JP Morgan Secretly Stockpiles Silver and Gold—Blood Money

By Dominique de Kevelioc de Bailleul

Leave it to Max Keiser to pick up on the Silver Doctors article, titled, “Is JP Morgan Shorting Paper Metals While Acquiring Massive Physical Stockpiles?

If Keiser, who himself appears to have once been a clever and scheming juvenile delinquent, believes the article’s supposition reeks of the devil’s sulfur, there may be more than a sliver of truth in it.

The Silver Doctors cite Jim Sinclair, ‘Mr. Gold’, who has said two things which would most likely prove to be foolhardy not to believe.  One, that the Fed would embark on “QE to infinity.”  And, two, the bullion banks would amass the lion’s share of the bull market profits in the rise in gold and silver prices.

The first looks like a done deal.  The second will most likely pan out as well, which takes us back to the Silver Doctors article.

The ‘Doc’ goes on to quote, David R, a veteran bullion trader, who has traded at the desks at AIG, Barclays, and UBS.

They [JP Morgan] buy the physical silver at the same time they sell the future (on Comex) futures trade in contango (higher price than spot physical) they get zero interest rate cash from FED so borrow the money for free, they own the vaults to store the silver…. so as the future comes to maturity they can either settle against their physical long or roll the future to collect more free contango…. This is pure arbitrage paid for by the FED.  This has been going on for over 30 years and why shouldn’t they be allowed to have 25% of the Open Interest?  There is no manipulation because they are short the futures and long the physical and have “ZERO” price risk, but nice profits!  It’s brilliant trading and completely 100% legal and that’s why they will never be charged with manipulation because there is none going on. Sometimes it’s just that easy!

Of course, it’s that easy.  Banks make money on spreads on every damn thing they touch.  But as Ted Butler and the fine folks at GATA have argued: when a single trader becomes dominate within a single market, it’s size, alone, affects price discovery.  That is, indeed, illegal, going back to the late 19th century—a time when the U.S. faced some of the nasty side-effects of an industrial revolution gone unfettered.

The man who fought the monopolists of the early 20th century, armed with the Sherman Anti-Trust Act of 1890, Teddy Roosevelt, must be rolling in his grave at the suggestion that JP Morgan’s “brilliant trading” is “perfectly legal,” as trader David R. suggests.  In fact, there’s nothing brilliant about JP Morgan’s criminal activity in the bullion markets.  The scam is not new; it’s as old as the hills.

According to Wikipedia, the lead author of the Sherman Anti-trust Act, Ohio Republican Senator John Sherman said the purpose of the Act was “to protect the consumers by preventing arrangements designed, or which tend, to advance the cost of goods to the consumer.”

In the case of the silver market, the cost to the consumer is inflation—in everything, especially in those things consumed each day for survival.  If the bullion markets are suppressed to give the U.S. dollar an advantage over the competition—bullion, the Fed can create more dollars, thereby forcing holders of the commodity (the dollar) to take a purchasing-power loss.

And with the latest mortality statistic revealing that more deaths in America come from suicide than from the result of an automobile accident, one must have to wonder how many of these suicides were the result of extraordinary bad economic times.

Another author of the Act, Senator George Hoar of Massachusetts, said, an entity that “merely by superior skill and intelligence…got the whole business because nobody could do it as well as he could was not a monopolist …(but was if) it involved something like the use of means which made it impossible for other persons to engage in fair competition.”

By the way, after the 1890 U.S. Senate ratified the Sherman Anti-Trust Act by a vote of 51-1, the House unanimously passed the bill with a vote of 242-0 on Jun. 20, 1890.

Can anyone image today’s Congress taking such a stand against the largest cancerous tumor of them all, JP Morgan?  Of course not.  Maybe Gerald Celente’s latest suggestion to boycott the upcoming general election is as good as Max Keiser’s suggestion to buy as much silver as one can.

The bottom line to the JP Morgan bullion prices suppression scheme is, if bullion prices reflected the weakness of the U.S. dollar, the Fed would have to stop printing them.  Congress would be forced to make the tough decisions regarding the public account, and the wrongs can be righted more quickly with less, much, much less pain—and most likely less suicides, too.

It’s been said, “Evil knows no boundaries.”  That evil is the Fed’s no. 1 stockholder, JP Morgan.  How Alan Greenspan, Jamie Dimon, Robert Rubin, Lloyd Blankfein and the other Den of Thieves can sleep at night is another puzzle for another time.  There’s a lot of blood on their hands, and for one, Blankfein, appears to have no idea why his hands are stained red.  What an anthropomorphic example of a living and thriving cancer.

God have mercy on these pathetic and perfect examples of humanity’s worst.

Gold Bugs: Do You Suffer from Pappagallo?

