Report from FSB says ex IMF head was jailed because US Gold Reserve is 'missing"

Thank you to David Kielhiemer for posting this here.

The Currency War

(The US has long been considered a great place to stockpile gold for countries, however, what interested me is what Jim Rickards said about gold several months ago - that the US could simply take Germany's, and the rest of the European stockpiles, if the US had to continue to finance the ECB, IMF, and EU, as a result of the Euro crisis. 

Why the problem now? Remember the sex scandal of IMF Chief Dominique Strauss-Kahn, and how he reportedly attacked a African cleaning lady? Research a little more, and you will find that Strauss-Kahn, who was trying to finance a bailout for Greece, was being told the US government already had liquidated the gold of the IMF.

Now, the Germans are reportedly coming to see if the US does have any of this gold, although the article attatched explains it simply, the US does not have the gold separated by vaults, but the bars are simply numbered.

If any of this is true, that the gold reserves in the US are not safe, then it will be an interesting 2013.)

"A new report prepared for Prime Minister Putin by the Federal Security Service (FSB) says that former International Monetary Fund (IMF) Chief Dominique Strauss-Kahn was charged and jailed in the US for sex crimes on May 14th after his discovery that all of the gold held in the United States Bullion Depository located at Fort Knox was ‘missing and/or unaccounted’ for.

According to this FSB secret report, Strauss-Kahn had become “increasingly concerned” earlier this month after the United States began “stalling” its pledged delivery to the IMF of 191.3 tons of gold agreed to under the Second Amendment of the Articles of Agreement signed by the Executive Board in April 1978 that were to be sold to fund what are called Special Drawing Rights (SDRs) as an alternative to what are called reserve currencies.

This FSB report further states that upon Strauss-Kahn raising his concerns with American government officials close to President Obama he was ‘contacted’ by ‘rogue elements’ within the Central Intelligence Agency (CIA) who provided him ‘firm evidence’ that all of the gold reported to be held by the US ‘was gone’"

(EU Times)

I would just like to make a few comments on this article:
Back in the days when Tony Blair was UK PM, one day in July, the whole London ATM network went down as they installed a new high speed trunk line between London and NY. When the computers came back up, all of the UK's gold was missing from their computerised account (the gold was being physically stored in NY) When the UK asked for the Gold back, the US replied that they would not give the gold back, but they would pay cash value for it, which was about $250 an ounce at the time. This is the reason that Tony Blair was fired (notice that Gordon Brown was not elected, but appointed). 
This is also the reason why many people believe that Gordon Brown consensually sold most of the UK's gold reserves at a time when Gold was the cheapest it had been in years.
2 weeks after the incident with the ATM network being taken down, a small article in the Financial Times said that the Bank of England had to take out all their gold bars to re-test them because they were unsure of their purity because they had been there for 50 years. 
Anyone who knows how good delivery works would know that this explanation is totally facile, since the gold bars never leave trusted banks. The only reason that this would happen is that the UK either needed the Gold to cover financial commitments, or the Gold had at some point been in the possession of the US and the BoE was worried that it may have been salted with tungsten or tampered in some other way while in US custody. Since then, financial tensions between the US and UK have been, lets say a bit lacking in trust, however, Tony Blair is doing great. Since turning Catholic, he has an account at the Vatican Bank and judging by the jobs he keeps getting given he certainly got paid.

Christopher Carrion.

Spanish Bond Yields

Since so much of the future of the world at the moment seems to be based on whether Spain is going to take a bailout from the ECB, I thought I would scout around and find what rind of rates their bonds are currently paying and hence how close to the edge they are. The results might surprise you. From some viewpoints, it seems quite possible that Spain could hang in there much longer than Greece.

Ok, lets start with the One Year Yield. Usually, when countries are in crisis, debt starts to pile up at the short end of the spectrum. because people do not trust that the country will pay the money back, but either bond buying by the ECB or a perception by bankers that Spanish collapse cannot come that soon, means that their 1 Year Bonds are trading quite low.

As you can see, the short term yield spiked twice in July, signifying genuine trouble, however, at the moment, the yield is only 3.2%, well within their range to pay.

