Gordon T Long

RESEARCH ANALYTICS for the GLOBAL MACRO

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PRESERVE & PROTECT: What Made America Great is now Killing Her!

 

 

 

What made America great was her unsurpassed ability to innovate.  Equally important was also her ability to rapidly adapt to the change that this innovation fostered. For decades the combination has been a self reinforcing growth dynamic with innovation offering a continuously improving standard of living and higher corporate productivity levels, which the US quickly embraced and adapted to.

 

This in turn financed further innovation. No country in the world could match the American culture that flourished on technology advancements in all areas of human endeavor. However, something serious and major has changed across America.  Daily, more and more are becoming acutely aware of this, but few grasp exactly what it is.  It is called Creative Destruction. 

 

It turns out that what made America great is now killing her!

 

Our political leaders are presently addressing what they perceive as an intractable cyclical recovery problem when in fact it is a structural problem that is secular in nature. Like generals fighting the last war with outdated perceptions, we face a new and daunting challenge. A challenge that needs to be addressed with the urgency and scope of a Marshall plan that saved Europe from the ravages of a different type of destruction. We need a modern US centric Marshall plan focused on growth, but orders of magnitude larger than the one in the 1940’s. A plan even more brash than Kennedy’s plan in the 60’s to put a man of the moon by the end of the decade. America needs to again think and act boldly. First however, we need to see the enemy. As the great philosopher Pogo said: “I saw the enemy and it was I”.

READ MORE

 

 

SULTANS OF SWAP: Gold Swaps Signal the Roadmap Ahead

 

SLIDE REFERENCE PAGE: Shadow Banking

 

The news rocked the global gold market when an almost obscure line item in the back of a 216 page document released by an equally obscure organization was recently unearthed. Thrust into the unwanted glare of the spotlight, the little publicized Bank of International Settlements (BIS) is discovered to have accepted 349 metric tons of gold in a $14B swap. Why? With whom? For what duration? How long has this been going on? This raises many questions and as usual with all $617T of murky unregulated swaps, we are given zero answers. It is none of our business!

Considering the US taxpayer is bearing the burden of $13T in lending, spending and guarantees for the financial crisis, and an additional $600B of swaps from the US Federal Reserve to stem the European Sovereign Debt crisis, some feel that more transparency is merited. It is particularly disconcerting, since the crisis was a direct result of unsound banking practices and possibly even felonious behavior. The arrogance and lack of public accountability of the entire banking industry blatantly demonstrates why gold manipulation, which came to the fore in recent CFTC hearings, has been able to operate so effectively for so long. It operates above the law or more specifically above sovereign law in the un-policed off-shore, off-balance sheet zone of international waters.

Since President Richard Nixon took the US off the Gold standard in 1971, transparency regarding anything to do with gold sales, leasing, storage or swaps is as tightly guarded by governments as the unaudited gold holdings of Fort Knox. Before we delve into answering what this swap may be all about and what it possibly means to gold investors, we need to start with the most obvious question and one that few seem to ask. Who is this Bank of International Settlements and who controls it?

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READER ROADMAP -  2010 TIPPING POINTS aid to positioning COMMENTARY

 

 

 

1

         

SOVEREIGN DEBT PIIGS

EU BANKING CRISIS
BOND BUBBLE

STATE & LOCAL GOVERNMENT

CENTRAL & EASTERN EUROPE
BANKING CRISIS II
RISK REVERSAL

COMMERCIAL REAL ESTATE

CREDIT CONTRACTION II

RESIDENTIAL REAL ESTATE - PHASE II
EXPIRATION FINANCIAL CRISIS PROGRAM
US FISCAL IMBALANCES
PENSION CRISIS
CHINA BUBBLE

TODAY'S TIPPING POINTS UPDATE

Last Update: 08/16/2010 06:05 AM

RED ALERT

AMBER ALERT

ACTIVITY

MONITOR

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POSTS:  MONDAY 08-16-10

 

 

GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN

 

IRAN

Banks put on notice over Iran business  FT

 

ISRAEL

US issues arms deal ultimatum to Turkey  FT

Obama warns Erdogan over Israel and Iran

 

KOREA 

 

SOVEREIGN DEBT & CREDIT CRISIS

 

Ireland can withstand the euro's ordeal by fire, but can Southern Europe? Pritchard

 

Games of ‘Chicken’ Between Monetary and Fiscal Authority: Who Will Control the Deep Pockets of the Central Bank?
"As long as neither the monetary authority nor the fiscal authority gives in, the deficit is financed by public debt issuance. With the public-debt to GDP ratio rising without bound, an eventual catastrophe occurs: the sovereign defaults and banks holding large amounts of sovereign debt may collapse, triggering a financial crisis and a deep slump. Following default, the fiscal authority loses access to the government debt markets, at least for a while. The resulting need to instantaneously balance the government’s primary budget means sharp public  spending cuts and tax increases. This would be the "collision" outcome. The outcome where the monetary authority gives in and monetises public debt and deficits is called Fiscal Dominance. Monetary dominance is the outcome where the fiscal authority gives in and cuts public spending and/or  raises taxes to stabilise or reduce the public debt to GDP ratio to prevent a sovereign default."

Buiter does a dramatic deconstruction of this theoretical principal to the practicality of Europe, in a truly fascinating and must read analysis. His conclusion is that the "analysis emphasises that the Eurosystem can absorb much larger losses without risking its solvency or undermining the effective pursuit of its price stability target. We don’t, however, argue that the resources of the Eurosystem should be used in this quasi-fiscal manner. Openness, transparency and accountability suffer when the central bank is used/abused for quasi-fiscal purposes, and the legitimacy of the institution can be undermined."

Alas, this only means that fiscal stimulus fundamentalists like Krugman will now start pushing for monetary replacements to traditional policy. And with that QE2 (and its myriad of imminent associated alphabet soup programs) is even more of a certainty.

Game of Chicken  

 

GREECE

 

SPAIN / PORTUGAL

 

FRANCE

 

GERMANY

 

ITALY

 

UK

UK school leavers scramble for best jobs  FT

BT gets more applications than Oxford University

House prices slip further as sellers return Indpendent

 

JAPAN

Japanese economy slows unexpectedly  FT

Annualised growth for quarter only 0.4%

Japan's hobbled economy slows Dow Jones
Nearly 80% of firms predict slowdown: poll Kyodo

 

CHINA

July trade surplus a rare case: Expert China Daily

“The Western countries should not press for faster appreciation of the yuan based on the July trade figures”

China Favors Euro Over Dollar as Bernanke Alters Path BL

“Asian central banks, other than China, don’t want to be caught holding all of the dollars when China is rapidly diversifying”

US and China to clash over yuan fall Pritchard  Yuan Weakens

Beijing still controls the yuan, so last week's drop reflects a policy decision. It is certain to infuriate hawks in Congress, who have called a hearing on China's currency in mid-September.

China Favors Euro Over Dollar as Bernanke Alters Path  BL

 

USA

A Fragile Economic Outlook Continues Hussman
The Paradox of the Zero Bound Hester
Mass Delusion - American Style JimQ
President Obama's nightmare economy Jackson

 

EU BANKING CRISIS

   

 

BOND BUBBLE

 

Companies Are Falling Over Themselves To Issue Even More Junk Bonds Than Last Year's Record  BI

The Fed Is Feeding An Addiction By Continuing Quantitative Easing  BI

 

Obama America Wins Low Yields as Markets Shrink Aiding Deficits BL

Shrinking credit markets help explain why some Treasury yields are at record lows...

 

Corporate-Bond Rally Killers WSJ
Investors are fleeing to the safety of investment-grade corporate bonds. But are they really as safe as people think? 

