Silver Update

This Video shows the fear in the market and need to hold hard assets as protection against monetary collapse.

Dollar/Yuan

 

 

Obama Misinforming Public About U.S. Dollar and Yuan

 

President Obama's comments on Wednesday in a joint press conference with Chinese President Hu Jintao, misinformed the public about potential changes in foreign exchange rates and their effects on U.S. citizens. Obama on Wednesday said that he would like to see the Chinese yuan appreciate faster in value. While Hu indicated that China is committed to allowing the free market to better dictate the value of the yuan, Obama said China is implementing their steps to allow the yuan to appreciate "not as fast as we'd like."

 

For years, the U.S. has been criticizing China by calling them "currency manipulators". The fact is, the Federal Reserve is the real currency manipulator because their actions will soon lead to a U.S. Hyperinflationary Great Depression that destroys the lives of all Americans who aren't prepared for life with a worthless U.S. dollar. All China is doing is pegging the yuan to the U.S. dollar so that their product manufacturers and exporters can maintain some level of stability. However, the U.S. is using this as an excuse to explain its rapidly deteriorating export market.

 

Obama was correct when he explained to the world how China would benefit by having a stronger yuan. Obama understands perfectly how a stronger yuan would bring down prices for Chinese citizens and allow them to enjoy a much higher standard of living. In fact, NIA believes China could solve their current inflation crisis simply by allowing the yuan to appreciate alone.

 

China has seen the prices of many food items soar by 25% or more in recent months, which is horrific for a country where many of its citizens spend half of their income on food. While most mainstream economists on CNBC, Bloomberg, and FOX Business are quick to blame China's food inflation crisis on the weather, NIA believes the weather has very little to do with it. It seems like the weather is always the excuse every time food prices rise. Mainstream economists would have you believe that the world has been experiencing never-ending droughts and floods that continue to worsen each year.

 

NIA members know better than that. After all, we have the most educated membership base in the world. The truth is, China's food inflation crisis is coming as a direct result of the Federal Reserve's destructive quantitative easing and money printing policies, and China's willingness to keep the U.S. dollar artificially propped up out of fear that Americans will no longer be able to afford their exports. China is importing all of its food inflation from the U.S. and if President Obama gets his way, China will throw its food inflation right back into the faces of all U.S. citizens.

 

Imagine a food fight in school between American and Chinese kids with the American kids throwing their free National School Lunch Program (NSLP) meals (paid for by Chinese purchases of U.S. treasuries) at the Chinese kids while the Chinese kids sit there ignoring it trying to enjoy their own meals that they spent half of their income to buy. All the while, the American kids are antagonizing the Chinese kids, calling them currency manipulators and blaming their need for free NSLP lunches on China's currency peg (when the peg is actually preventing the American kids from starving). Sooner or later, not only will the Chinese kids throw the NSLP lunch remains back at the Americans, but they might become so disgusted (because they paid for the food being thrown at them) that they actually regurgitate their meals that they worked half of the day to be able to consume, into the American kids' faces.

 

If the Federal Reserve continues down the path it is currently on, not only will China allow the yuan to rise to a free market determined level, which will send China's food inflation crisis back to the U.S., but China is likely to dump their U.S. treasury holdings that they are currently hoarding. China's foreign exchange reserves rose by $199 billion last quarter (its largest quarterly gain in 15 years and 78% higher than analyst estimates of $112 billion) to a record $2.85 trillion for total growth in 2010 of 18.7%. Most likely, about 2/3 of these reserves are in U.S. dollars. Americans have been deceived by the U.S. government and the mainstream media into believing the U.S. economy is recovering, because the U.S. has been enjoying the benefits of inflation without the consequences of rising prices. When the U.S. bond bubble begins to burst and these trillions of dollars being hoarded come home to roost, inflation will become the primary concern of all Americans.

 

NIA finds it completely outrageous how Obama can be so honest with Chinese citizens about their benefits of having a stronger yuan, but then seconds later outright lies to the American public by saying that Americans would gain by having a stronger yuan as well. A stronger yuan by definition would mean a weaker U.S. dollar. It is insane for Obama to proclaim that having a stronger currency is good for China but bad for America. The rules of economics are the same in both countries.

 

As the Chinese see their purchasing power increase by having a stronger yuan, Americans will see their purchasing power decrease by having a weaker dollar. These simple economic principles are easy for any human being to understand, but nobody in the mainstream media is calling Obama out on it. The media completely accepts Obama's statements as the truth, without providing any warning to American citizens that Obama's desired change in foreign exchange rates will shift China's inflation crisis completely to the U.S.

 

On November 12th, NIA's President Gerard Adams warned Americans on FOX Business to beware of massive food inflation in early 2011. We are less than three weeks into the new year and massive food inflation is already here. SuperValu, the third-largest U.S. food retailer with 2,349 stores that operate under such names as Acme, Albertsons, Save-A-Lot, just reported that all of their major vendors have announced their intentions to pass along rising costs throughout the calendar year and the company will be raising prices on all food items by 3% to 14%. NIA's experience tells us that SuperValu is planning to increase prices on most goods by approximately 14%. Trust us, if SuperValu was expecting to increase prices by an average of only around 5%, they would have given an average instead of such a wide range. (By the way, SuperValu's stock crashed 16% on the news and one of NIA's top 10 predictions for 2011 was that U.S. retail stocks will decline after reporting lower profit margins.)

 

The SuperValu situation confirms that double-digit U.S. food price inflation is just about guaranteed to occur in 2011. We also expect to see double-digit price inflation this year in clothing, oil, gasoline, natural gas, and all of the most important things Americans need to live and survive. If the U.S. Bureau of Labor Statistics (BLS) somehow manages to report a CPI increase in 2011 of anything less than 5%, and the mainstream media continues to report the BLS's CPI numbers as the truth, any Americans who continue to listen to the mainstream media deserve to lose all of their purchasing power during hyperinflation.

