Gold: Brace for Bizarre QE3 Hail Mary and Hyperinflation

By Dominique de Kevelioc de Bailleul

If a 1.53 percent yield on 10-year U.S. Treasuries isn’t enough to spook investors of a global economy on the verge of implosion, Michael Pento of Pento Portfolio Strategies expects the Fed to aggressively respond by ceasing to pay interest on excess reserves held at the U.S. central bank—and removing all reserve requirements on purchases of sovereign debt.  Fed Chairman Bernanke has his sites on negative rates.  The gold bugs will surely like that.

The one-two punch of a bazooka QE3 of that size, the potential onslaught of capital fleeing into hard assets as a result of a no-reserve global banking system, could be more than the Fed bargained for, and clearly indicates how desperate central bankers have become to prevent the largest Ponzi scheme of history from collapsing, according to Pento.

“So let me put it together for your listeners,” Pento told King World News (KWN), Sunday.  “We have $1.42 trillion of excess reserves.  We are now going to be told that there will be no capital reserve requirements on owning sovereign debt. You will have commercial banks flooding the market with the purchase of sovereign debt.  Not just U.S. debt, Portuguese debt, Spanish debt, Greek debt, all of that debt will have zero capital requirements.”

In other words, the Fed intends to lower the rate of the riskiest of all sovereign debt while punishing cash hoarders of the least risky sovereign debt, because, surely, rates on the shorter end of the Treasury curve will turn negative and it’s hoped will move the 10-year Treasury that much closer to zero, as well.  Ditto for sovereign and commercial debt across the entire spectrum of the global credit markets.

That’s the plan, according to Pento, but the market reaction to such a desperate, high-risk policy move is expected to soar commodities and the precious metals, as the last step beyond a no-reserve requirement banking system is ‘helicopter money’ directly into the hands of consumers.

“Let me be clear on this, I’m not saying it could increase M2 money supply to $15 trillion, this could increase it by $15 trillion,” Pento continued.  “So we’re talking perhaps about $24 trillion.   It has the potential to increase to rapidly increase the global money supply, and it would be a tremendous boost to commodities, oil and precious metals.”

Pento’s expectations for such a move is consistent with earlier policy suggestions made by the Treasury Borrowing Advisory Committee in January 2012 (reported by zerohedge, Feb. 1, 2012), which stated in its report to the Secretary of the U.S. Treasury, “There was a lengthy discussion regarding the bid-to-cover ratios at recent Treasury bill auctions. It was broadly agreed that flooring interest rates at zero, or capping issuance proceeds at par, was prohibiting proper market function.

“The Committee unanimously recommended that the Treasury Department allow for negative yield auction results as soon as logistically practical.”

And it would make no sense for the Fed to impede the plan by requiring reserves on top of the U.S. Treasury actually charging bill and note holders of U.S. debt for lending the U.S. government money.  In this perverse environment of targeting negative interest rates, it’s become clear that the Fed has given up on the U.S. economy, and more broadly, hopes of the global economy pulling the U.S. out of its nosedive; Bernanke and Company are merely playing out a losing hand—a hand that ShadowStats economist John Williams has said will lead to hyperinflation by the close of 2014.  Lowering borrowing costs to offset lower tax receipts to service $15.8 trillion of U.S. debt in addition to the fiscal 2013 budget is the only option left open to the Fed.

“Outside timing on the hyperinflation remains 2014, but events of the last year have accelerated the movement towards this ultimate dollar catastrophe,” Williams said in an interview with KWN, Jan. 26, 2012.  “Following Mr. Bernanke‘s extraordinary efforts to debase the U.S. currency in late-2010, the dollar had lost its traditional safe-haven status by early-2011.  Whatever global confidence had remained behind the U.S dollar was lost in July and August [2011].”

Pento agrees, understating the Fed’s goal of negative interest rates—on top of zero reserve requirements—as “not a good idea.”

Pento said in his July 8 interview with KWN, “What he [Bernanke] needs to do is let the free market work, and I can tell you that unleashing $1.5 trillion into the American economy, and having that money roll-over and multiply (to $15 trillion), through the money-multiplier-effect, is not a very good idea.”

Indeed, it is not a good idea, but there is no other idea left for the Fed to execute.

Spot gold: $1,569 per Troy ounce.

Jim Rogers: I’m telling you, the economy is going to be bad next year

By Dominique de Kevelioc de Bailleul

Commodities investor extraordinaire Jim Rogers of Rogers Holdings strongly suggests battening down the hatches, because the global economy is headed for the rocks, taking stocks with it.  To protect wealth from a deepening of the mostly Western side of the global depression, the 69-year-old Rogers is long oil, gold and other tangibles to front-run the predictable response by central banks of further money printing.  He is short equities.

“If stocks collapsed around the world I would have to buy a lot more stocks,” he told CNBC, Wednesday.  “I would buy stocks again, but I don’t see that happening. I’m telling you, the economy is going to be bad next year. Why buy stocks in the face of something like that?”

Rogers’ gloomy assessment of the future reconciles with the data out of Europe, the U.S. and China—which, taken together, these economies represent approximately 60 percent of global GDP.

In Europe, the sovereign debt crisis accelerates, from relatively paltry numbers needed for a Greece bailout, to gargantuan bailout packages recently proposed for Spain—amounts so large that the ECB emergency bailout fund will be wiped out completely in a matter of weeks.  Then again, there is Greece; it teeters on leaving the eurozone all together, according to EU member of parliament Nigel Farage.

“There’s an impending looming disaster . . . . 100 billion (euro) is put up for the Spanish banking system, and twenty percent of that money has to come from Italy,” said Farage on the floor of EU parliament this week.  “Under the deal, the Italians have to lend to the Spanish banks at three percent.  But to get that money, they have to borrow on the market at seven percent.  It’s genius, isn’t it?

