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A very important objective change
has taken place in the gold market. Its price is not moving above the
resistance established in the 1600 to 1900 wide berth range. Its price is not
moving below support in the same wide permitted range. When the gold price
has approached the 1800 level recently, all manner of naked soldiers emerge
with imaginery swords to whack the price down, to bring it under heel. The
ruse has a high cost in the real world though, as the gold cartel has been
forced to shed an enormous supply of gold as punishment for each naked short
episode. The opponents to fraudulent controlled manipulated markets have
emerged in force to respond. They fight from the East. They fight for a fair
and equitable market. They are poking holes in the floor of the syndicate
helm where legs fall through. Demand for the gold core has become acute with
pitched battles. The financial presss reports none of it. In desperation, the
cartel has conducted regular and routine raids of the Exchange Traded Funds,
using shorted shares as the ticket at the rear dock window to cart off gold
bars. What a corrupted bill of lading. Meanwhile, the major gold suppliers
from mine output appear to be on the defensive or actually on the ropes. The
deficit in silver only punctuates the precious metals shortage, as investment
demand ramps up. The dutiful lapdog press prefers to tell the story of
reduced jewelry demand, without noting how it emphatically signals the
powerful bull market. The stories rely on the public being poor students of
history. Still, the underlying forces behind the Gold & Silver bull
markets remain a team of horses, the 0% cost of money and the debasement of
currency in sovereign bond redemptions. The system is broken. Long live the
new system that comes, based upon gold and barter, as the USDollar loses its
vital ticket in global trade settlement.
GOLD REVOLVING DOOR BLEEDS GOLD
The battle has expanded. It is no
longer solely on price. It has focus on draining the crooked camps of their
physical gold. The latest wrinkle is the revelation that the derivative
sector is as corrupt as the bond core, as banks are liable for hundreds of
$trillions they cannot pay following years of hefty ripe fees taken in. The
constant backdrop since 2008 is that the big Western banks are almost all
hollow bankrupt insolvent and moribund operating zombies. The talk of tight
lending standards is intended to conceal their deep insolvency and inability
to serve as the economic credit engines. The lack adequate reserves to serve
as system lenders. They are slowly having their gold removed, methodically
bank by bank, as a consequence of their insolvency and ruin, aggravated by
their derivative exposure. The newest agent in the game is the anonymous
London Trader, whose activity has been nicely chronicled by King World News
in a series of interviews. A central bank has been buying with both hands
with lust for the yellow metal. What great news for gold investors, an
enforcer.
The Gold Wars have significantly
changed in the last two years in particular. From 2004 to 2009, the battle
was to win a fair higher gold price. No longer. The war has turned the corner
and reached an end game scenario. The objectives have changed. The tactics
used have been altered. The upper hand by the Good Guys against the Crooked
Boyz is evident. Some new confusion has entered the room. The objective is
to remove gold from the bullion bank inventories and major bank inventories,
all of it. This is a new battlefield in the war. Being a Zombie bank means
losing all the gold in reserves, in a time hourglass process that reflects
the reality of their balance sheets. By the end of 2013, no big bank will
own any physical gold. They cannot defend against off-side positions in the
sovereign bond market and the currency market. See what happened to JPMorgan
in such a case, as it preyed upon MFGlobal accounts. Other big banks are
losing all their gold from the balance sheet. UBS is a dead body on the
field, their false story of a rogue trader having provided a little
distraction. Few if any financial press stories are honestly told anymore.
Certainly not the Libya story, where 144 tons of gold were confiscated as war
booty by London. That supply filled some gaps but only temporarily.
Price implications are part of
the sacrifice, as the Good Guys will help to push down the Gold price at
times in order to kill a gold cartel player. Like right here, right now.
Every couple months (the last being in January), a massive group of orders
must be filled at a low price, for the benefit of the Good Guys, with an evil
player in a vulnerable position, who knows he is dead and must forfeit its
gold. The gold market stalls until the hairball is passed and another gold
cartel player is gutted, carried off the battlefield under the cover of press
darkness. Therefore the Gold price stays down until the order is
completely filled, and only then will recover a couple hundred dollars in
price per ounce, but only after this gold cartel player is killed off.
