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

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

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

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

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

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

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

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

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

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

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

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

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

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)

 

 

 

Gold Short Squeeze is ON

In a dramatic change of events from decades-long control of the gold market by the gold cartel, led by JP Morgan (NYSE: JPM) and HSBC  Holdings (NYSE: HBC), the cartel shorts took a bloodbath in the overnight trade after Monday’s close in New York.

The long awaited short squeeze is ON in the gold market.

“Well, what’s happened with the shorts that were in there is they were absolutely crushed on that overnight rise on Monday,” said King World News’ (KWN) anonymous London trader in a Tuesday interview with Eric King.

Anonymous added, “These guys in London woke up with their asses handed to them and I don’t think some of these guys will ever be short again, if they are still in business.  So some of these perennial shorts that have always joined in the party got screwed, I mean literally lost everything.”

After the Fed announced Tuesday afternoon it would extend its ZIRP through mid-2013, the 2 and 3-year Treasury notes soared, while the Swiss franc jumped 400 points against the dollar in a matter of minutes.  And gold, it sold off $50 after short covering in the pits took the metal to a new record price of $1,782.50.

But in New York trading this morning, gold trades at less than $5 from its all-time high.

Earlier, on February 10, Goldmoney’s James Turk told KWN he was watching the gold futures chain closely for signs of a breakdown in the dollar.

As of the close Tuesday in New York, the gold futures chain now look like the silver futures chain, all but completely inverted, a sign that Turk’s backwardation scenario in gold could be near.

“It will be interesting to see whether the backwardation in silver will lead to a backwardation of gold,” said Turk.  “If it does, the end game for the U.S. dollar is near.”

Last month, Turk had warned investors that this summer was shaping up to look like the summer of 1982, the time when the Mexican government devalued the peso, creating a 50% firestorm rally in the gold market.

Back to KWN’s anonymous London trader, who said Tuesday some gold shorts won’t be playing in the pits anymore, and predicted a possibility of the yellow metal achieving the $1,800 print soon.

“Gold just gapped up and didn’t come back and these guys were heavily short,” the anonymous London trader said.  “I believe there is still enough momentum to push gold into the $1,800’s.”

“I fully expect to have $2 moves in silver and $50 moves in gold as absolutely normal at this point.”

Another new normal.

U.S. Budget Deal is Gold Bullish, says Peter Schiff

As the economic data continues to point to a rollover in the U.S. economy, with the latest ISM data for July moving down sharply in step with equally horrible employment and GDP prints, Euro Pacific Capital’s Peter Schiff said that in light of the further evidence of a declining economy, Washington won’t make the bold moves needed to bite the bullet on spending and arrest the gold price.

Washington’s announcement on Sunday that a deal was reached, which includes $900 billion in spending cuts over 10 years, the authorization for raising the debt ceiling by $2.1 trillion by 2013, and a promise to seek additional cuts of $1.5 trillion through a bipartisan, bicameral congressional committee won’t change the course of gold’s ascent in the least, according to Schiff.

On Sunday, Schiff wrote of four possible scenarios coming out of Washington on dealing with the $1.6 trillion projected deficit and the effect it most likely would have on the gold price.  In fact, Schiff has said in the past that today’s projected deficit is much too optimistic, and any proposed spending cuts will become diluted on a deficit-to-GDP percentage basis.

Under Schiff’s four scenarios, he predicted the scenario that Washington has always chosen when faced with a sick economy and a consumer dependent on transfer payments from the public coffers, that, for this year, has reached 20% of total income.  That scenario is: “they will raise the debt ceiling and make spending cuts which sound substantial, but which only mange to slow the accumulation of new debt.”

“The plans on the table suggest cutting a couple trillion in cumulative spending over the next decade,” Schiff continued. “In other words, they propose cuts that only reduce deficits by about 10%-20%; they do nothing to reduce actual debt levels. So if these talks are successful, then instead of a $1.5 trillion deficit each year, perhaps we only suffer a $1.2 trillion deficit. Meanwhile, the debt continues growing. This is ‘success’ in Washington.”

