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Monday afternoon, and I can start early as the MLK holiday has ended all U.S. market activities at midday.  Gold and silver were up modestly, as were most commodities, with silver closing right on the KEY ROUND NUMBER of $30.00/ounce, pending return of the Cartel for full-out operations tomorrow morning at 3:00 AM EST.

Although it is hard to make significant conclusions on such a thinly traded day, I still see more of the same when it comes to PTB market control.  Remember, Friday night saw Standard & Poor’s downgrade nine European nations, including the stripping of France and Austria’s AAA ratings and a two-notch knock of Italy’s rating to BBB+, barely above JUNK.  During today’s trading day, S&P stepped up the heat by stripping the AAA rating from the EFSF, or European Financial Stability Facility, before it was even approved by EU member nations, and espoused its expectation of an imminent Greek DEFAULT.

S&P Downgrades EFSF From AAA To AA+, May Cut More If Sovereign Downgrades Continue

S&P Says Greek Default Imminent – Zero Hedge

Moreover, in what even a jaded, PPT-supported market should consider “unexpected, very bad news,” Portuguese sovereign yields EXPLODED higher, by a whopping 180 basis points to 1,250 bps above German Bund yields, essentially screaming NEAR-TERM DEFAULT.

Has The ECB Given Up On Portugal?

However, in the spirit of the U.S. “President’s Working Group on Capital Markets,” i.e. the PPT, European stock markets, such as Germany’s DAX Index below, magically rose at the end of the day in the manner Americans have been accustomed to for the Dow over the past decade, i.e. via “HAIL MARY.” 

Perhaps it is possible to control financial markets indefinitely…NOT!  Just like last spring, we are back in a PPT/Cartel/ESF-created “eye of the storm,” costing exponentially more amounts of PRINTED MONEY – covert AND overt – to produce than the last “eye,” with rapidly decreasing marginal returns and HALF-LIVES.  “How long will it last?” is the question. The answer should not be when will it end, but how can it, to PROTECT ONESELF before it does.

I perused an article from Bob Chapman, one of the brightest newsletter writers around.  I agree with nearly all his conclusions, but was miffed at something he wrote in his latest missive, which again caused me to ponder why newsletter writers consistently act against the best interests of their readers.  Business 101 taught me the best way to build a successful enterprise is to provide a product that maximizes customer profits, and, equally importantly, act consistently in all communications. 

That is why I cannot understand his commentary below, suggesting that by simply PRINTING MONEY via the Fed “swap facility” and LTRO, the financial system is “saved” for another year.  In fact, per the paragraph below, he predicts increased U.S. bank lending, expanding job creation, and modest GDP growth (whatever that means in our world of fudged economic data), as well as an end to the European recession and a resumption of Chinese export growth.

We usually do not predict what the mainstream economists predict, but for 2012 we are, but for reasons other than theirs. The certain recession has been put off for a year or two due to backdoor Fed funding and operation twist, which has allowed bank lending to increase by some 10% over the past several months. That has allowed expansion by small and medium sized firms that create 70% of new jobs to expand. The result is a GDP growth rate of 1-1/2% to 2% in 2012, although if not continually funded this spotty mini-recovery will die as the year-ends, or by the end of the second quarter of 2013.  The European recession underway will end shortly and Chinese exports will increase over the year. The best mainline economists were deceived by not watching what the banks were lending and to whom, and they could not have possibly known that the Fed would loan the ECB $1 trillion. This shows you how dangerous economic forecasting can be eve by the best. Due to this funding the European overhang will not exist and plus growth will return to the EU.

Am I truly going crazy?  Are even the most die-hard realists, such as Chapman, leaving the 2+2=4 universe for a front row seat in the Bizarro World

After ALL we’ve seen the past four years, when MONEY PRINTING has created NOTHING except higher debt, unemployment, sovereign yields, and inflation, is it possible that simply printing MORE money will cure the terminal addict?  Was it that simple, just hand out MORE free money to banks, and lickety-split, all is saved?