By Dominique de Kevelioc de Bailleul

As the Greek vote Sunday came and went, the G-20 Summit, ditto, and now the announcement of the FOMC meeting in Washington comes to a close, gold bugs appear to be hanging onto every event like dogs eyeballing his master in hopes of receive a scrap from the dinner table.

And for those news junkies following the European spectacle, how many times do we need to read a variation of the following quote?

“This [prop up of the global financial system] is not going to work unless they let the fund gear up and draw on the full firepower of the ECB,” David Owen of Jefferies Fixed Income told The Telegraph.

And here comes that ‘pappagallo’ line that Trends Research Institute’s Gerald Celente talks of—that tired, over-baked and repeated analysis coming out of every so-called financial ‘expert’ quoted for the past three years from so-called ‘papers of record’ . . .

The “only institution with the credibility and balance sheet to reassure markets. It would be much simpler if the ECB carried out quantitative easing but that does not seem to be an option.”

No kidding!  If only the masters of markets would notice how hungry you are, how starved for capital you are.  You’ll get it, because if you don’t, some very angry mobs, mixed and matched up among 46 million food-stamp recipients toting guns, won’t be too happy going to bed hungry.  And if you don’t think America’s pathetic version of nobility didn’t notice what happened in Egypt and Libya after the money run out, you’re not even half on track to understanding the gold market.

“So the wolves are at the door and it’s the door to (German Chancellor) Merkel’s home,” prolific author and money manager Stephen Leeb told King World News, Monday.  “My guess is she is going to cave. The Mexican central banker, Ortiz, who is widely regarded as one of the clear thinkers, was quoted as saying they can stop the problem in Europe almost immediately, ‘by carrying out a massive round of government bond purchases.’”

Leeb continued, “I think that’s where we have to go.  In other words, just as our Fed has printed literally trillions of dollars by buying our bonds, the European central bank has to do something very similar.”

High-profile politicians and bankers are deathly afraid of violence and retaliation from an awakened citizenry, now hungry.  When a nation’s currency collapses, so do civility and bourgeoisie pretensions.  Leeb isn’t quite sticking his neck out with his prediction (and he knows it).  Either money floods the system now or in the fourth quarter, or whenever, privately held gold won’t change one microgram.

According to three-years of veteran gold trader Jim Sinclair’s commentary, the path has already been set; the endgame to the global financial system is clear—it’s done!  The propaganda, sideshow events from the actions taken by politicians and monetary authorities at this stage, are much, much too late and won’t change the outcome for gold.  Sinclair calls the charade, the circus act of political spin and downright lies—MOPE—Management of Perspective Economics.  The Fed calls it, Management of Expectations—or ’1984′ talk for the word: propaganda.

Either gold drops far less than financial assets, or gold will soar to massive heights, leaving financial assets behind.  What’s important is, the purchasing power of gold after the financial 9-11 dust settles in the coming months.  Then you become one of the ‘rich’ and ‘wanted’ by the lynch mob who will come to believe that you were unpatriotic for ditching worthless script, contributing to the dollar’s demise.  That’s all that you need to worry about.

Take it from Kyle Bass, the billionaire who has prepared for anarchy by fortifying his residential estate against wayward criminals.  Ask George Soros about Malaysian Prime Minister (1981-2003) Mahathir bin Mohamad’s publicly scapegoating the famed currency trader’s role in the Asia currency crisis of 1997-8.

In other words, just get some of the yellow metal and stop the suffering from the day-to-day wranglings of the price of gold.  Better yet, if you want to see what a patient’s heart monitor reading looks like during a heart attack, buy the white metal, silver, and enjoy the adrenaline rush.

Now, start preparing for escape routes and telling your friends you gave up on the gold market and sold all of what you had to pay for unexpected expenses.  You’ll be scapegoated, ratted out and a victim of envy and scorn—as the Mogambo Guru Richard Daughty predicts.

‘Mr. Gold’ on Gold: Toughen Up! Forge Ahead!

As an apparent gesture to lend a helping hand to Sprott Asset Management John Embry’s call for seasoned gold professionals to coach rosy-cheeked newcomers through the treacheries of the gold market, as witnessed so far this month, Mr. Gold, Jim Sinclair, posted an Open Letter for the weak-of-heart among his flock to ignore mainstream media, stare down that empty-chambered pistol of the Fed, and “forge ahead.”

“Please make an effort to stay balanced. Greed is a condition of lack of balance similar to fear,” the 40-year gold market veteran Sinclair stated in his Open Letter of May 16.  “Fear is being fanned from within the gold community as much or more than from outside. When people who know gold is seriously under priced talk temporary bear, they kick good people when they are down.”

