Jim Willie: 20,000 Tons of Gold Have Been Replaced by Certificates!

By Jim Willie, GoldenJackass.com

Many are the signals of extreme dangerin the visible financial system.  The widening LIBOR scandal dominates the news, but the USDollar is being pushed off its pedestal.

-The LIBOR lawsuits should make quite the spectacle, with hundreds of class action lawsuit cases
-The damages could reach into the $trillions, since many $trillions in volume are affected with skimmed percentages
-The last great scandal will be the ALLOCATED GOLD ACCOUNT raids
-My excellent source claims that far more than 20,000 metric tons of Gold bullion has been replaced by certificates

-The banks will face this music sooner or later, and the restitution will send the Gold price over $5000/oz

 

 

In recent public articles, the USTreasury Bond bubble was described, supported by Interest Rate Swaps to produce artificial demand and to create an illusion of a flight to safety in toxic USGovt Bonds. A Black Hole phenomenon was described, which will suck the capital life out of most assets, celebrate the USTBond rally, and accelerate the recession in the USEconomy. Numerous endgame signals were described, all alarming in their own right, not a single signal being from the realm of normalcy. Extreme danger is the warning. This week consider just a handful of danger signposts, all screaming loudly of systemic breakdown. They are all deeply disturbing signposts that complement the endgame signals with a scattered pox of symptoms on the landscape. The Jackass is firm and rigid in maintaining that ugly forecast made in late 2008, dismissed by many as foolish and off the mark. No longer. The USGovt debt default in the form of a massive forcible debt restructure is being considered by creditors in charge. The USEconomy is imploding, and Money Velocity is falling. The true protection in both an inflationary spiral and a deflationary spiral is GOLD. The current storm center has a mix of both, a fast rise in the monetary expansion coupled with a painful decline in the value of all things paper. Never overlook that home prices are a consequence of paper games, not the hard asset ploy. The USDollar is being pushed off its coveted throne as global reserve currency. A system based upon GOLD is coming, designed to manage trade settlement. The paper kings hope to impose a new and better paper bond vehicle, and a new and better paper banking depot, but they are failing miserably. They are on the extreme defensive. Their captains are cutting deals to stay out of prison. Justice might actually be served. Watch the LIBOR lawsuits, which will be a different kind of mushroom cloud.

 

USECONOMY IN GALLOPING RECESSION

Forget what the political leadership claims on a USEconomic recovery. Reality could not be farther from their claims, as their credibility is strained. Their deception and wishful thinking put to public speeches could not have been more incorrect. The domestic gasoline volume sales from refiners has fallen a ripe 50% since the 2007 peak. Notice that Quantitative Easing, the hyper monetary inflation designed to purchase USTreasury Bonds and USAgency Bonds that almost no global creditor wishes to buy, did not result in stimulus. Instead as my claim has been, it results in capital destruction from rising costs, vanishing profit margins, and retired equipment. Much more stimulus will have to come, much more bond purchase, much bigger federal deficits, much more currency debasement. The effect on the GOLD price will be huge, but only after the blockades are removed that interfere with free markets.

LABOR MARKET IN TATTERS

The USEconomy requires around 140 thousand jobs to stay neutral, as population growth is absorbed. This important point was often stated back in 2004 and 2005 and 2006. But it is not made any longer, since the goal is to achieve 100k to 200k jobs. The Non-Farm Jobs report is widely regarded to be a farce display, with a powerful fudge factor that can bring about almost any final figure desired. The Birth-Death Model is a travesty. Let this statistical analyst assure that an auto-regressive integrated moving average model of 11th order is nonsense in the Time Series arena of modeling artistry. The BDModel is designed to track small business job growth, since the NFPayroll survey does not. Instead the BDModel is used as a fudge factor with no bearing whatsoever on the reality of small business climate. The Natl Federal of Independent Businesses has its own measures, and in the last three years they have been uniformly negative. Yet the BDModel continues to add jobs to the official estimate.

