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Whenever it suits Team Titanic from the increasingly
tense helm, more phony comparisons are trotted out in baseless news stories
posing as legitimate analysis. The latest propaganda plank is that the
current financial climate, worse by the week, resembles 2008 and therefore
bodes badly for the Gold & Silver prices. The implicit inference has no
basis. In the final months of that fateful 2008 year, when Lehman Brothers
served as the flagship going down in icy waters, writing the epitaph that
marked the historic death event for the US banking industry, not yet
recognized, the precious metal price fell by a huge amount in a liquidity
drain amidst a grand crisis. While the
current climate does resemble that fateful cardiac arrest and death event,
followed by the coroner being paid off to falsify the death certificate (see
the FASB accounting rules change enacted in law April 2009), the differences
are so profound as to warrant a better description. The delineation
should help investors to realize that the Gold price will zoom on repeated
upward jaunts undeterred, the opposite of the controlled demolition in early
2009. That past raid was led by Wall Street assaults on hedge fund clients
and gigantic USFed loans well over $10 trillion to
buddy bankers. They engineered a fire sale for a global asset grab, a
secretive aggressive shopping spree with illicitly obtained funds without USGovt permission. Nowadays three years later, the same
central bankers are on the defensive, presiding over a failed franchise
system. We see the
exact opposite today.
SIDETRACK ON
FALSE 1980 COMPARISON
Sidetrack for a moment in an amble as preamble.
Remember back a few years when the Gold bull market was slamming through
several barriers. Take for instance just one such barrier, the $1000 barrier.
Numerous clients and acquaintances asked the Jackass if the thousand dollar
level would mark the end of the bull market in Gold, as in a psychological
end of the road. My response was Hell No!! When pressed further my
explanation was that the entire system
was going to experience a convulsion that would endure a few years, with
recognition coming later on, much later on, with debasement of money to
become a veritable public sport in acts of desperation, that would culminate
in government debt defaults across Europe and extended finally to the USGovt, the wicked Competing Currency Wars waged in the
open even as government deficits spiral out of control. The response from
dozens of people listening to the harangue in justification for a $1500 then
$2000 Gold price was disbelief, raised eyebrows, and openly stated doubt, and
open admissions that they simply could not see that happen. They missed each
leg up, and will continue to miss other uplegs. In
fact, in a few years, we will sell to them at double and triple the current
Gold price, and four to six times the current Silver price.
Some people dutifully have recited the nonsense
spouted by the US financial press and Wall Street maestros that a repeat of
1980 was underway, certain to fall once again for a decade of fizzle. My
rebuttal was full of laughter and accusations of actions like human sheep,
led away from the highly nutritious trough. Some even admonished me that the USDollar has done well for the nation. Most expected the
system to right itself, to rectify its own imbalances. They did not
comprehend the exhausted potential for another virtuous asset bubble (USTBond is a tombstone bubble), and did not comprehend the
absent US industrial base (shipped to Asia and China). Without legitimate income sources, the USEconomy
will sink in quicksand, as the factories would have served as ropes to pull
out. The moves in the Gold price past $1500 put to rest such stupid
comparisons to 1980. While the Hunt Brothers tried to corner the paper Silver
market, the current marquee billboard title is the drainage of the COMEX of
metal inventory, the Asian raids on the metal, heightened global investment
metal demand, and lost confidence in the monetary system itself. This chapter
has been characterized by a run on metal, not a gathering of paper contracts,
daring Wall Street to change the rules. May the 1980 comparison rest in
peace, yet another distraction, diversion, and lie.