Recent bond offerings seem especially risky. On July 28, McDonald's sold $450 million of 10-year bonds with a coupon of 3.5%, just 0.55 percentage point more than the equivalent Treasury. If corporate bond yields rise just one percentage point over the next 12 months, owners of the McDonald's issue would stand to lose 3.8%.

"You have very little cushion from interest-rate risk in that security," says , the Los Angeles-based portfolio manager for the , which has $4.2 billion under management. "I don't see a lot of opportunity there."

What if the economy dips and another recession unfolds? Treasury rates may well fall further—but even that might not help corporate bonds. In a recession, earnings would suffer as consumers spent less and businesses retrenched, making it more difficult for companies to make their debt payments. And if deflation followed, many companies would lose pricing power, hurting profits all the more.

That possibility isn't priced into corporate bonds either, say money managers.

"The pricing in the corporate market has gotten completely away from the idea of credit impairment," says , portfolio manager for the $1.8 billion .

Asian borrowers take advantage of record low Treasury yields Finance Asia

 

Investors Fleeing Equities With Record Cash Flow Lure JPMorgan, BlackRock  BL
About $185.3 billion was invested in bond funds in 2010 through July 31, according to ICI. That’s the most for the first seven months of any year since 1984, when ICI started compiling the data. The spending has helped push the average investment- grade bond price to more than 110 cents on the dollar, the highest level in more than six years, Bank of America Merrill Lynch index data show.

STATE & LOCAL GOVERNMENT

 


CENTRAL & EASTERN EUROPE

 

 

HUNGARY

 

BANKING CRISIS II

 

US banks get securities buy-back window  FT

$118bn of high-cost ‘Trups’ can be redeemed over 90 days

 

STRUCTURED NOTES
In brief - there has been $25.85 billion in YTD structured note issuance, and over $60 billion in global interest-linked note volumes. An amusing excerpt from the brief: "Sales of notes linked to wheat jumped this month after Russia’s worst drought in 50 years spurred a surge in the price of futures contracts on the grain. Banks including DZ Bank AG and Royal Bank of Scotland Group Plc, issued 82 wheat-linked warrants this month, compared with a total of 159 in the first seven months of the year, according to data compiled by Scoach, the structured products trading platform run by Deutsche Boerse AG and Switzerland’s SWX Group. The listed notes, called knock-out warrants, offer investors a leveraged way to bet on the price of wheat." For all those who thought Wall Street was dormant in the post-CDO implosion vacuum, this is a rough wake up call - it appears no matter what, idiots and their money are promptly parted, and the world's foremost financial innovators will always find a way (and a product) to guarantee that. And it is very refreshing to see that Germany's DZ Bank has almost learned from the CDO bubble: the questionably solvent German bank dominates the Structured Note market with $7.2 billion in issuance to date, followed closely by such stalwarts of financial stability as Barclays and Deutsche Bank.

Structure Notes  

 

DODD FRANK ACT

 

RATING AGENCIES

 

RISK REVERSAL

 

 

 

COMMERCIAL REAL ESTATE

 

 

RRESIDENTIAL REAL ESTATE - PHASE II

 

Geithner takes aim at mortgage market reform G&M

 

EXPIRATION FINANCIAL CRISIS PROGRAM

 

 

PENSION & ENTITLEMENTS CRISIS


Boomers Threaten Economy  WSJ

America's baby boomers—those born between 1946 and 1964—face a problem that could weigh on the economy for years to come: The longer it takes for the economy to recover, the less money they'll have to spend in retirement.

Policy makers have long worried that Americans aren't saving enough for old age. And lately, current and prospective retirees have been hit on many fronts at once: They have less money, they earn less on what they have, their houses aren't rising in value and the prospect of working longer to make up the shortfall has dimmed significantly in a lousy job market.

"We will have to learn to make do with a lot less in material things," says Gary Snodgrass, a 63-year-old health-care consultant in Placerville, Calif. The financial crisis, he says, slashed his retirement savings 40% and the value of his house by about half.





