Gold Price “Close to a Breakout,” John Hathaway

As the gold price smashed past through technical resistance at $1,680 on Tuesday, King World News’ usual suspects came out this week feeling confident that another big rally in gold is underway.  The gold cartel shorts are covered and sentiment in the gold market is terrible, a set up, he said, is “really what you want” before taking a position in the metal.

Speaking with KWN, Tocqueville Gold Fund manager John Hathaway told Eric King the gold manipulation cartel may be losing grip on the powerful forces of the golden bull.  He likens the situation to the problems faced by the infamous London Gold Pool of the 1960s.

“The central banks are losing to the extent that they are failing to keep the gold price down,” said Hathaway.  “You know whoever is fighting this battle is fighting a losing battle.  So I just don’t think there is going to be much courage left on the central bank side.  If this latest ‘London Gold Pool’ style manipulation fails and at the same time you see more of this disgust with paper currencies, that’s where you will get nothing but air to the upside.”

Hathaway’s point brings back memories of James Turk’s famous ‘Gold’s Infallible Indicator’ article of 2007, a clever qualitative indicator which came about as a result of his observation that each time the UK business publication The Economist published a ‘negative’ outlook for the gold price, the complete opposite happened.

Turk’s notations from his original article, posted on Kitco.com:

Date Article is Published

Gold Price
On Date of Publication

Low Gold Price After Date of Publication

Number of Days Low Is Reached After Publication

Subsequent High in the Gold Price

Date of Subsequent High in the Gold Price

% Gain from Publication Price to High Price

23 Jan 1993

$328.60

$326.30

32

$407.00

30 Jul 1993

23.9%

11 Sep 2003

$379.70

$369.20

20

$426.40

9 Jan 2004

12.3%

1 Dec 2005

$502.50

$493.00

14

$719.80

11 May 2007

43.2%

8 Apr 2007

$674.20

$651.90*

34*

$1,032.00*

03/19/08*

53.10%*

ñ     Updated chart from original publication

Not included in the Turk’s chart is a May 13, 2010, article published by the The Economist, entitled, Gold to Fall Below $1,000 By End of Year: Economist.

The article’s publication, proving once again that Turk’s ‘Infallible Gold Indicator’ is, indeed, infallible, the gold price of the date of the article’s release was $1,229.20.  Subsequently, the yellow metal rallied, dropped, then drifted to as low as $1,158.00 on Jul. 27.  But by the close of the year, instead of trading at $1,000 as predicted by The Economist, the gold price achieved a print of $1,421.40—a gain of 15.6% from $1,229.20.

It should be noted that the May 13 article was published in a nick of time for the start of gold’s seasonal soft period range of mid-May and the last trading day before Labor Day (first week of September).

“How can The Economist get it so wrong?  Or in other words, why is this indicator so reliable?” Turk asked in his May 7, 2007, article.

He added, “While The Economist pretends to offer serious analysis of gold, in reality it doesn’t.  It has another objective – anti-gold propaganda.  It is an apologist for the Bank of England and the other central banks that want to keep the gold price low.”

But tell that to CPM Group’s Jeffrey Christian, the apologist for the Fed.  GATA right again.  In fact, any time someone accuses you of being a ‘tin-foil hat’ guy for suggesting the gold market is manipulated, just tell ‘em to Google ‘GATA right again‘.  The raft of links to article of GATA’s fine detective work on the subject of gold cartel manipulation scheme is so overwhelming that even a judge, if presented with so much circumstantial evidence surrounding a murder of a Catholic Calcutta lad, would send Mother Teresa to the gas chamber.

Then, appeal to the naysayer’s greed by sending the ‘useful idiot’ to Turk’s May 7 article.

Even the Financial Times of London has found the time between initiating rumors of the European debacle (see here . . . here . . . and here) to report that, maybe, just maybe, further investigative work by FT might lead to subsequent article, entitled, ‘GATA right again’.

Back to the KWN Hathaway interview:

“To the extent that this is a rigged game, the game is now over,” he said of the gold cartel’s diminished capacity to stem the avalanche of physical gold buying.  “We are not quite at stampede levels yet, but we will be.  Who wants to hold euros? And if the U.S. starts to intervene through some form of central bank asset purchases, lines of credit, whatever it is they use, nobody is going to want to hold the dollar either.”

He continued, “We potentially have nothing but air to the upside in gold.  We could see a big number on gold before the end of the year.  Nobody is going to want these paper currencies going forward.  That’s kind of where we are now, we’re close to a big breakout.”