CONVINCING GOLD
PRICE PERFORMANCE
The performance of Gold in the last three years has
proven to demonstrate loudly and visibly that the potential price in future
years is likely to be more like $2500, then $3000 and higher. The reason is
simple. Nothing is being fixed, no remedy even attempted, the debasement of money
continues, the ruin of the monetary system spreading like a Texas wildfire,
the bailouts making headline news almost every week, and Gold actually being
the ONLY, the ONLY good performing asset. The bigger question is no
longer whether Gold will repeat the 1980 decline and multi-year fizzle, but
nowadays whether climbing aboard the Gold train at the $1800 to $1900 price
will offer much upside potential. In other words, is it too late to enter the
Gold investment trade? My answer is that if a rise from $1800 to $2500 and
then a zoom past $3000 seems attractive, sure, climb on. By the time $2000 is surpassed, the upward moves in the Gold price
will be justified by widespread openly discussed debate about whether the
Western monetary system and sovereign debt structure is permanently broken. The
next hotly discussed topics will be whether almost all efforts to treat the
severe ills actually make the problem worse and actually add to the
potentially higher Gold price. The next year will see the arrival of more
realistic debate over a Gold Standard, the dreaded solution.
In my opinion, as publicly stated in a recent
article, the panic phase has begun.
The American people have begun to sense the broken nature of the system, the
suppose curative cream of new debt actually adding to the debt saturation
problem, the USGovt deficit as never to be reduced,
the grotesque imbalances growing worse, the global disputes turning uglier,
the system fracturing before our eyes. The people are awakening to the
systemic failure. They are at last showing fear and sensing some doom. They
are painfully and openly more aware that the system cannot rectify itself,
due to a broken policy apparatus, due to ineffective economic counsel, due to
corrupt bank operations, due to unprosecuted fraud, due to an endless housing
decline, due to a vanishing Middle Class in America. These are the elements of systemic failure. In doing so, they
have not only pushed aside the stupid comparison of the Gold market to 1980,
but are embracing the notion that Gold indeed has no upper limit in price,
can rise almost forever, as long as no limitations are put on money creation,
debt monetization, federal stimulus, and permitted bond fraud. With each new
poorly constructed bailout, the potential Gold price rises further! There
will be no end to the stream of futile proposed solutions implemented. The Powerz will try everything except the true solution, a
Gold Standard. Yet such a standard imposed would dissolve half the US banking
system, ignite hyper-price inflation, result in profound shortages, eliminate
large tracts of private wealth, and deliver the United States as a nation
into the Third World.
Finally, forecasts of Gold reaching over $5000 in price
are seen as reasonable, and hardly silly. Such high potential makes a lot of
sense, as the PIGS sovereign debt crisis spreads to Italy and the USGovt debt hurtles toward a ripe $2 trillion annually.
Both European and US deficits and bailout bills will
be staggering, coming down the pike. The tax revenues have turned down in
recent months. The levitation support by the USFed
has been removed to some extent. The USEconomy has
hit the skids suddenly and emphatically. All kinds of federal programs will
be hastily put in place to address the problem. My stated Panhandle Doctrine will be applied in
another round to consumers. My twin Parasite
Doctrine will be applied in another round to the financial sector. The
Obama Jobs Plan is taking shape, another gutless errant ineffective exercise
in stupidity, futility, and misdirection. Prepare for an annual $2 trillion
federal deficit, as all engines for austerity and budget cuts will be
abandoned in a bold reversal to address an emergency. The Gold price will
zoom past $2000 per ounce when it becomes crystal clear that more USGovt stimulus and spending is next, not less. Ironically, watch the $2 trillion budget
deficit go hand in hand with the $2000 gold price arrival. The United
States will be last to enact austerity. Heck, the Standard & Poors debt downgrade has been relegated to the back
pages. Its ratings agency Chairman has been replaced by a Citigroup
executive, the bandaid applied. If truth be told,
the USGovt has already exceeded the new debt limit
in violation. But the story is not deemed newsworthy.
When the additional $1 trillion in USGovt deficit for just the October to December quarter
is reported on the books, the debt limit might return as a story, especially
when the official debt limit must be
lifted to $17 or $18 trillion to give it some wiggle room. That wiggle is
the patient going through convulsions and cardiac arrest, legs twitching,
body gyrating, with the death of debt default more visible than ever before
in future years. The patient's eyes will not turn glassy gray, but rather
bold red from red ink. The Wall Street controllers are simply buying time,
loading up on USGovt Credit Default Swaps and
private gold positions. See the Carlyle Group Initial Public Offering. Jim
Sinclair revealed back in March 2009 that the private Wall Street executive
accounts reside in the Carlyle Group as investments. Conclude that the
investment banks are being gutted with a firm USGovt
guarantee and backstop, while the private accounts go long long long in Gold, and probably
Silver too.
