Jim is back with an update on the internal, external and systemic factors currently hitting the gold market and a whole lot more…
A Perfect Storm is hitting the Gold market, with an internal factor (return to Quantitative Easing on steroids), an external factor (Shanghai Gold Exchange taking market share), and a systemic factor (Basel 3 Rule permitting Gold in account ratios). All three forces are positive in releasing Gold from the corrupt clutches of the Anglo-American banker organization. The Eastern Hemisphere has a planned coordinated and effective strategy to abandon the USDollar and to adopt the Gold Standard. It has happened first in the trade payment form, actually more like a global blossoming process. More progress can be inferred in its early stages. In the last ten years since the Lehman Brothers failure, all systems have undergone the same reckless treatment that the mortgage bonds endured. Slowly the realization is coming to the fore, stated by a few astute analysts. In the last decade, the US-UK bank management wing of the cabal has created the USTreasury Bond as the global subprime bond. This is the result of magnificent persistent QE abuse, hidden derivative activity to produce false bond demand, foreign dumping of USGovt debt securities, astonishing debt explosion, pilferage of foreign bond holdings, and wickedly false AAA debt rating.
It is reported that the USTBond is the favorite asset used to finance the Belt & Road Initiative projects. Something like $2.5 trillion has been spent, toward the nearly $9 trillion in MOU commitment for the vast BRI project slate. This has occurred after the USTBond was the primary asset used to build the Siberian oil pipeline to serve Chinese demand. The irony of such Indirect Exchange (spent USTBonds as cash by third parties) is extremely important, yet nowhere repeated in the tilted Western financial press. All this has occurred while the US press calls the BRI projects frivolous but motivated to trap the member states in participation. Such pathetically shallow propaganda, equal in pathology as the claim that the USEconomy is robust. All measures is flashing red, worse than seen in 2006-2007.
USTBOND AS GLOBAL SUBPRIME BOND
The USTreasury Bond is the global subprime bond, and the outcome will be a much bigger bond market crisis than in 2008. It is often called the Everything Bond Bubble. The so-called financial stimulus has been actually hyper monetary inflation, which has destroyed the bond market, even if having prevented a USGovt debt default back in 2012. Legitimate bond investors have vanished years ago. There are no legitimate USTreasury buyers outside the US foreign vassal states. On many different platforms, the USDollar is being rejected, including the crude oil market. Next comes its rejection in the commodities market. By this is meant that the oil and commodity trade is much less dominated by the USD in trade payment. Such is motive to keep the wrecked bankrupted shale sector alive, so as to provide some added USD-based oil trade.
A perfect Storm is hitting the diverse Bond market. Witness a diverse set of very serious if not calamitous warning signals, many noticed but not well as a collection to signal imminent financial crisis. In the Jackass opinion, the Systemic Lehman Crisis has begun. Witness the many warning signals:
- enormous USGovt debt heading for over $1.2 trillion this fiscal year
- a gigantic mass of BBB-rated corporate bonds now measured at $3.3 trillion
- a badly inverted USTreasury yield curve with all points upside down
- heavy reliance upon derivative machinery to produce fake bond demand
- strained primary bond dealers who cannot find investors
- dwindling USFed cash reserves which worsen each month
- anomalies with respect to Interest on Excess Reserves
- an official Fed Funds rate above many bond yields along the maturity spectrum.
The storm will grow much more intense, as the US Federal Reserve is forced to cut interest rates. Doing so will render great harm to the Money Market, which has almost no eyes upon it these days. The result will be more bond dumping both by US domestic funds and foreign official entities. The pressure put upon the derivative machinery will be fierce. Normally bigger debt results in higher bond yields to attract the required capital. But the United States Govt operates in reverse, trying to conjure up a bond rally with false narratives, fake demand, and utter horse puckey bonds wrapped on fancy ink and paper to sell. It will not work this time, since the new consensus is that the USGovt debt will never be repaid. The Jackass forecast of a debt default, made first in 2009, is coming into view at last. But the biggest effect of the cut rates in combination with a return to high volume QE monetary policy (reverse of tightening) will be felt in the Gold price. It will finally break north of the $1450 resistance level and seek higher level targets quickly. Already major billionaire investors are talking about a big important bull move in gold finally.
GOLD STANDARD COMING INTO VIEW
The Gold Standard is step by step coming into view. Consider it arriving on a four-legged table, each with strong legs. Given the steadfast vicious defense of the King Dollar and its hegemon court, all transformations and transitions must be gradual, subtle, and deep. During the last two years, the Jackass has regularly made the claim that the Gold Standard would see it initial implementation in the trade payment form. This has turned out to be the case.
GOLD TRADE NOTE – commercial global trade payment
The suspicions are ripe and rabid that China is using the Gold Trade Note (GTNote) in their crude oil purchases. Nothing can be proved, all done surreptitiously with large scale payments made, like with the Saudis and other Gulf oil monarchies such as Qatar and Oman. Significant RMB currency has shown up on the ARAMCO balance sheet in recent months. In fact, the volume exceeds the British Pound and Japanese Yen ledger items together. The RMB item was not present a year ago. It would make sense that China also uses the Gold Trade Note with oil purchases from Iran. These two nations are expanding their barter facilities, like with Import-Export Bank functions, and might underpin a growing volume with the GTNote itself. Their motive would be to advance the Gold Standard, indirectly in the King Dollar’s face. The entire Belt & Road Initiative (aka One Belt One Road) is to conduct trade outside the USDollar.
BASEL-3 RULE CHANGE – gold as countable asset in ratios
The rule change has opened the gates. The major central banks and the secondary central banks are deploying closely aligned financial firms to go out and buy Gold bullion while selling USTreaurys. This is all being done in secrecy, and kept off the balance sheet. In the meantime, the same dutiful agents of the banker cabal decry, denigrate, and deny the value of gold. They are grand hypocrites. These many central banks are collecting Gold for the big rise in its price, which might tend to save their fat hind parts during the crisis that builds. Their FX paper will be shredded while their newly placed Gold will enjoy a fast rise on the balance sheets. What they say is usually 180 degrees opposite for what they actually do. They want the public to be on the opposite side of their movements always.
PANDA BOND ISSUANCE – gold backed sovereign bonds
A bond priced in Chinese RMB terms defines a Panda Bond. They typically are for sovereign debt issuance, with some high profile corporate bonds at times. This is the newest of the four legs to the Gold Standard implementation. The astute analyst can infer a gold role in these Panda Bonds, which heretofore has not been admitted. This golden leg is analyzed in the June Hat Trick Letter to be posted very soon this month.
REGIONAL GOLD CURRENCY USAGE – decentralization
When Malaysian Prime Minister Mahathir announced the cooperative venture to use a regional gold currency in order to settle bilateral trade obligations a few weeks ago, he put his life at risk. The very same initiative announced by Japan was quickly followed by the Fukushima attack, called an accident in the West, but called an attack all through the East. Expect the entire Pacific Rim to climb aboard the regional gold currency for settlement of trade payments, which has yet to take shape or to be named. The Jackass expects Malaysia to be joined by Indonesia, the Philippines, Singapore, Thailand, even Taiwan, possibly Hong Kong. The key to this regional instrument for trade payment will be the absent participation of China. They might direct the movement from behind the curtain.
The next stage for global finance will incorporate regional structures and platforms. The entire community of nations is making major adjustments as preliminary preparation to the Global RESET, in order to minimize the shock, disruption, and potential chaos. Expect regional themes to dominate, as the Dual Universe comes into form. The East will prefer to trade in Chinese RMB terms, and often in Euro terms. The West will prefer to conduct trade in USD terms, but also British Pounds in trace amounts within the old colonies. A dichotomy has formed with great geopolitical division amidst hostility and trade friction, in addition to direct threats and slapped sanctions. The entire USFed QE initiative, coupled with unbridled $trillion USGovt debts, has fostered a rebellion during a long period of time marred by visible bond fraud. The rest of the globe is in active revolt, whose movement gains momentum each month. The transition period will involve the two dominant currencies at work: the USD and RMB. The fully implemented Gold Standard will require still more time, more cooking. The USDollar will not go away quickly or easily. It is well rooted in trade payments systems, in credit systems, in banking systems, in derivative contracts, and more. The entire Langley seven silos of corrupt illegal enterprises (narcotics, weapons, human trafficking, human organs) are based in the USDollar, with gargantuan savings accounts and business investments. They will not go away anytime soon, which dictates an interim period. The Dual Universe has been born, without much fanfare, as an evolution taking form during tremendous tensions and conflict. The Chinese RMB is to be the designated caretaker, used for ushering in the Gold Standard.
The United States must adapt to the Gold Trade Note in usage. It must contend with shortages and rising prices, following import supply interruptions. Weather related food supply shortages and trade tariffs costs are the newest ugly wrinkles. The US must launch a competing gold-backed currency. It must live with the reality of the lost global currency reserve and shared mantle of global leadership. It must share global power, while losing the exceptional status and its license for fomenting terrorism. It must ward off isolation. It must reindustrialize. It must pay down the $22 trillion debt. It must source gold for the new currency. It must face the risk of a stark reality in the New Scheiss Dollar, a Third World conception, provided the USGovt resorts to its usual fraudulent finances. My full expectation is that the USGovt will launch at a very late stage a fully fraudulent gold-backed Dollar. It will be fortified by fake gold bars (tungsten with gold clad) and by claimed deep storage gold. It will be supported by falsified auditing reports supported by deadly threats. After a year or more, the global challenge will be fierce for its null integrity and voided legitimacy. The USGovt has proved since September 2001, that it will execute all the corrupt decisions, make all the wrong steps, and be forced to take proper steps only at the point of a howitzer gun, or at the creditor table during a restructured bankruptcy. In fact, the bankruptcy of the USGovt Corporation is the new poorly kept secret.
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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 newly revamped website to find articles from topflight authors at www.Golden-Jackass.com. It now has a hyphen in the URL address. For personal questions about subscriptions, contact him at [email protected].
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Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. The historically unprecedented ongoing collapse has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury Bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.