The player will be identified later, in the fair market obituaries known to
the internet journals. The tombstone epitaph will be carved by an Eastern
hand. The US press would never report on a cartel bank having to sell $70 to
$100 million worth of gold bullion to remove their big off-side position in
bonds or currencies. The Good Guys have put in a series of escalating orders
at low prices, from extremely well funded accounts whose war chests boast
tens of $billions. The damage done to the gold cartel is immense, yet not
adequately reported. The pattern showed itself in January, when after a
similar event, the gold price moved from roughly 1600 to almost 1800. By February
29th, the cartel leaped on the day into position to conduct one of the
largest naked short events in history. The press never seemed to catch wind,
since paid not to notice.
RAIDERS OF THE ETF ARK
Nothing new on this Modus
Operandi, used heavily for over three years. The game is easy. The ignorance
is widespread. The gold analysts barely notice, certainly not the deaf dumb
blind Adam Hamilton. The cartel wrote the GLD and SLV prospectus. They
permit shorting of shares for some odd reason, yet pose in legitimacy. They
permit satisfaction of short shares in the removal of bullion from inventory.
They might not permit altered bar lists that bear no consistency, but that is
convenient to cloud the loading docks from which bars are removed in high
volume. The gold and silver supply in a pinch for cartel banks is the very
metal that stooge nitwit naive folks believe they indirectly hold by
exercising their lazy fingers to punch in GLD or SLV while eating at their
desks. The smart investors, the intrepid winners, they own vaulted accounts
of physical metal in safe distant lands, untouched by the vagaries of paper
certificates, the ultimate in forged wealth. The ETFund investors are victims
to be revealed at a later date, when those corrupted funds trade at a 25%
discount to the spot price and the differential is blamed on something lame
like accumulated management fees. The march of lawsuits will make for great
theater, possibly more entertaining than the MFGlobal & JPMorgan criminal
travesty. The metal taken from these Exchange Traded Funds will soon gather
much attention, and high time!
SUPPLY REDUCED FROM THE FIELD
A comment will be made on only
two camps, but significant camps. Australian gold production fell in year
2011. Supply is struggling to keep pace with surging physical demand. The
dynamics are gradually changing as the gold price rises, making deeper and
lower yielding deposits more attractive and profitable. The output might
decline, but the profits have continued upward. The consulting firm Surbiton Associates
conducted a study on Australian gold production. On a full year basis, for
the year 2011, output went surprisingly into decline. Last year, Australia
retained its position as the second largest gold producing country after
China, but in comparison with 2010, Australian gold production dropped by
two tonnes. In 2011 mining companies Down Under produced a total of 264
tonnes (=8.5 million troy oz) of gold. This occurred despite a higher
average gold price, proof of my longstanding argument of an inelastic gold
supply in the equation. Output does NOT respond to higher price. In 1997-1998
Australian gold production reached a peak of 318 tonnes, a record not matched
in recent years despite more attractive prices. Production declined by 6%
year-on-year in Q4. Despite the decline, most Australian mining companies
increased their profits due to higher gold prices. Last year China produced a
total of 300 tonnes. America is the third largest producer. Couple the
burgeoning investment demand with reduced supply to arrive at a simple
conclusion that the gold price will rise in a powerful way in the next couple
years.
South Africa has become a basket
case, predictably though, since the marxist track record is so well
established. Gold production has hit a 90-year low in the former gold giant.
Multiple factors are involved, from gross mismanagement by the marxist clowns
in charge, to labor interruption, and even to deposit depletion. The official
blame is given to depletion, but it is a lame excuse actually. A real example
is given in contradiction. The scale of the collapse is utterly incredible. The
gold output from the former leader in South Africa has fallen by a factor of
five or more in the last 40 years. The old Apartheid regime might have
exaggerated the volume of their national gold production. In January, a
sizeable 11.3% decline was realized, which eclipsed the already hefty
December 8.2% gold output decline. The explanation attributed by the
Jo-burg government ministry is that many of the country's biggest gold mining
operations having reached the ends of their lives and have closed down. They
say depletion has occurred. Don't believe it, nonsense. They fail to
mention recent attempts to impose higher taxes on the cash cow industry. The
higher gold price justifies deeper mining efforts and even lower yields, as
seen in the Australian story.
A real example came in response
from a gold trader source who has SA contacts. He offered details about a
reclamation project that turned into riches, a success story. He wrote, "The white mine owners went
underground for centuries, but totally ignored the placer/aluvia deposits.
