Mike McGill Trading Operations

The first month of 2012 has been a great one for the precious metals markets. Gold bullion prices saw their biggest calendar gain this century – just shy of 14% above the December 2011 close. Silver bullion prices enjoyed a 21% boost since the beginning of January.

The forecast for gold and silver looks extremely promising for this coming spring, and for that matter, the rest of the year. There has been a convergence of fundamental forces and a litany of breaking news stories that are extremely bullish for all precious metals. A brief examination of the events and factors now driving this recent upsurge are outlined below.

Federal Reserve to Continue its 0% Interest Policy

The Federal Reserve’s January Open Market Committee announcement that it intends to keep interest rates at essentially 0% through the end of 2014, drove the spot price of gold up over $40 in three hours. The Fed is setting the tone for cheap money and negative interest rates (far below the real cost of inflation) for the foreseeable future. Cheap interest rates equate to cheap currency valuations and cheap currency valuations mean that all commodities, including gold and silver, must accordingly be priced higher.

The fact that the Fed has taken the unprecedented step of announcing its interest intentions three years out, versus the normal quarterly and, at best, yearly declaration, can only mean that it knows the US and world economies are on extremely shaky ground. The trillions of risky sovereign debt run up by Europe, the United States, and the rest of the G20 countries, can never be satisfied let alone extinguished. The only hope is to keep rates so low that sovereign nations can continue to refinance their ever-burgeoning deficits at extremely low rates. This will allow them to survive, maybe, a couple of more years before they implode under the sheer weight of the unconscionable debt which they have run up.

2011 US Dollar Surge Coming to an End

The US dollar index, which charts the floating US dollar value against the euro currency and five other major world currencies, has appeared to top out just short of the 82 range. Having failed to break this resistance, it has sold off two and half basis points in January. A weakening US dollar is positive for the precious metals in two ways. The first is that a weakening US dollar signifies the need for more central bank assistance which inherently means more loose credit, more money printing, and more outright debt monetization (purchase of US bonds by the Fed to keep the US debt $16 trillion Ponzi scheme alive). Of course, all of this new additional financial stimulus is definitely inflationary and nothing responds to inflationary measures better than precious metals – nothing.

The second reason that is just finally being understood by the novice investment public, is that gold and silver are competing currencies against government issued fiat paper ones. As the US dollar, being the world reserve currency, begins to show weakness, gold and silver rise accordingly, in real terms and in the sentiments of the investing public.

A Breakdown in the US Dollar as the World Reserve Currency

Since the end of World War II and the Bretton Woods Agreement, the United States dollar has enjoyed the status as the world reserve currency. The dominance of the US dollar as the arbiter of world economic value was enhanced even more by two events that occurred at the beginning of the 1970s. The first was President Richard Nixon’s unilateral declaration in 1971 that removed the United States dollar from the gold standard. No longer would the US be willing to honor its debts with shipments of gold bullion but would instead, from then on, pay its obligations with US denominated treasury bonds only.

From this point forward, the US, being by far the largest economy in the world, has literally flooded the planet with trillions of US dollars; so much so, that the dollar has become, by default, the benchmark common denominator for most all world financial transactions.

The second event was Uncle Sam’s successful strategy to persuade (more precisely, coerce) all the OPEC nations to sell their oil in exchange for US denominated treasury notes and bonds. This allowed the United States to pay for its energy needs on credit. Any annual deficits caused by rising oil prices or increasing domestic expenses, were simply paid for by the US Treasury (with the collusion of the Federal Reserve) issuing IOUs in hundreds of billions of dollars to the respective oil producing nations. Any nation that didn’t like this relationship received a friendly reminder from the State Department that a very convenient revolution could easily be orchestrated within that country and a new government quickly installed, which more than willing to accept US debt for oil.

This is exactly what happened in Iraq and, more recently, Libya, when their respective leaders, Saddam Hussein and Muammar Qaddafi, began requesting other forms of payment for the oil produced by their countries, namely eurodollars and/or some form of gold denominated assets.

The US dollar’s hegemony is about to change, and quickly! A little over a week ago, India announced that it was going to begin paying directly for oil and natural gas shipments from Iran in gold bullion, thus bypassing the US petro dollar trade entirely.

Meanwhile, in the last few months, many other countries have announced that they have commenced commercial agreements whereby they intend to facilitate trade amongst themselves conducted in their national currencies and/or gold, avoiding the need for the US dollar in their transactions. A list of these countries includes China, Russia, Venezuela, Brazil, Japan, and Iran, with certainly more to follow (for an excellent overview, see “The US Dollar Paper Tiger” by Jim Willie and “China, Japan Bypass US Dollar in Pivotal Trade Agreement” by Julian Phillips).

CONCLUSION

The writing is on the wall. The US dollar is quickly losing its privileged status as the world reserve currency. More and more, intelligent nations of the world are declining to accept US debt IOUs for their exports. As the US dollar begins to decline in its acceptance for foreign trade, its purchasing value will erode as well. US citizens will see prices for all goods and services, especially imports, soar as their home currency is recognized as the counterfeit fiat currency that it is. The recent announcements by some of the world’s top industrial powers to abandon the US dollar can only have a profound positive influence on the prices of gold and silver.

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.

Mike McGill Trading Operations

The War for Gold, Silver, and Liberty

Right now, there is a very heated contest occurring in the precious metals community – a war between the banksters, Wall Street elite, and mainstream news financial pundits over who can make hard money advocates most afraid of owning gold, silver, and mining stocks. These bad boys are working triple overtime to scare precious metals investors that the US dollar will somehow continue to gain in stature and value against other competing investment classes, hard commodities (e.g. precious metals), and foreign currencies.