POMO

The most recent POMO schedule and the amount of money the Fed Res is buying. QE2 as it is called.

Source and commentary, Larry Levin.

Free $$$ Schedule

Although today was another up day on Fraud Street, it was yet again accompanied by ridiculously low volume.  The lack of volatility is also miraculous but we know why: the Federal Reserve and the ECB have declared that nothing is allowed to fail and no bondholders will ever have to take a loss on a terrible investment.  There is no fear.  Let’s be blunt – because of the Fed and its QE/POMO there is no free market.
 
Since I have been asked relentlessly when the next POMO operation will take place I decided to post the schedule.  However, the pertinent question is really: when ISN’T the Fed conducting a $$multi-billion give away to the very banksters that nearly brought the entire global financial system to a permanent end?  (Seen even ONE in handcuffs yet? Neither have I.)
 
There are only two non-POMO days over the next month - Monday, January 17 and Wednesday, January 26. All other days have a POMO operation scheduled.  EVERY other day over the next month the greedy banksters will be pilfering more of your money – and ramping equities higher in the fashion of your favorite Euro-trash central planner.
 
The estimated giveaway for Treasuries over the next month is $112 BILLION.  Annualized, this comes to roughly the amount that the White House and Congress are deficit spending.  Watch Bernanke lie to us again tomorrow afternoon when he claims that he is not monetizing the debt.  Uh – huh.

College Bubble Set to Burst in 2011

 

 

College Bubble Set to Burst in 2011

 

The National Inflation Association believes that the United States has a college education bubble that is set to burst beginning in mid-2011. This bursting bubble will have effects that are even more far-reaching than the bursting of the Real Estate bubble in 2006. College education could possibly be the largest scam in U.S. history.

 

NIA's advice to the youth of America today is to think for yourselves. Don't get suckered into overpaying for a college degree that is worthless because everyone else has one. College is only worth attending if you plan on actually learning something there. If you are only going to college because you think a piece of paper is going to help you find a job, you would be much better off skipping college and entering the workforce right now at any entry level job. Your experience will benefit you more than any piece of paper.

 

The median U.S. home price is currently $170,600, down 26% from its peak of $230,200 in July of 2006. The Dow Jones is currently 11,672, down 18% from its peak of 14,198 in October of 2007. Oil is currently $91 per barrel, down 38% from its peak of $147 per barrel in July of 2008. After the financial panic of 2008, the U.S. saw a collapse in the prices of just about all assets, goods, services, and commodities. Between lost stock market and home equity wealth, Americans lost $10.2 trillion in paper wealth in 2008, and have only recouped a fraction of it since then.

 

College is the only thing in America that never declined in price during the panic of 2008. It actually rose in price substantially. The annual tuition for a private four-year college was $21,235 in the 2005-2006 school year. Despite Real Estate beginning to collapse in late-2006, college tuition rose by 4.6% in the 2006-2007 school year to $22,218. Despite the stock market beginning to collapse in late-2007, college tuition rose by 6.7% in the 2007-2008 school year to $23,712. Despite oil and other commodities collapsing in late-2008, college tuition rose by 6.2% in the 2008-2009 school year to $25,177. Even after the Dow Jones crashed to a low in early-2009 of 6,469, college tuition still rose by 4.4% in the 2009-2010 school year to $26,273.

 

Annual tuition for a private four-year college in America is now $27,293, up 29% from five years ago. Meanwhile, the employment situation in the U.S. has deteriorated. There are currently 130.7 million non-farm jobs in America, down 3% from 134.5 million U.S. non-farm jobs in December 2005. 3.8 million jobs have been lost, while the U.S. population has grown by approximately 14 million people during the same time period. We would need to have seen the creation of 6.7 million non-farm jobs just to stay even, but now we are 10.5 million jobs short.

 

All across America, thousands of students are graduating law school each year with $250,000 in debt, but with no jobs at law firms available to them. 15,000 attorney and legal staff jobs have disappeared since 2008, yet 43,000 law degrees are being handed out each year. Law degrees are losing their value faster than the U.S. dollar is losing its purchasing power. Lawyers are non-producing workers that do nothing to create any real wealth for society. The artificially high incomes of lawyers are made possible entirely by inflation, which steals the wealth from hard working goods producing middle-class Americans and transfers it to those who add no real value to society.

 

The service sector currently makes up 76.9% of the U.S. GDP. Agriculture, which in 1933 made up 28% of GDP, currently makes up only 1.2% of GDP. The wealth of any country is primarily created at first from the production of food, oil, and precious metals. Secondly, wealth is created from the manufacturing of real consumer goods. After a country generates wealth by producing real things and builds a large domestic pool of savings, it can begin growing a service based economy, just so long as it has enough savings to support it.

 

During the past decade, an unprecedented number of Americans went to school to become lawyers, because they thought if they became a lawyer they would immediately become rich. 60% of the U.S. Senate and 37% of the House of Representatives are lawyers. The reason we have so many lawyers in Washington is so that they can pass as many new harmful laws and regulations as possible, in order to provide enough work for all of their lawyer friends. All of the needless legislation that is passed each year in order to provide work for lawyers, has the devastating unintended consequence of destroying what little is left of the free market. Small businesses are the backbone of the U.S. economy, but it is now nearly impossible for a small businessman with limited financial resources to build a large successful corporation in any sector, because their legal costs would eat up all of their profits.

