gold nugget“The compounding debt is the monster that is eating the U.S. The only way out is to renege on the debt or try to pay it off with inflation or hyper-inflation. The bull market in bonds is over. From now on, we’ll be dealing with a bear market in bonds, at which time natural forces will drive bonds down, and as bonds fall, interest rates will rise.
Since 1982, rising bond prices in the bond bull market and falling interest rates have buoyed stocks and encouraged Americans to borrow and leverage. Them days are now gone. Coming up is payback time. That’s the down-to-earth story. All else is daily news and noise and rumors and waiting.

Gold Maples As Low As $39.99 Over Spot!


Submitted by Deepcaster:

“More than three quarters of Americans say they are living paycheck to paycheck, with barely enough to scrape by in an emergency. In a survey of 1,000 adults, fewer than one in four said they had enough money to cover expenses for six months. Half said they had less than a three month cushion, while a quarter said they had no savings at all.”, 7/2/2013



Successful Investors are typically those who keep in mind the Great Trends And Fundamental Realities when making their decisions. And these Trends are not usually those on which the MainStream Media, with its addiction to “reporting” Politically Correct GroupThink, focuses.



For example, it is widely reported that the citizens of Greece, Portugal, Italy, and Spain are in increasing economic difficulty. But it is not as widely reported (and when reported, not focused on) that a majority of Americans, for example, are increasingly living on the economic edge, and that therefore, one cannot expect that consumer spending (70% of U.S. Economy) will Buoy an Economic recovery.


But even though the Trends and Realities may be Negative (as is Americans’ impoverishment described above) they often provide investors with Opportunities for Profit and Wealth Protection.


And the other Key Trends and Realities on which we focus here are vastly underreported,  if reported on at all.


“The compounding debt is the monster that is eating the U.S. The only way out is to renege on the debt or try to pay it off with inflation or hyper-inflation. The bull market in bonds is over. From now on, we’ll be dealing with a bear market in bonds, at which time natural forces will drive bonds down, and as bonds fall, interest rates will rise.


“Since 1982, rising bond prices in the bond bull market and falling interest rates have buoyed stocks and encouraged Americans to borrow and leverage. Them days are now gone. Coming up is payback time. That’s the down-to-earth story. All else is daily news and noise and rumors and waiting.


“Medical and Social Security costs are due to soar as 10,000 people a day will turn 65 for the next 17 years.


“Interest rates will devour the U.S. By 2024 interest payments on the Federal debt will quadruple. Thus, even if the yearly deficit declines, the national debt will grow.”


Richard Russell,, 7/2/2013



We are not alone in reporting the ongoing Sovereign Debt Hyper-saturation and its consequences. But, unpleasant as it is, that Reality will be with most developed and key developing, Nations (e.g. China, India and many Eurozone nations) for years. It will therefore limit political and economic options and require hard choices for years to come.


But Debt Hypersaturation also carries a considerable threat for investors – Bail-ins – as Gene Frieda notes.


Eurozone banks’ legacy debt problems must be cleaned up first—


“The newly agreed bank recovery and resolution directive swings Europe from one extreme – a system laden with implicit government guarantees that protected bank creditors from bearing losses – to the other.


“The regime creates a serious time inconsistency problem by requiring private bank creditors to cover any significant losses without first cleaning up legacy debt problems. Without comprehensive efforts to restructure corporate debt, clean up banks’ balance sheets and fortify the European Stability Mechanism, bail-in will leave Europe much more prone to old-fashioned bank runs than in the past.


“In 2010-11, most of the periphery economies ran large current account deficits. When foreign funding for these deficits dried up, the periphery experienced a sharp rise in public and private borrowing costs that plunged their economies into deep recession and, in several cases, threatened default and exit from the euro area. Foreign ownership of public debt fell by a third in Italy and by half in Spain. Not only did the periphery experience a sudden stop in capital flows, but the stocks of past foreign investment began to unwind. The outright monetary transactions programme stopped the stock unwind, but did little to generate a return of foreign investment.