“Any banking analyst will tell you that 100 billion (euro”) doesn’t solve the problem,” Farage added.  “It would be more like 400 billion (euro).  The real elephant in the room is, once Greece leaves, the ECB, the European Central Bank, is bust. . . It has 444 billion euros worth of exposure to the bailed out countries.”  The Euro Titanic has now hit the iceberg, and sadly there simply is not enough lifeboats.”

Jim Rogers agrees.

“What they’re [European Parliament] doing is they’re making this situation worse,” he said in Wednesday’s CNBC interview.  “What I see happening is more and more bailouts . . . the debt is up to the ceiling. The recession is going to be worse. This is not going to be fun.”

Rogers has said in an earlier interview with NewsMax that he knows the economic statistics coming out of Washington are jury-rigged in an effort to bolster the dollar in the wake of the euro woes, and also suggested that after the U.S. elections in November, the EU sovereign debt collapse will move to the U.S.—and that’s the time when the global panic may begin in earnest.

“ . . . this year is going to look good and feel good, because Mr. Obama is going to give out a lot of good information,” Rogers said in a NewsMax interview of nearly two weeks ago (BE article).  “It may be manipulated information, but he’s going to put out a lot of good information.  He’s going to spend a lot of money; he’s going to print a lot of money to get us through the election . . . So if you are not worried about 2013, please — get worried.”

And the signs of a U.S. economic collapse to pair up with Europe’s breakup riddle throughout the monthly data, according to Charles Biderman, CEO of TrimTabs.  Biderman reported as early as March that he saw massive discrepancies in the job data released by the U.S. Department of Labor for the months of January and February, alone.  As the Labor Department reported approximately 350,000 jobs added, Biderman calculated approximately 3 million loss for the two combined months.

Biderman, too, believes the day of reckoning is coming for stocks.

“How can stock markets be this high if the real economy is barely growing?” Biderman stated in his latest video, posted on

After the election, the truth cannot be withheld from the casual observers of the markets regarding the phantom statistics not jibing with reality.  It’s then, Rogers believes, the global sell off in stocks will catch up with investors who are long the U.S. recovery story.  In fact, Rogers is so convinced of the bubble in stocks popping in the coming months that he’s short equities.

“I’m not advocating because I’m short, but I’m short because I think there are going to be more problems in the world economy in the next year or two,” he said on Wednesday.  “That’s how you protect yourself in times like this.”

Zerohedge: Buy. Real. Assets. NOW!

By Dominique de Kevelioc de Bailleul

“Buy. Real. Assets. Now!”  That strong suggestion, from the highly-trafficked website to which investors go for their daily dose of critical analysis of daily economic and financial events, was posted for its readers, Monday.

The spark for the advice from the folks at zerohedge to run to gold, silver, oil, among other tangibles, is directed to those new to the site who may be finally awakening to the realization that inflation, not deflation, is in our future, globally.

Zerohedge’s ‘Exhibit A’ comes from the news wires, which reported that Bank of England policymaker Adam Posen sees no way out of the global Kondrateiv Winter other than to now monetize private debt, such as small business loans, automobiles and anything connected to vital components of the British economy.



“Further asset purchases by central banks can improve the economic situation we are now in,” Posen said in London, Monday.  He added, it is “time for the major central banks, including the Bank of England, to engage in purchases of assets other than government bonds.”

Posen goes on to say in his speech that he was wrong about the UK economy, and he now believes economic activity has manifestly stalled, justifying further unconventional central bank actions to ward off an Armageddon-like financial collapse for another few days, or so.  A suggestion from a policymaker of the relatively lesser-important BOE to other central bankers that they should look to monetizing private debt decidedly moves the world that much closer to hyperinflation, as statements made by the BOE might just as well have come from the Fed, itself, as today’s central bankers no longer step out alone, but work together closely.

It appears Posen’s comments hint to another coordinated policy response among central banks to include any form of debt monetization they deem impeding credit creation and liquidity.  To minimize volatility between major currencies, monetary policy among central banks is coordinated to achieve a homogenous problem between the euro, dollar, yen and sterling, leaving investors with no meaningful  currency of choice among the big four.  There’s no question: central banks sink or swim together.

Consider, for example, the shock announcement of Nov. 30, 2011, during which six major central banks simultaneously slashed overnight rates of dollar holdings among their respective member banks.   Equities and precious metals soared, as traders fell over each other to buy ‘risk-on’ assets in huge volumes in an effort to front-run future inflationary effects.  After opening at 11,559.27, the Dow never ticked down and soared nearly 500 points to close at the high of the day’s trade of 12,045.68, for a 4.2 percent jolt higher.  Similar, or better, percentage moves to the upside were seen in the DAX, CAC, FTSE and Nikkei.  Currencies remained relatively stable in comparison.

In the case of Posen’s most recent statement, it’s most likely that such a heretical buying spree to shave further value off the world’s major fiat currencies will be conducted globally.  It appears, too, central banks are also coordinating preparatory language for the collective grand announcement—the bazooka.

Other hints of desperate measures forthcoming comes from the EU, according to Reuters.  Capital flight akin to the 1970s in Europe is expected to escalate, mostly out of the PIIGS banks, this time, and into Swiss banks, again, where monetary policymakers there have recently stated their undying resolve to prevent a spike up in the franc during the capital flight out of the PIIGS banks.

Moreover, to limit destabilizing capital movements, free movement (of human bodies) across EU member states, afforded Europeans by way of the Schengen Agreement of 1985, may be coming to an end, as memories of the 1997 Asian currency crisis saw money from SE Asia and Indonesia flooding over the boarders in suitcases into the Switzerland of Asia, Singapore.  Instead of Europeans moving unrestricted from country to country as Americans move from state to state, inspections of passport stamps and bulky suitcases will most likely reemerge, suddenly.




