Numerous events have taken place of global importance. Alone, each story
seems of some significance. Together, they paint a mosaic of extreme change
in a very dangerous sequence of events that fit together. The greater
aggregate story is that a tremendous paradigm shift is underway, with early
steps and major moves by global players in clear view. The Western analysts
and pundits and mavens are missing it. A PARADIGM SHIFT HAS BEGUN, WITH
BANKING POWER SHIFTING TO THE CREDITOR NATIONS AS THE USDOLLAR IS
SUPPLANTED, MADE POSSIBLE BY SEVERAL NEW INSTITUTIONAL PILLARS AS WELL AS
NEWLY FORGED ALLIANCES. The consequences are significant and will change
the face of global banking and commerce. The Hat Trick Letter has described
the various steps and their importance all along the way. Much more detail
is provided for each major point to follow in the HTLetter reports. Some in
the United States and England believe that a return to normalcy comes. They
are wrong by 180 degrees. The G20 Meeting of finance ministers and heads of
state was the warning. The message from that meeting in London has been
long forgotten, a call made in my public article immediately after its
conclusion. This article provides an outline of events that have occurred
only in the last few weeks, as the pace is accelerating for transformation
that begins at the foundation. Piece it all together, use some mental
power, sprinkle with only a little imagination, connect some dots easily,
and take a look at the global picture that is emerging. Yesterday came the
crowning blow, as the United Arab Emirates rejected the Saudis in the Gulf
monetary union. My belief is that the rising power in the UAE wants Russia
instead of the Saudis, who are tied at the US hip.
EVENTS STEEPED IN SYSTEMIC CHANGE
Numerous events mark major milestones. They should be viewed in aggregate.
The major media networks have no vested interest in enabling more than
trivial perceptions toward each story. Paradigm Shifts are magnificent
processes, not easily made possible, which require great and steady
powerful forces behind them. Cooperation must be present from most global
players of importance. Here is a list of events. To be honest, if after
reading them in entirety, a deep sense of tectonic changes is not sensed,
then at best a sleepy state prevails in the cerebrum and at worst a
compromised state dominates.
1) The US-UK banking systems are shattered by deep bond asset losses,
shrouded in fraud, deep with leverage, teeming with collusion, which
renders them as insolvent and in need of transfusions. The reality is that
Wall Street firms remain in control of the USGovt financial operations
despite their responsibility for both the collapse and clear legal
violations. The USDollar image is badly tarnished.
2) Incredible volumes of money have been committed by the US Federal
Reserve and the USGovt, much already delivered, with staggering future
rescues, bailouts, and stimulus packages assured. The sums total $12.8
trillion at last count. The undermine, if not debauchery, to the USDollar
and its vehicle the USTreasury Bond is vividly clear, a palpable threat to
foreign creditors.
3) Foreigners have begun to worry openly about the onset of profound price
inflation. What normally had been less than 4% in excess bank reserves is
now 92%. US banks will channel the bulk of their excess reserves into loans
and investments, when considered safe. The baseless ‘All Clear’ signal
can be witnessed, orchestrated and phony. For political and credit market
reasons, do not expect any noticeable central bank drain. Price inflation
awaits the landscape on a path of least resistance. The USTBond yield would
rise, and lose colossal sums of money for foreign bondholders.
4) Foreign creditors have owned over half the US$-based government and
mortgage agency bonds for almost a decade. With the dependence upon foreign
institutions (central banks and sovereign wealth funds), the United States
has quietly lost control of its fate. It can no longer make decisions
without consulting major creditors.
5)The USMilitary has tacitly been supporting the value of the USDollar. By
pressuring the Saudis on a regular basis, they have maintained the
Petro-Dollar standard without a peep of objection for a few decades. When
South Korea expressed interest in diversifying out of USTreasury Bonds a
few years ago, suddenly some US naval exercises occurred off their coast.
The pattern is clear to foreigners.
6) Some recognition has come that the aggressive USMilitary of recent years
depends heavily upon USTreasury Bond sales in order to continue their
adventures. As long as the USDollar is pre-eminent, the USMilitary will
continue to play in neighbor’s back yards doing whatever.
7) The Chinese have been taking numerous steps to establish the yuan
currency more as a global currency for international commerce. The more
important step has been to set up numerous yuan swap facilities across the
globe, the latest being in Argentina and Brazil. Others are across Europe
and Asia. Such facilities make easier trade in high volumes, without need
for settlement in US$ denomination, as has been the custom for a few
decades.
8) The Chinese have begun to switch from a US$ basis to a yuan basis in
their banking system domestically. They also have given a giant assist to
the new emergency fund for the extended ASEAN group of SouthEast nations.
My belief is that the fund, based in yuan currency, will morph into a
regional development fund. Conversation already has lead in that
direction.
9) The Chinese gave authorization to two banks outside the Middle Kingdom
proper to sell yuan-based government bonds. The HSBC (based in London) and
Bank of East Asia (based in Hong Kong) have been given permission to do so,
with details to follow. More broad-based formal trading of Chinese Govt
bonds is coming soon to a nation near you.