CHRONIC UNEMPLOYMENT

 

Startups Or Behemoths- Which Are We Going To Bet On  TechCrunch

Kauffman Foundation has done extensive research on job creation. Kauffman Senior Fellow Tim Kane analyzed a new data set from the U.S. government, called Business Dynamics Statistics, which provides details about the age and employment of businesses started in the U.S. since 1977.  What this showed was that startups aren’t just an important contributor to job growth: they’re the only thing. Without startups, there would be no net job growth in the U.S. economy. From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.

When analyzed by company age, the data are even more startling. Gross job creation at startups averaged more than 3 million jobs per year during 1992–2005, four times as high as any other yearly age group. Existing firms in all year groups have gross job losses that are larger than gross job gains.

Half of the startups go out of business within five years; but overall they are still the ones that lead the charge in employment creation. Kauffman Foundation analyzed the average employment of all firms as they age from year zero (birth) to year five. When a given cohort of startups reaches age five, its employment level is 80 percent of what it was when it began. In 2000, for example, startups created 3,099,639 jobs. By 2005, the surviving firms had a total employment of 2,412,410, or about 78 percent of the number of jobs that existed when these firms were born.

So we can’t count on the Intels or Microsofts to create employment: we need the entrepreneurs. And there is an important lesson here for the states and cities that offer huge incentives to companies like Dell, Google, and Intel to locate their operations there. The regions should, instead, be focusing on creating more startups, not providing life support to technology behemoths.


Here Are 5 Reasons The Unemployment Rate Will Soon Start Heading Higher  BI

Imagine The Employment Problem Without America's Biggest Jobs Program: WAR

America’s biggest — and only major — jobs program is the U.S. military.

- Over 1,400,000 Americans are now on active duty;
- another 833,000 are in the reserves, many full tim
- Another 1,600,000 Americans work in companies that supply the military with everything from weapons to utensils. (I’m not even including all the foreign contractors employing non-US citizens.)

If we didn’t have this giant military jobs program, the U.S. unemployment rate would be over 11.5 percent today instead of 9.5 percent.

And without our military jobs program personal incomes would be dropping faster. The Commerce Department reported Monday the only major metro areas where both net earnings and personal incomes rose last year were San Antonio, Texas, Virginia Beach, Virginia, and Washington, D.C. — because all three have high concentrations of military and federal jobs.

This isn’t an argument for more military spending. Just the opposite. Having a giant undercover military jobs program is an insane way to keep Americans employed. It creates jobs we don’t need but we keep anyway because there’s no honest alternative. We don’t have an overt jobs program based on what’s really needed.

For example, when Defense Secretary Robert Gates announced Monday his plan to cut spending on military contractors by more than a quarter over three years, congressional leaders balked. Military contractors are major sources of jobs back in members’ states and districts. California’s Howard P. “Buck” McKeon, the top Republican on the House Armed Services Committee, demanded that the move “not weaken the nation’s defense.” That’s congress-speak for “over my dead body.”

Gates simultaneously announced closing the Joint Force Command in Norfolk, Virginia, that employs 6,324 people and relies on 3,300 private contractors. This prompted Virginia Democratic Senator Jim Webb, a member of the Senate Armed Services Committee, to warn that the closure “would be a step backward.” Translated: “No chance in hell.”

Gates can’t even end useless weapons programs. That’s because they’re covert jobs programs that employ thousands.

He wants to stop production of the C-17 cargo jet he says is no longer needed. But it keeps 4,000 people working at Boeing’s Long Beach assembly plant and 30,000 others at Boeing suppliers strategically located in 40 states. So despite Gates’s protests the Senate has approved ten new orders.

That’s still not enough to keep all those C-17 workers employed, so the Pentagon and Boeing have been hunting for foreign purchasers. The Indian Air Force is now negotiating to buy ten, and talks are underway with several other nations, including Oman and Saudi Arabia.

Ever wonder why military equipment is one of America’s biggest exports? It’s our giant military jobs program in action.

