Thursday, October 31, 2013

Just When You Think It Can't Get Any More Absurd Out There...

We have a President who lies through his teeth straight into the camera - with a smile - about his knowledge of NSA spying, Obamacare and, really, just about everything else going on, and yet his approval rating - although it has hit a new record low - is still at 42%.  "Disapproval" is 51%, which means a majority of the country disapproves of the job he's doing.  As for the 42%, the only possible reason I can see his rating still being that high is that he gets unconditional support from his African American support base and from a high percentage of faux-liberals who believe that if they oppose Obama they will be branded a racist.  

And how about the fact that NSA chief Keith Alexander is telling anyone within ear-shot that the NSA is doing what it is doing in order protect our freedom and civil rights.  I'm not quite sure how the NSA accomplishes either by knowing about everytime I log onto to my email account and by tracking my daily trips to the grocery store with the Google and Apple GPS app loaded into my smart-phone.  I'd like to hear him explain that one and answer about 100 questions I have that Congress is getting paid well by SuperPacs to not ask.

I guess all you can do is laugh about what's going on.  I will say that I'm already fatigued from seeing "Duck Dynasty" Halloween costumes and it's not even noon in Denver.  If anything speaks to the inability of most people to think outside-the-box, it is the preponderance of people running around looking like a ZZ-Top band member in camo today.

I know a few other commentators are now remarking how ridiculous it is that Wall Street, the financial media and the entire investment community spend most of their time now analyzing every last sub-atomic particle that is part of every last punctuation mark of the FOMC statement to try and figure if and when the Fed will taper.  Probably the most patently absurd comic book portrayal of this is the bald Steve Liesman pouring over his copy with sweat beading up on his bare forehead as he strains and grunts to figure out exactly what changed from the previous FOMC statement.  It just can't get any more pathetic than that.

The fact of the matter - and I made this same statement shortly after Bernanke first uttered the word "taper" - is that the Fed unequivocally can not taper.  Well, it can start to reduce its Treasury and mortgage bond purchases but the entire financial and political system would collapse in short order.

Not only can the Fed NOT taper but it will actually end up having to INCREASE its money printing and bond buying.  Why?  Because despite the accounting games being used to hide the truth, big banks are choking on massive derivative bets and many other bad investments - like foreclosed home inventory and risky loans that are not paying interest.  This huge pile of assets has rendered the Too Big To Fail So We Must Bail banks increasingly insolvent.  This is a fact that can be seen by anyone who really knows how to sift through financial statements.

Secondarily, the Government will be issuing a lot more debt this year.  If you don't think that's the case then why did Harry Reid and his Republican sidekick Lisa Murkowski slip a provision that removes the debt ceiling limit for now into the agreement that ended the Government shutdown?  The United States in total - both the Government and the private sector - is taking on total systemic debt right now at a rate that is significantly faster than the ability of our economic system to generate the growth and cash flow needed to service that debt.

I don't know how much longer it will take before the Government is soon issuing debt just to make interest payments, but I would bet my life - and I'm serious about that - that it will happen far sooner than anyone - I mean anyone - out there is now forecasting.  If the Fed were to slow down its purchasing and monetization of Treasury debt, interest rates would shoot catastrophically straight up instantaneously.  We saw a preview of that in May.

At any rate, my recent article on Seeking Alpha which was highly critical of Pulte Homes use of accounting management techniques drew a very strong protest from Jim Zeumer, the investor relations nerd there.  So in the spirit of Shakespeare's, "the lady doth protest too much methinks," I asked him:  "We know that your management has been very good at selling a lot of stock lately.  If you are confident in your math and your company's decision-making with regard to its application of accounting standards, then why don't you and all the other upper level executives take money out of your bank account - as in cash already earned and taxed - and buy a real amount of stock?"  I might add that the Company spent $83 million in shareholder cash to buy back shares while the insiders were selling in copious amounts.

So far only crickets in my in-box.

Tuesday, October 29, 2013

The Wall Street Journal Published Blatant Lies About The Gold Market

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State- Joseph Goebbels, Hitler's Minister of Propaganda
Over the past year or so there has been a very aggressive attempt by Wall Street and the financial media to discredit gold as both an investment and a store of value against the intentional devaluation of the U.S. dollar by the Federal Reserve and the Government.

As a perfect example of this, the Wall Street Journal published an article yesterday titled, "Gold Fades From Investment Picture."  You can read the article here, which I've reproduced except for one irrelevant picture of gold bars (you can download this document by clicking on the "Download" button on the top right) :

WSJ_Gold -

Notwithstanding the absurdity of the opening sentence, the next sentence makes the statement that Russia's Central Bank has accounted for 30% of all gold reported to the IMF  since the start of 2010 and that Russia sold gold in September.  First, note that the statement is qualified by making sure that they cite all gold purchases reported to the IMF.  The truth is that the IMF is emphatically not the official Central Bank scoreboard for Central Bank gold purchases.  There is no such thing.  Theoretically it would be the the BIS (Bank for International Settlements) but tell that to China, which hasn't issued an "official" Central Bank gold report since April 2009.

But let's put the WSJ's assertion into the context of the Russian Central Bank's gold activities since 1994:

As you can see, since 2007 Russia has nearly tripled its gold reserves and has been steadily accumulating nearly every month since then.  You can also see that there were two other months, both in 2012, when Russia sold a small amount of gold.  To make the assertion that a relatively small gold sale by the Russian in Central Bank indicates that Russia's appetite for gold is waning is outright incompetent reporting.  It's a borderline fraudulent statement.  In fact, one Russian Government official recently had this to say:  "The more gold a country has, the more sovereignty it will have if there's a cataclysm with the dollar, the euro, the pound or any other reserve currency"  LINK.