 

     MONTH

 ORIGINAL

   REVISED

  BDMODEL

       NET

March

+153k

+133k

+90k

     +43k

April

+115k

+68k

+206k

minus 138k

May

+69k

+77k

+204k

minus 127k

june

+80k

+124k

minus 44k

 

The table displays the trend in revision downward, and removes the fallacious fabricated fiction that is the Birth-Death Model fudge factor. The USGovt Bureau of Labor Statistics could not tolerate posting a negative job growth number in consecutive months, to reflect the true condition of the reeling USEconomy. So the fudge factor enters the equation. Blatant deception, kind of like constantly updating the seasonal factor adjustments in monthly statistics, another common gimmick.

 

MONEY SUPPLY CORRELATION

The correlation between the Gold price and USGovt outstanding debt had been rather tight, like in a death match wrestling. Then in 2011, the masters of the banking universe decided to double down on their uneconomic naked short positions for Gold, and worse. When the USFed or Euro Central Bank have taken bold steps that show both desperation and a broken financial system, the hidden actions have been intense since late 2011 and into year 2012. The massive Dollar Swap Facility dispensed over $3 trillion over European banks. The entire QE dispensed more than $2.5 trillion over US banks. The Operation Twist embarked on a new approach that involved more secretive monetary expansion, but also simultaneous with much higher volume cartel short positions for Gold futures contracts. Correlation like what is shown between the Gold Price and outstanding debt at the USTreasury are rare indeed outside the scientific laboratory. Such is the power evident in hyper monetary inflation and the elicited response.

 

The bank cartel has taken extraordinary measures to hold down the Gold price during its Weimar fire drills that scream of systemic failure. At every Bernanke speech, at every FOMC minutes release, at every QE recent release, at every huge Dollar Swap Facility tap (like Jack Daniels whisky), the naked short patrol comes out to ambush the Gold price in increasingly bold fashion without any concern of being noticed. It is all illegal, in a world of banker activity far removed from proper. Expect the correlation to pick up once again, in big jumps back over 70%. The Gold price will make huge strides before long, to reflect the growth in outstanding USGovt debt and the growth in the USDollar monetary base. The two are connected by a bond honored by Mother Nature of Economics.

 

USDOLLAR REBELLION

The rebellion is based in barter, with the device the currency swap facility that enables trade. Another important China swap facility was put to contract in ink, a renewal with Brazil. These two large nations originally signed a swap deal in 2008, just renewed. Brazil is more than twice the size of any Latin American nation, only recently awakening. The USDollar epitaph is being etched within global trade circles on an imperial headstone. The trap is closing, as trade exclusive of the USDollar grows like a network, a veritable latticework that spans the globe. The USDollar is gradually being dethroned as the world’s reserve currency, the push coming from a growing list of nations that hardly qualify as Lilliputians. No longer is the so-called Dollar Exclusion Zone confined to Asia. By signing a renewal deal on currency swap, Brazil has promoted the renminbi (people’s money) as a reserve currency by becoming the biggest economy onboard with the barter swap table. Brazil and China announced the BRL 60 billion (=US$29B) local currency swap after a bilateral meeting between the two leaders. The Brazilian Real and the Chinese Yuan will enjoy a handshake to enable trade, all outside the fractured tainted US$ realm.

 

The message is clear. Trade dictates banking practices and reserves management, since the banks are lined up to make payment on vast trade contracts. China is not only fertilizing the global landscape for the Yuan to become a reserve currency, it is locking out the tired currency soon to be de-throned. The United States exports bonds (usually either fraudridden or bubbly), military hardware (full spectrum dominance, exhaustion, backfire), and food products (some genetically modified). While China dispatches trade representatives and dealmakers across the world, the USGovt dispatches tax collectors from the USDept Treasury, along with security agents whose mission is better understood by Al Capone in nefarious activity. Hint: it resembles talcum powder but has a very different effect on the human body. Without benefit of laundering facilities, the US banks would have collapsed a few years ago.

 

Consider the recent headlines just in the last few months:

  • “World’s Second (China) and Third Largest (Japan) Economies to Bypass Dollar, Engage in Direct Currency Trade”

  • “China and Russia Drop Dollar in Bilateral Trade”

  • “China and Iran to Bypass Dollar, Plan Oil Barter System”

  • “India and Japan sign new $15 billion currency Swap Agreement”

  • “Iran & Russia Replace Dollar with Rial & Ruble in Trade”

  • “India Joins Asian Dollar Exclusion Zone, Will Transact with Iran in Rupees.”