Here is the yield on the 5 year bond. As you can see, it follows a similar pattern to the one year, with yields spiking at the end of June. However, they started declining even before the ECB made the promise to buy their bonds (unless of course there has been an 'understanding' that the ECB has been buying Spanish bonds on the quiet, which would nou surprise me at all.

Now this is the 10 Year Bond. If the country is in serious trouble, here is where you would expect to see it, since no one in their right mind is going to lend to a country for 10 years if they are on the brink of collapse, unless they are backed by the ECB that is. Note the massive drop on 8 September when the ECB announced it's bailout plan, effectively guaranteeing Spain's bonds as long as they ask for a bailout. Even though yields have risen a bit ince then, it's obvious that most people still think that Spain will take the bailout. 

Here's the 20 year Bond Yield, which looks identical to the 10 year, except that the rate is higher, because what hold true for lending a country money for 10 years holds double for 20. Even after the OMT was announced, the yield only dropped to just under 6.4% and could spike back up pasy 7% very easily.

Finally, the 30 Year Note, which is a much wider graph, but you can still see the drop at the start of September and the moving around since. What's interesting is at the moment, it seems to be at the exact same point it was just after the bailout was announced. I presume people are optimistic that the meetings between Spain and the ECB will come in out in a result positive for them (the bond holders)

So what's the conclusion? Well i'm not really sure, you're guess is as good as mine, but I can make a couple of observations. Since the bailout was announced, the world seems to have bought the idea that Spain is financially stable, even after the massive rate cut today. As I said before, it may be that they are waiting for the results of the ECB meetings to make their decisions. Of course, the other problem is that unless their bond yields go over 7%, Spain might not want to ask for a bailout and give up so miuch of it's fiscal sovereignty, something I could understand. I guess only time will tell.

Christopher Carrion.

Rumours of Massive Silver find in Peru 'ephemeral'

A mass email was sent out on around 28th of September purporting knowledge of a company that had found a massive Silver deposit in Peru that was valued at 5 Trillion USD. The sender of the email was one Greg McCoach (that cant be his real name, seriously?) who gave a series of 'startling' hints about this massive deposit, but refused to name the company involved.

Fortunately, due to the vast number of people sent this email, it was not hard to find someone on the internet who had done a comment on it, thanks to Bob Tsui for finding it.

The company being advertised is Tinka Resources, which trades on the Canadian exchange (TK on the main exchange and TKNFF on the pink sheets) not only is their share very thinly traded, but according to their own announcements, they have only found 20 million ounces, which hardly translates into 5 Trillion. According to their own announcements, available here: They have only sampled an area 150m by 150m and found in 5 samples between 11 to 115 grams per ton of rock.

Needless to say, it is true that this company is cheap. It is also true that silver is due for serious upside. It may even ber true that there is a large silver deposit there in Peru, but the companies own documents do not show this. In my opinion, Mr McCoach's email was simply an attempt to sell a subscription to some shitty tip service.

In case there is any doubt, here is the last year of Tinka Resources.

Now the reason I originally got into this story was that 5 Trillion of new silver floating around would seriously dent my fundamental assumptions, but is seems they are safe. A bullion seller I was talking to today said that it took 6 months for a $15million USD transaction to be delivered and that there is only 3 days of extra capacity on the silver industrial system. I had assumed things were bad, but I had no idea they were that bad. At the moment, the large banks are using ETF's and other tricks to keep the prices of precious metals artificially low, however, once physical silver becomes even more short, there will be a divergence between paper and physical prices, because after all, you cannot electroplate with paper. =)

26th of September, The Current Financial Situation

So, strange times indeed we are living through. Without many people realising it, a world wide QE programme was launched over the last two weeks, with the US, UK, Japan, China, Russia, Brazil and more spewing out vast amounts of money. The Japanese intervention is valued at over $7 Trillion alone, dwarfing the size of the US program. So now many are asking the question, what will happen next? The answer, as always is that I do not know, but I could make a few educated guesses and here they are.

The world QE will be a boost for precious metals and may be a short term boost for equities, although i would not be surprised if equities begin to decline as the effects of the world QE wear off, after all, it is only the USA that has been insane enough to announce open ended QE. Everyone is very nervous in the market at the moment. There have been declines in the price of commodities and the DJIA, to which they are closely linked. The main problem is that although the head of the ECB has said that he is willing to buy the bonds of bailed out countries, no country has actually applied yet, presumably because of the strings attached and also, unless their applying to the bailout program was kept secret. the lack of faith would make their lending rates shoot up.