 

Many law students got suckered into going to law school due to deceptive marketing practices. Some law schools are advertising that 90% of graduates are employed within one year of graduating. Sure, maybe 90% of law school graduates were employed a year later, with half of them working at McDonald's, but no law school degree is required for that. Schools are using dozens of unethical tactics to manipulate their numbers while encouraging alumni to falsify the surveys they fill out about their employment situation. Just like we are now seeing countless class action lawsuits against mortgage companies that misled customers about the loans they signed up for, we will soon see a massive number of lawsuits filed against colleges that lied about their job placement rates and average starting salaries of graduates. (At least there will be some work for law school graduates.)

 

Most Americans today are sheep who believe that the key to success and happiness in life is following the same career paths as everybody else. While everybody went to school to become a lawyer, nobody went to school to become a farmer because Americans didn't see any money in farming. With prices of nearly all agricultural commodities soaring through the roof in 2010 and with NIA expecting this trend to continue throughout 2011, the few new farmers out there are going to become rich while lawyers are standing at street corners with cups begging for money.

 

The college tuition bubble has been fueled by the U.S. government's willingness to give out easy student loans to anybody who applies for them. If it wasn't for government student loans, the free market would force colleges to provide the best quality education at the lowest possible price. By the government trying to make colleges more affordable, they have actually driven prices through the roof. Colleges have been encouraged to spend recklessly on wasteful construction projects, building new libraries, gyms, sports arenas, housing units, etc. Colleges spent $10.7 billion on construction projects in 2009. Although this is down from an average of $14.7 billion per year colleges spent on construction projects from 2005 to 2007, colleges are still struggling to pay off their old construction related debt. When interest rates start to rise, it will add further upside pressure to college tuition prices.

 

College students borrowed $106 billion in total student loans for the 2009-2010 school year, up from $96 billion in 2008-2009, $94 billion in 2007-2008, $87 billion in 2006-2007, and $83 billion in 2005-2006. Total student loan debt in the U.S. currently stands at $830 billion and now exceeds credit card debt. President Obama's new student loan bill that was passed last year now makes the government the primary lender to students. By taking the free market out of the student loan business and allowing students to receive loans from the government at artificially low interest rates, colleges will be encouraged to spend more recklessly than ever. None of this wasteful spending is doing anything to improve the quality of education in America.

 

Over a year ago when NIA was filming 'The Dollar Bubble' in Los Angeles, violent riots broke out at UCLA over a 32% increase in college tuitions (from $7,788 to $10,302). We went to the protest in order to video tape the shocking footage to show you. While we were there we remember thinking to ourselves, why on earth are these students protesting at all? If tuitions are rising by 32% and they are unhappy about it, why don't they quietly and peacefully enroll someplace else for college next semester. If not enough students enroll into UCLA, the university will be forced to either dramatically cut their costs or shut down. UCLA decided to completely ignore the riots and went ahead with the 32% rise in tuitions. Did the students decide to enroll someplace else? Nope, most of them simply took out larger student loans and went back to UCLA. In fact, UCLA reported that they received a record amount of freshman applicants for the next semester.

 

With all of the technological advancements taking place around the world today, the cost for a college education should be getting cheaper. Americans today can purchase just about any type of product they want over the Internet for substantially less than they can find it in a retail store. When the U.S. dollar collapses and the college bubble bursts, NIA predicts we will see a boom in online education where Americans take all of their courses over the Internet from the comfort of their own home at a fraction of the cost of traditional college.

 

Later this year, NIA is going to be producing a documentary about America's college education crisis and the college tuition bubble that is about to burst. In the weeks ahead, NIA is going to begin searching for people who deserve to be featured in our documentary. If you are a college student, a recent college graduate, or a current or ex-college professor with an extremely shocking, interesting, and important story that the whole world needs to know about in what will be the most viewed college documentary in world history, please send an email tocollegebubble@inflation.us. We would also love to hear from any NIA member who has any ideas of topics that we should cover in this new documentary. Please send all ideas and suggestions to collegebubble@inflation.us.

 

This will truly be one of the most important documentaries NIA has ever produced. We need to change the mindset in America that only those with college degrees have any chance of becoming successful. Americans have become so brainwashed that even after graduating college with over $50,000 in debt and not being able to find a job, many of them are wasting even more years of their life and getting even deeper into debt to attend a graduate school, for a master's degree that is just as worthless as a bachelor's degree. It is like comparing a $10 bill (master's degree) to a $1 bill (bachelor's degree), they are both worthless pieces of paper with no intrinsic value.

 

NIA believes that any recent high school graduate with $30,000 saved for college who invests that money into silver and becomes a minimum wage apprentice for the next 4 years, will likely have enough money in 4 years to buy a median priced U.S. home. Not only that, but they will have work place experience that is far more valuable than the worthless college degrees of any of their friends. We must work hard to educate America to the truth if our country is going to have the wherewithal to survive the upcoming bursting college bubble and Hyperinflationary Great Depression.

Massive Silver Withdrawals From The Comex

The following is from another blog.

Here is the reprint:

Massive Silver Withdrawals From The Comex

It will be interesting to see how the CFTC, the Obama Administration, and the Comex deal with this situation with silver, including the disposition of the massive paper short positions that appear to be undeliverable.

It could prove to be a watershed event, or at least an interesting scandal to observe as it unfolds.

Harvery Organ's commentary:

"And now for the big silver report.

We witnessed a massive withdrawal of silver unprecedented in the history of the comex. First there was a smallish 6507 oz of silver deposited to two customers, one being 497 oz and the other 6010 oz). But just look at the huge withdrawals:

Four customers (not dealers) withdrew a total of 1,019,310 oz from the comex vaults. This is real silver leaving from 4 registered vaults. The individual withdrawals are: 579,081, 30,380, 399,994 and 9855 oz.

