13 Reasons for Major Gold Breakout
By Jim Willie CB
Sep 10 2009 4:26PM
Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.
Before the Hat Trick Letter was launched, a little splash was made when a Jackass Nobody wrote “25 Reasons Why Gold Will Rise” in November 2002. It was so many years ago that the piece no longer appears in archives. The motive for the article was simple. Just too much pure nonsense and genuine rubbish had appeared in the financial press about why gold was rising. ‘THEY’ claimed the gold price was rising from MidEast tensions, from new global tensions due to a False Flag attack on New York City in broad daylight, and from other factors clearly irrelevant to gold. It was not disinformation so much as stark ignorance and stupidity, perhaps even compromised marketing from the fiat bowels on Wall Street. The crack analysts in financial circles overlooked the negative real interest rates offered by central banks, as the miniscule official rates were overwhelmed by price inflation, thus rendering gold a free pass profitable investment. Inane mindless drivel continues to pour out today as to why gold has reached the $1000 level. In simple English, THEY HAVE ABSOLUTELY NO IDEA WHY GOLD IS RISING. The faceless ‘THEY’ had no idea in 2002 and ‘THEY’ have no idea now. The main fallback factor ‘THEY’ turn to is a hedge against price inflation, the basic kindergarten concept. Wall Street is too busy building leveraged contraptions and forging collusions to bother with gold comprehension. Those who are aware in the Mainstream are dead silent as to why gold rises, since they realize their world is to vanish.
The original litany of reasons was examined two years later in “25 Reasons Why Gold Will Rise (revisited) + 2 more reasons added” from August 2004 (CLICK HERE). A couple mining factors had cropped up, worthy of inclusion. A quick swing to the present, after the insolvent US bank system died in September 2008, after the discredited USFed capitulated to offer near 0% rates, after colossal fraud spewed from Wall Street corner offices, after fraud was compounded by the Goldman Sachs creation of Congressional slush funds for self-dealing banker benefit, after the home mortgages continued to hurtle over the foreclosure cliff, after the USEconomy continued on a path of disintegration. Here we are again with oafish apologists trying to explain the rise in the gold price.
GLOBAL MONETARY SYSTEM BREAKDOWN
An acute lack of gold comprehension is evident almost on a global basis. The entire system is wedded to toxic paper. For the most part, so-called experts, industry analysts, and network anchors have absolutely no idea why gold has risen above the $1000 level. They are blind to the Paradigm Shift away from the USDollar and cannot admit the breakdown of the global monetary system. Their jobs might require them to turn a blind eye to such catastrophic events. At best they might have spent their entire careers inside the noxious US$ Greenhouse Dome, unable to see from an external vantage point, in no position to see the Dome from an outside perspective. It will be interesting to observe how long the ‘SYSTEM’ remains ignorant of the massive changes taking place, as the stages they sit upon and work upon are slowly vanishing. Their claims for golden reasons are vacant shallow factors. THEY miss the major factors. They do notice a staggering amount of fiat money being created without basis, which would fall generally under item#2. The actual reasons are many. The list is somewhat debatable, subject to interpretation. Some argument might even come from within the gold community.
Basically the reasons extend from the many tentacles and ramifications of the Grand Paradigm Shift in progress, the complete overturn of the USDollar global financial system. It is being turned upside down before it goes inside out, and finally fractures into a million pieces. This is an irreversible process that is already one year into the collapse process. Here are reasons according to my analysis and perceptions. They only number 13 this time:
1. PARADIGM SHIFT away from a USDollar centric world manifested as the global revolt against the USDollar in reserves management and transaction settlement, extended from bank structures
2. colossal irresponsibility of major central banks with expanded balance sheets, money creation, and credit growth, endorsing their government profligacy
3. failure of the central bank franchise model, exhibited by the ongoing credit crisis, insolvency of banks, and desperate attempt by the US Federal Reserve to serve as the global bank
4. ruined global monetary system from the complete debauchery of money itself
5. perversion of the USDollar from required USMilitary subsidy, from coerced USTreasury Bond support, and from tacit acceptance of Wall Street corruption (past bond fraud and debt rating agency collusion without prosecution)
6. proliferation of OTC derivatives over $1 quadrillion in value with no prospect of resolution, no hope of regulation, and deep corruption, but with deadly dependence
7. gradual recognition of a financial syndicate having taken control of the USGovt finance ministry, that involves privileged official channels of funds and widespread bond counterfeit
8. dishonor of financial contract law, chronic lapses in financial market integrity, and constant intervention in those financial markets
9. expectation of mammoth price inflation just over the approaching horizon, unless the central bank balance sheets inflate beyond measurement in Weimar style
10. anticipation of banking system meltdown in at least the United States and United Kingdom, likely to result in bank holidays, useful for a forced Bank Consolidation with dead banks capturing the system
11. observation of gradual economic disintegration and the decline of global trade
12. trend toward commodity stockpiles, of which gold is the financial commodity core element and crude oil is the industrial commodity core element
13. specter of numerous pockets of armed conflict, military war, and possible nuclear events, as chaos spreads and nations desperately exploit the confusion.
