A Toothless Cartel Gums at Gold

How the cartel resists the move to gold, but not its greed, threats of inflation, metals rampage, Oil peaks, resource stocks will have their day

February 23 2008

The Big, Bad Cartel Wolf has had its fangs removed and will now try to "gum" gold to death, or try to huff and puff and blow against one of the heaviest and densest elements on the periodic chart.  To this pitiful attempt to stop gold we reply simply: "Good Luck."  We are reminded of a scene from "Monty Python and the Holy Grail" where King Arthur meets the Black Knight.  After being challenged by the Black Knight, King Arthur proceeds to lop off his limbs one at a time.  Each time one of his limbs is hacked off, the Black Knight, seemingly undaunted, continues to challenge King Arthur, albeit minus one or more limbs, hopping on one leg at one point and butting King Arthur so that his crown was knocked askew.  Finally, after lopping off both of the Black Knight's arms and legs, King Arthur asks: "What are you going to do now, bleed on me?"  To which the Black Knight responds: "All right, we'll call it a draw."  King Arthur then rolls his eyes and "rides" on in search of the Holy Grail.  As a parallel, we see gold playing the part of King Arthur and the cartel the part of the Black Knight as follows:  After all the cartel's gold suppression weapons are broken by gold, the following conversation takes place: Gold: "What are you going to do now, throw your paper reserves at me?  You know, the paper reserves which represent the make believe bullion that has all been leased or swapped out?"  Cartel: "All right, we'll hit you with the IMF gold then instead and call it draw."  Gold then rolls its eyes and proceeds with its rally to 1,000+.

The extraction of the cartel's fangs has been a self-inflicted process, and that process has provided us with a most satisfying sense of poetic justice.  All the current problems you see are the direct or indirect result of unbridled and totally illegal market manipulations in virtually every market under the sun by a diabolical group of pathological liars, reprobates and sociopaths whose greed and avarice are only exceeded by their lack of compassion for, and outright hatred of, humanity-at-large.

To them, the public is little more than a pack of resource-wasting, useless eaters worthy only of slavery to the Illuminati and a barely subsistent standard of living.  What you are seeing unfold before your eyes is a toxic combination of imbalances that has been caused by rampant manipulation of markets on a worldwide basis and that will now bring the whole world financial system down in a final cataclysm that can only end unhappily in an inflationary recession (aka "stagflation"), followed by a deflationary depression the likes of which has never occurred before nor will ever been seen again thereafter.

Not content with the billions, nay trillions, that it has pilfered from the public by use of fractional reserve banking leverage, counterfeit and debt-based fiat currencies, wars for profit, inflation produced by interest on money created out of nothing to pay for political pork without raising taxes, fraud, deceit and insider-trading, the cartel ramped up its criminal operation to produce nothing short of an all-inclusive combination of these public-bilking weapons called the subprime mortgage and the devilish, reserve-killing paper securitizations thereof, all in the backdrop of a phony "War on Terror" which is really just another war for profit.  Their profits come at the expense of the blood of our sons, and now also of our daughters, not to mention the blood of Afghanis and Iraqis.  These beauties came on the heels of a "pump and dump," dot.com, flimflam operation that went bust immediately prior to a false-flag terror attack on the Twin Towers, both of which events served as the catalysts for the subprime debacle and the phony "War on Terror."  Note the combination of war and terror with economic fraud.  They always go hand in hand.