“Contingency planning is underway for a scenario under which Greece leaves,” one unnamed EU source told Reuters.  “Limited cash withdrawals from ATMs and limited movement of capital have been considered and analyzed.”

As Europe prepares for the end game of the global monetary system, Bloomberg reports that China’s whopping dollar and euro reserves have been fleeing into physical money at rates historically never seen before by any country.

Gold imports by mainland China from Hong Kong climbed 65 percent to a record in April, advancing for a third straight month as investors sought a hedge against financial-market turmoil and an economic slowdown. Shipments totaled 103,644.5 kilograms (103.6 metric tons) in the month from 62,913 kilograms in March, according to export data from the Census and Statistics Department of the Hong Kong government today. In the first four months, imports were 239,174 kilograms from 27,114 kilograms a year earlier, according to Bloomberg calculations. China doesn’t publish such figures.

And with gold imports into China up 782 percent for the first four months of 2012, compared with the first four months of 2011 (nearly 1,300 percent for April 2012, YoY), comments made by Wang Xinyou of Agricultural Bank of China Limited seem rather comical, when he told Bloomberg, “We can’t rule out the possibility that the central bank [of China] is buying gold.”

As data concerning exports of gold bullion from the (now) world’s largest producer of the yellow metal is zero, China’s reported stockpile of slightly more than 1,000 tons appears to be as comical as the suggestion that maybe, just maybe, the People’s Bank of China is stockpiling gold.

In defiance of the Warren Buffett and Charlie Munger duo, the Bond King, himself, Bill Gross of PIMCO, in a recent note to clients, stated this about the extent of the debt requiring some form of reconciliation:

Soaring debt/GDP ratios in previously sacrosanct AAA countries have made low cost funding increasingly a function of central banks as opposed to private market investors. Both the lower quality and lower yields of previously sacrosanct debt therefore represent a potential breaking point in our now 40-year-old global monetary system. […] As they (investors) question the value of much of the $200 trillion which comprises our current system, they move marginally elsewhere – to real assets such as land, gold and tangible things, or to cash and a figurative mattress where at least their money is readily accessible. Emphasis added.

And the screaming implications of Gross’ assessment comes by way of Eric Sprott of Sprott Asset Management, who stated in his own letter to clients, “Is the bond king recommending gold? YES, YES YES!”

And for Sprott’s recommendation regarding silver?  YES, YES, YES, and one more YES!

GLD ETF Raid Imminent as China Flushes JP Morgan of Physical

Sources close to newsletter writer Jim Willie of the Hat Trick Letter tell him the Chinese are finally putting an end to the Fed-sponsored JP Morgan’s gold manipulation scheme—but not until the Eastern juggernaut strips every ounce of physical gold in a brilliant Sun Tzu maneuver against the Comex gold cartel.

With the cartel levered as much as an estimated 100-to-one in the gold market, JP Morgan is trapped into a game it cannot win in the end.  As normal market forces seek higher prices to quell demand, JP Morgan’s price suppression activities only serve to hasten the day when the gold price will be set free—but on China’s timetable and at a level of gold stock the Eastern giant feels comfortable stripping before crushing the hold of the G-8 and the menacing U.S. dollar standard from which China wishes to extricate itself.

“My firm belief is that a fair equitable gold price will come only after the price goes dark in the normal traditional paper dominated channels,” Willie began his update of the gold market in a piece posted on, suggesting that, at some point, the price quoted at the Comex will be revealed as merely a camouflaged official price-fixing mechanism to throw off traders into thinking rallies and plunges in the price of gold are part of a normal price discovery process.

In other words, instead of Treasury announcing on a periodic basis a new pegged price for gold under a broken Bretton Woods configuration, the U.S. can lever dollar against ridiculously low gold reserves to match the dismally low dollar reserves against assets held on the books of Fed member banks via JP Morgan’s gold manipulation scheme.

The customer(s) of JP Morgan that Blythe Masters had referred to in an interview with CNBC is, accounting for the lion’s share in terms of dollar volume, the Fed itself—which makes sense in that JP Morgan is one of the owners of the Fed (contrary to the obfuscation presented on the Fed’s Web site).

“We store significant amounts of commodities, for instance silver [gold for instance], on behalf of customers. We operate vaults in New York City, in Singapore and in London. Often when customers have that metal stored in our facilities they hedge it on a forward basis through JPMorgan, which in turn hedges in the commodities market,” Masters told CNBC on Apr. 5. Emphasis added to text.

“If you see only the hedges and our activity in the futures market but you aren’t aware of the underlying client position that we’re hedging, then it would suggest inaccurately that we’re running a large directional position,” she added. “In fact that’s not the case at all. We have offsetting positions. We have no stake in whether prices rise or decline.”

At a ratio of approximately 100-to-one of paper “hedges” against physical gold, the only customer who would be large enough to cover such a bet for JP Morgan would be a printing press—the Fed.

Back to Willie.  He goes on to say in his article that the “Eastern coalition” has been stripping JP Morgan of physical gold at intervals of $10 in a “reverse pyramid,” or higher amounts of buy orders as the price drops.  As the Chinese lay a net of buy orders of physical during the massive de-leveraging process conducted by the European banks, the gold sold by the EU in an effort to remain liquid shifts from the West to East at fire sale prices made possible by JP Morgan’s paper shorts throughout the gold bull market.

“The gold price will not rise until the Eastern Coalition has had their fill in a Western diet rich in gold,” Willie stated.  “ . . . In the process of de-leveraging, the cartel is losing their gold bullion. They are vulnerable, made worse by their insolvency, aggravated by their lack of liquidity. The paper gold price is imploding, but not the physical price.”