So, the deal, if passed by both Congressional bodies, “is bullish for precious metals. It means more of the same – more spending, more debt, and necessarily more money-printing,” he stated.

After dropping to $1,608 in overseas trading, gold has retraced the post-announcement decline and actually advanced past Friday’s close to reach above $1,630 per ounce in late morning trading in New York, thanks to bargain hunters and a miserable ISM number.  So, the gold pundits who predicted steep declines in the gold price on an announced deal have so far been dead wrong.

Schiff, who’s predicted the rapid decline of the U.S. and the dollar in his book “Crash Proof – How to Profit from the Upcoming Economic Collapse,” hasn’t backed off from his prediction of a U.S. collapse of more than three years ago.    In fact, since his call for a grand bull market in gold in 2000, Schiff has gained a tremendous following as more and more investors seek an investment professional who’ll tells the truth as sees it and offer ways to protect from Washington’s profligacy.

Dow Theory’s Richard Russell: Gold $1,880

As the gold price doggedly trades above $1,600, the Godfather of stock market newsletter writers, Richard Russell, recently wrote that he’s targeting $1,880 for the king of currencies, gold.

“There isn’t much clear and defined in this market except for gold,” stated Russell, the author of The Dow Theory Letters.   “How much of this is based on the Washington shenanigans I don’t know, but once the debt boost is solved the test will be whether gold tends to hold its gains.  By the way, the P&F [Point & Figure] chart shows a price objective of 1,880.”

Incidentally, according to stockcharts.com, the technical rule for a breakout price objective for gold suggests a target of $1,910.

Nevertheless, today’s GDP report only buttresses Russell’s assessment for the future direction of the gold price.  Friday’s GDP report came in at a dismal 1.3% rate for the second quarter, while the real shocker in the Commerce Department announcement was the drastic downward revision for the first quarter to 0.4% from the initially published pace of 1.9%.

Plunging GDP and jobs puts the Fed in a situation not dissimilar to the summer of 1933, but, back then, the debt levels were a mere fraction of Boston University Professor Laurence Kotlikoff’s estimate of $200 trillion in today’s unfunded federal liabilities—which is an amount too unimaginable for creditors to anticipate anything other than a some form of default.  Under that scenario, gold could be just beginning to gather additional steam.

“I’ve studied bull and bear markets for over half a century,” added Russell.  “In my experience, great extended bull markets, such as the current ten-year bull market in gold, don’t die with a wheeze and a whimper.”

The gold market is telling Russell the American public has yet to fully comprehend the no-win policy decisions yet to be made in Washington and at the Fed, as well as much higher food and energy prices in store for Americans during the second half of 2011 due to the Fed’s QE2 (inflation) program—a prediction made this week by Euro Pacific Capital’s Peter Schiff.

And like Schiff, the older Russell relies upon his more than 50 years of acquired instincts for anticipating another gold craze he thinks is destined to be launched by the retail investor—a craze he’s stated in the past could dwarf the gold mania of 1979-80.

“They [gold bull markets] die amid excitement, torrid speculation and finally the wholesale entrance of the retail public,” continued Russell.  “I’ve yet to see any of those characteristics in the current gold bull market.  Therefore, I’m trusting history, and I’m sitting (in) the gold bull market.”

Russell also sees the possibility for a divergence in the Dow and gold, which, from the start of the rebound in both assets off the March 2009 lows have moved in tandem between a ratio of as high as 10:1 and 7.8:1.  But this week, the Dow-to-gold ratio has fallen through the 7.8 level to the 7.5 level—a sign that gold has usurped the dollar as the premier safe haven asset.

“Wait, does it make sense for the Dow to sink while gold moves higher?” Russell asked rhetorically.  “Under one scenario it does.  Here’s the scenario.  Bernanke continues to stimulate, but the newest stimulation (like the old ones) don’t work, and the declining stock market is already discounting Bernanke’s continuing failure.”

And what does Russell say about this year’s rage of the precious metals—silver?

In his latest edition of his daily newsletter, he wrote, “Silver broke out above both its 50-day and 200-day moving averages, and its MACD has turned bullish.”