Here’s why the Gold Price Goes Higher, according to Peter Schiff

In his latest interview with King World News, Euro Pacific Capital CEO said the U.S. economy is dropping quickly, gold will go much higher as a result of his bleak outlook, and the U.S. Treasury market is not a permanent safe haven for investors seeking shelter from market volatility brought on by sovereign bailouts, which, he added, will move across the Atlantic to the United States.

“We are going to fall off the edge of a cliff; it’s just a different cliff than most people are looking for,” Schiff told King World News’ Eric King.  “I don’t think the stock markets are going to fall off the edge of a dollar cliff, or nominal cliff, but the US economy is going over the cliff.”

Schiff, the author of several financial books on the subject of investment strategies investors should take to preserve wealth during the ongoing global financial crisis, suggested one of the ways American investors can protect themselves from the crisis slated to come in the United States is to hold gold bullion.

Though the gold price can be volatile due to fund managers, governments and  institutions liquidating gold to cover losses in other assets during the protracted crisis, gold, in the end, will remain as the ultimate safe haven as a store of wealth.

“Anything could happen in the short-run, but in the long-run, gold goes a lot higher,” Schiff explained.  “Everything that is happening right now that is pushing the price of gold down, is actually bullish for the price of gold.  That is why long-term the gold price will be higher.”

Just as famed commodities trader Jim Rogers of Rogers Holdings and Swiss money manager Marc Faber, publisher of the Gloom Boom Doom Report, Schiff’s betting on the Fed and U.S. Treasury to team up for providing further ‘stimulus’ to the U.S. economy in an effort to stave off a crisis in the U.S. dollar a little longer.  That plan, he said, is the primary driver of the gold price—currency debasement to offset stagnant, or lower, GDP.

“We have this completely phony economy going, this bubble economy, it is still going to deflate and that hasn’t happened yet,” said Schiff.  “The world is trying to keep the air in it, but ultimately the air will escape.”

In fact, the air has been escaping for quite some time, according to Jeffrey Gundlach of Los Angeles-based DoubleLine Capital.

Arguably the most respected bond fund manager, though lesser-known than PIMCO’s Bill Gross, the Wall Street Journal reported that Gundlach told approximately 100 financiers and reporters at a gathering at the New York Yacht Club, Thursday, “We’re in a recession right now.”

Co-founder & COO of Economic Cycle Research Institute (ECRI), Lakshman Achuthan, agrees.  Earlier today, the leading business cycle research firm posted to its Web site, businesscycle.com, “Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.” (emphasis added).

Schiff expects the aborted recovery back to lower economic output in the U.S. spells doom for the U.S. dollar.  Up till now, investors fleeing the euro into dollars will ultimately play out to have been the wrong move, according to Schiff.

“The dollar has been rallying, but I don’t think it should be,” he said.  “The dollar is a risky asset.  People are trying to hide out in dollars, in Treasuries, which are just future dollars, but I think that’s ultimately the riskiest place to move.  These people who are buying dollars are making a mistake.  People bought dollars in 2008, early 2009 and if they held them, they obviously lost a lot of money.”

“When we see an eventual precipitous decline in the dollar, you will see consumer prices rising and interest rates rising.”

At that time, the gold price in U.S. dollars will soar.

Jim Rogers: Don’t sell your Gold; buy the Dips

Commodities king Jim Rogers made the rounds with the media yesterday, speaking to, among others, the The Economic Times of India regarding his latest thoughts on the gold price.

Now living in Singapore, the 68-year-old American citizen reckons the gold price may meander lower in coming weeks, but strongly suggests that weaker prices present an opportunity for investors who missed the boat on this roaring bull market to jump aboard to higher prices he sees in the future due to the protracted sovereign debt crisis in the Europe, then, in the United States.

“ . . . gold has been up 10 years in a row, which is very unusual in any asset class,” Rogers told India’s largest financial daily publication The Economic Times.  “So if it is up this year or 11 years in a row, gold is overdue for a correction and it could have a nice substantial correction given that it has been so strong.”

“I have no idea what is going to happen this year.  I doubt if it will go to $2000 an ounce in 2011, it is more likely to have a correction which will last for several weeks, several months,” he continued. “It has been very strong. If it goes down some more, I would buy more gold.”