Gates has also been trying to stop production of a duplicate engine for the F-25 joint Strike Fighter jet. He says it isn’t needed and doesn’t justify the $2.9 billion slated merely to develop it.  But the unnecessary duplicate engine would bring thousands of jobs to Indiana and Ohio. Cunningly, its potential manufacturers Rolls-Royce and General Electric created a media blitz (mostly aimed at Washington, D.C. where lawmakers wold see it) featuring an engine worker wearing a “Support Our Troops” T-shirt and arguing the duplicate engine will create 4,000 American jobs. Presto. Despite a veto threat from the White House, a House panel has just approved funding the duplicate.

By the way, Gates isn’t trying to cut the overall Pentagon budget. He just wants to trim certain programs to make room for more military spending with a higher priority.  The Pentagon’s budget — and its giant undercover jobs program — keeps expanding. The President has asked Congress to hike total defense spending next year 2.2 percent, to $708 billion. That’s 6.1 percent higher than peak defense spending during the Bush administration. This sum doesn’t even include Homeland Security, Veterans Affairs, nuclear weapons management, and intelligence. Add these, and next year’s national security budget totals about $950 billion.

That’s a major chunk of the entire federal budget. But most deficit hawks don’t dare cut it. National security is sacrosanct.  Yet what’s really sacrosanct is the giant jobs program that’s justified by national security. National security is a cover for job security.  Wouldn’t it be better to have a jobs program that created things we really need — like light-rail trains, better school facilities, public parks, water and sewer systems, and non-carbon energy sources — than things we don’t, like obsolete weapons systems?

Historically some of America’s biggest jobs programs that were critical to the nation’s future have been justified by national defense, although they’ve borne almost no relation to it. The National Defense Education Act of the late 1950s trained a generation of math and science teachers. The National Defense Highway Act created millions of construction jobs turning the nation’s two-lane highways into four- and six-lane Interstates.  Maybe this is the way to convince Republicans and blue-dog Democrats to spend more federal dollars putting Americans back, and working on things we genuinely need: Call it the National Defense Full Employment Act.


Mort Zuckerman- The End of American Optimism  WSJ

The most obvious source of distress right now is lack of payroll growth, and it's likely to get worse. Real unemployment today is well above the headline number of 9.5%. That number held steady only because 1,115,000 people gave up hope of finding work and left the labor force in the last three months. Otherwise the headline unemployment rate would have been around 10.4%.

Now there are at least 14.5 million Americans still searching for work: 1.4 million of them have been jobless for more than 99 weeks, 6.5 million have been jobless for over 27 weeks. This is a stunning reflection of the longer-term unemployment we are coping with.

The unemployment numbers are worse than reported. Last year the Labor Department admitted it over-counted the number of jobs by 1.4 million. Why? Because they used a computer program that tries to extrapolate how many new companies are being created during each month and then estimates the number of jobs these firms should be creating. They were wrong.

Since April, the Labor Department has counted 550,000 nonexistent jobs under this so-called birth/death series. Without these phantom jobs, the economy this year created virtually no jobs—certainly not the 600,000 the administration has been touting.

The Obama administration projects the unemployment rate will drop to 8.7% by the end of next year and 6.8% by 2013. That is totally unrealistic. It means we would have to add nearly 300,000 jobs a month over the next three years. At the rate we're going, it will take anywhere from six to nine years to climb out of this hole. The labor market may be improving, but the pace is glacial.

 

Time for a New, New Deal?   Phil of Phil's Stock World

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GOVERNMENT BACKSTOP INSURANCE

 

Treasury Fixing Mortgage-Finance System Juggles Limitless Bailout, Economy  BL

 

 

CORPORATE BANKRUPTCIES

 

BP - British Petroleum

SULTANS OF SWAP: BP Potentially More Devastating then Lehman!

------------

 

UK liability limits to double after BP spill  FT

 

 

 



 

OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE

'Super Angels' Fly In to Aid Start-Ups  WSJ
A growing breed of start-up investors dubbed "super angels" is rapidly raising new money—and ratcheting up competition with established venture capitalists.