Echoing Embry’s comments in an interview with King World News (KWN) on May 15, Sinclair directed the reader’s attention to the heart of the financial crisis—the more than $1 quadrillion worth of derivatives, armed and ready to explode anywhere, and at any time.  And sure enough, the most likely culprit of reckless trading of those synthetic time bombs (by assets held), JP Morgan, last week began warning the bank’s stockholders of a $2 billion loss from its “hedging” activities for the current quarter.

And not surprisingly, this week, Bloomberg reports the loss estimate at the nation’s largest bank now stands at $3 billion—creeping higher over time—which has become a familiar pattern among the banks of, first, low-balling the initial announcements, then ratcheting up to the true losses incrementally by the time of quarterly reporting.

Bloomberg’s Dawn Kopecki said on Bloomberg Television’s ‘Inside Track‘ that JP Morgan’s initial estimate of a $2 billion loss from its European mortgage bonds trading represents only the “tip of the iceberg,” and that Jamie Dimon’s characterization of the trades as a “hedges” is a lie.  Under FASB rules, the loss is the result of a gamble, not a hedge, and Dimon knows it.  Therefore, can shareholders trust Dimon’s estimate of the total trading loss?

“The problems of OTC derivative just brought into the headlines by Morgan is alive and well, guaranteeing QE to infinity,” Sinclair continued—as he again reminds his flock of the JSMineset.com mantra: “QE to infinity.”  And as the banks trade in wild speculation in an attempt to dig themselves out of the derivatives hole, Dimon and his banking cohorts know the Fed will bail them out if they lose the bets.

And again, it appears Sinclair is correct.  The “QE to Infinity” works like a charm.

Thursday, Bloomberg reports the Fed Minutes of the April FOMC Meeting, which revealed that several Governors said further money printing will be forthcoming if the U.S. economy stalls or if “downside risks to the forecast became great enough,” signaling to traders in its typical obfuscatory language that the Fed fears an exploding derivatives market and that the European solvency crisis will take down the financial system in another Lehman-like swan dive.  It’s ready to open the money spigots.

“You must make your decision in present time, neither fearful or greed-ful of the future,” Sinclair said.  “Look at every factor of gold and list them as bullish or bearish.”

One of the many of the gold market’s bullish factors comes out of Asia, where GoldCore executive director Mark O’Byrne told Bloomberg the appetite has not waned during the entire decade-long gold bull market.

“There has been significant buying particularly out of Asia in recent days,” said O’Byrne.  “In Hong Kong and Singapore there have been reports of tightness in the marketplace and premiums have remained robust on gold buyers of those markets.

“So, this has been a pattern we’ve seen for the past 10 years—that the Asian markets seem to be a little bit more price sensitive and they tend to buy . . a little bit more savvy on their buying, and they tend to buy on the price dips as we’ve seen in the past 10 years.”

Given the 10 years of professional gold buying out of Hong Kong (China’s supplier of overseas gold) and Singapore on significant pullbacks, Sinclair told KWN on April 2 that the only remedy for the amateur jitters is to . . . well . . .  “toughen up” and trust that “everything that you are doing you are doing for good, right and logical reasons.”   That’s what Asian professional buyers are doing.

Insiders Tell Jim Sinclair, $17 Trillion in QE Coming

No matter how the Fed tries to manipulate the markets through its orchestrated communiques, more ‘quantitative easing’ is coming, says ‘Mr. Gold’ Jim Sinclair.  And this time, $17 trillion more of Sinclair’s mantra “QE to infinity” is a done deal, according to him. Sign-up for my 100% FREE Alerts

How does he know?

“How does anyone know an answer to a question?  By being told.  By having sources,” Sinclair revealed to King World News, Friday.  “I’m half a century in the business.  I’ve constantly kept up my contacts in a very unique and focused way.  Quantitative easing was made clear to me, prior to Bernanke’s speech to the Washington group, prior to quantitative easing.”

The 50-year-plus veteran of the gold market first came to use the term “QE to infinity” back as early as the summer of 2009, suggesting he knew all along that the Fed had finally reach a liquidity trap and that it was inflate or die from then on.

Nearly three years later, there’s been no chink in that assessment, as evidenced by the Fed’s subsequent QE2 program, bogus currency swaps schemes as well as the most recent backdoor bailout of Europe through the Troika earlier this year.

“The next step in the formula is the fatigue of Asia in supporting bad Western monetary habits and QE to infinity to protect the long term 28 year up-trend line in the 30 year U.S. Treasury bond market,” he said in a Jul. 2, 2009 post.

A look at a 20-year chart of the 30-year Treasury reveals the trend line Sinclair had spoken of.  Investors seeking clues to the dollars next major move could find in the chart of the 30-year bond.

Both the MACD and Slow STO indicate intermediate-term technical topping in the 30-year bond, and the trend line has held ever since the Jul. 2009 post.

