by the Fed has been so large for so long, the gold price has much more room to move higher to reach ‘fair value’.  See Goldmoney Founder James Turk’s analysis on this very point: BER article, Goldmoney’s James Turk, $11,000 Gold Price.

“I can turnaround and say, look if I consider the price of gold, an average price in mid-1980s, then we take $400 or $450, or whatever it is,” Faber explains, “and we take the monetary base at that time; we take the international reserve; we take into consideration that China hasn’t really begun in earnest to open up; and we haven’t had this wealth expansion in emerging economies, and so forth and so on.  Then, I can maintain, well, actually the gold price is not up; it’s just the price of money, or the value of money, has declined so much against a stable anchor.  So I don’t think that we’re in a bubble stage.”

For the newcomers to the gold market, Faber stresses, “Don’t buy it on leverage.”

Reiterating his previous comments during the interview, Faber leaves the FSN listener with his overriding observations of a U.S. government (other Westerner countries, as well) that shows signs of eventually taking the next steps in its fight to maintain a hopelessly broken political and financial system: confiscation, not necessarily though a highly unlikely and dangerous door-to-door search of proof of non-paid taxes on a citizen’s bullion stash, but through confiscatory levels of taxation and possible criminal penalties to those who daring to escape the Marxist or Fascist regime’s grip on power over its population’s wealth.

“My only concern with the gold insurance is government will take it away,” Faber concluded.  “That is my only concern.  I’m not concerned about the price.

“I also have a concern generally speaking about our capitalistic system.  For sure people with assets, they will be taxed more heavily, that’s for sure.”

Gold Price to ‘Double’ in 2012, says Guru

Get the checkbooks out, because the flight into gold is about to commence, says economist and NY Times best selling author Dr. Stephen Leeb.  But a liquidity crisis sell off in gold may provide that opportunity, first.

The dramatic move by six central banks on Wednesday to lower dollar swaps rates flashed a big red light to markets that liquidity, which has been drying up between banks in Europe, had become acute and created the risked of another 2008 Lehman-like meltdown event, taking the U.S. banks along with Europe’s down the path to Armageddon.  Sign-up for my 100% FREE Alerts!

“There are liquidity concerns right now.  I think the world, and in particular Europe, really does have a liquidity problem,” Leeb told King World news on Monday.  “If Europe has a liquidity problem that obviously has the potential to affect everybody, especially the U.S.”

Contrary to claims made by U.S. bank executives and analysts, featured endlessly on television programming (especially BofA’s cheerleader, Dick Bove), that U.S. banks are only marginally exposed to European sovereign debt defaults and could weather the storm, advisor to the IMF, Robert Shapiro, told the BBC that nothing that analysts such as Bove have said about the low possibility of a contagion in the U.S. could be further from the truth.

“If they [EU] cannot address the financial crisis in a credible way, I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system,” said Shapiro.  “We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom; it will spread everywhere because the global financial system is so interconnected. [emphasis added]

In fact, one could argue that the Panic of 1907, which created systemic collapse on both sides of the Atlantic following the banking system collapse in the U.S., serves as a fine example of what would most likely happen to U.S. banks if Europe’s financial system collapses, as a higher degree of interconnectedness between many more banks between the U.S. and Europe exists today.

Following the announcement of Wednesday, initially, gold and stocks soared on the news of the central bank coordinated effort to ease the liquidity (ultimately solvency) strains, but, not unlike 2008, gold has since come under pressure.

According to Leeb, the weak hands of bankers need to raise capital, which leaves the most liquid asset they’ve got to raise quick cash, gold.  But not to worry, said Leeb, the snap back to higher gold price could be as fierce as it was in 2008.  He, instead, suggested preparing for the volatility lower in the price of the yellow metal prior to its glorious “rubber band” launch higher.

Don’t fight the inevitable volatility, instead, embrace it as fact of life during the bull market in gold, according to Leeb.

“We did see a similar event back in 2008 where gold dropped on liquidity needs,” he said, “but once central banks got their act together and once liquidity was flushed into the system, gold took off like a rocket ship.  So you just have to expect this in the kind of world we are in.

“This is the kind of world that is consistent with a very powerful and persistent bull market in gold and it will carry many, many times higher than the gold price is today.  But those very conditions are going to be conditions that do lead, from time to time, to liquidity crises.”

Many street-smart observers of the European drama suggest that the ramifications of a sovereign debt and banking system collapse are too unimaginable for political leaders to allow another Lehman, so the crisis will be resolved, one way or another, even if it means breaking treaties or progressing toward a plan in an undemocratic and authoritarian-like way.

But, if Europe does falter, count on the Fed to step in—to do the right thing.

“I think eventually they will do the right thing,” Leeb speculated.  “I think that if they don’t do the right thing, we will.  It’s a lot easier for the US to act as a single entity than it is for Europe to act.

