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Back in November 2003,
before the Hat Trick Letter was hatched and launched, a seminal article was
written about 25 reasons why Gold will rise. It was updated afterwards,
around 2008 with a couple more reasons. Given the extreme situation in the
last few months, the entire outlook has changed. The gnarly intractable
crisis began in late 2008 when Lehman Brothers failed, Fannie Mae was
nationalized, and AIG was given a nationalist prop. In the last several
months, the crisis has entered a new elevated level of perma-crisis and
constant tension, widely recognized as something more serious, dangerous, and
risk-filled.
The key changes that mark
a quantum change in the global environment for Money, Banking & Gold are
many. Taken collectively, they are truly impressive and mindboggling. The new
normal is deep constant crisis without resolution, nor the attempt to resolve
anything. The banker power structure refused to endure liquidations. They
will forced upon them, consequently. The elevated
sense of urgency, greater degree of distress, and higher risk of systemic
breakdown are the result of many developments. They are largely due
to:
- ZIRP
Forever & QE to Infinity (hyper monetary inflation forever)
- Negative
Gold Forward Rates & Futures Contract Backwardation
- Arab
Spring & Instability across Middle East & North Africa
- Bail-in
Plans for Western Bank Account Confiscation
- Monthly Gold Market
Ambushes
- COMEX Vaults Going
Empty
- Exposure
of Derivatives as Bank Sector Point of Vulnerability
- Constant Pressure for
Intervention & False Support of Financial Markets
- Draghi Bond Solutions
Declared Invalid
- Unresolved
Debt & Deficits in Southern Europe
- Recognized Dysfunction
of USGovt Spending
- Infiltration
of Chinese Yuan Swap Facilities into Western Nations
- Renegade
G-20 Meetings with Gold Trade Settlement as Key Project
- Birth
of EurAsian Trade Zone with Pipeline Infrastructure
- Revelation of
Widespread Security Eavesdropping
The entire world has
changed with respect to money, banking, investments, and the rules that
govern wealth. The Hat Trick Letter is not concerned about legal matters, nor politics. The newsletter is focused on matters that
affect the USDollar, major currencies, sovereign bonds, banking systems,
economies, trade, and precious metals. No serious analysis can proceed on
Gold & Silver without analysis of the other concepts, since all are
integrated.
SHORTAGE
The following factors are
directly relevant as to why the Gold Price will rise to $5000 per ounce, then
higher. At the same time, the Silver price will rise
multiples higher. The gains for Silver will most likely be a greater multiple
than seen on the Gold price rise. The shortage for Silver is astounding and
obvious to analysts and experts, except those who work for banks. The
shortage for Gold is more subtle, as thousands of tons have been leased
illicitly. Therefore the accounting is replete with double counting and
outright missing accounts in false reporting. The most egregious ledger item
is the USGovt gold reserves, listed as deep storage gold, translated to mean
some scattered Barrick Gold ore bodies buried in mountain ranges.
GOLD PRICE FACTORS
1. Interest Rate Derivative Meltdown & Damage Effect from Rising
TNX
The London Whale of
JPMorgan's London office is responsible for giving it publicity. The Interest
Rate Swap is a key device used to control interest rates, especially the long
maturities. It is a complex mechanism. Final demand is artificially created.
Morgan Stanley has served as the Wall Street harlot for years, executing the
IRSwaps, fabricating USTreasury Bond rallies out of thin air. The leverage
within the device is between 50:1 and 100:1 in usage. Small moves in the bond
yield (like 30 to 50 basis points) can cause great disruption. We have seen a
130 basis point move in the USTreasury 10-year yield since May. Some big
derivative accidents with ten whales will be sighted soon. The
safer haven is the nemesis Gold bullion.
