fiat cliffTaking possession of precious metals and becoming your own central bank is becoming more essential in the current state of world fiat currency unraveling.
Fiat currencies lack the hard collateral value of precious metals. Furthermore, the global financial system is quickly running out of collateral, hence signs of a growing gold shortage abound.

binford xlWhen you add maturing debt to the new debt that the federal government is accumulating, the total is quite eye catching.  You see, the truth is that the U.S. government must not only borrow enough money to fund government spending for this year, it must also “roll over” existing debt that has reached maturity.  Of course the government never actually pays any of that debt off.  Instead, it essentially takes out new debts to cover the old ones.  So the U.S. government is actually borrowing far more money each year than most Americans realize.  For fiscal year 2013, the U.S. budget deficit will be about $845 billion, but on top of that the government will also have to borrow about 3 trillion dollars to pay off old debt that is maturing.  Overall, the U.S. government will borrow close to 4 trillion dollars this year, and that number will likely be even higher next year That is not going to cause a crisis as long as interest rates stay super low, but if interest rates begin to rise substantially, the game will change dramatically.

Financial analyst Karl Denninger says, “If you keep raising the debt ceiling willy nilly, you’re going to get downgraded.” Denninger thinks the latest talks in Washington will only kick the fiscal can down the road. He says, “The truth of what we have to do is still politically impossible.” Denninger contends, “All you are seeing now is the tap dance around the fact we have to accept a 7, 8 maybe 10 to 15% fiscal contraction in GDP in order to come back into balance.” Denninger says the sooner you take the hit, the better it will be because “the damage you take today is always less than the damage you will take if you kick the can and wait until tomorrow.” Don’t expect politicians to do the right thing–yet. Denninger says, “There is no stomach to put their jobs on the line . . . We need statesmen who will say I will get fired over this. . . . That’s the price the country has to pay.” Join Greg Hunter as he goes One-on-One with Karl Denninger.

imagesPIMCO founder and co chief investment officer Bill Gross gives no credence to the trillion dollar platinum coin scheme. “We feel that such an action would not only jeopardise the U.S. Fed and Treasury standing with Congress but with creditor nations internationally – particularly the Russians and Chinese.” It appears to be a bit of a stunt by and may be a convenient distraction away from the substantive issue of how the U.S. manages to address its massive budget deficits, national debt and unfunded liabilities of between $50 trillion and $100 trillion. It may also be designed to create the false impression that there are easy solutions to the intractable US debt crisis – thereby lulling investors and savers into a false sense of security … again. Gross said that subject to the debt ceiling, the Fed is buying everything that Treasury can issue. He warns that we have this “conglomeration of monetary and fiscal policy” as not just the US is doing this but Japan and the Eurozone is doing this also. Gross has recently criticised the Fed’s ‘government financing scheme.’  He has in recent months been warning of the medium term risk of inflation due to money creation and recently warned of ‘inflationary dragons.’

images“Quantitative Easing is not the only bullish factor for gold,” says January’s Metal Matters Monthly from bullion-bank Scotia Mocatta.  “The financial system is drowning in debt and there seems no end in sight to ongoing massive budget deficits…Confidence in the financial system and in the fiat government paper that facilitates it will remain low.”

The physical market has already responded positively to that price fall, with bargain hunting appearing in a number of regions,” says a note from another London market maker.   “If there was a reason for buying gold, you’ve got two good ones” in next month’s Chinese New Year and the ‘debt ceiling’ deadline in the US political system, now just 7 weeks away.  We’re surprised at how low gold prices are.”

The U.S. government may default on its debt in 38 days or as soon as February 15th, half a month earlier than widely expected, according to a new analysis adding urgency to the debate over how to raise the federal debt ceiling.
The analysis came courtesy of the Bipartisan Policy Center (BPC), which released a revised “debt limit analysis.”

If we reach the X Date and Treasury is forced to prioritize payments, handling payments for many important and popular programs will quickly become impossible, causing disruption to an already fragile economic recovery,” said Steve Bell, Senior Director of the Economic Policy Project at BPC.  The Treasury has said that the accounting schemes, known as “extraordinary measures,” ordinarily would forestall default for about the first two months of the year, though officials were clear that they could not pinpoint a precise date because of an unusual amount of uncertainty around federal finances.

If Congress does not raise the debt ceiling by the deadline, the White House has said that the nation probably will default.