Just as two other hard-money advocates Peter Schiff and Marc Faber have already suggested in their comments earlier this week, Rogers said he sees the pullback in the gold price as a healthy one within a larger contextual outlook for the precious metal in the longer term.  He, as both Schiff and Faber have indicated, view the pullback in gold—and silver—as, yet, another buying opportunity for investors seeking protection from the endgame of expected currency debasements of the euro and U.S. dollar.

But, as on several occasions of the past decade, the pendulum has swung to fear again in the gold market, as Mr. Market—with a little help from regulators and central bankers who apply pressure points to leveraged paper traders at seemingly the most opportune times—took latecomers and momentum traders to the woodshed as punishment for their short-term greed indiscretions.  Buyers of the physical metals, however, swamped dealers with orders during the vicious sell off (see $10 billion Sprott Asset Management’s Eric Sprott interview on King World News).

Rogers continued: “When fear permeates a market, everybody sells, especially the last ones in frequently have to jump out. They have raised margin requirements for both silver and gold. So that makes it more and more difficult for people to hold on.”

Incidentally, the uber-U.S.-centric Forbes Magazine’s takeaway from Rogers’ sanguine comments borrowed from the ET interview, regarding the recent turmoil in the gold market, was subtly skewed by its headline—omitting of his most salient point: buy the dips!

Forbes Magazine headline: Jim Rogers Tells India Press Gold Will Decline For ‘Months’.

On the other hand, the original price from the 40-year-old ET is entitled:

Gold price correction will last for several months; buy on dips: Jim Rogers. (emphasis added).

Though the Forbes’ piece does include the entire Rogers quote, which includes the “buy the dips” statement, one has to wonder how hard the magazine has been hit in advertising revenue now that U.S. dollar-denominated paper assets have taken a beating against real money, gold?  As Keynesians have previously indicated, higher gold prices are a barometer of the public’s disaffection of stewards of the purchasing power of the U.S. dollars—and the euro, at this time, too.

But in fairness to Forbes, it hadn’t spread comments from unconfirmed and anonymous sources during the never-ending crisis out of Europe as CNBC’s Steve Liesman and Financial Times of London have.

The crisis was a long time in coming, as Jim Rogers has repeated stated for years, and the Kremlin-like credibility of those reporting the crisis have only served to underscore Rogers’ comments regarding his reasons for owning gold.  Freegold for free people.

Here’s how the Fed could Shock the Gold Price Tomorrow

Sentiment between holding paper assets and hard assets will be tested shortly, as the FOMC deliberates on the multitude of troubling data from around the globe.

As of 6:37 a.m. EST, September 20, the Dow:Gold ratio stands at 6.37, just below its overhead resistance of 6.50.

For those preferring silver as a potentially much more exciting vehicle for fleeing paper assets, the Gold:Silver ratio trades at 45.26, or just north of its resistance of 45.

As the FOMC begins hashing out its next policy moves, beginning today, it appears traders are mixed on the prospects of a Fed surprise beyond ‘Operation Twist’ (Fed sales of short-term Treasury debt and simultaneous purchase of longer-term maturities) expected as a result of the scheduled two-day meeting.

So if the next big moves in gold and silver (equities and bonds, too) could well be predicated on the Bernanke Fed on Wednesday, what can we expect?  One interesting take on the Fed’s next move comes from David Rosenberg, chief economist at Gluskin Sheff.  He speculates that the Fed may be out to surprise the markets big time on Wednesday in its effort to juice equities markets as its only direct policy move to ignite an already dangerously fragile U.S. economy.

In a note, Rosenberg postulates:

“The consensus view that the Fed is going to stop at ‘Operation Twist’ may be in for a surprise. It may end up doing much, much more.  Look, we are talking about the same man who, on October 2, 2003, delivered a speech titled Monetary Policy and the Stock Market: Some Empirical Results. I kid you not. This is someone who clearly sees the stock market as a transmission mechanism from Fed policy to the rest of the economy. In other words, if Bernanke wants to juice the stock market, then he must do something to surprise the market.”

Since the market is already abuzz with expectations for ‘Operation Twist’, another money-printing scheme above and beyond will be announced, according to Rosenberg, in the Fed’s desperate effort to put some animal spirits back into, what Max Kieser refers to as, the ‘Casino Gulag Economy.

Rosenberg continued:

“’Operation Twist’ is already baked in, which means he has to do that and a lot more to generate the positive surprise he clearly desires (this is exactly what he did on August 9th with the mid-2013 on- hold commitment). It seems that Bernanke, if he wants the market to rally, is going to have to come out with a surprise next Wednesday.”

