Something VERY BIG is Coming to Silver

By Dominique de Kevelioc de Bailleul

Something truly very big is coming to the financial markets, and the precious metals are the place to be when that something big happens.

Too many analysts have come out lately, throwing around lofty targets to the price of gold and silver markets, and to take place within a very short period of time, for nothing concrete scheduled by global monetary ‘authorities’.

Something more than mere conjecture is at play.

The latest prediction for a moonshot in the silver market comes from Goldmoney Founder James Turk, who foresees, not only a massive short squeeze coming, but also surmises, at least, momentum also popping the top off the price of the poor-man’s monetary metal.

“I expect to see $68-$70 in 2-to-3 months,” Turk tells King World News (KWN), Monday.

Though incredible as that prediction may seem, others very close to the silver (and gold) market expect a similar explosive move in the metal.

“We could see those levels ($4,500 – $5,000 on gold) within a year and possibly much faster,” Swiss money manager Egon von Greyerz told KWN, Aug. 23. “This autumn we are going to have a very strong move.

“If we look at silver, silver is going to move a lot faster than gold,” he added.  “The same technical target for silver is $150.  That would move the gold/silver ratio down to 30/1.”

Whatever the catalyst for such an eye-popping move in the metals will be, someone in-the-know convinced GATA’s Bill Murphy that the coming news will be big—big enough to unleash silver from the grips of the JP Morgan-led cartel.

“The fellow I spoke with I’ve known for years, one of the wealthier men in all of Europe,” Murphy told the SGTreport, Jul. 19.  “He’s got a lot of connections . . . It will be tough for the gold and silver markets [during the month of July], but starting in August they would start to ‘go nuts’, and they would ‘stay nuts’ for a long time. . . Big, big moves are coming, starting in August.”

So far, Murphy’s source is spot on.

After briefly falling below $28, Aug. 20, the silver price soared $3.75 cents to $31.72, or 13.5 percent, to close out the month of August, breaking out of its 15-month-long descending trend line.

Could a truly favorable announcement from the CFTC regarding the JP Morgan manipulation scheme in the silver market be the catalyst for such a big move in silver?  Not likely.  But the news that could cause silver to “go nuts” might come from an announcement of another sort—a coordinated announcement by central bank of more ‘QE’, as JSMineset’s Jim Sinclair has suggested many months ago is inevitable.

It appears that Sinclair’s prediction, too, could be spot on, and if it were to come to pass, the flood of cash into the gold and silver market from hedge fund and institutional money managers would provide the needed ammunition to overwhelm JP Morgan’s price suppression scheme.

“Central banks need to take a more international perspective, recognize their collective influence and take into account monetary policy spillovers,” Jaime Caruana, general manager of the Bank for International Settlements told policymakers at Jackson Hole, Montana, the annual venue for central bankers.

The source of that quote comes from Reuters’ Alister Bull, who added, “Bernanke, in the audience at the luncheon address, did not flatly reject the suggestion, but he noted that a discussion about international monetary policy cooperation also implied cooperation on foreign exchange rates.”

After witnessing the effects on financial markets due to rapidly changing exchange rates leading up the 1987 stock market crash and the exacerbation of the Asian currency crisis of 1997-8, central planners won’t want to repeat that exercise.

The implications of a global coordination to debase the worlds major currencies are unprecedented in monetary history, as analysts outside of Wall Street’s “Hall of Mirrors” (as Jim Grant referred to the Fed’s deception) warn investors that the purpose of further central banking ‘easing’ beyond the already-failed economic growth policies of QE1 and QE2 has more to do with maintaining the illusion of solvency than these programs have done for economic expansion.

“For the first approximately 50 years of the last century, every additional $1 of debt in the U.S. created $4.60 of (additional) GDP,” von Greyerz told KWN, Aug. 30.  “In the last 10 years, every new dollar of debt has created 6 cents of GDP.”

But unlike the stock market crash of 1987 and Asian currency crisis, investors will have no strong currency with a deep enough market to sidestep a simultaneous devaluation of the world’s major fiat currencies.

The Swiss franc is loosely pegged to the euro; the BOJ is likely to be apart of the global coordination, along with the BOE; the Aussie and Canadian dollar are too small of a market; the Chinese will also be easing, according to Jim Rickards; and emerging market currencies that depend on healthy developed economies will ease as well in an effort to ameliorate a further drop off in exports due to a rise in their currencies against the dollar and euro.

For the first time in monetary history, the entire globe will embark on a currency debasement scheme, forced upon all nations by the Fed, primarily, and the ECB, secondarily, which, together, represent approximately 89 percent of all currency reserves held by central banks.

According to Goldmoney’s Turk, that scenario is the setup for what he refers to as “stage II” of the silver bull market—a stage in which the rallies are long and the rising prices attract institutional money as well as the wealthy retail investor into the market.

A move past the all-time high of $52 to Turk’s $70 target means that “silver is finally entering stage II of its bull market,” Turk tells KWN’s Eric King.  “That is when it will really gets exciting, Eric.  The first stage of a bull market, which is the one we are now in for silver, is always the boring part.