Willie’s intelligence of renewed aggressive Eastern alliance gold buying—as well as the just-released news flash from Reuters of Vladimir Putin’s decision to skip the G-8 summit—appear to dovetail at this time with geopolitical events concerning Iran.  Though Russia is a member of the G-8, China is not.  Escalating aggression by the U.S. against Iran has pushed Iranian allies China and Russia into a formidable alliance against America and may explain Russia’s abstention from the meeting in a show of allegiance with China against their mutual enemy in battle for another gold—black gold—oil.

If the U.S. can secure Iranian oil, China loses its leverage in the currency war and its timetable for the renminbi to be elevated as a world’s reserve currency—which the Russians would benefit as well, as the ruble would be elevated (and included in the proposed SDR with the renminbi) as dollars leave the oil market through bilateral trade agreements forged by anti-American forces, globally.

Gold market insiders sense that, as Willie reports, China and its Eastern partners have a window of opportunity before the U.S. presidential election and/or a Fed announcement of more QE to accumulate as much gold as possible before the gold price moves higher to relieve the massive physical buying at the hands of the Chinese.

But it appears the U.S. could buy more time in the event of a gold raid by the Chinese (akin to Europe’s raid on U.S. gold during the late 1960s) as a force majeure in the gold market would collapse the dollar and the means of funding U.S. military operations against Iran and countless other operations hostile to China and Russia.  That physical gold, not available to JP Morgan, would need to come from the confiscation of private gold assets, such as those held for the Barclay GLD ETF.

“Unfortunately, the Eastern gold raids waged against the Western gold cartel might be satisfied with gold bullion pulled from the back door of the GLD exchange traded fund. As the Eastern Coalition observes the de-leverage process and swoops to exploit the insolvent condition compounded by lack of liquidity, the demands made on cartel member gold reserves might come from the GLD fund itself,” Willie speculated.

He added, “The cartel simply shorts the GLD stock, entitling themselves to vast truckloads of GLD gold bars in illicit grabs. The tracks are covered by altered bar lists, whose track record is so abysmal and faulty that new covered tracks are easily made. The GLD fund is destined for a day like Madoff and Corzine before the Congress, but with far more lawsuits. Given the vast conduits between Europe and the United States, any event triggered on the continent will extend quickly to the U.S. and UK.”

Gold traders should realize that Willie’s analysis strikes at the heart of the U.S. dollar, taking Jim Rickard’s thesis to a much deeper and poignant level—a level that Rickards will not dare to go.

In fact, Rickards told TruNews radio that investors of gold will be disappointed by a probably confiscatory tax of “90 percent” on gold held by American citizens, leaving that Rickards comment to beg the question: then where do Americans go to flee the dollar?

The answer is still—GOLD!—and the corollary? Store it outside the jurisdiction of the U.S. and away from a criminal Washington hell bent to sacrifice every American in its effort to achieve its objectives.  But Rickards, the DoD consultant, won’t tell you that, which suggests to anyone who listens to him that it is futile to protect yourself from a fascist U.S. government intent on sacrificing a nation’s privately-held treasure for its globalist agenda.

Jim Rogers’ Warning: Riots Coming to America

Speaking with the Wall Street Journal on Friday, commodities trader Jim Rogers of Rogers Holdings said riots such as the ones witnessed in Greece and reported as widespread in China will hit the United States and again in Europe as the next leg down in the financial crisis takes shape (after the election, he speculates in previous interviews). Sign-up for my 100% FREE Alerts

“I’m more worried about those kind of problems [rioting] in the U.S. and Europe; this is where social unrest is going to be worse,” Rogers told the Journal.  “I would suspect that, when economic conditions get worse here and get worse in Europe, we’re going to see . . . you’ve seen governments fail in Europe; you’ve seen countries fail in Europe. I suspect you’re going to see more of it [rioting], yes.

“We saw it in London; we’ve seen it in several countries in Europe in the last year or two.  Yes, I expect to see it here, too.  If you don’t, look out your window”

When asked about Bernanke’s credibility regarding his latest FOMC public statement, in which he said the Fed will be able to contain inflation, Rogers became noticeably irritated.

“Mr. Bernanke has zero credibility as far as I’m concerned.  The Federal Reserve has zero credibility,” Rogers said forcefully.   “Simon, go back at everything Mr. Bernanke has said in the last seven or eight years he’s been in Washington.  He’s never been right about anything.  The man has zero credibility for anyone who would take the time to look at his history.”

As far as further inflation down the road, Rogers stated inflation is already in the pipeline, and will manifest in higher commodities and consumer prices—of which, historically, have lagged money supply expansion by six months to one year.

As of the week ending Apr. 25, 2012, the Fed reported its balance sheet reached a total of $2.92 trillion, up from $2.71 trillion a year ago, and up from $920 billion in March 2008—well before the brunt of the financial crisis took its toll on markets later in 2008 and early 2009.

A tripling of the Fed’s balance sheet within fours years won’t be the extent of the damage to the Fed’s debt monetizing scheme and the value of the U.S. dollar, according to Rogers, who sees much more Fed money printing to come as well as consumer price inflation as a result.

“Absolutely, they’ve been printing staggering amounts of money; they’ve been taking staggering amounts of debt onto their balance sheet, much of it is garbage,” said Rogers.  “The federal government is spending huge amounts of money they have.  We have inflation in the U.S., and it’s going to get worse, Simon.”

Rogers said investors have it easier today than prior to the crisis.  It’s a heads-you-win, tails-you-win scenario.  The emergence of Asia as a source of consumption of raw materials and finished goods will exact pressure on harder-to-find natural resources.  If demand is crippled by the financial crisis, however, central banks will respond by debasing their respective currencies, forcing smart money into ‘things’ as a means of protecting wealth.

“In times of inflation . . . that’s put it this way, if the economy gets better there will be shortages of those raw materials and I’m going to make money,” Rogers explained.  “If the economy doesn’t get better Simon, they’re going to print a lot more money.  Mr. Bernanke doesn’t know anything else but to print money.  And throughout history when governments debase the currency, you protect yourself by owning real assets, whether it’s silver or rice, or whatever it happens to be.” [Emphasis added]

Rogers’ take on the most popular asset class among investors who follow the American expat who now lives in Singapore—gold—is that, he holds the precious metal (and by extension, silver) as a reliable means of storing value during a globally coordinated money-printing policies executed among the world’s major central banks.  He also discusses the virtues of owning oil as a play on ‘Peak Oil’ in addition to currency debasements.

“I own both [gold and oil] of them,” Rogers said.  “Gold has been up 11 years in a row which is extremely unusual for any asset.  It’s consolidating; it wouldn’t surprise me if it continued to consolidate.  If it goes down a lot more, I hope I buy a lot more.  I’m not selling my gold by any stretch of the imagination.”

Rogers added about oil, “The surprise with oil is going to be how high it stays and how high it goes.  Simon, the International Energy Agency (IEA) has done a study.  The world’s known reserves of oil are in steady decline.  We have to find a lot of oil or the price of oil is going to unheard of heights.” Sign-up for my 100% FREE Alerts

Here’s How Iran Could Launch Silver to $100

As the latest news from Tehran suggests Iranian oil exports to France and the UK will be cut off in response to EU sanctions on the world’s fifth largest oil producer, the oil price inches to a breakout price above $105 per barrel.  Silver, too, is again prepping in sympathy for the possibility of a major move up to test $37, which, if cleared, could prompt traders to eye the last bastion of resistance at $50! Sign-up for my 100% FREE Alert

In essence, by his latest move, the confident and smiling and Ahmadinejad has told the Obama Administration to ‘bring it on’ and be thrown out of office as the US teeters to a market-driven bankrupt, not unlike Russia 1989 following its war with Afghanistan.

Iran’s oil ministry spokesman Ali Reza Nikzad-Rahbar stated on the ministry’s Web site during the weekend that “crude oil exports to British and French companies have been halted,” adding, “We have our own customers and have no problem to sell and export our crude oil to new customers.”

The threat of $150+ (maybe more likely $200) oil price from an attack on Iran during an election year will most assuredly usher in a Republican, and Obama knows it.  Inflation will kick him out of the presidency as fast as Jimmy Carter tumbled out of the Oval Office in 1980—over the same issue:  Iran.

“Above $115, there really isn’t any technical resistance until the $140 level, near the all-time high,” technician Dan Norcini told King World News.  “If we see two consecutive closes above $115, you dramatically increase the odds that crude oil will be revisiting the all-time highs near $150. . .”

On the other hand, the inflation that’s already primed into the financial system can be masked by a war with Iran, providing perfect cover for the Fed and its drive to lower the value of the U.S. dollar.  Could Obama benefit politically as a war-time president?  History shows Americans rally around their president during war irrespective of his popularity prior to the war.

What this may mean, is silver bugs could soon have their day in the sun despite the blatant dereliction of duty at the CFTC to put an end to JP Morgan’s criminal enterprise.

So, it turns out, instead of the ‘good guys’ ensuring a free market in silver, Iran, backed by the might of Russia and China, could free silver from the financial repression scheme of US policymakers.

The chart, below, shows the relationship between the oil and silver price.  As oil ran away from the silver in 2008, silver caught up with crude during the monster silver rally of July 2010 – April 2011, taking the price of silver from $18 to nearly $50 within eight months.

How high the silver price can achieve during the next rally could pop some eyes for sure.

The silver market is razor thin.   And with reports from both Eric Sprott of Sprott Asset Management, Goldmoney’s James Turk and the U.S. Mint indicating that the number of dollars moving into the silver market has equaled the amount of dollars moving into the gold market for months following the violent 50 percent silver correction last year, it’s difficult to imagine anything but spectacular moves to the upside could result.

Sprott recently told the Silver Doctors:

“ . . . [investors are] buying 50 times more physical volume of silver than they are gold. And when you go to the US Mint site, they sell the same number of dollars of silver as gold. Which means people are buying 50 times the volume of silver than gold.

“But when you look at what’s available to buy- you know we produce 80 million ounces of gold a year, and maybe 70 million of that is available for investment, and we produce 900 million ounces of silver, and theoretically let’s say 200 million ounces are available for investment, well that means you can only buy 3 times more silver than gold for investment purposes.

“But we see so many instances where the ratio is 50 to 1! And GoldMoney’s the same thing. Almost every time I talk to a metals dealer my favorite question- How much silver do you sell vs. gold? And every time, I get the same answer: We sell as many dollars of silver as gold. Well, that’s impossible. It’s just impossible that people can keep buying at that rate, and we not end up with some type of shortage. It’s those data points that make me so optimistic about silver.”

The chart, below, suggests a move in oil to $150 could spark that silver breakout above $50 that silver bugs have anticipated since the beginning of the year.  At $150 oil, silver could clear $50 easily, moving traders to the next target of the round number of $100.

Numerous predictions of big moves in silver for 2012 have streamed in since the start of the new year.  One standout, financial author Stephen Leeb, told King World News on Jan. 31 that he wouldn’t be surprised if silver cracks $100 in 2012.  He believes that, not only is silver an under-priced monetary metal, it’s a critical industrial metal for China’s alternative energy programs.

“I think the outlook for silver, both as an industrial metal and certainly as a monetary metal, is as bright as it can possibly be,” he said.  “I’m sticking with my target of at least $100, but I tell you, Eric [King], it will happen this year.  We are definitely headed for triple digit silver in the not too distant future.”