Those investors whose trading accounts and positions in physical metals have been underwater recently are especially susceptible to the siren song sung by the world’s ruling elite. After all, it is their job to keep the masses heavily invested in their counterfeit, fiat paper currencies while they reap a fortune of trillions from sovereign debt based interest while converting it to physical assets.

With the euro currency in turmoil as a reaction to the European sovereign debt crisis and the attendant threat that it poses for European bank lenders and US investment bank credit default swap issuers who are on the hook to guarantee counter party risk, the US dollar has once again become the temporary life boat darling sent to rescue all the passengers jumping overboard on the euro currency Titanic.

But, how really safe is that US dollar lifeboat? After all, a national currency is only as valid and secure as are its nation’s finances, debt, and banking system. And folks, I’m here to tell you that all of these are in hideous condition here in the good old USA. The Obama Administration is preparing to ask Congress to raise the US borrowing limit by another $1.2 trillion. White House press secretary Jay Carney reported on Tuesday, “I’m confident it will be executed in a matter of days, not weeks.”

Congress will undoubtedly kowtow and comply. With that merciless genuflection, the US national debt will be instantaneously increased by nearly eight percent, from $15.2 to $16.4 trillion. However, it is highly unlikely that this will be enough to pay for the profligate spending of our fearless leaders for the remainder of fiscal 2012. Another trillion or so will undoubtedly be needed by summer (we’ll bet you a bottle of good champagne on this).

Of course, the total debt obligations of the United States, if we take into account the unfunded liability of Social Security, Medicaid, Medicare, and a litany of other government pensions and entitlements, is actually far in excess of $100 trillion, an amount that can NEVER be repaid. Add to this the terrifying reality that the major “too big to fail investment banks” are carrying derivatives trading risk in the hundreds of trillions of dollars that dwarf their capital reserves by many thousands of times. Bank stocks have felt this and are cratering accordingly. The world’s largest bank, Bank of America, has seen its stock plummet in the last five years from over $50 per share to its current price of $6.87.

Please also include a non-reported but raging inflation of commodities in the US. For example, US grocers have reported that the average cost of a Thanksgiving dinner in 2011 increased by over twenty-three percent from last year. Add this to a country that sees over fifty million people having to use food stamps to survive and you have a recipe for a financial Armageddon.

And you are still worried about the viability of gold and silver? You still think the US dollar junkies are going win this end game?

We at Kristos Trading love competition. So, we have decided to enter the gold/silver versus dollar contest. We are going to carry into this great battle just ONE weapon, what we lovingly call the “Ultimate Fear Chart.” Please take a moment to study this chart carefully.

This is the gold chart for the last fourteen years. It reflects the continued waning confidence in paper currencies, especially the US dollar, and the accumulative trust in precious metals as the ultimate safe haven of wealth. There is always a risk in any investment but does this fourteen year chart make you think that gold is going to fall off the graph against the dollar? We don’t think so either.

Life is always a gamble of some sort. Life always entails some risk. There is a war being fought right now between the Bernie Madoff/Jon Corzine type world criminal class against the common people – the wage earners, the small business owners, the savers, and the lovers of freedom and liberty. Recognize that this IS a war and if you are going to have a chance to win this war, you need to get tougher and stronger. Stop worrying and start fighting. In the gold war against the fiat currency Nazis, you have got to be a soldier. Republican candidate Ron Paul has fought this criminal crew for over thirty years and at last, his message is starting to gain traction. The voices for liberty and freedom, with which precious metals resonate so perfectly, are on the rise. The tide against evil and usurpation is beginning to turn.

The fundamentals for gold and silver have never been stronger. They are the only legitimate money recognized by the US Constitution. Now is NOT the time to fear your investments but, rather, it is the time to jump on board the gold and silver express freedom train. Let’s drive the bankster and paper currencies mercenaries out of our sovereign land. Let’s send the paper dollar bugs home in disgrace where they belong. This is not a time to sell your precious metals, it is the time to buy!

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.

Mike McGill Trading Operations

Well, it’s another post Halloween nightmare surprise for the American taxpayer. Reuters is just announcing that Fannie Mae, the biggest source in the US for home loans, needs another $7.8 billion in federal aid to stay afloat, as the collapsing housing market extended its third quarter loss to $5.1 billion.

The real joke in all this is Fannie Mae Chief Financial Officer Susan McFarland’s announcement that the beleaguered real estate lender
of last resort was “working to reduce losses on those ‘legacy loans’ (translation: those pre-2008, $0 down, no credit check, no money a month plan giveaway loans) and limit taxpayer exposure.”

Gee, I guess asking for another fast $8 billion line of credit to be placed on the backs of the foundering American taxpayer is the government’s definition of “limiting taxpayer exposure.”

Come to find out, part of the reason for its drastic third quarter losses was attributed to deep cash drains on derivatives used to hedge its exposure to interest rate swings. Here we hear that nasty “derivative” word popping up again. It seems that nobody in government, ours or any other for that matter, can figure out what to do with the estimated $1.25 quadrillion derivatives risk that is threatening to rip apart the entire world financial system. The problem is way too vast. How vast?

It is twenty times larger than the gross domestic product of the entire planet! Please, does anybody really believe that there is even remotely enough money to cover the counter party risk to the failed bets made by the big investment banks in the US and Europe? Who is going to cover the credit default swap insurance for Italy’s soon to default $1+ trillion national debt? Then there is Spain, Portugal, Ireland, and Greece to consider, just to name a few.