Growth in gross domestic product — a measure of all goods and services produced within U.S. borders – rose at a 1.3% annual rate. First-quarter output was sharply revised down to a 0.4% pace from a 1.9% increase.

Economists had expected the economy to expand at a 1.8% rate in the second quarter. Fourth-quarter growth was revised to a 2.3% rate from 3.1%.

Marc Faber makes his Case: Gold is “Inexpensive”

Speaking with King World News (KWN) earlier this week, Marc Faber said when compared to the Federal Reserve’s monetary base, today’s gold is “inexpensive.”

As physical buyers of the yellow metal trounced the paper shorts in yesterday’s option expiration trading, taking the gold price to $1,620 at the close, the typical price smack down, followed by a rally, and then, a subsequent smack down wasn’t evident throughout the day.  If Asian buyers were stepping in to pick up the new shorts, the operation went off seamlessly.

It appears that something very different is going on in the flow to safe haven buying this month.

The ponytailed, Swiss-born, eccentric money manager, who calls Thailand and Hong Kong his stomping grounds, sees the simultaneous fiscal woes in Europe and the United States leaving investors little choice in the duck-and-cover maneuvers since the collapse of Bear Stearns in March 2008.

“Well I think investors are gradually realizing that it’s unusual, with all of the problems in Europe that the euro is actually relatively strong against the U.S. dollar,” said Faber.  “They are realizing U.S. holders don’t want to hold euros because they don’t trust the euro and the Europeans don’t want to hold dollars because they don’t trust the dollar.”

At the open of European trading at 3 a.m. EST, significant dollar weakness could be seen across a broad range of currencies.  In earlier Asia trading, the Aussie dollar broke through 1.10, the Swiss franc cracked 1.25, the NZ dollar reached 86.6, and the Canadian dollar as well as the Malaysian ringgit both trounced the greenback to finish strongly at the close.

Traders fleeing the dollar have been diversifying into “Canadian dollars, Australian dollars, New Zealand dollars, Singapore dollars and so forth,” said Faber.  “But, basically, the ultimate currency and the ultimate safe asset,” he said, “is gold and silver.”

At the open of trading in New York, the Dow-to-gold ratio had breached the 20-year support at 7.8 ounces of gold to buy the Dow.  Except for a brief breakout (to the downside) in the Dow-to-gold ratio during the panic of March 2009, the 7.8 level has been a base of long-term support since 1991.

In 1992, the U.S. economy emerged from recession and simultaneously reinvigorated the bull market in stocks and resumption of the bear market in gold until the peak in the ratio of above 43 was achieved in the second half of 1999—the year the NASDAQ popped.

Since 1999, the Dow-to-gold ratio has moved in a downward trend, with many analysts forecasting a 1:1 ratio when the gold bull market ends.

Investors fearing they missed the boat on the gold trade may take solace in that Faber believes the rally in the gold price is actually still in the early innings.  In fact, when calculated in terms of the Fed’s balance sheet (monetary base), today’s gold price is a comparative bargain.

“I just calculated if we take an average gold price of say around $350 in the 1980s and then we compare that to the average monetary base in the 1980s, and to the average U.S. government debt in the 1980s,” explained Faber.  “But if I compare this to the price of gold to these government debts and monetary base, then gold hasn’t gone up at all.  It’s gone actually against these monetary aggregates and against debt it has actually gone down.  So I could make the case that probably gold is today very inexpensive.”

According to St. Louis Fed statistics, the Fed’s balance sheet stood at approximately $150 billion, compared with the latest report which shows that the Fed’s balance sheet has reached $2.7 trillion, or an expansion of 18 times in 31 years.  If gold topped out at $850 in 1980, a rough estimate of gold’s potential climb in terms of the Fed’s balance sheet could take the world’s ultimate currency to more than $10,000—a number, by the way, that jibes with Jim Sinclair’s $12,500 gold price prediction.

Today’s Silver Price Critical, says James Turk

With silver hanging ruggedly firm above the $40 battlefield, the naked silver short cartel could completely lose control this time, James Turk told King World News  (KWN).  But today is a critical day, as the cartel typically throws everything they’ve got at the paper market before the August options expiration of July 26.

