Wednesday, July 31, 2013

Marc Faber : we are still in massive Money Printing and the worse the Economy becomes, the more Money Printing there will be. I’m holding onto my GOLD

"Question: We’ve often asked our guest experts about which asset classes our listeners should invest in, and what percentage of their portfolios should be in precious metals versus other investments. One of our listeners, who is a small businessman, has been following th
e experts’ advice and purchases precious metals as a store of value. He’d like to ask how he would know when it’s time to exit precious metals and what the best exit strategy is.

Marc Faber : I think that’s a very good question. By the way, I would say maybe in the fall of 2011, when gold prices reached $1,921 an ounce in September 2011, I should have issued a sell recommendation and said, “Get out of gold and get into cash or the SNP.” In general, I think that we are still in massive money printing and the worse the economy becomes, the more money printing there will be. I’m holding onto my gold. As I explained before, I bought some gold at $1,300 an ounce and I bought some more gold at $1,200 an ounce. - in ETF Daily"


Gold Market To See Largest Short Squeeze In Modern History

"Today one of the savviest and well connected hedge fund managers in the world told King World News that the gold market is getting very close to seeing a massive and unprecedented short squeeze that will eclipse anything in seen in modern financial history.  Outspoken Hong Kong hedge fund manager William Kaye also spoke about what is happening behind the scenes in the ongoing war in the gold market.  Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in his fascinating and powerful interview.
Kaye:  “The short interest in GLD right now is incredibly high.  It’s roughly 30 million shares, and the key point here is that this is taking place while the shareholder count keeps contracting.  The shareholder count is down to just over 300 million shares, so the short interest is roughly 10%.
The shareholder count keeps contracting because the physical gold keeps getting redeemed....
“The reason this is important is because shareholders who aren’t selling their gold are nevertheless having their shares borrowed.  So the bullion banks are now net short almost 10% of GLD.  That’s several billion dollars worth of gold.  This also leads me to believe that, despite the prospectus, each share of GLD is not backed by the physical gold.
This is pretty important because what it means is that because of the massive short position you now have 338 million net shares long of GLD.  This is a problem because it is 30 million more shares than what they are reflecting in their accounts.  So somebody is going to have to eventually come up with that gold.  This is another reason why the gold market is setting up for an enormous short squeeze at some point.
But, Eric, there are a lot of things happening now at a rapid pace, which is usually indicative of an end game.  There have been rumblings about more problems inside the LBMA delivery system.  All of this leads me to believe we are very near a major turning point.
It is now apparent that part of the feed stock (1,300 tons) for the takedown in the price of gold came from the Bank of England, as reported by Alasdair Macleod.  The problem with that is the Bank of England only owns about 300 tons.  So this is not their gold that is being sold.  Instead, this is gold being sold by the Bank of England which is owned by nations that have entrusted the Bank of England to store their gold. 
Well, guess what?  If those countries go to the Bank of England and ask for their gold back what they will get is the same type of answer that the Germans got when they asked the Federal Reserve to send Germany’s gold back to them, which is essentially, ‘You can’t have it, but we will give you a very tiny portion of the gold you are supposed to have stored with us, and it will take 7 years for you to get it.’  We don’t know whose gold was sold, but we do know that it didn’t belong to the Bank of England because as I said they don’t own that much gold..."


Tuesday, July 30, 2013

Unstoppable Demand Meets Undeliverable Object - A Run on the Bullion Banks

"The gambit of smacking down price to dampen the desire for gold appears to have backfired in a big way by sparking an insatiable demand for the physical metal and a remarkable decline in available inventories. That certainly wasn't what had been expected I would imagine when the process of a more energetic price manipulation in response to Germany's request for the return of its gold began.

That a sovereign nation asked for the return of its own gold being held in custody, and that request was flatly denied, is almost as unbelievable as the fact that so many are willing to take it in stride, like something that would happen every day. 

A seemingly unstoppable force, the flow of gold from west to east, is going to meet the undeliverable object, the nominal inventory of unencumbered gold in the bullion banks and exchanges, sometime over the next twelve months.

Of course one cannot predict exactly what will happen and when, given the phony controversies, obfuscations, and stonewalling that seem to settle like a thick fog over the markets at every treacherous turn in this slowly unfolding financial crisis.  But the math is intriguing.

This is getting very interesting. Let's see what happens. 

Is this what I wish to happen?  No, I would prefer that the markets be transparent, honest, and provide genuine price discovery and allocation of capital with relative rationale decision making open to all market participants.   I think for now the game is badly tilted in favor of insiders and their powerful friends.

I do not believe that there can be a sustainable economic recovery without genuine reform.  A financial disaster is what the financial predators seemingly wish to happen, assuming they even care about the broader effects of their foolish greed.

At some point one would have to anticipate a declaration of force majeure and/or a change in the rules if the financial interests do not relent on their aversion to a market-clearing price.  And when that tide goes out, we will see who is swimming naked.

But there remains plenty of opportunity for more desperate antics, so as always caution is advised , particularly in the use of any leverage and short term time horizons.  This is not a healthy trading environment for the non-professional.  And many a person has gone bust by underestimating the shameless manipulation of the markets when regulation is lax.

The exchanges and the Banks will not fail, because the financiers and their friends make their own rules as they go along, and do not hesitate to act in their own interests, promises and customers be damned.  That seems to be the way of modern finance and monetary theory.  Whatever we say it is, is because we say it is.

The time for debate seems to be coming to an end. Weighed and found wanting..."


U.S. Economy Looking More Japanese

"Is the U.S. Turning Japanese?

In the 1970s, many Americans feared Japan would set the tone for growth in the 21st century economy. One research group says that may be the case — but not in the way feared decades ago.

The Economic Cycle Research Institute, a private research firm that has been bearish on the U.S. economy, says the U.S.’s performance in this recovery is looking ominously similar to that of Japan’s “lost decades,” the period from 2Q 1992 until 1Q 2013, when Japan suffered through little economic growth and steep deflation.

The business cycle group looked at average yearly GDP growth for major developed nations as well as China for the periods of 1Q 1980 to 1Q 2001 (green bars on chart), 1Q 2001 to 1Q 2013 (yellow) and the last five years 1Q 2008 to 1Q 2013 (blue). For Japan, ECRI divided the periods to 2Q 1992, the lost decades (red), and the last five years.

The research showed that over the last five years, the U.S. grew just 0.7%, a notch below the 0.8% pace recorded during Japan’s lost decades.

“Basically the U.S. is already becoming like Japan during the lost decades,” says ECRI director, Lakshman Achuthan.

The downshift in growth is not a U.S. phenomenon. Major European economies also have seen growth slow across the three periods. And that is a major point of ECRI’s research.