Also making the small print in the back pages of the financial section, was Freddy Mac, the second largest source of US mortgage finance, announcing last week that it too had lost another $4.4 billion in the third quarter and needs to borrow another $6 billion from the federal government. Oh, that’s great; let’s just have the Obama Administration take it out of petty cash. Is anyone out there getting how bad this is? Fannie and Freddy combined underwrite 9 out of 10 new home loans in the country and yet have reported losses in 16 of the last 17 quarters.

Another nasty little issue that has been glossed over by the mainstream media is the failure and bankruptcy last week of MF Global, one of the largest futures trading and FOREX clearing houses in the world. It seems that MF Global wasn’t making enough money just clearing trades on hundreds of billions of weekly futures transactions on six continents. Who could be satisfied with that gravy train? After all, if some is good, more is always better, right? That certainly must have been the mindset of Jon Corzine, the CEO of MF Global and past New Jersey senator and governor, as well as being the ex-chief at Goldman Sachs.

Under Corzine’s direction, the company got pulverized when the bets it placed on highly leveraged European sovereign debt issues began to collapse this year. That wasn’t the end of it, though. Like a drunken blackjack player trying to double up his bets to recoup his losses, Corzine apparently raided his own client’s accounts in the desperate, insane hope that his bets would finally turn profitable and he could replace the missing cash down the road.

Matt Taibbi, in Rolling Stone, sums up the situation perfectly. Writes Taibbi, “This is the kind of crazy, stupid, panicked, extreme-short-term thinking you might see from someone at the tail end of an epic, Ray-Milland-caliber alcohol binge – when nothing matters anymore, and even concealing the crime effectively is too much of a burden, and the only thing that matters is getting through the next few minutes…Humorously, the night before it all came out, Corzine appeared at a steak dinner and wowed the crowd with a “spectacular speech” about his years running Goldman and then entering politics. ‘There was no sense at all that there was impending doom,’ said one of the event’s attendees.

Just another thing to keep in mind when you hear all of these bank CEOs confidently denying that they’ve ever done anything wrong, or that their companies might be sitting atop ticking time bombs of toxic assets that we’ll all end up paying for. These people are fantastic liars, right up until the moment the FBI starts rifling through their filing cabinets.”

The question to be asked is, “How long can this go on before the world debt crisis explodes into a Fukushima type meltdown? Just like the toxic radiation pouring out of the Fukushima nuclear disaster, there is a financial derivative debt disaster looming on the financial horizon. This financial debt bomb is going to destroy the assets of many hundreds of millions of hardworking people worldwide. Those desiring protection must reallocate a substantial portion of their wealth into assets that are outside the derivative debt casino, outside the reaches of the gambling money junkies in New York City and The City of London, outside the clutches of Washington’s corrupt politicians. Precious metals – gold and silver – are perfectly suited for wealth preservation and protection in this debt ridden environment in which we live. Please don’t wait too long to move your wealth into real money, gold and silver.

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.

Mike McGill Trading Operations

Our fine planet is in the midst of the greatest banking crisis in history. The fractional reserve banking system promulgated by the G-20 central banks has fostered a glut of sovereign and private debt and insane inflation of money supplies. It has also allowed the major investment banks of the world to over leverage themselves with derivative wagers that carry a combined notional risk of twenty times the annual gross domestic product of the entire world – $1.25 quadrillion. That’s “quadrillion” with a “Q!”

The result of all this has been the destruction of the life savings of millions and millions of families, an ever increasing inflation in consumer costs, the precipitous drop of real estate and stock equities, mass joblessness, and lastly but certainly not least, general civil unrest that is spreading to all nations and cities across the globe. The opposite end of this paradigm has seen the upper one percent of the population enrich themselves to gargantuan levels wherein that one percent now owns or controls over thirty percent of the wealth of their respective nations.

What must be understood here is that the herculean economic problems we are facing are not a recent phenomenon, but rather, are built into and are the result of the fractional reserve banking model, of which our Federal Reserve Bank is the principal villain. They are the final ponzi scheme result of debt based currency issuance, whereby central governments allow private banking cartels a state sanctioned monopoly to issue currency out of thin air and then charge that government and its ensuing generations of taxpayers, endless compound interest. The resulting debt always becomes impossible to repay and eventually crushes the economic life of any participating nation.

As we write this, the “Occupy Wall Street” movement is growing daily in intensity and has spread to every city and hamlet in the country. There is a vocal outrage against the inequities produced by the activities of the “money junkies” on Wall Street and their sycophant enablers in Congress. It is our position that the venom being directed at the Wall Street – Washington crowd should be specifically concentrated on the Federal Reserve banking system – because it is from there that ultimately stems the criminal imbalances being foisted upon American citizens. Capitalism is not to blame; a well-regulated and supervised stock market is not either. What certainly is to blame is the ugly truth about our money manipulators at the Federal Reserve Bank. We hope some of the following facts will help shine the spot light on their history and activities.

UGLY FACTS ABOUT THE FED

1 The Federal Reserve (The Fed) is neither; it has NO reserves and is NOT a branch of the federal government.

2 The Federal Reserve is a private banking cartel whose secret owners have never been investigated or audited by any government agency.

3 A large percentage of the ownership of the Fed is private foreign banks and clandestine investment interests who determine interest rates and lending practices for our citizenry.

4 The Fed has never paid one dime in taxes in its 98 year history!

5 The Fed has never been audited in its 98 year history!

6 The Fed holds a complete private monopoly over the issuance of currency in the US in direct contravention of the US Constitution.

7 The Fed is the sole cause of inflation.

8 The Fed has destroyed the value of the US dollar. Since 1913, the year of the Fed’s inception, the US dollar, under the Fed’s supervision, has lost over 98% of its purchasing power.