10) Watch their moves toward creation of the Chinese yuan as a global
reserve currency. Watch their simultaneous moves away from the USDollar and
toward gold for reserves management. The merger of the two important
strategic initiatives is a gold-backed yuan currency. In fact, that is
precisely what was stated openly by Zheng Lianghao, managing director of
the World Gold Council’s Far East division. That news came out this week.
The Chinese are clearly the spearhead to dethrone the USDollar as global
reserve currency.
11) Numerous nations have stated publicly that they regard the USDollar as
inadequate and unqualified to serve any longer as the sole global reserve
currency. The isolated revolt has turned into a uniformly global revolt.
They are blaming the US$ for their internal crises.
12) Russia demanded an alternative to the USDollar before the G20 Meeting
in London, at the G20, and after the G20. Russia and China endorsed the
IMFund plan to create a basket currency as a global reserve alternative. My
personal view is that the concept was and is a Straw Man device that will
pave the way to a new global reserve currency, or set of currencies later.
The motive was to direct attention away from the USDollar, and heap some
disgrace at it.
13) The Arabs have been planning for over two years an asset-backed new
currency for the Gulf region. New crude oil purchases would ostensibly be
conducted in the new dinar denomination, bringing an end to the
Petro-Dollar standard. In early May, the decision was made to locate their
new central bank in Riyadh. NOW THE EXIT FROM THE MONETARY UNION BY THE
UNITED ARAB EMIRATES SIGNALS SOMETHING BIGGER. MY BELIEF IS THAT THE U.A.E.
REJECTED THE SAUDIS DUE TO TIGHT USGOVT BEDFELLOW RELATIONS. THE U.A.E.
WILL NEXT COURT A GRANDIOSE ACCORD WITH RUSSIA. THE NEW ALLIANCE WILL
INCORPORATE A NEW CURRENCY, NEW PLEDGES OF SECURITY PROTECTION, AND A
COORDINATION OF CREDITOR ACTIONS. The Creditor Nations will soon tighten
the noose around the necks of Debtor Nations, and force a global banking
shift of power. It will be astonishing in its effect.
14) The Germans have demanded all of their gold held in custodial accounts
inside the United States to be returned to German soil. The story is not
public, but details have come to me from a private source close to the
action. The Germans have also given counsel for Dubai to demand all of
their gold held in custodial accounts inside London to be returned to
Dubai, where a new gold trading center will spring up. In my view, THIS IS
THE BIGGEST NEWS FOR GOLD THIS ENTIRE YEAR. The hidden arch-enemy for the
US-UK on all matters pertaining to gold bullion is Germany. This is not a
well-known concept. Insults were hurled at the US delegation during the
London G20 by their ministers. Germany is also advising the Chinese on
currency and gold matters. Can one detect some coordination?
15) Venezuela has followed the Chinese and Russian pattern to lock up the
majority of domestic gold mining output. They will keep most gold output in
domestic hands, primarily with the government, which will have first crack
at buying it.
16) A near default was averted at the Eleventh Hour when Deutsche Bank
found almost a million ounces of gold to cover its (naked) short in gold
futures at the COMEX at the end of March. Thanks to the Euro Central Bank,
which happened to sell over a million ounces for some reason. My conjecture
is that the Germans decided the time was not right to bust the COMEX. From
sources, that date might be this September in a coordinated attack that
requires preparations to remove the levers and kick out the pillars that
support the COMEX.
17) Germany has been the broker in creating a Russian-German barter deal
involving billion$ in trade between the two nations. Credits will be gained
from delivery of a raft of commodities, led by energy products from Russia.
In turn, Russia will receive finished products, equipment, and consumer
staples. Germany has been the broker in a similar barter accord between
Russia and China under similar terms. These barter deals will create entire
systems that bypass the US$-denominated trade settlement.
18) The Chinese announced an increase in their gold reserves from 400
tonnes to 1050 tonnes in the last five years. At the same time, they have
been harping on the extreme risk to their $2000 billion in savings, held in
USTreasury Bonds, USAgency Mortgage Bonds, and USCorporate Bonds. They
openly complain about US$ mismanagement, unbridled USGovt spending (for
numerous crisis projects), and the resulting risk to the US$ exchange rate.
They have engaged a war of words, precursor to trade war, with USDept
Treasury officials, one that has lasted for at least two years. The Chinese
have openly talked about a covert USTreasury Bond default, which is a very
serious accusation to make.
19) The Chinese Business News (CBN) has made several queries with the GATA
group, the US-based outfit challenging the USGovt on the legitimacy of the
USDollar on a Constitutional basis, and challenging the USGovt on its
illegal naked shorting of gold futures contracts in a long-running gold
price suppression scheme. The Chinese might be building a weapon to
challenge the USDollar’s legitimacy, in response to stupid currency
manipulation charges lodged by the hack USGovt bureaucrats in high
offices.
20) Either lawsuits or Congressional Bills have begun against the US
Federal Reserve to force a formal accounting of their balance sheet, and of
the gold contents at Fort Knox. A surprise would await them, to learn no
gold exists at Fort Knox. Another lawsuit has begun to force the USFed to
reveal the spending of the T.A.R.P. funds. Foreigners must watch the Wall
Street syndicate with some degree of disgust. Watch the Supreme Court enter
the picture.
21) Meanwhile, the big US banks are maneuvering themselves to return
T.A.R.P. funds when their insolvency is obvious, their balance sheet
accounting is phony, and numerous events have begun or are planned to raise
equity capital. They are rectifying their capital inadequacy and vanished
loan loss reserves. The real reason they plan to return USGovt funds is to
put an end to the extreme risk of underlings at the USDept Treasury,
Congressional Budget Office, Govt Accountability Office, and various
Congressional Banking Committees who have had access to records, the paper
trails. Eight months have passed since TARP funds were injected into big
banks, giving way too many eyes too much access. The situation is not
manageable, an unexpected grand intrusion after fund confiscation. The
financial (crime) syndicate must be protected. Quite a contrast event, in
view of foreign actions listed above.
PARADIGM SHIFT STATED PLAINLY
The Chinese strategy remains hidden, to execute a grand paradigm shift that
will take tacit control of the United States, which is now in disarray. Its
leadership is too busy being coopted by the Wall Street banksters. The
objective by Beijing leaders is to avoid violence and military actions
altogether. Sun Tzu would be proud. Beijing is gradually subjugating the
USGovt as a vassal in debt, the risk to the US being a transition toward
servitude to their credit master. We are in the midst of an historical
global paradigm shift, to date a quiet process. Power is shifting from
WashingtonDC and New York City and London directly to Beijing.
The United States has little choice but to acquiesce and comply with
Beijing wishes. The insolvent indebted nation with little industry left and
a destroyed banking system can endure the shameful process of bankruptcy
receivership, forced by the creditors, or the nation can permit a ‘New
Alliance’ with China that involves obedient hidden directives. The US
possesses a powerful defense contractor industry, half the world’s
agricultural output, and many spectacular locations for residence. The
practical consequence of the US ‘listening’ to Beijing wishes on a
regular basis will be for the European Union to be pushed into a ‘New
Alliance’ with Russia. Such a deal is practical, due to distances and
supply lines. The United Kingdom is in all likelihood to be left out in the
cold.
A WRETCHED LOOKING USDOLLAR CHART
The USDollar is in slow motion breakdown mode. Gold will rise from monetary
inflation and price inflation, apart from currency factors. Already, the
long-term USTreasury Bond has sprung a preliminary leak. For the USTBond
and the USDollar to falter simultaneously was not anticipated, and is
doubly bullish for gold. The dollar DX chart looks horrible, the pathetic
end of the Dollar Death Dance. The cyclicals look bad, and the 20-week
moving average has turned down. The triple failure is complete, for all to
see. What comes next might be an UGLY rollover decline, seeking support
desperately. Failure at the 81 neckline is happening right now, the defense
trampled. The next stop is 77 then 72 again, the target for the Head &
Shoulders reversal failure. Also, lousy psychology could join wretched
chart technicals and dreadful fundamentals to make a negative trifecta.
This could get ugly with a well observed crash in global view! One should
not rule out an breakdown below 71 eventually.
A BEAUTIFUL GOLD CHART
The gold chart is wildly bullish, with a 1300 target. The gold price
follows the central banks monetization and diverse federal fiscal stimulus
worldwide, and has ignored season. As the big banks struggle to survive,
the central banks take extraordinary measures, and frontal assaults are
waged against hedge funds, all patterns have been departed from. What
replenishes big banks also leaks generally into the system in time. As the
economic recessions show stubbornness, expect fiscal stimulus to be
monstrous and almost endless. The reversal pattern is unmistakable, the
classic Head & Shoulders pattern. The neckline is at 1000 and the top of
the head is at 715. The nearly 300 point potential indicates a 1300 target,
a number that has come up frequently in several different patterns
identified. Notice the upward vector in both moving averages, as well as
the cyclical index. The only resistance will be the illegal kind from naked
shorting of futures contracts by the usual villains who operate at the
behest of governments, protected from prosecution. They will not be able to
stop what comes. A challenge of the 1000 level could come very soon. Once
1000 is penetrated in clear fashion, with excitement and attention, an
overshoot of 1300 could even occur.
RELOCATION IN SPECTACULAR COSTA RICA
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27th, visit their May-July 2009 issue with interesting information about
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CREDIT CRISIS AUTOPSY
Trace Mayer comes to the gold community with a different slant and
background. He has a law scholar with emphasis on the Constitution,
especially how it applies to the gold and currency topics. In his e-book
entitled “The Great Credit Contraction” one can read about the
historical significance of a crisis that will surely reshape the world. The
global economy is built upon a currency whose illusion is evaporating
before our very eyes. This book is an autopsy of the current worldwide
systems and begins with financial history, discusses the current great
deflationary credit contraction, projects the future environment, and
concludes with suggestions on how to generate and preserve wealth in this
challenging time. An appendix analyzes important topics.
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
DISCLAIMER: All of the provided information is believed to be accurate, however errors are possible. The opinions in the Commentary section do not necessarily reflect the opinions of GoldIRAS.com. Past performance of any investment is no guarantee of future performance. All investments have risk.
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