Italian govt falls, economy sputters.

Italy's coalition government has unraveled with the resignation of 5 Ministers from Berlusconi's Party. The immediate cause was the attempt to expel Berlusconi, because of his tax conviction.

The country's economic problems flared again: July's economic numbers came in as  a drop of 1.1% instead of the expected increase of 0.3%. The government planned "reforms" (read tax increases and increased spending) and the Center Right rebelled. What reforms? Sales tax was about to go from 20% to 21%.

Italy's borrowing costs are rising again as 10 year notes increased yield from 2.4% to 2.7%, in spite of ECB guarantees. Ironically, Spanish conditions improved, even if only marginally.

Europe's economy is not improving much as shown by a drop in inflation, which is reported as 1.1%.

Yes Virginia, the PM Markets ARE being manipulated.

There is an interesting article on KWN about the US Government admission that the PM Markets are being manipulated. The reference is contained in an article entitled: "The Shocking Truth About Secret Documents and the CFTC.

In 2001 Reg Howe had sued the BIS, the FED, the US Treasury and JP Morgan for manipulating the Gold Market. The Author states:

 

 

"I bumped into the Exchange Stabilization Fund and JP Morgan back in 2001, when we were underwriting Reg Howe’s lawsuit against the Bank for International Settlements, the Fed, the US Treasury, JP Morgan, and other bullion banks.  Reg was charging them with gold market manipulation.

In one hearing I attended in US District Court in Boston, an assistant US attorney got up, speaking on behalf of the US government, and he said that the US government under the Exchange Stabilization Fund Statute, the Gold Reserve Act of 1934, had precisely the power to interfere with the pricing of gold that the lawsuit complained of -- that is, a US government lawyer declared in open court, in 2001, that rigging the gold market as government policy is totally authorized by law.

You will find the US Treasury Department quoting the Gold Reserve Act as saying the Exchange Stabilization Fund can intervene, as I said previously, not only in the gold market, but in any financial market.  This intervention power is essentially an economic declaration of war against every other nation in the world."

 

I have stopped doing TA on gold prices because it is manipulated by the US Government. Larry Edelson's insistence that the prices are not manipulated is the source of the many errors he recently committed in giving bad forecasts.

 

What is wrong with the manipulations? Plenty. The FED essentially risks the financial stability of the world to keep PM prices down. And in the effort, it is transferring gold to China and other countries.

 

 

 

The clueless GOP leadership.

The kerfuffle over the CR from the House defunding ObamaCare is a one of the best examples of what is wrong with the GOP Leadership:

1.  they listen o the Media;
2. they listen to the Democrats;
3. they do not have the intellectual smarts to analyze the arguments.

GOP Senators were told by the Media and Democrats that elections have consequences and the GOP lost the last election.

Really? It is not more complicated than that? Do not the Republicans have the right to filibuster Reid's attempt to strip the defunding from the CR? Yes they do. They missed their opportunity to do so, even though they ran on the platform to defeat ObamaCare.

True that the GOP does not control the Senate, but they control the House. Does not the same argument hold for the House that whoever controls the Legislature gets to write the Bills? There were elections for House seats as well and the Republicans had won that! Of course, the Media and the Dems argue that the House should give in and allow ObamaCare to go forward.

Republican Senators excuse themselves that they will put up a fight when it comes to the debt ceiling. How? The debt ceiling can also involve the threat of govt shutdown and as soon as O'Bungle threatens a govt shutdown, the Republicans will fold like a cheap suit and agree to phantom cuts like they did the last time.

O'Bungle argues that the Repubs want to stop his socialized medicine scheme because they are afraid that people will come to like it. But that is not what is planned. What O'Bungle plans is to destroy our health care system and replace it with the socialized medicine. That way people have two choices: 1. accept the inferior system or 2. have no medical care at all. This is not rhetoric, O'Bungle admitted that his goal is to set up a "Single Payer" system - socialized medicine run by the government. And kill off opponents by the "death panels" that are most assuredly part of ObamaCare.