The dealer (our bankers) also were involved in the withdrawal of silver to the tune of 769,941 oz (there were 2 dealers involved removing 102,866 and 667,875 ozs). When you see this massive drain of silver, the fire is raging. The total silver withdrawal by both dealer and customer totalled an astronomical 1,789,251. The Brink's trucks must have been very busy yesterday.

The comex folk notified us that an amazing 85 notices were sent down for servicing for a total of 425,000 oz of silver. The total number of silver notices sent down so far total 323 or 1,615,000 oz. To obtain what is left to be served, I take the open interest for January at 153 and subtract 85 deliveries leaving a total of 68 notices or 340,000 oz left to be serviced.

Thus the total number of silver ounces standing in this non delivery month of January is as follows:

1,615,000 oz + 340,000 = 1,955,000 oz (Thursday total = 1,625,000). As promised to you, this number is rising and will continue to rise until the end of the month as our banker cartel scrambles to get any morsel of silver to satisfy the massive demand for this metal. Our bankers are stunned to see such a huge amount of silver options in a traditionally slow month.

I hope everyone caught the Eric Sprott story on Kingworld news that he is having trouble locating silver."

A recent letter from Larry Levin.

Bond Losses

More encouraging economic data this morning in the way of the ADP jobs report and the non-Manufacturing ISM Index sent bonds down and equities higher.  Investors seem to be exiting bond positions and entering stocks.
 
For those investors who chased the bond bubble and bought late, the current decline in bonds is killing them.  When bond prices drop, yields increase. Therefore, a Treasury with a lower interest rate (that was purchased over the last few months) is worth less today than when purchased.  After all, who wants to buy an older lower yielding investment when a fresh government IOU today yields more?  
 
Surely there has been a lot of investor demand for Treasuries, but nobody has had as voracious an appetite as the Federal Reserve.  Remember that via POMO and QE2, your Federal Reserve Bank is taking the potential losing Treasury investment off of the books of the TBTF banksters…and giving a guaranteed loss to you, the taxpayer.  How very nice of the Fed.  It is hard to imagine ANY situation in which the Fed actually lost money in the end (because it can probably just declare “do over” and say the losing securities no longer exist. Who’s going to audit it – Congress?) but if it did lose money, the taxpayer will be on the hook.
 
Since Benny & The Inkjets have been monetizing near 100% of every Treasury auction for months, it owns a great deal of these securities.  So what happened to the value of its holding?  Oh yeah, it’s bad.  It is estimated that the Fed lost $10-BILLION today alone!
 
Zero Hedge has this to say…
 
The ongoing collapse in bond prices is making John Meriwether blush with envy at the wholesale wanton destruction of capital undertaken by Ben Bernanke. Keep in mind LTCM - the organization which proved definitively that Nobel prizes in economics are given only to the most consummate destroyers of value, logic, reason and humility - lost "just" $4.6 billion from its peak before it became the biggest systemic risk in the world back in 1998 and had to be rescued by a consortium of banks. The bottom line: with about $10 billion in SOMA losses today alone, Ben Bernanke has generated more than double the losses that nearly destroyed western finance 13 short years ago. And nobody cares.
John Lohman explains:
Chairman Top Tick continues to crash and burn, losing $7.2 billion in Treasury and Agency paper in today’s bloodbath alone.  Adding a rough estimate for the MBS holdings would put the session’s losses well over $10 billion.  Indeed, a baker’s dozen of John Meriwethers couldn’t destroy this much capital in such a short period of time.

And with all of the usual caveats that accompany a simple modified duration analysis (ignoring convexity, assuming instantaneous parallel shifts, etc.), the table below estimates the Fed’s losses for various upward interest rate shocks.  Again, keep in mind this does not include the massive MBS portfolio, which is extending in duration with every uptick in rates.
 
 


Soooooo…what will the Fed do?  If it sells its securities back to the banksters, the Fed loses a fortune (and this slide has just begun).  If the Fed holds the Notes & Bonds to maturity (I highly doubt it), it will receive its capital in full from the Treasury department BUT, the banksters will still have all that cash.  The Fed will not have “sopped up” the liquidity.  That money will eventually reach the economy and the inflation will be breathtaking.  The money the Fed will receive from the Treasury will be in devalued dollars so it loses money either way.  What’s more, the higher interest will absolutely annihilate the government’s ability to run the country.  At the current trajectory, the US debt will be near $20-Trillion in just five years and the interest payments will become unbearable.

Then again, since the Fed creates money out of thin air; can it really lose money it hasn’t earned?  It never existed before the Treasuries were purchased so why would the Fed care if it sold the securities for a loss if that would sop up the massive liquidity?  The Ben Bernank will just take the golf pencil out of the bag – the one with the fat eraser – and erase all of the necessary places on the balance sheet that it doesn’t like.  Poof, it’s gone!

One thing’s for damn sure: no matter the process, it will make bankers a great deal of money and you a LOT POORER.

NIA's Top 10 Predictions for 2011

 

 

The National Inflation Association is pleased to announce its top 10 predictions for 2011.

 

1) The Dow/Gold and Gold/Silver ratios will continue to decline.

 

In NIA's top 10 predictions for 2010, we predicted major declines in the Dow/Gold and Gold/Silver ratios. The Dow/Gold ratio was 9.3 at the time and finished 2010 down 15% to 8.1. The Gold/Silver ratio was 64 at the time and finished 2010 down 28% to 46. We expect to see the Dow/Gold ratio decline to 6.5 and the Gold/Silver ratio decline to 38 in 2011. Later this decade, we expect to see the Dow/Gold ratio bottom at 1 and the Gold/Silver ratio decline to below 16 and possibly as low as 10.

 

2) Colleges will begin to go bankrupt and close their doors.