In other words, Europe is in paralysis. At the same time, the US has stated QE3, called by many QE infinity, since they have announced that they will buy $40Billion in bonds a month until things turn around. Now, there are a bunch of problems with this. Firstly, the US Fed is already buying over two thirds of all the bonds issued by the USGovt. Secondly, the Fed has been engaging in 'Operation Twist' Which involves buying long term bonds and selling short term debt. This is to prevent the piling up of short term debt which happens as people begin to doubt whether a country will be able to pay their debts back. Less people ask for more money to hold long term debt from that sovereign.

This massive orgy of money is sure to do a number of things. Firstly, it will eventually debase the currencies involved, secondly, commodities will rise and there is a good chance that equities will also rise, at least in the short term. The works on the grapevine is that this world wide QE was hard to organise and explains a number of diplomatic visits made in the past few months.

If world wide QE fails to get us out of the shit, then there is a good chance that it will turn into every man for himself, intact, there is good evidence to suggest this is already happening, particularly with the new cold war between China and the USA. However, the Chinese have a hold over the US, which is that they hold massive amounts of US treasury debt. Even though they have been trying to shift the amount of USD that makes up their foreign reserves, the amount of money we are talking about is so massive, that if they sold their entire holdings, they would crash the USD. Now of course, they do not want that, no one does, it would be bad for business. Instead, China has been going into Africa and loaning all those worthless USD to African governments without strings attached, which is the real reason for the North Sudan / South Sudan situation.

One thing is for sure, there will be no attack on Iran before the US election. However, after that, it's anyone's guess. The word on the ground is that the Israeli's are hot to go, but the Americans are not so keen. The Israelis are trying to pull a fait accompli by making the Iranians attack them first, so they can call on the US for help, but the US have proved very reticent in this regard because of the looming election.

If you take a look at a map of the middle east, you will notice a couple of things. Firstly, because Iraq is now in ruins and the Americans have removed much of their presence, the Iraqi's have no air force to speak of. This means the Iranians will be able to strike targets in Syria or the Eastern Mediterranean, presumably, this is why there are so many American ships in the Gulf at the moment. Secondly, the USA has not been in a proper war for ages. Their usual tactic is to weaken a company through years of sanctions and then attack when they are fatally weakened, the way they did with Iraq. However,m cutting Iran off from the world economy has proved much harder due to Iran being a central energy partner of both German and China.

Thirdly, after being under sanctions for so many years, the Iranians have become VERY good at making their own technology. This is critical, since unknown to most people, many wars have been won by hacking. A classic example is the Argentine war, where the British pressured the French into giving them the disable codes for the ship to ship Exocet missile, which was being used by the Argentine navy. Now the US has a long history of selling components with backdoors to countries it does not like, witness the fall of the USSR, caused by the entire Russian oil system exploding due to valves imported from the US and tinkered with by the CIA, apparently, the explosion was visible from space. It was this cutting off of their export income that actually crashed the Soviet Union, despite the dreams of many an American hero.

There will be no such backdoor trickery if they fight Iran. America may have a larger army, but the Iranians have been preparing for this fight for the last 20 years. As a result, I expect that they have probably built an entire army around the concept of asymmetric warfare, given their inability to access the world markets due to sanctions. Asymmetric Warfare is probably best defined as using a $1000 missile to destroy a $15million tank. As Israel learned when they invaded Lebanon, Hizbollah had identified a weak spot in their main battle tank, the Merkava. The Merkava (Chariot of God) was not just a tank, but could also carry six troops, who could exit by a ramp than dropped down from the back. Hizbollah figured out that this ramp was poorly armoured and realised that by using an RPG (worth probably less than $1000) they could disable a tank worth thousands of times more to make.

It is this dilemma that the US is now facing. No doubt they have the better technology, but the maintenance of this technology is slowly bankrupting them.

I've said it before, and I'll say it again, NOW is the time to buy Silver or Gold and DO NOT trust an ETF. Only use a bailment service, otherwise, your money is probably as good as gone.

Thanks you for listening..

Christopher Carrion.