If a move in the silver price from $17.50 to nearly $50—within an eight-month period, beginning Aug. 2010 and ending Apr. 2011—is the “boring part,” the heights in store for silver investors during stage II could make some silver ‘stackers’ very rich, indeed.

Fire!!! Money Running for the Exits

By Dominique de Kevelioc de Bailleul

The Swiss 2-year sovereign just reached a -0.47 rate, and with JP Morgan doing such a good job suppressing paper bullion prices, gold has gone into a stealth ‘backwardation’, according to Goldmoney’s James Turk.

Quietly, the Swiss 2-year sovereign just broke through recent lows Friday, plunging to -0.435 percent.  Instead of getting a toaster with your deposit, investors have to give the Swiss government a toaster along with their money—each month, for two years?!

In other words, big money knows a catastrophic event is near and a response by central banks won’t be far behind.

Gold’s range-bound pricing while Swiss sovereign rates drop like a stone suggest an explosion in the gold price is also near.  In fact, because of the LIBOR manipulation scheme, gold may be already be in ‘backwardation’, but the market hasn’t picked up on the fire in the theater.

James Turk stated his rational for suggesting gold has reached backwardation to Eric King of King World News (KWN).

“Interest rates are a reflection of risk.  Normally, the lower the interest rate, the lower the risk of holding that particular type of money,” Turk explained.  “Historically, gold’s interest rate has always been the lowest. . .

“So interest rates for currencies are always higher than gold’s interest rate.  But because of this LIBOR scandal, and the fact that we are seeing interest rates being manipulated by central banks, for the past year we have had dollar interest rates lower than gold interest rates and that’s a huge anomaly.”

Here’s the anomaly shown graphically; and from the graph, below, Turk’s observation can lead the investor to conclude that he may have a valid point.

Pay particular attention to the white arrow in the chart, right around mid-May when the Swiss 2-year broke to a new low of -0.07 to -0.08 percent.

“On Monday, May 14, something happened that hasn’t happened since Dec of 2008,” stated Keith Weiner in a post on zerohedge.com.  “Two successive near-month precious metals futures contracts were in backwardation at the same time.”

Gold (and silver) touched ‘backwardation’ the week following the Greek legislative elections.

“On May 14, this is precisely what occurred,” Weiner continued.  “Both May and July silver are backwardated.  And June gold is backwardated.  Incredibly, the May silver contract is giving away a 3% annualized profit to anyone who would sell physical silver and buy a May future that delivers in a few weeks (thus recovering the same position).  Even more incredibly, no one can or will take the profit that is dangling out there!

“This should not be possible at all.”

Of course, central bank “manhandling” of interest rates, as Jim Grant puts it, are possible and create all sorts of distortions as well, not seen clearly, of course, during ‘normal’ times, but distortions become especially transparent during a financial crisis.

Jim Sinclair’s panic announcement of the possibility of an over-the-weekend global announcement of a new round of massive round of money printing from the G-6 was apparently warranted, as the Spanish 10-year rate began to distance itself to the upside from the 7 percent Maginot line of a Greece-like run while Swiss rates plunged.

“A lot of people are misinterpreting what that [LIBOR manipulation] means,” Turk continued.  “It’s really just a temporary phenomenon.”  It’s really just a reflection of all of the interventions we have in the market today.”

Turk asked rhetorically, “What we really have to consider is, is gold in backwardation?”

“I think it is, even though the gold forward rate doesn’t show it simply because dollar interest rates are manipulated,” he speculated.

As amateur money watches the Dow, the big money isn’t buying into the Friday’s jobs number (or any job number), Warren Buffett’s truly shameful malarkey about gold, and certainly not central bankers’ equally pathetic diatribe.

Most recent case in point: Another nonsensical jobs report out of the U.S. ministry of propaganda showed an ‘unexpected’ rise of 163,000 non-farm payroll jobs and an 8.3 percent jobless rate.  But, Swiss money manager Egon von Greyerz of Matterhorn Asset Management explains why there’s a panic run into Swiss paper.

“The real unemployment is 23%,” von Greyerz told KWN, on the same day as the Turk interview Friday.  “The Non-farm Payroll going up by 163,000, if you look at the seasonal adjustments and the birth/death model, those two adjustments were 429,000.  So they added 429,000 out of nowhere, on paper.

“If you take those 429,000 off of the 163,000, instead of an increase, you get a 266,00 decline in payroll.  So the figures are nonsense….”

Take it from the Swiss; they know money, and they know gold.  They were smart enough not to join the eurozone; they’re smart enough to hold the highest per capita official gold stock of the world—by far!

The Swiss aren’t about to be fooled by the Bernanke-Draghi tinkering of the financial ‘weights and measures’ as the rest of the world has been duped.  And which European country was never attacked by Hitler’s Third Reich?  Switzerland.

von Greyerz and other smart money managers know that the U.S. economy is tanking fast, which explains the sudden mass exodus into Swiss paper since May.  Therefore, gold must play catch up, or JP Morgan faces a force majeure in one of the precious metals—most likely in the silver market.

“. . . we probably missed the last chance to buy gold at $1,580, and silver under $27,” said Turk.

“I think it’s becoming increasingly clear that the central planners are bluffing,” Turk continued.  “They are holding a losing hand….People are starting to understand they are being played with by these guys.”