“Around the world, long-term trends in growth have downshifted, already resulting in weaker recoveries and more frequent recessions than most had expected when the 21st century began,” says Mr. Achuthan."


Former ECB Chief Economist Warns "ECB Will Soon Have to Support France with Bond Purchases"

"Juergen Stark, former ECB chief economist (who resigned in 2011 over a dispute regarding bond purchases), says in an interview in Handelsblatt "The Euro crisis will worsen in late autumn"

Via Google Translate 
A year ago, ECB chief Draghi announced plans to do anything to save the euro. The former ECB chief economist Juergen Stark considers this fatal. He fears that the ECB will soon have to support France with bond purchases.

"I think the crisis will come to a head in late autumn. We are entering a new phase of crisis management, "Stark told the Handelsblatt (Friday edition). After the parliamentary elections in late September that France would increase the pressure on the ECB and Germany. The government bond purchase program OMT should actually be used in Spain and Italy. "But the pressure will be enormous, use the instrument in France. And without that, the country must go to the rescue, "said Stark.

A year ago the head of the ECB, Mario Draghi announced in London to do anything to save the euro. A little later, he presented the plans for the bond purchase program OMT.

Draghi bought the governments in Europe time. "But this time was wasted," Stark said..."

Money Printing will End only when The System Breaks Down

"Dr. Marc Faber asked if money printing would end and when:

Yes, until the system breaks down. My view would be that there will be money printing, and the problem with money printing is always that you don’t control where it goes to. Ideally, it would go into higher incomes of the middle class and of the working class, but this hasn’t really happened. The real wait is for the typical household or the medium household, they are going down. What is going up is basically selected asset markets, like the real estate market has recovered. In some areas, we’ve hit new highs. The stock market has gone up. But as you know, only very few people own stocks in the United States, so it doesn’t impact the wealth of the majority of people..."


Economics Can’t Trump Mathematics & the Math Says US In a Debt Death Spiral

"The madmen who are responsible for the coming economic disaster continue to behave as if they can manage to avoid it.  Violating Einstein’s definition of insanity, they continue to apply the same poison that caused the problem. These fools believe they can manage complexities they do not understand. We are bigger fools for providing them the authority to indulge their hubris and wreak such damage.

Apocalypse In One Picture
James Quinn provided the following graph. If a picture is worth a thousand words, this graph is worth millions. The route to economic demise is depicted below:

The relationships in this graph are terrifying! Debt is shown relative to GDP. GDP growth has been one-third the growth in debt for the period. That is, the economy required $3 of debt to produce $1 more in real GDP. In recent years diminishing returns to debt required $6 of debt to increase GDP by a $1. Whatever the benefits of debt, they have clearly diminished, almost to zero. Debt expansion has gone exponential in order to salvage the weak growth in GDP..."


Friday, July 26, 2013

Gold & Silver Continue To Climb “The Stairway To Hell”

"Today top Citi analyst Tom Fitzpatrick sent King World News ten absolutely fantastic charts showing that gold and silver continue to climb what Fitzpatrick calls “The Stairway to Hell.”  Fitzpatrick also indicated that both markets are set to have massive price surges from current levels.  You are about to read one of the greatest reports on exactly where gold and silver are at this point in their bull markets, and where they are headed.
bottom in anything is always a danger, it certainly appears to us that Gold is finally finding a platform off of which the next leg higher may have already begun.  The long term structural dynamics which suggest a Gold price closer to $3500 by 2016 remain firmly in place and we do not expect them to change anytime soon.
Before feeling that Gold has in fact bottomed, though, we would like to see a (weekly) close through near-term resistance around $1321-$1338, and beyond (that level) medium-term resistance around $1522-$1532.  Such closes in our view would confirm the next leg higher in Gold has begun.
Should this in fact be the turn in Gold, it is likely Silver will actually outperform as it has done in the past.

We have been of the bias that the correction in Gold this year was just that – a deep correction – rather than an end to the long-term rally.  As such, determining when the correction is actually over is paramount as we continue to expect Gold to move towards our long-term target of $3400-$3500 by 2016 (more on this later).  While calling a bottom in anything is always a danger, it certainly appears to us that Gold is finally finding a platform off of which the next leg higher may have already begun.
The recent correction actually looks very similar to that which took place in the middle of the phenomenal Gold rally in the 1970s.  (As we have previously expressed, the current economic and asset market backdrop that we are going through is very reminiscent of that seen during the 1970s.): 
- After a rally where Gold increased five-fold, it saw a 44% correction over 17 months (1974-76), finally bottoming 14% below the 55-month moving average.

- After a rally where Gold increased seven-fold, it saw a 39% correction over 23 months (2011-13), finally stopping 14% below the 55-month moving average.  Will we look back at this point as the bottom?

As we think through that question, there are two things to consider:

Is this really a deep correction rather than the end of Gold’s long term rally? – What would we need to see to suggest the correction lower is over?  (On a side note, it is worth pointing out another similarity related to the Equity market for that time period:) 

When Gold bottomed in August,1976, the Dow Jones Industrial Average rallied 6% over the next 4 weeks before putting in the multi-year high and correcting over 20% in the flowing 1 1⁄2 years.  Since Gold has hit its recent low, the Dow Jones Industrial Average has rallied 7% over the last 4 weeks and has put in a new all-time high.  We will be keeping a close eye to see if history once again repeats.

The bigger picture dynamics for a higher Gold price in the coming years has not changed (see Gold and the US debt limit chart below).
The relationship is clear.  A chart using the asset side of the balance sheet for the Fed, ECB or, more recently, the Bank of Japan would look similar. 
There is nothing to suggest that the trend for the US Debt Limit over the next few years is anything but up.  The debt limit is currently expected to hold through September, but after that it will need to be raised for the US Federal Government to continue to operate -- (the alternative is some fairy tale scenario where the Federal Government reduces its annual budget deficit to zero going forward – given that it is usually in the hundreds of billions of USD a year, and that a simple reduction of $85 billion this year caused an uproar, it is hard to see that happening)...."

Eric Sprott - Physical Gold Shortage Now Reaching Extremes

"With the paper price of gold pulling back, today billionaire Eric Sprott told King World News that the shortage of physical gold is now reaching extremes.  Sprott also discussed the implications of this, as well as Western central planner desperation.  This is the first in a series of interviews with Sprott that will be released today.  Below is what Sprott, Chairman of Sprott Asset Management, had to say in part I of this remarkable series of interviews.
Sprott:  “I have now written three articles titled, ‘Do The Western Central Banks Have Any Gold Left?’  I think we have seen some things develop in the last eight months that tells you there is a bona fide shortage of gold.
It all started with the Germans saying they wanted their 330 tons back, which is a mere 4% of what the U.S. theoretically owns, and they (the US) announced it would take seven years to deliver it back (to Germany)....
Then we had ABN AMRO where they said that people wouldn’t get their allocated gold.  We already started to see depletion in GLD at the beginning of the year, not just with the April and May smashes, and it was obvious to me that there was a shortage (of gold).

