Stop The Ponzimonium [and Pawns-a-monium]: Shame On CFTC Commissioner Bart Chilton On Wednesday, June 24, 2009, CFTC Commissioner Bart Chilton appeared on Canada’s Business Channel [BNN] to discuss market manipulation [or as Mr. Chilton coined it, “ponzimonium”] in the commodities markets.  You can watch the interview here. [more.....signup] [open pdf....members]

Globalism or Localism:  A Peek at Financial Ecosystems World Trade, free trade, regional currency blocs, global warming, G-8, G-20, New World Order, carbon taxes, Central Banking and Debt Based Money Systems, expanded roles for the World Bank and I. M. F. – collectively, these are all factors – or components of a financial eco-system - which have contributed to our current deteriorating, global economic circumstances. [more.....signup] [open pdf....members]

The Bush Doctrine, Economic Warfare and Your Investment Portfolio Let us be clear, that in the aftermath of 9/11, American policy vis-a-vis its relations with the rest of the world changed forever under the aegis of the Bush Doctrine: The Bush Doctrine is a phrase used to describe various related foreign policy principles of former United States president George W. Bush. The phrase initially described the policy that the United States had the right to secure itself from countries that harbor or give aid to terrorist groups, which was used to justify the 2001 Invasion of Afghanistan. Later it came to include additional elements, including the controversial policy of preventive war, which held that the United States should depose foreign regimes that represented a potential or perceived threat to the security of the United States, even if that threat was not immediate; a policy of spreading democracy around the world, especially in the Middle East, as a strategy for combating terrorism; and a willingness to pursue U.S. military interests in a unilateral way.  Some of these policies were codified in a National Security Council text entitled the National Security Strategy of the United States published on September 20, 2002. [more.....signup] [open pdf....members]

CNBC:  The Spin Cycle After writing U.S. Gold: Going or Completely Gone? late last week, widely read London based analyst, Paul Mylchreest, expanded on my work in his Thunder Road News – which is widely read in the institutional investor universe.  The British publication, Telegraph.co.uk picked up on Mr. Mylchreest’s report and published the following on Monday, June 1, 2009: [more.....signup] [open pdf....members]

Auto Companies: Forensic Examination of Their Woes and More A couple of weeks ago in this space in an article titled, Theater of the Absurd: a view from the inside, a case was made that Interest Rate Derivatives, not credit derivatives, are the ‘root cause’ for the macro economic problems our global financial system is currently facing. [more.....signup] [open pdf....members]

U.S. Gold, Going or Completely Gone? This past Tuesday evening I found myself reading a snippet from Enrico Orlandini’s, DTAnalysis [DT stands for “Dow Theory”]  - where Mr. Orlandini opined, "I believe the [U.S.] trade gap will surprise people and continue to shrink and may even turn positive for the first time in decades. Unfortunately, this will only facilitate the flow out of the US dollar and bond and that’s not a good thing.” [more.....signup] [open pdf....members]

Theater of the Absurd: A View From the Inside I read an article that was published by The Institutional Risk Analyst [IRA] titled, Kabuki on the Potomac: Reforming Credit Default Swaps and OTC Derivatives.  According to the Kabuki article; "Kabuki is classical ancient Japanese folk theater performed broadly and loudly for the general public. I became familiar with it when I lived in Tokyo years ago. Kabuki on the Potomac this week fit Kabuki's theatrical definition with lawmakers wailing loudly, uttering angry threats, and rhythmically pounding podiums in a performance of mangled metaphors and fantasy." [more.....signup] [open pdf....members]

Forensic Examination of the Gold Carry Trade Is There A Supply Deficit? If you ask the World Gold Council or their “official numbers keeper” - GFMS – they’ll say there is no persistent gold supply deficit.  If you ask the folks at GATA – they’ll claim there is an annual 1,000 – 1,500 tonne gold supply deficit. So who’s telling the truth? [more.....signup] [open pdf....members]

Massive Blows to the Foundations of Our Faith Based Capital Markets Most widely accepted and reported accounts of our current global financial difficulties place its beginnings in the August 2007 timeframe – when sub-prime [mortgage] credit markets “seized up”. [more.....signup] [open pdf....members]