But here’s the danger for traders betting on the Bernanke put, he said, and clearly will be on the mind of Bernanke during the two-day central-planning powwow.  What if Bernanke doesn’t come through with the votes for the next step on the road to Weimar’s Hell Hole?  Rosenberg stated, “If he doesn’t, then expect a big sell-off.”

A sell-off in what, you may ask?  Well everything benefiting from the inflation trade, according to Rosenberg, including precious metals.  But if the Fed insists upon keeping the casino doors wide open, the Dow:Gold and the Gold:Silver ratio will most likely drop like a stone once again.

Here we go again! Turk vs. Faber on the Outlook for Gold

Two heavy weights of the hard-money camp, James Turk and Marc Faber, once again disagree on the short-term outlook for the gold price.

For those new to the competition in the Fight-to-be-Right, Goldmoney’s James Turk of Team Sinclair-Turk won the first bout against Faber in its predictions for the gold price during the summer months of July and August.

Back in June, Team Sinclair-Turk told its respective readers to expect an uncharacteristic boom in the gold price during the seasonally slowest time period of the year, July and August, while the Gloom Boom Doom Report’s Faber said he expected the price to follow the 30-year historical bias to the downside in the metal.

As we now know, Sinclair-Turk won hands down, as the gold price soared nearly 25% in the face of expected marginal declines—a truly bold call by Sinclair and Turk, who both stood out from the pen of gold bulls reticent of taking one side or the other.

So here we go again.  On September 12, Goldmoney’s Turk told KWN’s Eric King that gold’s short-term outlook is for still higher prices—technically overbought conditioned be damned—targeting $2,000 as the next stop for gold by the end of October—which, once again, defies historical data that suggest October is the month when gold typically sells off pretty meaningfully from September’s typical strong rally post Labor Day weekend.

“I was expecting closer to 50% [rally from July 1 $1,480 low] by the end of September; and even though we are not at the end of the month and may not reach that 50%, there is a lot more left in this move,” Turk told KWN.  “Gold is headed over $2,000 and if it doesn’t happen this month, it will probably happen in October.”

On the other side of the ring, gold bulls’ favorite pony-tailed Swiss eccentric money manger (who’s lived in Chiang Mai Thailand for the past 20+ years), Faber, of the Gloom Boom Doom Report, told an audience in Mumbai last week he believes the gold price is “extremely overbought” today and wouldn’t be surprised if the yellow metal drops to the $1,500 to $1,600 before resuming its secular bull market rally.

As followers of Faber already know, he’ll “never sell” his gold, but doesn’t recommend adding to a position above the $1,800 level.  Though Faber doesn’t make an outright call for the metal in the short term, Faber apparently doesn’t like the looks of the gold chart in the face of another seasonally weak period coming up for the month of October and believes market volatility could prompt some selling in the metal as a means of raise cash to settle hedge fund redemptions.

“I am not selling any gold but traders should realize the gold price is extremely overbought,” India-based Business Standard reported Faber saying at a Mumbai conference, “and that it could easily drop toward the 200-day moving average – that is, between $1,500 and $1,600 (not a prediction).”

So there you have it, two informed and studied men take diametrically opposed positions on the short-term outlook for the gold price.  Once again, Turk has thrown away the seasonal charts and has come out with another scary call for a $2,000 gold price “in 45 days,” as we moving into the most dangerous time of the year for the stock market—the seasonally lowest period for money inflows into stocks.

Will hedge funds need to raise cash (from their profitable gold positions) if the Fed disappoints at the close of its FOMC meeting on Wednesday?  What if the German parliament rejects funding of the EFSF after its scheduled vote on September 29?  What if Greece doesn’t get its second tranche from the IMF?  What if Berlusconi opens his mouth again?

Silver So Critical, “Government may even Ban Public Ownership”

In an interview with GoldSeek Radio Chris Wolzcak, Dr. Steven Leeb, the co-author of the upcoming book, Red Alert: How China’s Growing Prosperity Threatens the American Way of Life, began the interview somewhat loathed in his strong recommendation for owning precious metals at this time, noting that a rise in the price of gold, especially, denotes the dollar’s expected fall from grace—which he said will turn “tragic” to citizens of “our great nation.”