Silver Gains over 4%

Silver gained over 4% today, finally ending it's upward streak at 34.816, before dropping back to rest at  about 34.500. Now that the $34 barrier for silver has been breached, many people will be watching the market nervously. there is so much upward pressure contained in the physical silver market, that many people (myself included) believe that one the 34 barrier is breached, we may move to $50 very quickly, possibly within a week. Physical silver shortages continue, with large orders continuing to take weeks to fill for central banks. China's announcement of a Strategic Silver Reserve also throws the asian market into the mix, since they are going to want to get as cheap a price as possible. It is that combination, of everyone trying to get a cheap price before the market at large realises that silver is in a state of shortage that may cause the metal to rocket up in the coming months.
I have noticed that at the moment, silver seems to be following a very odd 2:1 ration with gold, ie, if gold falls 1%, silver will fall 2, if gold gains 2%, silver will gain 4. I am not sure how long this correlation will hold, but it definitely demonstrates that there are bigger returns to be made, percentage wise, in silver than in gold.

Finally, for history's sake, i wanted to post these two charts. First, silver rising over 4%

And the second, gold over the same period, putting on only 1.74%

I hope that this is the beginning of the proving of my theory that silver prices are about to shoot through the roof. It certainly makes more sense to believe that silver will hit $60 before gold hits $3000.

Tomorrow Decides the Fate of the ESM.

BERLIN—Eight judges in a sleepy German town on Wednesday will decide whether to torpedo European leaders' strategy for taming the euro-zone debt crisis.
The German government and most legal analysts predict the country's constitutional court won't block the currency bloc's planned permanent bailout fund, the European Stability Mechanism. If they are wrong, howev
er, the euro zone could find itself short of authorized funds to prop up struggling members such as Spain, forcing Europe to redesign its safety net for crisis-hit countries.
The Karlsruhe-based court is deciding only whether to grant a preliminary injunction that would suspend Germany's ratification of the ESM, pending a full ruling on whether the ESM is compatible with Germany's constitution, expected in December. But analysts say Wednesday's verdict will send a clear signal about the court's final decision.
Last year, the court approved the euro zone's temporary bailout fund, the European Financial Stability Facility, rejecting complaints that it undermined German democracy and the no-bailout clause of the European Union treaty. But the judges forced the government to seek parliamentary approval for every new aid package.
Many legal analysts say the court might once again strengthen parliaments' rights as its condition for allowing the ESM to proceed. That could potentially make new bailout deals in Europe even trickier politically for Chancellor Angela Merkel at home, where she faces growing opposition to bailouts within her governing coalition.
Without the ESM, euro-zone governments would have only the dwindling financial resources of the EFSF on which to fall back. Most of the EFSF's money is committed to bailouts of Greece, Ireland and Portugal and the recapitalization of Spain's banks, leaving as little as €150 billion ($192.2 billion).
Although financial markets hope the European Central Bank, with its money-printing press, will prop up the shaky bond markets of Spain and Italy, the ECB has said it would only intervene in tandem with the government-backed bailout funds. The EFSF would quickly run out of its remaining money if it started buying Spanish or Italian bonds. The ESM would bring another €500 billion in lending capacity, although it wouldn't be fully available until early 2014.
If Germany's top court were to strike down the ESM, governments could try to expand and extend the EFSF, which is set to expire in mid-2013. But German Finance Minister Wolfgang Schäuble last week said the government is counting on the ESM, and that he is certain the court won't block it. "We have no plan B, and we don't need one either," he said.
Germany's Parliament voted in June to ratify the ESM, but German President Joachim Gauck still needs to sign it into law. He is expected to do so quickly if the constitutional court rejects the injunction demanded by the ESM's opponents. 
All other euro-zone countries have ratified the ESM, apart from Italy and Estonia. The German court is seen as the biggest hurdle, however. Financial markets and much of official Europe will be watching closely when the German justices take the bench in their red robes and hats, led by the court's youthful president, 48-year-old Andreas Vosskuhle.
The challenge to the ESM comes from the biggest-ever mass complaint heard in Germany's equivalent of the U.S. Supreme Court. About 37,000 plaintiffs have signed the petition demanding the court shelve the ESM, including law professors, economists, a few members of Ms. Merkel's center-right coalition, the radical Left Party, and thousands of ordinary citizens who are fed up with bailout of other euro-zone nations.
The complaint alleges the ESM strips Germany's Parliament, the country's most important democratic institution, of control over the national budget and taxpayers' liabilities. Plaintiffs from the political right say it breaks the no-bailouts clause of European treaties; the left says it violates democracy for the benefit of international speculators.
Germany's government is confident the court will uphold the ESM, because Germany's Parliament would have to approve any financial-aid package that the ESM grants another euro-zone country.
Some of the plaintiffs are veterans of legal challenges to Germany's pacts in Europe. The court has a history of allowing the German government to deepen Europe's political integration. But the judges have insisted on the rights of Germany's Parliament to have its say and to limit the country's European commitments.