As far as the outlook for the gold market, Sinclair is as bullish on gold as he’s as sure of more QE from the Fed.

The battle, he said, for the Fed is to fight the rise in the gold price for as long as possible prior to the next formal announcement of further Fed expansion of its balance sheet.  A move through “$1,764 and they [Fed] lose control.  That begins the move which is exponential.

“It’s a formidable challenge (keeping gold below $1,800).  The true range of gold is $1,700 to $2,111, but these guys are going to try to fight it like nobody’s business.”

However, the fight will be lost and the breakout above the $1,700 to $2,111 range is inevitable following the next QE announcement by the Fed on the way to trillions more.  That, Mr. gold has no doubt.

He concluded, “If we’ve done over $17 trillion already, do you think we won’t do another $17 trillion?  Of course we will.” Sign-up for my 100% FREE Alerts

Attention Silver Bugs: Get Back into the Pool—NOW!

Insiders to Fed Chairman Ben Bernanke’s speech, delivered at a gathering of the National Association of Business Economics, popped silver futures higher by more than 60 cents within minutes of the NY open on Monday.  In his speech, Bernanke has finally admitted that more QE is needed, and his needed excuse is: fight stubbornly high unemployment.

The recent alleged decline (see ShadowStats.com) in the unemployment rate reflects a “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009,” he said to attendees in Arlington Virginia. “To the extent that this reversal has been completed, further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.”  Sign-up for my 100% FREE Alerts

“Continued accommodative policies!”  Translation: Attention silver bugs!  Get back into the pool—NOW!

While the FOMC is now stacked with nine doves to Bernanke’s 10-person committee, with Richmond Governor Jeffrey Lacker playing the sole bad cop in his role of providing the occasional head fake for those traders who don’t quite grasp the Fed’s communique con game, yet, there’s nothing stopping the Fed from its mission to monetize crushing levels of U.S. Treasury debt (save a long-shot Ron Paul win in November, of course).

To that point, on Friday, Gabelli & Company’s Caesar Bryan warned precious metals investors of the Fed’s ability (and a complicit media) to sway sentiment among the uninformed momentum traders who routinely push the silver market to massive extremes on the way up and on the way down.

“What we’ve seen is some optimism surrounding the U.S. economy,” Bryan told King World News. “This has led to people now thinking that the Federal Reserve can stop expanding their balance sheet and indeed begin to withdrawal some of their stimulus.

“So there’s been a pretty big change [due to Fed and media propaganda] in the last six weeks.  However, I think it’s important for investors to understand these mood swings can be pretty quick and violent.”

Bryan goes on to tell KWN that, though the Fed talks a tough game, it cannot stop expanding its balance sheet without imploding the entire global financial system—a point still not grasped by the majority of investors holding sovereign and corporate debt as well as money market accounts.

“There is real pressure for the central bank to continue to buy at the long end of the bond market to prevent long-term interest rates from rising,” Bryan said.  “So don’t be surprised in the next couple of months when psychology shifts back to people thinking the Fed will remain active.”

In retrospect, those “next couple of months,” according to Bryan, turned out to be only a couple of days.

But if investors can take to heart 50-year veteran Jim Sinclair’s macro outlook for gold (by extension, silver), long and drawn-out declines in the silver price provide excellent entry points for newcomers and accumulators, or ‘stackers’.

According to Sinclair, the Fed had already set course to monetize debt and devalue the US dollar following the collapse of Lehman Brothers in 2009, no matter what Bernanke may say about unemployment, the economy or anything else.

Moreover, geopolitical considerations regarding Iran and the White House’s decision to cut Iran from SWIFT only serves to hasten the dollar’s decline.

On Saturday, Sinclair posted on his Web site JSMineset.com:

The major financial weakness in the U.S. is the level of the U.S. dollar due to sundering use in international contract settlement [accelerated by cutting Iran from SWIFT], the clear and present trend of substituting both the Yuan and Euro as international settlement currencies, and the lack of true economic buyers in the U.S. long bond market.

History will record this decision at this time as a major factor in the final move to financial unwind in the West.

The letdown of the housing report today does not support the majority view that the U.S. is gaining take off speed economically. It is not. It will not and QE will go to infinity, about that there is no question. [Emphasis added]

Of course there’s no question about QE-to-infinity, as Sinclair has suggested all along; the question really is, who will be blamed for the roaring consumer price hikes to come?  The Fed or Iran and speculators?  Sign-up for my 100% FREE Alerts

Jim Sinclair: $2,000+ Gold “Coming Soon”

In Thursday’s post on JSMineset.com, Jim Sinclair reminded investors of his long-standing slogan for the global financial crisis: QE to Infinity Sign-up for my 100% FREE Alerts!

“QE to infinity – there is no other choice,” the life-long gold market consultant stated.  “There is no other functional tool in anyone’s toolbox to stop camouflaged runs on the bank.”

