THE INTERNATIONAL FORECASTER

09_19_07_MW_IF

P. O. Box 510518, Punta Gorda, FL 33951-0518

An international financial, economic, political and social commentary.

Published and Edited by: Bob Chapman

E-mail Address

International_forecaster@yahoo.com

CHECK OUT OUR WEBSITE

www.theinternationalforecaster.com 

RADIO APPEARANCES:

To check out all of our radio appearances click on this link below:

http://www.theinternationalforecaster.com/radio.php

US MARKETS

Gold is in the process of backing and filling in a consolidation pattern, which we don’t believe will last too long. The next effort will be to breakout over $730 and up to the $760-$780 level, and then on to $850. When $850 is reached we will have completed phase one of the long-term gold bull market. The next phase will be to the $1,700 to $2,500 level.

Every anti-gold article we read never discusses the monetary value of gold as a currency. It is very significant that it has been 2-1/2 years since gold broke out versus all currencies and that gold has recently broken above 500 euros. There is no currency immune against gold’s inroads as the only real currency. This is why our government and the Fed fight as they do to suppress gold’s upward price movement. This is an effort doomed to failure and a once in a lifetime opportunity for those who understand what is taking place to not only protect your assets, but also to make a great deal of money.

You would have to be living on another planet not to realize the terrible damage being done by the decline in the dollar and the really unnoticed damage being done to all currencies. The cost of massive debt and the following inflation will be paid by all fiat currencies. The trick of government, the Fed and their syncopates is to categorize gold as a commodity in order to mask gold’s real mission. When gold is described as a commodity it is done to sidetrack investors so that they won’t invest in gold.

Central banks have almost never acted responsibly. We have a credit crunch going on and their answer is to feed more money and credit into the system to allow banks that took ridiculous risks to be bailed out. The result is an expansion of money and credit that is now higher than 14% in the US and internationally approaching 20%. Every nation is producing bogus statistics, particularly those that relate to CPI, PPI and unemployment. American inflation is now over 11% and unemployment has reached 13.5%. This is why gold is rising, fiat currencies, high unemployment and hyperinflation, which is now stagflation, that is stagnation and inflation. This term was first brought to us in the 1960s by the famous, now 84 year old newsletter pioneer, Harry Schultz, to whom we owe so much. He guided us during those early years of discovery.

Wall Street and our media are demanding lower discount rates, lower prime interest rates and ever more money and credit being fed into the monetary system. They only see today and tomorrow, never the future. These are the players who create inflation and those who will eventually go broke. They do not get it, don’t want to get it and so they never will get it. Twenty percent money and credit creation is not normal - 3% is normal. We have not seen such inflationary monetary creation since 1978-80, 1924-29 and 1903 to 1907, all of which were followed by recession in 1980-83 and depressions in 1903-07 and 1924-29. We hope you are getting the message. The big question will be will we replicate the Weimar Republic? At today’s rate of expansion perhaps we will and if that may be the case, we can count on much higher gold prices than anyone can imagine at this point in time. What you have seen for the past two months is only the prelude to what is in our future. We are witnessing monetary madness.

We are working on a comparison of inflation and M3 in the late 1970s. We have already surpassed, we believe, the M3 creation for that period. If we are correct it will bring into vivid focus why M3 was officially abandoned by the Fed and the lies our government wants us to believe.

If the M3 rocket ship wasn’t enough, the Fed has reduced the discount rate and eased repayment restrictions for banks at the window. They are also accepting toxic waste as collateral. This and help from the FHA is not going to stem the tide. This has to mean monetization of the junk collateral and looser activity in the repo market, along with ever-greater additions to money and credit, M3.

$80 oil is behind us and that will increase price inflation along with staggering increases in food prices, never mind anything else. The only decline we see is in house prices, which means the family ATM card has been punched cancelled. Debt is going to weigh more than ever on consumers and their ability to purchase. All these factors are very bullish for gold and will send its price skyward.

...

GOLD, SILVER, PLATINUM, PALADIUM AND URANIUM

Early Monday most every market was lower except precious metals and commodities. The Dow was off 70, S&P 89, Nasdaq 74 and FTSE 191 Dow points. The CAC was -98 and the DAX was -56. The yen was +.51, the euro -.0011 and the pound -.0106. The 2-year was 4.05% and the 10’s ere 4.46%. Oil was -$0.68, gas -$0.02 and natural gas +$0.03.

Monday’s markets were very surprising. The PPT saved the FTSE and the Dow from collapsing and silver, gold and commodities rallied again. There was lots of gold selling but overwhelming physical buying. Gold ended up $6.10 at $714.70 after having been about $4.00 higher. Silver finished up $0.18 to $12.72. Copper was $3.42, +$0.03. Gold open interest rose 667 contracts to 387,063 and silver OI fell again the other way, dropping 703 contracts to 106,851. Japan was not operating on Friday so we have no Tocom quotes.

The Dow fell 39, S&P fell 70 and Nasdaq was -125 Dow points. The yen was up .20 to $11.1516, the euro was -.0011 to $1.3863, the pound fell .0126 to $1.9945, the Canadian dollar was +.26 at 97.30 and the dollar index rose .08 to 79.54. The 2-year was 4.06% and the 10’s were 4.46%. Oil crashed through to $80.57, up $1.47 to a new all-time high. Gas was up $0.08 to $2.04 and natural gas was +$0.37 to $6.65.