In my mind what happened was the powers that be thought, ‘What are we going to do here?  We can’t have people find out that the central banks don’t have any gold because it’s all been leased and sold to Asia.  So, what are we going to do?  Well, let’s go bomb the COMEX (price), and maybe everyone will see their GLD, and we will go in and buy the GLD and redeem the (physical) gold.’
As you know, 600 tons of gold was redeemed.  600 tons is a big number.  So we’ve had a 30% increase in supply because of the GLD liquidation.  Of course during this time period, all of the investment advisors who told people to sell were the same people that covered their shorts.  So they (bullion banks) have gone from being short gold to being neutral on the COMEX.
We have seen the COMEX inventories decline rapidly.  We know that all of the dealer inventory on the COMEX has already been spoken for by delivery notices, so essentially there will be zero (inventory) if they ever make the delivery.
And the central planners (also) went to India and said, ‘Look, you’ve got to do something about all of this gold buying in India.’  So we’ve had ten different steps by the Indian government to try to curb demand -- a 2% tax, a 4% tax, a 6% tax, an 8% tax, and a ruling that banks couldn’t lend money for people to buy gold. 
They also convinced the Jewelers Association that as of July 1st they couldn’t sell gold bars and coins.  Just last week there was a new rule implemented that if you are importing gold you have to prove that a certain amount is being re-exported.  We’ve probably had ten or twelve things (restrictions) happen in six months, all of which is a huge attempt to get the second biggest buyer of gold in the world, after China, to decrease consumption because the gold isn’t around.
The central planners have arranged all of these things.  I think it’s just been one big scheme to try to get people dissuaded from owning gold and to cause supply to come out.  As you mentioned, because of it (central planner actions) we have the gold forward rates (for gold) being negative, backwardation, and inventories plunging, all of which have been manifested because there is a shortage of gold.
I believe there is a huge shortage of (available physical) gold.  You have had many people comment on that -- Andrew Maguire over in London, who talks about all of the delays in shipments from the the LBMA, and people commenting that perhaps there will be a COMEX failure to deliver. 
All of my work tells me that there is a serious shortage of gold on an annual basis.  The central banks have supplied it in the past, but they don’t have the ability  to supply it anymore.  So I think we are getting set up for a big run in gold.  It looks like we’ve already seen the bottom and I think we are well on our way here.”


Thursday, July 25, 2013

Debt Levels Are Skyrocketing To Extremely Dangerous Levels – How Long Can This Possibly Keep Going?

"Never before has the world faced such a serious debt crisis.  Yes, in the past there have certainly been nations that have gotten into trouble with debt, but we have never had a situation where virtually all of the major powers around the globe were all drowning in debt at the same time.  And what makes this crisis even more unprecedented is that everyone on the planet is using fiat currency that is backed up by nothing.  It is all just a bunch of paper and data points that people have faith in.  Right now, confidence in this system is being shaken as debt levels skyrocket to extremely dangerous levels.  Many are openly wondering how much longer this can possibly go on.
Just consider what is going on over in Europe right now.  Even the countries that have supposedly "tried austerity" continue to rack up debt at a mind blowing pace.  New numbers that have just been released show that government debt to GDP ratios for some of the most financially troubled nations in Europe are absolutely soaring...
  • Euroarea: 92.2%, up from 88.2% a year ago
  • Greece: 160.5%, up from 136.5% a year ago
  • Italy: 130.3%; up from 123.8% a year ago
  • Portugal: 127.2%, up from 112.3% a year ago
  • Ireland: 125.1%, up from 106.8% a year ago
  • Spain: 88.2%, up from 73.0% a year ago
  • Netherlands: 72.0%, up from 66.7% a year ago
Meanwhile, the debt to GDP ratio in Japan is now well past the 200% mark and continues to march upward with no apparent end in sight.  The following is from a recent MSN article..."


Who Controls The Global Economy? Do Not Underestimate The Power Of The Big Banks

"A team of researchers at the Swiss Federal Institute of Technology in Zurich studied the relationships between 37 million companies and investors worldwide, and what they found was absolutely stunning.
What they discovered is that there is a "super-entity" of just 147 very tightly knit companies that controls 40 percent of the entire network...
When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network. "In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network," says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.
So exactly who are the companies that are at the core of this "super-entity"?
Well, almost all of them are banks or financial institutions.  The following is a list of the 50 "most connected" companies from the study, and the notes in parentheses are from Chris Martenson...
1. Barclays plc
2. Capital Group Companies Inc (Investment Management)
3. FMR Corporation (Financial Services)
4. AXA (Investments & Life Insurance)
5. State Street Corporation (Investment Management)
6. JP Morgan Chase & Co (Bank)
7. Legal & General Group plc (Investments & Life Insurance)
8. Vanguard Group Inc (Investment Management)
9. UBS AG (Bank)
10. Merrill Lynch & Co Inc (Bank)
11. Wellington Management Co LLP (Investment Management)
12. Deutsche Bank AG (Bank)
13. Franklin Resources Inc (Investment Management)
14. Credit Suisse Group (Bank)
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp (Bank)
17. Natixis (Investment Management)
18. Goldman Sachs Group Inc (Bank)
19. T Rowe Price Group Inc (Investment Management)
20. Legg Mason Inc (Investment Management)
21. Morgan Stanley (Bank)
22. Mitsubishi UFJ Financial Group Inc (Bank)
23. Northern Trust Corporation (Investment Management)
24. Société Générale (Bank)
25. Bank of America Corporation (Bank)
26. Lloyds TSB Group plc (Bank)
27. Invesco plc (Investment mgmt) 28. Allianz SE 29. TIAA (Investments & Insurance)
30. Old Mutual Public Limited Company (Investments & Insurance)
31. Aviva plc (Insurance)
32. Schroders plc (Investment Management)
33. Dodge & Cox (Investment Management)
34. Lehman Brothers Holdings Inc* (Bank)
35. Sun Life Financial Inc (Investments & Insurance)
36. Standard Life plc (Investments & Insurance)
37. CNCE
38. Nomura Holdings Inc (Investments and Financial Services)
39. The Depository Trust Company (Securities Depository)
40. Massachusetts Mutual Life Insurance
41. ING Groep NV (Bank, Investments & Insurance)
42. Brandes Investment Partners LP (Financial Services)
43. Unicredito Italiano SPA (Bank)
44. Deposit Insurance Corporation of Japan (Owns a lot of banks' shares in Japan)
45. Vereniging Aegon (Investments & Insurance)
46. BNP Paribas (Bank)
47. Affiliated Managers Group Inc (Owns stakes in 27 money management firms)
48. Resona Holdings Inc (Banking Group in Japan)
49. Capital Group International Inc (Investments and Financial Services)
50. China Petrochemical Group Company
Are you starting to get the idea?
The global economy truly is completely dominated by banks and other financial institutions.
In the United States, the big banks are not just content to own other companies anymore.  Now, some of our largest banks are actually starting to directly get into businesses such as "electric power production, oil refining and distribution, owning and operating of public assets such as ports and airports, and even uranium mining".  The following is an excerpt from a letter that several members of the U.S. Congress recently sent to Federal Reserve Chairman Ben Bernanke...
We write in regards to the expansion of large banks into what had traditionally been non-financial commercial spheres. Specifically, we are concerned about how large banks have recently expanded their businesses into such fields as electric power production, oil refining and distribution, owning and operating of public assets such as ports and airports, and even uranium mining.
Here are a few examples. Morgan Stanley imported 4 million barrels of oil and petroleum products into the United States in June, 2012. Goldman Sachs stores aluminum in vast warehouses in Detroit as well as serving as a commodities derivatives dealer. This “bank” is also expanding into the ownership and operation of airports, toll roads, and ports. JP Morgan markets electricity in California.
In other words, Goldman Sachs, JP Morgan, and Morgan Stanley are no longer just banks – they have effectively become oil companies, port and airport operators, commodities dealers, and electric utilities as well. This is causing unforeseen problems for the industrial sector of the economy. For example, Coca Cola has filed a complaint with the London Metal Exchange that Goldman Sachs was hoarding aluminum. JP Morgan is currently being probed by regulators for manipulating power prices in California, where the “bank” was marketing electricity from power plants it controlled. We don’t know what other price manipulation could be occurring due to potential informational advantages accruing to derivatives dealers who also market and sell commodities. The long shadow of Enron could loom in these activities."