In his latest market update, Greg Mannarino states that the market pop in the wake of the 2 month fiscal cliff agreement is merely a relief rally that has no real legs.  He points out that the agreement does absolutely nothing to address spending.
Mannarino states that the Fed’s $85 billion in monthly counterfeitting to monetize the US budget deficit will steal purchasing power from Americans.   Mannarino states that the US ratings agencies will face massive pressure to downgrade the US in 2013, which will result in the busting of the US debt bubble will burst in 2013, and force massive amounts of cash into commodities and physical precious metals.
Cash is going out of style, buy phyzz!

Full update below:

imagesSubmitted by Stewart Thomson:

On the last trading day of 2012, a watershed event occurred.  Key gold stocks staged superb breakouts, from their weekly chart power downtrend lines.
The gold exploration companies also look poised to rise significantly, and I expect large Japanese and Chinese companies to contact many of them soon, in an effort to secure reliable pipelines of the metals they need, to build their products.
For bullion investors, silver is clearly the metal poised to shine the brightest, in the short term.  To do so, gold must rally.  When you look at my next chart, I think you’ll agree that “Queen Gold” is indeed ready to perform.

I have given a label to the price area above $1800.  I call it the “Green Zone”.  The green zone is an area of tremendous support and potentially represents a place where an institutional buying frenzy could occur, pushing your gold items to much higher prices.

kick the canSenate Democrats are announcing the fiscal cliff has been averted for 2 months, with a last minute agreement in principle with Republicans to extend Bush-era tax levels for individuals under $400,00 and families under $450,000, and to postpone any spending cuts. 
The agreement would still need to be passed and approved retroactively by both the House and the Senate. 
See you in 2 months for Fiscal Cliff 2.0, next time combined with a debt ceiling crisis. 

big resetRaoul Paul sent shock-waves throughout the financial markets in June in what Tyler Durden called the scariest presentation ever, when Paul predicted a complete systemic collapse of the financial system was merely 6-9 months away.  Is the Big Reset still imminent?

The world has no engine of growth with most of the G20 countries approaching stall speed at the same time.  The western world is about to enter its second recession in an ongoing depression…
For the first time since the 1930’s we are entering a recession- before industrial production, durable goods orders, employment, and private sector GDP have made back their previous highs. ‘

As to the timing of the collapse Paul states:
2012- 2013 will usher in the end.  We have about 6 months left…  Assume that no one and nothing is safe.  After that, we put on our tin helmets and hide until the new system emerges.

As to what the collapse will look like:
A global banking collapse and massive defaults would bring about the biggest economic shock the world has ever seen.  No trade finance, no shipping finance, no finance for farmers, no leasing, no bond market, no nothing…


silverAfter consolidating throughout the overnight Asian and London session as well as throughout morning COMEX trading, gold and silver have just gone vertical, with silver up .65 from its lows to $30.53, and gold popping over $20 to $1681
Meanwhile, the FUBAR fiscal cliff negotiations are reaching critical stage with less than 12 hours left to make a deal, with Obama scheduled to speak at 1:30pm.
Somehow we suspect it will be to place blame on Republicans for sending the country over the cliff, rather than to announce a deal.

fiscal cliffCNBC invited retiring Congressman and former Republican Presidential Candidate Ron Paul on to discuss the lunacy of the fiscal cliff negotiations going on in Congress.  In this MUST WATCH interview, Paul informed the CNBC host that the resolution of the fiscal cliff is meaningless, as we have already passed the point of no return where we can get our house in order.   Nobody wants to talk about military cuts..the safety net is always available, there has been a recent hurricane, there will be no hesitation whatsoever to spend that money ($100 billion) without any offsetting spending cuts...

This will be just like the Greece debt deals where there is agreement after agreement, but nothing is ever really fixed.  There is no admission that there is a fiscal crisis. If they don’t admit it they can’t solve the problem, Congress is like a bunch of drug addicts seeking another fix!

Paul goes on to state that: “They pretend they are fighting up there, but they really aren’t. They are arguing over power, spin, who looks good, who looks bad, all trying to preserve the system where they can spend what they want, take care of their friends and print money when they need it.”