Therefore, he wrote, “QE to infinity in the Western financial world is assured. As a result, gold in the $2,000s is coming soon.”

How can Sinclair assure this outcome?  Well, no one sees into the future with anything resembling crystal clarity, but Sinclair is studied on matters of central banking, money printing and the psychology of politicians and the most likely social consequences of their actions during financial crises.

For the most part, Americans believe that as the sole superpower of the world, the U.S. is not subject to the same rules as foreigners must abide by.  During the first half of the 20th century, the German people, too, believed that they were special.

In his book, When Money Dies: The Nightmare of the Weimar Collapse (1975), its author Adam Fergusson describes the events, attitudes of politicians and public as well as the consequences of Weimar Germany’s monetary policies following WWI which led to the collapse of the Reichsmark.

There are some parallels to today’s crisis with the financial catastrophe of 1919-23 in Germany (and Austria) to support Sinclair’s thinking up to this point.

“The Chancellor [Karl Wirth, 1921-22] would accept no connection between printing money and its depreciation. Indeed, it remained largely unrecognised in Cabinet, bank, parliament or press. The Vossische Zeitung [German newspaper] of August 16 declared that the opinion that the flood of paper is the real origin of the depreciation is not only wrong but dangerously wrong.”

—When Money Dies

“S&P has shown really terrible judgment and they’ve handled themselves very poorly. And they’ve shown a stunning lack of knowledge about basic U.S. fiscal budget math. And I think they drew exactly the wrong conclusion from this budget agreement.”

—Treasury Sec. Timothy Geithner on S&P downgrade of U.S. debt

 “In Berlin the Majority Socialists and the Independent Socialists joined forces in a demonstration to protest ‘against the enemies of the Republic’”

“July 24 produced demonstrations against profiteering, capitalism and Fascism in Frankfort, where inoffensive citizens were molested, windows were broken, and one man kicked to death.”

—When Money Dies

“The ‘Occupy Wall Street’ movement has resonated around the world . . . Unlike some of the ‘anti-capitalist’ and ‘anti-globalisation’ movements that have sprung up and died down over the past couple of decades, this is directly linked to a sense of failure of capitalism itself. It is also intimately linked to working class discontent and rage at the conspicuous enrichment of the super-rich continuing through an enormous decline in working class living standards, unprecedented since the 1920s.”

—Red Scribblings – A blog for socialists politics, critical analysis and debate

 “In spite of his robust common sense, the man in the [German] street is beginning to believe what some interested industrialists are telling him, so that he seems almost readily to subscribe to the false doctrine that it is good for trade that a government, by inflationary finance, should habitually spend more than its income.”

—When Money Dies

 “O’Neill [Treasury Sec. Under President Bush] said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. ‘You know, Paul, Reagan proved deficits don’t matter,’ he said, according to excerpts. Cheney continued: ‘We won the midterms (congressional elections). This is our due.’ A month later, Cheney told the Treasury secretary he was fired.”

—Issues2000.org

“I will not support any plan that puts all the burden of closing our deficit on ordinary Americans.  We are not going to have a one-sided deal that hurts the folks who are most vulnerable.”

—President Barrack Obama

Clearly, the US is not at the stage of 1922 Germany, but the stage for a replay to some extent has been set in that U.S. budget deficits of 10% of GDP (not including unfunded liabilities, which exceed a projected $1.6 trillion cash-basis shortfall) is the first step toward a Weimar scenario.  A first step!

No one knows how the endgame will play out in resolving unsupportable debt levels, but it’s sure not going to include the Chinese continuing the game of mopping up debt issuance from Treasury.

Morgan Stanley’s Global Head of Economics Stephen Roach dismisses the notion that China’s $1 trillion-plus holding of Treasuries provides the needed disincentive to the Chinese to sell the bonds.

“After all, where else would they place their asset bets? Why would they risk losses in their massive portfolio of dollar-based assets?” Roach asked rhetorically. “China’s answers to those questions are clear: it is no longer willing to risk financial and economic stability on the basis of Washington’s hollow promises and tarnished economic stewardship. The Chinese are finally saying no. Read their lips.”

Recent data from the Fed’s H.4.1 shows a meaningful decline in Treasuries held by foreigners at the Fed.  The trend line of increased holding throughout the crises has finally been broken; holding are now beginning to decline at a time when holdings must increase at the same rate as the Treasuries are issued and rolled over.

For those interested in following Treasury holding by foreigners (not broken down by country), zerohedge.com provides a link and commentary on the Fed’s H.4.1 reported, issued weekly.

Jim Sinclair says gold’s going to $2,000 and beyond, with a final target price well above $10,000 as the crisis in Europe eventually makes its way to the U.S., ground zero.