MYOPIA & THE GOLDEN TIDE
This process would be almost amusing, observing cartels suffering at the hands of their own financial devices, if not so tragic by the hordes of bystanders and affected citizens. Some respected pundits will soon make fools of themselves as they awaken to explain events and their complicity. THEY do indeed comprehend item #2, but hardly anything more. Some shallow souls like Karl Denninger actually state that one cannot eat gold, and thus is has no structural value. What a truly moronic point of view by a fine forensic analyst. Stick to your knitting, Karl! Then again, he is half blind and a high school chemistry and physics laggard (see his 911 Event shallow commentary). One cannot eat crude oil, cement slabs, steel beams, or human undergarments, and these surely have structural value to gird a foundation. Before 1971, few financial crises occurred during an era ruled by gold as the foundational scepter. As the tide turns, THEY will expound on the virtues of gold, without benefit of comprehension, in a laughable climb onto a fastmoving bandwagon. Every pundit wants to join a winning parade. Ron Insana of CNBC states he does not understand why gold is rising, in supercilious manner, as though gold is somehow impudent. He had no idea that structured financial assets would implode in 2006 when he left the monopoly CNBC network that acts like a Wall Street marketing platform. He must have expected housing prices to climb without end. He must not have received word that even Goldman Sachs was shorting mortgage bonds heavily. He is neither enlightened nor connected.
Such myopic vision is typical of bright people who have no insight into the current Paradigm Shift, a dismantle of the stage they stand upon. We are witnessing the demise of the US-UK empire, a era built upon banker monopoly, engineered inflation, Wall Street power, economic mythology, and military prowess. The US$-based structures are vanishing, a gradual process to date, but as times passes, more sudden shocks are sure to arrive as entire floors simply crumble beneath the feet of the wizards and their harlots. Some technical analysts, the eerie bunch who follow price patterns, volume trends, and cyclical measures, care little about reasons. They notice extremely positive patterns in the gold stock index and gold futures prices. Such analysts expect much higher prices ahead from power evident to perceive. See the Bloomberg article (CLICK HERE) from the mainstream press. They notice strength and energy building. They care not why! There is genius at times in such simplicity and designed distance from wretched rationalization.
GOLD PRICE BREAKOUT BEGINS
The move to kiss $1000 gold was the first dance, the initial step to capture global attention and to preview the next much bigger move. Some important less visible factors are at work to push the gold price up, somewhat hidden from view. The Intl Monetary Fund and the London G-20 Meeting bear on the gold forces. The full breakout is imminent. It could be days, or a couple weeks, probably not more than a month. Ramadan ends in ten days, and Chinese anger is spilling over. Underlying structures are breaking with each passing week. Bank ripples are being felt. Insolvency is spreading like a disease, while corruption spreads like a cancer. Central bank money creation occurs like from a garden hose. Stories will be told about these days for decades. This is history in the making. They are accumulating gold bullion here. The fools are still selling gold, unaware of its 100% rise in price upcoming. Actually, what comes is a quasi-global 50% currency devaluation. China is cutting deals with the I.M.F. to secure central bank gold in huge blocks, much like geopolitical horse trading amidst grand power shifts for global control. If the West wishes to enjoy the benefits of Chinese credit supply, then China must be given much of what it demands. In short, the gold price will break out past 1100 and past 1200, toward a 1300 target, WHEN CHINA DECIDES TO GIVE THE ORDER.
This has come to a Financial War between China and the United States, waged in the USDollar and Gold marketplace. The war chest held by China was essentially given to it by the United States and other Western nations, with all the foundation from direct business investment in factories. The self-destructive economic policies carried out by the United States will be fodder for historians for many decades. The conflict will inevitably morph into a Big Trade War, and probably into a military hot war. Few believed my warnings made in 2005 and 2006 that China and the US will be locked in a Trade War within two to three years. Watch the tragedy of a wider conflict unfold, as the US makes one error after another, mixed with defiant disobedience of its credit master China. The Beijing leaders have giving the Obama Administration orders. The decision to reappoint USFed Chairman Bernanke to another term went in direct contradiction to Beijing orders. Is it any wonder that gold hit $1000 in just one month after White House meeting, and just two weeks after the Bernanke reappointment? Not here!
Sir Alan Greenspan, architect of the failed central bank franchise system, who offered monetary and political cover for the Rubin-Clinton pillage in the 1990 decade and for the Bush-Paulson pillage in the 2000 decade, has come to the stage to give two messages. He just will not go away! Greenspan seems to be one of his best historical critics, without recognition of his new role. He cannot help but offer criticism, a process that undermines his own legacy. Greenspan warns about inadequate bank capital. He should instead declare most big banks as insolvent, and even cadavers. He spoke via teleconference to the Antique India Markets Conference in Mumbai, an obscure forum.
Meanwhile, closer to home at a US-based economics conference, Greenspan admitted that the gold price gains are strictly a monetary phenomenon in his words, which should send shivers through central banker spines. He believes that rising prices of precious metals and other commodities represent an early move to shun paper currencies. He genuflected before the gold altar, when he said, “What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment.” He always did love gold! Economists should spend less time at conferences and press interviews and more time learning and studying their own field, so as to develop some expertise.
