It’s Monday morning, and I’m on FIRE with rage, a true RANTING ANDY morning!
As the world careens toward complete, utter FINANCIAL COLLAPSE, the efforts by TPTB to buy time and position themselves personally have reached SPIRITUAL levels, from unfathomably blatant PPT support of global stock markets, QE support of sovereign bonds, daily currency manipulation and, of course, the intensification of “OPERATION PM ANNIHILATION,” which commenced MINUTES after the Labor Day holiday, minutes before the Swiss National Bank devalued the Franc.
I hope you appreciate how much time I am now writing, as it is taking four-plus hours each day to update emerging “horrible headlines,” and hopefully inject a bit of wisdom somewhere along the way. Just this weekend’s gold manipulation “retraction” analysis took three hours, and I sense this morning’s market update will take at least that long, given the long, and rapidly growing list of “horrible headlines.”
To start, let’s take a look at what a true gold DEATH STAR attack looks like, yet another VERTICAL drop in the wee hours of a Sunday night, highly reminiscent of the SUNDAY NIGHT PAPER SILVER MASSACRE. As noted in my analysis above, any time the Cartel engages such an attack, be it around an employment report, FOMC decision (one coming tomorrow), or otherwise, they initially let gold drift up a bit to draw in more suckers, until…BAM…down $18 in what appears to be ONE MINUTE’S TIME! And before I get sidetracked, note a second WATERFALL DECLINE at…yep, EXACTLY 3:00 AM EST, another at the odd hour of 4:00 AM EST, and of course a $10 plunge at EXACTLY the 8:20 AM EST COMEX opening.
The first item I noticed this morning to “explain” the plunge was on ZeroHedge, which once again is the world’s best financial website, but one of the worst at understanding the inner workings of the MANIPULATED PM markets. First off, the headline suggests gold fell simultaneously with the release of poor Indian industrial production, but later notes the data came out long afterwards. In other words, no connection at all.
By the way, the premise of declining Indian economic activity having a negative impact on gold prices is comical at best, as the average Indian views their net worth in terms of OUNCES of gold and silver, NOT rupees. Gold has risen for eleven straight years, and despite the “all DEATH STAR, all the time” attacks, is STILL up 20% in 2011, by far outperforming ALL global asset classes.
Moreover, gold is one of the most price inelastic commodities on earth, seeing rising demand with rising prices due to a combination of greed and fear factors unique to it (and silver) due to their monetary properties. Perhaps that is why Indian gold imports are up 56% this year, while the Indian economy is significantly weakening.
And for the millionth time, the GLOBAL financial crisis has caused a fleeing of capital from less liquid currencies to the cancerous dollar, in its wake yielding collapsed currencies, and surging inflation, the world round, including several countries previously considered second- or even first-world, such as India, Brazil, Mexico, and Korea. This morning, for example, the Indian Rupee is down nearly 2% to an ALL-TIME LOW against the dollar, meaning that even with gold’s 2% DEATH STAR plummet in U.S. dollars, gold in Indian Rupees is UNCHANGED today!
There aren’t words to describe what occurred this week in GLOBAL financial markets, which have completely and utterly dislocated with fundamentals due to their aforementioned commandeering by Western Central Banks. Last week’s “EU Summit” could not have been a bigger ZERO if it tried, literally accomplishing NOTHING – as if there was anything that could be accomplished.
Think about it. The European economy is collapsing, the Euro in danger of extinction, and global investors on strike following a year’s worth of vicious declines and even more vicious volatility, yet the best these MASSIVELY insolvent, debt-ridden blowhards could come up with is an “austerity treaty?” Ladies and gentleman, when an economy is plummeting at terminal velocity, the absolutely most lethal action is reducing spending and investment. In other words, the odds of Europe reviving via “austerity” are about as good as Wile E. Coyote finding his footing in mid-air…
In a free market economy, of course, austerity is the best thing to do, but in socialist economies like Europe (or today’s U.S.), where the government is the largest employer, cutting spending means cutting jobs, which in turn reduces tax receipts, increases deficits, raises debts, raises interest rates, and increases social unrest. Not to mention, none of these nations have ever paid a whit of attention to mandated austerity measures, so why on earth would anyone believe they will now, at their greatest moment of MONEY-PRINTING need?
