June 16th, 2010
(WPost) – 8 House members investigated over fundraisers held near financial reform vote
The Office of Congressional Ethics is investigating eight lawmakers who held fundraisers within 48 hours of a major House vote on a Wall Street reform bill or received substantial donations from business people with a financial stake in the bill, according to congressional sources and letters. Read More Here
(Money&Markets) – Two Consequences of the Stimulus Programs Washington Wants You to Ignore! – Read More Here
(BullionBullsCanada) – Fannie Mae Proposes Bulldozing U.S. Homes – Read More Here
(EconomicPolicyJournal) – Bank Run in Spain and Its Destabilizing Ramifications for the Entire EU
According to FT, Spanish banks borrowed €85.6bn ($105.7bn) from the ECB last month. This was double the amount lent to them before the collapse of Lehman Brothers in September 2008 and 16.5 per cent of net eurozone loans offered by the central bank. Read More Here
(InternationalForecaster) – The Fed’s Purchase of US Sovereign Debt: “The US Treasury is under the Control of the Fed’s Owners”. – Bob Chapman
US, UK and European financial systems are on the way to collapse Read More Here
(MarketWatch) – U.S. home building craters after tax break expires
Housing starts fell 10% to a seasonally adjusted annual rate of 593,000 in May, the lowest level since December. The details were even worse, as starts of single-family homes plunged 17% to a seasonally adjusted rate of 468,000, the lowest in a year. Read More Here
(LewRockwell) – Amnesty for the Banksters, Debtor’s Prison for the Serfs – Read More Here
(SoColPatriotsClub) – House Democrats Drop Ron Paul’s Audit of Federal Reserve
Yes, you read that right. Ron Paul’s push to audit the Federal Reserve Bank and see who received how much money in the last few years has been drastically reduced. Read More Here
Video: The Greecing of America, Simplified
The repercussions from Greece’s fiscal crisis are starting to ripple around the world. But are lessons being learned? – View Video Here
REPOST – (RussiaToday) – Video: Greece was used as trojan horse by Washington and Goldman Sachs, to damage Eurozone
“The whole attack on Greece and the attack on the euro originated from a concerted strategy of Wall Street and US Institutions to permanently cripple or try to cripple the only alternative reserve currency anywhere in the world that can challenge the dollar,” Engdahl told RT. Video Link Here
Video: Instead of budgeting, Congress is….
With all of the attention on the BP oil spill, the European debt crisis and even financial regulatory reform, the fact that Congress hasn’t passed (and will likely not pass) a federal budget for fiscal year 2011 is flying under the radar. View video Here
(WPost) – More college-educated jump tracks to become skilled manual laborers – Read More Here
(LewRockwellShow) – Podcast: We Ain’t Seen Nothin’ Yet – Lew with Gerald Celente
What does the state-bank-military complex plan next? As the second stage of the financial crisis hits, says Gerald Celente, we can expect them to start another war to divert people’s attention from the wholesale robbery of the productive. Listen to Podcast Here
(LewRockwell) – Bailing Out Politicians Now? – Patrick J. Buchanan – Read More Here
(WRMEA) – U.S. Financial Aid To Israel: Figures, Facts, and Impact – Read More Here
(MarketWatch) – Fannie, Freddie to scrap NYSE stock listings – Read More Here
(EconomicPolicyJournal) – Bloomberg Considering Former-Goldman Man for Deputy Mayor – Read More Here
REPOST – (Snard) – More Than 1 In 5 American Children Are Now Living Below The Poverty Line
Perhaps the greatest victims of the economic nightmare that is unfolding right in front of our eyes are our children. Read More Here
(AlterNet) – “Lure People Into That Calm and Then Just Totally F–k ‘Em”: How All of Us Pay for the Derivatives Market
Derivatives are a hotbed of abuses and bailouts. So why are taxpayers footing the bill? Read More Here
(Infowars) – Why You Should Buy Gold and Silver – Mark Dice – Read More Here
(FinancialSense) – Gold Going to Parabolic Top of $10,000 by 2012 – For Good Reasons
No wishful thinking here! As I see it gold is going to a parabolic top of $10,000 by 2012 for very good reasons – sovereign debt defaults, bankruptcies of “too big to fail” banks and other financial entities, currency inflation and devaluations – which will all contribute to rampant price inflation.