2. Reversal of USTreasury Bond Carry Trade & Convexity Effect on
TNX
Since year 2009, the Fed
Chairman Bernanke encouraged the big US banks to replenish their balance
sheets with easy leveraged carry trade. They borrowed the free money on the
short end near 0%. Then they invested in the 10-year USTreasurys. The Excess
Reserves held at the USFed itself obscured the central bank's insolvency,
obtained as profits from the carry trade. Now with rising bond yields, the
damage is enormous, as the losses are approaching catastrophic levels
(hidden), the process in reverse gear. The losses are magnified by leverage.
The big US banks are in a rush to unwind their USTBond carry trade, which
relied upon futures contracts for leverage. The easy money has converted into
massive losses. The better investment is the nemesis Gold bullion.
3. Indirect Exchange: USTBond Returned to Sender & Eastern
Infrastructure Build-out, the Inflation Finally Imported after 30 Years of
its Export
In numerous large
projects, the payment between two parties is turning out to be in the form of
USTreasury Bonds more often. This is true for Rosneft acquisitions and
African asset purchases, along with numerous smaller projects. The Brazilian
OGX liquidation will see more of the same pattern. The payments in USTBonds
are then converted to cash to the party selling the asset. The USTBonds are
returned to sender, usually a New York or London bank. The exported inflation
from the United States Govt avoided any direct strong effect on price
inflation for the USEconomy, since exported debt. When it returns after 30
years, the inflation will be an imported effect, a massive delayed effect.
The Gold price will respond to the USTBond being dumped, the rising bond
yields, and the price inflation caused by the USDollar devaluation. The
true inflation hedge is the nemesis Gold bullion.
4. Bank Bail-in Executions & Private Account Confiscation
The Cyprus bank
confiscations provided the adopted model for the Western banking world. The
Bail-in will in no way restore the solvency of big banks, whose derivative
losses are typically 50 to 100 times larger than private accounts held in
deposits. When the United States and Western Europe, along with Great
Britain, impose the bail-in confiscations at whatever percentage for account
reductions, the fury and panic will be very visible. People will realize that
private funds held in insolvent broken corrupt banks are not safe. They will
remove money from accounts, whatever is left, and seek Gold instead. The
true safe haven is the nemesis Gold bullion.
5. Fall of House of Saud & Demise of Petro-Dollar & Rise of
NatGas Coop
The Saudis are special in
their command post at OPEC, and for colossal trade surplus recycling into
USTreasury Bonds, US bank stocks, and US property. The Saudi regime has
become unstable, due to many factors. Cite price inflation (food in
particular), lack of reforms tied to Islam rules, targeted appropriation
thefts by the princes, diminished national surpluses from the oil business,
and a basic problem with succession of power. Apparently King Abdullah has
recovered from a coma, his condition uncertain. The conditions for oil
purchase being in USDollar payments cannot be assumed to continue much
longer. The OPEC itself might fall victim to the Arab Spring disruptions, and
bend toward other currencies in oil payments. The rise of the Natural Gas
Coop is the biggest energy related geopolitical story in decades, linked
integrally with the pipeline constructions, battles, and controversy. As the
Petro-Dollar defacto standard falls to the wayside, the true standard in
trade will be the nemesis Gold bullion. Arabs including the Saudis, in
particular the Persian Gulf oil producers, will
chase Gold with a passion, when they discard the USTreasury Bonds and pay
homage to the new protector, China with Russia beside it. The longstanding
favorite form of wealth held by Arab has for centuries been Gold bullion.
6. BRICS Bank as Gold Trade Central Bank & USTBond Conversion to
Gold (G-20)
It was born as the BRICS
Development Bank for construction projects extending from the alliance of
Brazil, Russia, India, China, and South Africa. It later changed to the BRICS
Bank. It will eventually become known as the Gold Trade Central Bank, the
main processing center for supplied USTreasury Bonds accumulated by the
emerging nations, converted to Gold bullion. At this point, the BRICS Bank is
gathering in funds, typically in USTBond form. The details will be revealed
in time, but this bullion bank will become a behemoth,
and the core to global trade stability. The member nations will direct their
FOREX reserves, largely USTBonds, into the BRICS Bank. The ruse is that infrastructure projects is cited in order to divert
attention from US & UK attacks. The conversion of USTBonds for Gold
bullion will make for a historically significant event in the Paradigm Shift
for commerce and eventually banking, in brutal fashion, as USTBonds are
redeemed (liquidated) for Gold.
7. USDollar Devaluation & Global Split by Defiant Foreigners
As the USTBonds are
discharged from Eastern banking systems, the effect on the USTreasury yield
will be pronounced. Whether for basic diversification of banking and FOREX
reserves, or for payment of large project acquisitions, the effect will be
the same. The USDollar must adjust in its exchange rate, and be devalued. In
order to prevent staggering global price inflation, the foreign held
USDollars must split to create a foreign USD and domestic USD. Foreign
institutions will balk and object and resist a forced devaluation, having no
part of it. The devaluation effect will be isolated to the USEconomy. The
foreign defiance will reject the notion of a devalued USD outside the USGovt
jurisdiction control and policy. The USD split will lead to the birth of a
domestic USDollar, devalued by 30% at first, then later another 20% or 30%.
The price inflation inside the USEconomy will be obscene. The true
inflation hedge is the nemesis Gold bullion.
8. Banking System Meltdown & Default of Sovereign Bonds
The big Western banks
have been insolvent for five years, actually since Lehman failed. The damage
from Mortgage Bond investments was staggering across the world.The altered
FASB accounting rules allowed the big US banks to operate as zombies, with
doctored gimmicked balance sheet accounting. The cratered sovereign bonds of Southern Europe was the second major blow. The
final blow is the combination of USTreasury Bond losses, tied closely with
bank derivatives. Many derivatives are FOREX currency swaps, but ironically
using Gold as a currency under contract. But the deadly damaging derivative
is the Interest Rate Swap. The lost control of the USTBond is a big bank
death knell. The best secure asset held in a bank or elsewhere is Gold
bullion, seen slowly in new Basel Rules.
9. Discovery of Allocated Gold Account Thefts & 40,000 Missing
Gold Tons
The demands
for official gold account repatriation, first by Venezuela, lately by
Germany, has caused a global problem for both governments and elite
families. The exposure has extended to bullion banks and elite wealth funds,
supposedly safe in accounts for the former, and supposed backed by redeemable
gold for the latter. The gold is not there. The gold is not safe. The gold is
not redeemable. The Backwardation in Gold futures pricing and the negative
GOFO forward rates are glaring symptoms of the broken COMEX. For over 20
years, the major central banks of the United States, England, Switzerland,
and Western Europe have colluded to lease and sell the official accounts and
to abscond with private bullion accounts. My source The Voice estimates the
missing illicitly leased gold from Allocated Accounts is at least 40,000
tons. The redemption demands will escalate. He calls it the climax scandal in
banking that will catapult the Gold price to its proper value, at least
$5000/oz and more likely to $7000/oz. The central banks and their accomplice
bullion banks will be required to replace the improperly accessed gold for
the official accounts and elite private accounts. The catapulting Gold
price will reveal the beginnings of the true value of Gold bullion.
10. Discovery of Western Central Bank Fractional Gold Management, Contrasted
with Gigantic Eastern Central Bank Gold Reserves
For decades, the known
function of banking systems has been to use fractional methods. Between $10
and $20 is extended in credit, for every $1 held in deposits. The new money
has collateral in the bank deposits. The dirty secret is that the central
banks and their partner bullion banks have carried out fractional bank
methods in the gold storage business also, against the wishes of clients
(both government official accounts and private individual accounts) in
illicit manner. They have replaced the leased gold bullion with gold
certificates of dubious value, since the leased gold was used to suppress the
Gold price by massive systematic dumping. As the gold bank practices become
better known, as Andrew Maguire pointed out with 100:1 ratio of certificates
versus physical bars with serial numbers, the Gold price will skyrocket.
Meanwhile, the Eastern central banks are accumulating far more rapidly their
gold reserves than they admit, since they wish to lie to the Westerner
Bankers and their Government poodles after enduring so much fraud. The
scramble is on for gathering the gold bullion, which has true value, made
abundantly clear during the collapse of the sovereign toxic bonds that
support government debt in the West. Gold is the true wealth, not subject
to fractional tomfoolery.
11. Movement away from the Traditional USDollar Trade Settlement
&Widespread Adoption of Yuan Swap Facilities in Bilateral Trade&
Climax in Gold Trade Settlement with the new Gold Standard Adoption
The USDollar is actively
being avoided in many trade flows. The Iran sanctions only served to hasten
the USD alternatives in development. The Chinese trade partners have been
using Yuan currency in settlement on a net basis among the designated large
banks on a bilateral basis. In doing so, the Yuan Swap has permitted much of
the world to be weaned off the USDollar. In the last year, new partners to
the Yuan Swap Facility have been Australia, England, France, Switzerland, and
the latest Germany as the Euro Central Bank site, hardly Eastern enclaves.
The G-20 Nations are busily putting the platforms, cables, and wiring for a
new peer-to-peer system, a de-centralized trade settlement system where trade
is settled on a net basis with gold bullion. The G-20 Meeting has shown
defiance, determination, and dedicated agenda to build the required platforms
in gold trade settlement. The system will use Gold Trade Notes as letters of
credit, and rely upon gold banker intermediaries such as Turkey to settle
trade by participating nations. As the Gold Standard is returned via trade,
the banks and FOREX will be forced to follow suit. Gold will rise in a
grand ascendance to retake its proper place, from Eastern directives with the
Gold Trade Standard.
12. Rise of EurAsian Trade Zone & Expansive Energy Pipelines
The skeleton is coming
into view in the form of energy pipelines, vast networks to delivery crude
oil and natural gas. In addition, several important liquefied natural gas
facilities dot the ocean ports. The core is to be Russia & China &
India, along with Japan and South Korea and Taiwan, as well as the entire
Pacific Rim. They are banding together. They do not wish to save in USTBonds.
They do not wish to settle trade in USDollars. They wish to relax tariffs and
inspection methods. The Asians are in a unique hidden battle to capture
Europe as a gigantic trade partner. Europe is the global grand prize. The
United States is locked in a struggle to retain its European allies, firm
trade partners for 60 post-war years. However, US banker fraud and a certain
dose of ill-willed hegemony with power politics have tilted Europe toward
Asia. Heavy railroad lines have been completed from Russia to Germany.
Numerous Russian Gazprom pipelines will ensure British and Western European
cooperation. The diverse pipelines have displayed the sour motives of the US
& UK tagteam fascists. The core to Eurasian trade will not include the
United States, and will be centered in gold as the medium of exchange and
saving.
13. Explosive Growth in Demand for Coins, Bars, Jewelry across Entire
World
The growth for various
forms of precious metals at the retail level had been brisk before the turn
of 2011 when Quantitative Easing was introduced. The bond monetization is
hyper monetary inflation by any other name. The zero bound interest policy
kept the pressure on retail Gold & Silver sales across the world,
including in the United States and Europe. The Swiss refineries could turn
out to the be final breaking point in the interventions
that prevent Gold from taking its exalted position in banking and currencies.
Since QE became the norm, and after it became clear that QE to Infinity would
be the permanent policy, the growth for retail precious metals has turned
exponential. The most recent jet assist to retail demand has come on the back
end of the April and June Gold market ambushes, where naked shorting is more
understood to be the main method of price suppression. Demand has risen in
direct response to both lower price and vanished trust in the system,
including gold futures contract delivery. Like all Gold bull markets in the
past, the investment demand breaks the spine of the illicit gimmicks and
banker conmen criminal set. The population will demand Gold & Silver
bars, coins, talens, biscuits, and jewelry. The people will pay whatever
price eventually, and certainly premiums, until Gold is properly priced an
order of magnitude higher. The equilibrium in the gold market will come when
Gold is above $5000 per ounce.
THE HAT TRICK LETTER
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