Can Pigs Really Fly? The Fed / Treasury first announced that banks would be subject to stress tests back on Feb. 10, 2009.  This WSJ account is the earliest mention we’ve been able to find: FEBRUARY 10, 2009 Banks to Get Stress Test Before Aid As Part of Revamped Bailout, Cash Will Go to Those Deemed Healthy Enough to Lend By DEBORAH SOLOMON and DAMIAN PALETTA WASHINGTON -- Many U.S. banks will be subjected to rigorous examinations to see if they are healthy enough to lend before receiving additional financial aid, according to people familiar with the matter. The stress tests will be part of the bailout revamp to be announced Tuesday by Treasury Secretary Timothy Geithner. In addition to fresh capital injections into banks, the new approach will include programs to help struggling homeowners; a significant expansion of a Federal Reserve program designed to jump-start consumer lending; and a private-public partnership to relieve banks of bad assets…… So…. as of the date of the article above – WHEN STRESS TESTS WERE CLEARLY PLANNED and ANTICIPATED – FASB [Financial Accounting Standards Board] rules CLEARLY stipulated that mark-to-market accounting was the measuring stick for prudently gauging the true financial health of any banking institution. [more.....signup] [open pdf....members]

The Big Lie and A Whole Lot More Last Wednesday, April 15, 2009, The United States Treasury published their monthly Treasury International Capital [TIC] System report.  What this report captures, broadly, is macro international capital flows in and out of the U.S. capital markets.  Because the United States is a debtor nation – running huge fiscal budget deficits as well as massive, seemingly perpetual, current account [trade] deficits; they require massive amounts of foreign capital injections to finance these shortcomings.  In recent years the amount of foreign capital REQUIRED by the United States has been conservatively running in the neighborhood of +70 billion per month.  [more.....signup] [open pdf....members]

The Magnificent Seven and the Public Private Partnership So how big is the credit derivatives market anyway?  According to Reuters, the credit derivatives market is 55 Trillion in size at Oct. 7, 2008: ….AIG sold protection to banks on pools of risky mortgages and other assets in the $55 trillion credit derivatives market….. Now, let’s take a look at where the bulk of these derivatives are held, [more.....signup] [open pdf....members]

Humpty-Dumpty Fiat Sat on the Wall….You Know the Rest! We’ve heard much over the past number of days, weeks and months as to what lays at the root of our economic and financial woes.  We’ve been made painfully aware of sensationalized storylines; like a Made-off-ian styled Ponzi-fraud, a real head-scratcher when you consider that 64 billion in proceeds is alleged to have vanished into the ether without a trace; Bear and Lehman styled collapses where, in the confusion, 50 odd billions were created out of thin air – only to be quickly buried like bones in ‘rover’s clover’; and perhaps the most egregious of all, visibly, to date – the 180 billion and growing “black hole” of Darth Vader Ponzi-finance – AIG. [more.....signup] [open pdf....members]

More Derivatives Obscenities from Goldman Sachs “the Bank” The U.S. Office of the Comptroller of the Currency [OCC] posted its latest [Q4/08] quarterly derivatives report today.  Everyone in the civilized world should be shaking their head at this.  In the 4th quarter of 2008, Goldman [Hannibal Lecter] Sachs became a bank and, as such, for the first time was compelled to fill out and submit “call reports” to the Comptroller’s office.  Ladies and gentlemen, the tide just went out and it appears that the Horrible Hannibal is not wearing a bathing suit: [more.....signup] [open pdf....members]