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Peter Schiff’s Latest Gold Price Prediction

Speaking with GoldSeek Radio host Chris Waltzek this week, Euro Pacific Capital CEO Peter Schiff expects the re-inflation trade to dominate in an unprecedented way in 2012, as money mangers send oil, gold and other dollar-sensitive assets much higher in price, or at record prices, in their effort to flee the dollar.

In particular, the former U.S. senatorial candidate from Connecticut expects gold to reach its inflation-adjusted high of approximately $2,300 this year, citing the Fed’s reaffirmation on Wednesday that it intends to further suppress rising interest rates for another three years.  Sign-up for my 100% FREE Stock Alerts

Schiff contends that the dollar will suffer greatly as a result, “fizzling” out of investor portfolios as the market realizes that the alleged dollar strength last year has been nothing but an illusion brought about by the euro’s relative weakness against the Greenback.

“In fact, it [U.S. dollar] is already fizzling,” Schiff told GoldSeek Radio.  “In fact, it’s fizzling quite a bit today after Ben Bernanke basically said zero percent interest rates will be here until the end of 2014, so we got an extra year or so of zero percent interest rates.  Although I think it [dollar collapse] is going to hit the fan before 2014, but, that’s got gold up $40 today [Wednesday].”

According to Schiff, professional traders will view the Fed’s most recent language as a signal that more debt monetization by the Fed is planned for 2012, with a lower dollar as the price paid for a Fed monetary policy of affecting artificially low interest rates in the U.S. Treasury and corporate debt markets.  But Schiff doesn’t see how the Fed getting a free lunch from its actions.

Within 24 hours of the Fed’s statement of Wednesday, the USDX has already broken below its 40-month MA support of 79.72 and has accelerated downward on Thursday to 79.21 in early afternoon trading.

“They [Fed] have to create massive inflation to keep interest rates that low, especially as prices are rising, they will continue to rise,” Schiff added.  “I think we could see record high oil prices this year.  It’s clearly the consequences of all this money printing the Fed has to do to keep buying up the bonds to keep interest rates low.”

Schiff continued, “It’s reasons to buy more gold, buy more silver,” as a weaker dollar elicits more central bank buying of gold as a hedge against heavily-weighted dollar bank reserves.

While the euro was weak against the dollar throughout the second quarter of 2011, central banks began aggressively accumulating the yellow metal as its price, in dollar terms, dropped.

However, also during the second half of 2011, U.S. money supply has again stalled, according to economist John Williams of   That stall remains as the telltale signal to central bankers that the Fed, indeed, needs to step up purchases of future Treasury issuances, on top of maturing U.S. debt and illiquid mortgage-backed securities, if Bernanke has any chance of achieving his objective of negative real interest rates.

On Jan. 23, India-based The Economic Times stated, “The WGC, an industry-backed group, said in November it expected central banks to add some 450 tonnes of gold to their existing reserves in 2011, driven mainly by purchases from emerging economies that are seeking alternative investments to the U.S. dollar.”

Many gold analysts expect central banks to accelerate purchases of gold, led by China’s central bank, whose gold reserves continue to rise along with imports of gold from its principal supplier, Hong Kong.

Though Beijing reports its gold reserves at a considerable lag to its central bank’s activity in the marketplace, gold consultancy firm GoldCore reported earlier this month that China imported a record 102 metric tons of gold in November, as the that latest print shocked the gold community into reassessing their price targets for 2012.

GoldCore continues, “Informed speculation” suggests that some of Hong Kong’s gold exports to China include the People’s Bank of China, with one analyst telling Bloomberg following the news, “there is always the possibility that some purchases were made by the central bank.”

Gold’s $200 move off its bottom in December and breakout above the $1,700 point to a resumption of the gold rally.  The gold pundits are wrong, according to Schiff.

Without naming any analyst in particular, Schiff suggested that talk of the end of the gold market bull, as heralded by economist Nouriel Roubini and Kitco’s Jon Nadler during the December plunge, is pure nonsense.

Data show that American investors own so little gold, which indicates to Schiff and gold expert Peter Grandich (in an interview with GoldSeek this week) that the gold price has further room to run much higher before the manic stage ends at a top.

“We’re a long way from a blow-off top that you would get at the end of a bubble,” Schiff said.  “We might eventually get there, but we’re years away and thousands of dollars an ounce away.”  Sign-up for my 100% FREE Stock Alerts

Iran Could Make Silver Bugs Filthy Rich

If the first year of the Iraq War of 2003 offers up some clues to the potential move in the silver price following an invasion of its neighbor Iran, then grab as much of the white metal as you can and enjoy the ride.  This ride could be for the record books.  Sign-up for my 100% FREE Alerts

On the officially day of the U.S. invasion of Iraq on Mar. 20, 2003, silver traded at the lowly price of approximately $4.35.  On the first anniversary of the invasion, the silver price reached nearly $8.00, for an 83 percent return (see graph, below).

But an attack on Iran could make an 83 percent return seem miniscule.

Backing up for a moment, however, an obviously important question, first, should be: how likely is an imminent attack on Iran?

With reports of American troop movements into Israel, along with Reuters reports of two U.S. aircraft carriers headed to the Persian Gulf and a lot of chatter from Washington command appearing on television as salesmen for an attack, a military strike on Iran is likely, according to Jim Rickards, adviser to government personnel on U.S. national security issues and frequent guest of King World News.

“Eric, this really could not be more serious,” Rickards told Eric King’s KWN.  “The fact that we, meaning the United States, are on a path to a war with Iran is very clear at this point.  It does seem the countdown has begun and it’s coming to a head sooner rather than later.”

And following Iran’s announcement that it will no longer accept U.S. dollars for Iranian oil, the U.S., really, must respond (1).  If not, OPEC gets the green light to dump the dollar and it’s game over for the U.S. without a shot being fired.

