Jon's CHARTS

[jon_e_og]

good article: http://www.gold-eagle.com/editorials_05/willie053006.html

some excerpts

As we know, gold rose past 725 in early May, so as to confirm the bull flag identified. For almost a year, gold wrestled inside above the 400 level. Its flag in pause was bound by an interval centered at the 550 level. In a nearly symmetric extension, gold topped 700, only to climb higher. The Gold Train was only resting, dropping off "infidels" and taking onboard "new converts" instead. The quality of the passengers on the bull locomotive improved. They sensed a worldwide monetary revolution among officials, revulsion by bankers, and a reversion to real money in lieu of garbage toilet paper currency. My belief is that the inauguration of Ben Bernanke is far more significant than recognized to date. He is an avowed inflation advocate, a man who boasts of low-cost money printing operations, mocked with helicopter analogies of his own coinage, and suitable for the label of "Weimar Bernanke" in absolutely shocking disrespect. The man has no business experience, no banking experience, no financial market experience, yet is named to the most important central bank post on earth. Gold is the refuge, as fiat money has a master inflationary engineer at the helm on powerful and overused machinery, whose controls are hidden under the darkness of a discontinued M3 money supply statistic. Ben is expected to print money to monetize every asset class under the sun, sure to put the USDollar at risk. IT IS NOT POSSIBLE TO PRINT THE WORLD RESERVE CURRENCY WITH ABANDON, AND AVOID A MONETARY CRISIS. The rest of the world comprehends this basic notion. US-based economists and financial mavens seem not to understand this fact at all.

What is not to love with gold, as the world openly is in the process of rejecting the USDollar as the world reserve currency. What amazes me is that at least 95% of the US public remains totally unaware. Not only is the United States home to the most incompetent economists in the modern era, who serve as inflation liars and apologists, but it is the homeland to countless ignoramuses on all things related to inflation, to currencys, and to gold itself. So gold pays no dividend yield? Neither did Intel or Microsoft or IBM or EMC or EBay or Google. So jewelry demand is down. But central bank accumulation of gold, and diversification away from the USTBond in reserve holdings, are more than offsetting on the investment side. It can be safely said that as the USDollar is rejected, and the USEconomy suffers a heart attack, citizens in this country will be both in shock & awe and mystified as to what is happening. They have no concept of world events pertaining to central bank attitudes or currency confrontations. If one mentions China, in knee-jerk style we think of cheap products flooding our shores. We think of jobs outsourced. The public never think of how Beijing has made changes to its $860 billion in foreign currency reserves, with a quadruple in planned gold holdings. These remain as blind spots, perhaps intentionally inadequately reported in the US financial press & media. My maintained belief is that the USGovt prefers to have its citizens hate China and push for trade protection. A citizenry hell-bent on belligerence, arrogance, and ignorance serves a purpose to a nation instigating war for economic purpose in a classified energy policy.

The last year, especially the last few months, have seen critical changes to the mortgage finance sector, the derivatives world, and the silver market. Some things we know for certain, others left for guesswork. A wise mental approach has served me well. Look at the facts. Look at the past. Look at the forces. Look for what is not reported, which must be but which can only be distilled from facts and forces. Lastly, think like a thief and harbor deep suspicions. There are no grand coincidences, not when big money is involved. For instance, an easy one is that Fanny Mae is in unofficial bankruptcy receivership. Why? How can one know this? Because they boasted of "convexity" when interest rates fell. Refinance proceeds were used to buy bonds and leveraged bond futures contracts, which pulled interest rates even lower and triggered a new round of refinances. Now that interest rates are rising, we hear nothing about "convexity" on the dark side, as rates are rising, delinquencies mount, defaults pile up, and refinances are denied. Conclusion: Fanny Mae is kaput, news suppressed. Their hedge book and investment book must be working through laundry cycles by the great protectors of the housing bubble, all for the greater good. Over a thousand accountants are busily cleaning up the mess, not making re-statements of any kind, as they convert Fanny's giant portfolio, and receive huge monetized assistance from deep within the shadows.

Another distilled conclusion pertains to the upside down pyramid morass that is the derivatives market. JPMorgan is well known to own the lion's share of the bond derivatives. Interest rates have risen in the last year, as have mortgage rates. Up till now not a peep on quarterly statements for JPM on massive writedowns. Why? My inference is that JPMorgan has been integrated into the US Federal Reserve, with certain operations on that side of the wall, other operations on this side of the wall. Worse still, JPM merged with Japanese giant Sumitomo bank, complete with a $1400 million dowry delivered over two years ago. The belief that the USFed and Bank of Japan are a unified conglomerate entity is inescapable.

Back to the silver world, where yet another suspicion can be distilled. Warren Buffet might have bought his way out of legal trouble. He at Berkshire Hathaway sold prematurely the 129 million oz of silver. Why? Cannot this financial genius read the gold tea leaves? Cannot this legendary investor comprehend the monetary earthquake shaking the central bank paper pillboxes? Buffet was in hot water with buddy Hank Greenberg and the AIG fraud investigation. You see, the icons and powerful people often do not live under the same rules as little people, nor laws. My conclusion is that he possibly lent a helpful hand to Barclays in London, sold way too early his silver hoard. Records show the silver exchange fund run by Barclays might not have bought all that much physical silver in the open market. In return, the dogs might have been called off on Buffet investigations. After all, Warren is one of the good guys. We must draw the line on scandals, after all.

Some plain facts stand as indisputable. Silver was breaking out in price from a defended range. Stories abounded on the shortages of silver at the exchanges. Rumors persisted that big dealers were underwater, COMEX owners were on the hook for unmet client margin calls. Yet Buffet unloaded his vast silver hoard way early? Veteran to the financial wars, well aware of the Hunt Brothers, this Buffet superstar simply dumped his entire silver treasure precisely when he could have cornered the silver market, precisely when he could have forced that silver price to $20 for the benefit of his Berkshire Hathaway investors? No way. A fool's story has been told and eagerly lapped up. The other story is to be distilled amidst the cloud of missing information. Anyone who claims Buffet sold silver without covert inducement as it began to break out is a fool in my hedge book. No, Buffet had another motive, and plebeians will not be told its details. Warren earned some official brownie points. His adoring investors should be OUTRAGED. Regardless of why, a huge hoard of physical silver has been taken off the market.
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