Remember Greece, the nation who’s IMMINENT bankruptcy was universally believed to be the linchpin of global economic meltdown? Well, guess what, its “austerity” measures, which have barely even started, have caused massive social unrest, bank runs, and, frankly, total societal breakdown. Perhaps that’s why Greek CDS’ soared this morning to rates implying their sovereign bonds should have a negative price! Greece is so beyond bankrupt, it is hard to fathom it hasn’t yet been erased from the map, yet somehow European stock markets have been PPT-goosed in recent weeks from their Fall lows. Moreover, given the ISDA’s decision last month to disqualify the Greek “haircut” proposal from being a “credit event,” the fact that investors are pouring into Greek CDS’ with such reckless abandon demonstrates how confident they are in the announcement, shortly, of an all-out, irrefutable Greek default.
In fact, I see that my favorite stock, the “National Bank of Greece,” you know the one that traded around $0.50/share all Fall until it was recently reverse split by 1 to 5, is finally COLLAPSING this morning, after months of MORONIC investors buying this piece of garbage for who knows why? GREEK SOVEREIGN DEFAULT COMING IN T-MINUS 10, 9, 8…
Meanwhile, the rating agencies are out with their verdicts on Friday’s farcical Euro Summit, as I noted a big ZERO. Look for ALL Euro countries to be downgraded further, and the Euro to at least be partially be broken up by mid-2012, either via Germany pulling out or the PIIGS and other weak nations being expelled. In either case, numerous nations will immediately see their banking systems collapse and currencies hyperinflated, yielding MASSIVE demand for PHYSICAL gold and silver.
And speaking of how bad Europe’s economy is, how about the below headline from this morning, that the U.K. is now expected to have ZERO GDP growth in 2012? The fact that Cameron was dumb enough to be the lone dissenter to Friday’s EU “treaty” demonstrates just how deep the arrogance in this pathetic little country whose glory is now a century in the past. I cannot contain myself with how much I despite everything the UK represents, an also-ran who, in the annals of history, will be remembered for monarchy, imperialism, slavery, taxation, war, and, last but not least, “financial engineering” and market manipulation. These comments have nothing to do with the good people of Britain, but its long-standing tradition of self-righteousness, arrogance, and the imposition of its financial, religious, and societal culture on anyone and everyone they could exploit, the world round. The U.K.’s only real superior achievement, in my view, was its rapid advancement of WEAPONS, such as “her majesty’s navy” or “his majesty’s ROYAL air force,” which it used to KILL people and STEAL their wealth.
London taught New York everything it knew about stealing, and now sits in the corner of the room with a dunce cap hoping its master the U.S. government bails it out. The puny little U.K., a tiny island nation of just 60 million people, no larger than Oregon, has a debt load exceeding ALL NATIONS ON EARTH, with nearly all the debt emanating from its CRIMINAL BANKS, all of which I look forward to seeing slide into bankruptcy. England also has among the highest inflation rates in Europe thanks to its incessant MONEY PRINTING, and has tied ALL its fortunes to Wall Street.
The British people, who unlike their own master in Parliament and “the City” have not enjoyed decades of prosperity, showed this summer their anger through riots, a prelude to the hell that will reign down in the coming years!
Deutsche Bank cut its UK growth forecast for 2012 to zero, and said it now expects the BoE to buy a further GBP 75bln of Gilts in February, then a final GBP 50bln in May.
As for the rest of Europe, it is in utter CHAOS, so smashing PAPER gold at the same times each day and making meaningless “treaties” will not even slow the locomotive down. In Friday’s RANT, I showed how many nations are preparing for a return to their native (hyper inflated) currencies, and today I present further evidence that nations and corporations alike are implementing strategic plans to cope with the upcoming fragmentation of Europe.