DIFFERENCES
FROM 2008
Continue the theme of wrong comparisons. Wall Street
desperately needs bad thinking, distractions from the best paths, and
baseless analysis to be promoted. The Boyz have
more work to do. The following outlined points serve as merely a preamble to
the profound differences between now and 2008. Deutsche Bank CEO Josef
Ackerman shocked the continent this week with his frank comments about the
financial system teetering once more toward a breakdown just like in 2008.
However, many analysts astute in the art of deception have grabbed the story
and run in the wrong direction. He was not saying Gold will suffer a 25%
price decline. Ackerman was instead
saying that a string of Lehman Brother failures lies directly ahead. Although
he did not actually make that conclusion in explicit words, that is what he
meant, as insolvent trees stand helpless to the financial winds.
Consider the
numerous changes in the landscape that have taken place in the last three
years. This is an impressive list of changes. Nothing is
the same, only the proximity of another extraordinary sequence best described
as failure events where the Fiat Team suffers more heart attacks in the
Emergency Room and Intensive Care Ward. Both selective New York and London
banks have been pushed on gurneys through the ER and IC doorways. Next is the
string of 20 European Lehman lookalikes, that
actually topple some US banks across the big pond. It will make great
theatre, but more like a Greek Tragedy.
- USGovt debt limit breached again and again, to
be pushed out forever
- three years of 0% rates, a skein of QE
initiatives for over a full year
- a ripe $4.7 trillion in rescues,
bailouts, stimulus, all failed to right the ship
- the USFed
openly admitting to have no more available tools, a spent arsenal
- central banks joining the Global QE,
showing desperation (Swiss, Japanese)
- open disputes and revolt between Euro
Central Bank and German Bundesbank
- consolidation of Wall Street banks turns
sour, with poster boy Bank of America
- insolvent big US bank stumbling around,
the banks responding to lawsuits
- Bank of America seeks cash infusions to
stave off bank failure
- Royal Bank of Scotland serves as London
poster boy of bank failure
- Bank of New York Mellon charges fees for
bank deposits
- Western Economy not responding to
stimulus, entering recession again
- budget austerity arrives in force, with
attempts to reduce spending
- advent of sovereign bond busts turned
viral after Dubai in November 2009
- the Southern Europe sovereign debt crisis
spread from Greece to Italy and Spain
- the spotlight of crisis shines on France,
a PIGS lookalike
- distrust among banks, seen in absence of
inter-bank lending
- Credit Default Swap contracts openly
cited, no longer a hidden domain
- USTreasury long-term bond yields at 2%, not 4%
- widespread stock market declines usher in
panic
- housing decline turned chronic, causing
despair among the people
- monstrous climb in bank owned homes taken
in foreclosure, the Shadow Inventory
- the MERS title database discredited in
court, having zero legal standing
- hidden rise in strategic home mortgage
defaults, as people demand proof of title
- active avoidance of meaningful home loan
balance reductions
- USGovt files lawsuit against 17 big US banks
for bond fraud restitution
- a hefty $90 billion frozen (stolen) from
Libyan Funds
- a hefty $60 billion sequestered from
Egyptian Funds
- the entire North Africa & Middle East
in turmoil
- the fizzle of the Tax on Air we breathe,
as the $trillion fraud Carbon Tax fades
- the USGovt
political gridlock and stalemate prevents progress
- Too Big to Fail policy toward big US
banks becomes a challenged mantra
- US politicians openly mocked for their
empty battle cries for job creation
- Obama's biggest accomplishment the Health
Care plan, a cripple to small business
- new Gold exchanges open for trade in
competition
- the COMEX being drained of its Gold &
Silver inventory
- abusive diversion of GLD & SLV holdings
during backdoor removal of inventory
- THE ONLY SIMILARITY TO 2008 IS BROKEN
CONDITION AGAIN !!!
