THE INTERNATIONAL FORECASTER
APRIL 2006 (#4) Vol. 10 No. 4-4
P. O. Box 510518, Punta Gorda, FL 33951-0518
An international financial, economic, political and social commentary.
Published and Edited by: Bob Chapman
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Today’s monetary experts, such as Bernanke and Eichangreen, on the Great Depression, have a curious disregard for the fundamental role played by credit and speculation in fostering the fearful bubble this despite centuries of financial history illuminating their central responsibility. Yes, the Fed refused to inflate the money supply in the early 1930s and the gold standard was constricting, but the Fed knew full well what they were doing. Increases in tariffs came later and were too low to make a big difference. The real problem was interest only real estate loans and 90% margin in stocks. The Fed caused the depression just as they are in process of doing so again.
Now not only has the Fed been issuing credit and printing money, we also have outside the banking system massive credit creation.
We are now back to the argument of productivity gains and globalization and how they are providing a backdrop conducive to outsized economic growth, moderate inflation, which begets permissive monetary conditions, along with rising asset prices and surging financial wealth. Our comment is productivity gains have been 2 1/2% for years. That dispels Alan Greenspan’s lies. Globalization only profits transnational corporations and their shareholders. The economic growth is based on excessive money and credit chasing too few goods. We do not have moderate inflation. Inflation is over 10% and has been for four years. Our government lies about all its statistics. We have money and credit created out of nothing being massively misallocated.
The Fed’s financial profligacy of the 1920s doomed the US economy and the gold standard and they have doomed our financial system again, so they can garner even greater profits and form their One World Government. In addition, we have massive credit creation that never before existed. The combination is deadly.
Henry Kissinger is out and about selling a new snake oil. He is selling the concept of pre-emptive war in behalf of his Illuminati masters, just as George and the neocons are, and Tony Blair and the Black Nobility are. Fat Henry tells us when pre-emption was put forward it was attacked because it was contrary to generally accepted principles of the international system, which had evolved over three centuries and were ushered in the UN Charter in 1945.
Now we are led to believe those precepts and agreements are no longer valid because other countries have had more experience now with the emerging new threats and because of a more conciliatory American diplomacy has left new scope for consultation. That means we are changing the rules in the middle of the game to suit ourselves.
Henry tells us pre-emption may be so built into modern weapons technology that some reconsideration of existing rules is overdue. Then we have this gobblygook – “when the scope for action is greatest, knowledge is at a minimum.” Thus, we just nuke the supposed enemy into oblivion.
Henry then sites, “Had Churchill’s early warning been heeded, the Nazi plague could have been destroyed at little cost.” Firstly Hitler was financed from New York and London, and Churchill never drew a sober breath in his entire adult life.
Henry says, “the most obvious targets for pre-emptive war are terrorists organizations. Thus, pre-emptive force is necessary.” We say one man’s terrorist is another man’s freedom fighter. There are two sides to every argument.
There is not mortal danger in nuclear proliferation. Non-signers to the treaty, India, Pakistan and Israel, haven’t used them on anyone. There is no guarantee that Iran will. The summation is Iran doesn’t agree with the elitists and may use such a bomb so they can’t be allowed to develop such capability. The argument is circular and leads nowhere. The elitists are going to do what they want to do and they don’t care how many people die.
The consensus at the Fed is one more rate rise to 5% may be enough to reach neutral, but they are not as yet sure.
After over a year of waiting it looks like we are finally going to get a market correction to Dow 9,500 to 9,600. Foreigners are finally cutting back on US Treasury and Agency debt, which will be followed by selling in corporates and shares. In fact, some Asian nations are already net sellers. That means the dollar should start to move lower. At 7% to 7 1/2% mortgage rates not a lot of equity will be coming outof real estate. That means a softer economy.
We should soon see the Dow at 9,500-9,600. As we explained last week, everything is in place. The first wave back down will bring to an end the manipulated effects of a bear market rally. It will also take the dollar back to 80 on the dollar index – perhaps even lower. Then again the dollar falling could take the market down. It’s irrelevant which comes first – you see the numbers every week. Credit creation and increased money supply are still in the 10% to 12% range. Does anyone really believe this can continue? Government debt is off the charts and Congress and our President won’t stop spending. The Republican Party is facing a catastrophe. If Bush can get away with it there will be war. Let’s hope we can keep them off balance.
In five years current account deficit has risen from $1 trillion to $6 trillion. The question is where is the precipitance? You will never find out any of what you read in the IF in your national media. There are maybe a few hundred lone voices in our crowd, but that’s it. Everyone is too terrified to tell the truth and when you do you have to end up hiding from these sinister forces. Wayne Madsen joins our select group. He is now in hiding as well. He as we did worked for NSA at the beginning so we know how the system works.
People are fearful. They know their government is lying about everything. Just look at the polls. In elitist controlled polls our President gets a 36% and Congress 30%. In real polls those figures are 32% and 26% respectively. Americans are not only tax slaves; they are prisoners in their own country.