 

We have a college education bubble in America that was made possible by the U.S. government's willingness to give out cheap and easy student loans. With all of the technological advances that have been taking place worldwide, the cost for a college education in America should be getting cheaper. Instead, private four-year colleges have averaged 5.6% tuition inflation over the past six years.

College tuitions are the one thing in America that never declined in price during the panic of 2008. Despite collapsing stock market and Real Estate prices, college tuition costs surged to new highs as Americans instinctively sought to become better educated in order to better ride out and survive the economic crisis. Unfortunately, American students who overpaid for college educations are graduating and finding out that their degrees are worthless and no jobs are available for them. They would have been better off going straight into the work force and investing their money into gold and silver. That way, they would have real wealth today instead of debt and would already have valuable work place experience, which is much more important than any piece of paper.
Colleges and universities took on ambitious construction projects and built new libraries, gyms, and sporting venues, that added no value to the education of students. These projects were intended for the sole purpose of impressing students and their families. The administrators of these colleges knew that no matter how high tuitions rose, students would be able to simply borrow more from the government in order to pay them.

Americans today can purchase just about any type of good on Amazon.com, cheaper than they can find it in retail stores. This is because Amazon.com is a lot more efficient and doesn't have the overhead costs of brick and mortar retailers. NIA expects to see a new trend of Americans seeking to become educated cheaply over the Internet. There will be a huge drop off in demand for traditional college degrees. NIA expects to see many colleges default on their debts in 2011. These colleges will be forced to either downsize and educate students more cost effectively or close their doors for good.

 

3) U.S. retailers will report declines in profit margins and their stocks will decline.

 

Although most analysts on Wall Street believe retailers will report a major increase in holiday season sales over a year ago, NIA believes any top line growth retailers report will come at the expense of dismal bottom line profits. NIA expects many retailers to report large declines in their profit margins for the 4Q of 2010 and first half of 2011. Retailers have been selling goods at bargain basement prices in order to generate demand. Americans, being flush with newly printed dollars from the Federal Reserve, have been eager to buy up supplies of goods at artificially low prices. However, shareholders will likely sell off their retail stocks on this news. As share prices of retail stocks decline, retailers will begin to rapidly increase their prices by mid-2011.

 

4) The mainstream public will begin to buy gold.

 

Although the mainstream media continues to proclaim we have a gold bubble, it is impossible to have a gold bubble when mainstream America isn't buying gold. The average American is more likely to be a seller of gold through companies like Cash4Gold, in order to raise enough dollars to put food on their table. Most Americans today don't even know the price of gold. During the next 12 months, we expect to see a huge ramping up in the public's knowledge about gold. More Americans than ever will know the current price of gold and understand that it is real money. By the end of 2011, we expect the general public to begin looking at gold as an investment, just like they began looking at Real Estate as an investment in 2003. Sometime during the next six months, we believe you will overhear a stranger at a restaurant talking about investing into gold. We believe the price of gold could surge to as high as $2,000 per ounce in 2011.

 

5) We will see a huge surge in municipal debt defaults.

 

In the closing months of 2010, we saw yields on municipal bonds rise to their highest levels since early 2009. After 29 consecutive weeks of inflows into municipal bond funds, investors are now pulling money out of municipal bond funds by record amounts, with $9 billion exiting municipal bond funds in the five weeks leading up to Christmas. NIA believes there could be a small dip in municipal bond yields over the next couple of months as investors realize that municipal debt defaults might not be imminent, but we expect municipal bond yields to begin rising again by mid-2011 with a huge surge in municipal debt defaults coming in the second half of 2011. Although the Federal Government has a printing press that it uses in order to pay its debts, cities and municipalities do not.

 

6) We will see a large decline in the crude oil/natural gas ratio.

 

When we released our top 10 predictions for 2010, crude oil was $73 per barrel and we predicted that oil prices would rise to $100 per barrel in 2010. Crude oil ended up rising by 26% in 2010 to $92 per barrel, coming short of our outlook. However, it is possible our $100 per barrel oil forecast might be off by just a month or two. We wouldn't be surprised to see $100 per barrel oil within the first two months of 2011 and if so, we expect to see a huge movement in America this year towards natural gas.

The crude oil/natural gas ratio currently stands at 20. Historically, the crude oil/natural gas ratio has averaged 10 and based on an energy equivalent basis, crude oil and natural gas prices should have a 6 to 1 ratio. Brand new fracking technology has caused natural gas supplies in the U.S. to rise to record levels. Although our country might be flooded with natural gas, the natural gas fracking boom that is taking place across the U.S. today is causing ground water in the U.S. to become contaminated. Americans living near natural gas wells that use fracking, are finding that they can now light the water coming out of their faucets on fire. New government regulations are likely to crack down on natural gas fracking and this will come at the same time as American individuals and businesses begin to convert their automobiles and machinery to run off of natural gas. A large decline in the crude oil/natural gas ratio in 2011 is likely, possibly down to as low as 15.

7) The median U.S. home will decline sharply priced in silver.

 

For the past couple of years, being able to make ones mortgage payment has been the primary concern for the average American. In an attempt to support housing prices and keep mortgage interest rates at artificially low levels, the Federal Reserve has been implementing massive quantitative easing and buying mortgage backed securities. NIA believes the Federal Reserve will be successful at putting a nominal floor under Real Estate prices. NIA also believes that the Federal Reserve's actions will cause a massive decline in the value of the U.S. dollar, which will allow Americans to more easily pay back their mortgages with depreciated U.S. dollars.

