SilverDoctors: Ukraine to Issue Gold, Silver Investment Coins

SilverDoctors: Ukraine to Issue Gold, Silver Investment Coins: The Ukranian National Bank is launching production of Ukranian gold and silver investment coins. With a total first issue of 4-5 thousand c...

SilverDoctors: JB Slear- Cash Out Your IRA & Convert to PHYSICAL ...

SilverDoctors: JB Slear- Cash Out Your IRA & Convert to PHYSICAL ...: COMEX gold and silver delivery man JB Slear has answered SD reader Bryan's question regarding the 'safety' of storing precious metals in a C...

SilverDoctors: Treasury to Raise Debt Limit Dec 30th Another $1.2...

SilverDoctors: Treasury to Raise Debt Limit Dec 30th Another $1.2...: QE TO INFINITY......AND BEYOND!!! U.S. TREASURY SAYS DEBT LIMIT TO BE RAISED BY $1.2 TRILLION U.S. DEBT TO BE $100 BILLION WITHIN LIMIT O...

Tradition Analytics Asks The $64K Question: Has The Fed Run Out Of Options To "Grow" Credit Money?

Last week, we presented an equity "valuation" analysis based on Austrian economics, which concluded that the only thing that matters for the economy and for asset prices in general, is the amount of credit money moving one way or another at the margin, ie how active global central banker printers are. Unfortunately, in this economy of record correlations, and in which alpha creation is now impossible, this may well be the only approach to capital markets that works any more. Today, Tradition Analytics takes this analysis from the micro the macro level, explaining why the US, and global, economy is now like a shark - cash has to move (inward) or else the economy will suffocate. Naturally, nothing could make Bernanke happy- according to Tradition, "To sustain the up-cycle banks will have to pump out net new credit probably in the order of about $1 trillion in the coming 8-10 months, even larger than the $700 billion pumped out in the previous 8-10 months." Alas there is a problem with this, very much along the lines of what we discussed last week, which is that the new crude baseline is now a triple digit number, not one in the $30s or even $60s: "it is going to be difficult to sustain this level of credit expansion, not only due to the sheer gravity of the inflation problem that would follow, but also simply due to the fact that it is always increasingly difficult to extend more credit at the margin, and this time into an economy that is already steeped in credit."
Complicating matters is the long-discussed contraction of the business cycle, as volatility swings get ever wilder and with a greater amplitude, courtesy of record central planning encroachment which swings the global economy from one extreme to another with reckless abandon. To Tradition "it would suggest that cycles are getting progressively shorter in the great debt era and this in turn means the potential loss of monetary control, policy overreaction and misdirection, macroeconomic value destruction over time, and the risk of very deep, acute financial and banking crisis." In other words: the Fed is now boxed in a corner (and has been for years, maybe decades, in fact since its inception in 1913), and anything it does will push the pendulum to either one or another extreme. In this light, what consumer confidence does today (whereby consumers are confident because they are confident) is beyond ridiculous.
The bottom line from Tradition:

• The US economy, using growth in M2 money supply as a cyclical measure, has now been in a boom phase since the start of 2010.  This 2-year boom is coming to an end.  Credit and money growth has been running at such breakneck speeds that in order for the banking system to sustain the boom it would need to pump out roughly $1 trillion dollars’ worth of loans in the coming 8-10 months.
• If that were to happen, inflation will quickly become the most import problem for the US economy and the boom would be extended to such a degree as to make not only the inflation threat enormous but the crash risk even bigger at a later date.
• However it is going to be difficult to sustain this level of credit expansion, not only due to the sheer gravity of the inflation problem that would follow, but also simply due to the fact that it is always increasingly difficult to extend more credit at the margin, and this time into an economy that is already steeped in credit.
• The resulting bust could be sharp as 2012 unfolds.  By the middle of the year we expect that the slowdown in credit expansion will have forced the productive sector into another liquidative bust phase.  Employment numbers will begin deteriorating and production data will likely suffer again.
• If we are correct in this outlook then the current US boom phase may last little past 2-2½ years.  This means that since 1991 the three US boom cycles have roughly halved in length from 10 years (1991-2001), to 5 years (2003-2008), and 2-2 ½ years (2010-2012).  The implication of this should not be underestimated.  It would suggest that cycles are getting progressively shorter in the great debt era and this in turn means the potential loss of monetary control, policy overreaction and misdirection, macroeconomic value destruction over time, and the risk of very deep, acute financial and banking crisis.

Gold price set for hyperbolic increase

Author: Alasdair Macleod

I recently posted an article for GoldMoney showing how US True Money Supply (TMS) appeared to be growing at a hyperbolic rate, and that gold was also on a hyperbolic course. The difference between hyperbolic and exponential is a hyperbola’s rate of growth increases with time, while exponential growth does not. Hyperbolic growth in the quantity of money ends with hyperinflation, while exponential growth can go on for ever. Both TMS and the dollar price of gold are pointing to a hyperinflationary outcome. This article explains why this might be so.
There are five apocalyptic engines pushing the growth in US money supply: they are the government’s budget deficit, its debt trap, the financial condition of the banks, the delusion of Keynesian solutions, and lastly simple compounding arithmetic.

James Turk - What to Expect from Gold & Silver in 2012

SilverDoctors: Gold & Silver Smash Commences with Illiquid Holida...

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Did Bankers Deliberately Crash MF Global to Crash Gold and Silver Prices?