All you see in today's worldwide financial system is a string of frauds which are directly traceable back to the formation of the Federal Reserve System and the adoption of the Sixteenth Amendment (adding the income tax), in 1913, which was a very bad year for patriotic Americans.  Most recently, we have seen a dot.com "pump and dump" used to shore up the bursting of a real estate bubble and ensuing recession in the early 1990's, followed by a subprime lending debacle and new real estate bubble to shore up the dot.com debacle, which in turn are now being shored up by a money supply and credit bubble that is now breaking together with a devaluation of the dollar that will all end badly in a myriad of nonstop public bailouts, nationalizations and monetizations of our national debt and trade deficits that our foreign owners will no longer finance.  This process will produce a Weimar Republic scenario in the United States and eventually just about everywhere else as all the inflation the US exported comes back to haunt us with a vengeance.   The resulting Weimar-like hyperinflationary recession will terminate in a deadly deflationary depression as elevated risk and rates of inflation send interest rates on all types of debts and obligations into the ozone, igniting a thermonuclear meltdown of interest rate swaps and completely destroying what little remains of real estate markets and corporate and banking profits.  This risk reassessment is already happening in municipal bonds, junk bonds and jumbo loans in addition to toxic subprime waste, LBO's, commercial paper and various asset-backed derivatives.  Prime bonds and especially US treasuries are next as even 30-year rates are way behind actual inflation rates which all but the densest among us now understand are much higher than the rates we get from the Bureau of Lying Statistics.  But even official inflation rates are now bad enough in and of themselves to put prime bonds and US treasuries into negative territory.  The flight from these losing assets is at hand.  And what will the flight be to?  It will be to gold, silver, commodities and high quality government bonds in non-dollar denominations.  This is why gold and silver are continuing to explode.  There is simply no other way to preserve your capital so you can live to fight another day.

Once the bond markets go down, everything else will come down with them, as they are the pillar of our financial system.  The toxic waste from the subprime debacle has greatly devalued many types of bonds by destroying trust and confidence and therefore liquidity.  Without buyers, who are all now scared out of their wits and filled with terror, liquidity drops towards zero as do bond values.  That is why lower rates from the Fed are counterproductive.  It's not just about the fall of the dollar or the discouragement of foreign investors; it's about finding anyone who can fog a mirror who is willing to buy bonds.  Without buyers for bonds, nothing can get financed, and without financial credit, business comes to a screeching halt.  And since lower rates, accompanied by rampant growth in M3 money supply, are driving speculation and inflation ever higher as are constant bailouts of insolvent banks and monetizations of repos, bonds cannot help but become less and less attractive as this madness goes on.  We could see a complete freeze-up of the entire engine, which drives business finance.  The proposed US stimulus package may turn out to be the equivalent of throwing a ping-pong ball at a tiger tank that is about to open up with its 88's.
 
The cartel is now in a tizzy.  Every time we hear about IMF gold we get a bull rally because everyone knows this is now a signal that the cartel is about to cave in for lack of ammunition and they have nothing left but a cloudy threat to throw at gold.  By the time the IMF gold goes up for sale, if ever, the 400 tonnes will not even be enough to cover the backlog in gold supply due to decreasing supply and increasing investment demand.  You may also have noted that gold has gone up despite a dollar rally, which incidentally has just swooned, so even that ploy is no longer working for the cartel.  As a matter of fact, we like dollar rallies.  Because of the heavy weighting of the euro in the USDX average, a rallying dollar usually means a plunging euro.  And a plunging euro means gold going ballistic in the Euro Zone, where the gold IQ is much higher.  We hope that Trichet hammers the euro by cutting big, because that is the single greatest event that could drive gold way past 1000 and on its way to 2000.  That could also send Merkel and her haus fraus reaching for their kitchen implements as they dance Rhinelanders on Trichet's head and demand the return of the Deutsche Mark so they can put an end to the rampant inflation being visited upon them due to the profligate financial practices of their weaker partners in the EU.

We also ask what kind of manipulation madness causes the euro to drop from 1.48 to 1.45 after the Fed cut 1.25% to 3% and stay at that level after the ECB held at 4%.  Does this make any sense to anyone?  Even if the ECB was dovish, and was going to cut another .5%, they would still be .5% higher.  And isn't 1.25% a bigger drop than .5%?   And isn't the Fed talking a whole lot more dovish than the ECB with high odds for further cuts to perhaps 2%?  And don't Europeans historically worry more about inflation (i.e. Weimar) while Americans worry more about deflation (i.e. Great Depression)?  So much for market logic, charts, graphs, history and black boxes.  You have about as much of a chance using logic to make correct market calls as you do reading tea leaves when you are operating in a totally warped financial atmosphere of rampant and rampaging manipulation 24/7 without end.  Friday's 96-point miracle rally in the last half hour of trading after the Dow was down 130 points is a perfect example of this type of manipulation.  Here the cartel used brute force to produce a short squeeze to support tanking markets so Republican candidates don't get vaporized in November.  The Illuminati can't wait to get their hands on the Manchurian Candidate, John McCain, so they can plunge us all into WWIII.  Kosovo will be ground zero.  They think they can create order out of chaos.  What a bunch of knuckleheads.