 

Dreadful Market Perceptions Bob Chapman
What most professionals can’t understand is why the dollar is being dumped. It is not because it is mired in debt and bankrupt. It is not because other nations will lose 2/3’s of 60% of their foreign reserves. It is because those in power behind the scenes want world government and a global central bank based on the use of the SDR, Special Drawing Right, or the bancor. This would end up with a loss of sovereignty for all nations, plus no individual monetary or fiscal policies. All decisions would be in the hands of some one-world Illuminist bureaucrat. You would be abandoning the world’s fiat currencies, excepting the euro, which is partially gold backed, for another fiat currency such as the SDR, or the bancor. How can that present an improvement? Look at the mess that bureaucrats have made of the euro zone and the EU. Look at how the European elitists had to get a constitution passed and then it wasn’t even a constitution. It was some kind of agreement to subjugate Europeans -an agreement that most of the inhabitants of Europe voted against.
 
If the SDR or the bancor becomes a world currency the decisions, not only financial, monetary and fiscal, will be made in some foreign country, perhaps in Brussels, NYC or London. Decisions that will affect everything you do. Those policies will control every facet of your life. You will become controlled and enslaved.
 
The attempted changes could come next yr or in 2 or 3 years, but they are coming, if you allow them to come.
 
You ask what will work if the dollar no longer is the world reserve currency? We see the best alternative in an index of G-50 currencies weighed by financial conditions in each country backed by somewhere between 15% and 25% in gold. Nothing less will work. Unfortunately, the people in charge behind the scenes will never allow that to happen again, because they cannot control such a gold backed currency. Fractional banking would be limited to nine times deposits or less. That means no massive speculation on inside information. They will no longer be able to screw the public and create bubbles and busts on a whim. This is what these creatures are up too. Do not underestimate them, they will do everything they can to have a world currency and you will pay for it dearly.
 
Worse yet, everything the administration has done has been disastrous. They do not even want to talk about their successes because the public lowers their ratings almost every day. A financial regulations bill that makes the privately owned Federal Reserve a financial monopoly and dictatorial power. This is all bad, but do not forget he doesn’t make the decisions. They are made by the CFR-types behind the scenes that are running scared. Half want stimulus and the other half want depression. This is a mess, but it was predicable. Talk radio, the Internet and a handful of newspapers, magazines and newsletters have been raising havoc with elitist plans. The public is learning the truth and it is killing the insiders. That is why you are seeing vicious attacks on anyone that is effective, such as many attacks on radio programs that we appear on. Desperate people do desperate things and that is the vise that the shadow government is in presently. If you had any doubts why are gold and silver and commodities rising and the dollar falling? It is because the stimulus program was a failure and the geniuses behind the scenes do not know what to do. It’s inflate or die. If these one-worlders lose they lose everything just as they did when the Lombard system collapsed in 1348. This is where this is all headed and they are terrified and they should be.
 
Perceptions of the market are dreadful. 72% of the volume is front running, which happens to be illegal, known as black box trades. The public has been a major share seller for the last year and one-half. Why is the market rising again? It is called, “The President’s Working Group on Financial Markets,” which works 24/7 manipulating markets worldwide to serve the goals of those who want world government, a world currency and a world bank.

FLASH CRASH - HFT - DARK POOLS

Citigroup to Start Singapore `Dark Pool' Stock Trading in 2011 BL

 

MARKET WARNINGS

Here's What It Looks Like When Financial Markets Are Disintegrating  BI

 

 

GOLD MANIPULATION

Gold Market is not “Fixed”, it’s Rigged Market Force Analysis
Figure 2: Cumulative Intraday Change & Overnight Change 2001-2010
The change in price between the AM Fix and the PM Fix are cumulatively making a trend which is increasingly losing money in a very strong bull market! Clearly the fixes are not being set to “clear the market” but are being manipulated to suppress the gold price. In figure 3 the same chart as figure 2 is shown but with the right-hand scale inverted.
Figure 3: Same Chart as Figure 2 with Right-hand Scale Inverted
What this shows is that the more gold rises over night in essentially Asian markets the more it is sold down into the PM fix. This was exactly the modus operandum of the London Gold Pool but now it is being done covertly.