As dire as the future of the U.S. economy may turn out, however, he told listeners the only way out of becoming a victim of the vicious currency war to the bottom is to hold gold.

But, when Wolzcak steered the conversation to the potential for the silver price during Leeb’s expected continuation of the precious metals rally, Leeb raised his level of enthusiasm a notch, and stated, “silver is going to triple-digits, I mean, I think there’s little doubt of it, because, you know, it’s a monetary metal with probably a longer history than gold’s.”

But here’s where the Leeb interview went beyond the overcooked reasoning behind silver’s expected rise as a hedge to the world’s currencies debasement war.  Leeb continued, “I emphasize this, [silver is] a critical . . . the best thermal conductor in the world, the best electric conductor in the world, and one of the best reflectors in the world.”

“And as a result, silver is a critic ingredient in solar panels. . . so silver is critical to making the transition to renewable energy . . . in computers . . . it’s critical in many, many areas,” he added.  “So silver has the potential to truly go exponential.”

Leeb builds a compelling case for owning silver by citing China’s plan to spend up to $1 trillion in renewable energy projects each year for the foreseeable future, which will destroy replenishing stocks from mining and recycling activities.  He then surmises that alarms will trip in Washington to a point of near panic level.

And World Gold Council data back Leeb up. The WGC reported China imported 3,500 tons of silver in 2010, and that’s in addition to India’s growing demand (and China’s) for the metal as an alternative to gold’s demand as an inflation hedge.  Further increases of silver imports, not only into China, but into India, too, could choke silver supplies a lot faster than people now think.

“I mean, once the Chinese build out their solar energy, and they haven’t up to this point, but they will, they’ll start accumulating silver, added Leeb.  “In fact, I wouldn’t be surprise right now if they weren’t accumulating a lot of silver.”

“And my prediction is that silver will go high enough, and if we recognize it’s so critical, that the government may even ban public ownership of it, like the government banned public ownership of gold during the Depression,” Leeb continued.  “I think, well, silver over $100 per ounce—I almost think it’s inevitable, that silver hits three digits to be honest with you.”

And it gets better for the silver junkies.  Leeb said, though the price of silver has soared nearly ten-fold during the bull market, mining activity during the decade-long run has been abysmally low, because, he said, silver has begun to move into the category of rare-earths.

And because of the powerful mismatch between expected world supplies and demand for gold’s kissing cousin, silver will become increasingly more rare, according to Leeb.  The Chinese, he speculates, “know they’re going to need more than there is to build out their solar energy.”  As crazy as the fundamentals sound for the outlook for silver, he said, “It’s documentable.”

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.

On Gold: Team Sinclair-Turk 1, Marc Faber 0

Unless the gold price tumbles $400 in response to a surprise 500,000 rise in the Labor Department’s Non-farm Payroll Report, scheduled to be released prior to the NY open today, it appears the team of James Sinclair and James Turk have won the gold in the fight to be right on the move in gold this summer.

On June 23, as gold settled at $1,511, Sinclair stated, “Be prepared for covert QE between July 1st and late August when stimulation goes wild.  Be prepared for gold to take out $1,650 on the upside as magnets at $12,544 come into play.”

At that time, the gold community opined that Sinclair’s multi-year $1,650 gold price prediction may not be reached this year, after all.  Not only was the Sinclair call a gutsy one in the wake of 30+ years of seasonal data which suggested otherwise, it showed a man who’s willing to put his reputation on the line for the greater good of the investment community.  He sells nothing on his Web site, takes calls from anyone seeking his advice at all hours of the day—gratis, and doesn’t grumble or seek credit for his deeds.

And the other man of the gold medal team, James Turk, a man whose knowledge base and, more importantly, integrity, within the global bullion community, had said repeatedly the move in gold during the summer of 2011 will emulate the 50 percent move in the precious metal during the summer of 1982—the time of the Mexican peso devaluation.  He warned traders in June to hold gold during strength, not sell into the seasonal low period as is the custom.

James Turk is founder of bullion storage service GoldMoney.com.

On June 14, Turk told King World News to expect the unexpected in the price of gold during the summer’s intermission period of June-August.

“Everything is all set for new record high prices in both metals this summer, which is going to surprise a lot of people,” he said.  “I just think that people don’t really understand what can happen this summer.  We’ve spoken before about the summer of 1982 when the gold price rose 50% from June to September, propelled back then by the Mexican debt default.”

Turk added, “This summer, you could see a move higher in gold and silver that literally shakes the world.”
And shake the world they did.