Consider, too, recent data from the Fed, which show clearly that foreigners aren’t buying enough Treasuries to even remotely match the increase to the central bank’s balance sheet.  In fact, according to the chart, below, a war with Iran is a most likely stab at coaxing global money back into preventing a waterfall in the dollar after bond vigilantes are done with Europe.

Source:, Foreigners Sell Record $85 Billion In Treasurys In 6 Consecutive Weeks – Time To Get Concerned?

But here’s why the silver price could triple, or more!

The difference between the Iraq War and a war with Iran is:  Iran isn’t Iraq!  Saddam Hussein’s regime had no friends in the region, and certainly didn’t attract meaningful help from Russia or China before, or during, the conflict.

Hussein was essentially a rogue operator, according to William Clark, author of Petrodollar Warfare: Oil, Iraq, and the Future of the Dollar, which, by the way, offers a good foundation to Jim Rickard’s book, Currency Wars: The Making of the Next Global Crisis.

Because of the well-known and long-standing commitment from Russia and China to defend Iran, a war with Iran could turn into a proxy for WWIII, a notion widely offered in the public domain.

In other words, if Iran is attacked, the move in the silver price could be monstrous—with two and three-bagger returns very likely, with oil and other commodities soaring to unthinkable levels as China utilizes one of its financial weapons in response to military aggression.

The cost of a war with Iran will soar off the charts to an already hopeless U.S. debt level.  In fact, a planned dollar devaluation could be the motive behind an Iranian attack.

According to a policy paper penned by Felix K. Chang and Jonathan Goldman for the U.S. Army and posted on the U.S. Army Web site, titled Meddling in the Markets: Foreign Manipulation, the threat by China, Russia and sympathetic nations against U.S. aggression, a war with Iran will not be a cakewalk by any stretch of the imagination.  Link to document file, here.

According to Chang and Goldman, Iran puts at risk the U.S. dollar in a very meaningful way.

The simultaneous dramatic devaluation of the U.S. dollar and a sharp increase in oil prices would immediately unsettle global equity and bond markets. During such times of uncertainty, institutions and investors normally seek a safe haven where their assets will hold value. For much of the twentieth century, that haven has been the dollar. In this hypothetical, however, the dollar would be at the epicenter of uncertainty, as China unloads its U.S. Treasury securities in favor of gold or euros. Aggravating the situation, institutions and investors of all stripes would magnify the selling pressure as they tried to shed their own devalued U.S. assets—liquidity would rapidly disappear. [emphasis added.]

While many of traditional media may repeat the mantra that precious metals are risky investments, the facts about war and money show otherwise.  At risk here is the dollar.  Sign-up for my 100% FREE Alerts

(1) The Invasion of Iraq: Dollar vs Euro: Re-denominating Iraqi oil in U. S. dollars, instead of the euro

The unprovoked “shock and awe” attack on Iraq was to serve several economic purposes: (1) Safeguard the U.S. economy by re-denominating Iraqi oil in U.S. dollars, instead of the euro, to try to lock the world back into dollar oil trading so the U.S. would remain the dominant world power-militarily and economically. (2) Send a clear message to other oil producers as to what will happen to them if they abandon the dollar matrix. (3) Place the second largest oil reserve under direct U.S. control. (4) Create a subject state where the U.S. can maintain a huge force to dominate the Middle East and its oil. (5) Create a severe setback to the European Union and its euro, the only trading block and currency strong enough to attack U.S. dominance of the world through trade. (6) Free its forces (ultimately) so that it can begin operations against those countries that are trying to disengage themselves from U.S. dollar imperialism-such as Venezuela, where the U.S. has supported the attempted overthrow of a democratic government by a junta more friendly to U. S. business/oil interests.

Gerald Celente Predicts “ Brassiere Bomber” Could Close Banks

Trends Research Institute Founder Gerald Celente forecasts a false-flag by the United States will provide a needed excuse to shut down the banking system and institute an overnight dollar devaluation.  Sign-up for my 100% FREE Alerts

Speaking with GoldSeek Radio host Chris Waltzek this week, Celente suggested that covert plans from Washington for a staged event to cover up a financial collapse could take the form of either another act of terrorism or an all-out war with Iran.

“We believe that something [false flag or war] is going to happen,” Celente said.  “There’s going to be a financial collapse; it’s collapsing in front of us, but they [Washington] may use a false flag rather than calling it a financial collapse—like maybe they’ll have the brassiere bomber, or the granny bomber in a wheelchair, you know, who’s going to threaten the entire country, or it maybe war.  And war is ratcheting up with Iran.

Washington politicians from both sides of the aisle posture in preparation for an increasing likely military confrontation with Iran.

In a communique released to the European Union on Jan. 10, eight U.S. senators urged the EU to join the United States in an oil embargo and sanction of Iran’s central bank.  The group also indicating that 2012 must be the “turning point in the confrontation” with Iran.

“We believe that both (steps) are absolutely necessary if we are to prevent the Iranian regime from acquiring nuclear weapons and thereby foreclose either a regional war or a cascade of nuclear proliferation in the Middle East,” reads the communique.

Incidentally, signatures to the communique include Sens. Joe Lieberman, I-Conn.; Mark Kirk, R-Ill.; Charles Schumer, D-N.Y., and five others.

It should be noted, that Sen. Mark Kirk of Illinois, in particular, has studied the alleged Iranian threat to Western allies in detail, as he is the founder of a “bipartisan Iran Working Group” in 2004.  Kirk also serves the Navy Reserves as a Commander.