“One way or another there has to be money printing.”

Leeb’s advice on the possibility of a gold correction as a direct result of a failure among Europe’s political leaders in their effort to flood of the financial system with a ECB printing press of euros is to prepare for the event, psychologically and financially.

“I can say this, right now is no time to back out of your gold position.  I mean gold going down is telling you why it’s such a good investment,” Leeb explained.  “It’s is literally being used as liquidity because conditions are so dire.

“Any way to correct these dire conditions is going to involve massive amounts liquidity.  So buy gold on these dips and say, ‘This is a gift that will reward me in the next twelve months by at least a double or more.’  Let me put it this way, it’s a rubber band, the further gold goes down now, the more it’s going to bounce back.”

Gerald Celente, Unwitting Gold Cartel Operative?

The gold cartel may get some desperately needed relief from the barbarians after all, as the bone shivering tale of Gerald Celente’s hit by the banking syndicate, which stripped him of his “six-figure” account, has gone viral within the gold community.

With the untold number of longs still frozen with MF Global’s designated trustee (coincidentally, a JP Morgan vendor) as well as the shocking site of Celente hanging upside down from a bridge with a bullet in his head, how many Celente wannabes will now become herded away in fear of the endgame prize? Sign-up for my 100% FREE Alerts

“Now, after a decade in which official gold reserves shrank continuously – outpacing growth in exchange traded funds nearly twofold – there may be a change in the air,” according to the London’s Financial Times Nov. 17 edition (free subscription required).  “Central banks made the largest purchases of gold in decades in the past quarter, says the World Gold Council.

And what a fortuitous turn of events for the Fed, too, as Moe Green, played by Jon Cozine, takes a bullet to the foot for Washington’s mob boss Bennie Bernanke—who, amongst the confusion, clandestinely prepares the QE3 launch in an effort to ward off the inevitable de facto force majeure of the U.S. debt market and the widely expected knee-jerk rise in the yellow metal that’s sure to come following an announcement from the Godfather, himself.

The technique of sacrificing one of its primary dealers to offer some needed R&R to JP Morgan’s Joseph P. Kennedy School of tape painters wreaks of another job well done in a series of sorties on the gold market planned to punish the golden bulls out of their positions and to affect another beautiful waterfall on the charts.

“Central bankers are late to the gold party,” FT continued.  “Private buyers of ETFs alone have accumulated 15 times as much since their advent a decade ago as governments bought last quarter. But their shift should be of far more concern.”

Not to worry, the U.S. will show the Englishmen again how to win a war, this time without French help.

Jamie ‘Dapper” Dimon, who works as a JP Morgan banker, according to leaked internal IRS documents, couldn’t be more pleased with the Celente hit.   In fact, Dapper D was so delighted that he decided to cover Johnnie Cs gambling debts for a job well done.

“MF Global Holdings Inc., the bankrupt futures brokerage, has located $658.8 million in customer funds in a custodial account at JP Morgan,” two people [why anonymous] told Bloomberg News.

“The account contained a total of $2.2 billion as of Oct. 31, including both the firm’s own money and customer funds, according to one of the people, who declined to be identified because the information is private,” Bloomberg News added, but neglected to add that ‘sources’ who are willing to breach fiduciary ethics may not turn out to be all that reliable <gasp>.

Though, it’s nice to see that a second American news source can now become the most recent inductee to the journalism hall of shame, whose recent inductees, Financial Times of London and CNBC, were honored for their Yeoman’s work of providing COINTEL pro-euro rumors for the syndicate during the height of the European crisis, which helped buoy the euro long enough to install puppet governments in Greece and Italy.

Moreover, with the recent installment of another Goldman Sachs alumnus, Mario Draghi, as ECB head capo during the touch-and-go, he’ll surely pump the paper (as he did in Italy’s debt market, last week) to help the Fed out in a joint effort to coordinate the debauching of 78 percent of world’s central banks currency reserves, planned sometime soon.

But before the epic reflation can commence, all stops to hit the gold market must be pulled, including the added touch of screwing the most vocal gold bug, Gerald Celente, the latest live case of a variation of the gangster government’s implementation of the Milgram experiment to the gold market.

The controversial experiment, first performed at Yale University during the 1960s, demonstrated that, for the most part, people are lemmings and will follow a leader irrespective of their personal believes, morals or standards.  If a leader says to get out of the gold futures market, many will follow.  Since the U.S. is legendary for its CIA tactics across the globe, is there little doubt that a hit job on the largest commodities futures trading firm could have been waged?  Oh those tin-foil hats again.

“They [the Fed] are going to have to introduce some financial repression tactics, which just means they will do some money printing,” Hinde Capital CEO Ben Davies told King World News in a Nov. 20 interview.  “Now if that happens I cannot be short risk assets, I cannot be short silver and I cannot be short gold.”

Hang onto your gold.  These guys play rough.