For the first time in the infomercial CNBC’s 20-year history, the echo chamber of Wall Street’s tread-worn stock hucksters such as the likes of Morgan Stanley’s David Darst, decided it’s best to hedge its bet against plunging into the credibility abyss along side Morgan Stanley, or worse, Standard & Poor’s, by finally covering gold’s 11-year rally and by beginning to admit that the world may not be flat after all.

Gold’s emergence as a bona fide asset at CNBC is especially telling, as the duped legion of Lord Haw-Haws for the 40-year “in-crowd” intellectual dictatorship presently ruled by economist icons Paul Krugman, Ben Bernanke, Alan Krueger and other pseudo intellectuals at Princeton’s Woodrow Wilson School appear to sense that these despicable frauds will soon be exposed as a two-bit pack of 15th century shamans—at the very least!

And it could turn out that the year 2011 will be seen as the turning point of tyrannical rule of the U.S. dollar, in smaller part, in Libya and Egypt, but in a much more meaningful way in the fall of the evilest of empires of them all, The Fed—and just maybe a mass movement back to the principles of the U.S. Constitution is underway.

Jim Sinclair and James Turk are due some credit for their parts in exposing the most ruthless of tyrannies, The Fed, over the many years, and luckily have been afforded a mic now that the decade-long bull rally in gold has made their points illustrative.

And for the runner up to this inconsequential sideshow “bet” among raging gold bulls, Marc Faber, he is, indeed, not only the most entertaining money manager of the planet, he’s woken up more people to gold as the ultimate form of money than both Sinclair and Turk over the past several years through his made-for-television personality and cover of his Swiss-national status.  Americans can’t get away with making fun of the dollar like a Swiss can.  Ask U.S.-born Peter Schiff, another one who’s gotten it right.

These three man have gotten the overall trend in gold right for a decade, which is really all that investors need to know.  Long-term investors of gold did equally well irrespective of the hard-money advocate you follow.

Gold Price poised to “Go Parabolic” to $2,100

As the gold price touched $1,890 per the ounce in London trading today, persistent doubt of the consensus forecast for U.S. and Europe economic growth has weighed down equities, lifted bond prices, and soared gold, as traders scramble in and out of positions to suit renewed uncertainty and the growing distrust of the Fed as well as European and U.S. policymakers.

Adding to the stack of the most recent gold-bullish news, which has been streaming in nearly daily now, comes Hugo Chavez’s request for a repatriation of Venezuela’s gold reserves from the Bank of England.

CEO of Hinde Capital, Ben Davies, today told King World News he believes Chavez’s move to bring 365 tons of gold reserves back to Venezuela could result in an explosive move in the gold price, as data suggest that the gold market has operated equivalently to a banking fractional reserve system since 1971—and a highly levered fractional system, at that.

“There was a game changer event yesterday: Chavez – the proverbial thorn in the West’s side – ruined the gold-bears’ picnic, “ stated Davies.  “So what? I hear you say. Well I believe this is significant. Chavez holds 365.7 tonnes of gold overseas, mostly in Western Central Bank vaults, such as the Bank of England. Some 100 tonnes of Venezuelan gold is held there.”

“The question is: do these vaults still have all the gold?” Davies asked rhetorically, who now targets gold at $2,100 on this move.

In fact, the gold may not be there, according to Gold Anti-Trust Action Committee, who has published numerous articles showing the steep ratio between “paper” gold and the physical.  Davies said that the global gold market’s fractional reserve system “means each troy ounce has been lent or swapped out many times over, and should gold holders request the return of their gold en masse, we could get a proverbial ‘gold bank’ run.”

If Chavez’s move triggers a gold run, or not, it most certainly will spark at least some fear into those traders seeking an empty chair before the music stops in the gold market.  Force majeures at a time of panic to gold will leave wealth exposed to the threat of cliff-dive devaluations and bizarrely-priced physical gold ounce bars, a possible scenario that could turn rich people into poor ones, and vice versa.

Chavez appears nervous about the situation in the gold market, and may trigger other countries to repatriate their gold from Western entities, too, in another bullion bank run similar to the run on Ft. Knox in the early 1970s.

Even the U.S. dollar apologist of the gold market Dennis Gartman of the Gartman Letter is getting skittish about the possibility of a flashpoint in the currency markets.