 
The suppression of the gold price is achieved in three main “theaters of war”:

1) The LBMA unallocated gold dealing is a fractional reserve operation with a reserve of probably less than 3%. This is largely a paper gold market that masquerades as a physical gold market. Palming off the unsuspecting investor with unallocated gold with a very low reserve ratio prevents the investor’s money from chasing real physical bullion which inherently acts as a price suppression mechanism (see my recent article
Proof of Gold Price Suppression for more details).

2) For the investors who insist on having physical bullion it is important to suppress the price to dissuade them from thinking it is a good investment. As demonstrated in this article this is done by selling gold into the PM Fix to counter the rise in the price that occurs in the physical markets of Asia. This is exactly the same tactics as employed by the London Gold Pool of the 1960’s.

3) The large bullion banks, most notably JPMorgan Chase and HSBC sell short on the Comex inviting other commercials to join in the short selling binge to create frequent waterfall drops that wipe out speculators and serve as a cold shower for those who are bold enough to make leveraged bets that gold prices will rise.

Additional and complementary measures include the establishment of largely unbacked Gold Exchange Traded Funds (ETF) that serve to divert demand away from the real metal. OTC derivatives that are used to hedge the essentially naked short exposure that exists by virtue of the fractional reserve nature of the massive unallocated gold market.

The London Gold Pool failed due to insufficient gold to meet demand. In those days the paper market was not as dominant. By contrast it is through selling massive amounts of paper gold that the gold cartel has managed to keep the lid on its current price suppression scheme. But therein they have unwittingly planted the seeds of their own demise. I estimate that 45 ounces of gold have been sold in unallocated accounts for every one ounce that exists in the vaults. When just a fraction of these investors ask for their gold there will be a run on the bullion banks of epic proportions. When 45 claims go looking for one ounce of physical gold the rise in bullion prices will be breathtaking.

If you own unallocated bullion you likely only have a claim to about 2.3% of what you think you own. The window of opportunity to get your investment to be 100% bullion is closing rapidly.

This article has shown that physical gold is being dumped into the PM Fix to contain its price in a covert version of the 1960’s London Gold Pool. The result of the failure of the London Gold Pool to suppress gold was an appreciation of the gold price from $35/oz to $850/oz; a similar percentage today would carry gold to almost $30,000/oz. This is not a price forecast but an indication that when free market forces have been frustrated by market manipulation for a very long time the equilibrium price can be many multiples of the suppressed price and the rise is typically rapid when the suppression is overcome. There are many growing signs that suggest the
gold manipulation scheme is coming unraveled. The onset of an epic “gold rush” is fast approaching

 

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QUOTE OF THE WEEK
"the recent financial crisis and recession was not caused by high interest rates but by low rates that contributed to excessive debt and leverage among consumers, businesses and government. We need to get off of the emergency rate of zero, move rates up slowly and deliberately. This will align more closely with the economy’s slow, deliberate recovery so that policy does not lag the recovery.

Monetary policy is a useful tool, but it cannot solve every problem faced by the United States today. In trying to use policy as a cure-all, we will repeat the cycle of severe recessionand unemployment in a few short years by keeping rates too low for too long. I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no short cut."

Thoma  Hoenig
Kansas City Federal Reserve President
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Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

 

© Copyright 2010 Gordon T Long. The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from him.

 

         

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Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, we recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

Copyright and Disclaimer

© Copyright 2010, Gordon T Long. The information herein was obtained from sources which the Gordon T Long. believes reliable, but we do not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that the Gordon T Long. or its principals may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Gordon T Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from us.