Because of his work studying Iran, Kirk was asked to participate in a Q&A Congressional Roundtable discussion sponsored by The Jewish Policy Center publication inFocus in May 2007.  Kirk, at that time, a Congressman, stated during the discussion that the “one rising threat – the existential threat – has the potential to destroy this little democracy and end more than 100 years of Zionism in an instant.  And that is the growing danger we see in Iran, where a dictator openly calls for a fellow member of the United Nations to be wiped off the map. The Iranian nuclear and ballistic missile programs pose a mortal danger to the State of Israel, a danger we must remove through diplomatic means as soon as possible.”

Kirk’s proposed solution to the alleged Iranian threat to the “tiny democracy” is a simple one: quarantine gasoline imports to Iran in a similar technique deployed against Cuba by the Kennedy Administration during the Cuban Missile Crisis of 1962.

“Despite its status as a leading OPEC nation, the mullahs have so mishandled the nation’s energy sector that Iran lacks the refining capacity to turn its oil into gasoline,” Kirk explained.  “Iran is dependent for almost half its gasoline on foreign imports – most delivered by one Dutch company, Vitol, aboard tankers mostly insured by one British firm, Lloyds of London.

“Looking at history, we find an interesting diplomatic lever effectively used by President Kennedy during the Cuban Missile Crisis. We can see how a naval quarantine of gasoline would grind Iran’s economy to a halt, leaving thousands of pro-Western Iranian young people to wonder why its leaders would choose nuclear weapons over their economic welfare.

“And because Iran’s naval strength is limited, a quarantine administered 200 miles off the coast would leave Iran with no military response. A quarantine of gasoline would pit our strength against their weakness, achieving our objectives without a shot being fired.”

So in May 2007, Kirk explained a rather simple and effective solution to the alleged Iranian problem, a full 16 months prior to the dramatic collapse of Bear Stearns in September 2008.

Instead, token sanctions imposed on Iran have only served to posture the U.S. as a patient negotiator in a trumped up scheme to justify military action if such action would provide political cover for domestic economic problems, according to many U.S. foreign policy pundits familiar with the International Atomic Energy Agency (IAEA) and U.S. actions taken against other “enemies” of the U.S.

Iran, like Libya and Iraq before it, is being set up as a scapegoat for an imminent U.S. economic collapse, according to Celente.

The sales job to the American people as a means of stirring up jingoism is underway, while U.S. policymakers coax Iran into war.

“The United States and the European Union have effectively declared an act of war,” said Celente.  “They’re making it impossible for Iran to sell its oil.  About sixty (60) percent of Iran’s GDP is derived from oil sales.  They’re the third largest oil supplier in the world.  So if that happens [war with Iran], they’ll call a bank holiday of some sort.  So I’m very concerned.”

Further evidence suggesting an attack on Iran would occur under false pretenses came from U.S. Defense Secretary Leon Panetta on January 8 on CBS’s Face the Nation, where he said, “Are they [Iranians] trying to develop a nuclear weapon?  No, but we know that they are trying to develop a nuclear capability.”

A “nuclear capability” includes the production of 20 percent uranium compounds used in the making of a nuclear powered energy, a detail not expounded upon by Panetta, allowing the viewer to potentially miss the ambiguity of his statement in the midst of his theatrics of body language to matching a shift in tone.

Whether Washington embarks on another false flag attack or engages in other provocative acts against another sovereign nation, or creates a ‘catastrophic event’ through the use of an FBI-staged “brassiere bomber” in an attempt to disguise an economic collapse, Celente believes Washington needs some form of diversion to divert public anger away from failed political policies and the illegitimacy of a privately-held Federal Reserve.  Sign-up for my 100% FREE Alerts

Jim Rogers: What now for Commodities?

Jim Rogers said the commodities bull market is still on track to higher prices, but he isn’t buying anything right now.

In an exclusive interview with, the commodities king said the downdraft in commodities the markets experienced in June isn’t unusual. “It’s the way the world works.”

“If you look at oil, for instance, it has gone down over 50% three or four different times since 1998,” added Rogers.  “That’s what markets do, and they will continue to do that.”

When asked whether the commodities bull market that he envisioned more than a decade ago and about which he wrote in his book, “Hot Commodities,” is still intact, Rogers said, “yes.”

Close followers of Rogers know he likes agriculture more than any commodity, longer term.  Populations are growing in size and prosperity in Asia, bringing with that growth an upgraded and voluminous diet—the demand side of the price equation.  On the supply side, Rogers notes the aging of farming personnel will pose challenges to the restocking of qualified talent.

“We know that there are huge shortages of agriculture developing,” he said.  “I don’t know if you knew this, but the average age of farmers in America is 58 years old. In 10 years, they’re going to be 68, if they’re still alive. Throughout the world, we have serious, maybe even catastrophic developments in agriculture, which is going to hurt us all over the next couple of decades.”

In the oil market, Rogers sites the lack of meaningful new discoveries to offset Asia’s insatiable demand for crude, reminiscent of the days post WWII in the United States as industrial growth jumped into overdrive to supply a war-torn world with everything from household appliances and automobiles to military and commercial planes.  China isn’t selling air force fighter planes yet, but it sells just about everything else that can fit into a big box store.  Nevertheless, China has overtaken the U.S. in oil imports.

“I do not see any major new sources of supply [of oil]. We know that the known reserves of oil continue to decline worldwide,” Rogers explained.

And as far as the hottest commodity since the summer of 2010, silver, Rogers likes it for the rest of the decade and wants more of the poor-man’s precious metal on pullbacks.  He had said early in May that the moonshot move to $50 in April didn’t look healthy and hoped for a pullback to kill the froth.

“Well, I’m long silver, and if it goes down more, I hope I’m smart enough to buy more,” he said.  “I didn’t particularly like seeing it spike, because anything that turns into a parabolic move has to be sold. And I don’t want to sell my silver. I want to own it 10 years from now. Fortunately, that spike did break, and I find that encouraging and bullish.”