“The risks ahead are twofold. First, given the need to deleverage, periphery GDP growth will be weak and persistently vulnerable to shocks. But in the context of the new bail-in regime, a second, arguably more urgent risk has been introduced: that of a renewed unwind of past foreign investment, and indeed capital flight by domestic bank creditors intent on avoiding being bailed-in.


“Bail-in increases the loss that prospective creditors suffer in the event of a bank failure or resolution event. Against that backdrop, what should periphery bank creditors do in response to the threat of bail-in? Holders of senior unsecured debt should feel least secure, since they are now at the top of the pecking order. Given the persistence of high sovereign borrowing costs, this form of debt may well disappear in the riskier parts of the euro area. Uninsured depositors will move one step closer to being bailed in. (emphasis added)


“Secured lenders to banks will still lend against good assets, and the banks will in turn need to rely more on such funding. As the share of encumbered assets rises, unsecured creditors, including depositors, become ever more nervous. The bank is, after all, pledging its best assets to minimize its cost of funding.”


“Market Insight: Bail-in regime risks old-style bank runs”

Gene Frieda, global strategist for Moore Europe Capital Mgmt, 7/3/2013

Indeed, insured Depositors will likely be bailed-in (Have their deposits confiscated) as well as Ellen Brown points out.


“When Dutch Finance Minister Jeroen Dijsselbloem told reporters on March 13, 2013, that the Cyprus deposit confiscation scheme would be the template for future European bank bailouts, the statement caused so much furor that he had to retract it. But the ‘bail in’ of depositor funds is now being made official EU policy. On June 26, 2013, The New York Times reported that EU ministers have agreed on a plan that shifts the responsibility for bank losses from governments to bank investors, creditors and uninsured depositors.


“Insured deposits (those under €100,000, or about $130,000) will allegedly be ‘fully protected.’ But protected by whom? The national insurance funds designed to protect them are inadequate to cover another system-wide banking crisis, and the court of the European Free Trade Association ruled in the case of Iceland that the insurance funds were not intended to cover that sort of systemic collapse.


“Shifting the burden of a major bank collapse from the blameless taxpayer to the blameless depositor is another case of robbing Peter to pay Paul, while the real perpetrators carry on with their risky, speculative banking schemes.”


“Think Your Money is Safe in an Insured Bank Account? Think Again.”, Ellen Brown, via


And of central importance as well as the Debt Saturation and Systemically Risky Mega-Banking Crises are Bogus Official Statistics in the U.S., China, and elsewhere. Regarding the U.S. for example, Real Inflation is 8.99%, Real Unemployment 23%, and Real GDP a (Negative) -1.98% (see Shadowstats chart in Note 1 below).


And then there are the Slowdowns and Bubbles (which make the slowdowns more difficult to deal with). China, for example, claims GDP growth is 7.7%. But the hard numbers (e.g. Chinese electricity growth of 2.7%) indicate it is far lower than that.


And regarding bubbles, China has them in spades. Wang Shi, Chairman of the huge Chinese property developer China Vanke Co., when asked on 60 Minutes if there is a property bubble, said “Yes, of course. …if that bubble [bursts] – that’s a disaster,” (3/3/13).


“Traders took solace in comments from Ling Tao, a deputy director of the Shanghai branch of the People’s Bank of China, who attributed the recent spike in interbank lending rates to ‘seasonal factors’…


“Tao’s comments may signal the end of the recent scare but by no means indicate that China’s banking system is on the road to recovery, according to Jim Rickards, senior managing director at Tangent Capital and author of Currency Wars….

“‘It’s a giant Ponzi scheme,’ Rickards says of the wealth management products being marketed by Chinese trust companies. ‘There’s a lot to be concerned about.’

“In a nutshell, the ‘shadow’ banks borrow from China’s state-controlled banks, use the funds to finance construction projects and sell bonds tied to those projects with yields far above bank savings rates.