The Central Banks dont have all the GOLD they claim they have

"SMN: Your gold is more of an insurance policy against government manipulation and/or a collapse?
Marc Faber : I’m aware of some people, including Eric Sprott, that believe that there is manipulation in the system. Where I tend to agree with him is that maybe central banks don’t have all the gold they claim they have, because something must be funny. The Germans have asked for the gold to be returned to Germany. Why would it take eight years to do that? There’s no reason. You can do it in three months.
As I said, I don’t know, but one of the reasons I would be inclined to believe in some manipulation would be, let’s say you’re a central bank, like the Fed. You don’t have the gold that you declared and you know that you have to buy it back at some point. Then, you may wish to manipulate the price down until you can cover your short position in gold at a reasonable cost. There will still be losses, but you can cover them at a reasonable cost. That is really the only reason I could see why a central bank would want to depress the price of gold."


Jim Rogers expects The Chinese Yuan to appreciate 500 percent in the next 20 to 30 years

"Famed investor and co-founder of the Quantum Fund, Jim Rogers said in Shanghai that he expects renminbi, China’s currency, to appreciate 300, 400 or even 500 percent in the next 20 to 30 years.- via nextbigfuture "


Jim Rogers : PREPARE For The COLLAPSE When The FED Stops Printing FIAT CURRENCY


“The Gold System Is Based On Trust & Trust Is Breaking Down”

"Today one of the savviest and well connected hedge fund managers in the world told King World News that unprecedented events taking place in the gold market signal that the all-important trust in the delivery system is now breaking down.  Outspoken Hong Kong hedge fund manager William Kaye also spoke about what the breakdown in trust in the delivery system means for the future gold price.  Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in his fascinating and powerful interview.
“Part of the reason we’ve had this smash on gold is because it was very important to the central bankers and to the BIS that gold and silver not be seen as a viable alternative currency.  The reality is that the physical above ground stock of gold only increases at roughly 1% to 2% each year,whereas the amount of digital money that is printed by the Federal Reserve of US dollars greatly exceeds that by a huge factor....
“Now the central bankers are devious but not stupid.  They know that what I just said is true and they know that the market will catch on to that very quickly, so it’s very important for them to manage and suppress the price of gold, and that’s what they have done through the paper market. 
But we are reaching an important pivot.  As I’m talking to you gold is actually under pressure again, but what’s going on now is the typical gaming that you see which is related to the options expiry.  Options expire tomorrow.  This weakness is all by design.  These guys are extremely devious and very coordinated in the way they manage the price of gold.
The trading action now in gold is meant to discourage people who have reentered the gold market because of the improved technicals.  But despite the ongoing manipulation we have incredibly strong fundamentals, one example being the fact that the lease rates for gold have gone negative and stayed negative for two weeks.
What this means is people are paying a premium for physical gold today vs taking a paper promise from the COMEX or a bullion bank for delivery in a week, two weeks, or a month in the future.  So the fact that people will pay a premium for delivery of gold today tells you everything you need to know. 
Negative lease rates simply mean that the strains are so great in the system, as it relates to delivery of physical bullion, that banks will pay a premium.  This is a bizarre situation.  What this strongly suggests is that the system is breaking down.
It suggests that entities which are in the know, sovereigns and central banks that want to accumulate gold, they don’t trust the system anymore.  They don’t trust the paper contracts.  So the paper contracts for future delivery trade at a discount to current delivery.
What the market is saying is, ‘We want gold today, we don’t want your paper.  We don’t want to hear from you JP Morgan and we don’t trust you COMEX.  We want gold and we want it delivered physically today, and if you can’t do that we don’t want to do business with you.’
And this is why gold for spot delivery today trades at a premium to the paper for future delivery in a week, a month, two months and three months.  The gold delivery system is all based on trust, and trust is breaking down.  What this means is that the setup for gold is as good as if not better than Nasdaq tech stocks in the early 1990s.”


Here Is Why The Price Of Gold & Silver Turned Around Today

"With gold and silver options set to expire, today a legend in the business spoke with King World News about the remarkable events that are taking place in the gold and silver markets.  Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also spoke about the plunging gold inventories, collapsing future gold production, and how this developing crisis will impact the future gold price.  Below is what Barrron had to say in this powerful interview..."