9 Most of the Fed’s activities are not made public. There is NO transparency with the Fed.

10 The Fed, not our Congress or Treasury, solely determines interest rates and borrowing requirements for all loans in the US.

11 The Federal Reserve Note has illegally, under the Constitution, usurped the lawful issuance of gold and silver backed currency formerly issued by the US Treasury.

12 Every Fed note (US dollar) is an interest bearing debt instrument payable to private, invisible bankers.

13 The IRS was created as a tax collection body to fund the Fed.

14 The owners of the Fed have been the recipients of ucounted trillions of dollars in interest over the last century, paid for by hard working Americans.

15 The Fed has no assets; it creates and issues money out of nothing and charges outrageous interest to the American taxpayer.

We encourage you not to just take our word regarding the above “Ugly Facts.” Please do your own due diligence. We strongly suggest that all concerned citizens read “The Creature from Jekyll Island” by G. Edward Griffin, which is the definitive bible on the ugly history of the Fed and fractional reserve banking. Also, it is always a good idea to move a sizable portion of your assets into true money, namely gold and silver, as a permanent protection against the machinations of the banksters.

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.

Mike McGill Trading Operations

Well, dear readers, after having been an active trader in various markets since the 1970’s, I am here to assure you that it is fear. Greed will always push markets up, sometimes quite spectacularly, even hyperbolically. But dramatic declines instigated by fear of loss are always faster and more precipitous. When someone starts yelling "Fire!" in a crowded theater, ninety–nine percent of the crowd will panic and jam the exits. Most fire fatalities are caused by such fear driven impulses rather than the fire itself.

The last several weeks have seen a sharp pull–back in both stocks and commodities prices. Gold fell sharply from its peak after soaring past $1,900. Silver, likewise, declined $13 from its August $43 high. Volatility in commodity, equity, and currency markets has been very high and these short term price movements are creating a lot of uproar among Wall Street pundits. Some of them are screaming that deflation is here and that the gold and silver bubble has burst. We have been hearing this for the past ten days from the CNBC, Fox Business News, Bloomberg, and The Financial Times crowd.

But following "the crowd" has never been a valid reason to sell, or for that matter, buy gold and silver. After all, the following the crowd mantra would have convinced you to buy a super inflated condo in Las Vegas five years ago. That same condo can be purchased today for as little as twenty cents on the dollar, vis–a–vis, 2006. Since the fundamentals continue to point to the long term viability of gold and silver, to sell now would, in our opinion, be a serious mistake. On the contrary, the current draw down in precious metals offers an outstanding buying opportunity, to either enter the market or add on positions to your existing inventory.

Long Term Perspective VS Short Term Machinations

To be a successful investor, one must have a long term perspective on whatever market he or she is trading. In a nutshell, the long term perspective for gold and silver is, frankly, outstanding. Since 1970, gold is up nearly 4,500 percent and silver 1,500 percent. Since 2000, gold is up 600 percent and silver 750. A $50,000 investment in silver in 2001 is today worth $375,000! At the beginning of this century, you couldn’t give gold or silver away. The mining costs to bring them to market were often greater than the finished products. Ten years ago, gold and silver were referred to as archaic relics and literally laughed at by financial planners and the gurus on Wall Street. They are laughing a lot less today. Those laughing today are the investors who had the foresight to buy precious metals ten years ago – laughing all the way to the vault!

Any stock or commodity can be manipulated, often quite dramatically in the short term. Gold and silver are no exception. But the long term year to year trends are determined by supply and demand, and demand for gold and silver remains extremely strong. In 2011, all of the world’s national banks, with the exception of three, were large net buyers of gold. The Asian countries, China, India, Thailand, Vietnam, etc., have been devouring precious metals at an incredible pace.

Thirty years ago, these nations were poor and underdeveloped with little investment capital. Today their citizens are upwardly mobile and are investing large portions of their savings in precious metals. That is over 2.5 billion new potential gold and silver buyers in just the last three decades. In Europe and America, private gold and silver investment is also surging. Demand in some European countries has been so strong that their large national wholesalers had to suspend taking orders for several months this year to catch up with their backlog of orders. This trend will continue.

Short Term Price Influences

Even if one understands that the long term prices of gold and silver are determined by physical demand, it is important to know and recognize the most salient of the short term influences on precious metals to prevent impulsive greed and fear responses when prices either markedly rise or fall.

The following is a brief overview of the recent correction in gold and silver prices:

1.  There has been a liquidation of derivative gold and silver positions by large fund managers. It is important to understand that while the long term price of gold and silver is determined by physical demand, the short term price (day to day, week to week, month to month) is almost entirely set by buying and selling in the futures markets, and to a lesser
degree, in the various exchange traded funds (ETFs). Large fund traders, sovereign wealth funds, and bullion houses are the market makers and they buy and sell on high leverage margin. The spot price of gold and silver is, unfortunately, the result of large scale high leverage margin activities by such entities, NOT the demand for Krugerrands and silver bars at your local coin dealer. These funds have collectively trillions of dollars under management. For all intents and purposes, they purely trend trade. As the "casino century" progresses, short term "up and down swing trading" is one of the last few vestiges where these funds can make money. Long term buy and hold in bonds and equities has become the new "archaic relic."