Derelicts on the Dole (pdf version for members) March 24, 2009, I sat, watched and listened as U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Benjamin Bernanke gave sworn televised testimony to a U.S. Senate Banking Committee. The gist of the testimony and solutions posed by both Geithner and Bernanke were that the Federal Reserve / Treasury combo be mandated more regulatory power to cure the existing financial crisis and prevent future financial disasters from occurring – because their existing mandate was inadequate. This theater left me shaking my head. I’d like everyone to think about what these two men said under oath and, then consider how it pans with the following – excerpted from Stanford University alumni magazine: After Brooksley Born was named to head the Commodity Futures Trading Commission [CFTC] in 1996, she was invited to lunch by Federal Reserve chairman Alan Greenspan. The influential Greenspan was an ardent proponent of unfettered markets. Born was a powerful Washington lawyer with a track record for activist causes. Over lunch, in his private dining room at the stately headquarters of the Fed in Washington, Greenspan probed their differences. “Well, Brooksley, I guess you and I will never agree about fraud,” Born, in a recent interview, remembers Greenspan saying. “What is there not to agree on?” Born says she replied. “Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,” she recalls. Greenspan, Born says, believed the market would take care of itself….. ….As chairperson of the CFTC, Born advocated reining in the huge and growing market for financial derivatives…. ….. Back in the 1990s, however, Born’s proposal stirred an almost visceral response from other regulators in the Clinton administration, as well as members of Congress and lobbyists……. … Robert Rubin, who was treasury secretary when Born headed the CFTC, has said that he supported closer scrutiny of financial derivatives but did not believe it politically feasible at the time….. ….. Ultimately, Greenspan and the other regulators foiled Born’s efforts, and Congress took the extraordinary step of enacting legislation that prohibited her agency from taking any action. Born left government and returned to her private law practice in Washington….. Contacted for the Stanford Alumni magazine article, Mr. Greenspan reportedly now disagrees with Born’s recollection and characterization of their lunch conversation years ago by responding, “This alleged conversation is wholly at variance with my decades-long held view,” he said in an e-mail, citing an excerpt from his 2007 book The Age of Turbulence, in which he wrote that more government involvement was needed to root out fraud.” Born stands by her story. A Fond Remembrance This kind of got me wondering, if Sir Alan of Selective Amnesia – the knighted one – might remember whether he was mischaracterized in another one of his dalliances, back in 1966, when he wrote a paper titled Gold and Economic Freedom, wherein he wrote, “The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” Now, I ask how the above girds with this revelation, Alan Greenspan himself referred to the federal government's power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: "Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise." Far be it from me to call the esteemed former Federal Reserve Chairman a bold-faced-liar, I’ll leave that kind of conjecture to you, the reader.  But I digress. Contemptuous Critiques Now, I would like to focus on the disdain and utter contempt the establishment showed Ms. Born and her clarion calls – for probity’s sake - that EXISTING REGULATIONS be enforced, The CFTC was created in the ’70s to regulate agricultural commodities markets. By the ’90s, its main business had become overseeing financial products such as stock index futures and currency options, but some in Washington thought it should stick to pork bellies and soybeans. Born’s push for regulation posed a threat to the authority of more established cops on the beat. “She certainly was not in their league in terms of prominence and stature,” says a lawyer who has known Born for years and requested anonymity to avoid appearing critical of her. “They probably thought, ‘Here is a little person from one of these agencies trying to assertively expand her jurisdiction.’” Some of the other regulators have said they had problems with Born’s personal style and found her hard to work with. “I thought it was counterproductive. If you want to move forward . . . you engage with parties in a constructive way,” Rubin told the Washington Post. “My recollection was . . . this was done in a more strident way.” Levitt says Born was “characterized as being abrasive.” Her supporters, while acknowledging that Born can be uncompromising when she believes she is right, say those are excuses of people who simply did not want to hear what she had to say. “She was serious, professional, and she held her ground against those who were not sympathetic to her position,” says Michael Greenberger, a Washington lawyer who was a top aide to Born at the CFTC. “I don’t think that the failure to be ‘charming’ should be translated into a depiction of stridency.” Others find a whiff of sexism in the pushback. “The messenger wore a skirt,” says Marna Tucker, a Washington lawyer and a longtime friend of Born. “Could Alan Greenspan take that?” One Size Fitts All You see folks; I bring all of this up for good reason.  The contemptuous, maligning treatment of Ms. Brooksley Born as head of the CFTC concisely parallels the poisonous treatment doled [or Gored, perhaps?] out to Ms. Catherine Austin Fitts, former Assistant Secretary, FHA – Bush I Admin.  During her time in government, Fitts discovered that Fannie and Freddie were accidents looking for a place to happen.  When she left government and formed Hamilton Securities, in her capacity as government contractor, she learned; “In 1995, a senior Clinton Administration official shared with me the Administration’s targets for Fannie Mae and Freddie Mac mortgage volumes in low- and moderate-income communities. We had recently reviewed the Administration’s plans to increase government mortgage guarantees — most of these mortgages would also be pooled and sold as securities to investors. Even in 1995, I could see that these plans would create unserviceable debt loads in communities struggling with the falling incomes expected from globalization. Homeowners would default on mortgages while losses on mortgage-backed securities would drain retirement savings from 401(k)s and pension plans. Taxpayers would ultimately be hit with a large bill . . . but insiders would make a bundle. I looked at the official and said that the Administration was planning on issuing more mortgages than there were houses or residents. “Shut up, this is none of your business,” the official snapped back.” Ladies and gentlemen, there’s a pattern here.  