A large amount of investment funds entered the US from foreign investors last month, but unless US dollar asset yields rise the US may have more trouble in the future attracting funds, because the ECB has raised rates again ¼% to 3-1/4% and may well raise them once again to 3.5% soon.

            On the other hand, North Korea has called George and the neocons’ bluff and exploded a nuclear bomb underground. George’s answer sounded like a line from a John Wayne movie, ”North Korea can either have a future or they can have those weapons. They cannot have both.” Next we expect an invitation to the OK Corral. George’s words ring hollow and that is how empires begin to collapse. This new foreign policy fiasco, the increase in ECB rates and lack of higher US rates will make it more difficult to attract funds to fund wars, occupation, debt and the current account deficit. As we have told you previously something has to give. The first item as decreed by the Illuminati will be the end of occupations in Iraq and Afghanistan and negotiations are to begin with Iran. The elitists have to move fast because failure in the Middle East has set back their plan for world government by 20 years and the US and world economies are about to implode and at the same time have hyperinflation. This destructive event, although planned, could not have come at a worse time for this conspiracy. The window of opportunity may be open during the coming period and expose the plans of these one-world megalomaniacs. There is no more axis of evil. There is only little North Korea. Another big threat to the forces of evil is the end of the “terrorism” threat. That too will be exposed as a lie and a fraud.

            The US does not have sufficient forces to win and may not have enough troops to survive. The longer allied forces stay in Iraq the more they will be ground down. There are no more reserves that can be summoned within two months. The elitists, neocon forces, are in a terminal global position. The initiative has been lost. World events will then determine US foreign policy, not the elitists. That could well be accompanied by the loss of the House and the Senate by the elitist neocons. This officially lame ducks George Bush and compounds the elitist nightmare. They have to roll all their programs back and try to stop a depression steamroller that we believe is unstoppable. This could be where we break and expose the power of the Illuminati. They have opened the window of opportunity and they may not be able to shut it. Political initiative by the US will be lost. This is what has happened in every country at the end of an empire.

            You are all aware of American homes being used as ATM machines. When we declared that the recession had begun in January it was based in strong part on a diminution of value in real estate and the ability to draw against it. In 2006, we expect a fall in real estate equity withdrawal of about $1.5 trillion, money that will not be freed up for consumption. Those numbers should move over $2 trillion in 2007. That is a devastating fall in buying power. The only thing to replace it is the creation of more money and credit by the Fed and financial organizations and that is hyperinflationary.

            On October the 24^th the FOMC will probably leave interest rates unchanged. It’s just prior to an election and besides if they lower them the dollar will fall in value. They cannot have that because that would stop foreign investors from buying dollar denominated assets. As we said when the increases in the overnight rates paused, January was the first month that even a possibility of a change downward in rates would come about. The establishment economic hacks are looking at June as the month. We will see, as you can imagine the situation is fluid.

            Just to show you how the stock market is being rigged, corporate profits rose $175.6 billion in the first quarter and only $22.7 billion in the second quarter. In the third and fourth quarters we see a further faltering. The “experts” expect 12.5% earnings growth in 2006 and the same in 2007. We see 4-5% at best in 2007. There is only so much you can see when you can be fired for telling the truth.

            Those who run China and Japan see the economies of Europe and North America in recession in 2007, which makes those markets very suspect for their exports, so we see all of Asia closing trading ranks in an effort to internalize production and consumption to ride out what could be a depression.

            Here is the latest on M3. Early October figures indicate a pick up in credit and M3 growth again. September was a little soft. Total credit is growing 8.2% YOY, but M3 is growing 9.3% YOY. There has been a slight up-tick in the highly sensitive home equity loans to 4.7% YOY. That should ease again in November. All other loan series growth rates are holding steady. If you add in independent financial credit growth you are looking at a net 11% or more. Total loans were up 8.7%, business loans up 13.6%, rollover loans 9.7% and consolidated loans up 1.8%.

            Our government paid $184 billion in interest in 2005 and they probably will pay $220 billion in 2006. This is now the fastest growing item in our Treasury debt. In 2008, that figure will be $270 billion. In addition, we have a real accrual budget deficit of some $600 billion for fiscal 2006. Through August, our current account deficit was $522.8 billion. That puts our estimate of the 2006 deficit at just under $800 billion. We find these numbers discouraging.