Is Fort Knox empty?

asks one of my advisory newsletters. The question arises because:

1. There has been no audit of Fort Knox since 1974;
2. Attempts to secure an audit are rebuffed or answered by a list of what is supposed to be there;
3. The US shipped $1B worth of gold this year to somewhere in S Africa; Coal to White Castle?
4. The rumor is that US gold is shipped to China as collateral for Treasuries and the weak Dollar.

Hundreds of tons of gold were used in the schemes to suppress the gold price. Where from?

Why the manipulation of PM prices is objectionable.

Some of us object to the manipulation of gold and silver prices, because they are illegal and pose a great danger to the financial wellbeing of the US and the West.

1. First of all, the manipulation is illegal. It is fraud and theft. The COMEX is rife with the sale of PM options where the options do not represent actual gold or silver. This is naked shorting which is prohibited. Regulatory agencies have ample evidence provided by whistleblowers, but sit and do nothing. The perps (both the naked short sellers and the regulators that ignore their crimes) should be brought to justice.

2. The suppression of PM prices result in gold and silver being transferred to China at below production costs. When a new global financial order will be restored, America will suffer.

Nancy Pelosi uncorks another one.

Someday someone is going to collect the [idiotic] sayings of Nancy Pelosi. Like the one about 'having to pass the ObamaCare bill to find out what was in it.' Or the one about how 'unemployment checks grow the economy.' Not to fret folks. Just because she is no longer Speaker, it does not mean that she will no longer make idiotic statements. Like the one about Obama being NONPARTISAN and APOLITICAL. You have to wonder, even for a Democrat from California...

Is the Pope Catholic?

That used to be the saying when someone questioned the validity of something overwhelmingly obvious. The current Pope (Francis) may make that saying join the one about "sound as the Dollar." By urging us that we should make homosexuality and abortion acceptable, Pope Francis had knocked two of the fundamental Catholic teachings out of the way. The third one (about Socialism) has already been abandoned by the Catholic Church. On his way to Jerusalem to be crucified, Jesus sanctified the legitimacy of the profit motive and the principle of investing in His parables about the Talents (the Talent was worth 60K denarius -one day's wages) and the Minas (one Mina = 20 Denarius). He established the moral legitimacy of Capitalism.

California: Blue-footed Boobie sighted.

The Boobie has a reputation of being stupid. It is unafraid of people and has some pretty bizarre behavior on land. But, it is a great flier and is not handicapped by its blue feet.

I propose to make the Boobie our national bird - short of that, make it the State bird of California. Gov Jerry (Moonbeam) Brown, like Obama, excels while doing high-flying rhetoric, but on land they have trouble. Californians are excited about the visit of some Blue-footed Boobies, but ignore the one in their State house.

Is it appropriate to compare the Liar in Chief to a Boobie bird? Certainly. Mr Obama declared that "Raising the Debt Ceiling Does Not Increase Our Debt."

Larry: Trapped in hubris.

Larry's latest prognostication came out a couple of days ago. These are his proclamations:

1. The gold price is yet to hit bottom. Why? Because according to his calculations, it should have hit 1150 and instead it hit only 1178.

2. According to his cycle diagrams, the minimum will occur either on Oct 2,3 (if it goes below 1150), or Jan first days.

3. He now tells us the "I'm convinced" number is 1605.50 , instead of the previously ballyhooed 1422 -
this is the number where he is convinced that
gold is back in the Bull Market.

Let's look at the flaws in his arguments.

1. It is stupid hubris to think that one can determine precisely the number of the low in the Market.

2. The gold price exceeded the previous "I'm convinced" number set by Larry at 1422. He now acts as if that did not happen.

3. Note that Larry's cycle prediction numbers are out of phase with the actual gold price:

Let us now look at the actual gold price:

What the graph shows us is a reverse head and shoulders formation. This graph predicts a rapid rise to 1600 just around the corner.

Now, I have no faith in TA vs gold because of the wide-spread manipulation. (See articles on the subject at KWN). But, if the patterns indicate something, it is the coming increase in gold prices.

Lots of news!!

1. Draghi says EU recovery is in its infancy. Yeah, like it is a zygote.

2. Janet Yellen becomes leading candidate for FED job, because Summers bows out. She is a former University of California (Berkeley) Professor, which means she is a Leftist. You think Summers bowed out because he did not want a confrontation in the Senate? Who would confront him? The Republicans led by McCain? Or, Senator McMumbles? Summers bowed out because he was told to. Yellen is the choice of Obama, because she wants to enlarge the money printing.