Turk believes the next big rally in the precious metals has begun.  He was correct last year, and from the looks of the Swiss 2-year bill, gold could breakout above $1,640 as early as this week.

“Big, Big Moves” in Gold Price in August, Elite Insider Leaks to GATA

By Dominique de Kevelioc de Bailleul

As early as 10 days, the gold price will suddenly explode to the upside, according to one of Europe’s elite.  Moreover, the European tycoon also explained why the silver price soared approximately 150 percent to nearly $50 within an eight-month period of Sept. 2010 and Apr. 2011.

Speaking with SGTreport host Brandon Smith, Chairman Bill Murphy of Gold Anti-Trust Action Committee (GATA) said a longtime British “contact” told him that the month of August will usher in an event which will shock traders into buying the gold and silver bullion market aggressively again.

“The fellow I spoke with I’ve known for years, one of the wealthier men in all of Europe,” said Murphy.  “He’s got a lot of connections . . . It will be tough for the gold and silver markets [during the month of July], but starting in August they would start to ‘go nuts’, and they would ‘stay nuts’ for a long time. . . Big, big moves are coming, starting in August.”

Murphy continued with the suggestion that the “big, big move”, starting in August, could possibly be triggered as a result of an announcement by the CFTC regarding its nearly four-year-long investigation into charges of silver market manipulation practices leveled against mega-banks JP Morgan and HSBC, the two banks that Murphy and his associates at GATA have accused for more than a decade as the kingpins of the gold and silver market cartel.

“I’ve a great deal of respect for Bart Chilton, one of their commissioners,” Murphy explained.  “I’ve met him twice—communicate with him here and there—he doesn’t tell me anything he can’t—but he told me . . . I don’t know . . . two, three months ago, that we should be hearing something [announcement] in three or four months, either way.  So, that would put it [the announcement] in August.”

Echoing predictions for a late-summer rally in the precious metals market, Goldmoney’s James Turk, told King World News, Jul. 16, the factors that soared precious metals prices in 2007, 2008 and 2010 are, again, in place for another stellar move to the upside this summer, as well.

According to Turk, in addition to the volatile credit markets in Europe, prices of food commodities are expected to jump sharply in August in response to global drought conditions, including severe drought conditions in the world’s breadbasket, the United States, not witnessed since the 1950s.  Turk expects the commodities market to spark another eye-popping move in the precious metals.

“There is a new factor at work that is about to light a fire under the precious metals that few people recognize – food inflation,” said Turk.  “It was one of the key drivers in the summer of 2010 which launched the huge rally that eventually took silver near $50 and gold to a new record over $1900.

“Food inflation was also a factor in the big run-up of the precious metals in 2007, and early 2008, when food riots broke out around the globe because of high prices,” added Turk, and conclude, “food inflation will again become one of the drivers sending gold, silver and the mining shares much higher from here.

“The summer doldrums are over.  Gold and silver are ready to get exciting once again.  We can expect a rally from here that will take our breath away.”

Gold & Silver: Explosive 2010 Rally Poised to Repeat

By Dominique de Kevelioc de Bailleul

“The precious metal markets feel just like the summer of 2010,” Goldmoney Chairman James Turk told King World News, Monday. With European woes presently the primary focus among investors, as it was at about the same time in 2010, Turk suggested the monster rally that began in the summer of 2010 is overdue for a major move to well past $2,000 and $50 for gold and silver prices, respectively.

In the summer of 2010, gold and silver prices took 31 months to recover and eventually breakout to new bull market highs following the Lehman collapse.

It’s been 14 months since the brutal correction in PM prices from the April 2011 highs, but Turk believes the corrective phase may have run its course, with “sentiment being at rock bottom” as an historically reliable hint of an imminent market about-face to higher prices.

To illustrate Turk’s point, in order to match today’s abysmally low market sentiment in the precious metals, we have to go back to October 2008, the month of panic from the post-Lehman debacle.

During that month of impending doom, which coincided with the absolute bottom of the silver crash of $8.50, off from the high in March 2008 of $21, Bloomberg wrote, “It looks like we’re on the edge of a bottomless pit in precious metals … Confidence is at rock bottom. No one wants to be long any commodity.”

From Reuters, a month later, in November 2008, “Fears of a global recession will continue to weigh on silver prices. Globally, we’re in a new paradigm. It’s difficult for anyone to know exactly where the bottom is.”

Fast forward to the summer of 2010, Turk famously predicted a seasonally-unusual late-summer rally in the precious metals—a rally which, in retrospect, was the result of market participants front-running an expected announcement of further ‘quantitative easing’ from the Fed.

It turns out, the front-runners were correct. On Nov. 3 2010, the Fed announced QE2, the buying of $600 billion of U.S. Treasury securities. Gold and silver prices soared, with gold jumping from $1,175 to $1,920 and silver soaring from $17.50 to nearly $50 throughout a 13-month rally in the precious metals.