Ms. Fitts attempted to identify rampant systemic financial abuse – in her case, colossal mortgage fraud.  From speaking with Ms. Fitts personally, I am aware that Fitts – in her capacity as President and founder of Hamilton Securities – actually met with the Greenspan Federal Reserve.  For trying to expose the reality that one of the dirty little secrets behind the housing bubble is the long standing partnership of narcotics trafficking and mortgage fraud and the use of the two in combination to target and destroy minority and poor communities with highly profitable economic warfare back in the 1990s – Fitts found herself the subject of secretive but factually baseless investigations by H.U.D. and the U.S. Dept. of Justice.  Along with the legal proceedings aimed against her, her company [Hamilton Securities] was ruined, she was threatened and harassed to the point where recent revelations by Seymour Hersh that, Vice President Dick Cheney was running an executive assassination ring made her stop and consider, “I have always wondered if this ring was responsible for a series of poisonings between 2002 and 2005 while I was in litigation with the federal government.” The Common Thread It has occurred to me that Ms. Fitts attempts to fix a broken system shares a common thread with Ms. Born’s experience – The U.S. FEDERAL RESERVE – that blocked both their efforts to either prevent or expose systemic, fraudulent financial abuse. And now there is serious consideration to give the Federal Reserve / Treasury more power???? As the most important members of the President’s Working Group on Financial Markets [aka the Plunge Protection Team], these two bodies would have had direct input [and thus been complicit] into the S.E.C’s 2007 elimination of the “Uptick rule” on legal shorting of equities. Similarly folks, these are the same two organizations which in 1999 oversaw the repeal of the Glass-Steagall Act, which since 1933 had separated investment and commercial banking activities – allowing unfettered growth in securitization and derivatives trading.  Additionally, in the same complicit manner, these folks for years sat idle and silent - observing the inaction of the S.E.C regarding the serial Naked Shorting of equities [the illegal practice of short selling shares that do not exist] in contravention of EXISTING SECURITIES LAW.  Add to this their complicit derelict behavior of crony capitalism in fashioning schemes of “selective” outright bans on shorting, what-so-ever, of selected financial equities. Now, ask yourself, “Should these miscreants at the privately owned Federal Reserve really be graced with more power?” While we’re doing our dirty laundry, let us also not forget last Friday night’s [Mar. 20] takeover [or mugging, perhaps?] by the FDIC of U.S. Central Federal Credit Union, a huge wholesale credit union with about $34 billion in assets based in Lenexa, Kansas.  This institution provides settlement services to 100 percent of corporate credit unions and 93 percent of all U.S. credit unions. At minimum, this means that local Credit Unions all over the U.S. [one of the only credible alternatives to money center banks] will now be facing higher costs according to Reuters: “The immediate costs of the takeover are coming out of a $7 billion industry-maintained insurance fund, but will mean higher premiums levied on retail credit unions.” The reason offered for regulators taking control of this wholesale credit union [and in turn burdening the ENTIRE credit union system] is alleged to have been that it failed a regulatory mandated “financial stress test”.  If U.S. Central Federal Credit Union failed their financial stress test; the cadavers of Citibank and B of A must already be undergoing autopsies at the county morgue. Interesting how anything that competes with, threatens, or offers an alternative to the Federal Reserve controlled financial system [like community banking] dies or is threatened but AIG lives!!! In short, the Fed / Treasury combo should have their oversight curtailed since they have clearly shown a blatant disregard for enforcing existing financial law. In my own research and writing, as a foot soldier for the Gold Anti Trust Action Committee [GATA] – I have personally chronicled and documented systemic financial abuse – encapsulating ALL that Fitts and Born have warned about - all emanating from the highest levels of the U.S. Fed and Treasury – primarily in the global gold and bond markets; and all aimed at fraudulently perpetuating the global primacy of the U.S. Dollar.  I’ve been able to determine through independent forensic examination of undeclared, nefarious Fed Reserve activity over the last 5 years that the Federal Reserve has NEVER had a coherent policy – unless one considers the major observable planks of “scorched earth” and/or “gold-price-bashing” to be any semblance of sound economics. Isn’t it time that the Federal Reserve is publicly recognized for what they are – derelicts on the dole – and what they’ve done?  Isn’t it about time they are ORDERED to put their shovels down and quit digging a deeper-debt-hole for the American public?  Haven’t the American people given enough? America and the world-at-large might be a better place to live if American monetary and political elites would quit trying to become more omnipotent and – for a change - simply execute their existing mandates. This article is published publicly [unusually] in its entirety.  Subscribers to Kirbyanalytics.com regularly receive guidance and actionable recommendations to help insulate themselves from the aforementioned systemic financial abuses.  Subscribe here. * Rob Kirby acknowledges the keen nose of GATA lieutenant Adrian Douglas  and Lemetropolecafe.com for drawing attention to the existence of the Brooksley Born interview in the Stanford University alumni magazine. [signup]