This morning alone, European sovereign debt yields are EXPLODING higher, with roughly two-thirds of the bogus money printing-induced rally of the past week ERASED!
In fact, in a STUNNING turnaround, and as strong an indictment of the FAILURE of last week’s ECB rate cut and Euro Summit “austerity treaty,” yields on Italian government 10-year bonds, i.e. “BTPs,” are up 120 POINTS, from 5.5% to 6.7%…
…while the CRIMINALLY STUPID, INSOLVENT, soon to be bankrupted European BANKS continue to sell (gosh darn) Credit Default Swaps like drunken sailors, particularly on their own nations, you know the very nations they will soon be asking for bailouts!
And by the way, here’s video of a bank run in Latvia this weekend (of a Swedish bank). Get ready for such events to become commonplace, WORLDWIDE, in 2012.
As for “the world” outside Europe, economic collapse is prevalent EVERYWHERE, and I mean NO NATION has been spared. In the “Land of the Setting Sun,” the dumber than rocks Bank of Japan continues to OVERTLY flout Economic Mother Nature with continued promises to PRINT UNLIMITED MONEY to buy stocks, corporate bonds, and government bonds. Only Japan’s cumulative debt ranks as high as England’s, although America’s is probably HIGHER when you account for its “unfunded liabilities” and “off-balance sheet debts.”
Japan – Reuters suggests that the Japanese banks have a much greater liquidity cushion now than when Lehman’s collapsed thanks to the BoJ’s long easing campaign. The central bank also has a JPY55trn (USD709bn) highly stretchable fund that can be used to counter any strains, buying either government or corporate debt. “The necessary tools to fight any shock are already mostly in place. It’s just a question of how and when to use them” according to a BoJ source. The balance of current account deposits with the BoJ, now around JPY30trn, is double the size when Lehman’s went under and roughly matches the peak during its 5 year QE program that ended in 2006. In addition, if equities fell sufficiently to hurt bank balance sheets, the BoJ may revive its program of buying shares from them. In the case of heightened fears of counterparty risk pushing up borrowing costs, the BoJ will consider speeding up purchases of risk assets or top up the target for asset buying , further sources said.
Remember, readers, that AIG, Freddie Mac, Fannie Mae, and all wars are considered “off-balance sheet” for America, as they are, in crooked Wall Street parlance, “non-recurring factors.” War, a “non-recurring factor” for the U.S.? ROFLMAO.
In China, business SUCKS, as its global exporting machine slows to a crawl amidst WORLDWIDE economic recession, en route to depression. You bet the Chinese will add “further stimulus,” as NO COUNTRY ON EARTH prints as much currency as the Chinese, desperate to devalue the Yuan by pegging it to the collapsing dollar.
In Russia, the equivalent of “Occupy Wall Street” is gaining steam, as even the almighty Vladimir Putin has become widely mistrusted by the populace, which cannot understand how Russia can be so “rich” but it’s people so poor. I’ll tell you how – CORRUPTION, THEFT, and MILITARY RULE.
And how about the Middle East, where civil unrest is growing amidst an expanding “Arab Spring” (does Syria not resemble Libya II or what?)…
…and oh yeah, World War III could break out any day as AMERICA and its PUPPETS such as the U.K. continue to poke Ahmadinejad with a stick, hoping he’ll lash out and provide a reason to engage thousands of our troops, provide lucrative military contracts to administration cronies, and (unsuccessfully) attempt to steal its oil.
Think it can’t happen, particularly in an election year? Then I suggest you take a look at some HISTORY BOOKS!
On a combined basis, GLOBAL economic activity is COLLAPSING, no matter what drivel the world’s number one weasel, Barrack Obama, tells 60 Minutes. Are they really that desperate for ratings, the oldest news program in America? Is it that important to have the liar-in-chief on TV, even to kow-tow to him and let him continue spreading, at best PROPAGANDA, and at worst outright lies?