Today, the market is on the cusp of another monster rally, according to Turk, and the “eery” feeling he has of a replay from the Fed, the catalyst for the entire bull market rally in the monetary metals, could be gleaned from post-FOMC comments as well as speeches and writings of Fed ‘officials’ of late. The latest speech comes from San Francisco Fed President and CEO, John Williams, who attempts to condition the markets to incorrectly conclude that the Fed’s QE initiatives don’t correlate to consumer price inflation—a point also, coincidentally, made by the Tokyo Rose of the gold market, Jon Nadler, in an interview with Bloomberg Television on Jun. 22. See BER article, Jon Nadler, Another Fed Whore

In a speech by the Fed’s Williams, Tuesday, titled,Monetary Policy, Money and Inflation, he stated, “In a world where the Fed pays interest on bank reserves, traditional theories that tell of a mechanical link between reserves, money supply, and, ultimately, inflation are no longer valid.

“Over the past four years, the Federal Reserve has more than tripled the monetary base, a key determinant of money supply. Some commentators have sounded an alarm that this massive expansion of the monetary base will inexorably lead to high inflation, à la Friedman. Despite these dire predictions, inflation in the United States has been the dog that didn’t bark.”

Economist, John Williams (the other John Williams) of ShadowStats.com, disagrees. According to the ShadowStats.com website, Williams published (see chart, above) how the Fed attempts to divorce Fed actions from market effects by jury-rigging consumer price data. ShadowStats Williams’ CPI model of 1980 reveals inflation running at nearly 10 percent, not the 2.1 percent published by the Fed.

According to Goldmoney’s Turk, investors of precious metals should buy during these phases of very low market sentiment and lulls in Fed policy, because when the Fed actually makes the announcement for more ‘quantitative easing’, a good amount of the move in the precious metals will happen before the announcement, as was the case in 2010.

The silver price, for example, climbed nearly 50 percent to $25, leading up to the day of the QE2 announcement of Nov. 3, up from its summer 2010 low of $17.33. After the Fed QE2 announcement of further U.S. Treasury buying of $600 billion, silver doubled in price within six months.

Turk expects another big move, like the one that began in the summer of 2010, and he urges investors to accumulate more metals before the formal announcement of QE3, not after.

Global Financial System, a “Dead End of Historic Proportions”

By Dominique de Kevelioc de Bailleul

As the S&P rallies on any particular day while the ongoing sovereign debt crisis plays out in Europe, American traders could be seriously misinterpreting the meaning behind any move higher in U.S. stocks, and conversely, the deceptively less-than-spectacular move higher in gold that traders have come to expect during the heat of the sovereign debt crisis now reaching panic levels.

As recently revealed data from the Census and Statistics Department of the Hong Kong government, the Chinese have escalated purchases of gold bullion through its Hong Kong proxy.   In addition to the record-breaking gold import data, Beijing has maintained a standing order to its gold producers to desist from supplying the gold market outside of China.  All of that should ring alarm bells loudly to anyone paying attention to the stealth stampede into gold—physical gold—and that it’s very likely that some nasty global devaluation of paper assets is being hatched in the not-so-distant future.

Chief Investment Officer of Sprott Asset Management’s $10 billion investment pool told King World News that he agrees with KWN’s earlier interview with money manager Egon von Greyerz, who said, “There is no solution” to the European debt crisis.  Central banks are preparing for a “massive worldwide package” of “money printing” to devalue currencies on a global scale.  Paper assets will lose significant value against gold, according to Greyerz.

“The only way they can do that [to prevent an immediate Armageddon financial collapse] is with exactly what Egon (von Greyerz) suggested, and that is with a massive, global bailout,” Embry told KWN.  “I think it’s absolutely essential that the listeners be aware of the depth of the problem, and not listen to the mainstream media which glosses over everything and tells you to be in the conventional assets and that everything is going to work out fine.”

In fact, to illustrate Embry’s suggestion to nix any mainstream media coverage for financial advice at this critical period, hours earlier to his interview with KWN, mainstream news outlet Yahoo Finance prominently placed an article titled, “Gold is 15% to 20% Overvalued: Jack Ablin” on its front page, which featuring a video interview with Harris Bank’s Jack Ablin.  And as the title of the Yahoo article stated, Ablin believes the price of gold is 15 percent to 20 percent too high, though when asked to clarify his reasoning in the Breakout interview, he wouldn’t (or couldn’t) offer any metric to make his point.  But Yahoo ran with the story anyway.

Interestingly, nearly three years earlier, on Sept. 18, 2009, when gold traded at approximately $1,000, Ablin admitted in a CNBC interview that he has no experience offering a fair value for the yellow metal.  Instead, he recommended that investors stay with paper assets and that gold is a “psychological” investment that cannot be valued.

“I’ve never been able to get my arms around gold,” Ablin told Maria Bartiromo.  “I think there are so many psychological factors which weigh on the price movement of gold that people like me, who generally like to look at the numbers, can’t come up with anything significant.”

But today, Ablin is confident that gold is overpriced at today’s level, though talk among the leadership of the EU regarding capital controls for the countries of Greece, Spain and Italy rippled through the gold market as he spoke.

As Ablin pitches stocks, those who can get their “arms around gold” suggest following the Chinese and other holders of unwanted U.S. dollars by accumulating gold bullion.

“Reuters reported today that EU officials are discussing capital controls,” Goldmoney’s James Turk told King World News, Monday.  “The central planners want control of your money, which is another good reason to own physical metal instead of paper.”