3. Two competing forces are acting on the Stock Market now: a) the expected tapering and b) the anticipation of higher inflation under Yellen.

4. Two JP Morgan Traders admit that their bank is manipulating the precious metal markets. Like are we surprised?

5. Bouillon banks head for default. It is getting close to impossible to deliver the gold that is "sold" on the COMEX. So, two things are in the offing as the financial elites contemplate the mess they created: a) gold deliveries will stop and b) those who own paper gold will get cash. It will not even be called a default.

6. Holland is joining the economically troubled countries of Europe. Its deficit will go up next year.

Gold and econ: Here we go again.

Europe.

Do you recall reports a month ago that Europe's economic troubles were solved and that the EU was on the mend? The reports were not true. That talk was heard after reports that the EU's GDP was up 0.3% in QII. Probably another lie. The July figure was DOWN 1.5%. There was a significant drop in Germany, but Italy and France as well.

How about the recovery of the automobile industry of Europe? The recovery did not happen. The actual figures show that car manufacturing dropped 6.6% this year.

Greece! Remember? Unemployment in Greece is 27.9% and in the group below 25 years it is 58%.

The US.

We have a similar situation in the US. An anemic rise in the GDP of 1.7% was made into a 2.5% because of the drop in imports (due to less oil needed because of the increased oil production due to new technologies). Here, too, we get a report of a robust automotive industry. No doubt, that report will be revised.

Then we have a drop in initial unemployment applications. We know how this was achieved: two States did not report!

Talk of the FED phasing out bond buying is just that: talk. The US economy would be boosted if ObamaCare was defunded, but a lot of Republicans have no stomach for a fight.

GOLD.

That takes us back to gold. Central planners are pulling out all stops trying to reduce gold price once again. And it all goes to China How far can they drop gold prices this time? Hard to tell.  Gold is in backwardation again and  GLD is telling their customers that they can't have their gold. JP Morgan is "forecasting" once again that gold will go below $1,000/oz. So, they expect gold mines to operate at a loss or shut down. These are dangerous folks.                                                            

Is the economy really getting better?

GDP figures for QII have been revised from 1.7% to 2.5%. Vow! The Obama cheerleader squad of "Reporters" squeals in delight that O'Bungle's policies are beginning to bear fruit. Is that true?

If you look at the numbers, we find that wages have actually decreased and real personal consumption, nondurable goods and spending on services are virtually flat. So, how did thw Labor Department can conclude that GDP increased from 1.7% to 2.5%?

The increase in the GDP is due entirely to the decrease in imports. SPECIFICALLY, to the decrease in the imports of oil. Yes, the much-maligned oil industry. The use of hydraulic fracturing techniques (FRACKING) has reduced oil imports from 10.2 million barrels to 6.8 million barrels. That is why the GDP figures were revised.

O'Bungle lost little time in trying to take credit for the increased oil production - something that he strenuously opposed. He claims that oil production has increased because of federal research and increased permitting. Hogwash.

Here are the actions O'Bungle took to DECREASE the use of oil production:
1. Initiated a federal investigation into fracking, trying to intimidate the oil industry;
2. Sought to limit drilling via the EPA;
3. Sought to use the SEC to force oil companies to admit to liabilities due to 'global warming.'
4. Slowed the permitting process for the Gulf of Mexico;
5. Blocked permits for drilling on ALL federally owned lands;
6. And called for a special tax of $44B on oil companies.

Increased oil and natural gas production is taking place not because of but in spite of O'Bungle.

Gold: Capping operation in place.

The story I hear is that the powers that be (BIS, BOE and the FED and the Bouillon Banks) have given up on trying to bankrupt the precious metal miners, because it created a firestorm of demand. So, they now went back to the older strategy of capping the price of gold between 1,380 and 1,420.

How long will this hold?

Hard to tell, but the strategy has a weak Achilles heel: silver. While, the banks have stockpiled gold in their vaults, they have not stockpiled silver. So, expect the gold/silver ratio to narrow down from 62.