Eric Sprott Breaks Down The Fed’s Rate Hike & Reaction in Gold & Silver Prices, the Dollar, & Bond Markets.
Was This Week’s PM Take-Down Planned MONTHS AGO?
Finally, Sprott Explains Why The Fed is Losing Control of the Bond Market & Warns This Is the DEATH KNELL For the Market:
In his first interview of 2015, Hat Trick Letter Jim Willie breaks down the emerging global currency war, discusses the Tower of Bubble & the coming derivatives collapse, and explains why a 4-5 FOLD rise in the gold price is coming!
Willie makes the case that the US Fed is supporting $200 BILLION a month in failed derivatives, and that the rise in the USD is a sign of COMPLETE COLLAPSE of the US economy!
“They will take our retirement accounts, they will take our IRA’s. They will say we’re going to save you, we’re going to give you government bonds.“- Jim Rogers
From Obama’s MyRA announcement to Russia massively divesting itself of UST bond holdings, it is becoming apparent that something we have been warning about for years here at SD is not only possible, but is in fact extremely likely to occur- the national confiscation of 401k retirement funds into forced treasury bond allocations.
The MUST WATCH mini-doc below connects the dots, and reveals the 401k scheme:
We are at the doorstep of a major USTreasury Bond breakdown. The TNX (10-year bond yield) is at the 3.0% doorstep, as 3.5% looms very likely in the coming months. If and when the breakout comes, it will make the Taper Talk backfire seem rather insignificant, as a gathering storm will hit like a financial hurricane on every continent.
A currency crisis is in powerful early stages, an extension of the enduring Global Financial Crisis that bank leaders had no desire in quelling for over five years running.
A USDollar currency crisis eruption could send the 10-year USTreasury Bond yield past 3.5% easily, then later toward the 4.0% level in a sudden burst.
It is not just the Gold market they are losing control, but the nemesis to gold, the USTreasury Bonds.
Russia & China are at an advanced stage to replace the USDollar in its key role as trade settlement medium and global reserve currency within banking structures.
The big conflict will come when the Chinese no longer are able to convert their USD sh*t paper into Gold bullion.
Only then will Beijing light the fuse.
With last night’s announcement by President Obama of his new MyRA, the “No Risk, Guaranteed Return” Retirement Savings Bond Program, we thought it apropos to bring back AGXIIK’s November 2012 warning that President Obama had begun a push to confiscate Americans’ IRA’s & 401k’s, and force retirement assets into treasury bonds.
While many have scoffed, we have long warned at SD that Americans’ retirement plans are the last remaining bastions of wealth for the criminal banksters to pilfer, and that they will ultimately be confiscated via forced allocation into treasury investment vehicles.
With President Obama’s State of the Union speech on 1/28/2014, the process has officially begun.
As AGXIIK warned, Please realize that this is 100% about funding $1.5 TRILLION annual deficits using Americans’ retirement funds, as there is simply no other remaining pool of wealth able to soak up $1.5 Trillion in T-bills annually.
AGXIIK’s Full MUST READ 2012 Warning on Obama’s Plans to Confiscate 401k’s & IRA’s is below:
I’m going to clear the air on this matter. For over 2 years I’ve been writing about the impending federal takeovers of pension plans.
10 countries in the Europe and South America have engaged in pension theft, conversion or expropriation to fund government operations.
It is quite likely that we will see more of this theft in 2014, and before the financial crisis is over, probably from the TSP.
The brokerages will be completely compliant with these actions just like the Bail-in provisions signed by the FDIC, FED Bank of Canada and BOE, as was reported here on Silver Doctors in 2013.
Like Detroit with its complete expropriation of the $11,000,000,000 in pension plan funds, the Feds will use the $1.6 trillion in the TSP as they see fit. They are patterning this on Poland and the NDRP. Poland recently confiscated 28 billion in Euros to reduce their country debt to 56% of the GDP.
The government simply took the funds from the private and government pension plans WITHOUT ANY COMPENSATION.
Surely that could never happen here!