Soon many currencies will rise versus the US dollar. For now the three best will be the Swiss franc, the Canadian dollar and the euro. That means you want to be soon out of US investments. The only exceptions are gold and silver related assets and commodities.
GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS
In a couple of weeks a Santiago court could give a humble Chilean prospector back the title to one of the world’s largest gold projects. The $1.75 billion Pascua Lama project could produce 18 million ounces of gold worth over $10 billion presently. In its process, Barrick Gold, which believes it owns Pascua Lama, will find out if it does own the property. Herman Montealegre, one of Chile’s brightest legal brains says, “Barrick has been arrogant and guilty of unforgivable negligence.” We call it sweet justice.
Rodolfo Villar, a mining graduate and geologist in his fifties noticed that Barrick had not made the payment that the Chilean rules demand for a license or patent to safeguard rights to 8,600 hectares around the main ore body. Without them, Pascua Lama, which is covered by 3 glaciers, will be impossible to work. Mr. Villar has signed a contract with Barrick for what he believed was $1 million and what he received was $19.00. Under Chilean law such a figure cannot be considered a serious price. Thus supposedly the sale is void and Mr. Villar is still the rightful owner.
Reports in Santiago say this property is more valuable than Pascua Lama itself. Barrick’s plans have been fiercely opposed by the local farmers who are fearful of damage to their livelihoods and their sources of water, particularly if Barrick uses cyanide to recover the gold. Environmentalists are also concerned about the effect on the glaciers covering the site. Barrick may never mine Pascua Lama. If that happens Barrick won’t be able to cover its hedges. Barrick has a serious problem if they lose access to these claims.
Gold and silver as you know on Monday had a mega day and we are sure Tuesday will be another great day. In gold open interest rose a paltry 2640 contracts to 351,548 and that still leaves room for another 100,000 to 150,000 spec longs before there is a long saturation. These are the days we promised you - $20 to $100 daily moves in gold and $0.50 to $1.00 moves in silver, and the public and 65% of gold and silver investors are not in the game. It’s a tragedy, but that leaves lots more buying for later.
Eastman Kodak is probably short lots of silver. They just raised prices 3% to 17%.
We write this because some investors have Comex short positions in gold and silver as well as bank silver certificates and forward selling/leasing arrangements as well as leveraged pool accounts. There are billions of ounces of silver short and hundreds of thousands of ounces of gold short. If you have any longs among these venues be careful as some shorts will not be able to deliver and will be wiped out and there goes your long profit. As we predicted, the shorts are being decimated and many will go bankrupt so be very careful.
That supercilious idiot Dennis Gartman, who is so full of himself was on CNBC on Wednesday. We could hardly keep from puking. Dennis told us gold was in a bubble. The only bubbles he knows are in his bubble bath. What else would we expect from him when his clients are in who’s who among the elitists. This is the same gang that is short thousands of tons of gold. Their scheme has finally come apart at the seams after almost 20 years of rigging the gold and silver markets. Wait until the public finally realizes what the Fed and their government has been doing in all financial markets. They are not going to be happy.
We have told you, over and over, the market in silver and gold would be driven by the shorts and that is exactly what is happening. There is no limit to where gold and silver are going. The shorts are trapped and they can’t get out. Gold on Wednesday rose $13.40 to $632.70 and open contracts fell 1,220 contracts, proof positive that this is a short driven market. Silver closed up $0.73 at $14.54.
Two central banks under the Washington Agreement sold 30 million euros of gold or 2.51 tons. This is the smallest weekly sale since January.
The major Tocom shorts reduced their shorts by 4,793 contracts on 4/18 to a total of 189,145. Goldman covered 2,805 to 47,026. This offsets their new shorts of 2,909 on April 17th.
Jimmy Rogers tells us gold is going to $1,000 an ounce. He was right on commodities, but he missed the whole gold move up to 4/18/06.
Again the subscribers of Harry Schultz, Mike Bolser and Peter Grandich should be very unhappy. Out of gold at $510 to $525, and silver at $8.80 to $9.20, and told to go short. Their subscribers lost billions.
Silver is up almost 50% in the past few weeks as the shorts are squeezed as in copper. The losses by those who got out of the market and for the shorts are staggering. All that wonderful opportunity lost and wasted because some meatball has to play with his charts, waves and cycles. The same, of course, is true for gold from $520 to $646. All the geniuses never really believed that the elitists were or had been rigging the gold market and they never believed in the fundamentals. What tragic losses, because they simply don’t believe there is a conspiracy. The criminals have lost control and now we are in the driver’s seat. All other factors presently mean nothing in gold and silver markets. It’s the shorts - they are buried and cannot get out. The gold to cover is no longer available.
We are now seeing normal trading day gains of $10 and $14. After 9/11 gold only rose $18. What is going to happen when we have an event? Gold will rise $25 to $100 in a day, that’s what. You all know derivatives are based on probability and volatility causes crisis. Will we be able to cover the gold calls that were sold naked? The chickens will still come home to roost and when they do there will be thunder and lightening. The derivative writers are now looking over the abyss.