For the sake of brevity, I'll skip over the ridiculous comments that are in the article that were made by moronic Wall Street analysts and get to the part in which the article asserts that Central Banks are on track to cut their buying by 34% in 2013.  The truth is that we really don't know exactly how much gold any of the Central Banks are buying other than that nearly all of the Central Bank gold buying is coming from eastern hemisphere Central Banks + several South American CBs.

What we do know is that based on the amount of gold flowing into China through official sources in Honk Kong plus physical gold deliveries reported by the Shanghai Gold Exchange, China alone is on track to import close to entire annual amount of gold that will produced in 2013 by all gold mines.  Here's the net import (imports less re-exports back to Hong Kong) for China through August this year:

I don't know about you but this chart doesn't look to me like the world's largest importer of gold is slowing down its purchases.  Please note that this chart does not include gold that has been delivered year-to-date on the Shanghai Gold Exchange.  When you add those numbers in, China has imported well over 1,000 tonnes of gold so far this year.  In fact, let's take a look at that:

Please note that this total 1,750 tonne number would include gold imported through Hong Kong.  Also note that it is anticipated that estimates for the total amount of gold mined in 2013 are between 2200 and 2230 tonnes.  So you can see that China is sucking down nearly all of the world's gold production on its own.

One more very important point to emphasize.  The gold that may or may not be imported into China that is purchased for the Peoples Bank of China (Central Bank) does not get reported officially.  We have no idea how much gold is being accumulated on an annual basis by the PBC.  We do know that China produces about 400 tonnes of gold per year from its mines and the gold it produces internally is not exported.  But if you net out the gold produced by China from the global total produced, you can see that ex-China the world is going to produce about 1800-1900 tonnes of gold.

There are several other problematic aspects to the Wall Street Journal's article, but they all center around the fact that "sources" cited by the authors of the article are, at best questionable.  I will go out on a limb and state for the record that the article is intentionally or unintentionally fraudulent.

One more aspect to all of this to note.  You might be asking yourself, if China is taking down most if not all of the gold that will produced by mines this year, where is India, Turkey, Russia, Viet Nam, the Middle East and the other gold-buying Central Banks getting their gold and how come the price of gold isn't going higher?

First, the GLD gold trust has had over 500 tonnes removed from it since mid-December 2012.  Accounting for the gold that has been removed from all of the physical gold ETFs plus the Comex in New York, roughly 700 tonnes of gold being stored by various institutional custodians has literally disappeared from sight.  We have no idea where this gold has ended up, but it's safe to say that most, if not all, of it has ended up in private vaults of Central Banks and investors in all of the gold major gold importing countries.

One more point about that.  The LBMA (London Bullion Market Association) does not report the amount of gold held by the Association so we have no idea how much gold has been drained from it.  We do know that the Bank of England released 1300 tonnes of gold from its vault sometime this past summer.  We also know that gold swap rates on the LBMA were negative for a significant amount of time this summer and have been over the past several days.  This is indicative of a very tight supply vs. demand for physical market in London.

So there you have the facts about global demand and supply.  The truth is that China, and other countries, are buying gold hand-over-fist and there's not really much that western Governments can do to stop it.  The price of gold has been contained by the U.S. Fed, the Bank of England and ECB through the use of paper derivative gold contracts - futures and forwards.  It is also highly suspected that the Bank of England released 1300 tonnes of physical gold from its vaults as described above to help keep a lid on the price of gold.

I think it's now becoming somewhat generally accepted that western banks and Central Banks are actively manipulating the price of gold and silver via the paper derivatives markets.  At some point, and I have no idea when but I suspect the time is not far off, these entities are going to lose control of their ability to keep the price of down.  Although this will be a huge gain for those of us who are positioned to take advantage of what we see coming, I truly fear the ramifications of this event for the U.S. dollar and U.S. economic/political system.

Be Careful With That Sushi You Are About To Eat...

Which is worse?  A rogue NSA or a President who gives his approval and then lies about it?  - Washington's Blog
The secret of freedom lies in educating people, whereas the secret of tyranny is in keeping them ignorant.   - Robespierre, one of the leaders of the French Revolution

Ever wonder why you are not reading news about the Fukushima nuclear reactor disaster?  Do you even realize what a catastrophe it is - and will be for the west coast of the United States?  How about because of the fact that General Electric built all six reactors for plant and was integral in the construction of it.  It just so happens that GE used to own NBC, CNBC and MSNBC as well.  Rest assured that GE has made sure that Comcast, NBC's new owner, has placed  a media blackout on Fukushima at those news outlets.   But it also happens that GE's CEO, Jeff Immelt, has been tapped to be one of Obama's "special" outside advisers.  You can bet that Immelt made sure a general squelching of any news related to Fukushima was ordered by Obama.  Why?  Let's find out.

I was not paying attention to this issue either until a friend of mine who is an energy trader brought it to my attention.  He has made it an avocation of his to dig up as much news as he can from alternative sources in order to stay informed.  Some of the reports he has mentioned to me would make the hair on the back of your neck stand up.  For instance, did you know that herring fish with blood coming out of their eye sockets are being caught off the coast of British Columbia, Canada?  I bet your local newspaper didn't catch that story...

I also heard a news report about tuna fish being caught off the coast of California that were found to have high levels of radiation.  In addition, apparently there are massive pools of cesium-137 - i.e. radiation-laced sea water - headed for the coastline of California (the Kuroshio Current).  This is another reason why the U.S. has put an informal media blackout on Fukushima-related news.  Imagine the devastation to California real estate bubble values if people were truly informed.