CHINA DECLARES A SUBTLE FINANCIAL WAR
China made three major announcements in the first week of September, each highly disruptive, enough to add thrust to the Paradigm Shift, enough to usher in the nasty phase (see Trade War escalation). The timing of late August and early September for disruptions and onset of instability has not been a disappointment. China has shaken the global system in three key ways, resulting in a grand challenge to the power structure. China announced:
1. permission granted for state owned firms to selectively dishonor OTC derivative contracts by means of self-administered Stop-Losses in reneges
2. Hong Kong demands the return of its gold bullion held in custodial accounts held in London, to make its own airport vault facility (the Zurich Switzerland model)
3. Mongolian rare earth metals will no longer be exported to the West, an assault against hybrid cars, certain electronics, and military weapons (missiles).
Implications are enormous. The OTC abrogated contracts for crude oil and metal contracts, ripe with corruption and entirely unregulated, could wound deeply Goldman Sachs and JPMorgan. The demand for Hong Kong gold is more a symbolic threat, adding thrust to what already has begun. Germany, Switzerland, and the United Arab Emirates have demanded a return of their gold from US and UK storage locations, the bank centers where some accuse the gold was routinely leased. The trend puts considerable pressure on the COMEX, which could be deeply wounded from lack of underlying metal. Some accuse its routine shorting is conducted without sufficient required collateral. Neither the USGovt nor the USMilitary have accumulated stockpiles in rare earth metals, a clear lapse. The distraction of profits from bond trading and organized USGovt fund channels must be too great. Rare earth metals are critical for weapons programs, and their absence could put further strain on the over-extended and generally strained USMilitary. See scandium (21), yttrium (39), and 15 elements from lanthanum (57) to lutetium (71), whose atomic numbers are cited in paranthesis. By the way, copper, silver, and gold are all in the same column for the periodic table of natural elements, a key point, since they share unique traits in their valence.
The Chinese actions border on extreme, but are part of a grand mosaic of change, if not rebellion amidst a Paradigm Shift. THE CHINESE ARE EXTREMELY ANGRY. They are angry about amplified USTreasury debt monetization. They are angry about outsized USGovt deficits. They are angry about USFed Chairman Bernanke being reappointed. They are angry about the battle waged by the USGovt against Swiss bankers. They are angry about Yuan currency manipulation charges. They are angry about being given second class seats at the global banker tables. They are angry about being set up as US debt bagholders. They are angry about the slow retreat of USMilitary presence in Asia. The entire foundation will undergo powerful changes from these three salvos, and more to come, likely even more defiant and elevated. The US-UK wizards who wrecked the banking system will soon find themselves hurtling downhill, weighed down by their own insolvency. That bank system insolvency grows worse by the month, as fresh credit portfolio losses still outpace USGovt ‘gifts’ and new capital infusions.
SAUDI BANKS READY TO TOPPLE
Saudi banks are beginning to topple, soon to cause deep ripples across the globe. Meanwhile, Saudi royals are under threat of assassination. The Saudi Arabian central bank announced it will not purchase the debts from two family businesses after a major default. The Saudi Arabian Monetary Agency will not cover the debt from Ahmad Hamad Algosaibi & Brothers and Maan al-Sanea’s Saad Group. The debt is owed to local banks. Units of the two groups have borrowed at least $15.7 billion from more than 80 regional and international banks. About $5 billion of that is owed to Saudi banks, Standard Chartered stated in an August 26th report. See the Bloomberg article (CLICK HERE). On August 30th, a suicide bomber injured Saudi Prince Mohammed bin Nayef, son of the interior minister and nephew of King Abdullah. The incident took place in Jeddah Saudi Arabia. Reports indicate the motive might be tied to Saudi involvement in the civil war in Yemen. A check reveals that Ramadan ends on September 19th. Expect a jihad from chaos in the Persian Gulf after its end. Mayhem will be permitted at that time.
In a Jackass public article entitled “US Bank Enemies at the Gates” from late August (CLICK HERE), the risk of broad Arab bank failures was mentioned. “But the Persian Gulf bank failures represent the clear and present threat… A bank panic in the Persian Gulf could ensue very soon, a back door threat. It would clearly have origins in the United Arab Emirates, spread to the entire Persian Gulf like to Saudi Arabia, Kuwait, and elsewhere. From this global toehold, the bank panic could then spread to London, New York, and points in Europe.” Perhaps the origin of Persian Gulf bank shocks will be both Saudi Arabia and the United Arab Emirates. The construction project bust in Dubai, rescued by the Abu Dhabi bankers, will deliver massive shock waves soon. They own a boatload of USTreasurys and US bank stocks. The ugly geopolitical secret is that the reign of the Saudi regime might be in danger of an end. The Saudi people might then gather in what remains of the black gold!
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Jim Willie CB
Editor of the "HAT TRICK LETTER"
Hat Trick Letter
September 9, 2009
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 24 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com . For personal questions about subscriptions, contact him at JimWillieCB@aol.com