However, the Federal Reserve will not be successful at reinflating the Real Estate bubble. In fact, in terms of real money (gold and silver), NIA believes Real Estate prices will decline to record lows. The median U.S. home is currently priced at $170,600 or 5,500 ounces of silver. Priced in silver, the median U.S. home price is down 16% from one month ago and 45% from one year ago. After the inflationary crisis of the 1970s, silver rose to a high in 1980 of $49.45 per ounce. The median U.S. home price in 1980 was $47,200, which means the median U.S. home/silver ratio declined to a low of 954.

With the Federal Reserve printing money at an unprecedented rate and record amounts of new homes built during the recent Real Estate bubble, NIA believes it is inevitable that the median U.S. home will decline to a price of 1,000 ounces of silver this decade and possibly as low as 500 ounces of silver. In 2011, we believe a decline in the median U.S. home price to 4,000 ounces of silver is possible.

 

8) Food inflation will become America's top crisis.

 

Starting a few decades ago and accelerating in recent years, America has seen a boom in non-productive service jobs, mainly in the financial sector. Most of these jobs were made possible by inflation. Without inflation, which steals from the purchasing power of the incomes and savings of goods producing workers, the majority of the jobs on Wall Street would not exist today and our country would be in much better financial shape because of it.

With most Americans in recent decades seeking non-productive jobs in the financial services sector because that is where they could access the Fed's cheap and easy money, very few Americans sought jobs in the farming and agriculture sector. In the 1930s, approximately 28% of the population was employed in the agriculture sector, but today this number is less than 2%. Agriculture currently makes up only 1.2% of U.S. GDP, compared to the services sector, which makes up 76.9% of U.S. GDP.
There is currently a major shortage of farmers in the U.S. and a lot of land that was previously used for farming has now been developed with Real Estate. To make matters worse, agricultural products now trade on the international market and Americans must now compete against citizens of emerging nations like China and India for the purchasing of food.
Prices of goods and services do not rise equally when governments create monetary inflation. Inflation gravitates most towards the items that Americans need the most and there is nothing that Americans need more to survive than food and agriculture. As the U.S. government prints money, the first thing Americans will spend it on is food. Americans can cut back on energy use by moving into a smaller home and carpooling to work. They can cut back on entertainment, travel, and other discretionary spending. However, Americans can never stop spending money on food.

The days of cheap food in America are coming to an end. The recent unprecedented rise that we have seen in agricultural commodity prices is showing no signs of letting up. In the past few days, sugar futures reached a new 30-year high, coffee futures reached a new 13-year high, orange juice futures reached a new 3-year high, corn futures reached a new 29-month high, soybean futures reached a new 27-month high, and palm oil futures reached a new 33-month high.

 

We estimate that it takes as long as six months for rising agricultural commodity prices to be felt by U.S. consumers in their local supermarket. Even if food producers and retailers accept substantially lower profit margins in 2011, we are still guaranteed to see double-digit across the board U.S. food inflation in the first half of the year. That is correct, let us repeat, NIA guarantees that Americans will see double-digit food inflation in the first half of 2011.

 

Shockingly, except for Glenn Beck (who was kind enough to feature our food inflation report), absolutely nobody in the mainstream media is doing anything to warn Americans about the food inflation crisis that is ahead. In fact, left-wing groups like Media Matters (funded by George Soros) have been working tirelessly to try and discredit NIA's research while reassuring Americans that they need not worry about food inflation. The truth is, when Americans realize that they can no longer take food for granted, we will likely see the outbreak of an all out food price panic with everybody rushing to the supermarket to stock up on goods before prices rise even further. The end result will likely be government price controls and empty store shelves, but NIA doesn't project this to occur until later this decade.

 

9) QE2 will disappoint and the Federal Reserve will prepare QE3.

 

The Dow Jones is now back up to 11,670, which is where it was in mid-2008 before the crash. NIA believes that most of QE2 has already been priced into the market, before the Federal Reserve even prints the $600 billion. At some point, we expect it to become apparent to all that the U.S. economic recovery is phony and stock prices are rising solely due to inflation. In our opinion, we will see some sort of catalyst that causes the stock market to sell off at some point and the consensus on Wall Street will be that QE2 will not be enough to save the U.S. economy. By the end of 2011, we expect the Federal Reserve to begin planning QE3. QE3 might be the final dose of inflation that causes the U.S. economy to overdose into hyperinflation.

 

10) Sarah Palin will announce she is running for President as a Republican.

 

NIA believes that Sarah Palin has been setup perfectly to run for President in 2012 and that she will announce her candidacy for the Republican nomination with great fanfare from tea party supporters in 2011. We give Sarah Palin credit for recently speaking out against the Federal Reserve's QE2 and warning Americans about the food inflation crisis that is ahead. Unfortunately, we believe Sarah Palin is not a true independent and is being controlled by the Republican establishment, which is just as responsible as the Democrats are for the financial crisis we have today. As President, Palin would be unlikely to implement the measures that are necessary to prevent hyperinflation. In our opinion, we need to elect a true libertarian candidate as President who will cut government spending, balance the budget, and restore sound money. NIA intends to support Ron Paul, if he decides to run for President.

JP Morgan Covering Silver Short Position

 

JP Morgan Covering Silver Short Position

 

There were reports out today that JP Morgan has now admitted to having their massive naked short position in silver and is taking steps to reduce it. According to the Financial Times in London, "JPMorgan has quietly reduced a large position in the US silver futures market which had been at the centre of a controversy about its impact on global prices for the precious metal." According to a person familiar with the matter, "The decision by JPMorgan was an attempt to deflect public criticism of the bank’s dealings in silver." JP Morgan said in a statement, "It is absolutely incorrect to say or imply that the Nymex, CFTC or any other exchange or regulator has instructed or asked us to reduce our position."