2.  The run–up of gold and silver this summer has been beyond excellent and various large trading entities began to close out their winning summer positions going into autumn, thereby commencing a sell–off from the $1,900+ high in gold and the $43 high in silver. As the price began to decline, it triggered thousands of protective "sell stops" at various levels that had been robotically pre–set to lock in profits. This started a rapid cascading effect as each "sell stop" position was reached. As mentioned above, futures contracts are paper derivative instruments and are denoted by high leverage. Each gold contract contains one hundred ounces of gold and each silver contract, five thousand ounces. Large funds are allowed to trade with very low margin, sometimes as little as five percent. The highly leveraged margin effect of futures trading carries with it an inherent volatility. When the selling fear hits the futures markets, it means "Katie bar the door" and run for the nearest exit. This is essentially what has just happened.

3.  Just in case anyone reading this has been on an extended vacation to upper Siberia and has had no contact with the outside world for the last six months, the Eurozone is in crisis. The risk of sovereign debt default is threatening to wipe out some of the largest European banks. It is not just the banks that are threatened; the Euro currency itself is in danger of extinction. There has, therefore, been a huge move by large fund investors to move out of Euro denominated assets and into, what is considered, the last liquid safe haven, US Treasuries. This move has driven the ten year US Treasury note and US thirty year long bond to record highs in the last few days.

4.  Extreme demand for US bonds has subsequently driven up the value of the US dollar. In order for foreign investors to buy US Treasuries, they must first convert their local currency to US dollars. As a result, the dollar index (the value of the US dollar weighted against the Euro and five other major world currencies) has surged from a May low of 72.8 to almost 80. This represents nearly a ten percent increase in the value of the US dollar in the last four months. It must be remembered that gold and silver have always been true money and should be considered a competing currency with fiat paper currencies. The temporary run–up (and the operant word in this sentence is "temporary") has correspondingly diminished the value of gold and silver, for the time being.

5.  World stock markets have been in recent decline. The Dow Jones Industrial Average suffered its worst quarter since 2009 and caused many investors to liquidate their winning gold and silver positions. There has always been a tendency, especially among large investors, to trade commodities in short intervals and to quickly sell them in order to prop up their equity positions, as they are considered more fundamental to portfolio strength. Declining stock markets are viewed as deflationary. Since gold and silver are seen as perfect hedges against inflation, a deflationary perception has temporarily dampened the enthusiasm for gold and silver.

Physical Demand is Running Strong

One of the reasons that we can tell that the long term trend for precious metals is bullish, is the incredibly robust physical buying over the past several weeks. Wise investors are jumping in to buy with both feet. Here at Kristos Trading, our phones have been literally ringing off the hook with smart customers lining up to take advantage of the recent pull–back. One small mint for which we broker, informed us that on silver’s worst price day last week, they sold over a quarter million ounces in one day. That represents over $7.5 million in one eight hour trading day! Other wholesalers and mints are reporting extraordinary sales figures accompanied by rising margins over spot and shipping delays up to three weeks. We believe this trend will continue.

Oceans of Debt and Money Printing

Today we are experiencing another great buying opportunity in gold and silver. Any investor in gold and silver should recognize the primary reasons for owning gold and silver have not changed one iota. The US government has been riding a multi–decades long spending spree of truly historic proportions. In order to finance the inevitable resulting debt, the Federal Reserve is cranking out ever greater mountains of printed money. The rest of the world’s major central banks have followed suit in the mistaken Keynesian belief that a nation can spend, borrow, and print its way out of any economic downturn. The debt of all major countries is spiraling out of control with the national indebtedness of some of the leading world players now greater than their annual gross domestic products. This situation has become totally irretrievable. How irretrievable is it? Zero Hedge has just reported that total US debt has increased $162 billion in only the first three days of October! Let me repeat: The US government has borrowed in just THREE days, $30 billion more than our nation’s entire yearly deficit in fiscal year 2000/2001! Ladies and gentlemen, this is going to end badly.

As we mentioned above, Europe is in even worse shape. The situation in Greece is so bad that its one year treasury notes are paying an incredible seventy–two percent annual interest in order to entice investors to purchase the worthless bonds, and the situation is spreading. Italy’s debt will soon surpass its annual GDP of over $1 trillion. Moody’s just downgraded Italy’s debt by three notches and the nation is selling bonds with yields twice as high as were offered at the beginning of the year. Major European banks such as Societe Generale, Credit Agricole, and UBS are verging on insolvency. A lone London rogue trader cost the Swiss bank UBS $2 billion alone in the month of August alone. It has been reported this summer, that our own Federal Reserve secretly financed major European banks and others to the tune of $16.5 trillion. Think this will end next week? The answer is plainly NOOOOOO!!!

Enduring Safety of Gold and Silver

It is obvious that the world’s leading governments in collusion with their central banks, are going to continue to borrow and spend their respective populations into penury. Most all of our major banks are insolvent and are teetering upon collapse. Stock markets are weakening world wide and all their shares carry extreme risk.

Please, please, do NOT allow yourself to be caught up in either the pessimism or excitement of short term price movements, even if they are extreme. Always look closely at the fundamentals of debt, fiat currency proliferation, and stock market and banking instability. Always remember, you are in precious metals for the long run. They have stood the test of time and every failed nation state since the Assyrian Empire, circa 2000 B.C. They certainly will continue to do so in the future. When all else fails, gold and silver will reign supreme.

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.

Before we begin with our official Kristos Trading 2011 autumn forecast for gold and silver, allow me to share a personal experience I had regarding gold trading just over thirty-two years ago, in the late autumn of 1979.

About a year before, I had borrowed about $40,000 from my family inheritance and had bought that amount in Krugerrands. Now a year later, gold had made what in those days was an unimaginable 65% increase in one year. I decided that I would take my profit and went down to the leading coin dealer in the city of Portland, Oregon, to sell my gold and bank my profits. To my incredible surprise, I found myself at the back of a very long line of highly excited buyers and sellers waiting outside the coin shop. The line extended almost a block long – just what you would expect at the opening of the premier of a marquee movie.