As capital controls for the people of Europe are proposed by political leadership in Brussels, the Chinese, Russians, Indians, Iranians and a half-dozen other Eastern nations that hold dollars are dumping them as expediently as possible without markedly disrupting the price—a ploy which comes with the help of JP Morgan’s paper price manipulation scheme.

“China has purchased hundreds of tons of gold in the last couple of months,” the KWN anonymous London trader told Eric King on the day of Fed Chairman Ben Bernanke’s testimony to Congress.  “China is not disclosing what their true reserves are.  Russia is delaying disclosure and so is Iran.  We saw record gold imports of over 100 tons through Hong Kong to China in April, as reported by the mainstream media, but what has been reported is just the tip of the iceberg.”

And to keep the unsophisticated investor off guard and ignorant of the undercurrents dramatically playing out globally in the gold market, JP Morgan has held headline ‘paper’ gold prices to range-bound levels while sophisticated central banks of Asia accumulate gold on ‘the hush’—a truly convenient arrangement for holders of the lion’s share of dollars.   And throwing in an Ablin interview once in a while to distract the average investor away from the real prize, gold, the Fed can surreptitiously devalue the dollar that much longer.

The scheme aids the Chinese, Russians and Iranians, but hurts middle-class America.

“One full hour before Bernanke’s testimony, the bullion banks started selling,” Anonymous continued.  “Over the next 4 hours, the bullion banks sold the equivalent of 515 metric tons of paper gold.  This was in just 4 hours, and again, the selling started one hour before Bernanke’s testimony.”

Anonymous goes on to say that an astounding 515 tons of ‘paper’ gold were sold within a four-hour period, giving Eastern buyers of the physical metal an enormous amount of tonnage at cheap prices.  “. . . this action did create tremendous supply for the Eastern buyers to lock in the spot price of gold.  This will patiently be converted to physical in the coming weeks,” (s)he said.

That activity behind the scenes within the gold market is a clear sign to 40-year veteran of the markets Robert Fitzwilson of Portola Group that the financial system is in the throes of an epic event.

“Governments, economies and societies are converging on a common dead end, and it is a dead end of historic proportions,” he told KWN, and suggested that the only asset to cling to is the same asset that central banks of Asia have been furiously and quietly accumulating—GOLD.

Swiss Bank Copies MF Global Fraud, Averts Disaster

When James Turk, Marc Faber, Eric Sprott and Gerald Celente say get your gold out of the hands of bankers, each one of these men isn’t hyping the gold trade.

Consider Switzerland, a nation which relies on customer trust of its banking system for a substantial portion of its Gross Domestic Product (GDP), and which holds approximately 28 percent of all funds held outside of the jurisdiction of the funds’ origins (The Boston Consulting Group Global Wealth 2009), committing a fraudulent disclosure of a highly sensitive financial product.  That’s what happened to a well-heeled customer of an unnamed Swiss bank charged with storing the customer’s physical gold bullion, according to Egon von Greyerz, founder of Switzerland’s Matterhorn Asset Management.

“We are stressing to investors to take their gold out of the banking system, not only because there are runs on banks that will continue, but the risk of being in the banking system is major,” von Greyerz told King World News.  “So you should take the additional step of not just owning physical gold, but also owning it outside of the banking system.

“We (just) had an example of a client moving a substantial amount (of gold) from a Swiss bank to our vaults, and we found out the bank didn’t have the gold. This was supposed to be allocated gold, but the bank didn’t have it.  We didn’t understand why there was a delay (in our vaults receiving the gold), but eventually we found out why there was a delay (the bank didn’t have the gold).  It’s absolutely amazing, but not surprising.”

Reminiscent of another landmark breach of fiduciary trust in the U.S., regarding one of the Fed’s primary dealers MF Global and Gerald Celente’s gold futures account, the revelation of banking fraud has moved to Switzerland. But fortunately, the Swiss bank in question scrambled to find the gold—and was successful acquiring the bullion for its customer—this time.  Though, in the case of Celente, he still hasn’t been made whole from his missing ‘allocated’ brokerage account held at MF Global.  And the gold he contracted for delivery was credited to JP Morgan’s books, instead.

“Every financial institution is under the same kind of pressure as we see in Europe. If you think your money is safe with any of those big names, you’re making a big mistake,” Forbes Magazine quoted Celente in an InfoWars.com interview of Nov. 17, 2011, more than two weeks after MF Global’s Oct. 31 bankruptcy.

“When I say take your money out of the banks and put it under the mattress, this is not advice,” Celente said, reminding listeners of the interview that he is not a registered investment adviser.  “Personally, I buy gold coins from reputable companies. I take my money out of investment funds and I buy gold and silver. You need the three g’s — gold, guns and a get-away plan.”

Celente has stated numerous times that, not only bank cash accounts, but bullion stored within the banking system should be withdrawn and held at fee-for-service storage facilities—such as private bullion storage vaults—or home safes.

Cracks in the physical gold market can be anticipated, according to CFTC testimony from one of the gold market’s leading apologists of JP Morgan’s suspicious derivatives trading, Jeff Christian, founder of commodities consulting firm CPM Group, though Christian’s statements weren’t expressed clearly to the layman.  Note: Jeff Christian once worked for Goldman Sachs, another firm suspected of rampant fraud in the derivatives market for mortgage-back securities.