“‘The Ponzi scheme is going on with retail investors…they don’t want 1% or 2% in the bank or even less,’ Rickards explains. ‘The quasi banks come along and say ‘we’ll give you 6%-7%-8%.’ They take the money, invest in these assets that are completely non-productive [with] no way to be able to pay off the debt.’…

“In true Ponzi scheme fashion, the key here is that the shadow banks use the proceeds from the latest asset sale to pay off investors from prior ventures. “They never sell the assets,” Rickards says. ‘They sell [new] products and use that money to pay off the old guys.’

“China’s leadership is well aware of this problem, he adds, which explains why they’ve recently stood by as the spike in interbank lending rates caused a cash crunch and accompanying market freakout.

 “…’there’s no good outcome.’


“China’s ‘Giant Ponzi Scheme’ Won’t End Well: Jim Rickards”

The Daily Ticker,, 06/25/2013



And we have been calling attention for months to the all-time largest Bubble – the U.S. T-Bond Bubble, a Bubble which had already started to deflate, as rising rates which we forecast attest. But there is Good News on the Horizon – the Cartel’s (Note 2) thus far successful Precious Metals Price Suppression Attempts may be ending.


“The singular more important development in the gold market in my 53 years being involved in gold is the Russian cash bullion market now in the process of development. This is a new broad public means of gold price discovery that sits ready to replace the paper gold manipulative fraud market.


“Russia and China cannot be pleased by the Fed utilizing the Gold banks to move gold around so violently. Yes, they can buy cheap but so can you. Are you happy with the COMEX paper gold ability to manipulate price at will? You can buy gold cheap, but I hear precious few voices enthralled with the opportunity the COMEX knuckle draggers have offered us at $1187.


“With a cash exchange functioning in Russia, the bombastic paper offering of multi-year world production will get its hand called and head handed to the paper manipulators. On this exchange you deliver the real gold or get bought in real gold.


“I would love to have a membership on that exchange.


“After one more try in late 2014 the manipulators will be flattened by Russia’s ‘Free Gold’ friends.”


“The Russian Cash Bullion Market”

Jim Sinclar,, 6/30/2013



Indeed. Demand for Physical continues to Skyrocket with Chinese imports via Hong Kong up 68% in May, year on year. We and other Independent Analysts have been recommending (and still do) buying physical Gold and Silver to Profit and move assets outside of the Banking System. And regarding Deepcaster’s related recommendations for Purchasing Power and Wealth Protection, see Notes 3, 4 and 5 below.


Given Russia’s development of the Physical Gold Exchange and impending Hyperinflation, the question of timing becomes important. Consider John Williams very well-informed Analysis.


“U.S. Dollar Remains Proximal Hyperinflation Trigger.  The unfolding fiscal catastrophe, in combination with the Fed’s direct monetization of Treasury debt, eventually (more likely sooner rather than later) will savage the U.S. dollar’s exchange rate, boosting oil and gasoline prices, and boosting money supply growth and domestic U.S. inflation.  Relative market tranquility has given way to mounting instabilities, and severe market turmoil likely looms, despite the tactics of delay by the politicians and ongoing obfuscation by the Federal Reserve.


“This should become increasingly evident as the disgruntled global markets begin to move sustainably against the U.S. dollar.  As discussed earlier, a dollar-selling panic is likely this year—still of reasonably high risk in the next month or so—with its effects and aftershocks setting hyperinflation into action in 2014.  Gold remains the primary and long-range hedge against the upcoming debasement of the U.S. dollar, irrespective of any near-term price gyrations in the gold market.


“The rise in the price of gold in recent years was fundamental.  The intermittent panicked selling of gold has not been.  With the underlying fundamentals of ongoing dollar-debasement in place, the upside potential for gold, in dollar terms, is limited only by its inverse relationship to the purchasing power of the U.S. dollar (eventually headed effectively to zero).  Again, physical gold—held for the longer term—remains as a store of wealth, the primary hedge against the loss of U.S. dollar purchasing power.”