The author of Washington's Blog has posted a very informative, truth-seeking article about just how deadly the Fukushima nuclear disaster is becoming and I highly recommend spending time reading it - it might just add another dimension to your understanding of just how severe the problems are in this country:  Fukushima Is Here

There are technical details about what's happening there that are even worse than that blog report but I'll spare you the details.  But did you notice that there was tsunami warning after an earthquake in the Fukushima area this past weekend that seemed to completely disappear from the news?  I guess we can just call that the case of the disappearing weather disaster.  But even if a big wave of water doesn't crash down on Fukushima, based on what my friend has told me the earthquake alone has likely caused the release of even more deadly radiation into the ocean and into the current that takes seawater from Japan's coast to the north coast of California...

Monday, October 28, 2013

We Better Rename The White House Or This Is A Racist Country

I find it very hard to believe that Obama had no idea that the NSA was tapping Angela Merkel's cell phone.  Either he's lying or he's asleep at the switch and should be evaluated to determine if he's fit to be President.  The denials and lies have to stop.  Time for Obama to stand up and take responsibilty like a man.  In fact, for starters I'd love to see the short list of just exactly on whom the U.S. Government/Obama Regime isn't spying.

I have to say, this idea of "political/social correctness" has become utterly absurd.  It first peaked my interest a few years ago when a friend of mine, who's son goes to Cherry Creek High School - a public bastion of white, upper middle class privilege in Denver - told me that his son, who has liberal views, happened to be in a discussion with some peers in which he disagreed with some of Obama's policies.  From that point on he was told that he was a racist because he disagreed with Obama.  Hmmm....

Ed Asner said it publicly first when he was asked why the ultra-liberal, anti-war Hollywood celebrity crowd was not coming out at all in opposition to the Obama Government's attempt to militarily - unprovoked I might add - flatten Syria and put in a puppet, to which he responded that if you oppose anything that Obama does or stands for in Hollywood you are labelled "anti-black."  His words, not mine and I'll note that he stated that he voted for Obama.

So now, and this is what provoked me to write this rant, I saw over the weekend that some actress, Julianne Hough, was heartily slammed for her Halloween costume which portrayed an African American character in the TV series "Orange Is The New Black."  You can see her costumer here:  Racist costume?  I can't even express how absurd this situation is.  I'll let the readers decide for themselves, but what it tells me is that if I were to dress up as my favorite African American NFL football player for Halloween this year, I would be branded as a racist.

What's even more pathetic is that Obama has been actively campaigning to coerce the the owner of the Washington Redskins to change the nickname of the team.  The Redskins originated in 1932 as the Boston Braves.  They changed it to Redskins in 1933 and moved to DC in 1937.  I have been avidly following football since the late 1960's.   I have never in over 44 years have ever heard any overt criticism of the use of "Redskins" as a nickname.  Yes, I do remember there was a brief period several years ago when Indian-derived team nicknames were attacked and there was a movement to get the Atlanta Braves to change their nickname and stop using the "tomahawk chop" to cheer their team.  And there was a movement to try and force the Florida State Seminoles to change their nickname.  I also recall that the Chief of the Seminole Tribe came out and strongly supported the use of the nickname.

Quite frankly, I have to believe that given all the scandals and poor political decisions - and the fact that Barack is riding the economy into a serious depression -  plaguing Obama and his incompetent administration, that Barack has much better things to take care of than wasting his time lobbying his dwindling support base for a name-change to Washington DC's dynastic NFL football franchise.  Kudos to Reskin's owner Daniel Snyder for, up to this point, ignoring the ridiculous request from Obama.

But this does bring me to my modest little proposal - with apologies to Jonathan Swift.  We have called the building in which the President resides while he is in office "The White House" since 1811, long before Obama's ancestors ever stepped foot in this country.  However, I find myself feeling like a racist every time I reference that building as "The White House."  I therefore am asking everyone to write their Congressman and to send to letters to that place where Obama lives requesting that we rename that building as something that is not racist and might be offending certain demographics.

Sunday, October 27, 2013

Kerry Lutz Of The Financial Survival Network Interviews Me About Treasury Debt, Gold And The Housing Market

I did an interview with Kerry Lutz and his Financial Survival Network's radio show last week.  Kerry's mission is to educate his audience on the truth behind the hype and to understand what's really occurring in our system with the end goal of helping people financially survive what's coming.

The show lasts about 20 minutes and I review the circumstances behind that massive spike in Treasury debt outstanding, the latest developments in the physical gold and silver market and the resumption of the bear market in the housing market.

You can hear the interview here:  Is The Housing Boomlet Over?

Just like many articles, including some Wall Street firms, are now publishing hard data which shows that the stock market - by several metrics - is the most overvalued it's ever been in history - the housing market is currently significantly overvalued, with prices bid up by one-time factors that are disappearing.  It's going to get very ugly out there over the next 12 months.

Friday, October 25, 2013

Housing Market Update - Pulte Home's Misleading Earnings - Short Homebuilders On Every Bounce

The housing market bulls never cease to amaze me.  Pulte Homes pulled a brazen earnings management stunt in their Q3 earnings reported yesterday and now I've got some former Big-4 accounting firm audit geek harassing me about my interpretation of accounting guidlines.  It's hilarious.  I couldn't resist but point out that it's the big accounting firms that tend to go under after they've been prosecuted and found guilty for aiding and abetting accounting fraud.  Anyone remember Enron?  That's why what used to be the Big 8 is now the Big 4.  In order to prevent further embarrassment to the highly paid regulators who are supposed to oversee the accounting standards being applied, the FASB and the SEC just made the accounting rules and standards significantly more liberal and  more open for a very wide range of "opinion."

At any rate, I never expect to leg into a short position at the very top of a trend - especially when I take short positions in volatile stocks with a high level of existing short interest in them, like the homebuilders. I always give myself room to double down - or "double up" in the case of shorting.

The homebuilder stocks spiked up dramatically on the back of what I consider to be very questionable net income numbers reported by Pulte Homes yesterday.  You can read my analysis of the situation here:  Pulte Home's Earnings Management Game

Remember as you read this, my analysis is in the context of my view that the housing market is in a long term bear market that started in 2006-2007.  The homebuilder stock bear market actually began in mid-2005.  What have seen in the last 18 months or so is a small "dead cat" bounce that was fueled by a couple trillion dollars in direct housing market stimulus by the Fed and the Obama Government.  Now this stimulus has run its course, the demand "pool" of available buyers has largely been depleted and the bear trend in pricing and volume is about to resume.  It will be a very cold shower for a lot of people who use "hope" as their investment strategy.

Have a great weekend.

Thursday, October 24, 2013

Existing Home Sales For September: The Real Decline Is Worse Than The Headline Reports

The National Association of Realtors released its report on September existing home sales on Monday this week, which showed that on a seasonally adjusted, annualized basis existing home sales dropped 1.9%. However, a look behind the "adjusted" numbers shows a much bigger decline in existing home sales and a housing market that is fundamentally in trouble.

In fact, quite frankly there's quite a bit of misleading information that has been communicated to investors and observers via the headline reports and the television media sound-bytes.  Not only is the market for existing home sales now in decline - independent of seasonal factors - but prices are also starting to decline.

I review the data beneath the headlines and analyze the implications in this article published by Seeking Alpha:   LINK

What's even more interesting is that the Government is getting ready to roll out new mortgage market regulations which will tighten the clamps on underwriting standards and decrease the availability of mortgage financing to large segments of the population as well as reduce the capability and willingness of mortgage brokers/bankers to finance riskier mortgage applicants. 

I will be publishing more on this soon.

Monday, October 21, 2013

Record Surge In Treasury Debt

The one day explosion of $328 billion to the U.S. debt load smashed the previous record of $238 billion in one day, set two years ago. These are figures that would normally be seen in banana republics.  - (LINK)
Well, I certainly was way off the mark on my prediction for the outcome of the Broncos/Colts game last night.  And the comments on the blog post were sure to let me know it!  But the game attracted a lot of interest, as it posted the highest tv ratings for an October football game in 15 years.  It also was NBC's highest Sunday night prime time tv rating since February's Academy Awards.

But I digress with useless boob-tube trivia there...The most interesting data point of the last week was the one-day jump in the United States' Treasury debt outstanding, which soared by $328 billion the day after the debt ceiling agreement was reached.  Hell, the ink wasn't even dry on the deal and the total amount of Treasury debt increased overnight by 2% (source:, edits in red mine):

Given that there were not any Treasury auctions held to sell more debt, the only way I can think of that the debt loaded exploded like that is that all of the funds borrowed from places like the Federal pension fund and the Social Security Trust - you know, the accounting games that Jack "I'm A Thief" Lew referenced back in the spring - were converted into Treasury IOU's aka Taxpayer liability Treasury bonds.

But that's okay.  Keep issuing debt and printing up paper money to fund that debt and everything will be alright.  At least that's the message the stock market gave us last week.  In fact, now that everyone knows there's no actual debt ceiling in place for the time being we may as well just borrow and print our way into nirvana, right?

While Obama gets on television and lies through his teeth by telling us he's cut down the size of the deficit, in reality the amount of money borrowed over the last 5 months - funded by $400 billion in borrowing since May - actually implies deficit spending at an annual rate of $960 billion.  However, the last 5 months also include some one-time, non-recurring payments back to the Treasury from Fannie Mae and Freddie Mac.  So, in reality, the deficit spending "ex" those payments is back on track to be occurring at a rate well in excess of $1 trillion.  It also means that over the next 12 months we can expect the debt outstanding to approach, if not exceed, $18 trillion.   Still feel good about the latest agreement between Harry Reid, John Boehner and Barack Obama to kick that old can down the road?

But hey, at least there's not a debt ceiling limit in place right now so at least the Government can fearlessly issue the amount of Treasury bonds required to fund that deficit spending - even it the Fed has to print the money to make it happen...

Sunday, October 20, 2013

Broncos vs Colts: Take Denver And Lay The Points

Manning goes back to Indianapolis to deliver a Mile High butt-kicking and let the city know it was a mistake to get rid of him:

Denver wins 45 - 21.  Game is over by the end of the 3rd quarter.

Friday, October 18, 2013

The Budget/Debt Ceiling Bill Potentially Eliminates The Debt Ceiling Limit

Paper money eventually returns to its intrinsic value – zero.  (Voltaire, 1694-1778)
Often rather quickly, I might add to that nugget of wisdom.   Unbeknown to most people in this country - and certainly not reported in the mainstream media - is a Provision buried within the Continuing Appropriations Act of 2014 that - in effect - gives the President the ability to unilaterally waive the debt ceiling limit.  Although Congress can override the President's move to lift the debt ceiling entirely, it would take a 2/3 majority in both Houses of Congress to block the action.  That just would not be possible for all practical purposes.

It's amusing because when I first saw the news that a deal had been reached, I spent time scouring the internet to see if I could find out the new debt ceiling limit - i.e. how much more deficit spending could occur between now and February 7, the next drop-dead date.  I could not find any numbers.  Now I know why.

It looks to me, based on reading the Bill, that Harry Reid and Lisa Murkowski, who is on the Appropriations Committee, slipped the Provision into the legislation at a late stage in the game, when they realized that Boehner had caved in and the world was begging the Government to avoid default.  I would bet a lot of money that probably 90% of the Congressmen who voted "yes" on the Bill didn't even know that the Provision was in there.  I can guarantee that as fact.

In addition to this, there is no specified limitation on the amount of debt that can issued between now and Febraury 7th, when supposedly Congress reconvenes to vote on extending the debt ceiling limit.  But now it appears as if February 7th is a meaningless date.

In essence, while most people feel a sense of relief over the passage of the Bill enabling to Government to pile on even more debt, the cold reality is that the legislation is a ticking time bomb for the U.S. dollar and it sets up the next stage of systemic collapse.  I wrote an article for Seeking Alpha which lays out my analysis, which you can read here:  LINK.

The truth is, the U.S. political and economic system is now akin to a runaway freight train in which the brakes have failed and it's headed toward a gorge where the bridge has collapsed.

Wednesday, October 16, 2013

Obama's Frankenstein

First, as a follow-up to yesterday's post, I'd like to comment that I find it truly amusing that the stock market has shot up over 1% today on the fantastic news that Congress has reached a deal that will give the Government the ability to ramp up spending deficits and debt outstanding for another four months.  I guess when you're trapped in a speeding car with no brakes and headed for a cliff, you may as well celebrate and make whoopie until the car goes over the edge...

I wanted to present an informative piece about Obamacare, written by a doctor who seems to have caring for her patients as her only real agenda.

Before I link the article, what I would love know - and I wish one of the media's zombie-like reporters would directly ask Obama this question and not give up until he gives an answer - is whether or not Barack envisioned that most big companies would downsize as much as possible their labor force from full-time to part-time in order to shed the cost of providing health care onto the individual and the Government.  As  the non-farm payroll data has shown - and for as manipulated as the numbers are, the Government can't hide the fact that big companies are shifting their workforce from full-time to part-time jobs - the percentage of part-time jobs vs. full-time jobs in the economy has increased this year.  And overall the percentage of people who are actually counted as part of the labor force is at 30-year lows.

I guess what's most ironic about Obamacare is that - despite the El Hefe's claim that Obamacare would create jobs and cut the cost of health care for everyone - full-time jobs are being shed and, as you'll read below, the cost of health care for most people is going to go up dramatically while the quality declines.  You'll also note that doctors are now rolling out what is being referred to as "concierge," fee-for-service practices.  In other words, for those who can afford it - and that's a very small percentage of the population - doctors will set up practices for those who will pay out of their pocket for superior health care.  I wonder if Obama saw that coming...

In addition, the cost of implementing and rolling out Obamacare has already far exceeded what we told it going to cost the taxpayers.  Obama is one of the best natural-born liars I have ever seen.

Here's the article which gets the the golden truth about Obama's Frankenstein, aka the Affordable Healthcare Act:  10 Things To Expect From Obamacare In 2014

It's frightening to contemplate that there's people in this country who still approve of the job Obama is doing.  But it's truly horrific to think about what Obama and his Monster are going to do to our system and way of life.

Tuesday, October 15, 2013

This Sure Isn't The America I Grew Up With

I just can't believe that the average American looks at the stock market and says, "this country is in great shape - just look at the Dow."  There is no way that the public is THAT stupid or blind.
The increasing degree of corruption in our financial and political system continues to blow my mind.  Every day I uncover new evidence and facts about just how rotten to the core our system has become.  What's even more staggering is that the average American just "turns the other cheek" and let's it happen.  The Government has zero opposition to its frightening move towards a Totalitarian State.

And this stage show going on DC between Democrats and Republicans is nothing more than idle entertainment.  MTV for the political class and for the masses who are glued on a daily basis to the farce that is disguised as news being broadcast on Fox News, CNN, Bloomberg and CNBC.  Amazingly to me, intelligent, educated adults just stare and absorb and accept.  It's Huxley's "Brave New World" unfolding before my eyes.  What passes for "news" and accurate reporting of the facts is a complete insult to the intelligence of the few of us left who have the willingness to question what's happening and to grasp the real truth.  The truth is that this country is collapsing.

Whatever you want to call going on in DC right now, it is an unmitigated fact that the end result will be an even bigger disaster for our country.  What really staggers me is that Americans are pounding the table for a resolution to the budget and debt ceiling impasse.  For what end?  So that the Government can continue its deficit spending and INCREASE the ability to print money and create more debt in order to fund that spending.  It's the equivalent of the chickens in the barnyard cheering for Colonel Sanders - on their way to the slaughterhouse.   You got that America:  anyone who is supporting either Party in this DC debate is no better than one of Colonel Sanders' chickens - about to be fried and eaten.

I was having a discussion with a friend earlier this morning about what's happened to this country:
It's amazing how robotic Americans have become - Huxley's brave new world is here.  What irritates me the most is this insistence and widespread acceptance that you have to be "socially/politically correct."

The people running the show behind the scenes - the true elitists - were brilliant in choosing a black man to be President.  His policies are more fascist than were Bush's but you can't disagree with Obama or you risk being labelled "anti-black."   I had that aspect figured out right after he was elected in '08.

You can't name one campaign promise Obama has fulfilled other than Obamacare, which is going to probably be - ironically - the sledge hammer (not straw) that breaks this country's back.
And if you think I'm wrong about our country slipping into Orwell's or Huxley's vision for our future back in the 1940's, just think about the significance of these current images of our country:

"Of course, things are a bit different now since we became a nation of overfed clowns dedicated to getting something for nothing, but despite the abject futility of American life in its current incarnation, there is room for plenty of violence and destruction. The sad and peculiar angle of the current struggle is that both sides in government wish heartily to keep all the rackets of daily life going — they just disagree on the distribution method of the vig."  James Kunstler: Creepily Close

Friday, October 11, 2013

The CME/Comex And Truth In Reporting

The information in this report is taken from sources believed to be reliable; however,  the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness.  This report is produced for information purposes only.
The above legal disclaimer mysteriously, and with no explanation, showed up one day on the Comex gold and silver warehouse stock reports about 8 months ago (roughly).  After several years of publishing the warehouse stock reports, why all of a sudden did the CME feel compelled to stick this disclaimer specifically on the gold and silver warehouse reports?

I bring this up because I was having a discussion with a couple of long-time colleagues about the unprecedented level of manipulation of gold and silver that is occurring specifically on the Comex and primarily during Comex trading hours.  Today's activity is a perfect example.  And the behavior of the price action in the paper Comex market completely defies the unprecedented amount of physical gold being bought for accumulation by Asia, Russia and the Middle East.  In fact, India and China together are on track to inhale more gold in 2013 than is currently being produced by every single gold mine globally this year.

The nature of the discussion had to with the fact that, according to the CFTC Commitment of Traders report (COT), the four biggest gold futures traders on the Comex are, and have been, net long a record amount of gold contracts.  In an ordinary, unmanipulated and uncorrupted system, that positioning stance would be extraordinarily bullish.

But my view is that the data being reported by the CME/Comex and the CFTC is not to be trusted. In fact, if we could get a completely independent audit done of the CME/Comex, I think we would find a fraudulent horror show there beyond anyone's imagination.

But then there's Ted Butler.  He'll tell anyone who wants to be spoon fed by his drivel that the CME/Comex numbers are 100% accurate and there's no fraudulent reporting.  And it's pure speculation on Ted Butler's part that it's JP Morgan who's long Comex gold futures - he's the originator of the idea.  I place a heavy discount on anything Butler speculates on that I can't verify with my own eyes. 

The other BIG problem with basing analysis the way Butler does - and he unbelievably puts full faith in the notion that the CFTC/COT reporting is accurate and honest - is that I do not trust the data that is reported by the CME or the CFTC.  The CFTC COT report is based on the data it gets from the CME.  The CME bases its reports on the data it gets from the banks.  Obviously the CME recently put a legal disclaimer on the data coming from the banks.  But then again, Butler has to maintain religious-like faith that the CME/Comex reports are not fraudulent because he makes a healthy living selling newsletter subscriptions to his newsletter that is based on analyzing that data.  He has no choice but to believe the data is uncorrupted.

IF the banks are honestly reporting the CME data, it would be the ONLY aspect of their financial reporting that is being done honestly.  The irrefutable laws of probability would suggest that the CME/COT/open interest reports are fraudulent, just like every other aspect of the Comex.  Let's take JP Morgan as an example.  In it's latest earnings report released today, it reported that it is taking $9.2 billion in pre-tax legal expenses this quarter.   This is $9.2 billion that JPM is forced to spend to defend itself from the very type of fraud and corruption in every other aspect of JPM's trading and banking business that Ted Butler says does not exist with respect to JPM's reporting of its trading positions and its gold/silver warehouse stock on the Comex.

I know that myself and several other long-time precious metals and financial market professionals are confident that JPM's warehouse stock report is full of fraud - that most of the gold/silver it reports is  either not there or is sitting there but has been hypothecated in some form.  It would be a mistake to overlook the fact that the MF Global bankruptcy and fraud case - with which JPM was intimately involved - has set the precedence in terms of protecting banks who hypothecate customer assets.  I highly suspect that the daily open interest positions reported by JPM and the other banks is also corrupted.

If Ted wants to believe that the CME/CFTC/Comex data is accurate and honest, I have a bridge that I own that connects the upper east side of Manhattan to the borough of Queens that I would love to sell him.  What's your bid, Ted?  And, just for the record, I was highly critical of Ted's undying view in the early 2000's that eventually the CFTC would crack down on the obvious manipulation of gold/silver on the Comex by the big banks and specifically JPM.   He was wrong then and he's wrong now.

That tragedy of all of this is that the crime/corruption/fraud on the Comex reflects the same on all of Wall Street and, in fact, our entire political and economic system.  This country's "wealth" has been built on the back of the giant Ponzi scheme that is the U.S. Treasury market and the $17 trillion in debt that has been issued to keep the system alive.  In other words, our entire system of economics and politics is one giant facade of complete deception.  And I'm not even addressing here the massive insolvency of the cities, States and public/private pension funds.

This will not end well.  The volatility exhibited by the economy, the stock market, the political situation in DC and in the gold and silver markets - especially the latter - reflects just how broken and corrupted our system is.   Try to enjoy what you can, while you can - because there's no telling when the inevitable occurs and life becomes extraordinarily unpleasant for everyone.

Thursday, October 10, 2013

U.S. Government Debt Is THE Biggest Ponzi Scheme In History

The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.  -Investopedia
First, let me just say up front that anyone who is worried that the U.S. will default on its Treasury obligations because of this grand Vegas stage-show going in DC is a complete idiot.  To begin with, I fully expect Boehner to cave in and come to an agreement that at least temporarily lifts the debt ceiling so that Jack Lew and Obama can continue spending our money at a far greater rate than the incoming revenues.  Second, for all you folks with your head in the sand about what has happened to our Constitution over the last 13 years, the Patriot Act/Homeland Security Acts give Obama the authority to unilaterally print the money needed to service the Government's Treasury Ponzi scheme in case the stage actors don't blink by October 17th - Jack "Yes I'm A Thief" Lew's drop-dead date for cash in the Treasuries drawer.  Ultimately the debt ceiling will be raised by at least $1 trillion and Government spending will not be reduced.  But rest assured that the massive graft and kick-back payments that flow freely all around Capitol Hill will continue unabated.

The Treasury bond market is a Ponzi scheme because the amount of debt outstanding keeps growing pretty much at an accelerating rate:

(Treasury Debt Outstanding)

The reason this is a true Ponzi is because at every Treasury auction, held twice a month, the Government issues enough debt to repay the existing debt that is maturing and issues even more debt in order to fund Government overspending.  That is a Ponzi scheme in its essence.  In fact, Putin was wrong, this is an exceptional country because nature of the U.S. Government  Treasury Debt Ponzi scheme is truly exceptional.

Now that I think about it, The United States' Treasury bond Ponzi scheme is not only the biggest in history but it's the greatest in terms its ability to keep it going.  A typical Ponzi scheme, like Bernie Madoff's, requires new investors putting more money in to the scheme in order to payout the existing investors.  In contrast, if the Chinese and Japanese decide they'd rather not keep putting an increasing amount of money into financing our Governmental spending juggernaut, the Fed can just print money under the orders of the President to keep the gerbil going on the wheel, as it were.  Madoff's biggest problem is that he didn't have his own U.S. dollar printing press.

Worried about the price of gold?  This chart below shows you why you don't have to worry long term:

This chart shows the "exceptional" correlation between the price of gold and the level of the debt limit ceiling going back to 2000, the genesis of the current bull market in gold.  The drop in price since September 2011 shows the "exceptional" degree of Government/Federal Reserve intervention in the gold market - conducted by the Exchange Stabilization Fund as authorized by law and executed by JP Morgan - in order to deflect concern/fear about the increasing levels of Government spending and debt and the exceptionally increasing level of international distrust of the U.S. dollar.

The problem with Government interference in markets is that over time there are natural laws of economics and mathematics that come into play and that can not be avoided, by anyone.  The particular law of nature here is the "regression to the mean."  At some point, sooner rather than later, the price of gold will "regress" back up to its mean level of correlation  with the imminently-to-be-raised Treasury debt limit ceiling.

Wednesday, October 9, 2013

Will The Real Goldman Sachs View On Gold Please Stand Up

The head of Goldman Sachs' commodities research area yesterday announced in headline-grabbing fashion that gold was a "slam dunk" sell.  What's truly stunning about this is that during the 2nd quarter this year, Goldman Sachs revealed in an SEC 13-F filing that it had accumulated over 4 million shares of GLD (that's half a billion dollars worth) of GLD to become the 6th largest holder.

True to its historical track record, Goldman often says one thing through its research reports but does the exact opposite with its capital.  I've written an article published by Seeking Alpha which compares the Goldman's "sell" report, which has no basis in factual analysis, with a list of fundamental factors that point to the reasons that Goldman is saying one thing but doing the exact opposite with its capital.  You can read my article here:  Follow The Money

But before you read that, consider this accounting from of the last time Goldman issued a highly publicized "sell" on gold back in 2007:

It is worth remembering that Goldman, to much fanfare and media attention, “told clients” in November 2007, to sell gold. On November 29, 2007, Goldman recommended that investors sell gold in 2008 and it named the strategy as one of its ‘Top 10 Tips’ for the year.

Gold subsequently rose nearly 6.4% in December 2007 alone - from $783.75/oz to $833.92/oz.

Gold then rose another 5.8% in 2008 - from $833.92/oz at the close on December 31, 2007, to close at $882.05/oz on December 31, 2008.

Gold rose 12.2% in the 13 months after Goldman's sell gold call. Gold then rose 23.4% in 2009, 27.1% in 2010, 10.1% in 2011 and 7% in 2012.

Thus, proving Goldman’s ‘Top Tip’ prediction absolutely wrong and costing their clients and many of the unsuspecting public a lot of money in the process.

At the time, Goldman cut its gold forecast to $740/oz from $810/oz on a 12 month basis. One year later, gold closed at $882.05/oz - more than 19% above Goldman’s ‘forecast’.

The crystal ball gazing of Wall Street banks and hedge funds and others who have suggested gold is a bubble in recent years has cost many of the investment public dearly.

As ever, it remains wise to ignore the considerable noise that emanates from Wall Street and maintain a healthy, long term allocation to physical gold.

Friday, October 4, 2013

The Saga Of How JP Morgan/Jamie Dimon Ripped Off America With Barack Obama's Full Endorsement

JP Morgan is one of the best managed banks there is.  Jamie Dimon, the head of it, is one of the smartest bankers we got.   - Barack Obama on "The View," May 14, 2012
Read that quote a few times to let the full force of the absurdity of it sink in.  It actually took me a few minutes get over the glaring and pathetic grammatical error.  I'm guessing there wasn't a teleprompter set up in front of the El Hefe when he was snuggled up on that couch with the group of cackling moronic ladies of "The View."  There's a lot of questions that still persist about exactly who Barack is and where that rock is from under which he crawled into politics, but for now don't let your kids see that statement from the President unless you intend to give them a grammar lesson.

As far as being a "best" managed bank, I guess that could be the case if you overlook the hundreds of billions of taxpayer money that has been used to keep JP Morgan from collapsing.  And I guess that could be the case if JP Morgan was not currently embroiled in several Government investigations that will ultimately result in tens of billions of settlement payments.

Currently the Justice Department has six ongoing investigations of JP Morgan.  You can read about them here:  LINK.   And I'm sure there would be several SEC investigations into JP Morgan's accounting fraud if Obama's newly appointed head of the SEC - Mary Jo White - wasn't one of JP Morgan's chief defense litigators before she was plucked from Debevoise Plimpton in order to make sure that JP Morgan has a solid line of defense inside the Government.

And I guess you could say that  JP Morgan did a great job avoiding a much bigger settlement payment related to its extremely fraudulent mortgage activities when it appeared as if the bank would skate away with an $11 billion settlement - a mere fraction of the money it made during the housing boom and bust.  But now there's complications surrounding that potential settlement and the number could grow even bigger.

Taking all of this in to account - and again, overlooking Obama's inability to use proper English - I'm not really sure how he can possibly conclude that JP Morgan is "best" managed - or even well-managed.  And is Jamie Dimon smart?  I dunno.  You give me a couple hundred billion in taxpayer money and freedom from any fear of criminal prosecution and I'll do things with that money to create profitability would make make me look like a financial Einstein.

I know one thing we can conclude with 100% certainty is that JP Morgan pays Barack Obama very well to speak highly of the firm.  If you watch this video - which was sent to me by a reader who produced it - you'll see that JP Morgan has been Obama's 4th largest money donor and the #1 bank donor:

The beast named Jamie Dimon, of whom President Obama speaks so glowingly, is a liar, perjurer, criminal and, worst of all, a taxpayer thief.

Thursday, October 3, 2013

Is Gold Money? Well, Do You Trust Ben Shalom Bernanke? (Yes and NO)

The metals have not gone nuts because of the extreme intervention by the Fed and the BOE and probably the BOJ.  The intervention now is the most extreme that it's been in 13 years.  But the end is near.  90-95% of the American public - by design - will never have the chance to buy gold or silver - it will move higher in price too quickly and retail investing patterns suggest they will refuse to chase the price.  And given that 76% of the public lives from paycheck to paycheck they don't have money to buy gold/silver anyway - that's my prediction.

My comment above was in response to a discussion I was having with a colleague about the fact that most people in this country are completely clueless about what is really happening in this country in terms of the indisputable fact the U.S. is in a state of political and economic collapse.  The extreme corruption and massive ongoing theft of wealth by corporate America - in collusion with the Federal Government - is symptomatic of this collapse.  Unfortunately, Karl Marx predicted this about America back in the mid-1870's - a fact that I hate yo acknowledge because I despise socialism/communism.

So I thought it would be interesting to present the differing view on what gold is and what it represents between non-U.S. Central bank officials and our wonderful B.S. Bernanke.  The following is an excerpt from the keynote speech given by the Director General of Italy's Central Bank to the audience at a London Bullion Marketing Association conference recently held in Italy (the Bank of Italy has the 4th largest gold reserve in the world - that is, if you assume the U.S. really has possession and legal claim to the gold it reports as owning):
During Banca d’Italia’s keynote address Salvatore Rossi the director general told delegates how gold plays a key role in the central bank reserves:

"Not only does it have the vital characteristic of allowing diversification, in particular when financial markets are highly integrated, in addition it is unique among assets in that it is not issued by any government or central bank, so its value cannot be influenced by political decisions or by the solvency of any institution," he said.

"These features, coupled with historic ... and psychological reasons, stand in favour of gold's importance as a component of central bank reserves," he said. "Gold underpins the independence of central banks in their ability to (act) as the ultimate bearer of domestic financial stability."
Now compare that statement to the remarks by BS Bernanke a couple years ago when he was being questioned by then Congressman Ron Paul while under oath - I've transcribed the salient section:

Ron Paul:  Do you think gold is money?
Bernanke:  No
RP:  Even if it has been money for 6 thousand years, somebody reversed that and
       eliminated that economic law?
Bernanke:  (pause) Well, it's an asset
RP: Why do Central Banks hold it?
Bernanke:  Well, it's tradition

I don't know about anyone else, but I think it's quite fitting that the first two initials of Bernanke's full name are "B" and "S."  I can't believe nobody has flagged that in 7 years of his Fed Chairmanship - because, if anything, Bernanke is certainly full of BullShit.

Wednesday, October 2, 2013

September Auto Sales And ADP Payroll Report Confirm The Economy Is Tanking

I have to say, Barack Obama is probably the biggest political sell-out in the history of the United States.  Anyone who voted for him and still supports what he is doing is either tragically brain damaged or pathetically naive.  That's not to say the Republicans are a better alternative but Obama sold out his supporters like  plantation slaves in the 1800's.
Yesterday's auto sales report for September - led by GM's 11% plunge in sales and incredible bloating up of dealer inventory levels - confirms my view that the economy is tanking.  Today's ADP (Automatic Data Processing, Inc) Payroll report for September further confirms, as today's payroll report was nothing short of disaster, with a big miss of the consensus estimate AND the two previous month's reports revised downward sharply.  The dollar has lost the 80 level.  The world isn't buying into the story being reported in the media by Wall Street and the President that the economy is improving.

I review this data plus three other observations in this article:  September Auto Sales/Tanking Economy.

I further expect that housing sales will follow auto sales lower.  September home sales data will start coming in three weeks.

Tuesday, October 1, 2013

Is Bart Chilton Serious?

Zerohedge published this amusing email interchange between a plebian serf citizen and Bart Chilton, one of the empty suits occupying desk space at the CFTC (Commidities and Futures regulatory department).

He responded to an email by saying that "no regulators looking at markets due to Government shut down."  LINK

That's hilarious, because by making that statement he's implying that the regulators make difference when the Government is working. 

I don't know if Bart is either tragically stupid or is just trying to provide justification to his pathetic existence as a useless Government employee.  But we know the CFTC couldn't spot market manipulation even if it was in the form of a no-anesthetic colostomy being performed on them.

Keep punching the clock Bart - in a few more years you'll have your 20 yrs behind you and can retire to some fishing hole and collect a taxpayer-provided pension monthly pension payment.