A Date That Shall Live In Infamy Mark it on your calendar folks – Wednesday, March 18, 2009, the demarcation point - the date that the U.S. Federal Reserve publicly acknowledged that they will monetize the nation’s debt. While we suspect that the Fed has been doing so for quite some time – on the ‘Pirates of the Caribbean sly’ – the public disclosure that the Fed is resorting to quantitative easing [aka the printing press] has signaled a clear shift to the long predicted hyper inflationary end-game gyrations which historically have manifested themselves in virtually ALL irredeemable fiat money systems. [more.....signup] [open pdf....members]

Setting the Record Straight I want to share with you all a piece of correspondence I received from reader [I’ve removed his real name] with the hopes that you all benefit from this exchange.  I believe it has value because is demonstrates that even when folks “get it” that something is seriously wrong in the financial system – they are not [in my opinion] making informed decisions to protect themselves.  If any of you are having difficulty grasping the content of what I am writing – ask questions!: [more.....signup] [open pdf....members]

The Real Ponzi Scheme – “Unreal Interest Rates” Recently, former chairman of the Federal Reserve – Alan Greenspan – penned an editorial, “The Fed Didn’t Cause the Housing Bubble”. It was published in The Wall Street Journal March 11, 2009.  In the article Mr. Greenspan attempts to blame today’s global financial crisis on “too-low mortgage rates” between 2002 and 2005 which led to a real estate bubble. [more.....signup] [open pdf....members]

Underlying Assumptions: A Forensic Review I’d like to take everyone on a little trip back in time – to May, 2003 – when Allan Yarish penned an article, Mark-to-market accounting undercuts banks' loan hedging, extolling the virtues of Credit Default Swaps.  He did so methodically, by first identifying a problem or need: “FAS [financial accounting standards] mandates that derivatives be recognized in the statement of financial condition as either assets or liabilities and are to be disclosed at fair value. Changes in fair value of the derivative instrument may be offset by changes in the value of the hedged asset. However, distortions that arise from differences between fair value accounting of derivative instruments and the accrual accounting valuations used in valuing bank loans makes hedge accounting difficult if not impossible to achieve.” [more.....signup] [open pdf....members]

J.P. Morgan Leaking Oil Last week’s article, The Statue of the Three Lies, examined the key “lynchpin” roles being played by the institutions Harvard and J.P. Morgan in our current global economic morass.  This week, we’ve learned that insurer AIG is the recipient of another 30 billion in government [taxpayer] assistance to augment the obscene 150 billion already sent their way.  Lawmakers on Capitol Hill this week began asking tougher questions of Benedict Bernanke about who the ultimate recipient[s] are of bailout funds being extended to AIG. Benedict Bernanke has thus far refused to divulge who the REAL recipients of these funds are. [more.....signup] [open pdf....members]

The Statue of the Three Lies Canada’s Globe and Mail newspaper reporter, Heather Scoffield, interviewed renowned Harvard Economist Niall Ferguson for an article published Feb. 23, 2009 titled, There Will Be Blood.  In the interview Ferguson states, The global crisis is far from over, has only just begun, and Canada is no exception. [more.....signup] [open pdf....members]

Failure or Sabotage? As our beloved fiat financial system continues its ‘long predicted’ systemic melt-down, it has been most interesting to observe the jockeying of establishment Keynesian acolytes; positioning themselves and their revisionist rhetoric to obfuscate / obscure the nascent havoc that their ideology has cast upon humanity. [more.....signup] [open pdf....members]

Oh Yes They Did! I’ve been trying to resolve what’s behind the recent inversion of the historic premium that West Texas Intermediate [WTI] Crude Oil has enjoyed versus Brent Crude?  Historically, West Texas Intermediate Crude Oil trades at a premium price to Brent Crude Oil for quality as well as logistical reasons.  In recent weeks and months – WTI has been trading at a deep discount to Brent Crude: [more.....signup] [open pdf....members]

Crime Scene Investigation Last week, on Thursday February 5th, 2009 – The President’s Working Group On Financial Markets held their first official soiree with former New York Federal Reserve Bank President, Timothy Geithner, installed as President Obama’s pick as Treasury Secretary [more.....signup] [open pdf....members]

We’ve All Been Had                                              As world leaders gathered over this past week for their annual wine-and-cheese ski-fest in Davos, Switzerland – perhaps we, the little people, should all take-stock [or a forensic account, perhaps?] of the cards we’ve been dealt. [more.....signup] [open pdf....members]

A Reminder / Refresher for Physical Gold Investors    The prices we are all accustomed to “watching” on a daily basis are “mimics” of an exchange traded price.  Exchanges trade uniform futures contracts [each contract or “lot” representing 100 troy oz. of gold] aka the PAPER price of gold pretty much 24 hours per day Monday – Friday: [more.....signup] [open pdf....members]

Further Forensic Examination Borrowing from the axiom that, “a picture is worth a thousand words”; today we are going to view the incredulity of recent macro-economic events with the aid of charts and graphs.  First up is a chart of the price of gold [POG] over the past year with a few “milestones” pasted in for good measure: [more.....signup] [open pdf....members]

