US MARKETS

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          All confidence has now left the markets, and as the Beaver might have said: 'It ain't never comin' back!'  Sure, we may get a final blow-off top through pure power manipulation by the Fed, the PPT and the US Treasury as lower interest rates and rampant output of money and credit re-ignite market speculation once again.  That course of action is now written in stone with the action taken at the Fed's panicked emergency meeting that was held Tuesday ahead of its normal meeting date on January 29-30 in an attempt to forestall a worldwide market meltdown that was rampaging around the globe.  The Fed cut both its funds rate and its discount rate by .75% in a "between-meetings" move that we had anticipated, although the media called it "stunning" and "surprising".  The Fed should have done this in December, or even in November, but gold got in the way with a stunning rally.  As a result, the markets developed a severe case of yellow fever as the Fed kept on top of JOB ONE, which is gold suppression.  They had to lower rates to jolt the credit markets out of their freeze-up, but lower rates meant a plunging dollar, more inflation and skyrocketing gold, so they chose a middle ground by cutting a useless .25% in both November and December.  The carry trade was another problem.  The cartel needed it to support the markets, but the liquidity provided by weakening the yen was getting plowed into gold and silver big-time as the credit-crunch raged on, so they were forced to strengthen the yen over and over again to put the kibosh on precious metals by creating metals liquidations to cover margin calls generated by losses in stocks.  So the stock markets, disappointed with the puny cuts and under pressure from the yen's reign of terror, finally gave up the ghost and started into free-fall.  In mid-December's IF we made the comment:  "Surely you're joking, Mr. Bernanke!"  We said that if the Fed's intention was to attempt to suppress gold and to simultaneously attempt to ease the credit-crunch and support the stock markets by taking half-measures on interest rate reductions, they would fail at both.  And that is exactly what has happened as gold has ripped through $900 per ounce while the credit markets continue in a cryogenic state and the stock markets explode and go down in flames.

          The stock markets will be propelled upward now by brute force and a much weaker yen to keep the Dumbo candidates in the running for President and to keep both the Dumbo and Jackass incumbents from being booted out of office (Good Luck!).  The current and future rate cuts and weak yen needed to keep this farcical rally going will send gold and silver to the moon!  After the elections, the illusions will be lifted and reality will be allowed to set in as earnings reports continue to disappoint, more derivatives losses are brought to the surface, inflation goes ballistic, the dollar continues its plunge into fiat money hell, consumer spending becomes nonexistent, defaults on both prime and subprime credit continue to mount, ARM rates and Pick-a-Pay payments bury borrowers and the real estate markets crash and burn while stock markets get to do a reenactment of the Hindenberg.  While this debacle picks up where we just left off this past few days, gold the hedge and safe-haven will continue to explode, and may even enter intergalactic space.  Resource stocks will play catchup as soon as people realize that gold is headed nowhere but up, and that day is just around the corner.  You must take a position in the precious metals and their stocks now while they are unbelievably cheap, or you will lose out on mega-profits.

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          Not to be outdone by Japan, the US economy will crash and go down in flames like the Japanese Zeroes who are running the Land of the Rising Sun soon after these Kamikazes complete their final mission.  This will happen after a period of hyper-stagflation during which we will all get to do a reenactment of the Weimar Republic of Germany, 1920's style.  You have heard us continually repeat that the Fed is in a box and cannot get out.  If they raise rates to support the dollar, the real estate market, corporate profits and overall economy will implode.  If they lower them, they will invite speculation and a re-inflation of the credit bubble to new economy-destroying heights that will send inflation to the moon as the dollar explodes and goes down in flames while everything is monetized in a monstrous bailout to free up the credit-crunch and to force the US public to pay for the profligacy of the Illuminati.  But in reality, this was never really a box to begin with.  Rather, it was a one way ticket to hell.  The reason is that raising rates was never even an option.  If rates are raised, not only will the real estate market and economy be stopped dead in their tracks, the entire multi-trillion dollar bond market would be destroyed as bond principal was eroded by rising interest rates.  And if that was not enough, those on the wrong end of interest rate swaps with notional principal in the hundreds of trillions would be vaporized in an instant in a reenactment of Hiroshima and Nagasaki.  Think about it.  For every trillion of notional principal, an increase of one percent beyond the equilibrium established in the initial contract will cause a loss of ten billion dollars every year until the contract expires.  If rates were to go into double digit territory, those who were unfortunate enough to exchange a variable rate of return for a fixed rate of return would not have to worry about bankruptcy court.  They would simply cease to exist.  The results that would follow from a move into higher rates are simply unthinkable!  So the Fed really has no choice but to lower rates.  The problem is, hyper-stagflation will take its toll on the US economy by increasing the cost of production and of imports as the dollar tanks.  If businesses eat the cost increases, they will go out of business.  And if they pass them on, the US consumer will flee in terror as prices climb and their income and productivity are destroyed by inflation.  No one will want to or be able to buy anything but the barest of necessities if they can even manage that much.  This means business failures.  Increased business failures mean rampantly escalating risks as a new conflagration in credit default swaps is ignited and loan defaults rocket to record levels.  And rampantly escalating risk means that we will suffer much higher interest rates as risk reassessment comes home to roost regardless of what the Fed or any other central bank might do.  So rates are going up anyway.  It is only a matter of "when," not "if."  The best the Fed can hope for is to delay the inevitable for a very short space of time.  Then the end will come, and life as you have known it will never be the same when it does.  The end result will be complete and utter destruction that will cause major social upheaval around the world.

