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The gold price has finally
disconnected from its nemesis, the USDollar. This news should be read as the
coming of spring after months of wintry torment, or as the sighting of land after
30 days adrift at sea in a derelict vessel. From 2002 to very early 2008, the
gold price had risen from the massive speculative fervor that swept the United States and Europe, whose economies had
been supplied largely by Asian factories. The mines from Latin America to South Africa to Australia greatly aided the process. The very paradoxical
event of the USDollar rising this past autumn amidst truly horrendous news,
one disaster after another, one major bank failure after another, one
nationalization of a large financial institution after another, makes the
disconnect all the sweeter for gold investors. That set the stage for a
powerful gold price move. Imagine a notable rise in the buck, based upon
broad negative news in August and October!
The gold price withstood the
counter-trend US$ rally. While the buck has undergone a retest, gold has
risen and not looked back, as though the US$ has become an irrelevance. IT HAS! This is great
news! We are at the doorstep of a powerful gold rally, one that will see a
silver rally accompany. New highs are soon to come! We are the doorstep of a
powerful gold rally on a global scale, where gold rises in ALL currencies. The
gold move in US$ terms is last, but guaranteed! The fundamentals of the US$ are fifteen steps beyond miserable. The technicals in
the chart are looking tremendous. The psychology is aligned for a powerful
move on a global scale, undeniable even to the most ignorant commentators in
the financial press.
GOLD BREAKOUT IN
FOREIGN CURRENCIES
This is the biggest story in England not told, the gold breakout. True to form, the
gold price has seen a powerful breakout in the nation whose financial
foundation has been destroyed more rapidly than any other nation on the
planet, except the Untied States of America. After a serious hesitation in December, when the
gold price in London
experienced a spastic episode, unsure of its direction, probably endofyear
squaring, gold has launched into a powerful breakout. The most vivid and
strongest breakout for gold in foreign currencies has been in terms of the
British. The pound sterling has suffered a severe pounding, precisely as
forecasted in the Hat Trick Letter for over a year, when at over 200 in late 2007, my forecast was for a step by step painful decline below 150. The sterling currency
has no advantage of lift from liquidations or payment of Credit Default
Swaps, nor a hunkering down into the global reserve bond, like the USDollar
does. One should begin to ask the question whether England, the Untied States, and Mexico will be
the next failed states behind Iceland!!! The gold in pound sterling chart provides a
vivid preview of the gold price in US$ terms, soon enough.
A similar graphic can be seen for gold in terms
of other major currencies. Gold in euros, gold in Swiss francs, gold in
Aussie Dollars, they are all in breakout. The laggard is the gold
price in US$ terms, since the global financial breakdown has led to bizarre
counter-intuitive demand for USDollars. Gold will next benefit enormously
from the movement out of USTreasury Bonds, which have topped. No such thing
exists as Flight to Quality or Flight to Safe Haven. The only flight of money
is out of bonds not guaranteed by the USGovt, the German Govt, or the
Japanese Govt. THE DEATH OF YOUR NEIGHBOR DOES NOT JUSTIFY A CLAIM OF YOUR
OWN IMPROVED HEALTH. We are witnessing precisely the effects of competing
currency wars, the competitive devaluations, the beggar thy neighbor. The
financial press has yet to learn this concept. But then again, they are paid
not to do so!
MASSIVE MONETIZATION
DEAD AHEAD
The funding requirements for the
USGovt are fifteen steps beyond colossal. A nasty surprise has already
come for those who issue USTreasury Bonds and conduct auctions, A VERY BIG
NASTY SURPRISE SO BIG THAT THE MEDIA NETWORKS REFUSE TO MENTION IT!!! The
details are in the February Hat Trick Letter, and relate to angry, defrauded,
and themselves defensive creditors. Foreign economies must tend to their own
lands first and foremost. They also react to fraud on a scale perpetrated
against them never witnessed before in human history. Find a time in all
annals of history when national savings have been solicited and defrauded on
this scale by another nation. There is none! This is the legacy of the Untied States, or
better yet Wall Street, which has taken control of its host the USGovt like a
cancer. The combination of unfettered usage of federal printing presses to
create (and thus debauch) its money, together with abusive bilateral hostile
actions directed at creditor nations (like China), together with bailouts
& rescues soon to reach $10 trillion, together with continued Wall Street
control of the USDept Treasury (see Goldman Sachs), together with a steady
stream of major monster fraud cases (see Bernie Madoff), WILL SEND GOLD &
SILVER NORTH IN PRICE. Lastly, the rising USTreasury Yield Curve also heralds
a rising gold price, as the vile specter of monetization has begun to harm
the 10-year and 30-year USTreasury Bond integrity.
Just a quick note on the Madoff
victims. A closer look of supposed victims reveals his co-conspirators. They
are framed as victims by a subservient press that has no desire at all to
publicize where the stolen money is stored. It is in the banks of an allied
nation that is beyond reproach, bordering the Mediterranea n.
CANNOT MAINTAIN US$
& USTBOND BOTH
After the USDollar enjoyed a perverse lift in the
early autumn months from a fundamental disaster and detailed wreckage, it
suffered a swoon in December of serious magnitude. The fall from 88 to 78 in the space of four weeks qualifies as the floor suddenly disappearing. The event carried with it
a billboard message of extreme volatility and growing instability to come,
much like a highway with signs of dangerous curves before a cliff. Step back
to see that in the autumn months, the USDollar rose from the critical support
in the low 70’s into the upper 80’s, on a senseless rise. At the
same time the USTreasury Bond complex also rose in principal value as bond
yields marched toward 0% on the short end and toward 2% to 3% on the long
end. The Zero Interest Policy was much decried of Japan. Now the US boasts the same.
Many astute analysts have
declared that the Corrupt Powerz that control the vast manipulated machinery
cannot conceivably keep both the US$ and USTBond levitated for long. One had to fall. My
conclusion was simple. Any strong selloff of the USTreasurys, pushing bond
yields higher, would trigger a credit derivative sequence of events that
would result in overnight bank failures and collapse of entire financial markets,
starting with a JPMorgan meltdown. It would occur much like a financial
nuclear bomb. So the victim will be the USDollar, clearly, by default. As the
US$ falls to unthinkably low levels, many banking and
governmental leaders will proclaim the wondrous advantages of increased
competitive position for exports. That would indeed be beneficial if any
American industry were left standing. Also, the other side of such a position
is a sudden thrust down the global staircase for the USEconomy into the Third World. The consequences of a severe US$ decline carry with it all the
attendant disruptions, the interrupted supply chains, the vast unemployment,
and the highly likely isolation. Foreign creditors are soon to vanish, as the
Untied States would become a widely acknowledged pariah. America had better make preparations for the Third World, where credit strangulation carries a bitter cost. This will
occur only after new global currencies are introduced in January 2010.
Forget export advantage. Prepare for non-existent credit, or very expensive
credit, the hallmark for Third World nation
finances.
ENTIRE TRIANGLE TO SHATTER
(US$-USTBOND-GOLD)
For two decades or more, the
triangle is the name given by me to the vast financial complex that has
supported a mindnumbing corrupt system of fiat currencies led by the
USDollar. In fact, it is more like two important triangles exist: the US$-USTBond-Gold triangle, and the US$-USTBond-Oil triangle. The defacto Petro-Dollar enters
the equation, or commands its own equation. A suppressed gold price has been
the norm for a long time, engineered by selling forward two years worth of
global production in the futures contract market, aided by sleepy regulators
at the Commodity Trading Futures Commission. The CFTC regulators are even
more corrupt than their counterparts at the Securities & Exchange
Commission, if that is possible. Enter the vast machinery again by
JPMorgan, to keep the USTreasury Bond levitated. Their principal device is
the futures contract, which offers nice leverage. The crude oil triangle is
maintained by conversion of OPEC oil revenues into USTreasury Bonds. It too
is under great strain with a lower crude oil price, down over 60% since last
summer.
The secret weapon of mass
destruction in the last decade has been the Interest Rate Swap. Notice how the
dreaded ‘Bond Vigilantes’ are all dead, run out of town, or
converted to blacksmiths. The IRSwap device enabled JPMorgan to use lower Fed
Funds rates and immediately associated short-term USTreasury Bill yields in
order to leverage down the long-term USTBond yields. The IRSwap extended the
reach of JPMorgan and the US Federal Reserve to control long-term rates. Fires
are burning hot in the JPM basements, complete with visible smoke, since 0%
yields put nearly infinite pressure on the leverage devices. This is pure
physics. USTBills have approached a near infinite value, thus exerting
unsustainable pressures on the IRSwap leverage. The end result is a shattered
triangle that reined supreme for two decades. The powerful machinery is
broken. Like horses no longer held back by weighty stagecoaches loaded with
burdensome ballast and overweight men in stolen suits, the gold price will be
released. The crude oil triangle will be broken also, but later.
INTERPRETATION: SHOCK
WAVES COMING
The rise in the gold price
during a US$ counter-trend rally foretells of a strong message. THE
GOLD PRICE IS HEADING TOWARD NEW HIGHS. ALSO, THE USDOLLAR IS SOON TO
EXPERIENCE SHOCK WAVES. Patience for gold & silver investors will be
greatly rewarded. Numerous stories support this claim. Heavy reliance upon
the printing press, as in monetization of USTreasury Bonds, is the biggest
immediate threat to paper money, and the biggest immediate positive prospect
for gold. The USFed has already announced this new policy, as they will
purchase USTreasurys from expanded money supply. Any reluctance by
foreign creditors to participate in auctions (see the Hat Trick Letter
proprietary reports) will exacerbate the movement. Then there is the planned
launch of the new Persian Gulf gold-backed
currency in early 2010, which should act as a nuclear bomb against the
USDollar in less than one year. That is the hidden motive for unprecedented
attack of hedge fund crude oil positions by the sponsored Wall Street
gangster bankers, aka banksters. That label is well deserved. Their crimes
and protection given by USGovt authorities has been clear for the entire
world to see. It has been revealed in plain view. Anyone who denies the
criminal element in Wall Street, tied with ropes five feet thick to the
USGovt ministries, is hopelessly blind at best, and compromisingly moronic at
worst.
Jim Willie
CB
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