Submitted by smartknowledgeu on 12/27/2011 00:20 -0500

Did bankers use the MF Global to suppress gold and silver prices and create the panicked appearance of collapsing precious metals to give themselves additional precious time to delay the crash of the Euro and the US Dollar? As crazy as this sounds, a closer investigation of some key data seems to imply this possibility. Though bankers claim that they created futures markets to provide a mechanism for commodity producers to hedge against volatile market prices, I have never bought the kool-aid the bankers were selling in this explanation for the rationale behind their creation of futures markets. Given that today, futures and spot prices for gold and silver in the short-term are entirely set by banker manipulation of the supply and demand for paper derivatives that often have no backing of any physical metal, I believe that bankers created futures markets for the explicit intent of allowing themselves to manipulate the prices of commodities and to enrich themselves, and themselves only, through the process of alternately and artificially inflating and deflating prices as would not be allowed in any type of free market. In other words, bankers invented futures markets to allow themselves to siphon off and steal money from other parties that wanted to invest in commodities with a mechanism, risk-free to them, that required deception and zero honest work and zero integrity.

The futures markets in commodities is such a deceptive market that it is hard to know even where to begin to unravel its many mechanisms of deceit in all their glory. Futures contracts traded on the world’s largest commodity markets such as the COMEX in New York and the LBM in London allow bankers to commit reverse alchemy, turning real physical gold and real physical silver into nothing but false paper contracts and air. Secondly, through futures contracts traded in New York and London, bankers routinely defy the economic principles of supply and demand, and set short-term prices for gold and silver that literally have zero to do with the supply and demand dynamics of the physical gold and physical silver market. In the world of physics, such an illogical, comparable feat of deception would be the indefinite suspension of the law of gravity. Bankers invented paper derivative gold and silver markets to allow themselves to literally defy and suspend every single sound economic principle that exists.

This is important to understand because not only does understanding this concept make the bulk of what you learn in business school a lie and entirely useless, but also because bullion banks such as Deutsche Bank, Citibank, JP Morgan, Goldman Sachs et al that serve as the puppet conduits for more powerful families that control Central Banks, routinely used to lease physical gold into the open market as their primary mechanism to suppress the price of gold and silver. However, as their mechanism of fractional reserve banking began to threaten the viability and utility of the most widely used fiat currencies in the world, the USD and the Euro, bankers understood that they needed to utilize and/or create another mechanism to suppress gold and silver prices that could replace selling physical PMs into the open market as they no longer wished to give up a solid asset with no third party counter-risk for what they knew they were turning into essentially worthless pieces of paper. Thus bankers increasingly turned to the paper futures markets to manipulate and control the price of gold and silver and also served up additional bogus derivative products to the public like the GLD and SLV ETFs. Bankers knew that there was no way they could possibly control the price of gold and silver if the supply and demand determinants of physical gold and physical silver had anything to do with the price, so they conspired to fool the world into believing that the fake paper price they set was set by the supply and demand of the physical markets.



Collapsing OI of Gold/Silver Futures Markets Directly Related to MF Global Collapse?


And here’s where MF Global enters the banking cartel gold and silver price suppression scheme. Today, short-term futures and spot prices of gold and silver have almost nothing to do with the physical supply and demand dynamics of gold and silver, as odd as that may sound. Bankers created the futures markets and paper derivatives in gold and silver to kill free markets and for the express purpose of suppressing gold and silver prices. Today we literally have no idea what the free market price of gold and silver should be or could be, besides the fact that both would be multiples higher than their current price, because of the fake paper market in gold and silver that the bankers created.

As well, bankers ensured that they armed a legion of worker bees in commercial investment firms all over the world that would represent these paper derivatives backed by very little physical gold and silver to their clients as the equivalent of investing in 99.999% pure physical gold and silver. In doing so, the worker bees thereby lured people all over the world into what will turn out to be the fatal mistake of not buying millions of troy ounces of physical gold and silver and instead buying their offering of fool’s gold and fool’s silver. When we receive a massive default of gold and silver futures contracts that stand for delivery on the COMEX or LBM, or if the SLV and GLD default, then, and only then, will the public start to see true price discovery of physical gold and physical silver in action. However, for clients of MF Global, unfortunately, they have already experienced the mistake of buying fool’s gold and fool’s silver from the bankers and have received air in exchange for gold and silver futures contracts they purchased that stood for delivery.

Bankers invented fake paper gold and silver contracts, because they knew that if they could not fulfill contractual obligations to deliver physical gold and physical silver because the contracts were a binding lie to begin with), that they could always renege on these contractual obligations and give the people the nothingness they truly owned in return. And thus, we have the story of MF Global.

Ratings agencies downgraded MF Global on Oct 25 and MF Global declared bankruptcy on Oct 31. If one scours the data that the Chicago Mercantile Exchange (CME) releases via its aggregated Commitment of Trader (COT) reports during this time period, one may not notice any data that immediately stands. However, investigation of the disaggregated reports reveals far more interesting patterns that almost undoubtedly can be traced back to the collapse of MF Global. In a period just preceding the MF Global collapse, from late August to mid October, the open interest (OI) in longs in gold and silver futures within the Managed Money category collapsed by 33.75% in gold (202,430 to 136,103) and 44.74% in silver (29,849 to 16,494). During this exact same time period, shorts in the gold and silver futures in the Managed Money category increased by 19.3% and 83.82% respectively (see the chart below). Within the Managed Money category, between Sept 13th and 27th, in just a two-week period, the drop in OI in the longs in gold and silver futures was even more pronounced, with a 25.41% plunge and 34.3% plunge in silver. I imagine if someone could trace the connection of this plunge in OI in the Managed Money category in the gold and silver futures markets, one would discover that a good deal of the plunge was somehow directly tied to the impending MF Global bankruptcy and its freezing and/or liquidation of gold and silver futures accounts in its possession.