There are grave doubts whether the Federal Reserve actually holds the 8,044 tons of gold it claims it does. The former International Monetary Fund director, France’s Dominique Straus-Kahn, demanded an independent audit of the Federal Reserve gold after the US refused to deliver to the IMF 191 tons of gold agreed to under the IMF Articles of Agreement signed by the Executive Board in April 1978 to back Special Drawing Rights issuance. Immediately before he could rush back to Paris, he was hit by a bizarre hotel sex scandal and abruptly forced to resign. Straus-Kahn had been shown a secret Russian intelligence report prepared for President Vladimir Putin in which ‘rogue’ CIA agents revealed that the US Federal Reserve had no gold reserves and only lied that it did.
The stakes for Washington and Wall Street in depressing the gold price are staggering. Were gold to soar to $10,000 or more, where many believe current demand-supply pressures would find it, there would be a panic selloff of the dollar and of US Treasury bonds. China now holds a record $3.7 trillion of foreign currency reserves and the US Treasury bonds and bills are about half that.
That sell-off would send US interest rates sky-high, forcing a chain-reaction of corporate & banking bankruptcies that have been avoided since the financial crisis broke in 2007 only owing to record near-zero Federal Reserve interest rates. That sell-off, in turn, would be the end of the US as the world’s sole superpower. Little wonder the Obama Administration is manipulating gold.
It cannot last very long at this pace, however.
The great global Paradigm Shift involves far more than wealth migrating from West to East in the form of Gold bullion. The corruption among the Wall Street bankers, the Chicago pit commodity traders, and the London bankers is all playing out in the COMEX & LBMA fall from grace.
This article should add a good deal more light on the phony USTreasury Bond market which is not well understood for its status as being the greatest asset bubble in human history, not just modern history. It exceeds the housing & mortgage bubble that formed a decade ago, if not from volume, then from scope since it is laced throughout the entire global banking system.
The USGovt shutdown is blatant evidence of the march to the cliff.
The global USTBond dumping, combined with some diversification from sovereign bonds to gold bullion, aggravated by Indirect Exchange, will continue to put great pressure on the USFed to maintain the bond equilibrium charade. The volume of USFed monetization is going to rise from all these negative factors at work. In 12 months, it will be clear.
The climax blow will be the conversion of USTBonds and EuroBonds and UKGilts and JapGovtBonds into Gold bullion that kills the current system and opens the door to the new system. With great disruption, the new Paradigm Shift is in progress, unstoppable, but offering hope for a better day, a better system, a more fair system, with participants and savers given a just system. For three decades, Gold has had a nemesis in the USTreasury Bond. The USTBond is dying, a wreck in progress. As the old pillars fall and the new pillars rise, The Price of Gold will be set free.
It is written. It shall be done.
Are the central banks of the world starting to lose control of the financial markets? Could we be facing a situation where the bond bubble is going to inevitably implode no matter what the central bankers do? For the past several years, the central bankers of the planet have been able to get markets to do exactly what they want them to do. Stock markets have soared to record highs, bond yields have plunged to record lows and investors have literally hung on every word uttered by Federal Reserve Chairman Ben Bernanke and other prominent central bankers. In the United States, it has been remarkable what Bernanke has been able to accomplish. The U.S. government has been indulging in an unprecedented debt binge, the Fed has been wildly printing money, and the real rate of inflation has been hovering around 8 to 10 percent, and yet Bernanke has somehow convinced investors to lend gigantic piles of money to the U.S. government for next to nothing. But this irrational state of affairs is not going to last indefinitely. At some point, investors are going to wake up and start demanding higher returns. and we are already starting to see this happen in Japan.
Wild money printing has actually caused bond yields in Japan to go up. What a concept! And that is what should happen – when central banks recklessly print money it should cause investors to demand a higher return. But if bond investors all over the globe start acting rationally, that is going to cause the largest bond bubble in the history of the planet to burst, and that will create utter devastation in the financial markets.
As gold has plunged in the past couple months, yields on benchmark US 10-year Treasury Notes have soared. Many Wall Street analysts claim these rising long rates are very bearish for gold, and have exacerbated its recent weakness. Since the metal yields nothing, higher bond yields make investing in gold less attractive. This thesis certainly sounds logical, but do rising long rates really threaten gold?
Like any market theory, this one is best tested against the record of history and precedent. If rising or higher bond yields hammered gold prices in the past, then the gold bears’ warnings about their impact this time around are probably justified. And given the extraordinary surge in 10y Treasury yields in the past couple months, gold investors really need to consider how these yields affected gold historically.
Financial analyst Jim Willie says there is no way the Fed is going to stop printing money or even “taper” it. He charges, “Everything is dependent on Fed support. They know if they take it away, they’re going to create a black hole. The Treasury bond is the greatest asset bubble in history. It’s at least twice as large as the housing and mortgage bubble, maybe three or four times as large.”
Willie goes on to say, “I think the Fed’s balance sheet is going to expand further, not contract.” As far as the gold price, Dr. Willie says what you are seeing now is not real. Dr. Willie says, “In order for the real gold price to reflect true value, we must shut down the COMEX. Don’t worry; they’re helping themselves to shut it down by keeping the price down and causing a fire sale around the world.” Willie says a big upward move is coming in gold. What could be the trigger? Willie says, “It might be a default for gold delivery . . . at the same time that a big bank fails. I am hearing every single night there are three big banks that are running the risk of failure.” Willie predicts, “If we have another repeat of Lehman, it’s going to be 10 times larger. It’s not going to be containable.”
Federal Reserve Chairman Ben Bernanke is on the way out the door, but the consequences of the bond bubble that he has helped to create will stay with us for a very, very long time. During Bernanke’s tenure, interest rates on U.S. Treasuries have fallen to record lows. This has enabled the U.S. government to pile up an extraordinary amount of debt. During his tenure we have also seen mortgage rates fall to record lows. All of this has helped to spur economic activity in the short-term, but what happens when interest rates start going back to normal? If the average rate of interest on U.S. government debt rises to just 6 percent, the U.S. government will suddenly be paying out a trillion dollars a year just in interest on the national debt. And remember, there have been times in the past when the average rate of interest on U.S. government debt has been much higher than that. In addition, when the U.S. government starts having to pay more to borrow money so will everyone else. What will that do to home sales and car sales? And of course we all remember what happened to adjustable rate mortgages when interest rates started to rise just prior to the last recession. We have gotten ourselves into a position where the U.S. economy simply cannot afford for interest rates to go up. We have become addicted to the cheap money made available by a grossly distorted financial system, and we have Ben Bernanke to thank for that. The Federal Reserve is at the very heart of the economic problems that we are facing in America, and this time is certainly no exception.
It makes perfect sense why Bernanke is looking to hand over the reins of the Fed at this point. He can probably sense the carnage that is coming and he wants to get out of Dodge while he still can.
The Gold manipulation will continue until the Gold market is totally broken, until the big banks that control it are totally broken, or until the USDollar & USTBond structures are totally broken. Personally, I am encouraged by the mid-April events to crash the Gold price. It has resulted in exposure of the criminal element, in exposure of the COMEX & LBMA as being desperately low in Gold inventory, in exposure of the great difference between paper Gold price (futures contracts) and physical Gold price (actual high volume sales), and in tremendous motivation by the very wealthy to reclaim their Gold in Allocated Gold Accounts. The bankers have brought to the table a Prima Facie case that their corrupt Gold market attack was motivated by having no Gold for contract delivery.
The Jackass forecast is for the next great scandal to be centered upon the Allocated Gold Account thefts, which my excellent source informs me involves the improper usage, leasing, and theft of over 20,000 metric tons of Gold bullion. The German Government formal request for repatriation is the tip of the iceberg. It is a contest, a race, between the breakdown of the USD/USTBond structure and the COMEX & LMBA Gold market structure. The former is in the process of being rejected by the Eastern nations, now organized. The latter is in the process of being recognized as an empty arena with no Gold in inventory.
The Doc & Eric Dubin cover a lot of ground on this week’s show, including:
Doc’s report on physical market trends and our outlook for precious metals
Constructive mining shares & general metals price action despite Friday’s trading
Asian-based physical demand remains strong; shortages are still being reported
The Fed & Treasury starting to lose their grip on the bond market, as free market forces begin to overwhelm manipulation- the bond market may well roll over before Bernanke can get out of Dodge!