 

NIA, along with the Gold Anti-Trust Action Committee (GATA), has been at the forefront of helping expose JP Morgan's silver price suppression scheme. Over a year ago on December 11th, 2009, NIA declared silver the best investment for the next decade at $17.40 per ounce. NIA said in its December 11th article, "It's not a coincidence that the day silver reached its multi-decade high of over $21 per ounce in March of 2008, was the same day Bear Stearns failed. Bear Stearns was a holder of a massive short position in silver."

 

NIA went on to say, "The reason why we believe the Federal Reserve was so eager to orchestrate a bailout of Bear Stearns, is because Bear Stearns was on the verge of being forced to cover their silver short position." NIA then said, "JP Morgan still holds the silver short position they inherited from Bear Stearns" and "JP Morgan will have to cover this short position or it could jeopardize their existence."

 

On February 5th, 2010, JP Morgan was successful at manipulating the price of silver down to below $15 per ounce. On February 7th, NIA wrote an article entitled, "NIA Bets Big on Silver Price Recovery" in which it said, "NIA is betting big that this past week's short-term decline in the paper price of silver was just a temporary wash out, before a huge surge in silver prices later in 2010. One of NIA's co-founders purchased on Friday, 1,300 January 2011 $20 SLV call options at a price of $0.89." These call options that NIA suggested went on to rise as much as 1,024% to a high this month of $10.

 

On March 25th, 2010, the CFTC held a hearing on position limits in precious metals. Bill Murphy of GATA (see NIA's video page for an interview we conducted with Mr. Murphy on Thursday) was allowed to speak (within a five-minute time constraint). Right at the beginning of Murphy's speech, there was a technical failure of the live television broadcast, which was mysteriously fixed as soon as he was done speaking. This did not stop Murphy, who was brave enough to present the evidence of Andrew Maguire, a former Goldman Sachs precious metals trader who on February 3rd became a whistleblower when he wrote to Eliud Ramirez, a senior investigator for the CFTC's Enforcement Division, giving him the "heads up" for a "manipulative event" signaled for February 5th. Maguire described to the CFTC in February 3rd emails, exactly what would happen on February 5th (which did occur exactly like predicted), yet the CFTC refused to take any action against JP Morgan or the other conspirators.

 

Murphy was scheduled for several mainstream media television interviews after the CFTC hearings, but they were all abruptly cancelled at once. In the weeks that followed, Murphy's car was stolen, his web site was hacked, and he was punched with brass knuckles and knocked out cold less than two blocks from his house. As for Maguire, a couple of days after the CFTC hearings, he and his wife were involved in a bizarre hit-and-run car accident in London where a second car coming out of a side street struck their vehicle. The hit-and-run suspect then hit two more vehicles when he desperately attempted to flee, which resulted in a police chase with helicopters. The suspect was nabbed, yet surprisingly, his name was never released and it was never made known if charges were filed.

 

On April 3rd, 2010, with silver at $17.89 per ounce, NIA wrote an article entitled, "Silver Short Squeeze Could Be Imminent". In this article, NIA said, "With the spotlight now on JP Morgan, NIA believes they will be less likely to naked short silver at these levels and manipulate the price down like in February. With the mainstream media blackout, it is important for NIA members to work harder than ever to spread the word and help expose what could be the largest fraud in the history of the world."

 

On May 13th, 2010, NIA released its critically acclaimed documentary 'Meltup', which featured our in-depth research on JP Morgan's silver price suppression scheme. Thanks to the help of tens of thousands of NIA members who worked tirelessly to spread the word about 'Meltup', nearly 1 million people saw the documentary and became educated to the truth about JP Morgan's silver manipulation. Without the hard work of NIA members, JP Morgan would have went on naked shorting silver for years and the topic would have never become mainstream.

 

In 'Meltup', NIA's President Gerard Adams stated, "The current gold/silver ratio of 64 wouldn't be possible unless silver prices were being held artificially low through manipulation. I don't believe it is possible for the silver that JP Morgan is short to be backed by physical silver. Most likely, JP Morgan has been naked shorting silver, by selling paper silver that doesn't physically exist." Since the release of 'Meltup', the gold/silver ratio has fallen by a shocking 27% down to 47. Within the next few years, NIA expects the gold/silver ratio to at least fall to 16, which will mean another three times increase in the purchasing power of those who own silver. In fact, because silver prices have been held artificially low for so long by JP Morgan's manipulation, there is a chance the gold/silver ratio will over swing to the downside and decline to 10 or lower this decade.

 

Throughout world history, there have been 46 billion ounces of silver produced compared to 5 billion ounces of gold. Although gold gets all of the headlines in the mainstream media, silver shares all of the same monetary qualities as gold. Based on historical production ratios, a gold/silver ratio of 10 down the road could certainly be realistic. In fact, considering that most of the silver ever produced has been consumed by manufacturing, a gold/silver ratio of much less than 10 is possible. Worldwide inventories of silver have declined 90% since 1940 from 10 billion ounces down to approximately 1 billion ounces today. NIA believes that a major shortage of physical silver is in the process of developing.

 

On September 9th, 2010, NIA released an article entitled, "Is JP Morgan's Silver Manipulation Over?". In this article, we discussed how JP Morgan was winding down their proprietary trading desks, which we felt were responsible for the silver manipulation. We stated that we were "hopeful but skeptical that the manipulation is coming to an end" and "cautiously optimistic at this time". Since September 9th, the price of silver has gained over 50% and is holding strong near $30 per ounce. There have been no noticeable manipulative takedown attempts by JP Morgan.

 

NIA estimates that over the past 30 days, JP Morgan has covered approximately 4,000 silver contracts, which has corresponded with about a $4 per ounce upward move in the price of silver. We estimate JP Morgan to still be short approximately 26,000 silver contracts or 130 million ounces of silver, which equals about 18% of worldwide annual silver production from mining of 709.6 million ounces. If JP Morgan covers their entire silver short position and the price of silver was to continue rising by $1 for every 1,000 silver contracts that JP Morgan covers, silver would rise to $56 per ounce.