          After the US goes down, major trading partners like England, Europe, China, India and Southeast Asia are toast.  Industrial production will plummet worldwide, transportation will be reduced greatly, and demand for commodities, especially oil, will drop dramatically.  Note that the so-called peak oil effect is partly real and contrived but is also partly fiction.  While we agree that the failure to seek out new profitable sources of oil and to increase refinement capacity were planned by the Illuminati to cause growing shortages, most of the gains in oil recently are due to the loss of value in the dollar, not to increases in demand and decreases in production.  Both gold and oil have moved in tandem together as the dollar has been taken to the woodshed.     When all the world's major economies start their big swirl around the toilet bowl, all the oil-producing and resource-rich countries such as Russia, the Middle East, Australia, Canada and Venezuela as well as much of Africa and South America will get hammered as prices plummet.  Those countries that have delayed their precious metals projects will deeply regret doing so as the price of gold peaks due to hyperinflation and mass economic and social upheaval that will rock the globe before deflation takes over and takes everything down.  They are going to have missed the greatest bull market in gold in all of history.  What they should have done is to get their projects going at the earliest possible moment, stockpiling gold from their producers at a discount using their cut of the profits as a portion of the payment so that they could wait for the market to top out and sell for the absolute best price.  Those that waited will be chasing after little more than dreams as they watch gold plummet with everything else (albeit not as badly) and many will never see these projects get off the ground once the worldwide calamity saps the strength of economies everywhere and hyperinflation and high interest rates make projects unfeasible leaving few survivors.  You need credit and resources to extract gold from the ground, both of which will be in short supply.  Gold does not magically pop out of the ground when you want it to.  It takes years of careful planning and these sorry countries will find that gold has lost much of its luster by the time their gold projects finally get off the ground, if ever.

...

GOLD, SILVER, PLATINUM, PLADADIUM, URANIUM

 

Tuesday worked out as we predicted Monday in 4 radio shows. Gold ended the day up $7.90 to $889.80 and silver fell $0.07 to $16.02. Both were spectacular recoveries. The Dow fell 128 to 11,971, S&P fell 132 and Nasdaq fell 286 Dow points. We had predicted the Dow would be off 100 to 200 points and that gold would be even to plus $10.00. The Fed lowered interest rates 3/4% to 3.5%. The yen fell .87 to $1.0655, the euro rose 1.72 to $1.4625, the pound rose .20 to $1.9607 and the Canadian dollar rose .61 to .9729. The 2-year Treasury yielded 2.04% and the 10s 3.48%. Oil fell $0.72 to $89.85, gas fell $0.03 to $2.28 and natural gas fell $0.03 to $7.64. February gold was trading $3.30 higher than the Comex close. The cut in interest rates is extremely bullish for gold and it won’t really be helpful for Wall Street. As you can see this is where market manipulation has led us. Gold open interest fell 98 contracts to 561,647 and silver OI rose 1,160 contracts to 182,055. The Tocom big shorts increased their shorts by 697 contracts to 90,316 on Friday and cut net shorts by 2,027 on Monday to 88,289, as Goldman increased shorts 2,419 and 131 to total 13,773. The same group cut silver shorts by 175 and 22 to total 987 contracts. Goldman increased Tocom shorts over the last four sessions by 3,600 contracts, a departure from what they had been doing, which tells you they knew what was coming. Wait until the Shanghai Futures Exchange gets rolling, then the gold suppression cartel will really have a nightmare. Their Chairman said the new gold contract will “improve China’s influence on the global metals market and pave the way for China to set the prices in markets.”

 

The weekly ECB gold sales report shows central banks sold 41 million euros of gold last week, or 2.24 tons up from 2.19 tons the prior week.

 

Wednesday early saw another nasty opening. The Dow was minus 70, S&P minus 104, Nasdaq minus 132 and the FTSE minus 66 Dow Points. The CAC was off 63 and the DAX off 126. The 2-year was 1.95% and the 10s were 3.43%. Oil was off $0.89, gas off $0.02 and natural gas up $0.01. Gold was off $1.80, silver off $0.07, copper off $0.05 and the Nikkei Dow up 256 at 12,829.

 

          A huge yen-hit on gold is on its way as the yen makes new highs.  In order to save the stock markets from their 464-point Dow-Death-Plunge on Tuesday, the yen was weakened from its lows of about 105.951 yen per dollar and 152.998 yen per euro on Monday at about 12:20 pm EDT to 106.917 and 156.258 as of 1:25 pm EDT on Tuesday.  That move, together with brute force PPT action that must have cost a mind-blowing fortune that we will all get to pay for to save the pirates on Wall Street, turned a 464 point crash into a 128 point loss.  Because of gold's violent reaction upward to the Fed's cut, markets will be treated to a new yen- hit as the cartel hopes to suppress gold until the February futures are rolled over at the end of January by strengthening the yen to a new high of 105.187 per dollar and a very high 152.967 yen per euro as of 8:45 am EDT today.  Now mind you that about a week ago on 1/14/08 the yen was at 108.273 and 161.021, so you can see the extent to which the cartel will go to hit gold at the expense of stock markets.  Is it any wonder that the Dow has been given an 800 point haircut since the 1/14/08 close?  The barbaric relic has become the bane of the stock markets, which will now continue to suffer from "yellow fever."  And can you believe that the dollar is rallying today after yesterday's huge rate cut?  Its Theatre Bizarre once again as the cartel warps the markets beyond recognition once again.  Let's see how gold does in the face of this latest yen-hit.  Remember, a demand for physical delivery under gold futures contracts is just what the doctor ordered for this situation.  That would send gold past 1000 and on its way to 1500 in very short order.  The cartel is out of gold.  It is time to call their bluff and put an end to their BS.    

 

…

 

THE INTERNATIONAL FORECASTER

WEDNESDAY JANUARY 23, 2008 -  011608(6)_IF

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

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-- Posted Thursday, 24 January 2008 | Digg This Article | Source: GoldSeek.com

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