By Susann Kreutzmann for Wall Street Journal

The Current Euro Situation.

The European situation is growing stranger by the day, while most people dont seem to think about it, the truth us that the peripheral Euro states are headed for a car crash whether they like it or not and here are the reasons why.
Firstly, the Germans are essentially terrified by the current situation. At the moment, the EFSM (the European 'bailout fund') is being contributed to by all members except greece, I believe. However, once a country requests a bailout, then they no longer have to put money towards the EFSM. What this means is that if Greece, Spain and Italy go into Bailout, then between them, Germany and France will be left holding the bag for 66% of the total value of the EFSM, which is currently valued at 60 Billion.
As a result, the Germans want gold as collateral for their bailouts to Greece and Spain. Now Gold is a tricky thing. If you give another country your gold reserves, then essentially, you have also given them your sovereignty. History shows that a countries gold reserves are the central credit basis that all other transactions that country makes are based upon.
Incidentally, if you are interested in how the EFSM works, you can have a look at the very confusing report from the OECD here. Please note that it was written in 2011, so the differences between the text and the reality may have widened somewhat.. =) However, you can also check out the EU's explanation here.
Now, this is speculation, but I believe what is happening is this.
Not everyone is aware that Goldman Sachs hid 1Billion euro of Greece's debt so they would appear to be within financial limitations to join the EU. In other words, they joined under false pretences. The Germans, quite rightly, feel probably shocked by this, since as a result of this fraud, Greece is now in the situation it is in now.
Now none of the southern European countries are going to _want_ to give up their financial sovereignty (remember, the EU is a financial union, not a fiscal union, or to put it in english, we all use the same currency, but all the states are allow to set their own economic policies).
Now of course, this had lead to big problems, essentially, large banks have been raiding the bonds of peripheral EU countries and making a killing. In a strange twist that is often true of the market, if everyone didnt think that greece was on the edge, then their borrowing costs would not be so high, therefore, they would not be on the edge..=)
The only solution, as far I and others can see is the Eurobond. Like the USA, the EU has to have a single bond, so that peripheral countries cannot be raided and have their interest rates forced up. However, if this happens, Germany's (and probably France as well) will have their ratings cut because of the extra debt they have to take on, regardless of whether this debt is 'sterilised' or not, which will lead to higher borrowing costs. However, this may not be such a problem for Germany. Another little known fact is that German bonds are actually at _negative_ rates now, which means that you have to pay them to hold on to your money, since people are so scared to put it in the bonds of any other country.
If the Eurobond is made, then the EU will have to become a fiscal union, which means that the financial policies of the PIIGS will be decided by Germany (and France) the populations of these countries are not going to like this, but I suspect that once things get bad enough, they will beg for the eurobond. After all, things are not really bad yet, people still have food, for instance. But once the price rises from all the droughts happening in the world filter into the world food prices, there are likely to be food riots and other serious disturbances in the PIIGS. Politicians are by nature cowardly creatures and once the civil disturbances start, I suspect they will tell the people anything to get them to accept the eurobond, (including trying really really hard not to tell the people that Germany is getting all their gold.)
After all, a country without a gold reserve is not really a country. Just because we can create 'money' out of thin air, when the debtors come calling, that have to be paid with something more than paper of electrons and gold historically, is that thing.

This is one of the reasons why the value of gold is rising at the rate that it is. Unlike paper or electrons, which work fine when everything is in a boom, when the shit hits the fan, everyone wants the gold, because unlike contracts, swaps, derivatives, or ETF's, gold has intrinsic value.