“The CFTC, when it did its most recent report on silver, used the term that we use, ‘the physical market.’ We use that term, as did the CFTC in that report, to talk about the OTC market — in other words, forwards, OTC options, physical metal, and everything else,” Christian told CFTC Chairman Gary Gensler in a Mar. 25, 2010 testimony, admitting to the Commission that the CFTC weekly reports regarding physical inventories at the COMEX includederivatives.  Emphasis added.

Gold Anti-Trust Action Committee (GATA) Director Adrian Douglas provided one of the most powerful testimonies at the CFTC hearing, when he pointed out the enormous size of paper gold in the market (led by JP Morgan’s derivative desk) and the tacit implication that physical gold allegedly held for unsuspecting clients across the globe may not exist, including gold allegedly stored in Swiss banks in alleged ‘allocated’ accounts.  In other words, there’s approximately one ounce of gold for many times more paper gold, which, if called for delivery, could force another MF Global incident anywhere in the world.

“ . . . if we look at the physical market, the LBMA, it trades 20 million ounces of gold per day on a net basis, which is $22 billion,” Douglas told the CFTC.  “That’s $5.4 trillion per year. That is half the size of the U.S. economy. If you take the gross amount, it is about 1 1/2 times the U.S. economy. That is not trading 100-percent-backed metal; it’s trading on a fractional-reserve basis.”

And, on Monday, CFTC Chairman Gary Gensler has opened another investigation into JP Morgan’s derivatives trading losses from activities its CEO Jamie Dimon initially said where executed as hedges, according to Dow Jones Newswire.  However, Bloomberg has confirmed that Dimon has since retracted his statement regarding the type of trading activities that resulted in a substantial loss.

“Commodity Futures Trading Commission Chairman Gary Gensler said the agency had opened an investigation into JP Morgan Chase’s trades, which have resulted in a more than $2 billion in losses so far, but declined to comment on the specifics of the probe,” stated Dow Jones Newswires.

The full extent of the losses and ramifications of the red ink at America’s largest Fed primary dealer to the global banking system are not yet known.  Speculation of banks calling in gold to sell it into the marketplace to remain liquid run rampant.   von Greyerz’s statement to King World News only serves to escalate nervousness among investors to run to physical bullion in the gold market.

Billionaire George Soros Spikes Gold Position; Yahoo Says Gold in Bear Market

On the day GoldCore reports George Soros’ nearly quadrupled his holdings of the SPDR Gold Trust GLD in his latest SEC filing, Yahoo posts a front page article titled, Gold Tumbles Into Bear Market on Concern Greece May Leave Euro.

As the latest example of media working with Washington to bamboozle the public, the reader of the Yahoo piece won’t find an amplification of its salacious headline.  On the other hand, gold specialist firm GoldCore reports on the same day that global insider George Soros told the SEC he raised his stake in GLD, dramatically.

“Billionaire investor George Soros significantly increased his shares in the SPDR Gold Trust in the first quarter. Soros Fund Management nearly quadrupled its investment in the largest exchange-traded gold fund (GLD) to 319,550 shares – compared with 85,450 shares at the end of the fourth quarter,” stated gold market consulting firm GoldCore in an open letter to the public.

In addition to its hit-and-run article title, Yahoo slyly touches on a significant talking point of the Fed’s tactic of conditioning the uninformed investor into eschewing the only lifeboat available to most middle class investors during the global financial crisis—gold—by seducing the reader into believing that the U.S. dollar is a safe haven and that gold is merely another commodity vulnerable to terrible economic prospects.

Yahoo quotes a Fed primary dealer UBS in an interview with a primary outlet for Fed propaganda—Bloomberg Television:

“It’s a risk-off environment,” Peter Hickson, head of commodities research at UBS AG, said in a Bloomberg Television interview. “People are concerned about liquidity and they’re going to take security in the U.S. dollar.”

Former George Soros partner of the famed Quantum Fund, Jim Rogers, has repeated stated that the knee-jerk reaction by institutions and amateur investors to run to the dollar during this particular and protracted crisis is “the wrong thing to do”, as running away from the euro into another “flawed currency”, the dollar, will turn out to be financial suicide when the trade is over.  Rogers is staunch gold bull.

But speculators will take the trade for a short-term profit, according to Rogers, while long-term investors should view the quirk of madness in the gold market as an opportunity to buy gold at lower prices.  The Chinese and other Asian investors certainly have been, scaling into gold all the way down during the correction in the yellow metal.

“Right now, the gold market is in the middle of a battle between the paper traders and the holders of physical metal,” Goldmoney’s James Turk told King World News (KWN), Tuesday.  “We are seeing huge Chinese import stats for physical gold and robust demand elsewhere for physical metal.”

But Yahoo won’t lead with a headline about massive Chinese buying of gold or that gold futures (and silver futures) have slipped once again into backwardation, a market condition which implies heavy physical buying of the metal as the virtual paper market sells off.