James Turk on Gold: Getting Close to the Endgame

James Turk increasingly sees the tell-tale signs of the endgame for the U.S. dollar rapidly emerging right before his eyes.  Ergo, a move in gold that will “light people’s hair on fire,” as the Nostradamus of the gold market, Jim Sinclair, has predicted, moves ever closer to reality.

“What we are seeing today is just like we saw in the 1970s when hot money was flying around the world from place to place,” Turk told King World News on Monday.  “Despite the fact that the Federal Reserve is buying long-term paper, interest rates are still rising.”

And rising rates on the long end of the curve, not only have demonstrated the dangers of levering up the Fed’s balance sheet but extending its average maturity (one of the many problems with Greek sovereign debt), it’s extraordinarily costly to the Fed and those who’ve made a living front-running the Fed, a la PIMCO’s Bill Gross, who, by the way, just released his crocodile tears mea culpa address to investors on Friday.  It appears the insiders at Gross and Co. have had a bad year.

“So the high in government [Treasuries] prices is probably behind us,” Turk speculated.  “This will eventually [lead] to questions about the Federal Reserve’s solvency.  The Fed has a lot of low-yielding paper and as interest rates rise, the price of that paper will fall.”

It appears that while Turk’s legion of tin-foil hat wearers have so far weathered this year the most vicious turmoil in currencies, sovereign debt and stocks since the 2008-2009 meltdown, Bill Gross has been busy taking a bullet for the Fed (Buffett, too, from his purchase of BofA ahead of the most dreadful earnings releases for the banks in recent memory) at the expense of his shareholders.

What?  Bill Gross?  Sounds like another tin-foil conspiracy theory.

Consider the real threat of a military invasion of any OPEC nation that threatens to bypass the U.S. dollar in oil transactions.  Collectively, OPEC holds approximately 30 percent less Treasuries than the potential holdings of PIMCO’s $1 trillion.  It’s a far-reaching conclusion to support a case that Gross has not been touched by someone at the NY Fed—and at a most critical time when ‘Operation Twist’ needed a little help beyond the initial reaction to the news of its deployment.

That’s a sign of desperation, or fear, at the Fed.  As the founder of bullion storage company Goldmoney reviews his proprietary model, called the ‘Fear Index,’ Turk has not backed off from his earlier prediction of $2,000 by November 1.  But from the looks of things, gold may not reach Turk’s $2,000 target with only 10 trading days left for October, but given his widely-followed track record, reaching as far back to the year 2000, Turk can only be faulted for his intermittent flubs in the precise timing of his calls.

That precision, of course, only proves that Turk is not included in the loop of cc’ed memos following ad hoc conference call pow-wows held by Bernanke, Geithner, JP Morgan and CFTC cabal.

Besides, a review of Turk’s record for timing major moves reveals miscalculations of only mere weeks, for the most part, but more importantly and typical of Turk, it shows his willingness to stick his neck out for investors time and time again—unlike the endless lame calls made by big Wall Street firms that issue target prices 5% from present levels and on a time horizon that nearly assures a correct call.

Turk continued, “It won’t take a big jump in interest rates to cause people to question the Federal Reserve solvency, especially given the poor quality of the assets on the Fed’s books from the bailouts it has engineered.  This is all part of the the overall trend of increasing fear as part of my ‘Fear Index.’”

And that’s where the dollar dominoes are mostly likely to fall first.  In line with Turk’s belief that a dollar collapse will show up first in the U.S. Treasury market, Donald Coxe, former Global Portfolio Strategist for BMO Capital Markets (the firm of the iconic CEO Jeremy Grantham) told listeners of Financial Sense Newshour that the dollar’s Achilles heal can be gleaned from the stresses on the Fed’s balance sheet and from the participation (or lack, thereof) at Treasury market auctions.

Keeping a careful eye on the amount of direct bid take-downs by the Fed’s primary dealers in relation to the indirects (mostly central banks and the likes of PIMCO) may provide investors a heads up to the stress the Bernanke Fed feels.  Zerohedge.com does a good job keeping investors apprised of the capital flows at the Fed’s custodial accounts.

As the Fed stresses, gold moves higher.

“What we are seeing in the metals right now is the quiet before the storm, Eric,” said Turk. “These are excellent times to be accumulating gold and silver on the dips because longer-term you are going to see price levels for the metals that today would be considered unimaginable.  This is how secular bull markets work and this one won’t be any different.  It will end in a mania that will, ‘Light people’s hair on fire,’ as Jim Sinclair is fond of saying.”

Jim Sinclair applies Chaos Theory to Gold Price; Krugman loses Sleep

As a growing sense of a world about to turn upside down at any minute—and pretty hard, too—one has to wonder if much of the extreme political, social and economic events coming at us all at once from across the globe tie to the natural forces of a world desperately disentangling itself from the gross unfairness of a global economic model, its political systems contrived to enforce it, and the side-effects of its once-willing participants seeking justice through a the use of a new model now that the old one no longer works from them.