Questions Begging Answers To say that markets have been behaving “strangely” recently is an understatement.  In recent weeks and months we’ve been witness to historic lows in sovereign interest rates in-the-face-of record amounts of debt being issued by governments?  We’ve seen the price of gold behave counter intuitively by “not rising” in-the-face-of unprecedented systemic global economic malaise?  Last, but not least, we’ve witnessed a “complete flip-flop” in the traditional pricing of Brent Crude Oil [IPE-London] versus West Texas Intermediate [NYMEX-N.Y.]? [more.....signup] [open pdf....members]

“When”, Not “If” – Not Even Close Two weeks ago in this space in an article titled, “When”, Not “If”, I attempted to highlight the disparity between annual global gold production versus amounts of physical ounces of gold transferred on the London Bullion Market Association [LBMA].  At this time I would like to acknowledge the contribution of reader Allan C. who pointed out two oversights in my analysis which led to my dramatically understating my position: [more.....signup] [open pdf....members]

In Fraud We Trust Amazing, isn’t it, how times have changed?  Just [Wed.] this morning, President elect Barack Obama stood before microphones and television cameras and told the world that his administration was set to inherit an annual deficit of 1.2 TRILLION dollars.  He went on to add that the fiscal 2009 amount did not even include “his” stimulus plan, rumored to be as much as an additional TRILLION dollars, reportedly geared toward infrastructure spending, would be required to “jump start” the U.S. economy. [more.....signup] [open pdf....members]

Whether Or Not We Like It In the past, I’ve written papers where the following quotation was included at the end of the treatise as an “exclamation point”: “We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent.” – James Paul Warburg, whose family co-founded the Federal Reserve - while speaking before the United States Senate, February 17, 1950 Today, I feel that I’ve finally got it “the right way around” with this important quote – where it should be – at the beginning of, and in fact the subject of, a treatise of its own. [more.....signup] [open pdf....members]

A Familiar Tune Funny isn’t it, how modern day economists prattle on about how “sub prime” mortgages are / were at the root of the systemic financial collapse we’re currently experiencing?  They usually follow that bleep up with some hollow hogwash about how deflationary forces are winning the battle over inflation – thus explaining every otherwise inexplicable occurrence observed in our modern day monetary morass. Updated: Conclusion added [more.....signup] [open pdf....members]

Government Sanctioned Theft The Office of the Comptroller of the Currency just released it’s Q3/08 Quarterly Derivatives Fact Sheet today.  Here is one of the highlights: Take a look at J.P. Morgan’s gold derivatives [futures] position, paying particular attention to how the < 1 yr. position changed from the end of Q2/08 to the end of Q3/08: [more.....signup] [open pdf....members]

“When” not “If” The global gold trade – or at least its price discovery – is historically and primarily conducted on major exchanges; primarily at the London Bullion Market Association [LBMA] and to a lesser extent the New York Commodities Exchange [COMEX]. Let’s take a look at the primary sources of global gold supply: 1] - Global gold production: has been running at roughly 2,500 metric tonnes per annum in recent years: [more.....signup] [open pdf....members]

Backwardation:  Facts from Fiction An important piece of academic research was published last week [Dec. 5, 2008] by Professor Antal Fekete, titled, Red Alert: Gold Backwardation!!!  In this article, Professor Fekete reasoned that Dec. 2, 2008 was a landmark date in the saga of the collapsing international monetary system; [more.....signup] [open pdf....members]

Have We Peaked Already? Last Friday, Dec. 12, 2008, CNNMoney.com published an article chronicling the dismal state of the U.S. employment picture, highlighting December's job cut total – which already stands at 115,416. The article went on to explain that December job losses could be even worse than November, when the Bureau of Labor Statistics [BLS] reported that 533,000 jobs were lost [most since 1974] – since, according to David Wyss, chief economist at Standard & Poor's;             "Generally companies like to make their cuts by the end of the year." If we can dismiss the human suffering associated with job losses for a moment and instead view “employment” as an “energy consuming activity” – it might help one begin to grasp the true nature of exactly what’s confronting the industrializing and industrialized world. [more.....signup] [open pdf....members]

The Great Flation Debate and More  Over the past few weeks I’ve been inundated with requests for my opinion on whether the near term future is going to be deflationary or inflationary?  The topic has been the ‘subject de jour’ provoking spirited debate in many precious metals forums and has been the subject of many recent articles in the letter writer’s community. [more.....signup] [open pdf....members]