 

Of course not, which is why Chapman clearly was apparently high when he wrote this commentary, in complete contradiction to essentially everything else he has written.  Once again, a case of a newsletter writer forsaking what is best for his clients in the name of an unknown agenda, which usually includes predictions of trend changes that never seem to occur.  I mean, is he suggesting that all of a sudden his clients should buy stocks and bonds – and have increased faith in governments – because of a new round of MONEY PRINTING, which, by the way, hasn’t stopped five Federal Reserve governors from publicly calling for additional QE in the past WEEK?  And is he actually suggesting that decimated GLOBAL currencies such as the Indian Rupee won’t fall further due to increased inflation from said MONEY PRINTING?

 

India Holds Emergency Meeting To Deal With Price Inflation

 

Or that the increasingly militant German public, government, and bank officials will happily accept HYPERINFLATION to save a bunch of profligate, spoiled brats such as the PIFIGS?


Just Say Nein – Bundesbank On European QE: “Abandon The Idea Once And For All”

 

Or that printing trillions more dollars, Euros, pounds, yen, and yuan will alter the GAPING DISCONNECT between commodity prices and global shipping costs?  I’m not sure ANY pair of charts can show the stark contrast of REALITY versus the false PERCEPTION created by MONEY PRINTING/MARKET MANIPULATION than these two, as the CRB Commodity Index has essentially doubled from its late 2008 Global Meltdown I lows while the Baltic Dry Index is PLUMMETING into the abyss (props to Jim Willie for bringing this to my attention).

No, Bob Chapman, the global economy – particularly Europe – will not magically be “safe” to invest in because the Fed and ECB printed TRILLIONS of new currency and handed it out.  ALL that money has been re-deposited in the Fed and ECB banks, so no new lending will occur, but even if the banks were inclined to lend, businesses are no longer borrowing, and if they did all you would see is worsening balance sheets and stagnant economic activity.  And don’t forget that little old, balance-sheet destroying REAL ESTATE COLLAPSE eating away asset values at a breakneck pace.

If you are dumb enough to invest in stocks and bonds because newsletter writers like Chapman tell you the collapse has been put off for a year, you deserve the punishment you will receive from government algorithms.  Conversely, PHYSICAL gold and silver are likely to rise whether he is right (increased monetary velocity) or wrong (collapsing confidence in currencies, sovereign bonds, and economic prospects), so do not consider changing your investment thesis one bit.  The die is cast, the END GAME set in stone, and the outlook for PHYSICAL gold and silver assured for the next decade at least, so make sure inconsistent and/or misleading NEWSLETTER WRITERS do not detract you from PROTECTING YOURSELF.

 

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Tuesday morning, and I walked into the gym to see gold up – get this – by 1.99%, amidst the latest “risk-in, re-flation trade”, the result of investor apathy following the single largest month of Central Bank MONEY PRINTING since the BOTTOM of Global Meltdown I in late 2008.  The only difference between then and now is that Global Meltdown I took TPTB completely by surprise, creating a brief vacuum of market collapse before they figured out their grand MONEY PRINTING scheme, whereas today they are more aware, and thus more prepared, to print TRILLIONS at will.  No longer are such trivialities as Congressional debate or approval required for such destructive operations, which in my view are, and certainly will be, responsible for more deaths than even the WARS Congress is no longer asked to approve.

 

Think about how close we were to the abyss just six weeks ago.  After five months of collapsing equity and bond markets (except U.S. Treasuries, care of QE), it appeared a European collapse could occur any day, with the outlook for the U.S., Japan, and many others not far behind.  Numerous MONEY PRINTING schemes had already failed, with even the Fed’s November 30th “swap facility,” conveniently announced hours after Bank of America fell to $5.00/share, failing to instill confidence.  Within a week of the swap facility’s failure, the ECB lowered interest rates to 1.0% and announced its greatest MONEY PRINTING operation yet, the “LTRO.”  Cumulatively, these announcements were so inflationary that TPTB were forced to resort to petty jawboning via the now infamous, and since retracted (but not denied) headline, “MARKET SOURCES REPORT BIS, BOE & FEDERAL RESERVE WERE SELLING GOLD AFTER IT POPPED TO SESSION HIGH AT GMT 1335.”