GLOBAL Central banks, including the FEDERAL RESERVE despite Obama’s statements that “all’s well,” are now “increasing their balance sheets” (i.e. PRINTING MONEY) at the same rate as the bottom of GLOBAL MELTDOWN I, and that’s just the OVERT portion of the equation. Yes, that’s how “not well” things are, and trust me we are still in the first inning of our journey to economic, political, and social HELL.
Darn right I’m ticked off this morning, as I watch the “Dow / Gold x 2” ALGORITHM on steroids and the Dow bottom at..get this…12,009! But remember, I am 100% in PHYSICAL gold and silver, so my tiny “paper accounts” are barely down this morning, resulting in no material impact on my financial condition. In others words, while the rest of the world is bemoaning why their rigged STOCKS, BONDS, and CURRENCY investments are plunging, many of them on MARGIN, I will be going NOWHERE, no way, no how. If it is the last thing I do in life, I will spend every waking hour convincing people to pull their capital out of the fraudulent financial “system,” whose only purpose is to STEAL your capital and put you on financial “skid row.”
As for AMERICA, the land of corruption, fraud, propaganda, and lies, the world sits with baited breath waiting for the world’ most inept economist, Helicopter Ben, to bless us with his words of wisdom following tomorrow’s FOMC meeting. I guess the PAPER gold attack pattern described above won’t be required tomorrow, given that we have been taken down more than $50/oz this morning on the same type of news that took gold to nearly $2,000/ounce in late August, before “OPERATION PM ANNIHALIATION” commenced a week later, MINUTES after the Labor Day weekend.
Readers, just as my 2005 forecast of a housing-led U.S. economic collapse came slightly later than expected due to intensified MONEY PRINTING, we WILL see the all-out, complete destruction of the American economy in the coming months, no matter what illegal, heinous, COVERT strategies Obama’s team of weasels come up with in their quest for the only thing that matters to them, re-election in 2012. And that goes for the behind-doors strategies of the Republican party, whom will also do ANYTHING to retake the White House, including total and utter destruction of the economy via gridlock, hyperinflation policy, or impeachment if necessary.
By the way, the ONE action Democrats and Republicans agree upon is PRINTING MONEY at ANY and ALL opportunities, such as the unfunded Payroll Tax Cut the Republicans have been jawboning about to try and make Obama look bad. In a welfare society such as the U.S., as noted above the government MUST keep printing money, i.e. “QE to Infinity,” lest the game ends NOW, as in TODAY.
That is why the once ballyhooed “debt ceiling debacle” has long been forgotten, and why the debt ceiling will be raised on December 23rd (11 DAYS from now) by another $1.2 TRILLION. Gee, I seem to remember gold SOARING in August when the “debt ceiling debacle focused” on a $14.2 TRILLION debt ceiling, which just four months later will be $16.3 TRILLION!
And speaking of government inflationary policies, how about San Francisco topping $10.00/hour for minimum wage, and people STILL not able to avoid poverty? When I was a kid, minimum wage was $3.35/hour, but then again an arcade game cost a quarter compared to $1.50 now. Why they even mint quarters in today’s inflationary world is beyond me – yet more wastes of time and money.
Hey Barrack, if America is doing so well, why are its largest companies doing so poorly? I guess there’s more one way to get to an 8.0% unemployment rate, such as half of America dropping out of the labor force!
And speaking of corruption, here’s another story only to be read after your last meal is well-digested, listing 30 major U.S. corporations that paid more in lobbying expenses than taxes over the past three years, including GE, which was bailed out with TARP money and a “faux investment” by Warren Buffett in 2008, only to reward the American taxpayer by sending its jobs overseas, paying a negative 45% tax rate, and instilling its slimy CEO, Jeff Immelt, as head of Obama’s “Job’s Council.”
And speaking of slime, guess who else cracked the list – Warren Buffett’s own financial racketeering vehicle, Wells Fargo!