Wednesday, July 24, 2013

Gold To Surge $180 & Silver Set For Massive 35% Advance

"With trading in the $1,350 area, and silver rebounding near $20.50, today top Citi analyst Tom Fitzpatrick sent King World News three fantastic charts covering both the gold and silver markets, and told KWN that both markets are set to have massive price surges from current levels.  
Here is Fitzpatrick’s outstanding interview along with 3 tremendous charts:  “Gold is really now looking like it is set to make a move higher.  Gold had these initial support levels which the down-move had taken gold to, but gold has now pushed back above those important areas.

We would like to see a weekly close above this $1,322 area, which represents the lows we had in the April down-move.  That weekly close will open up the gold market for continued upside.  The next target after that would be to continue to rally and retest what was the impulsive breakdown at the $1,522 zone, which would represent roughly another $180 on the upside for gold (see chart above).”

Failed Gold Gamble To Burn Down Western Financial System

"With gold and silver consolidating, today acclaimed money manager Stephen Leeb told King World News that the West’s now failed gamble in the gold market will only accelerate the destruction of the Western financial system.  Leeb believes that China, which has been the primary driver in the gold market, is positioning itself to become the world’s superpower as the West declines.  Here is what Leeb had to say in this powerful interview.
Leeb:  “Eric, you have to like the technical action in gold.  At one point gold dipped below $1,200 and that marked the bottom.  Gold reversed that day and despite pauses, it has been in a steady uptrend since then.
Gold may consolidate some of the recent gains at these levels, but it’s clear to me that nothing has changed fundamentally in terms of the big picture for gold...."

Tuesday, July 23, 2013

The History of Money – From Gold & Silver to Fiat Currenci

Global Gold Switzerland (, a bullion company specializing in brokerage and custodial services exclusively in the physical precious metals market, has created a report (which can be obtained here) and a short educational 9 minute video (which can be viewed here) in which they explain how our current monetary system works, where it fails and how you can protect yourself against it.
In this particular article we provide 12 insights from the extended report….
  1. Governments have a track record of diluting the value of their currency. History is full of examples where governments started mixing worthless metals into gold coins as soon as they ran into financial trouble.
  2. The first documented case of fraud by a banker dates back to the year 393 BC. A banker called Passio used bribes and falsified documents to misappropriate the gold which was entrusted to his bank. It became a widely used practice of goldsmiths and other depositories to lend out the gold which was handed to them for safekeeping; earning interest on lending out gold in the form of receipts; which wasn’t legally theirs.
  3. The ancient Greeks were the first to use gold coins: The Drachma. Different civilizations in history, like the Greeks, Romans and the history of city states in Italy, have proven that the blossoming of these civilizations took place when they adopted gold or silver based currencies.
  4. The economic and social collapse of the Roman Empire was caused by the inflationary policies of the state; which reduced the purchasing power of the currency. On the other hand, price caps were set for basic goods. This led to the demise of many businesses and brought trade in the Empire to a halt. This development brought banking to an abrupt end. It took nearly 800 years until the banking system was rediscovered during the Middle Ages in the Italian cities.
  5. The gold coin “Solidus” was the world currency for over 800 years. It was used from China to Britain during the Byzantine Empire. At the end of the empire the currency was issued only in silver and minor copper coins with no gold issue.
  6. Banks and governments have been acting as an “alliance” till this day because the fractional system benefits both. Why? Because governments give the banks the right to “print money”. In exchange, they expect the banks to buy their bonds (which is nothing more than debt) so they can continue to spend money which they simply don’t have.
  7. If the gold standard had not been abandoned, World War I would not have lasted longer than a few months. Without the gold standard, however, the war went on for more than four years, ruined leading economies and claimed millions of lives.
  8. Before becoming the chairman of the Fed, Alan Greenspan wrote: “This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the Gold standard”.
  9. Since 1971 the [world currency system has been]…a paper based reserve currency. There is no gold backed currency anywhere on the planet. This has never happened in the last 3,000 years.
  10. Gold was “demonetized” on August 15th 1971 when US President Nixon “temporarily” closed the gold window because, he said, US citizens would be better off, as the dollar would hold its value. Since then, however, the value of the dollar has lost some 90% of its value since then.
  11. History has shown that when governments go too far the market loses trust in their currency, which results in hyperinflation. In the 20th century alone, we have seen 50 hyperinflations across the world.
  12. Debt levels are not sustainable anymore…but there is one concerning fact: Somebody has to pay for it."

David Stockman Warns Investors “Get Out Of Harm’s Way”

"Today David Stockman warned King World News that people need to be prepared for tremendous chaos in global financial markets, and investors need to “get out of harm’s way.”  Stockman is the man former President Reagan called on in 1981, during that crisis, to become Director of the Office of Management and Budget.  Below is what Stockman had to say in part II of his powerful and exclusive interview.
Eric King:  “You’ve talked about large carry trades, and I’m just wondering what your vision is of how those will unwind?”
Stockman:  “That’s what’s wrong with zero interest rate policy and keeping the overnight rate at zero.  It allows people to buy assets that have any kind of yield or any kind of appreciation, put them up as repo, and borrow 95 cents to 98 cents on the dollar.
This isn’t a natural way for a market to function.  The point is that if confidence is ever lost that the Fed and the other central banks of the world can keep this game going, these massive trillions of dollars of carry trades of this sort will unwind....
People will sell the assets, pay down the overnight repo, and there will be no bid to stop the downward acceleration.  The Fed is playing with fire.  It’s created enormously unstable and dangerous markets, and it seems to be either unaware or clueless as to how much danger it has created in the financial system.
We’re taking so much for granted today -- that a $17 trillion debt is no problem.  (Investors assume) we will kind of work our way out of it over time.  Or that a Fed which has taken its balance sheet from a half a trillion dollars at the beginning of this century to $3.5 trillion today is trying to help.
These things are not sustainable.  These things are dangerous policy aberrations that are creating tremendous risks for the whole global economy and financial system.  As I say, all markets are dangerous because correlations have gone to 1.0 during a moment of crisis. 

You can’t have confidence in the central banks, and you can’t have confidence in the mainstream narrative.  The only thing you (investors) can really do is get out of harm’s way.”

Art Cashin - Watch Plunging Gold Inventories & Backwardation

"Today 50-year veteran Art Cashin warned about major concerns in the gold market because of declining gold inventories.  Cashin, Director of Floor Operations at UBS ($650 billion under management), also cautioned about the backwardation in gold, and noted the massive global demand as well.
Art Cashin:  “All That Glitters Is Not Arbitrage – Monday, spot gold spiked up $45 and the media pundits pointed to things from China to the FOMC.  While all the cited may have been factors, veteran traders saw the bulk of the move resting in a conspiracy story.
In my mid-day email to friends I had noted this:
Gold soars as NYT story on metal warehouses fans flames of conspiracy theorists that gold warehouse
stores have been "lent" out.  That theory also aided by backwardation (spot price far above near future).
If you haven't been following gold closely, let me expand on that a little.  For several months “physical gold” (bracelets, coins and small bars) have seen near riotous demand with long lines stretching into the streets.  At the same time “paper gold” (ETF's, futures and nominal spot) have seen sharply falling prices.  That dichotomy has sparked more than a few conspiracy theories.
The worst (and most strained) claims the world's central banks have put a bear raid on gold.  That rumor claims that they are trying to cover the fact that they have sold/lent the gold they were supposedly safeguarding for their citizens.  A plunging gold price would reduce the urge to look behind the curtain (or into the vault) and discover this misfeasance.  A more pervasive form of the  rumor/hypothesis substitutes the global banks for the central banks but with the same, theoretical, abuse of custody.
A key support of these theories is the backwardation in gold – the spot price is higher than the near future contract.  That's unusual.  It could normally be resolved by selling spot gold and buying the cheaper future one month out.  Thus, in a month, you would reap an apparent locked-in, riskless profit.  Yet no one seems to be doing it.  Is there doubt that there is gold in storage that will be deliverable in a month?  So, the theorists assume. 
Now add in the front page NYT story, hinting chicanery and manipulation by the big banks of warehoused metals.  Was this the smoking gun?  Some folks seemed to think so as a short covering stampede exploded the gold price.  The next five days will be key.”


Monday, July 22, 2013

Gold Daily and Silver Weekly Charts - Reuters Says Gold Demand Outpacing Supply

""The current dislocation indicates that holders of gold futures have begun demanding delivery. But because of the large amount of leverage in the market, participants are not able to deliver on their obligations."

Reuters, Gold Futures Hiccup Indicates Demand Outpacing Supply
This is not news to anyone who has been frequenting this café.  But it is nice to hear it from another source..."


Developing Gold Bottom: A Closer Look At a Short Term Excess of Power

"Here is a closer look at the gold bottom that everyone and their brother was rushing to call last week, so they could claim prescience.

As I have said several times over the last several weeks, every time that the COMEX dealer inventory has fallen to record lows like this, it has marked an intermediate trend change that in retrospect proved to be significant.

The drawing down of physical inventory available for delivery is one of the surest signs of a price manipulation gone too far.

And for the first time in this waterfall decline since the German people had the temerity to ask for the return of their national gold from the NY Fed, we see a legitimate chart formation that could mark a significant bottom in price..."


Ahead Of Tomorrow's Hearing On Goldman And JPM's Commodity Cartel

"Back in June 2011 we first reported how "Goldman, JP Morgan Have Now Become A Commodity Cartel As They Slowly Recreate De Beers' Diamond Monopoly" in an article that explained, with great detail, how Goldman et al engage in artificial commodity traffic bottlenecking (thanks to owning all the key choke points in the commodity logistics chain) in order to generate higher end prices, rental income and numerous additional top and bottom-line externalities and have become the defacto commodity warehouse monopolists. Specifically, we compared this activity to similar cartelling practices used by other vertically integrated commodity cartels such as De Beers: "While the obvious purpose of "warehousing" is nothing short of artificially bottlenecking primary supply, these same warehouses have no problem with acquiring all the product created by primary producers in real time, and not releasing it into general circulation: once again, a tactic used by De Beers for decades to keep the price of diamonds artificially high."

Over the weekend, with a 25 month delay, the NYT "discovered" just this, reporting that the abovementioned practice was nothing but "pure gold" to the banks. It sure is, and will continue to be. And while we are happy that the mainstream media finally woke up to this practice which had been known to our readers for over two years, the question is why now? The answer is simple - tomorrow, July 23, the Senate Committee on Banking will hold a hearing titled "Should Banks Control Power Plants, Warehouses, And Oil Refiners."

While congratulations are also due to the Senate for finally waking up to this monopolistic travesty conducted by the big banks, we can only assume that this is due to various key non-bank industry participants (such as MillerCoors) crying foul so much that even the Fed is now involved and is supposedly reviewing its own decision from 2003 that allowed this activity in the first place.

Bloomberg explains:

When the Federal Reserve gave JPMorgan (JPM) Chase & Co. approval in 2005 for hands-on involvement in commodity markets, it prohibited the bank from expanding into the storage business because of the risk.  Five years later, JPMorgan bought one of the world’s biggest metal warehouse companies.

While the Fed has never explained why it let that happen, the central bank announced July 19 that it’s reviewing a 2003 precedent that let deposit-taking banks trade physical commodities. Reversing that policy would mark the Fed’s biggest ejection of banks from a market since Congress lifted the Depression-era law against them running securities firms in 1999.

“The Federal Reserve regularly monitors the commodity activities of supervised firms and is reviewing the 2003 determination that certain commodity activities are complementary to financial activities and thus permissible for bank holding companies,” said Barbara Hagenbaugh, a Fed spokeswoman. She declined to elaborate.

“When Wall Street banks control the supply of both commodities and financial products, there’s a potential for anti-competitive behavior and manipulation,” Brown said in an e-mailed statement. Goldman Sachs, Morgan Stanley and JPMorgan are the biggest Wall Street players in physical commodities.

Of course, when one is a monopoly, the revenues follow easily. The trick, of course, is to keep Congress very much unaware of said monopoly and let the good times roll.

The 10 largest banks generated about $6 billion in revenue from commodities, including dealings in physical materials as well as related financial products, according to a Feb. 15 report from analytics company Coalition. Goldman Sachs ranked No. 1, followed by JPMorgan.

While banks generally don’t specify their earnings from physical materials, Goldman Sachs wrote in a quarterly financial report that it held $7.7 billion of commodities at fair value as of March 31. Morgan Stanley had $6.7 billion.

On June 27, four Democratic members of Congress wrote a letter asking Fed Chairman Ben S. Bernanke, among other things, how Fed examiners would account for possible bank runs caused by a bank-owned tanker spilling oil, and how the Fed would resolve a systemically important financial institution’s commodities activities if it were to collapse.

Just because questions like these finally had to be asked, one has to laugh. One person not laughing, tough, is Ben Bernanke - the man whose Fed allowed bank commodity cartellization to take place originally. He is certainly not laughing now that he may be forced to undo this permission, in the process impairing banks to the tune of billions in revenue: as a reminder, the Fed works purely to benefit America's banks and to provide them with whatever top-line amenities they need and are confident they can pass by under the noses of dumb congressmen. But at least the Fed promises it can "supervise" all these TBTF banks. Or can it?

Now, “it is virtually impossible to glean even a broad overall picture of Goldman Sachs’s, Morgan Stanley’s, or JPMorgan’s physical commodities and energy activities from their public filings with the Securities and Exchange Commission and federal bank regulators,” Saule T. Omarova, a University of North Carolina-Chapel Hill law professor, wrote in a November 2012 academic paper, “Merchants of Wall Street: Banking, Commerce and Commodities.”

The added complexity makes the financial system less stable and more difficult to supervise, she said in an interview.

“It stretches regulatory capacity beyond its limits,” said Omarova, who is slated to be a witness at the Senate hearing. “No regulator in the financial world can realistically, effectively manage all the risks of an enterprise of financial activities, but also the marketing of gas, oil, electricity and metals. How can one banking regulator develop the expertise to know what’s going on?”

Now that the entire world is looking, and not just a select subset of Zero Hedge readers, the full extend of Goldman's monopoly becomes apparent:

Goldman Sachs owns coal mines in Colombia, a stake in the railroad that transports the coal to port, part of an oil field off the coast of Angola and one of the largest metals warehouse networks in the world, among other investments. Morgan Stanley’s involvement includes Denver-based TransMontaigne Inc. (TLP), a petroleum and chemical transportation and storage company, and Heidmar Inc., based in Norwalk, Connecticut, which manages more than 100 oil tankers, according to its website.

Mark Lake, a spokesman for New York-based Morgan Stanley, referred to company regulatory filings that said the bank didn’t expect to have to divest any of its activities after the grace period ends. He declined to elaborate or to comment on the Fed’s announced rule review.

Brian Marchiony, a spokesman for JPMorgan, also declined to comment on the review, as did Michael DuVally, a Goldman Sachs spokesman.
In February 2010, Goldman Sachs bought Romulus, Michigan-based Metro International Trade Services LLC, which as of July 11 operates 34 out of 39 storage facilities licensed by the London Metal Exchange in the Detroit area, according to LME data. Since then, aluminum stockpiles in Detroit-area warehouses surged 66 percent and now account for 80 percent of U.S. aluminum inventory monitored by the LME and 27 percent of total LME aluminum stockpiles, exchange data from July 18 show.

Traders employed by the bank can steer metal owned by others into Metro facilities, creating a stockpile, said Robert Bernstein, an attorney with Eaton & Van Winkle LLC in New York. He represents consumers who have complained to the LME about what they call artificial shortages of the metal.

“The warehouse companies, which store both LME and non-LME metals, do not own metal in their facilities, but merely store it on behalf of the ultimate owners,” said DuVally, the Goldman Sachs spokesman. “In fact, LME warehouses are actually prohibited from trading all LME products.”


Gold Surges To Its Best Day In 13 Months

"With gold now up an impressive 13.1% from its post-Bernanke lows 3 weeks ago (notably more than the +8.8% in US equities), it appears the physical demand is quietly catching up to the paper supply. As we noted here, shorts covered around 11% of their positions in the last week and we suspect today's surge is yet more covering as the massively over-crowded paper-short gold position starts to unwind. Of course, this surge is disappointing to many (including China we suspect) as the 'transitory' end of the price beatdown means we can buy less physical (and take immediate possession) now than at the June lows of $1180. With gold testing its 50DMA for the first time since February, we suspect the momo crowd will be quick to jump ship should we push on through..."


Goldrunner: Fed’s Review of Banks Trading In Physical Commodities A Pivotal Moment For Gold

"Gold has busted up on the open to take out the $1300 resistance. This article explains the reasoning for that move, why it is so pivotal in nature and what to expect in gold pricing action over the short term.

In the past we have discussed how the Glass-Steagall Act repeal effectively allowed the Fed Banks to move out of the banking realm to trade in everything in the market and, as such, the Fed Banks have been able to completely manage all of the markets with the use of paper leverage since they know in advance what the Fed is going to do and going to say.  To put it more simply, they have been able to front-run everything with huge leverage. That may be about to change, however, with the announcement over the weekend by Reuters that the Federal Reserve was going to review allowing banks to trade in physical commodities.

The Fed and its banks would have known this end of pure control was coming which would go a long way towards explaining why the total “in your face” paper shorting of Gold, Silver, and PM Stocks that we have seen occurred. In fact, with this news, we might be seeing the final fling of the Fed Banks in terms of complete control of the markets..."


Jim Rogers: All the Debt is in the West while all the Credit is in the East

"Fusion: Druckenmiller is warning about a rise in US rates, due to uncontrollable entitlements here in the US. Will China reduce their holdings of US Treasuries? What is your take ?
Jim Rogers: If you keep giving stuff away, your debt goes higher and higher, and there is no one to pay the debt. The US is the largest debtor nation in the history of the world. Only half pay taxes – this is an absurd situation.  All the debt is in the west while all the credit is in the east. Regarding China, yes, I wish they had already started reducing their exposure to Treasuries.   - Jim Rogers interview with Fusion MarketSite"


Andrew Maguire - Hedge Funds Gold Shorts To Get Massacred

"Today whistleblower Andrew Maguire stunned King World News when he said that hedge funds which are heavily short gold will get massacred and may in fact go under.  Maguire, who recently appeared in the CBC production “The Secret World of Gold,” also spoke about extraordinary events taking place at the LBMA, where bullion banks are in serious trouble once again.  Below is part two of a series of extraordinary written interviews which covers only a small portion of what Maguire had to say in his tremendous KWN blockbuster audio interview.
Maguire:  “The LBMA bullion stocks are thin.  For example, the LBMA delivery conditions were extended from 2 days to 5 days.  Why do you think this little known decision to extend delivery times was made at the request of the bullion banks?  The fact is that the gold market has been in tight supply for some time now. 
There is just very little physical (gold) for sale in size at these current levels.  In the past I reported leased gold regularly appeared at the (London) fixes, where the Bank of England would step in at the clearing hour, after the fix, to lend metal to meet these delivery shortfalls....
“Much less of this is now happening.  Many of these accrued positions, they already can’t be paid back within the originating terms.  So on a short-term basis they have to be rehypothecated, further rolled out, and they match even further out forwards and futures (contracts).
These guys are digging an even deeper hole.  Talk about an act of desperation.  When viewed from a wholesale market perspective, it’s absolutely clear this is an act of desperation.  There is only one other alternative -- you buy back these leases.
The first stage we just discussed is what we’ve already seen.  The second is now happening and it’s about to accelerate, which is going to ignite very large hedge fund short fuel above the market.  Eric, these funds are the bullion banks’ reserve fuel.  It will be the next source of bullion bank short covering, and it’s going to place the funds in serious trouble.  (They will be) left holding the bag.

We could easily see some of these short funds go down.  People say, ‘But they’ve got lots of profits.’  But bear in mind that with their short profits, instead of crystalizing them, they’ve continued to add to these shorts to unprecedented levels and at much lower price levels.

So it doesn’t take much of a gap higher to place some of these funds (seriously) under water.  And I expect a very narrow exit window when this happens.  Some of these funds are going to be unable to exit.  I would absolutely advise your listeners (and readers) to be really careful who you have your investments with. 
This (upside) resolution is going to be disorderly.  I believe the only way the Fed can stem this outflow of bullion is to actually allow the price (of gold) to go back above $1,300.  Western central banks are no longer in a position of strength, and these paper market games are just desperate acts (at this point).”

Gold Headed To Old High, But Gains In Silver Will Be Historic

"With the price of gold and silver soaring, today John Embry told King World News there is going to be a continued massive surge in the gold price, but the gains in silver will be “historic.”  Embry spoke at length about the gold and silver markets, the Fed and the mining shares.  Below is what Embry had to say in this powerful interview. 
“I’m focused on the better tone in the gold and silver markets.  It’s been a long struggle, but with all of the information that’s come out recently regarding how tight the physical market is and the fact that the paper gold market really is one of the greatest Ponzi schemes of all-time, I think we could finally be on the cusp of a huge move in gold...."

Thursday, July 18, 2013

China Reported Planning To Back the Yuan With Gold

"This is an interesting article for several reasons, not the least of which is that it is from a Russian publication and perspective, reflecting on the possible actions of China in the evolution of the global reserve currency regime.

As you know Russia is promoting a rethinking of the post Bretton Woods monetary system through their chairmanship of the G20 this year.   There are other shoes to drop yet from that.

I suspect that China is playing chess here, or perhaps more appropriately the game of 'Go,' and not checkers. So snap judgements about what they are doing and why they are doing it are probably going to be fairly shallow.  Most professionals and so-called experts are blinded by the status quo, lost in their own jargon and assumptions.  There are many mechanics, but fewer systems thinkers. 

Every action that is public masks a myriad of moves and countermoves done off the board and in quiet.  Most who comment fail to grasp this because of cultural predilections.

Thoughts about capitalists selling rope do come to mind among other things relative to the short term and self-serving, stupidly greedy nature of the markets these days.  But to borrow a phrase, economic power grows out of the barrel of a gun.  It can call most hands.

Among other things the price discovery mechanism for gold currently resides with the Anglo-American financial establishment, which has been fairly shameless of late in shoving prices around the plate using paper leverage, and fixing key prices at will whether they reflect reality or not.   That will have to be addressed.  And I suspect it is well underway.

The terms of 'redeemability,' if any, are obviously of paramount importance in such a value reference to gold, as well as currency markets that are notorious for predatory practices, whether one wishes to acknowledge the rigging or not.

I am giving this more thought and will have other things to say about it in the future.  But these are undeniably interesting times..."


Detroit Will Now Almost Certainly File For Bankruptcy, And It's Going To Be The Biggest Ever

"Detroit is likely to file for bankruptcy after two municipal pension funds sued city emergency manager Kevyn Orr.

The Motor City faces $20 billion of long-term liabilities. The Wall Street Journal's Matt Dillon says those holding onto $11 billion in unsecured debt are basically staring into the abyss, facing the prospect of getting next to nothing from the city's obligations.
If, as expected, the city files for Chapter 9 protection, it will be the largest municipal bankruptcy in U.S. history, dwarfing Jefferson County, Ala.'s $3.1 billion sewage district restructuring..."


40 Stats That Prove The U.S. Economy Has Already Been Collapsing Over The Past Decade

"The following are 40 stats that prove the U.S. economy has already been collapsing over the past decade...
#1 According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001.  That number dropped to 21.6 percent in 2011.
#2 The United States was once ranked #1 in the world in GDP per capita.  Today we have slipped to #14.
#3 The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.
#4 Since the year 2000, the size of the U.S. national debt has grown by more than 11 trillion dollars.
#5 Back in the year 2000, our trade deficit with China was 83 billion dollars.  Last year, it was 315 billion dollars.
#6 In the year 2000, about 17 million Americans were employed in manufacturing.  Today, only about 12 million Americans are employed in manufacturing.
#7 The United States has lost more than 56,000 manufacturing facilities since 2001.
#8 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.
#9 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.
#10 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Today, China’s high-tech exports are more than twice the size of U.S. high-tech exports..."


Is China Surpassing U.S. As A Superpower?

"People in the U.S. and China view each other with increasing suspicion, and many others around the world see the U.S. losing its place to China as the leading economic and political power, a new public opinion poll shows.
The two most powerful nations in the world, the United States and China continue to wage a quiet war using cyber terrorism and NSA spying as weapons.  The world’s population is witnessing the United States falling to the number two position economically and politically.

Recession in the U.S. contributing to receding reputation

According to a survey of around 38,000 people in 39 countries released on Thursday by the Washington-based Pew Research Center, majorities or pluralities in 23 of the nations surveyed said China either has replaced or eventually will oust the U.S. as the world’s top superpower.
The people of China are in complete agreement of the world’s assessment, but in the United States the reaction is mixed.  For three decades China’s economy has shown steady growth, while in 2008 a recession in the United States resulted in a lack of faith that it will continue to be the world’s greatest economic power.

Chinese believe their country surpasses the U.S.

This recent poll shows that only 47 percent of Americans believe that the United States will continue to be the number one rated nation in the world.  In 2008, the percentage was at 54.  Two-thirds of Chinese believe their country has surpassed the United States, and 56 percent believe their country deserves more respect.
The people of China are losing faith that the two super powers are cooperating in a positive fashion.  The numbers have dropped from 68 percent to less than one-third of the population.  In addition, the Chinese say they are losing faith in President Barrack Obama..."

An Economic Collapse that is Going to be Worse than 1929: Karl Denninger

"Employers are cutting full-time employees back to part-time to avoid the requirement of providing health insurance under Obama Care.  Trader Karl Denninger says, “As the Obama Administration runs against the economic reality of what they passed, they are now trying to find ways to dodge it. . . . The Obama Administration’s reaction to this has been to unilaterally, and by the way illegally, put off the imposition of mandate.”  This is not going to save the teetering economy as Denninger contends, “Bernanke has lost control of the bond market and, in general, his policy. . . . The reality is the Fed is not in charge, and when that confidence level breaks, you are going to see all hell break loose.”  Denninger goes on to predict, “We are setting up for a collapse that is going to be worse than 1929, and it’s going to come sometime within the next two years.  It could come as soon as the next couple of months, but it is going to happen, and there’s nothing that is going to stop it.”  Join Greg Hunter as he goes One-on-One with Karl Denninger of "