Not surprisingly, I have company in that view:
Money manager, Peter Schiff, told Business Week recently that, “Gold could reach $5,000 to $10,000 per ounce in the next 5 to 10 years” and highly respected economist David Rosenberg is of the opinion that “There is no doubt that gold can easily double from here.”
1. History is No Guide
Gold has only been trading freely since President Nixon’s 1971 decision to deny gold to the French and others attempting to repatriate their paper dollars for the metal. As such, there has been a scant forty years of gold production and trading since it was detached from supporting paper money. This period has also been marked by substantially higher monetary and price inflation as well as currency devaluation.
2. Market Manipulation
The Commodity Futures Trading Commission (CFTC) recently held a major hearing which blew the doors off bullion metals futures trading markets in terms of what was revealed publically. I predict this public hearing will be viewed in the period ahead as the precious metals price liberation event of the decade.
It is commonly known that JP Morgan Chase in the major player in commodities futures markets trading. Not only do they take massive naked short positions (betting that prices will fall), they do it with large substantial leverage. What isn’t as well known though is that Chase acts as the agent for the Federal Reserve Board and other central banks in ‘managing’ the markets on their behalf. Central banks want ‘orderly’ precious metals markets and prices and currencies which don’t gyrate wildly. Only then can they achieve stealth inflation in their monetary policy which is so beneficial in servicing debt. It also makes for good (meaning effective) politics.
3. Insufficient Physical Inventories
While it is normal for traders to roll their expiring contracts over into new paper trades, some traders accept cash in settlement rather than the metal. To the amazement of everyone the recent hearing of the CFTC – specifically Jeff Christensen’s comments – inadvertently confirmed that there is little bullion in storage at the London Metals Exchange or New York’s COMEX to back the metals trading. He justified this fact by noting that only one ounce of one hundred traded is paid out in physical metal. This revelation confirmed a much worse reality than even critics, such as the Gold Anti-Trust Action Committee (GATA), had expected. It seems that the Asian and Mid East buyers and owners of bullion have been removing gold from their dealers’ vaults and are taking it “home” thus leaving much less than previously thought in the London, New York and Toronto vaults.
In addition to what looks like a production peak in the gold mining industry (production has fallen in 5 of the last 8 years), central banks have for the first time recently become net purchasers (having bought more gold last year – 425 tons – than at any time since 1964).
The single largest purchasers of metal these days, other than central banks, are the bullion ETF’s (Exchange Traded Funds) which ostensibly have their metal inventories in vaults. These relatively new investment vehicles, unfortunately, are not transparent in their business practices. Regular audits by reputable accounting firms and allocated and segregated bullion inventories stored in reputable vaults are opaque at best. This begs the question: “Do the large ETF bullion funds actually have the metal they purport to own, or is their inventory more the ‘paper gold’ variety in which bullion trading exchanges seem to specialize?”
1. The revelation, outlined above, that there is insufficient physical inventory to meet new investment demand for ownership and delivery of physical bullion, is about to blow the price lid skyward.
2. As public awareness of sovereign debt mounts, it will drive home the reality of mounting government insolvency.
3. Confidence in currencies will wilt commensurately.
4. Investment demand for real gold and real money as a safe haven investment will expand exponentially.
5. These events should take place from mid 2011 through 2012 and extend further out toward 2015 before demand is satiated.
6. The dramatic price increases in gold and silver will at that point also satisfy the unstated desire of central banks and politicians to devalue their currencies in order to assist them in meeting their debt and unfunded liabilities.
After the 2008/2009 crash, governments bailed out their failing financial institutions and investment banks through a variety of innovative measures. The next time round most governments will not be in a position to do so – again. Even more troubling, the IMF (International Monetary Fund) will not be capable of rescuing the increasing number of insolvent governments and their financial institutions.
You may think my aforementioned views are crazy or perhaps just that my imagination is way out of hand or, at best, that I don’t have access to the appropriate reality checks. Be that as it may, I am increasingly confident that the consequences of fragile sovereign debt, precious metals market manipulation, insufficient physical supply, and the need for a safe haven investment refuge, will drive precious metals bullion and mining stock to unimagined heights.
The circumstances immediately ahead are largely unprecedented. History is therefore only marginally useful as our guide to the future price of precious metals. We are now in genuinely unchartered territory.
Get yourself positioned to take advantage of this event of a lifetime. Protect your assets from the next and more serious leg of the ‘Greater Depression’ directly ahead. Get a running start NOW on growing your future wealth.
Source: Financial Sense