On the topic of slime, I want to bring up another person I despise, the almighty Bill Gross, government parasite supreme and top investor capital vacuum. The reason for writing about him now was that, while at the gym this morning, the muted CNBC TV on the wall had some clown named Kashkari from PIMCO yapping away about his expertise on nothing and stupidity on everything. On the screen, they list his resume:
– Goldman Sachs
– U.S. Treasury Department
– Head of TARP program
– And now, PIMCO
Talk about slime, and this is who Bill Gross, the “Warren Buffett of bond investing” hires, as he, too, tries to “partner” with the government for inside information by trying to utilize the size of his fund and his pathetic CNBC “bully pulpit” as leverage. Sorry, Bill, you’re no Warren Buffett!
|Lloyd Bentsen puts down Dan Quayle|
This weasel spent 2008 BEGGING the government to bail him out of his huge, leveraged mortgage bond investments, of which his holier-than-thou “Total Return Fund” (TRF) was choking on because he, the ‘most brilliant fixed income mind’ in the country, couldn’t figure out a real estate crisis was coming.
|Bill Gross’ Pumping of Fed Buying of MBS Is Self-Dealing|
Next, he not only sells all his U.S. Treasuries, which I agree with totally, but goes heavily SHORT, this time fighting AGAINST the government’s money-printing QE program, and thus losing his precious “TRF” investors billions.
Now, this “fiduciary” of what is supposed to be one of the most “conservative” mutual funds in the nation, has DRAMATICALLY increased TRF’s exposure to government and mortgage-backed debt, “betting” the government will again bail him out! My god, people, “PIMPCO” jumped the shark many years ago, why on earth do people still invest in it? This guy is losing money hand over fist running a fixed income fund with U.S. rates at record lows!
And one more note before I get to today’s RANT topic, about the gradually improving odds of Ron Paul obtaining the Republican nomination for President. I don’t think he has a chance in hell of winning UNLESS the financial system implodes before the elections, which is EXACTLY what I expect to happen.
Finally, to my RANT topic of the day, REHYPOTHECTATION, which by the way, has a GREEK etymology.
Last week, I wrote of the ramifications of MF Global’s actions on the financial markets and “Main Street,” particularly businesses such as farmers and bullion dealers that require functioning, fair futures markets to go about their daily businesses. And for those of you thinking supply of PHYSICAL metal will always be available at your beck and call, think again:
I talked to one of my local coin dealers today and he had $60k in an MF Global account. He still hasn’t gotten his money back. When I asked him about what he was going to do he said “Once I get my money back I’ll NEVER use futures and options again to hedge my inventories. They’ll NEVER get their hands on my money again!”
-Bix Weir, Road to Roota
I would like to add a few cents worth to Durden’s article. This is a very big problem for precious metals dealers. The only way we can “lock in” a price for a client before their funds clear the bank is by “hedging” their order with a futures contract. We are not far from a new reality in our industry that would make it impossible to quote you a firm price. Without a futures market to hedge your order, you would have to wire us $10,000 and you would not know what the spot price would be for your gold or silver until your wire was received. We could not place the order without the funds in hand. Rather than sending you a specified number of ounces that would be locked in on a phone call, as is now the case, you would receive as many ounces as your $10,000 would buy when the funds cleared and get a check back for the balance. Not the best of all worlds, but it may come down to that.
-David, Precious Metals dealer
I wanted to extend this discussion further, as the “fraud du jour,” based on the vile actions of MF Global, is “REHYPOTHECATION, when a broker pledges “hypothecated,” client-owned securities in a margin account to secure a bank loan. Since “hypothecation” means “pledging property as security or collateral for a debt without transfer of possession or title, the practice of “rehypothecation” means taking YOUR securities from YOUR margin account and using them as collateral to borrow money (and in MF Global’s case, using that money, collateralized by YOUR securities, to go bankrupt investing in European sovereign debt!).
The practice is PERVASIVE throughout the banking industry, and as one can guess the largest U.S. practitioner of rehypothecating client securities for its own, evil, proprietary uses is…drum roll please… JP Morgan…at more than $500 BILLION.
However, U.S. usage of rehypothecation, which caps this practice at 140% of the client’s “debit balance,” pales in comparison to the CRIMINAL BANKS in LONDON, where there are NO LIMIT to the amount of permitted rehypothecation of client assets!