            The ECB as we said earlier is raising interest rates from 3% to 3.25% and we suspect we will see 3.5% before the year is over. The Bank of Japan wants to raise rates, but Japanese politicians, under order from elitists in Washington, have been told don’t you dare raise rates, this in spite of the fact that their deficits are bigger than those of the US. The Fed and US Treasury doesn’t want the yen carry trade stopped because it is pouring trillions of dollars into the world economy. The dollar is the centerpiece of the world monetary system. It is the world reserve currency and it is in serious trouble just as is the US economy. Debt payment as we just pointed out is the fastest growing item in the budget. Higher interest rates would slow the economy even more, expedite the collapse of real estate, but at the same time, keep the dollar from falling and keep it attractive for foreign investors. We believe that next year interest rates could be lowered and if that happens the dollar will collapse in a hyperinflationary environment much like Australia now has, only much worse...

GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS

            Gold was up all day on Wednesday and in the last ten minutes of trading it got whacked as often happens, finishing the day down $0.90 at $588.70, silver rose $0.05 at $11.72. The early physical buying was overcome by the futures and derivatives markets. You could see what Henry Paulson was up to as gold rose and the better gold shares fell. The December contracts on gold finished down $0.90 to $592.60, silver was up $0.04 to $11.82 and copper was unchanged at $3.50. The access aftermarket rose $1.40. Gold open interest rose 743 contracts to 329,875 and silver open interest was again up strongly, adding 1,799 contracts to 106,890. Tuesday on Tocom the large shorts reduced their short position by only 79 contracts to 93,591. Goldman covered 843 contracts bringing their short position to 29,761. On Wednesday, the XAU lost 2.45 to 126.88 and the HUI gave up 5.93 to 297.84.

            On Wednesday, the Dow gained 43 after being up 100 and down 20 to 11,993, Nasdaq fell 48 Dow points and S&P was up 18 Dow points. Oil fell $1.28 to $57.65, gasoline rose $0.01 to $1.47 and natural gas gained $0.37 to $6.81. The dollar index rose .03 to 86.67, the euro fell $0.09 to $1.2528, and the pound fell $0.45 to $1.8671. The Canadian dollar rose .32 to 88.01. The 2-year Treasuries yielded 4.84% and the 10’s, 4.76%.

            The World Jewelry Confederation says China, India and Russia are expected to stand at the center of the expected double-digit silver consumption in the coming years. That will be in industrial production as well as in jewelry products and silverware. The Confederation represents miners, refiners, manufacturers, wholesalers, retailers and a variety of service industries.

            CBOT margin changes: 100 oz. gold contract, initial deposit $3,038 will drop to $2,734 on October 19^th - mini-gold from $1,013 to $911 and 5,000-ounce bars from $5,400 to $4,050 and mini-silver from $1,080 to $810.

            At 4:00 a.m. gold on Thursday was flipping from $-0.10 to plus $1.00. At the opening in NY gold went straight up and stayed up all day. We saw all the earmarks of hedge funds and other speculators covering shorts. We have three weeks to go to the election and we believe that gold will move slowly upward in a choppy pattern and then take off after the election. Gold closed up $10.10 at $598.80 and silver rose $0.32 to $12.04. The December contract month rose $9.90 to $602.50, silver jumped $0.34 to $12.16 and copper was up $0.01 to $3.51. Don’t forget the specs and hedgies are very short and the physical buying is enormous. Yesterday gold open interest rose 2,230 contracts to 332,105 and silver added 810 contracts to 106,700. Gold got a boost from an inflation viewpoint as Saudi Arabia said they’d support a 1m/b/p/d cut in production and said they may cut further at their December 14^th meeting. Yesterday Tocom’s big shorts increased their shorts by 2,806 contracts to 96,397. Goldman covered 60 contracts to be short 29,701. The silver shorts increased their shorts by 399 contracts to 1,934. The HUI broke out to 308.83 and the XAU rose 4.45 to 131.33. The access aftermarket was up $0.50...

-- Posted Monday, 23 October 2006 | Digg This Article