 

JP Morgan appears to be covering its shorts in a very managed and orderly way. We are not yet seeing anything that resembles a short squeeze, although one could occur at any time. If we see a major silver shortage and a real short squeeze, silver could literally rise to hundreds of dollars per ounce overnight. Silver's all time high of $49.45 per ounce adjusted to the CPI equals $139 per ounce in today's dollars. As all NIA members know, the CPI understates inflation through geometric weighting and hedonics. The real inflation adjusted all time high for silver is over $400 per ounce.

 

With almost everybody who has ever purchased silver being up on silver in terms of dollars, it is possible we could see silver prices take a breather in the short-term. NIA is hoping for a short-term pullback, but with so many investors waiting to buy on dips, there is a chance that a large short-term pullback will never occur. NIA is very pleased that for the first time in many years, silver prices appear to be trading based on free market forces and not the manipulation of JP Morgan.

Federal Reserve

The following is a very good read as to what has been going on at the Federal Reserve.
http://ampedstatus.com/the-wall-street-pentagon-papers-biggest-scam-in-world-history-exposed-are-the-federal-reserves-crimes-too-big-to-comprehend

Wikileaks Data Scam

Wikileaks Reveals Even China Says Not To Believe Its Economic Data

Economic Data

WikiLeaks

The following is another person's viewpoint on the recent WikiLeak happening. This is taken from Larry Levin.

Wikileaks

In a recent post I mentioned the now viral speech that Nigel Farage gave to the Eurocrats in Brussels. “But look at your response to them (Ireland): what they are being told as their government is collapsing is that it would be inappropriate for them to have a general election. In fact commissioner Rehn here said they (Ireland) had to agree to a budget first before they are allowed to have a general election. Just who the hell do you think you people are? You are very, very dangerous people indeed: your obsession with creating this European state means that you are happy to destroy democracy, you appear to be happy with millions and millions of people to be unemployed and to be poor.”   Although Mr. Farage wasn’t speaking to a cabal of banksters, he could have been.  Instead, he was speaking to the muscle of the banksters: politicians that allow them to do whatever they choose.  Moreover, when he said “dangerous;” I wonder if any of you thought in the very literal term of the word?   For Mr. Julian Assange, owner of Wikileaks, life has gotten very serious…but not until he said his website would release information on a mega-BANK in the USA! There was no problem with multiple war leaks over Afghanistan. There was no problem with multiple war leaks over Iraq. There was no problem with Israel/flotilla leaks & video. However, as soon as a bank may be exposed – all hell breaks loose! Within 2-days.. Interpol issues a global manhunt for founder Assange. Professor Tom Flanagan, a senior advisor and strategist to the Canadian Prime Minister Stephen Harper, called for the assassination of Wikileaks founder Assange - a fatwa if you like. http://www.youtube.com/watch?v=bqtIafdoH_g&feature=player_embedded Senator Lieberman trashes freedom of speech – gets website shut down. The timing of when Wikileaks said it would announce a “data dump” of a mega-bank in the US (believed to be BAC) and the sudden escalation of angst and anger – including murder - on the part of those who protect the banksters simply can NOT be ignored and it is simply sickening. These banksters apparently CAN get away with murder; it’s no longer a simple statement.  “You are dangerous people, indeed!” I think a few more appropriate nuggets from Nigel Farage are in order… "This whole project, this whole dream, this whole modern Marxism, has been imposed upon the people of Europe (and creeping into the USA), without their view being sought, and in the case of France and the Netherlands, when they did give their opinion, they simply ignored them and continued." …"Complete madness has overcome the European Union (and US bankers): on the broader point there are those here who do see the European project a staging post to one world government." My thoughts for summing up this disgraceful turn of events couldn’t have been done better, so I bring you Mish’s last word… Fools like Lieberman think we can stop leaks by legislation. We can't. We can only stop leaks by fostering an attitude from the top that will prosecute fraud and corruption instead of looking for scapegoats, and instead of pursuing policeman policies that "the end justifies the means" President Obama is a blatant liar. He promised to release details of US torture of prisoners. He failed to do so. I praise WikiLeaks or anyone else who is willing to disclose the hypocrisy of this president and this administration. I am not a Republican. I am an independent. I praise WikiLeaks or anyone else who is willing to disclose the hypocrisy of Republicans as well. I fear for our country and the path it is taking. We need to elect someone willing to stand up TO the banks, stand up TO our bloated military, stand up TO public unions, and stand FOR less government spending, stand FOR prosecuting fraud wherever it takes, stand FOR smaller government. President Obama is not that person, nor was President Bush. We need a Ron Paul, or someone like him, willing to do what is needed before we destroy ourselves. Trade well and follow the trend, not the so-called “experts.” Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

EU at Weekly Control MM

EU is at the weekly MM that hasn't been filled. Levels shown in pic.

EU Weekly Target

EU weekly target to look for within current trend.

EU hits 100 DMM

EU hits daily 100% MM projected from the current day's high. This is also confluence with the 61.8 daily fib pivot projected from the open. Larger targets are also shown at the 100 fib pivot. Eu has now hit the weekly 50% and daily 100% MMs. The current day has also fallen within the weekly 38.2 MM projected from today's high. Very high probability that EU has extended to its maximum for todays range.

EU hits 50% WMM

EU hits the weekly 50% MM

EU Setup Short

Zone for trend continuation.

EU hits Monthly Control 61.8 MM

EU today extended its bearish run to hit the Monthly Control 61.8% measured move for Nov.