Those studied in such matters have already made the connection between the post-Bretton Woods era and today’s payback.  In fact, many have predicted the inevitable turmoil—but the sense (the underlying connection not yet made by many) that the world is about to change radically has finally begun to take hold of the mainstream, where it really matters.

“Markets usually do a pretty good job of coping with problems one at a time,” Oaktree’s Howard Marks wrote in a note to clients.  “When one arises, analysts analyze and investors reach conclusions and calmly adjust their portfolios. But when there’s a confluence of negative events, the markets can become overwhelmed and lose their cool. Things that might be tolerable individually combine into an unfathomable mess whose extent and ramifications seem beyond analysis.”

Isn’t what Mark describes a manifestation of a complex global financial model taking on a life of its own, as discussed in Nassim Taleb’s book, The Black Swan, which was inspired, in part, from Benoit Mandelbrot’s Chaos Theory?

But unlike the surprise fall of the Soviet Union in 1989, the collapse of the U.S. and Europe, along with the two regions’ 88% lock on global currency reserves, has, so far, played out in a most cruel and slow death.  But maybe that’s about to change.

According to JSMineset’s Jim Sinclair, the notion that the gold price has strayed too far from its 200-day moving average neglects to factor in Mandelbrot’s theories of the unpredictable nature of complex modeling outcomes.  Sinclair has said that the gold price has now moved into the “geometric phase,” taking a page from Mandelbrot’s work and applying it to the gold price.  If the $1,764 hold this year, Sinclair may also have his timing correct for the geometric phase, as well.

How many fat-tailed correlation plots of historical Treasury yields, money supply levels, debt-to-GDP ratios and a plethora of other broken relationships to the norm need demonstrating before other gold experts wake up to realize that the “new normal” mantra spewed on financial programs is the latest misdiagnosis of a condition that seeks to explain a malady that’s anything but normal.

But when feigned explanations for the rapid advance of the gold price from none other than the Sigmund Freud of economics, Paul Krugman, comes popping out in an early-morning exercise of free association during a bout of unexplained insomnia, you really know that overdue canary (U.S. economy) is never coming back out of that mine hole.

For more on this point, read Peter Schiff’s article, The Last Haven Standing

“The conscience of a liberal” still can’t find a conscience, it appears, and may explain his insomnia.

“Yes, it’s 4:30 a.m. where I am,” Krugman began his post.  “I found myself wide awake, thinking about gold prices. You got a problem with that?”

No, hard-money advocates don’t have a problem with that, Krugman.  But apparently, you have one.

Ever since Jim Sinclair, James Turk, Peter Schiff, James “Mr.” Dines and Richard Russell began losing sleep, too, over the inevitable fate of the U.S. dollar—back in 1999—readers rightfully discerned the authenticity and motive of these fountainheads of money theory by taking action to protect themselves from a debauched dollar way back then—and have since been sleeping very well.  And by the way, anyone who seeks to communicate with made-for-Princeton deterministic graphs, not only shows a lack of understanding of the possible applications of Chaos theory to global markets, but demonstrates an unwillingness to communicate to others outside of the Church’s cryptic language, too.  Maybe that’s a good thing.  Go back to sleep.

Gold Price entering Phase 3 of Bull Market: Jim Sinclair

$1,764.  That’s the demarcation price for gold’s move into the next phase of the bull market, the third and most exciting phase, characterized by widespread participation by the mainstream investor, according to Jim Sinclair.

As one of the world’s foremost “scholars” on the subject of gold and money, Sinclair believes the long-awaited awakening of the retail investor to the dollar endgame lies just ahead.

Phase 2 of the gold bull, he said, began at $524.90, and has now ended.

“$1764 has the same significance as $524.90 because it represents phase 3, the point when a runaway price market for gold would gain exponential properties,” stated Sinclair, on his Web site, JSMineset.com.

Anecdotal evidence of increased traffic at bullion dealers in the U.S. have been streaming in, as investors there already see the handwriting on the wall for the dollar, and want to front-run a replay of 1979.

Certainly, in Europe, the reports of periodic bank runs in Greece, Ireland, Spain and Italy (with the latter two through electronic withdrawals) have been well-reported since 2010, leaving Americans anxious for refuge as the back-end of the eye of the currency storm reaches the shores of the U.S.

So far, the assets of choice at this stage of the global financial crisis have been deep government paper markets, the Swiss franc, yen and gold, with most of the scared money presumably bypassing reasonable (and not so reasonable) facsimiles of money, and moving straight into gold.

“Some of the finest minds in gold anticipate a very short but brutal reaction in price,” added Sinclair. “The dollar market seems to not agree with a gold correction here.”

“Market wise, the Fed has thrown the U.S. dollar into the wind. Under .7400, the dollar denies a reaction in gold at these levels.”

Sinclair’s $1,764 marker for the price of gold is a key point in the bull market, he has repeatedly stated over the years.  That is the price where the most dramatic devaluation of the dollar begins, with a target north of $10,000 per ounce as a projected peak price for the metal, following the final months of the predictable mania period of phase 3—a phase much similar to the 100% move in the Nasdaq during the last six months of the tech bubble of 1999.  But, first, the fight for entry into phase 3 rages on before the real fun begins for holders of gold, according to Sinclair.

“Because $1,764 is such a significant number, you can expect one of the more serious price battles before the price departs to Alf Fields’ and Armstrong’s predictions,” he stated, referring to five-digit projections for the gold price from fellow hard-money advocates, Alf Fields and Martin Armstrong.

With price targets above $10,000, $1,764 gold is a screaming buy, according to the JSMineset think tank.

“To sum up the situation, you haven’t seen anything yet,” exclaimed Sinclair.

3 Gold Stocks to Watch

Goldcorp Inc. (NYSE: GG)

 

SPDR Gold Trust (NYSE: GLD)

Yamana Gold Inc. (NYSE: AUY)

 

 

 

Silver to reach $75 following Wild Volatility, says Silver Guru

Silver investors have become routinely accustomed to silver’s rapid price advances during less-impressive advances in the gold price,and vice versa, on the way down; silver has plunged sharply while gold merely “corrected” during the decade-long 2-steps-forward-and-1-step back bull market.  Silver can be said to act as a leveraged play to the gold price.

But during a period when global market participants suddenly get hit in the face with the chilling reality of how bad the state of the financial and political system of the West really are (and, now, how this mess could affect China), a lot of unwinding of trades dependent upon the prospects for silver’s industrial demand will greatly dampen, or depress, the upward move in the silver price which otherwise would result from buyer of silver as a safe haven monetary metal.

But not to worry about silver’s temporary disconnect with gold, according to life-long silver aficionado, David Morgan, the publisher of The Morgan Letter.

In an interview with The Gold Report, Morgan said it’s hard to predict the amount of hot money in the silver trade at any one time compared with committed money in the metal.

“As people figure out that there really is no solution to the global financial system without a great deal of pain and some defaults along the road, more will seek the safety of precious metals,” said Morgan.  “So, even when things calm down for the moment, it does not mean the precious metals will not get pushed down.”

In the event of a tragic solvency crisis turning into outright signs of a Depression coming, the bloodletting in the silver market may continue until it’s flushed of weak hands jumping from one trade to the next—which is a considerable amount when considering the ratio of dollars held in paper silver against physical silver is approximately 100:1, according to GATA.

“You could see gold and silver react to the downside, perhaps dramatically—$5/ounce (oz.) silver is not entirely out of the realm of possibility,” Morgan speculated in the event of another 2008-like sell off, though the catalyst for today’s crisis centers on the insolvency of governments and the shock of much weaker-than-expected economic growth from debtor nations.

“My best guess is we will see some pullback going into mid-August,” he added, as investor demand comes back in to pick up silver at bargain prices before the traditional September to April buying season and strong demand accelerating out of Asia.

But more importantly, Morgan, who agrees with Swiss money manager Marc Faber suspects that the endgame in the Bretton Woods currency scheme failure is near, and that governments will opt to continue debasing their respective currencies in lieu of outright default.  But where the two men differ from Goldmoney’s James Turk and the legendary Jim Sinclair is, first, a sell off before the historic advance in the silver price past the all-time high of $50.35.

As the crisis deepens in Europe, banks have stopped lending to each other, as no one really knows the extent of hidden liabilities on the books of their brethren banks.

“It seems interbank lending is starting to freeze up in Europe,” said Morgan.  “This was one of the main factors contributing to the financial crisis of 2008. So there is much to consider and it boils down to the fact we are in the final stages of a currency depreciation on a global basis.”

And like 2008, Morgan expects the same volatility in silver in the coming weeks, though maybe not as dramatic as 2008′s swoon.  And this time, the strong hands, who understand the unpleasant symptoms of volatility during the currency crisis in progress, will be rewarded on the other side—as was the case in 2008.

“What happened in 2008 was a silver sell-off that caused a shortage, pushing the physical price of silver at the retail level to around $13/oz., while paper silver traded under $9/oz. on the futures exchanges,” concluded Morgan.  “Excessive short selling then ran the price from about the $20/oz. level to the brink of $50/oz. The next leg up could take out the $50/oz. level after a few tries and then not look back until establishing a new nominal level of $65/oz.–$75/oz.”