 

I believe zero PHYSICAL metal was sold, or at most a token amount via the negative lease rates that coincidentally emerged that day and remained in place for several weeks.  Instead, I believe an ALL-TIME RECORD amount of PAPER gold and silver was naked shorted, at an accelerating rate during the thin holiday trading period, until gold had been knocked down a whopping $230/oz, or 13%, from the KEY ROUND NUMBER $1,750/oz, and silver by $7, or 21%, to a 52-week low of $26/ounce.

 

Amidst the artificial PAPER PM smash, stocks were floated back up, and thus apathy enabled to set in.  Recent equity market movements had become so irrational that even the talking puppet heads are at a loss to explain it, and thus have given up trying.  OVERT and COVERT QE, on a worldwide basis, has never been broader, so despite a non-stop barrage of “horrible headlines,” including the fact the essentially ALL the PRINTED MONEY is unproductive, both volume and volatility have dried up.  “Investors” care not that the LTRO money has ALL been re-deposited into the same ECB bank that issued it, instead focusing on non-events like the sale of T-BILLS (LOL) to rationalize higher stock prices.

 

EFSF, Spain, Belgium, Greece And Hungary Issue Bills; Deposits With ECB Pass Half A Trillion

 

As for the Cartel, they have no problem taking their foot off the gas for the moment, as long as the PM rebound commences from depressed levels.  They, as I, KNEW gold would not remain below its 200 DMA amidst a MONEY PRINTING orgy, nor silver at such incredibly oversold levels.  Thus, while the global PPT-induced rally in financial stocks continues, they only need to enforce their daily cap limits and other schemes preventing momentum gains, such as this morning’s 2% “limit up” rule.  All you need to see is the overnight gold chart to know the Cartel is omnipresent, as the price was STOPPED COLD at EXACTLY 3:00 AM EST when it attempted a material rise above 2.0%.

As for this morning’s news, just more of the same, albeit less so given the EXTREME apathy consuming the news cycle.  Aside from the above article featuring ECB “re-deposits” surging ABOVE the €489 billion LTRO funding amount, Fitch noted that Greece WILL default by March 20th.  Ho hum, nothing to see here.

Fitch Says Greece Will Default By March 20 Bond Payment

 

Or, following up my timely commentary yesterday, a decline of the Baltic Dry Index, the most important measure of GLOBAL TRADING ACTIVITY, to its lowest level since the BOTTOM of Global Meltdown I in January 2009.  No problem, all’s well, we’re in a “recovery.”

 

Baltic Dry Index Slumps To Lowest Since January 2009

 

Not to mention, the announcement of an “MF Global Lite” scandal in, of all places, CANADA.  Yes, a smaller futures trading firm, Barret Capital, has been accused of commingling client funds, but no matter, all is well.  Given the rapid decline of futures open interest levels, there are no such things as “markets” anymore, as HFT funds and government intervention accounts for essentially ALL trades in “Communist America,” so who cares if the brokers are frauds?

 

Second MF Global Unveiled As Canadian Regulator Accuses Barret Capital Of Commingling Client Funds

 

And don’t forget the ongoing FRAUDULENT accounting rules enabling U.S. banks to report whatever they want as “earnings,” and subsequently take unlimited 0% loans at the “Fed Funds Rate” (sorry, 0.00% to 0.25%) to pay themselves BONUSES and lobby Presidential and Congressional candidates.

 

Half Of Citi Pretax Income Over Past Two Years Comes From Loan Loss Reserve Releases

 

ALL that matters is that MONEY PRINTING activity is set to go berserk in the coming months, perhaps at next week’s FOMC policy setting meeting, and certainly on February 29th, when the SECOND round of LTRO debt monetization is set to commence.  Word on the street is it may DOUBLE the €489 billion printed in mid-December, to an estimated €1 TRILLION.