“Do not listen to the propaganda and the mainstream media, and do not be spooked by market action because the manipulative activity in the markets right now is so extreme that the market prices are telling nothing about reality,” Sprott Asset Management’s Chief Investment Strategist John Embry told KWN on the same day as the Turk interview.

“I think it’s important at this time that people who’ve been around a long time and have a pretty good grasp of what’s unfolding should express their views to the public, just to counteract the propaganda that they’re receiving from mainstream media.  It’s tough enough without being lied to all the time,” he added.

With more than four decades of working the markets under his belt, Embry closes the KWN interview by advising nervous gold investors to “stick with your positions and you’ll be fine” in the end.  Stop reading comments by media and financial institution surrogates of the Fed, and stay the course.

Hey Silver Bugs, Start Buying!

As silver continues to slide from Wednesday’s mini massacre, with today’s trade already dropping silver below its 20-month moving average of $32.74, accumulators of the white metal should immediately begin scaling into the metal in preparation for the next assault on $50, according to precious metals bulls.

The brightest minds of the bullion markets agree that a coordinated take down of the PM complex was orchestrated in advance of an upcoming big event—or two.  James Sinclair, Goldmoney’s James Turk and Sprott Asset Management’s Eric Sprott agree that central banks were behind Wednesday’s assault. Sign-up for my 100% FREE Alerts

Moreover, many within the PM community, as well as those outside of the relatively small bullion market clique, believe that the recent rally from last December’s lows foreshadows something big anticipated this year.

Marc Faber of the Gloom Boom Doom Report and Jim Rogers of Rogers Holdings place strong odds that Iran will be attacked—but, by whom and when, are unclear.  But an attack is “almost inevitable,” Faber told Reuters on Tuesday.

Two weeks ago, Rogers told India-based Economic Times an attack on Iran is “madness” on the part of the U.S. or Israel, as a threat to the world’s fifth-largest oil by the West (or allies) would most likely escalate a confrontation with Iranian allies, Russia and China.  Crazy? Yes, “but it looks like it will” happen, he said.

Though Iran’s threat to close the Strait of Hormuz could soar oil to $200, taking already-disintegrating Western economies down harder, still, both Faber and Rogers believe that the Fed and ECB would then be forced to openly announce more ‘quantitative easing’—though Rogers has said on several occasions that the Fed hasn’t stopped QE2.

“Say war breaks out in the Middle East or anywhere else, (Fed chairman) Mr Bernanke will just print even more money.  They have no option; they haven’t got the money to finance a war,” said Faber.

Roger’s hasn’t offered a plausible reason for the U.S. (or Israel) to attempt a geopolitical move against Iran so outrageous as to characterize it by him as “madness.”

But Faber does proffer a strong enough motive to make sense of such a bizarre plan—a plan that threatens to draw two Asian nuclear powers in defense of Iran.

“The Americans and the Western powers know very well they cannot contain China economically, but one way to contain China is to switch on and switch off the oil tap from the Middle East,” Faber said.

The lesser-discussed issue in the Middle East, which, by proxy, would most likely draw Russia and China into a military confrontation with the West, revolves around Syria and its known reciprocal defense treaty with Iran.  An attack on Syria equates to an attack on Iran—which brings back again the likelihood of Russia and China as defenders of Syria.

Last week at the United Nations, Russia and China vetoed proposed sanctions by Europe and the U.S. against Syria.

“Some countries submitted a draft resolution to blindly impose pressure and even threatened sanctions against Syria. This would not help to ease the situation,” Chinese foreign ministry spokesman Ma Zhaoxu said, according to Agence France-Presse (AFP)

Russia’s envoy to the United Nations, Vitaly Churkin, said the UN draft was “based on a philosophy of confrontation,” and added that sanctions imposed on Syria were “unacceptable” to Russia.

In response to the veto from Security Council members, Russia and China, American Ambassador Susan Rice said she is “disgusted” at Russia and China’s decision to veto the UN resolution to sanction Syria.

Russia’s Churkin struck back.  “Unfortunately, some of our colleagues choose to make rather bizarre interpretations of the Russian proposals,” said the Russian UN Ambassador.

After last week’s war of words between the U.S., Russia and China over the U.S. Security Council vetoes, Faber cannot help but to believe that the next step could include unilateral action by the U.S. in the region.

He told Reuters, “I happen to think the Middle East will go up in flames,” and added, “You have to be in precious metals and equities . . .”

On Friday, Faber told The Gold Report, “If you don’t own any gold, I would start buying some right away . . . ” Sign-up for my 100% FREE Alerts

Hey Silver Bugs: Is James Turk Off His Rocker?

Last years call by Goldmoney’s James Turk for gold to reach record highs during the seasonally slow summer months seemed, frankly, off the wall.  But, not only was he nearly alone in the call (James Sinclair agreed with Turk), he was right.  See BER article, On Gold: Team Sinclair-Turk 1, Marc Faber 0.

Now the gold and silver expert extraordinaire expects the silver price to double as soon as it breaks out of its ‘descending wedge’ price pattern.  He offers the chart, below, obtained on the KingWorldNews.com Web site. Sign-up for my 100% FREE Alerts

“This following weekly silver chart is really looking very powerful and as I have been saying, once silver hurdles above $35, I expect to see $68-$70 in 2-to-3 months,” Turk told King World News during the weekend.