The result of that expected struggle will be telling, he said.

“The fact that we are breaking through $40 [for silver], which has provided overhead resistance for so long, is a clear sign that the shorts are losing control,” Turk told Eric King of KWN.  “The upper hand is shifting to the buyers of physical silver.”

Coincidentally, signs of another break from the correlated moves up and down in the Dow and the precious metals market are evident in the Dow-to-gold ratio, which has been teetering on collapsing below the 7.8 mark this week.  If broken, as it was in the panic month of March 2009, the precious metals could attract buyers of the metals this time around and trigger another short squeeze, especially in the razor-thin silver market.  In 2009, the rush to liquidity took the gold price down.  Today, the problem in the global financial system is solvency—not liquidity.

“My near-term target is still something in the mid $40s, but if gold starts moving higher, as I expect, silver will be testing that $50 level by next month,” said Turk, who has warned of that scenario nearing reality all year.  “That is going to spoil the summer vacations of many of the silver shorts who will be left shocked and in disbelief as they buy hand over fist to limit their losses.”

Several bullion experts have expressed disbelief that the Commitment of Traders report (COT) indicates subdued bullish sentiment in silver under the circumstances in Europe and the U.S.  It appears that possibly the large speculators (specs) have mistaken the summer of 2011 as any other summer of the past 29 years, according to Turk, and may not fully appreciate why this summer could be one for the record books.

“I’m surprised by all of the bearish sentiment, particularly in view of the fact that both metals look ready to rocket higher,” Turk continued in the interview.  “The summer is just getting started and this is already looking more and more like the summer of 1982 when gold was up 50% in three and a half months.”

The continuing crisis in Europe and renewed weakness in the U.S. dollar against the commodities producing nations of Australia and Canada, as well as the record print against the Swiss franc, could indicate the dollar’s morphing status from safe haven to one of just another currency in line for trouble after the euro and sterling.  With the euro under threat of unraveling, the dollar, remarkably, still trades at near 1.44 against the dollar, or only $0.16 off its all-time high before the crisis began.  At this time last year, the dollar traded at near parity, and has lost approximately 25% against the Swiss franc within those 12 months.

Is the Swiss franc’s strength foreshadowing the summer rally in the metals?  Today’s silver price action could give traders a clue as to the possibility of such a rally.  If the price of silver can struggle to trade above $40 amid the expected cartel onslaught, Turk could be spot on with his analysis of a breakout and test of the $50 mark.

“So tomorrow [July 26] is shaping up to be an interesting battle between the option sellers and the physical buyers,” he said.

Expect $85 Silver, says Legendary Market Technician

As Asia continues to report soaring CPI statistics, with Vietnam’s 22% inflation rate as the most recent evidence of the Fed’s QE2 “liquidity” rippling through the world’s economies, legendary technician Louis Yamada told King World News (KWN) the precious metals are set to takeoff again as a result of Bernanke’s monetary actions.

Yamada’s fame as the market technician with a track record of “getting it right,” began as director and head of technical research at Smith Barney (now of Citigroup (NYSE: C)).  After being voted as the leading market technician in 2001-2004, she went off to found her own research group, Louis Yamada Technical Research Advisors, in 2005.

“Gold continues to be in an uptrend in our work,” Yamada told KWN.  “You had a little bit of a consolidation, seasonality would suggest a rise into the fall. The primary support level remains at $1,475 … Our next target is $2,000, and we did a gold special in our last piece that suggested from a very long-term perspective … we could see $5,200 on gold.”

Yamada is the latest of a raft of highly credible analysts, money managers and bullion dealers coming out during the past two weeks to tell KWN and other news organizations of the imminent explosion in the price of precious metals.  James Turk, Jim Sinclair, John Taylor, Ben Davies, John Embry, Peter Schiff, and Jim Rogers (who announced he is adding insult to injury to the U.S. dollar fiasco by shorting U.S. Treasuries) have all advised to go long the anti-dollar trade.