At that time, I made a mental note to myself that I might be witnessing an historical event. Actually, I was right. Several months later, gold hit its all time high of $850 an ounce. Shortly thereafter, Paul Volcker, the chairman of the Federal Reserve, announced mammoth interest rate increases for US treasuries and bonds, in order to suppress the demand for precious metals that had arisen in response to the inflationary policies of our government at that time.

Now, thirty-one years later, we find ourselves in a similar nexus. As I write this newsletter, gold is within $15 of its all time high, at $1,900 an ounce. This may appear on face to be a very similar scenario to what occurred three decades ago. However, I must warn you that now the dynamics of the US and world economies have completely changed.

Back in 1979, the criminal cartel, which is behind the Federal Reserve and the other central banks of the developed world, could easily force precious metals investors out of their bets by substantially raising interest rates. By doing so, this made paper currencies look extremely attractive versus gold and silver investments. The Fed went on to dramatically increase the 30 year Treasury Bond rate to an annual rate of 16%. This caused a capitulation of the gold and silver investors, who sold off their positions to buy treasuries.

Today, it is 2011 and everything has changed. The Fed Funds rate is 0% and 30 year Treasury Bonds are paying a smidgen over 3%. About forty million high paying manufacturing jobs have been eviscerated from the US landscape and shipped to Asia and South America, thereby removing the immediate inflationary demand in wages that, forty years ago, would have doubled up silver and gold in a matter of months.

The Federal Reserve is completely out of bullets and so is the US Treasury. The Treasury, stuck over 100 trillion dollars in debt, has no answers. The world banking system is completely insolvent with 1.25 quadrillion losing derivative bets at risk. The world’s nation states will never be able to repay their debt and their central banks can never make good their bad loans. Their central banks can no longer raise rates to entice investors out of their precious metals holdings.

Predicated upon this, here is the official Kristos Trading prognostication: The precious metals are going to explode in the next nine months. The reason is that the Chinese and Indian central banks are buying mass quantities of gold for their nation’s balance sheets. Thirty years ago, both these nations were Third World countries. Today, they are industrial and technical juggernauts, whose citizens cannot buy enough gold and silver. The debt crises that face the G20 nations of the world are completely out of hand. In addition, a sovereign debt crisis is sweeping Europe and will soon consume the USA. Inflation in commodities is soaring dramatically. Gold and silver will respond accordingly.

Mike McGill Trading Operations

Question: What do Jackson Hole, Wyoming, and a McDonald’s Quarter-Pounder Meal in Zurich, Switzerland, have in common? Well, in a word, EVERYTHING!
Like a frog that has been placed in a pan of water on a stove and doesn’t realize that the water is continually heating up, the American consumer is just gradually becoming aware of ever accelerating commodity prices – in the United States that is. In the last year, the price of a McDonald’s Quarter Pounder Meal in the US, has increased from an average of $4.80 to $6.10. That is a very hefty increase of 27% in just one calendar year. Now, please go buy that same Quarter Pounder Meal in Zurich, Switzerland.

What do you think it will cost there in US dollars? Seven dollars? Eight dollars?……….
Try $18.95! How could that possibly be, you ask?

Well, here is the answer. The value of the US Dollar is tanking compared to the perceived stability of the Swiss franc. With Ben Bernanke and the Federal Reserve Open Market Committee (FOMC) just announcing the Fed’s intention to keep the Fed Funds Rate at 0% for the next two years, the weakening of the US dollar continues against other major world currencies. This summer, the greenback has hit all time lows against the Japanese yen and the Swiss franc. Against the franc, the US dollar has lost over 25% of its value this year alone. Over the last decade, the exchange rate for the US dollar and Swiss franc has plummeted from an astounding 1.77 francs to the dollar in 2001, to its value today of less than .80.

Why is this? The answer is that the Swiss franc is perceived as a safe haven for the protection of wealth. Unlike the United States, whose profligacy in welfare and warfare spending continues unabated, the prudence of the Swiss government and its banking system appears very appealing to savvy investors. Intelligent savers all over Europe are attempting to park their liquid assets into Swiss bank accounts thus driving up the demand for the Swiss franc. Like the US dollar, the euro currency is floundering hard. In the European Union, weaker nations are in such bad shape that nobody, and I mean NOBODY, wants their debt.

The Greek debt is so toxic that it now has to charge an amazing 72% interest on its one year Treasury yield in order to entice investors! FREAKING 72% for only twelve months of risk? Jeez, Louise! That makes Michael Milken’s junk bonds of the 1980s look like a sound investment. Greece may be only days away from default. Portugal, Spain, and Ireland are not far behind either. The real scare, however, is Italy, whose national debt of over a trillion, is now greater than its GDP. A default in Italy would absolutely rock the world’s banking system to its very core.

Yes, folks, it’s the world’s two largest currencies, the US dollar and the euro, both on a Titanic cruise to the bottom of the ocean! The European Union, just like our own Congress, is replete with corrupt politicians more than willing to bail out the large private banksters’ sovereign debt loans, and lay it on the back of the working populations of both continents. A revolt is on the way. Germany specifically is on the verge of throwing out Prime Minister Merkel and her entire cabinet if they vote one more euro of German savings to bail out Greece, Portugal, Ireland, or any other country.