Compare Turk’s latest call for a double in “2-to-3 months” with silver’s monstrous run of 177 percent from September 2010 through April 2011.  That eight-month move, or a 13.6 monthly compounded rate of return, is half the rate of return expected from Turk’s latest forecast of a 26 percent compound rate of return for throughout the three months.  A truly remarkable call.

However, before silver bugs can sit back and watch the fireworks, silver must overcome its descending wedge upper band, first, which, from the graph, looks like the $35 level.

“Note how the downtrend line, the $35 resistance level and the current silver price are getting ready to meet,” Turk added.  “Silver’s first attempt to hurdle $35 could happen within the next 2-to-3 weeks….”

Today, as silver trades near $33, it could break through $35 by as early as February, according to Turk.

Presumably, dollar weakness must play a part in Turk’s latest call.  The chart of the USDX, below, shows the dollar beginning to breakdown from its eight-month rally beginning in early spring, as the euro crisis escalated to a point of near hysteria.

Many bullion analysts have pointed out, however, that throughout the crisis in Europe, one would think the dollar would have manage a more meaningful rally.  An 11 percent move off its near-term bottom of 73 on the USDX, the dollar topped out at approximately 81, which, considering the intense focus brought onto the euro, day after day for eight months, the dollar’s touted ‘safe haven’ status should be considered only that: touted.

What could Turk be sure about that would warrant a frenzied buying silver fest?

A move in silver that rapid could possibly mean that a surprise deal in Europe to stabilize the euro is in the offing, or, maybe, Iran gets drawn into a kickoff to WWIII.  Or, how about the Fed panics and announces what it has been doing all along anyway, monetization of debt through more QE.

In any event, Turk expects a flight out of the dollar.  That would leave Beijing plenty of room to ease again as China fights its own real estate crash and declining exports (see BER article, GET OUT of STOCKS).

What ever triggers a Turk scenario will no doubt disturb the peace in the currency markets, between warring nations, or both.

If silver does double in price within three months following a clean break from the $35 level, Goldmoney’s James Turk should go straight to the head of the class as far as silver investors are concerned. Sign-up for my 100% FREE Alerts

Marc Faber’s latest take on the Gold Price

After gold’s nearly $150 rebound from its December low, Marc Faber continues to believe that gold is not done with its correction, but he recommends the precious metal during an environment of negative real yields on U.S. Treasuries engineered by a Bernanke Fed. Sign-up for my 100% FREE Stock Alerts

Speaking with Fox Business on Jan. 17, the publisher of the Gloom Boom Doom Report suggests that, in response to record-low interest rates, investors should accumulate a “little bit” of gold each month instead of trying to pick a bottom in the gold price and going all in.

For approximately a decade, Faber has liked assets, which have historically benefited from widening U.S. current account deficits and central bank money printing, especially following 9-11.  For most investors, today, that means holding stocks and precious metals.

“Well, I think that eventually you want to be positioned more in equities than in government bonds, and you want to own some precious metals as well,” Faber said as a response by investors to future inflationary pressures he expects as a result of rapid money supply expansion and continued $1+ trillion U.S. budget deficits.

When asked about a gold price within range of $1,650, Faber took the contrarian viewpoint held by many gold market analysts and technicians.

Taking the opposing position of those held by 40-year veteran Jim Sinclair of JSMineset.com, currency specialist Jim Rickards, and another veteran gold analyst GoldMoney’s James Turk (who believe the lows in gold had been reached in early January), Faber apparently still harbors the notion that gold could drop to as low as the $1,100 to $1,200 range before beginning its next move to all-time highs.

“Well, I like it [gold], yes, but I think the correction is not over yet,” he said.  “I think, we had a big correction from the peak September 6 when gold hit $1,921.  We went down to around $1,522 at the end of December.  Now we’ve rebounded above $1,600.  I think we can have another leg down.”

In September 2011, Faber told CNBC, ““We’re now close to bottoming at $1,500, and if that doesn’t hold it could bottom to between $1,100-1,200.”  So, Faber remains unconvinced that the gold price has bottomed.  See BER article, Marc Faber Releases Gloom Boom Doom Report.

In countless previous interviews, Faber has said he would never sell his gold due to its special historically based role as insurance against profligate government spending, expansionary central bank monetary policy or financial disaster.

“If I were an investor or a saver I would buy every month, a little bit, and not everything at the same time, because what you want to essentially have is an insurance policy,” Faber suggested.

As no surprise to those already familiar with Faber’s thinking, he has recommended that investors stay far away from U.S. Treasury debt, a viewpoint also held by another popular investment guru, Jim Rogers of Rogers Holdings—who, by the way, is short U.S. bonds.

Faber has said repeatedly that at some point bonds will fall and interest rates will rise, but he doesn’t know when that will happen.

“It’s very difficult to tell when the central banks are manipulating and keeping interest rates artificially low,” he said.

Though not asked during this interview, Faber routinely gives a similar response to journalists who ask him how high gold can go before the gold bull market comes to an end.  His pat response is usually, “I don’t know; you’ll have to ask Mr. Bernanke.”  Sign-up for my 100% FREE Stock Alerts