The lone hold-out of considerable import to the precious metals market is Marc Faber, the favorite go-to guy for the most steamy of quotes and anti-establishment rhetoric of all hard money advocates.  His forecast for this summer is for the monetary metals to succumb to the 30-year track record of weakness and relatively thin volume.

As gold makes new highs above $1,600 and silver makes its way past $40 amid a fierce “250 million ounces of silver in 1 minute” smack down attempt by the cartel last week, according to Precious Metal Stock Review’s Warren Bevan, the majority of our favorite talking heads, so far, have it right, and Marc Faber has it wrong.  But the summer isn’t over yet, and Faber hasn’t budged from his forecast for the metals.

Yamada, who, incidentally, didn’t offer a time frame for her targets for the gold and silver price, said her next target for silver is for a double “over time” from the $40 print.

“We hit part of our silver targets at $50, (expect) $65, even $80, $85 over time,” speculated Yamada in the KWN interview.  “We had an 88% rally in a very short period of time from January and a one third retracement, 34% down, so that was pretty normal. We saw some support at $33 and would loved to have seen it go sideways a little bit longer to be honest with you,” noting considerable dollar weakness in light of the  sovereign debt crisis with the PIIGS of Europe has revealed the dollar’s diminished status as the world’s safe haven currency.

“I think that one of the observations that one has to take into consideration is that with each of the Euro financial crises and our own financial crisis in 2008 to 2009, the dollar has rallied less!” she said.

“In other words you had a rally in 2009 that carried 25%,” Yamada explained.  “Then, in early 2010, the rally was only 19%.  And the second one in 2010 was only 7%.  And this time, you haven’t even seen 7% with the crisis that has evolved.  So that suggests to us that it (the dollar) is becoming less and less considered a really safe haven.”

While the systemic problems with the euro and dollar come fully into focus, we should be mindful of U.S. Treasury Secretary Tim Geithner’s recent comment on Meet the Press of July 10, when he said, for a lot of people, “it’s going to feel very hard, harder than anything they’ve experienced in their lifetimes now, for a long time to come.”  Bloomberg reported that Geithner may step down from the head of the Treasury.

As of 12:36 in New York, gold trades at $1,612.79 and silver at $40.05.

Economist John Williams: Hyperinflation by 2014

Ridiculing Europe’s handling of the financial crisis has become a popular go-to talking point for the dollar bulls.  Yes, there are still some diehard old timers on Wall Street (Art Cashin, not among them) who cannot image their Wall Street careers without the benefit of a credit bubble gravy train.  Those same tired cheerleaders also tell us that a rebound in the U.S. economy is inevitable “because we always bounced back before” in the hopes of sucking the public into the markets one more time in order to make those bonuses.

The U.S. may bounce back in nominal terms, priced in dollars, but not in real terms, argues economist John Williams of www.shadowstats.com.  Williams told listeners of Financial Sense News this weekend he believes the March 2009 collapse is merely a precursor of even more grave consequences for an already battered dollar following the $5+ trillion of stimulus the Fed has injected into the financial system since the start of QEI during the spring of 2009.

“Hyperinflation in the United States will be particularly painful,” said Williams, noting that the U.S. has no backup currency to the dollar in the event of a sudden panic out of the dollar, which he believes will be not later than 2014.  At least in Zimbabwe, he said, commerce continued via a black market settled in U.S. dollars.  But in the U.S., “we don’t have a backup system here,” he said.

Williams acknowledges the hesitancy among central bankers to trigger a run on the U.S. dollar until they’ve diversified enough dollars into other currencies (such as the euro, some of the hard currencies, and gold) to weather the coming collapse.  That is especially true in the case of the Bank of China, which has on numerous occasion complained about U.S. monetary policy and the effects on food and energy prices in the People’s Republic of China.

Moreover, China’s state-sponsored rating agency has already stated that the dollar is systematically being devalued, and has lowered its rating of U.S. Treasury debt.  The Chinese want out of the dollar.

“They [the Chinese] want to get out of the dollar as quickly as they can,” said Williams.  “No one wants to create a panic.  Everyone wants to get out as whole as possible.”

Williams expects the inevitable fate of the dollar will shock the world. It’s going to zero—in real terms, in purchasing power.