“Gold Price and Market Instabilities, No. 537”

John Williams,, 6/30/2013



Many of the foregoing Trends and Realities may seem Daunting and Depressing but, in fact, most are also Knowledge-Nuggets providing Opportunities for Profit and Wealth Protection.



Best regards,



July 5, 2013


Note 1: calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider:


Bogus Official Numbers          vs.      Real Numbers (per


Annual U.S. Consumer Price Inflation reported June 18, 2013
1.36%     /     8.99%

U.S. Unemployment reported July 5, 2013
7.6%     /     23.4%

U.S. GDP Annual Growth/Decline reported June 26, 2013
1.62%        /     -1.98%

U.S. M3 reported June 17, 2013 (Month of May, Y.O.Y.)
No Official Report     /     4.24% (i.e, total M3 Now at $15.126 Trillion!)


Note 2: We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions – III” and Deepcaster’s July, 2010 Letter entitled “Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds” in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.


Note 3: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.


And there is an Extraordinary Buy Opportunity in One Key Sector.


To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s  ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” posted in the ‘Alerts Cache’ at


Note 4: “The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. Up today, maybe a little more tomorrow and then pulled back on command. Good luck with that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.” –Paul Volcker, Former Fed Chairman, June, 2013


Indeed! The St. Louis Fed’s adjusted Monetary base shot up from $800 Billion in 2009 to $3.2 Trillion in June 2013.


And as Shadowstats correctly notes, Real Inflation in the USA is Already a Threshold Hyperinflationary 8.99%.


And if you are in an indebted Country in the Developed or Developing World, there is now a probability that your bank deposits will be confiscated. First Cyprus. Now Japan. Tomorrow (Your Country?!) – The aforementioned are Indicators that three MEGA Developments are coming.


To consider The Three MEGAS coming soon and how to prepare to Profit and Protect, read Deepcaster’s recent Article, “Prepare! – Three MEGAS Coming & What to Do,” posted in ‘Articles by Deepcaster’ on


Note 5: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, Negative Real GDP growth, nearly 9.0% Real U.S. Inflation (per and prospective Sovereign and other Defaults.


One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High Yield Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (8.99% per year in the U.S. per


To consider our High-Yield Stocks Portfolio recommendations with Recent Yields of 17.97%, 10.6%, 18.5%, 10.7%, 26%,  8%, 15.6%,  8.6%, 10%, 6.7%, 14.9%, 8.8%, 10.4% and 15.4%  when added to the portfolio; go to and click on ‘High Yield Portfolio.’



Silver Buffs Generic Add2


    • Yep.  Makes me wanna go out and buy another AK, just to celebrate those glorious [email protected]@rds.  😉

    • I wouldn’t count any chickens before they’re hatched, or any gold before it’s delivered for a more relevant analogy.
      Ed, note this not a recommendation to forego another AK!

  1. If the bond bubble popped and interest rates start to rise, how can gold keep on ‘moving up’? I remember that Jim Willie said that 0% interest rates is the fuel to the gold price going up.

    Any thoughts?