While the yen is behaving and gold, silver, oil and copper did well today, Monday, there are some notable actions in certain markets that are very pointed at supporting the dollar and controlling gold in the wake of the upcoming Fed meeting tomorrow when we will get to see where the Fed really stands on certain issues, which basically boils down to whether they will do what is best for the US public (hold rates steady or even raise them, go into recession, possibly depression, and purge the system immediately) or what is best for the criminals on Wall Street (lower rates, push the ever-burgeoning Ponzi scheme into intergalactic space, kill the dollar along with its reserve status, and eventually the economy with it, in a financial devastation which the usual words recession and depression will be inadequate to describe, just so a bunch a greedy reprobates can party on for a few more months of profligacy).

First, USDX futures officially reached the 40,000-contract level once again today, with the spot USDX gaining a modest .103 to close at 79.720 per the ICE site (formerly the NYBOT site) with a total of 40,140 contracts of OI. The last time this 40,000+ level of OI was in effect was on August 9 when the USDX was at 80.744, and that elevated level helped propel the USDX to 81.822 a week later on August 15. This all followed an all-time record of OI for the USDX of 47,619 contracts on July 25, the day after the USDX closed at 80.077, and open interest above the 40,000 contract level was maintained from 7/13/07 to and including 8/9/07 to help save the dollar at that time. As you can see, the dead-cat bounce up to 81.822 on August 15 was quickly unraveled, culminating in break below 80 on 9/7/07, a period of three weeks. The current dead-cat bounce in the spot USDX will be lucky if it lasts the three days it has gone so far, having crept upward from a low of 79.365 on Wednesday to 79.720 on Monday. If the Fed cuts on Tuesday, look out below!

Second, gold and silver lease rates, especially in the shorter terms, continue to plummet, a sure sign of a manipulation in the making. A week ago on September 10, the lowest rate for any term of lease was .26% for gold and .27% for silver. By today, the one month gold lease rate has dropped to a manipulative .11%, the two month gold lease rate is .18%, which is still very low, and the three month gold lease rate is .23%. The one-month silver lease rate is now a stunning .01%, the two month silver lease rate is an equally stunning .04%. The conclusion has to be that the cartel is setting up for an attempt to contain gold that will most likely be futile as this time they have far fewer and much weaker weapons at their disposal due to the subprime CDO debacle and credit crunch. We sincerely hope and believe that this time relentless physical off-take will blow the cartel right out of their collective "shorts" (pun intended) that the large commercial shorts will implode and that gold will explode.

Gold and silver both had an outstanding day on Monday, while the XAU and HUI held steady and were virtually unchanged. Spot gold rocketed from 710 to 720 early on, thereby continuing to close in on the May, 2006 high somewhere between 728 (floor) to 732 (electronic), and ended the session up 6.10 with a close of 714.70.

The London PM fix was pushed up from Friday's 716.35 to 719.00.  Silver has started to perk up, exploding, from about 12.55 to about 12.77 before ending up .18 to close at 12.72, this time outperforming gold substantially. So some of silver's luster has returned, but the ratio of gold to silver is still 56 to 1. This may explain the drastic lowering of shorter-term silver lease rates as a vain effort to manipulate and prevent silver from exploding. The XAU closed at 158.35, up .35, and the HUI closed at 365.41, down .12. Oil futures had a banner day in the October contract setting yet another all-time high close of 80.57, up a whopping 1.47, adding yet another reason for PM's to explode. If we get a .5% rate cut, gold will take off like an ICBM (intercontinental ballistic missile).

Early Tuesday most everything was in the plus column. Surprisingly the star of the day was gold, up $4.40, followed by silver, up $0.19 and copper unchanged. The Dow was +15, S&P +8, Nasdaq +22, and the FTSE +60 Dow points. The CAC was up 2 and the DAX +13. The yen was -0.8, the euro +.0008 and the pound -.0004. The 2-year Treasury bill was 4.07% and the 10’s 4.47%. Oil was +0.39, gas +$0.03 and natural gas +$0.03.

September 18, 2007, the day the US dollar died.  Let the eulogies begin as we prepare to bury the dollar.  In what can only be described as a complete capitulation by the Fed to the criminals on Wall Street, the Fed lowered not only its funds rate by .5%, exceeding expectations, but again lowered its discount rate by .5% to keep the funds-discount rate spread at .5% in an attempt to stop spikes which might occur in interbank loan rates due to mistrust and a lack of confidence in credit markets.  The dollar, upon hearing this horrific news, suffered a myocardial infarction, clinched its chest and died.  Efforts at revival have failed and the dollar has expired for all intents and purposes but for the fact that manipulation by the PPT and the Fed is keeping it going artificially on life support systems.  The heart may still be beating, but the dollar is now brain-dead, and so is the Fed.  The dollar was taken to the woodshed for a whoopin' it will never forget before suffering its painful myocardial infarction.  The spot USDX closed down a whopping .511 to close at 79.209, and went as low as about 79.1 before beginning to recover.  It will be going much lower in the future.  Adding insult to injury, Venezuela announced yesterday its decision to trade in euros and Asian currencies instead of the dollar.  The flight out of the dollar will now begin in earnest as everyone runs for the door at the same time.  This could get really ugly.

You could see this latest move by the Fed coming, what with the 40,000+ level of OI for USDX futures, the plummeting of short-term gold and silver lease rates and a major hit on gold and silver just prior to the Fed announcement, the moratorium on gold shorts which began last Friday and continued into Monday, plus a bonus weakening of the yen to give the markets an extra boost when the announcements came.  All the signs were there, but even we were a bit taken aback by the degree of the Fed's capitulation.  Gold will eventually explode past the Einstein-De Sitter boundary at the farthest visible outer limit of the universe.  It is now only when, not if.

...

-- Posted Thursday, 20 September 2007 | Digg This Article