Those are very rich and plentiful. The big mining firms jump for joy if they
get 3 to 5 grams per ton of dirt moved. We have a number of aluvia mines
exclusively supplying refiner outfits that have 150 to 285 grams per ton. A
South African mining engineer recently bought a closed shaft, deep mine from
his former employer for peanuts. He turned the mine into an aluvia operation
and produced 890 kilograms of nuggets and dust at 94% purity last year. He
expects to bring it up to 2 tons this year and beyond for the next 10
years." So opportunities exist is these so-called shut down mines
that are supposedly depleted. The Marxist morons cannot even assess what is
under their noses, after they destroy an industry.
The global gold investment demand
is growing exponentially, while physical gold production in several important
nations is flat, in decline, or in South Africa's case in steep chronic
decline due to horrendous mismanagement and stupidity. It all adds up to shortage
of supply and much higher physical gold price. Observe the reduction since
1970 from 2600 tons of annual SA output, while the SA share of global output
has fallen from 80% to 15%. Marxist morons do what they do best, ruin
industries amidst elevated crowd support and noise from the dumbest sections
of society.
SILVER DEFICIT CHART
Mine output for silver is running
a losing battle. Notice how silver demand in 2005 was greater than in
2011. However, the silver price was around $9 per oz a full seven years ago.
Higher price does not translate into reduced demand, even four times higher
price! It might result in more recycling of scrap and recovery of
grandma's silverware from the hope chest though.
The zinger factor is investment
demand. Notice the dark green segment on the rise, powerfully so in 2009
after the Lehman, Fannie, and AIG disasters. These were Titanic sink events
following in delayed fashion the Pearl Harbor event of 2001. Investment
demand has at least tripled from 2005 and 2006 to today. The same surge is
seen in coin demand, shown in the darker gray bar segment. Conclude that
reduced mine output will come against fast growing investment demand, to
produce an upward price spike in silver. Just a matter of time. Actually time
is necessary to remover the crooked players who sell silver contracts without
the benefit of collateral or metal, with the full permission and blessing of
the USDept Treasury, which operates on a leash from Wall Street. Of course,
the motive is to keep America strong. For the purchase of exciting Tennessee
oceanfront property, enter the room to the left.
GROUNDHOG GOLD PRICE REDUX
The repeated episodes of naked
short ambush in price takedown, followed by depletion of gold cartel member
banks, followed by swift rising price, all to be replayed in two months, is a
pattern made evident. Most within the gold community have little clue of the
depletion, except for the London Trader accounts barely heard. The motive
for the naked short illicit ambush was clear. On the week of February 29th,
the central banks poured $1.2 trillion in funny money into the banking
system. To offset the powerful monetary hyper inflation, they sold 22
million oz of gold without the metal. The Bernanke comments this week gave
lift to gold. He and Mario Draghi and Mervyn King, along with the other
central bank chorus, have no choice except to keep the monetary press
running. They begin to comprehend how the economies do not respond to the
supposed 0% stimulus, when in fact it kills capital. They must recapitalize
the big banks. My guess is that the coordinated Greek solution is not much of
a solution, merely a patch job with a focus on covering the newest black hole
in the derivative market by pitching paper money at the big banks. The next
$trillion joins the previous several $trillions in a great debasement of the
USDollar, the Euro, and the British Pound. The Dollar Swap Facilities have
been abused to the hilt. The hidden nugget lies in Germany, where vast
rescue funds have been replenished for the expressed purpose of aiding their
big banks, should the nation depart from the Euro currency. Imagine all
that bad debt from the PIGS pen to absorb. The European Monetary Union is
doomed. Look for France to be the Lord of the Flies. Great disruption cometh
to the FOREX currency market. Big gains lie ahead for Gold.
As the cycle plays out, up and
down, up and down, the market forces have set up a potential for a strong
reversal with momentum off a familiar reliable pattern. The Head &
Shoulders reversal pattern is quite reliable to forecast high breakout
prices. Look to the Eastern Coalition to eventually resist the next paper
ambush that has contributed to the ruin of the COMEX integrity. Let's watch
JPMorgan squirm before Congress. Will it be soft lobs or hard line with
prosecution for high financial crimes? Sometime in the near future, the day
will come when JPMorgan is brought to trial for $trillion fraud, $billion
fraud, and $million fraud, all of which has brought the nation to the brink
of systemic failure.
Jim Willie CB, editor of the “HAT TRICK LETTER”
home: Golden Jackass website
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