    • I would be shocked to see the 10 year past 3%.  I didn’t think we would see rates go up this much.  A market sell off should be coming to force liquidity back into the bond market.  A little crisis in Europe (Portugal, Spain, Italy) with their yields rising should get people nervous.  The US bank stocks took off on Friday.  It seems like they are pumping the financials in the US to withstand a market selloff.  Nothing is fueling the metals in these markets.  They are all rigged and manipulated.  Fundamentals are meaningless short term.  Supply and demand is not factored in.  IMO, they are trying to create a deflationary environment because there will be no tapering or end of QE.  It simply can’t happen.  Anyone with a brain can figure this out.  There is one simple question a investor needs to answer.  IF the central banks stops QE and monetizing the bonds, who can step up to replace them?  What entity is large enough to replace the central banks?  There is nobody large or willing to buy up all this worthless debt.  It’s game over.  The only option is to expand the balance sheets of the central banks until the system completely dies.  It’s all about perception and keeping the illusion alive.  This unwinding and tapering idea can’t and will never happen.  The system blows sky high if the FED wants to go down that path.  Zerohedge has been harping on collateral backing up all of these positions.  Good collateral is non-existent now.  Basil III requirements are forcing the banks to come up with more collateral.  This is a major problem.  How do you come up with more collateral when your balance sheet is so over leveraged, overweight, and has toxic liabilities?  That is why the FED is buying up 45 billion dollars of MBS a month.  The FED understood that they would have a perception problem if they expand their balance sheet.  We are now in the middle of the storm of the FED trying to keep the confidence of their actions.  Even the stupid idiots on CNBC talk about the FED never unwinding.  They are years late to the game but they admit it now.  I haven’t even got into the derivatives that could blow the system up.  Rising rates have cost the FED 125 billion already.  This is a drop in the bucket when it comes to the swaps and put options to artificially keep rates from rising.  Somebody is getting killed right now with these moves in the bonds.  Since it’s all off balance sheet, it’s impossible to find out until it blows up.  The IG-9 trade by JPM will look like a picnic compared to the losses that could be coming.  The spreads are blowing open on some of these trades.  I don’t see how it couldn’t.  I just see a market sell off soon to force rates lower.  They just can’t be allowed to go up much more or major pain will soon come for the banks.

    • Sorry to burst your bubble (T-Bond) that is,  The ONLY PERSON I’ve found that called this gold market correctly is Precious Metal Pete who said over a year ago that gold prices would plunge.  Everyone else said gold & silver were going to the moon in 2012 and 2013. 
      Precious Metal Pete just made another statement that suggested gold is nearing a revaluation but only for the physical as the paper continues to devalue to its true worth.

  2. Boy Howdy DV  you are right on the numbers.  The IR derivs total $441 TRILLION.  A 1% twitch of that is $441 billion.  UST just hit 2.71% Friday.  Ooops.  We’ve seen a 105 BPS jump in UST since May 2. 
    Can the Fed contain the damage of the last 2 months?  Beats me.  I don’t think so unless they unleash the FIAT hounds of hell.  Then even the least educated will realize that the ‘game’ is ending.  JPM implodes and the entire SNAP, EBT and paycheck debit card system goes toes up.  JPM has a lot of people chasing their fuzzy butts. They are not invulnerable. Maybe the only way the gummint could save itself is by nationalizing this TBTF bank. Now there’s a turd sandwich I’d not like served up but we will be asked to bail-in our ‘fair share’
    Here is my present day concern.
    A bank holiday to save these banks when the deriv market guts them to  pieces.A full on bail-in is implement. We wake up on Monday too find banks closed, savings destroyed and complete lack of access to our money. The EU Banks are being frogmarched by BASEL III.  The Fed just told our TBTF banks they can expect some harsh margin calls to get their balance sheets in better, stronger order.  Good luck with that. I wonder what magic tricks are up the sleeve of the sorcerer’s apprentice.

    PS For the 11,000 people entering the Social Security and Medicare systems. In reality the net entry/exit number is 4-5,000 daily. Some olders are shuffling off the mortal coil. Given the fact that the government can’t afford to pay promised benefits, I expect the gummint will come up with a new program. Call it Geezer-cide. Dr Feelgood will gently suggest that Youth In Asia might be more appealing. Soylent Green is the next stop.

    • “The IR derivs total $441 TRILLION.  A 1% twitch of that is $441 billion.”
      Isn’t 1% of $441T equal to $4.41T and not $0.441T?   😉

    • OMG   O>>>>M>>>G>>>  
        Ed,  it’s even worse that I ever thought. 
      Not my math—you knew that. That the reason I was hired as a banker.  That’s only a one Order of magnitude mistake, a rounding error at my bank.  HAHAHAHA. 
      But $4.41 trillion is a big boo boo if the 1% adjustment did happen. 