“Nothing is normal: not the economy, not the financial system, not the financial markets and not the political system. The system remains still in the throes and aftershocks of the 2008 panic and the near-systemic collapse, and from the ongoing responses to same by the Federal Reserve and federal government. Further panic is possible and hyperinflation is inevitable. What continues to unfold in the systemic and economic crises is just an ongoing part of the 2008 turmoil. All the extraordinary actions and interventions bought a little time, but they did not resolve the various crises. That the crises continue can be seen in deteriorating economic activity and in the panicked actions by the Federal Reserve, where it proactively is monetizing U.S. Treasury debt at a pace suggestive of a Treasury that is unable to borrow otherwise. -John Williams, ShadowStats
It had to happen. And now it has begun. The very biggest bubble in financial history has begun to deflate. And over the next few months, we expect that deflation to accelerate and morph into a bursting.
The USFed stated publicly in early 2009 their desire to pursue an Exit Strategy. The Jackass on repeated occasions over three years ago refuted and contradicted their claimed path on monetary policy restoration to normalcy.
There is an Exit Strategy, but it is evident in the East. The Eastern nations are assembling a Eurasian Trade Zone and a BRICS central bank (aka Development Fund) with which they will exit the USDollar global reserve standard. In doing so, they will not require to fill their banking systems any longer with toxic USTBonds.
The end of the USDollar as global reserve is near, visible in tangible form.
Real Estate investor Fabian Calvo says, “Trust me; there are enough troubled assets for the Fed to be buying much more than $40 billion a month- It’s all about manipulation.” Calvo says, “In essence, they are creating another bubble. I believe in 24 to 48 months, they are going to pull the rug out again, and we’ll see prices go down when rates go up.” Calvo predicts, “The Fed balance sheet will likely be $5 trillion in toxic assets by the end of 2014.” Calvo thinks what is going on behind the scenes will one day come to light, and it won’t be pretty. Calvo thinks the mortgage rate forecast will eventually go up, but the Fed will suppress rates as long as it can. Calvo says, “It’s kind of like Enron. When it falls apart, then you realize what level of corruption and deceit was really taking place. . . . It’s a trillion times worse than Enron.” Join Greg Hunter as he goes One-on-One with Fabian Calvo.
Guest Post by Bill H.
Can a barrel of oil “default”? A bushel of wheat? Gold or Silver? Of course not but these are, in today’s upside down backwards world considered “risk assets”. How whacked out have we become? Sovereign governments that just 20 years ago would have been taken out back to the financial “disciplinary woodshed” are considered AAA rated or close to it, but physical commodities are risk assets.
In the midst of the latest epic cartel paper gold and silver raid this week, legendary precious metals expert Eric Sprott sat down with The Doc for an exclusive, MUST LISTEN interview.
In one of his best and most shocking interviews ever, Eric discusses the latest gold and silver raid, his take on the platinum & palladium markets, the Bundesbank’s recent gold repatriation request and the correlation with massive physical gold buying in Asia, and his view on how the endgame of the Western financial/ debt crisis will play out.
Sprott stated that the Treasury Department’s 2012 GAAP budget deficit report was an astonishing $6.9 Trillion, and this has not been reported in 1 single major news outlet! He also stated that the US government may be exporting German gold from the NY Fed to China, and that despite their recent apparent success, he expects that one day soon the cartel will be brought to their knees simply by traders standing for delivery of physical metal.
Eric Sprott’s full MUST LISTEN audio interview with The Doc is below:
Submitted by Stewart Thomson
I refer to gold bullion as “Queen Gold”, and the US T-bond as her secret agent James T. Bond. At some point, Sir James is going to outlive his usefulness to your queen, and a great bear market in bonds will unfold.
Specifically, I believe that the pressure put on all fiat currencies by the global tidal wave of QE, will make it appear that hyperinflation is a “done deal”. I don’t think you are going to experience full hyperinflation in this crisis, but you’ll get something very close to it.
As that happens, central banks around the world will likely begin raising rates aggressively, to combat the severe institutional loss of confidence in all fiat currencies. So, should you hold & buy gold now, or wait until 2015? The answer is that you should buy now.