Little Doubt! $3,500 Gold Price, a Minimum

By Dominique de Kevelioc de Bailleul

To the ‘man on the street’, a price target of gold $3,500 must sound to him like the typical hyperbole of gold peddlers.  It must; sentiment of the gold-market-ignorant American public of the future price of gold still remains  low.

As Bill Murphy’s GATA has said, “They don’t even know how to spell gold.”

That’s because the public really has to see the effects of the Fed’s QEs.  In fact, a relatively few Americans haven’t an idea what so-called ‘quantitative easing’ truly means to him, personally, just as few understood similar Fed monetary practices orchestrated by Arthur Burns and William Miller during the inflation-roaring ’70s.  But he sure will see how inflation is eroding his lifestyle in the coming months—starting with a much higher oil price, and his coincidental savior, gold.

But something convenient for the monetary ‘authorities’ just happened.

A day before Bernanke pulls the trigger on indefinite purchases of mortgage-back debt, anti-American sentiment suddenly flares up in the Middle East and North Africa.

Coincidental?

The thinking behind the “there’s no such thing as a conicidence” may be driven by the assumption that Bernanke and his handlers knew that during the aftermath of the collapse of Lehman, AIG and the rest, the talking point, that the threat of another dip in the housing market will lead the U.S. economy into ‘deflation’ can only be told for so long.  Bernanke knew that food and energy prices are poised to soar faster than these dollar-sensitive ‘things’ rose during the 1970s.

Thinking that the Fed believes its own BS regarding the living costs of the average American reveals profound ignorance of the Fed’s real mandate, especially at this late stage of the Kondratiev debt cycle.  That mandate is: to protect its member banks.

And protected they will be.  With the Fed coming in at the last moment to cope with the mess at JP Morgan and Morgan Stanley, the effects of an addition of $1.3 trillion (estimated by the close of calendar year 2013) expansion of the central bank’s balance sheet in the coming months will necessitate a new mantra from the Fed and MSM to now explain rapidly increasing food and energy prices during a global recession.

This time, China, alone, can no longer be blamed for stubbornly high oil prices.  Its economy is dropping like a stone, too.  Therefore, a new scapegoat for the future price of $150 to $200 per barrel of oil will emerge in the Middle East and North Africa, instead.  It will be called, either the “Arab Fall” or “WWIII”.

With the latest Fed announcement, it should be abundantly clear by now: the Fed is intentionally debasing the dollar, and it appears that the central bank will continue to debase the dollar until it fears a currency collapse—a course that Ron Paul said is a “detachment from reality,” after hearing of the press release of Fed’s FOMC meeting decision, Friday.

The Fed lives in reality, and it knows what it’s doing many months ahead of a carefully coordinated plan of public distraction.

There’s little doubt; gold will take off and begin the final stage of this tremendous secular rally.  Today’s low sentiment among mom and pop for holding gold will change this year and accelerate in 2013, taking gold to great heights.  Gold has reached new highs against the Indian rupee and near-highs priced in euros.

As far as the dollar, an ultimate price target for the gold price of $2,000 will turn out to be much, much too low.  It’s much more likely that Egon von Greyrz’s target price of $3,500 to $5,000 within 18 months will make much more sense, in retrospect.

Here’s why.

The following chart provides a rational for a target gold price of $3,500.

As an example of the Swiss economist and money manager Marc Faber comments about the effects of inflation, the chart (above) shows that inflation doesn’t manifest in all markets at the same time.

In the chart, the data show inflation had flowed into the oil market months following the peak in the gold price at the end of 2011 through to today.  The expected next rally in the gold-to-oil ratio is poised to test the Aug. 2011 high of 24.  But, instead of oil surging while gold was coming off its Apr. 2011 all-time high, today, both ‘commodities’ are expected to move much higher as a result of QE++, with the gold price outperforming the oil price by a considerable clip.

With predictions of a minimum oil price of $150 as a result of the Fed’s new QE-to-no-limit plan (to north of $200 in the event of an attack on Iran) and the multiple of the all-time high gold-to-oil ratio of 24 applied to the oil price, the gold price calculates to $3,600.  In the event of a $200 per barrel handle, $the target price moves up to $4,800.

Morgan Stanley Intentionally Set Up to Fail

By Dominique de Kevelioc de Bailleul

Knowing the financial system will never recover following the derivatives blowup at Bear Stearns of 2008, the next bank-broker-dealer intentionally slated by the Fed to collapse as the next bad bank is Morgan Stanley, according Hat Trick Letter publisher Jim Willie.

The evidence of the coming “killjob” on Morgan Stanley appears to jibe well with Willie’s thesis, but only an analyst who naturally doubles as detective with a flare for nailing down the criminal profile of the syndicate leaders earlier than most can also see what others may wrongly regard as paranoia.

“Morgan Stanley put on $8 TRILLION in interest rate swaps in the first half of 2010,” Willie explained to readers of bullion dealer SilverDoctors.   “I call them the designated hitter for Wall St.  Why wasn’t it JP Morgan, BOA, or Goldman Sachs?  My theory is simple: THEY EXPECTED LATER TO KILL MORGAN STANLEY!”

Could the resignation of Morgan Stanley CEO John Mack in September of  2009 following the height of the March 2009 meltdown serve as a clue to the banking cartel’s plot?  Maybe Mack abruptly left the firm after receiving word from the NY Fed of his coming role as a placeholder for the Eccles boys who had plans to go completely rogue to the dark side.

That’s speculation, of course, and so is Willie’s latest supposition—but considering the mounds of obvious criminal activity riddled throughout the global financial system, revealed to the world following the fall of Lehman Brothers, and the sudden drop of the monicker ‘Crazy’ Jim Willie by the goldbugs when referring to him and his ‘crazy’ theories, reporting the next likely fraud by the bank cartel has turned into a lucrative cottage industry, led by Jim Willie, Max Keiser and the folks at GATA.

It turns out that there’s nothing more popular than true crime stories, and Willie’s analysis of the motive behind the scheme certainly dovetails nicely into what all good money managers and correctly-trained economists now know: the bond market wags all dogs, but lately something isn’t right.

Since the monster-size monied participants of the yield curve game attract the smartest and most staid of the lot of this otherwise filthy financial industry, the bond market, in the past, got it right far more many times than the ‘vigilantes’ got it wrong.  But has happened to the bond vigilantes?  Willie explains.

“Morgan Stanley created the false impression of a flight to safety in U.S. Treasury bonds,” states Willie.  “Take a look at the 10 year yield early in 2010.  It was moving up to the 3.5% range! Alarm bells were going off!

“They were talking about QE and bond monetization by the Fed! China was backing out of buying treasury bonds!  We had more supply, and less demand, and a rising 10-year yield.  Suddenly we had a tremendous ‘flight to safety’.  What a bunch of propaganda!”

But the risk to investors beyond a collapse of asset prices of equities and real estate can now include cash—once considered a risk-less asset.  Not anymore, according to Willie, and the failure of a big Wall Street fixture will wake the public up to the risks of holding any asset besides bullion (in your hand or storage outside of the banking system) is coming, and that firm will be Morgan Stanley.

“No one is protesting against these big banks for stealing from these segregated futures accounts.  It’s because they’re futures accounts! The point is they’re segregated private accounts, and in bankruptcy law they are first in line during bankruptcies!!

“This is very big, and I expect we’re going to see a jump into private brokerage accounts.  It doesn’t look like it’s going to be Merrill Lynch, it looks like it could be Morgan Stanley.”

Willie expects segregated accounts at Morgan will go the way of Sentinel—into the black hole.  Holding bullion is the last refuge to the U.S. investor.

Get Your Money Out of Morgan Stanley—Fast!

By Dominique de Kevelioc de Bailleul

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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