GOLD PREPARES
FOR ASSAULT ON $2000
Put aside the Gold correction news. That is today's
news, soon to become yesterday's news. It is merely a healthy consolidation,
compressing the ground so that it supports more weight and higher prices. The
Powerz said in May that Gold was a dead trade, only
three months before yet new highs were established. Tomorrow's news will center on USGovt
stimulus, heading off a recession, the transition back to bigger deficit
spending, the better understood Global QE, and the inability for the USEconomy to find its footing and generate anything
resembling growth. Recall that a 0% economic stall in official
calculations represents a MINUS 5% RECESSION, since the lie on inflation
adjustment is at least 5% conservatively. The most accepted facts in the
financial sector going into the autumn months are:
1) a
permanent 0% rate providing unending fuel for the Gold bull market
2) economic
recession accepted as the next immediate crisis
3) an
exhausted USFed without tools, credibility, or
spirit
4) a USGovt debt limit always at the doorstep
5) political
strangle and useless fiscal policy
6) debt
applied as solution to a system saturated in debt
7) an
insolvent system unable to respond to amplified liquidity
8) Western
banking system ready for 20 Lehman episodes
9) the
ruin of money accelerating among all major currencies
10) the USTreasury Bond bubble almost run its course
11) panic
setting in across the society, marked by worry, anger, and despair
12) lost
trust of public officials, whose talk about jobs and housing is empty
13) giving
up on US housing for a recovery ever
14) the
powerful grip of hyper-inflationary recession an imminent reality
15) decline
in Oil price as signal of the deep recession and lost demand
16) rise
in Gold price as signal of inflation and systemic ruin of money
17) Gold
seen as the only asset without debt risk, the only bonafide
safe haven
18) a divergence between empty COMEX price and premium
paid for physical buyers.
It helps to take the big picture approach and to
ignore the narrow immediate viewpoint actively promoted by the US financial
press. They never liked or respected Gold over the entire 2000 decade,
despite its 300% gains. They will not like or respect Gold in the next few
years when it doubles again. They will be scratching both heads when its
price surpasses the $2000 mark, the days of ambushes in May and August long forgotten.
The recent breakout occurred with heavy volume, a confirmation signal. More
consolidation is needed before an assault on the $2000 level is to be
achieved. The certainties are of more ruin of money, continued endless
bailouts, and much more stimulus, even misdirected initiatives with wasted
money. The benefits will be spurious and vaporous.
A healthy bull market will retest the highs. Even if
the highs are not overcome, the bull is still alive and well, actually
healthy. The consolidation is always doubted and misunderstood, as nothing
has changed in this respect in the ten years of the bull run. The Brown
Bottom in 2001 was established when the compromised (not mental midget)
Gordon Brown sold the British gold bullion in the central bank. The fuller
story was that the sale facilitated a secret bailout of Deutsche Bank, which
was huge short in gold bullion. That story will be told after D-Bank goes
belly up in the next round of bank failures. The Gold top is not yet known,
as each round of ruinous monetary and debt creation enables yet a higher
potential limit. Some clueless analysts out there who pretend to understand
the gold market actually proclaimed a Head & Shoulders bearish reversal
pattern in progress in late August. How incredibly clueless, and totally
ignorant of the fractured fundamentals! Their following will vanish surely.
Instead, the $1900 breakout was revisited and retested. The current consolidation will permit an all-out assault on the $2000
level this autumn, complete with severe psychological damage. What a
pleasure to see that the May ambush of Gold is long forgotten, the effect
overcome with the passage of time and the pathogenesis of the financial
crisis continuing its course.
THE HAT TRICK LETTER PROFITS IN THE CURRENT
CRISIS.
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Jim Willie CB, editor of the “HAT TRICK LETTER”
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