Shock and Awe at COMEX  This past Friday, Nov. 28, 2008, was first notice day for delivery of the December COMEX [a division of NYMEX] gold and silver futures contracts which trade on the New York Mercantile Exchange.  The chart appended below shows that, on Friday, 8,600 gold futures contracts @100 ounces per contract [and 3,040 silver futures contracts @ 5,000 ounces per contract] were delivered.  To try to give some perspective to these numbers; the previous delivery month for gold futures was October, 2008 when there were 11,554 deliveries for the entire month – a “big” number by historical standards. [more.....signup] [open pdf....members]

The Federal Reserve – Draining the Swamp Hank Paulson went on national television today, Oct. 12, 2008 and made the claim that the Treasury / Fed is doing everything in their power, utilizing the TARP, to “ease” consumer’s access to credit. I’m saying that Hank Paulson is LYING SNAKE.  The Treasury / Fed combo has done EVERYTHING IN THEIR POWER to shut the credit spigots. They injected capital into the balance sheets of their cohorts – the banks and their Wall Street friends – and at the same time, as of Oct. 3rd, 2008, the Fed began PAYING banks interest on reserves held at the Fed.  Formerly, or prior to Oct. 3, 2008, it was mandatory that banks hold reserves at the Fed but they paid no interest on them.  The ONLY purpose of such an action was to stymie the banks from creating more money / credit – by putting those reserves to work. [more.....signup] [open pdf....members]

An Undisclosed Act of Treason  For those of you who are unfamiliar with the work of John Williams of Shadow Government Statistics fame; this missive should prove to be quite an eye opener.  For those who are familiar with Williams’ work – this is nothing more than logical extension[s] and conclusions.  Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies.  So, let’s just say the man knows of what he speaks. [more.....signup] [open pdf....members]

Clarity: Shrouded In Double-Speak  Today, we’re going to begin with the cliche, “the more things change – the more things seem to stay the same”.   It was back on Oct. 3rd, 2008 that Rep. Brad Sherman [D-Ca] reported from the floor of the House [C SPAN] the disingenuous nature of the [then] proposed Bail-Out Bill by revealing that dissenting voices had been “threatened” of imminent, dire consequences if the bill was not passed in its proposed form [see link:  http://www.youtube.com/watch?v=gnbNm6hoBXc] [more.....signup] [open pdf....members]

J.P. Morgan – Loving Their Handiwork The following research paper was compiled as the basis for a radio interview with Patrick Timpone at One Radio Network. Morgan is the quintessential leviathan in the Interest Rate arena through their obscenely sized Medium-Term Interest Rate Swap book which stood at 59 Trillion at June 30, 2008. The interest rate swap book, due to its sheer size, overwhelms the bond complex by creating artificial demand for government securities.  This interest rate suppressive activity began in earnest back in the 1990’s and has kept market rates of interest at artificially low levels.  The FUNDAMENTAL [and ongoing] MISPRICING of CAPITAL – for many years – has led to a myriad of economic excesses like the Dot Com boom, subsequent housing boom and the financial asset boom itself. [more.....signup] [open pdf....members]

Fudging, Fundamentals and the Electoral Cycle Anyone who’s paying attention has probably noticed that commodities prices have been, shall we say, volatile? Most economists worth their salt will generally proffer opinions on the sometimes erratic moves in the prices of commodities based on their views of inflation, deflation or possibly even their perceptions regarding where we are in the business cycle? If we take a stroll down memory lane and unearth a few comments of gold market impresario, Doug Casey, from a 2002 essay titled, Gold During Inflation, Deflation and Chaos, they tell quite a story: [more.....signup] [open pdf....members]

Plumbing the Depths:  Conclusions and Action Plan  Although we’ve experienced a stiff round of short term asset deflation, I remain firmly in the reflationary / hyperinflation camp.  The Congressional Budget Office [CBO] is calling for a fiscal deficit of 438 billion for 2008 – up from 161 billion in 2007.  Non-government types are now suggesting that FY 09 shortfalls will likely top 1 Trillion: [more.....signup] [open pdf....members]

Plumbing the Depths of Depravity First, for a bit of historical context, a little bit of fact-finding pertaining to Henry Paulson complements of my friend, Jesse: “I didn't know he was a member of the Nixon White House as his first 'real job.' In 1970, fresh from the Masters program of the Harvard Business School, Paulson entered the Nixon administration, working first as staff assistant to the assistant secretary of defense. In 1972-73, Paulson worked as office assistant to John Erlichman, assistant to the president for domestic affairs. Erlichman was one of the key figures involved in organizing President Richard Nixon’s notorious "plumbers" unit that carried out illegal covert operations against the president’s political opponents, including espionage, blackmail, and revenge. Ehlichman resigned in 1973, and in 1975 he was convicted of obstruction of justice, perjury, and conspiracy, and was imprisoned for 18 months. Utilizing his connections, Paulson went to work for Goldman Sachs in 1974. In a 2007 feature, the British newspaper the Guardian wrote, "Not only was he well connected enough to get the job [in the Nixon White House], but well connected enough to resign in the thick of the Watergate scandal without ever getting caught up in the fallout. He went straight to Goldman back home in Illinois." [more.....signup] [open pdf....members]