Last week, I speculated that rehypothecation is part of the fine print of every brokerage account agreement. And indeed it is, as discussed in these two blogs focusing on pure brokerage firms (not banks) such as E-Trade, Scottrade, and Fidelity.
Per the comments below about Schwab, I want to explain further, given that I have the small amount of my net worth NOT in my house and PHYSICAL metals in Schwab brokerage accounts. I have gone over the company’s net-debt free balance sheet at length with the company’s Investor Relations department, and remain confident in the firm’s integrity and relatively low business risk. If you have any questions for Schwab, please email Chelsea de St. Paer at [email protected], she is very helpful and intelligent.
Secondly, I need to emphasize the ONLY way Schwab can rehypothecate your securities is if they are in a margin account that is currently utilizing margin. I long ago stopped utilizing margin, a standard I HIGHLY RECOMMEND readers to emulate. Irrespective, my account, and my wife’s, were still margin accounts, so on Friday we had them switched to CASH accounts, as far as possible from a situation where rehypothecation, a la MF Global, could occur.
Not to say Schwab is IMMUNE from securities industry systemic issues – IT IS NOT – but if you MUST have your funds somewhere in “the system,” you must carefully choose where, and I am remaining with Schwab. Please do your due diligence on this topic, as I expect the banking system minefield to become more dangerous with each passing day.
Some brokerage firms will attempt to deny the usage of rehypothecation, but the odds a bank or broker are NOT engaging in this morally questionable, but still legal, practice are close to ZERO. Yes, readers, thanks to the repeal of Glass-Steagall and billions of lobbying dollars from illicit, bordering illegal banking practices, your brokers are now allowed to steal your securities for usage as collateral in their own, proprietary investing schemes, or should I say scams.
Already, we are seeing lawsuits EXPLODE from tier-one THEFTS of client assets by MF Global, including….whattya know…PHYSICAL GOLD. How interesting that HSBC, the crooks that act as custodian to the fraudulent GLD ETF, are suing MF GLOBAL over “disputed ownership of gold.”
Anyone going near MF Global, HSBC, or GLD deserves the financial ruin that will come upon them. Those losses will eventually be validated when it is discovered GLD has leased out, sold, or double-counted much of the PHYSICAL gold it is supposed to hold…
…however, that will be of no help to you if you have lost your money investing in these crooked enterprises…
Is this the “EUREKA MOMENT” when everyone realizes any gold not in your possession, be it paper or physical, is either an irrelevant electronic binary claim held in some semiconductor, or at best an asset in some vault, that the brokerage next door suddenly also has claims over?
Jim Sinclair certainly thinks so, and ignoring him on important matters related to the gold market can be hazardous to your financial health.
Finally, a few Precious Metals POSITIVES to empower you to invest in the one asset class sure to PROTECT you from the global financial conflagration approaching at the speed of light. For one, this highly informative video from Future Money Trends, published this weekend regarding the outlook for PHYSICAL silver. The U.S. Geologic Service (USGS) years ago predicted it will be the first EXTINCT ELEMENT (except for vaulted bullion investments), and I firmly agree!
Second, I have done much research on the Pan Asia Gold Exchange, or PAGE, to open in mid-2012 in China. This futures exchange, unlike the LBMA and COMEX ,will only have contracts backed by REAL, PHYSICAL metal. Many great minds in our business believe it will be a game changer, when the PHYSICAL FIX finally shifts from West to East, as well as the preponderance of “pricing activity” in the gold and silver markets.
Initially, these contracts will only be available to the Agricultural Bank of China’s 320 million customers, but if even a small percentage of its clients invest, it will have a material effect on PHYSICAL demand, to expand dramatically once the contracts are opened up to the entire Chinese population.
Readers, we will soon be fully outside the “eye of the hurricane,” and once we are, there will be NOTHING TPTB can do to prevent investors from swarming into real, PHYSICAL gold and silver, out of FEAR. Make sure you are ahead of the curve, and take steps to PROTECT YOURSELF, NOW!