“Gold is the primary hedge against what’s happening here and what going to happen to the purchasing power of the U.S. dollar, which is eventually going to decline to zero,” he warned.

As far as the timing of a dollar collapse, Williams told FSN’s Jim Puplava it could happen at any time.  There are numerous possibilities or surprises lurking that could trigger a panic, precipitated by politicians or a Black Swan event.  But the outside of his timetable for a dollar collapse is 2014; but he gives a better than 50 percent chance of the event happening sooner.

3 Gold Stocks to Watch

Yamana Gold Inc. (NYSE: AUY)

Goldcorp Inc. (NYSE: GG)

Barrick Gold Corp. (NYSE: ABX)

Latest Gold Market Shocker: India’s Gold and Silver Imports soar 500%

Recently published data about India imports of gold and silver shocked analysts Monday after India’s commerce and industry minister Anand Sharma released trade figures for the month of May.

Those figures show a 500% increase in May (month-over-month from April) and another impressive hike of 222% from May of last year.  Bullion imports reached $8.9 billion in May, which, if put into more meaningful perspective, represents nearly half of India’s average imports for the ENTIRE YEAR!

The article, first published on internationally recognized source of mining data, Mineweb.com, has since gone viral on the Web within the gold community since yesterday.

“People in India have accepted high inflation as a reality of life,” Rajesh Shukla of the Centre for Macro Consumer Research told Mineweb.  Shukla also noted that Indians turn to gold during times of excessive central bank money printing, and is most likely the cause of the spike in gold and silver imports during May.

India’s craving for gold and silver is beyond outsized, now.  It’s a frightening show of what sheer numbers can do to the short-term (and long-term, in the case of India) of any given market.  What was once pretty much under the radar of Wall Street analysts is now too glaring to miss.  Move over Peak Oil theorists, the Peak Precious Metals thesis could soon spread more quickly now that India has decided to stampede its Indians onto the gold and silver life raft.

Moreover, and probably most troubling to the gold cartel, the latest India import report strongly suggests that India’s 1.1 billion population can break the precious metals market suppression scheme all by themselves without any help from American media, who have been tirelessly urging mainstream investors to accept blindly Ben Bernanke’s dangerous, untested and unsound monetary policy moves.

But the hang up among American investors centers, first, on a prerequisite deprogramming of false economic theory regarding a vital role gold plays in economics, taught in Western-centric colleges, and repeated as gospel from the flock of the high priestesses of Modern Monetary Theory (MMT).

So when Bernanke and his echo chamber at CNBC report on the Fed’s latest actions (and obscuring the primary dealer and accounting fraud), investors believe that, though the economy is “not at full capacity,” we’ve been here before and it’s only a matter of time before we dig out of this hole and create meaningful jobs again.

“The gold story is puzzling” Standard Chartered financial analyst A S Kirolar told Mineweb. “Consumers are shying away from stocks and bonds and heading to safe assets like gold and real estate, but one cannot understand this given the meager 12% growth in imports of petroleum and oil products.”

As Western-trained analysts remain puzzled from the recent “unexpected” demand for gold in India, Indian authorities, on the other hand, aren’t confused at all, taking steps to open the gold spigot wide open to accommodate the feverish demand for gold to its people of the world’s largest democracy.

Shivom Seth, the Mineweb author of the article, wrote:

“Analysts maintained that India’s central bank, the Reserve Bank of India’s decision to grant licenses to seven more banks to import bullion has helped push up demand. Karur Vysya Bank, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, Punjab and Sind Bank, South Indian Bank, State Bank of Mysore and Seth continues:

“As of the start of 2011, some 30 banks in India have been granted permission to import gold and silver. Jewelers are getting easy supplies which is also helping push up demand. Moreover, the flow of scrap is also expected to fall from a yearly average of 200 tonnes, which could again boost imports, underlining the insatiable appetite of the Indian consumer.”

Adding that latest report out of India to the gold story emerging out of “Communist” China, then the verdict on the value of gold to investors is taking shape: No matter what a people’s political ideology or cast, the people want to hold gold—especially during times of government theft of purchasing power.