 

A Shocking €1 Trillion LTRO On Deck? CLSA Explains Why Massive Quanto-Easing By The ECB May Be Coming Next Month

 

Yet, people wonder why global gold demand is “surging,” particularly from Central banks, which “increased net purchases by a massive fivefold to 430 tons last year, and may buy another 190 tons in the first half of 2012,” according to GFMS, or Gold Fields Mineral Services, a leading PM statistical consultant.

 

Global Gold Coin & Bar Demand Surges in 2011 – Thomson Reuters GFMS Annual Gold Survey

 

And now for morning update #2, an $8 WATERFALL DECLINE at EXACTLY the 8:20 AM COMEX opening, and another $4 at EXACTLY the PM Fix at 10:00 AM EST.  We’re now 3-for-3 today, and as any baseball fan knows, the ultimate goal for a hitter is going 4-for-4 (but not PM investors).  As always, the “Dow / Gold x 2” algorithm is switched ON, allowing PAPER gold to rise ONLY when the Dow is rising, albeit at half the percentage gain, and I see the HUI is actually DOWN with gold up $19 and the Dow 110 points.  Conversely, when the Dow turns back down, PAPER gold and the HUI fall at twice the rate.   I guess we’ll see what the day’s batting average is after 12:00 PM EST, the “cap of last resort.”

And one more note, before I move to today’s RANT topic, the below article about India raising import taxes on gold and silver. Contrary to the article’s intimation, it will have ZERO impact on PHYSICAL gold and silver demand. However, I have brought it to your attention as an omen of what to anticipate if you have a heavy weighting of PM mining stocks in your portfolio. No matter what stage of the PM bull we enter in 2012, 2013, and beyond, there will ALWAYS be new “black swan” events lurking to steal your “precious” shareholders’ equity.

For nearly a decade, I owned a portfolio fully invested in PM mining shares, and for five years worked for the companies themselves. I have thus seen it all, and from experience can tell you 90% of it was BAD. Moreover, as the PM bull has progressed, the “percent bad ratio” has risen dramatically, from perhaps 30% in 2002 to 50% in 2006 to 95% today. Given that your primary goal in today’s horrific, soon-to-be catastrophic investment environment should be CAPITAL PRESERVATION (while the majority experiences losses), you are risking your financial lives, and that of your family, by investing heavily in mining shares instead of PHYSICAL gold and silver.

India raises import tax on gold, silver

And, PERFECTLY TIMED, and explaining why the HUI is performing so badly, bellwether “POS” (I’ll let you figure out that abbreviation) Newmont Mining just reported, as I write this, its 2011 preliminary results and 2012 operating outlook. As has been the case for essentially the entire decade I have watched this embarrassment of a “market leader” (sadly, based in Denver), they expect production to DECLINE by approximately 5% in 2002, despite having spent $3 BILLION on capital expenditures in 2011 alone, and likely $20+ BILLION over the past decade.

Despite an eleven year bull market that has taken gold prices up sevenfold, and among the industry’s lowest cost mines, NEM stock trades at the same level as it did 15 years ago. In my view, the company’s largest problem has been CARTEL MANIPULATION, of both its stock price via naked shorting and the gold price itself, yielding lower-than-required capital investment and an ongoing shortage of quality geologic and engineering personnel. Additionally, given how rare and PRECIOUS gold is, it should be quite apparent the “low hanging fruit” has long since been mined, leaving only difficult-to-mine deposits featuring low grades, high capital expenditures, and heightened political and environmental risks. And finally, poor management, which I believe is heavily influenced by the aforementioned confluence of negative factors. Irrespective, you get what you pay for, and if you pay too much for MINING SHARES, you may miss out on the biggest bull market – and life-saving event – in financial history.