Finland has taken the same stance, now requiring solid cash collateral for any extended credit whatsoever. Ladies and gentlemen, we are facing a world crisis of confidence in paper, read that fiat, currencies. As predicted by the Kristos Trading staff, gold and silver will continue to benefit very handsomely as a response to the ever depreciating major paper currencies. Please, please, please protect your assets now by buying gold and silver while they are still affordable and available!

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.

Mike McGill Trading Operations

It has been brought to our attention that pursuant to The Dodd-Frank Wall Street Reform and Consumer Protection Act, suspension of Forex trading in over the counter trading in gold and silver contracts, will go into effect on July 15, 2011, for all US residents.

An excellent article detailing the specifics of the legalese behind this suspension is well chronicled in an
article by Tyler Durden posted on zerohedge.com.

Several major Forex brokers, including forex.com, have announced that spot market trading gold and silver will be prohibited next month. Interestingly, CMC Markets, an Australian broker, has just formally joined the increasingly larger group of international brokers that is suspending trade in the over the counter silver and gold Forex market for all clients, USA or otherwise. It appears that many more brokers are interpreting The Dodd-Frank law narrowly enough to where nearly all Forex gold and silver products will soon be removed from retail trade.

It is yet too early for us to fully evaluate the ramifications of this legislation. However, the Kristos Trading team views this with some suspicion. There has been a move underway for some time on the part of the federal government, to throw up road blocks to discourage or frighten both coin dealers and buyers from precious metals sales and investing. To wit, Congress tacked on a last minute rider to the infamous Obama Health Care Bill last year that would have made it mandatory for all coin dealers to issue a 1099 for every sale over $600. This would have allowed the government to essentially trace the owners of all precious metals purchases after January 1, 2012. Very fortunately, the new Republican majority in the House, bowing to obstreperous complaints from the mining and precious metals industries, voted out this addendum.

On a more ominous note, the owner of a silver rounds manufacturing concern,
Bernard von NotHaus, was convicted this past March in a North Carolina federal court for possessing and selling his own silver "trading coins". The US Attorney’s office claimed that the "Liberty Dollar" coins minted by NotHaus were intended to be used as counterfeit money. It took the jury less than two hours of deliberation to find NotHaus guilty and he faces fifteen years in prison and a $250,000 fine!

The outrage and irony of this is incredible. Many silver rounds manufacturers use designs closely resembling US silver coins. What distinguishes them, as did NotHaus’s coins, is the obvious fact that nowhere on their rounds appears the designation "United States of America", which is standard on all coins minted by the US Mint. In a frightening declaration, without question meant to intimidate precious metals investors, the FBI accused NotHaus of orchestrating "a unique form of domestic terrorism".

"Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism", said US Attorney Anne Tompkins in announcing the verdict. "While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country. We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government."

The only question we have regarding the outcome of this trial is, where exactly did the government find this darling jury? Did it get them from the drunk tank, or what? The question has to be asked, what is the difference between what NotHaus did and all private mints do in this country?

The government and banking cartel, which is led by the Federal Reserve System, is working overtime to force people into fiat currency denominated assets (paper dollars) that are daily growing more worthless. The purchasing power of the US dollar since the inception of the Federal Reserve in 1913, has lost 98% of its value.

So who is the ultimate counterfeiter here? We will leave that for our readers to decide. We expect more erosions of the free exchange of precious metals to continue. We strongly recommend that all who are contemplating investing in gold and silver do it now rather than later, while there is still the opportunity and availability. We will keep you informed of further developments.

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.

Mike McGill Trading Operations

For the last year and a half, there have been rumblings emanating from the halls of Congress and the Obama Administration, that the federal government might try to solve some of its massive budgetary problems by nationalizing (read “stealing”) the money that millions of hard working Americans have set aside for retirement in their 401(k) plans, Individual Retirement Accounts (IRA), and personal pension plans.
One proposal being floated is for the government to confiscate the cash and stock value on hand in exchange for a specious promise to make future payments in the form of an “annuity” ….
an INVOLUNTARY annuity.

In the annual report of the White House Task Force on the Middle Class, Vice-President Biden discussed in detail the creation of what is being referred to as “Guaranteed Retirement Accounts (GRAs)” which would be designed to provide so-called protection from what the Task Force refers to as “inflation and market risk” and thus “guarantee a specified real return above the rate of inflation.”

That is certainly troubling enough but it gets worse. Congress is considering proposing to eliminate favorable tax treatment currently offered to 401(k) plans and IRAs, and in their place, use the contributions to fund government-invested GRAs into which all employees would be required to contribute a portion of their salaries. This would effectively dismantle the current private sector deferred taxation investment system and instead replace it with a government run investment plan, something along the lines of what is now Social Security.

Think this idea is far-fetched? Think again. It is already underway in other countries. The nation of Hungary is busy instituting a mandatory nationalization of private pension funds of $13.73 billion, or ten percent of the gross domestic product of that small country. Hungary is giving its citizens a stiff ultimatum: move your private pension fund assets to the state or lose your existing pension.

Argentina has previously nationalized its $30 billion in private pensions back in 2009. The nation was struggling to pay some $2.4 billion in foreign debt obligations and was short on export revenue because of declining commodity prices in 2009. The solution? Seize the cash liquidity of hard working Argentinians’ private retirement plans and give them a laundry ticket to be paid later.

But please do not think that these confiscations are only for South American banana republics or former Soviet satellite marxist states. No, no, no, not at all. Last November 29th, The Financial News reported that Ireland had announced it would utilize the country’s 24 billion euro dollar National Pension Reserve Fund “to support the exchequer’s funding program.”