  • “China and Chile to Establish Strategic Partnership, Launch Currency Swap and Settle in Renminbi”

 

CENTRAL BANK ZERO WALL OF SHAME

On July 5th, the Euro Central Bank showed both failure and desperation. They cut the official rate to 0.75% to join the other failures. The Bank of England stayed put at 0.50% and the USFed is stuck firmly at 0.25%, while the Bank of Japan has been at or near 0% for almost 20 years. The clowns sitting as central bank heads talk of Exit Strategy, when they should instead talk about resignation, post mortems on the dead economies and banking system they reign over with arrogance and rain over with toxic liquidity. They cannot pull back the reins on the powerful team of horses going down the hill. They have exhausted their entire arsenal of weapons, yet remain boastful about their vigor and strength. They are impotent. Their central bank franchise system is an utter failure. They have morphed into facilitators to the Weimar Engineering Corp, managing over the worthless paper Printing Pre$$ Publications, the toxic distribution Dollar Swap Facility Warehouse, the Budget Austerity poison pill medicine cabinet, and the Financial Engineering suicide toolkit. Their latest is complicity with the LIBOR price rigging fraud. The LIBOR field agents like Barclays and JPMorgan and Deutsche Bank are mere executors of the rigging, in order to maintain a matched rate with the artificial near 0% benchmark dictated by the central banks themselves. The Bank of England and USFed will be dragged into the lawsuits, where they will claim executive privilege.

 

LIBOR LAWSUITS

The attorneys and aggrieved victims are lined up, as perhaps over 900 thousand lawsuits will come. That is how many adjustable rate mortgages were arranged from 2005 to 2009, with underwriting banks serving the complaints. The army of US legal beagles is on the job. The lost income to the victims is obvious. The lawsuits will eventually target the central banks. The fraud reaches into the $trillions easily, when all the derivatives are factored in. Think many $trillions in volume times small percentages skimmed illegally. The mainstream press carefully avoids such topics. Do a GOOGLE search of “municipal lawsuits LIBOR” to produce 21.1 million hits. This story will be gathering momentum for several months, and be in the headlines a year from now.

 

ALLOCATED GOLD ACCOUNTS

The sequence of financial scandals must be noted. It is difficult to discern exactly the forces behind the sequence of cases, but the chain of dominos on effects is intense and blatant. This chain will continue until a systemic collapse is visible to expert and commoner alike. The LIBOR scandal is the latest link in the chain. The corruption channel is full. The exposure is glaring. The fan to distribute shame is revved up. The scandal is widening.  The pressure is mounting. The bankers have never been on the defensive this much for alleged corruption, accused corruption, and admitted corruption. Their most vulnerable points are under attack. Big damage is done in recent months. Event #1 was MFGlobal. Event #2 was JPMorgue losses tied to IRSwaps. Event #3 is LIBOR price rigging. They are all related, from vast insolvency and illiquidity that built over three years time. Other events will come, only later to discern their connection to the sequence. My firm belief is for event #6 to be Gold Allocated Account raid scandal. The bankers have improperly accessed at least 20 thousand tons of allocated gold, replacing them with gold certificates without permission or knowledge of by the account holder. The volume of raids could be as much as 40 thousand tons. My gold trader source is adamant about the level of raids, and expects a scandal to shake the Western world banking system to the core, resulting in massive prosecution. This deadly chain all began with Lehman Brothers, whose killjob involved a pure skate on the deeply corrupt and mischievous activity that should have resulted in a gigantic scandal in 2009 and 2010. Yet US regulators ignored the produced criminal fraud evidence, and the clock moves on. In truth, event #0 was the TARP Fund and the $700 billion gift never fully scrutinized or prosecuted for its fiduciary violations and extortion angles.

 

WHEN THE ALLOCATED GOLD SCANDAL HITS, THE GOLD PRICE WILL RISE TO MULTIPLES OF THE CURRENT PRICE. IT WILL BREAK RANKS FROM THE PAPER CLUTCHES AND PHONY PRICE DISCOVERY METHODS. THE GOLD PRICE WILL EASE PAST THE $5000 PER OUNCE MARK, AND TAKE SILVER ON A GREAT UPWARD RIDE. YOU SEE: THE BANKERS WILL HAVE TO REPLACE THE GOLD BY OPEN MARKET PURCHASES AS RESTITUTION!!

 

The events will continue to occur in a sequence, probably managed much more than we are told. My suspicion is a new sheriff is in town, who stepped off a jetplane a few months ago from an Eastern location. Some suspect the Western castle dwellers are staging a systemic collapse in order to impose a new centralized government. It would not be pretty, nor permit rights or liberty, and be described as a debt slavery serfdom. My belief is that the Western strategy is backfiring, as de-centralization is occurring, the exact opposite. The primary secure safe haven is Gold, always has been Gold, and always will be Gold. The experiment since 1971 when the Gold Standard was unilaterally broken by the United States is coming to a conclusion. The wreckage is complete and a great tragedy. A new system will emerge, but only when the current system is in a shambles and the main captains in the banking sector have found other employment, perhaps making license plates and presiding over a system where cigarettes serve as legal tender in a closed system. My suggestion is for human teeth to be a better medium of exchange. Let’s hope they are kept deep underwater, where in time they can sleep with the fishes.

 

THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

 

“In my 40 plus years of business experience that includes stints in public and private companies as well as entrepreneurial ventures, I have read numerous newsletters in an effort to stay abreast of a rapidly changing world. In my opinion, you seem to be tying the pieces together better than any other source.”

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(BrentT in North Carolina)

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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 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

Comments

  1. Hopefully much sooner than later. 

  2. Thanks for the posting doc.  JW is the man.

  3. Thanks Doc!  What great info from someone in the KNOW!

  4. Does anyone remember how many billions in gold certificates were given to the Chinese in the 1930′s as ‘deposit receipts’? That story came and went about six months ago without any follow-up or elaboration, but I damned sure remember that it was floating around for a few days.

  5. Love reading Jim Willie.

     

     

    On a really sad note: today suffered an unfortunate boating accident and lost all my phyzz. Am unbelievably bummed
    and only have a very small amount of dry powder to begin a new stack.

  6. As always, Jim is the man. I have no gold certificates so I’m in the clear. Bummer 4 OZ. I had to trade most of mine for vehicle and house repairs. Starting a new stack soon.

  7. ing4OZ  Quit boating!  You’re always losing your stack while boat.  I lost all mine when I crashed my truck into the river so I stopped driving.  Advice—-stay off the water

  8. Libor Rigging: The Tip of the Iceberg
    By Rob Kirby

    Some highlights from his article:

    The fact that gold prices and interest rates were so highly “inter-related” was first publicized in the alternative media by Reg Howe in 2001.  Howe
    alerted the world to academic accounts of the special relationship
    between gold and interest rates.  He highlighted the body of economic
    law and observation associated with “Gibson’s Paradox” – something Lawrence Summers
    [later, U.S. Treasury Secretary and current senior economic advisor to
    Obama] wrote about with Robert Barsky while he was a professor at
    Harvard in the 1980’s.

    The upshot of this Gibson’s Paradox economic theory goes something like this:  real interest rates and the gold price are causal and inter-related with each other.

    Conclusion:  since
    1994, the mythical Strong Dollar Policy had necessitated a two prong
    strategy: that of keeping rates low because weak currencies are typified
    by high interest rates; and the price of gold must be suppressed as it
    stands as an historical alternative settlement currency – and they don’t
    want the alternative to appear “strong”. 

    The interrelatedness of the gold price and interest rates helps to explain why – According to the Office of the Comptroller of the Currency – of the 302 Trillion in aggregate derivatives held by American Bank Holding Cos – 81 % of this is composed of interest rate products.  This is due to the symbiosis that exists between gold and interest rates.

    Libor
    – or the London Inter-Bank Offered Rate – is one of the lynch pins in
    setting [rigging] global U.S. Dollar interest rates.  This is why a
    larger discussion needs to be had about the Libor rigging – it is not a
    London or Barclay’s centric story.  It has EVERYTHING to do with making
    the American Dollar look viable as the world’s reserve currency.

    But the “Free Markets” were overwhelmed by J.P. Morgan’s rate rigging / defense of the dollar.

    Ladies
    and gentlemen, 7.5 Trillion dollar interventions into the 3 month
    credit markets are not and never will be the work of Commercial Banks or
    Bank Holding Companies.  Interventions of this kind are EXCLUSIVELY the work of National Treasuries / Central Banks.

    The
    late 2007 dichotomy between Libor [Eurodollar Futures] and 3 month U.S.
    T-bills was brought on – not because Libor was “broken” – but by the
    U.S. Treasury’s Exchange Stabilization Fund [ESF] pursuing/inflicting
    Imperialist U.S. monetary policy – brokered through the N.Y. Federal
    Reserve – on the world through the trading desk of J.P. Morgan Chase.

    Additionally, in the wake of the failed Barclays/Lehman arranged marriage – there was a “small issue” with a $138 Billion Post-Bankruptcy JP Morgan Advance to Lehman; At Least $87 B Repaid by Fed:

    One
    advance of $87 billion was made on Sept. 15 after the pre-dawn filing,
    and another of $51 billion was made the following day, according to a
    bankruptcy court documents posted today. Both were made to settle
    securities transactions with customers of Lehman and its clearance
    parties, the filings said.

    The advances were necessary “to avoid a disruption of the financial markets,” Lehman said in the filing.

    So,
    while Lehman was in the death-throws of collapsing – after Barclays
    couldn’t be induced to touch them with a “barge pole” – J.P. Morgan
    “advanced” 138 billion [collateral perhaps?] to Lehman so they could
    “perform/settle trades” ––  mostly, if not all reimbursed/paid for by the Fed.
    While this “stabilizing trade” was being instituted –

    What appears to have happened here:  J.P.
    Morgan did not want to be identifiable as the originator of 8 Trillion
    worth of less than 1 yr. Swap instruments – so they pre-funded Lehman to
    strap these positions on – positions they KNEW IN ADVANCE they would
    inherit once Lehman’s collapse was official.  This way – no more unwanted attention would be drawn to J.P. Morgan [the Fed / U.S. Treasury in drag]. 

    Barclays
    clearly knew how bad the whole situation was – being the last ones to
    see the horror that was Lehman’s books – and were likely the only
    counterparty in the proceedings who acted in an informed, financially
    responsible manner.

      THESE MARKETS ARE SO RIGGED IT NOT FUNNY!!!

  9. FDIC to Classify Gold as a 0% Risk-Weighted Asset?

    By James Anderson
    July 13, 2012

    On June 18 the Federal Deposit Insurance Corp. proposed rule changes to categorize gold as a Zero Percent Risk-Weighted, Tier 1 Asset.
    This is significantly bullish for gold
    in the long term as this potential systemic change could drive gold
    demand and gold prices much higher.
    In light of the global financial downturn, cash and bonds have begun to lose their luster as global financial regulators have begun to recognize the implied risks behind paper assets.
    In a world characterized by central
    bank printing binges and rampant government spending, banking regulators
    are quietly being forced to recognize one of the only remaining
    counter-party risk free assets: Gold.
    While
    cash, credit, and bonds can be produced at almost infinite rates, there
    are real supply limits to physical gold. Central banks know this fact
    and the world’s central banks are now net buyers of gold.

    Today it appears, with this latest
    proposed rule change from the FDIC, commercial and private banks may
    soon be following into the soundness and stability which only gold can
    provide.
    Thus, as an individual investor, would you rather own a zero percent
    risk-weighted asset with limits to its supply? Or would you rather hold a
    bundle of cash, credit, and bonds whose supplies are beyond your
    control?
    Massive currency printing and bond issuances to finance growing debt
    levels are ahead. The continued decrease in the value of paper assets
    over the longterm appear all but inevitable. As the global financial
    system begins to shift toward real money, the escalating gold bull
    market’s rise should only quicken.
    Why not front run this trend?
    Why not position you and your loved ones, on the correct side of the coming wealth transfer?

  10. Jim Grant The World Of Finance Is Nothing But The “Truman Show”

    While we have heard a lot from Jim Grant recently – all pointedly
    correct and substantial - [but yesterday] marked the pinnacle of
    propaganda-brinksmanship. Explaining to Maria B. just why the world in
    which she lives, Bernanke-lovers-all, is nothing but a hall of mirrors – a fake mirage – of the true reality thanks to central bank repression of all that we know about risk and return.

    “By changing interest rates,
    central banks change the perception of every asset class – so what
    seems cheap may not be cheap” as Grant notes that when you can fund
    investment at 0%, we are collectively being manipulated and moreover
    should try to realize – as an investing public – that we are Jim Carrey
    in The Truman Show.

    I like this better:   Rene Magritte

  11. CANNNNNNNNNNN

    some one tell me how long can you be in a RECESSION…….before it becomes a depression ?

    Because for where i sit …some folks RECESSION…….is for a whole lot of other folks a DEPRESSION

    IF it walks like a duck & quacks like a duck…….its a duck (DEPRESSION)

  12. Da yooper;

    It’s only a recession to the MSM using manipulated reports from our government. To all others that do not drink Kool-aid it is a depression.  
  13. From wikipedia:

    In economics, a recession is a business cycle contraction, a general slowdown in economic activity.[1][2] Macroeconomic indicators such as GDP, employment, investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise.

    Recessions generally occur when there is a widespread drop in spending, often following an adverse supply shock or the bursting of an economic bubble. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.

    In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe downturn than a recession, which is seen by some economists as part of the modern business cycle.

    Considered by some economists to be a rare and extreme form of
    recession, a depression is characterized by its length; by abnormally
    large increases in unemployment; falls in the availability of credit,
    often due to some kind of banking or financial crisis; shrinking output
    as buyers dry up and suppliers cut back on production and investment;
    large number of bankruptcies including sovereign debt defaults; significantly reduced amounts of trade and commerce, especially international; as well as highly volatile relative currency value fluctuations, most often due to devaluations. Price deflation, financial crises and bank failures are also common elements of a depression that are not normally a part of a recession.

    I believe we are in a full on depression but central bank interventions and social programs mask the real environment.  Also credit is also issued more then in the 1930′s.  Credit is shrinking and the manipulation of the markets are more abrasive.  The deep dark hole of debt is sucking everything into to it.  Nothing can stop this train wreck.  Money printing just prolongs the end but the end will come if we like it or not.  The markets and the global economy is deathly sick and needs to be put down.  We need a global understanding that this can’t be saved and needs to die.  Then a new beginning will start.  I fear a long slow death. The pain will occur but we will get through this.  I say let’s get this event going now and get it over with.

  14. duckvision – we have a popularity contest every 4 years called an election.  After the levers are pulled then reality sinks back in for the middle class who was once again sold a bucket of horse hockey.  The politicians will continue to smile, use strong language and act as if there is nothing they can do while tens of thousands of good paying U.S. jobs are moved overseas.

    In short, they will keep everything propped up at a minimum until the levers are pulled.  Afterwards all bets are off.  Shadowstats has stated 2013 or definitely before the end of 2014. 

  15. This may be a repeat but a classic. Our money system

  16. Powerball, I agree with your timeline.  It seems like 2013 will be a monster year.  There have been major elections all over the planet in 2012.  I put zero stock into our political system and our representatives.  They have no clue or bought by the banks and corporations.  The political system is just a branch of our corrupt monetary system.  It’s all one and the same.  It’s crony capitalism at it’s finest.  Throw in a little dictatorship by Obama, and you have one of the most rigged, manipulated, corrupt systems on the earth.

    I believe the system is so dead, the central banks are having some serious problems holding the system together.  The markets need to keep the perception of control and stability.  Recently with MF Global, PFG mess, JP Morgan IG-9 trade, Libor scandal, ZIRP, NIRP, QE, operation twist, LTRO, the central banks are working overtime to keep these markets from blowing up.  I fall in this trap thinking the central banks have control of these markets.  Well, JP Morgan thought that too but they just lost a reported 6 billion on one trade.  There models are broken because the derivatives are so complex and exotic that it’s really difficult to control the money flows into these trades.  I think of the markets like quantum physics.  Every single trade is interlinked with every other trade.  All markets from all over the world are now connected directly and indirectly.  It doesn’t matter how big or small.  When you have a OTC derivative market at 1.4 quadtrillion dollars, how can you control the flow of credit, collateral, and currencies?  The world has never been at this place.  The spending to GDP right now in the world is 350%!!  Think about that number?  The world spends $3.50 to every dollar it produces.  It is amazing the system hasn’t collapsed already.  With the Libor scandal and all the lawsuits, the system will be really blown apart.  The Libor scandal is the biggest market rigging in the history of the world.  It controls a estimate of 510 trillion dollars worth of derivatives.  The cracks are showing in the interest rate swaps.  There will be many more PFG’s and MF Globals.  The next Lehman moment already happened.  It’s called the Libor scandal and it’s going to take down many huge financial institutions in the near future.  10, 20, 50 trillion dollars will not even touch what will be necessary to paper over the defaults.  We have moved into companies and now we are into countries defaulting.  Defaults happen in clusters and are not singular event.   That is how the derivatives are written.  Derivatives are only as strong as it’s weakest link.  The whole daisy chain gets broken and it takes down everyone in it’s path.  That is the quantum mechanics of the global system.  The only thing left to brake is confidence and perception.  That is the real reason why the MSM will be in full force with the deceit and lies about the markets and the economy.  Just like religions, the markets need belief and hope.  QE is hope for all the stock pickers and long only account managers.  They hope and believe more QE will come and prop the markets up again.  Nothing fundamental matters only hope.  If all else fails, just pray and hope because I believe the markets will be resurrected once again.  It’s just a illusion of stability and the system will soon collapse.  Like you said, shadowstats by John Williams is saying 2013-2014.  I tend to agree with him because he uses logic and reason.  Hope and belief isn’t in John William’s formulas.

  17. JW loves gold, that is clear.  What is his opinion on silver? 

  18. If silver ramps with gold and gold triples,  silver is $100 an oz with the GTSR remaining at 50 to 1  I think silver to Willie is kind of a moot point and minor issue since gold is a $5 trillion value in the market  Silver above ground is bupkis at about $60 billion.  Gold can back currencies.. Silver is pocket change in that arena.  That does not take away from silver. It will launch of its own accord and for different reasons—investor safety, inflation protection, alternative currency, commodity value, hyper scarcity   No worries, silver will do just peachy.

  19. Many are seeing gold playing a monetary role again but more and more it seems silver is being left out of those considerations.  And despite silver’s funamentals, it is causing me some concern.

    While silver may be bupkis now, silver bugs (Bix, Hommel, SGT, Doc?) believe the GSR will come down considerably. Perhaps 10 to 1, maybe 1 to 1 or even better. That is no longer bupkis.  Even so, it is still difficult seeing silver playing a monetery role again.

    More than ever, I am thinking that gold proponents such as Sinclair, Willie, FOFOA, etc are right in that it’s the yellow stuff you want to have in the end.  To repeat – in the end.  But for now, I do believe that stacking silver is the best way to get there.  Just so long as gold isn’t monetized and silver instead gets nationalized and declared a strategic commodity.

     

  20. Gold can’t hold as a single currency unless you want to buy a loaf of bread with a 1/10 OZ. gold piece. There has to be a metal partner that will allow the common man to make his purchases. Otherwise,only the rich will possess money and everyone else will get mad and lay the smack down on the rich man. Silver will be there. So, don’t worry too much.

  21. Amen to your sentiments Silver Alert  The GTSR is out of line and skewed largely due to silver price supression. I am all for seeing this ratio narrow to its historical level at 16-1.  That would be spectacular.  And 2OZ is right that silver will is the ‘street cash’ that allows everyone to have some of the benefits of PM ownership.  A 1 ounce gold coin would be awkward at best unless converted to cash.  These two metals have a way of working themselves into the system to meet the needs of all people   Gold may very well be rotated into central bank vaults to provide a backing to currency which may make it so valuable that to extract its value increase we will be trading gold for silver or assets that provide value such as land, rental units, businesses or tradeable commodities.  The post regarding the systemic global collapse, if it comes about, will be a complete game changer that would  put silver and gold into a very different category as the world works it way through this cycle  If all hell breaks loose we will be well prepared.  I hope

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