Newmont Provides Preliminary 2011 Operating Highlights and 2012 Outlook

And boy are these miners making me look smart today. Geez, Kinross Gold (KGC), another of the world’s largest miners, is down 17% today after publishing its preliminary 2011 Results and 2012 outlook last night, and it ain’t good. While not expecting a decline in 2012 production, it clearly missed its 2011 guidance and only expects flat production in 2012. Once again, great for the prices of GOLD, but not the price of Kinross, which also trades at the same price as 15 years ago. Global gold production peaked nearly a decade ago, and based on such atrocious results from the world’s leading mining companies, will not materially increase any time soon.

Kinross Provides Preliminary 2011 Results and 2012 Outlook

PROTECT YOURSELF – with PHYSICAL gold and silver, NOT mining stocks – and do it NOW!
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RANT topics typically come to me in a flash, as my brain is subconsciously keyed in to the relevant events of the day. Thus, like a crystal ball or “mirror, mirror, on the wall,” I have no control over what it tells me. Sadly, much of the recent “content” from my noggin relates to the decline of American culture, the eminent result of an empire in decline. Each day, America moves a step closer to the “bread and circuses” denouement of Ancient Rome, when its society deteriorated to a welfare state of mindless, bloodthirsty civilians a few notches above wild animals.

On Sunday afternoon, Diana and I went to Buffalo Wild Wings to watch the Giants/Packers game, as it has an amazing layout of big screen TVs. The food is not so great, and I hope I don’t offend any Buffalo Wild Wings employees reading this, but the atmosphere and service is great. Given that I live in Denver, I asked our waitress how crazy it was the prior evening, when the hometown Broncos played the Patriots in a much anticipated, Saturday night playoff matchup at the height of “Tebowmania.”

She said it was “packed,” but NOT so much due to the Broncos game but because it was “Fight Night,” the charming moniker depicting a big Ultimate Fighting bout. For those not versed in “Ultimate Fighting,” it is not much different than the pro wrestling “steel cage matches” of the 1980s, albeit in this case the fighting is real, resulting in brutal, debilitating injuries. In reality, it’s not much different than watching Roman Gladiators – sans “to the death” – or the futuristic death matches in Mad Max – Beyond Thunderdome.

To think that amidst perhaps the most hyped football game in Denver in a decade – a football crazed city to start with – there was more interest in watching Ultimate Fighting than a Broncos playoff game. I’d have thought “UFC” fans would also be football fans, but I guess in today’s “bread and circuses” world, football is no longer violent enough for them.

Gruesome movies (although I admit to enjoying a horror flick on occasion), vile video games, and a general desensitization of culture have pushed the collective American psyche dangerously close to its primal instincts, abetted by rising unemployment and a growing welfare state. Given so much time, so little responsibility, and rising poverty and despondency, it’s no wonder these futuristic “death games” have become so popular, and I cringe to think how far the envelope will be pushed in this violent cult.

Ultimate Fighting Championship – Wikipedia

Birthed just before the economic peak at the turn of the century, UFC was a mere curiosity until the mid-2000s, when – coincident with acceleration of economic decline – its worldwide popularity EXPLODED, particularly in its “sacred birthplace,” the United States. UFC has since usurped boxing and Professional Wrestling for the crown of most popular fighting sport, so much so that boxing essentially disappeared while Wrestling has weakened from the equivalent of a Cat 5 hurricane to a mere Tropical Storm.
By 2006, the upstart UFC had already broken the pay-per-view industry’s all-time records for a single year, generating $223 million of revenues, surpassing both WWE and boxing combined, and in 2010 nearly doubled its pay-per-view revenues to $411 million, and overall revenue to nearly $500 million. At this rate of growth, it could become the most popular second-tier sport in America within a decade, perhaps challenging stock car racing – the current second-tier king.
I believe the exploding popularity of vile “sports” such as “Ultimate Fighting” symbolizes the despair and despondency of an empire in decline. The experience of all such empires are essentially the same, and sadly, America will be no different.

All I can say, parents, is “don’t let your babies grow up to be UFC fighters,” and to the rest, hopefully you will not, one day, be involuntarily thrown into the “steel cage” yourself.