The stock markets have "yellow fever" again as the cartel is completely baffled about what to do about the yen and the carry trade.  If they weaken the yen to support the stock market, gold goes ballistic.  And if they strengthen the yen to put a yen-hit on gold, the stock markets explode and go down in flames.  Thus the yen weapon has been neutralized.  Over the past 30 days, with the exception of a yen-hit on gold on 1/23/08 that almost sent the stock markets into a 1929 death spiral as gold threatened to blow past 900 again, the yen has held to a very tight trading range.  On the day just excepted, the cartel risked the complete destruction of worldwide equity markets on a manipulation that did not even come close to working.  These people are unmitigated boneheads.  On 1/23/08, after yen strength earlier in the day was used to hit gold, that strength was greatly lessened later in the day in an effort to boost stocks after the COMEX closed, and this helped to create the granddaddy of all rescue rallies which took the Dow from minus 300+ points to plus 300 points.  Since that day, the yen has traded between about 106.3 and 108.3 yen per dollar and between about 155 and 159.2 yen per euro, which is quite remarkable.  In the past, when the yen has been used to hit gold, we would see trading ranges that were double this magnitude in a single trading day, and we cite the yen manipulations of 8/16/07 when spot gold was attempting to break through the 670 mark as an example of this madness.  The Dow was down almost 340 points that day before being rescued once again at the end of the day to close at only minus 15 points, and once again the yen was weakened later in the day after the COMEX closed in order to assist with the rescue of stocks after gold got hammered while the yen was much stronger.  This huge move in the yen was orchestrated by hitting the Nikkei for 1200 points from 8/16/07 to 8/17/07, causing a flight to the yen and Japanese government bonds as everyone in Japan ran for cover.  No market is sacred when it comes to gold suppression.

Because the cartel is out of gold to the point where the IMF boondoggle had to be dragged out again, and because the cartel is stifled in its yen manipulations as just described, and because the interest rates on all debt are either rising or are higher than they should be due to elevated risk caused by skyrocketing defaults, lack of regulation, lack of transparency and loss of confidence, and because hyperinflation is assured by out-of-control M3 money and credit, insolvency bailouts, debt monetizations and nationalizations, and because the dollar is doomed along with all other fiat paper currencies which are all losing ground to precious metals and commodities, and because an ongoing recession and tanking consumer demand mean a loss in value of virtually all paper assets, especially those denominated in dollars, and because the mountain of shorts in gold and silver futures are once again way underwater and about to sink even deeper next week, gold and silver, together with platinum and oil, have gone on an amazing rampage this week, setting more all-time and 27-year records.  On Thursday, spot gold took out its all-time closing high to finish at 946.30 after setting a new all-time intra-day high of 953.80.  Gold futures (April-most active) also hit new all-time intra-day and closing highs of 958.40 and 949.20, respectively.  Spot silver broke 18 on Thursday and powered to as high as 18.14 on Friday before closing Friday at 18, both new 27-year records.  Also on Friday, platinum blasted through 2,200 for the first time and closed at an all-time high of 2,169.

Oil futures (March-lead contract) on Wednesday hit 101.32 before closing at 100.74, both all-time records, and then, partly because of the switch to April as the lead contract, the price was slightly below 100 later in the week.  The XAU and HUI are once again consolidating after being pounded by the cartel again, but are still near record levels despite brutal beatings from the cartel, which is fighting a losing battle in any case.  The final explosion in resource stocks will be all the more powerful as a result.  Just be patient, our time is coming.


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