“Gold is strong in any and all currency terms, and it is now entering that stage when prices go parabolic,” Gartman stated in his Gartman Letter.

Flight out of the U.S. dollar and euro won’t have many paths to left to safety, as banking officials of well-managed currencies fight back the stem of appreciation.  A recent survey among Swiss reveals a majority of respondents alarmed by the rise in the franc, and fear a string franc will devastate exports of Swiss-made goods.

“You have a look at some of the other safe-haven assets that investors were looking at, the Swiss franc and Japanese yen,” Fat Prophets resource analyst David Lennox told Bloomberg.  “Authorities there have taken steps to try and curb the rise in those particular currencies. That’s probably pushed more investors into gold.”

Peter Schiff slams Obama, Geithner and Buffett

As global stock markets crash in the backdrop of a soaring gold price, Euro Pacific Capital CEO Peter Schiff unleashed a series of salvos on the Obama Administration in the handling of the budget crisis, and slammed billionaire investor Warren Buffett for encouraging continued profligate policies of the White House and, by implication, the Congress.

Standard & Poor’s downgrade of U.S. debt kicked off a firestorm of financial and political calamity that has now required an all out damage control operation from the White House and the government’s go-to “private sector” operative Warren Buffet.

“In Wall Street parlance, any downgrade means get the hell out … If they [rating agencies] go from a Strong Buy to a Buy, it means, you know, look out below,” Schiff told Max Keiser of Russia Today’s Keiser Report.

“What S&P is saying, as far as I’m concerned, is get out of U.S. debt, any dollar-denominated debt, because what they’re really downgrading is not Treasury bonds, but the dollar.”

And, immediately after the S&P downgrade, investors fled the dollar—in mass.  As U.S. Treasuries soared (dollar positive), gold sailed past Treasuries (dollar negative), turning what seemed like a dollar-positive event into a catastrophein the dollar in purchasing power against the ultimate currency, gold.

Even the Wall Street Journal headlined an article on Monday, following the rating agency’s announcement of a U.S. downgrade on Friday, heralded U.S. Treasuries as the “gold standard” of debt, in a well-place position atop Yahoo’s financial news feed.  The orchestrated response, crafted over the weekend, couldn’t be more obvious to those following closely the 3-year-long slow-motion global financial crisis.

Of course, the U.S. has other options apart from defaulting in a manner Argentina, Mexico or German had defaulted in the past.  Instead, it appears the U.S. has predictably chosen to inflate its way out of overburdening debt, which Schiff said, is the point of S&P’s downgrade.

“Because S&P knows—as Alan Greenspan said, and Warren Buffett said—they don’t have to default, they can print,” Schiff explained. “But that’s worse, especially if you’re a bondholder; you get paid back in Monopoly money.”

In complete agreement with European leaders, Schiff went on to ridicule a rating agency system that rates the world’s largest creditor, China, below the world’s largest debtor, the U.S.

“Why is China, the world’s biggest creditor nation—we owe China trillions—how could they be rated AA-, and we’re rated AA+?” Schiff asked, rhetorically.  ”What kind of twilight world is the world’s biggest debtor a bigger risk [meant to say, better risk] than world’s biggest creditor?”

Then, in a typical Schiff rapid-fire rant, U.S. Treasury Secretary Timothy Geithner entered Schiff’s sites.

Geithner, who said S&P made a math error in its calculations of projected U.S. deficits, calling the error a “$2 trillion mistake,” only serves as a red herring, or a canard, as Keiser put it in his question to Schiff about Geithner’s comments.

Schiff responded to Geithner’s comment by pointing out that the Congressional Budget Office (CBO), a political arm of the White House, had made grandiose growth and unrealistically low inflation assumptions in its forecast, which Schiff implied, were nothing more than typical self-serving propaganda budget forecasts out of Washington.

“The reality is that we are going back to recession,” Schiff scoffed.  “So you take all those rosy scenarios and throw them in the trash can where they belong.  The budget deficit is going to be much worse than both the Administration and S&P believe.  So they’re all wrong on the math.”

And on the subject of Warren Buffett’s comment following the S&P downgrade announcement, in which, he said U.S. Treasuries should hold a “AAAA rating,” Schiff again commented by implying that Buffett is a has-been, a kept man of the rigged system, and has become more of a humorous sideshow during the crisis than a man whose comments should actually be taken to heart by investors.

Buffett’s opinion is “moronic,” said Schiff.  In his advanced age, “senility is catching up with Warren.”