Not to be outdone, the French Parliament, via a surreptitious change to its social security law, appropriated the 36 billion euro currency French Reserve Pension Fund, the Fonds de Reserve pour les Retraites (FRR), to help retire some of the debts of France’s welfare system.

The truth is that just about every nation in the world, with the possible exception of Switzerland, is being bled to death by both ever increasing debt and shortfalls of tax revenue. They are all scrambling to get their hands on any available funds by any means whatsoever to help satiate the unrelenting debt monsters preying on their national solvencies. And at the head of that list of debt ridden nations, we find the United States of America.

Currently, the US Treasury is saddled with on-budget debts of $14.3 trillion and is begging – no make that coercing – Congress for a debt limit increase. But that is the minor problem. If you take into account Uncle Sam’s unfunded obligations such as Social Security, Medicare, Medicaid, government and military pensions, etc., the sum total exceeds $114 trillion according the US National Debt Clock. Dividing this astounding sum by the estimated 115 million households in America, and you arrive at the startling realization that every American household is presently on the hook for nearly one million dollars!

Congress has no courage to either raise taxes, which they should not, or curtail entitlements and military spending, which they should. The national debt spirals out of control. The trillions invested in private retirement accounts is right now looking very tempting to the politicians and central bankers in Washington. Want proof? A little over a month ago, Treasury Secretary Tim Geithner announced his intention to circumvent the current US $14.3 trillion debt ceiling by suspending investments in two government employee retirement funds while borrowing from one of them. The foreign precedent for retirement account confiscation is presently under way internationally. It appears our own country may well be next.

The Kristos Trading team believes that there is a better than even chance that this will soon be trotted out as one of many desperate solutions to the funding crisis in this country. We are strongly encouraging our readers and clients to move their retirement funds into precious metals as a safe haven for wealth protection. We will be more than happy to assist you in transferring your existing retirement account assets into precious metals. Please do not wait too long.

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.

Here at Kristos Trading, we are sure that by tomorrow morning the world media will be flooded by so-called expert commentators attempting to analyze exactly why this has occurred and what it means for the world’s finances. Analysts of all sorts will be coming out of the woodwork to try to decipher this shocking turn of events. Since we value our readers’ precious time, we have attempted to distill this complex event into one, very simple idea. That is: YOU CANNOT INDEFINITELY BORROW YOUR WAY TO PROSPERITY. It does not work for individuals, for families, for companies, or for any level of government – especially nation states.

Fear is once again running wild through the markets. Investors worldwide are scurrying around to try to find some safe haven to park their wealth. Last year, it was the Euro; so far this year, it has been the US Dollar. Worried investors have to be asking themselves, “How will this game of currency musical chairs play out?” Joel Bowman, the editor of “The Daily Reckoning”, prophetically addressed this dilemma in this morning’s edition of that newsletter, when he says,

“Of course, it’s not only dubious currencies keeping investors awake at night. Those dubious governments standing behind said currencies are enough to strike fear (and loathing) into the hearts of many a brave man and woman. With a gaggle of nitwit inflationistas manning the world’s central banks, it’s hardly surprising that many of our fellow reckoners are turning to gold as an anti-printing press store of wealth.”

Puru Saxena, founder of Puru Saxena Wealth Management, agrees. Comments Saxena in a Kitco news interview from his office in Hong Kong, “…Gold should continue to benefit purely as an anti-currency because people have lost faith in the Euro and the dollar. At some point, people are going to say, well, ‘We don’t want to lose purchasing power in currencies that are dubious, we want gold as an insurance.’”

The scary truth is that the treasuries of most of the world’s developed nations are broke. And none is more broke than that of the US federal government. Yet the US government continues to dig a deeper and deeper fiscal grave in which to bury its citizens. According to the brilliant and well respected economist John Williams, whose superb website, www.shadowstats.com details the actual financial statistics (as opposed to the continual lies regurgitated by official US statisticians), the true 2009 US deficit was approximately nine trillion dollars, or $24.7 billion dollars per day. Writes Stewart Dougherty in a January 2010 article entitled, “America’s Impending Master Class Dictatorship”:

“Putting Fiscal Year 2009′s $9 trillion deficit another way, 17% of America’s private wealth, accumulated over a period of 235 years, was wiped out by just one year’s worth of government deficit spending insanity.

America’s public finances are now so completely dysfunctional and chaotic that something far worse than debt enslavement and monetary implosion, terrible curses unto themselves, looms on the horizon: namely, a Master Class  sponsored American Dictatorship.

Throughout history, the type of situation in which America now finds itself, has been a fertility factory for tyranny. The odds of an outright overthrow of the people by the Washington and Wall Street axes, or more broadly, the Master Class are increasing dramatically. The fact that so few people believe an American dictatorship is possible is exactly why it is becoming likely.”

Indeed, these are fearful times in which we live. But fear can be your friend if you listen to its warnings. The woeful world financial condition is an engineered disaster created by the unfathomable greed of the world banking elite and its various minions. But fortunately, it is giving you warnings. All of us are being given a chance to protect our life savings and our families’ futures by investing our wealth in the only true and tested storehouse of value since antiquity. Gold and silver are the only true money. Paper currencies are nothing but debt instruments whose temporary value is only determined by the legitimacy of the issuing countries. To survive the coming debt bomb, you must buy precious metals and buy them now while they are still available and affordable. Do not let the debt bomb destroy your life work and savings.

To learn more about the rewards of precious metals investing, including how to fund your existing retirement account with gold and silver, call Kristos Trading seven days a week at 888.385.1116. To learn about the very best referral program in the precious metals industry, please visit the Kristos Trading Referral Program.
We will take all the time that you need to go over the specifics with you.