Dis-Information Specialists Ply Their Trade  Tim Gardiner, president and CEO, Mitsui & Co. Precious Metals Inc. appeared on Canada’s Business News Network [BNN] and – in a ridiculous attempt to explain the recent demolishing of the gold price - made the claim that demand for gold was down and, “the only reason for physical shortages of gold products at retail was ‘logistical’ and due to a shortage of ‘blanks’ from which the coins are stamped”. [more.....signup] [open pdf....members]

Derivatives Disclosure Like it or not we hear the term “derivatives” bandied about in the mainstream financial press these days with increasing regularity. In recent times it has come to be a term that, when mentioned in conjunction with a particular financial institution, can cause loss of confidence or worse – maybe a herd like run on deposits [or policies] on the offending institution. To help clear up some of the confusion, today’s market wrap will deal with Derivatives:  where they came from and how they’ve morphed into the reviled bank-killers they are known as today. [more.....signup] [open pdf....members]

Bear Stearns: Murdered at the Golden Gates Much has already been written about the untimely demise of investment bank Bear Stearns.  Most, if not all, that has been written to date – deals with issues related to equities / expiring options – or the share price. Recently, new information has come to light which allows us to forensically examine the demise of Bear Stearns from a completely different angle – GOLD. [more.....signup] [open pdf....members]

If Pigs Could Fly Interesting times we live in, eh?  Our global financial markets have metamorphosed more in the past fortnight than they did in the previous 14 years.  Here’s a recap as to why, paying specific attention to the build-up of DERIVATIVES – and their unraveling which is causing so many of the dislocations that are now manifesting themselves: The great unwinding we are now witnessing had its roots in myth – The Strong Dollar Policy.  This myth was a conceptual concoction of former Treasury Secretary Robert Rubin and his protege Lawrence Summers [with an academic “assist” to Barsky and the Harvard Economics Department]: [more.....signup] [open pdf....members]

The Invisible Hand and the Pox Known as Usury First, from Wikipedia, a little background on usury: Usury (pronounced /?ju???ri/, comes from the Medieval Latin usuria, "interest" or "excessive interest", from the Latin usura "interest") originally meant the charging of interest on loans.  After countries legislated to limit the rate of interest on loans, usury came to mean the interest above the lawful rate. In common usage today, the word means the charging of unreasonable or relatively high rates of interest….. ….But one must always consider that usury, in historical context, has always been inextricably linked to economic abuses, mostly of the masses and of the poor; but sometimes of the financier and royalty, as bankrupt royalty has led to many a demise, thus frowning upon lending at interest or for a euphemistic "just profit". The main moral argument is that usury creates excessive profit and gain without "labor" which is deemed "work" in the Biblical context. Profits from usury do not arise from any substantial labor or work but from mere avarice, greed, trickery and manipulation. In addition, usury creates a divide between people due to obsession for monetary gain. Most importantly, usury commodifies biological time for profit, which is linked to life, considered sacred, God-given and divine, leading to excessive worrying about money instead of God, thus subjugating a God-given sanctity of life to man-made artificial notions of material wealth….. I began this paper with a broad definition of usury to explicitly point out, in an historical context; it has always been inextricably linked to ECONOMIC ABUSE. Today is no different. [more.....signup] [open pdf....members]

Monday, Sept. 29th Subscriber Only Commentary At the time of writing, the Paulson Plan Bail-Out Bill has just been defeated on the floor of the U.S. House of Congress – overwhelmingly defeated [counter-intuitively I would suggest] by Republicans. Blather emanating from Hank Paulson over the past week has included his disingenuous claims that he “never realized” the extent of the regulatory problems or “over leverage” facing markets. As former Chairman of Goldman Sachs, no-one in the world was better positioned to have fore-knowledge and fully comprehend the “casino state” of our Capital Markets. [more.....signup] [open pdf....members]

The Backgrounder This report has been prepared as a more-in-depth follow up to Monday’s public article, Treachery Abounds, to fill in some blanks and provide subscribers with a fuller understanding and honest assessment of what they are confronting. Regarding Recent Dollar and Interest Rate Rallies Today, the U.S. Treasury released July TIC data.  Here’s a snippet: [more.....signup] [open pdf....members]

Click here to sample more of Rob Kirby's articles

Proud To Support and Recommend GATA's Gold Rush 21 Conference DVD: