The Golden Jackass discusses the rally in T-bonds and the dollar (sympomatic of a systemic failure in process, which will result in an official debt default), gold preparing for a violent rebound, and the noose tightening around the necks of the TBTF financials in his latest MUST READ Hat Trick Letter.
In September, the COMEX officials raised Gold futures margin requirements in a falling market, a repeat episode of what occurred in the first week of May. It was raised several times again, but was not well reported by the sleepy financial press. An anomaly has occurred. The Commitment of Traders shows very little if any abandonment by Speculators in Gold. It also shows a stunning drop in the net short position by Commercials. That adds up to a firm foundation for a V-shaped recovery in the ambushed Gold & Silver price, which the Jackass admits was much worse than expected from this vantage point. The stories of gold being sold to cover losses is poppycock. It was not sold on the physical side. The COMEX relied on their trusted time (dis)honored tool of naked shorting of the metals. The Big Four US banks continue to sell gold & silver they do not own, using metal contracts they do not post collateral toward. The COMEX is the grandest fraud among the major markets. Actually that is a close competition with the USTBond market reliant upon USFed hidden monetization and Wall Street Interest Rate Swap applications. The USDollar market is dominated by heavy handed activity from the Exchange Stabilization Fund, that notorious dark office accountable to nobody. The US stock market is dependent upon the USDept Treasury, which leads the Working Group for Financial Markets (aka Plunge Protection Team). Is any US financial market honest and free from corruption? Not at all!
Notice, in keeping with the theme of this article, that the COMEX decided to leave USTBond margins intact even though an obvious bubble. With the 10-year under 1.8%, the market has become a laughingstock, a farce, a joke, an embarrassment. The very powerful move in Gold from the $1550 base in the early summer to the $1900 level triggered a selloff. It had help with numerous COMEX margin hikes focused entirely on Gold. Some prefer to point out a 2008 redux. My view is no way a similarity. A strong ugly 25% decline in late 2008 and early 2009 resulted in the Gold locomotive downshifting into second gear. In the late summer 2011, a move of greater than 20% to a record high was canceled. The 2008 gold decline was like a move backward that took all the wind from the sails. The 2011 gold decline was like a move back, still to a high gear, that merely removed the summer gains. The Gold locomotive returned to a pause between fifth gear overdrive and the fast fourth gear. The comparison to 2008 is loaded with propaganda and inaccuracies. The strong established uptrend is as clear as the morning sunshine. The Gold price has returned to the middle range of the stable upchannel.
Gold is preparing for gigantic new destinations being stuffed with money. The money is tainted, like all past money dedicated as bank aid, economic stimulus, and more debt monetization (whether hidden or revealed). The next round will be very powerful in new monetary expansion. Gold is ready to jump quickly back toward the $2000 level. Notice the potential for a technical rebound that could be extremely quick, very exciting, but deadly to the system once again. A strong rebound move is likely from $1680 to $1820 in a flash, since no resistance is evident. The sudden move might take your breath away.
Some truly dangerous winds are blowing. Restrictions of gold purchase are being imposed in Central Europe. Wall Street has openly mentioned their menacing arbitrage targeted against Europe in exploitation of their financial crisis. The Mexican disintegration continues apace, with no coverage except the illicit weapons sales from the USDept Alcohol Tobacco & Firearms. The Mexican Peso is down to 14 per USDollar. The Saudi transition continues behind the curtains, as they adapt to a new Chinese protector in the Persian Gulf, and watch the global pendulum swing from an oil-based pivot to a gold-based pivot. Russia is busy preparing channels to Central Europe for commodity supply. That is not new, but the financial underpinning might be, since not based upon the USDollar. JPMorgan CEO Jamie Diamond bickers with the Canadians and overlord Swiss bankers. Perhaps is all show. Perhaps instead JPMorgan stands on far fewer legs than a couple years ago, and what we observe is twitching and teetering. Goldman Sachs CEO Lloyd Bunkfein struggles to avoid a perjury indictment. Lies to the Levin Committee might have come back to haunt him. They were blatant. The prestige of the US bankers is fast vanishing.