Paul’s full fiscal sanity below:


The U.S. federal deficit is now exceeding $1 trillion dollars every year —up from $161 billion in 2007, the last year before the financial crisis. Spending is up some $1 trillion, as outlays for Social Security, Medicare, Medicaid and other entitlements have increased by an amount equal to the entire 2013 military budget – a budget which may again surpass the combined military expenditure of every other nation in the world. U.S. unfunded liabilities are now estimated at between $50 trillion and $100 trillion and by the end of the decade (in less than just 7 years), runaway entitlement spending will require shutting down the military or crippling many other vital domestic spending programs to head off massive deficits that will likely lead to a dollar crisis and significant inflation. No matter what deal is eventually agreed, whether before or after the new year, it will at best nibble at the edges of the trillion dollar annual deficits that are being piled up. While all the focus has been on the so called U.S. ‘fiscal cliff’, amnesia has taken hold and many market participants have forgotten about the far from resolved Eurozone debt crisis – not to mention looming debt crisis in the UK and Japan.

The only CNBC commentator who does have a clue, Rick Santelli, gave another epic rant this morning concerning the fiscal cliff, Federal debt and unfunded liabilities, and the Fed Santelli, sounding like James Grant or Tyler Durden, stated the true fiscal cliff is the $100 Trillion in unfunded liabilities, and stated that The Fed doesn’t have a clue.

Santelli’s full rant below:

RJ O’brien Senior Commodities Broker Phil Streible was on Bloomberg this morning, and when asked by the host for his #1 commodities pick for 2013, Streible responded: Silver!

Streible stated that: The Fed will continue to buy mortgage backed securities and treasuries, causing the Fed’s balance sheet to expand from $2.9 Trillion to $4 Trillion by the end of the year.
The Bloomberg host then asked Streible why then wouldn’t he buy gold rather than silver?

Streible responded:  Ultimately the Fiscal Cliff issues will be resolved, silver prices have been beat up recently, we’ve seen a 10% decline in the last week, and I think that a snap-back short covering rally will occur, and prices will explode!

Full interview below:

In the face of this week’s massive cartel intervention knocking down the metals in the wake of QE4, James Turk has just revised his $8,000 gold target- but NOT to the downside.
Turk states he now expects gold will surpass $8,000 an ounces in the next 3 years.

Recalling that gold was $350 back in 2003, and the DOW Jones Industrial average was about 9500, I forecast that gold and the DOW would be 8,000 some time between 2013 and 2015. Given that that this time frame is now upon us, I would like to discuss the basis on which I made that forecast, and more importantly, update it in one significant way; I now expect that the price of gold will rise higher than $8,000 per ounce as I will explain.

Turk’s full update below:

With the media fixated on the fiscal cliff, no one seems to be noticing the fact that the FDIC’s expanded 100% coverage for insured deposits ends January 1st, 2013.

Submitted by SD Contributor AGXIIK:

As of January 2013 the FDIC stops offering 100% coverage for all insured deposits.  That amounts to $1.6 trillion in deposits, 85-90% deposited with the TBTF mega banks.  Once the insurance ramps back to $250,000 the FDIC risk amelioration offered to large depositors will cause them to flee from the insecurity of the much reduced FDIC coverage.  This money will rotate immediately into short term Treasury securities.  The treasury, in order to handle this flood of money, will immediately offer negative interest rates.  This financing will resemble the .5% negative interest rate offered by the Swiss and Germans on the funds flooding to their banks from Spain, Greece and Italy.
This will be a bank run much larger than the Euro banks flight to safety

With the financial MSM salivating over the fiscal cliff, today’s chart of the day brings a little perspective to the situation. 
Obama’s proposed tax hike solution, compared to a visual of the true severity of the problem facing our country via unfunded liabilities.


All-but-one of 49 economists polled by news agency Bloomberg predict the Fed will buy US Treasury bonds in addition to the $40 billion per month of mortgage-backed securities purchases announced in September.  “It’s going to be massive and open-ended in size,” says Deutsche Bank’s chief US economist Joseph LaVorgna.
[Fed policymakers] view this stimulus as what’s needed to sustain the economy,” agrees John Silvia, chief economist at Wells Fargo.
If the Fed comes out with $45 billion of bond purchases [as some analysts have suggested], it could be the spark we need for another gold rally,” says Matthew Turner, precious metals strategist at Mitsubishi.
“Previous episodes of quantitative easing have seen a gold rally. The policy should increase inflationary expectations, and gold acts as a hedge against inflation.”
People have realized that what the Fed has been doing is damaging to price stability,” adds Dominic Schnider at UBS Wealth Management, citing strong gold coin sales from the US Mint last month.

CNBC’s Rick Santelli went on another epic rant this morning regarding the rapidly approaching fiscal cliff, sending a HEADS UP!! to the middle class, stating that all they’re after isn’t fixing the economy, it’s your bucks!
Indeed Rick, indeed.

Santelli’s full rant below: