muses of the moment

April 30, 2010

Explaining the gold price

Why did gold shoot through the $1160 and then $1175 resistance and is currently sitting at 1181?

Bank of Nova Scotia ‘stopped’ 699 big contracts, or roughly 1.7 tons of gold, the bulk of which was supplied by J.P. Morgan.

As you may recall, the Canadian bullion bank Scotia Mocatta is a subsidiary of Bank of Nova Scotia. Socita Mocatta was recently involved in a bit of a scandal when some investors went to visit ‘the vault where their gold was stored’ and found it to be surprisingly, perhaps shockingly, undersupplied.

Is BNS acting to back up their paper, or are large investors asking for their bullion in advance? Either way, its an act of good faith on the part of BNS to take the delivery, and probably very smart to do it.

Click here  for the whole story from Jesse at Cafe Americain.

When investors/bullion banks start taking delivery of the physical metal instead of cash settlements, this is the effect on the price of gold….$1180.

$5000 gold is completely attainable in light of the rumors of the amount of “paper” gold out there. It is just a matter of time before more investors get nervous about where their physical gold really is located.

Have most of your gold and silver investments in the physical metal in several allocated accounts.

And if you need more proof. Click here. Gold is the best performing currency, no one acknowledges as a currency….yet.

The public doesn’t like to be fleeced. Click here.

Someone is getting their hand slapped for market manipulation. Click here.

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Groovygirl’s summary of the crisis

So, I thought I would summarize and comment on the multi-economic crisis going on right now.

First, it’s all a distraction from the real issue fast approaching….collapse of all global currencies.

Therefore, don’t panic. Preserve your savings and capital with physical gold and silver, and at the right time, most all other commodities, as anything made of or written on paper is dead.

Goldman Sachs and their hedge fund partners-in-crime will not be prosecuted for anything criminal on a federal level. I am sure some individual “fall guys” are being set-up now. GS et al will continue their strategic investment plan of shorting stressed markets, and no meaningful regulation will come out of Congress. They will however be crippled by private lawsuits from now until at least 2020. When State pension funds start suing, the real fun will begin. Relax, the circle of karma will be complete, it’s just not in a rush.

All global governments and central banks will continue to print money. They will sell their debt to a market of sheeple until they have to buy it back themselves. They will continue to bailout any bank, debt, country or currency under stress. This process will cause hyperinflation in all Western currencies. It will cause a hyperinflationary depression worldwide. Western countries will be the most effected, Eastern countries the least.

Western governments’ lack of addressing the severe crisis and resulting hyperinflationary depression will lead to civil unrest and political upheaval in the West.

The period before or after the hyperinflation phase will result in a new global reserve currency. Gold will be part of that currency.

The likelihood of a large-scale war to distract from the global crisis is high.

Immigration is a problem, but still just a distraction from the real crisis…collapsing dollar. Guns…distraction. Health care…distraction. The collapsing USdollar will make all the “issues” non-issues, whether anyone cares to acknowledge it or not. No one will be able to deal with any of these issues in a true democratic manner until the collapsing dollar is acknowledged and fixed in a meaningful way.

The gold and silver markets are manipulated in the same way all other markets are manipulated. Be aware, but it is ultimately good for those buying metals now. In this environment, nothing can stay hidden for too long, as the fall in Martin Armstrong’s investor confidence is the cycle we are observing right now. Physical gold and silver in an allocated account/vault can not be manipulated for long. You may be taxed, but if you buy now, that will have little bearing compared to what you will lose for certain in any fiat currency.

Nothing is fixed, it will not be fixed, look only for distractions and doublespeak from the Western governments you have come to rely on.

It is groovygirl’s opinion that the severity of the global crisis will become apparent to most by 2012, if not already, and to all by 2015.

The reign of the West is over. China will be the global power by 2020.

This is a phase, a cycle of the winter K-wave, fully expected if you study economic history. This, too, shall pass.

Protect your savings and your family, the government can no longer afford to do it for you, even if they wanted to.

Side musing: this gold manipulation is still very interesting…no one is giving up any answers to any questions. Gold market selling is becoming very secretive lately. Click here. And here.

April 29, 2010

Today’s lesson

When you can’t fix the economy, change the formula for the data.

Click here for the latest one-time change from The Big Picture.

Expect much more of this. This is rearranging the furniture on the sinking Titanic. Nothing is fixed. And it appears nothing will be fixed, just rearranged. That is why it is so important to have the real stats from websites like shadowstats.com.

Side musing:

Ben Bernanke is preparing the media/public for the next phase in the crisis: higher interest rates and the next economic downturn.

Click here for Ben’s latest thoughts. Groovygirl is confused that Ben is talking about a budget gap, when his organization has the power to not bailout American banks, European debt, and AIG. The Fed creates the money to lend to the US gov or IMF to bailout anything that moves. These are the things that have created a budget gap in the last 18 months, but they will blame the economy and cut social security and medicare and increase taxes. SS is a problem, but the economic crisis just moved up the problem 10 years and closed out any time for a solution.

“Increasing levels of government debt relative to the size of the economy can lead to higher interest rates, which inhibit capital formation and productivity growth — and might even put the current economic recovery at risk.”

And this.

Higher interest rates will crash US sovereign debt and implode the USDollar. This scenario can not be avoided at this point. Gold and silver is your security against a falling dollar. Europe’s debt is imploding, the Euro is falling, and so gold priced in Euro is reaching new highs. This same thing will happen in the US. No bailout or rumor of bailout will help this situation because the debt is too big to cover no matter how much money you print.

If you are watching the European crisis, the fall of the USDollar will come as no surprise to you.

The GS circus is a distraction now. While they are speaking before Congress, they are using the same hedging technique in European debt.

April 28, 2010

Janjuah has switched sides

Bob Janjuah has a new post out (via zerohedge.com). Click here.

He has moved to the reinflation, bubble camp. He has some predictions for the next few months and long-term for stocks, gold, currencies, and sovereign debt.

He has finally joined the rest of us…governments and banks will continue blowing bubbles, damn the consequences for the globe.

totallygroovygirl:

As an investor, if you are day-trading a portion of your net worth, you may ride the bubbles before they pop. But make sure the rest of your net worth is protected from the ultimate popping bubble…..currencies. The more bubbles we have, the bigger the currency bubble will be. If you are not out of currencies when it pops, all your previous bubble profit will be gone. Be very alert.

This is not the time to be greedy, it is the time to be alert and protect your savings.

Side musing: I thought the following link was an excellent interview with Jesse from Jesse’s Cafe Americain. Click here. Groovygirl shares Jesse’s concerns for political challenges facing the US.

Side-side musing: gold in USDollars made a nice little jump yesterday. Let’s see if it can keep it up. We are fighting that 1160-1165 level.

April 27, 2010

Bill Moyers on banking

Bill Moyers’ Journal has produced some really good shows about the banking system and net neutrality recently. Bill Moyers is one of the few news programs actually reporting news. Even if you don’t agree with Bill’s guests conclusions, you will usually get the facts from both sides so you can do your own research.

Here are some links.

Banking show from April 16 , 2010 with Simon Johnson. Click here.

FCC and Net Neutrality show from April 23 , 2010 with Michael Copps. Click here. (Warning opinion: Groovygirl is a little concerned about Mr. Copps’ background. He sounds like he is on the right track for solutions to these problems and listening to the people, but will it play out as it is intended? The track record of government regulation, even under President Bush, has not been that effective.)

William Black on the bank bailouts from April 23, 2010. Click here. (I really like Mr. Black’s take on more regulation…..we had regulation, but the watchdogs did not use it, thus we have a crisis. This negative feedback loop is now affecting other areas, such as immigration. If law lets people, businesses and thus immigrants, break laws or go through loopholes that have been on the books for 20 years, it will be a much bigger problem when you all of sudden enforce the law, then if you had no law in the first place. The laws now have to be rewritten from scratch for the current situation, not just old laws all of sudden enforced. IMO, NAFTA just accelerated this issue by driving small Mexican businesses/farmers, out of business. This negative feedback loop is what Martin Armstrong refers to the failure of the rule of law.)

April 26, 2010

The US Dollar…doomed in next 10 years (probably sooner)

Here is a great post by Eric Sprott. Click here via zerohedge.com. This is an informative post, lots of very important information. We are making the transition from banking crisis to sovereign debt crisis.

However, today, groovygirl would like to focus on one section:

The rating agencies’ ranking of the United States is even more disconnected from reality. To believe that the US sets the benchmark for sovereign debt credit ratings is preposterous. While we have written ad nauseam about the excessive debt issuance by the United States, we found a recent update written by United States Government Accountability Office (GAO) to be particularly instructive. The update noted the US’s budget deficit equivalent to 9.9% of GDP in 2009 – the largest since 1945 – and stated that without significant policy changes the US government would soon face an “unsustainable growth in debt”. This was not news to us. It goes on to state, however, that using reasonable assumptions, “roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020.8 This is news! In less than ten years, using reasonable assumptions, there will essentially be no money left to run the US government – 93% of all tax revenues the US government collects will go to pay social security, Medicare, Medicaid and the interest costs on their national debt. This implies no money left over for defense, homeland security, welfare, unemployment benefits, education or anything else we associate with the normal business of government. And the US government is rated AAA!?

The government will HAVE TO either print more dollars or devalue “revalue” the dollar before 2020 (probably both). The baby boomers will not allow the government to go back on their social security/medicare promises completely. So, the government will create a hyperinflationary situation where the social security checks will buy nothing. This will also have the effect of “devaluing” the amount owed on the historical sovereign debt to other countries. When the hyperinflation is noticable, they will issue a new dollar that is worth less. 

This scenario has to happen in the next ten years, most probably closer to 2015. The government has no other choice. Destroy the dollar’s purchasing power or complete civil upheaval by the people because of failed promises.

Prepare your investments now for that change. Do not count on social security or any other government program for your retirement. If you are in the middle of retirement now, make drastic changes.

Gold and silver are the ultimate currencies. Every Western government will be facing the same situation, each currency/sovereign debt will be facing the same thing. The currency markets will become very violent.

April 25, 2010

More on gold and silver manipulation

Filed under: Gold and Silver Investing, Precious metals, The Dollar Crisis — Tags: — totallygroovygirlfriday @ 1:07 am

Mike Maloney from goldsilver.com has a 3 min video on the gold and silver manipulation going on. He says “bring it on”. Groovygirl agrees, this gives the average investor (and China) time to buy physical precious metals at reduced prices.

Click here for the video.

If you can not afford gold, buy silver. If you can afford both, please do.

Groovygirl would love to see the rule of law prevail and manipulation be stopped in all investments, but sadly, gg doubts that will happen. So, go with the flow. When the price breaks out, it will be explosive.

Thoughts from Marc Faber on manipulation and other current financial issues. Click here.

April 24, 2010

For those freaking out about the gold price

The chart show that gold is right on track. Do not panic. Do not be distracted by the daily noise from the F-TV talking heads. The short-term manipulators take gold down at 6 am every morning, but the price is moving exactly as it should long-term. China understands this and is taking advantage of it.

If inflation continues to increase, so will this chart. Gold has far to go.

Side musing: one explanation for the up/down in gold price the last few weeks. It’s all about the Euro debt crisis. Click here.

Seven banks in Illinois taken down this week. This is a controlled banking implosion. At some point, it will not be controlled. The government can not continue forever to print and borrow money to buyout this crisis. Be prepared.

April 23, 2010

Food inflation

Filed under: Hyperinflation, Inflation, The Dollar Crisis — totallygroovygirlfriday @ 1:52 am

Here is an email I received from the National Inflation Association:

Click here  for their website link.

U.S. Food Inflation Spiraling Out of Control

 The Bureau of Labor Statistics (BLS) today released their Producer Price Index (PPI) report for March 2010 and the latest numbers are shocking. Food prices for the month rose by 2.4%, its sixth consecutive monthly increase and the largest jump in over 26 years. NIA believes that a major breakout in food inflation could be imminent, similar to what is currently being experienced in India.

 Some of the startling food price increases on a year-over-year basis include, fresh and dry vegetables up 56.1%, fresh fruits and melons up 28.8%, eggs for fresh use up 33.6%, pork up 19.1%, beef and veal up 10.7% and dairy products up 9.7%. On October 30th, 2009, NIA predicted that inflation would appear next in food and agriculture, but we never anticipated that it would spiral so far out of control this quickly.

 The PPI foreshadows price increases that will later occur in the retail sector. With U-6 unemployment rising last month to 16.9%, many retailers are currently reluctant to pass along rising prices to consumers, but they will soon be forced to do so if they want to avoid reporting huge losses to shareholders.

Food stamp usage in the U.S. has now increased for 14 consecutive months. There are now 39.4 million Americans on food stamps, up 22.4% from one year ago. (Food stamps are the soup lines/bread lines of the Great Depression.) The U.S. government is now paying out more to Americans in benefits than it collects in taxes. As food inflation continues to surge, our country will soon have no choice but to cut back on food stamps and other entitlement programs.

 Most financial experts in the mainstream media are proclaiming that the recession is over and inflation is not a problem in the U.S. Unfortunately, they fail to realize that rising food and gasoline prices accounted for 58% of February’s year-over-year 3.85% rise in retail sales. NIA believes price inflation is beginning to accelerate in many areas of the economy besides food and energy, and all increases in U.S. retail sales this year will be entirely due to inflation.

April 22, 2010

Martin Armstrong’s latest letter dated 4-18-10

Filed under: Economic Crisis, Martin Armstrong, The Federal Reserve, The Financial Crisis — Tags: — totallygroovygirlfriday @ 1:58 pm

Here is Martin Armstrong’s latest letter (10 pages) dated 4-18-10 entitled, The Paradox of Solution. Click here.

Martin is “out of the hole” now.

This letter reviews the original purpose for the Fed and the changes since then.

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