  3. Talk about interest rates going up.  Happnin’ Now!
    London Spot Futures open.
    Anybody on here think about The Fed having to pay at this moment 2.72% on the 10 Year? They will need to print a shitload of money to buy down the rising T-Bond rates Fact is no countries have any faith in U. S. Treasuries and holders are selling like crazy! Hang on for theride cowboys and cowgirls this stuffis really getting interesting!!!

  4. Interest rates are rising because bond buyers are not being offered sufficient inducement to buy them.  The bond coupon rates have to be high enough to reward bond buyers for the risks they assume when buying bonds.  In the current environment, this is not the case, so buyers are not buying and, in fact, there are more sellers than buyers now.  This causes higher rates to be offered as an enticement to buy new bonds.  As rates rise, the prices for already issued bonds fall because older bonds pay less interest than newer ones at higher rates.  I believe that a lot of investors are awakening to the thought that sovereign debt is a poor bet these days and that the US is not immune to sovereign debt problems.  The US may well be the best looking horse in the glue factory but that still isn’t a very good horse.
    “Medical and Social Security costs are due to soar as 10,000 people a day will turn 65 for the next 17 years.”
    Right.  But this has been known for what, 40 or so years?  And the politicians did ZERO to address this problem until it simply cannot be ignored any more?  Employees in a business get fired for such incompetence.  Even now, the attention that is being paid to this massive problem is lukewarm at best.  All of the politicians seem to think that they can address this whenever they get around to it and that it is not a particularly pressing problem.  Actually, it is more like a ticking time bomb… not dangerous UNTIL it blows!
    “But Debt Hypersaturation also carries a considerable threat for investors – Bail-ins – as Gene Frieda notes.”
    Unfortunately, bail-ins and bail-outs are not solutions to our long term financial problems.  These only address temporary symptoms that arise due to structural defects in our system that remain untouched by such “solutions”.  This absolutely guarantees that problems of this type will continue to occur and that they will get ever larger and nastier until even their symptoms cannot be addressed at all.  Checkmate.
    “As the share of encumbered assets rises, unsecured creditors, including depositors, become ever more nervous. The bank is, after all, pledging its best assets to minimize its cost of funding.”
    Ah, but that is just it.  Depositor funds are NOT BANK ASSETS.  Yes, they are assets but they are not bank assets.  They are OUR assets.  Therefore, it is illegal and unethical for anyone to pledge them to anyone else, for any reason, ever.  This is called theft when anyone other than a bank does it.  This IS the proverbial “license to steal” and rot like this WILL destroy the national and world economies of everyone who engages in it.  Only, instead of the system going bankrupt and citizens maintaining their wealth so they can deal with it, it seeks to bankrupt everyone else first.  🙁
    “In true Ponzi scheme fashion, the key here is that the shadow banks use the proceeds from the latest asset sale to pay off investors from prior ventures. “They never sell the assets,” Rickards says. ‘They sell [new] products and use that money to pay off the old guys.”
    Yes, the Chinese banks are running a huge Ponzi scheme, no doubt.  But, is it any better in any of the Western countries?  Nope, not a bit.  Here, we have hypothecation and rehypothecation many times over, pledging assets to many prospective buyers but continuing to hold those assets ourselves.  Thus we have demands for rehypothecated gold that we cannot meet, as Germany has found out.
    We also have $17T in debt that we cannot pay, so must sell new bonds to finance the payments on older bonds as they come due.  This is called “rolling them over” but it is not a “roll over” as most of us understand the term.  It IS a classic Ponzi scheme by definition… taking money from new investors to pay off old investors because the scheme itself does not generate the wealth to do it.  Again, this is called fraud when anyone but a government, a bank, or a central bank does it.

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