Gold Price Breakout: Three Major Factors / Commodities / Gold & Silver 2019

The Gold suppression game appears finally tobe coming to an end. A Perfect Storm ishitting the Gold market, with an internal factor (QE), an external factor (SGE),and a systemic factor (Basel). These factors can be identified, each verypowerful, each with a very new recent twist to alter the landscape. Allthree forces are positive in releasing Gold from the corrupt clutches of theAnglo-American banker organization. They have been willing to destroy theglobal financial structure and many national economies, in order not just to maintainthe political power, but also to continue the privilege of granting themselves$trillion free loans. The owners of the US Federal Reserve, Euro Central Bank,and Bank of England have granted themselves free money in gifted pilferage for afull century. As the saying goes, a nation needs a central bank like an oysterneeds a piano. In the last ten years since the Lehman Brothers failure, allsystems have undergone the same reckless treatment that the mortgage bondsendured. They saw corrupted underwriting, corrupted title database, andcorrupted demand functions.

THE US-UK BANKSTERSHAVE FINALLY CREATED THE USTREASURY BOND AS THE GLOBAL SUBPRIME BOND. THIS ISTHE RESULT OF Q.E. ABUSE.

The perfect storm in the Boston areainvolves three storm masses hitting the New England coast at the same time fromdifferent angles. One of the most beautiful sights in my 20 years in Boston wasseeing a Nor’Easter slamming the coast with white snow laced with blue algae,visible in the sunlight angles. The perfectfinancial storm will be at least three times worse than the 2008 financialcrisis that engulfed the subprime bond market. This time, the entire globalbond market has been wrecked. The USTreasury Bond market has almost no legitimatebuyers, has suffered massive dumpings in abandonment, and depends upon bankerderivatives to fabricate phony demand. The corporate bond market is turninggradually into a BBB junk bond yard, after years of abused bond issuancedevoted to share buybacks and executive options. The malinvestment has beenastonishing and universal. The Emerging Market bonds have been kept afloat byWestern banks, as they lent money to service the badly impaired debt. It canactually be stated with accuracy that the entire global bond market is subprime,led by the USTBonds.

Harken back to2012, when the Swiss decided to install the 120 Euro-Swiss Franc peg. Thepublicly stated monetary policy was cover for a grand Gold price scheme whichinvolved the USDollar, the Euro, and the Swiss Franc currency. It was verysuccessful in bringing down the Gold price from its $1900 high, with full EuroCentral Bank collusion, joined by massive USDollar Swaps. Together with the QuantitativeEasing (QE) monetary policy from the US Federal Reserve, the Gold price hasbeen stuck in a rangebound interval. However, an impasse has been reached, andthe roadblock is being cleared.

In the last ten years, absolutely nothing has beenfixed, no remedy even attempted, while all the errors, crimes, and recklessmonetary policy that created the Lehman fiasco with the Global Financial Crisis,have been repeated on a global scale.

The EmergingMarket debt is ready to explode. The Petro-Dollar has been largely dismantled,no evidence better than the crude oil price which cannot find its way above the$60 to $65 mark. Therefore, Wall Street energy portfolios, stuck with shalesector debt, are also set to explode. The corporate bond market is set to turninto junk, with GE, General Motors, and Deutsche Bank leading the parade of perhaps$1 trillion in corp debt into junk territory in the next year. But the grandestof the big stories is that the USTreasury Bond has become the global subprimebond.

Three factors willwork to force the Gold price much higher, as a new chapter is unfolding. Thefactors are internal with QE, external with the SGE in Shanghai, and systemicwith the BIS in Basel. One must always recall that the Gold price for almost acentury had followed the money supply in a tight correlation. For the last tenyears, the USD-based money supply has almost tripled. The process created acoiled spring. The Gold price is due to triple, making up for lost time. It justneeds some internal, external, and systemic pushes.

INTERNAL – QE
The stage is set for anotherheavy big important Quantitative Easing (QE) initiative. The official monetarytightening has been a disaster. Next comes a reversal of policy, and resumptionof extreme easing with heavy volume bond purchases. Maybe this time, it willinclude all types of bonds, from sovereign to bank bonds to general corporatesto mortgages, even to energy sector bonds. A new wave of securitized bondscould occur, to facilitate monetization of debt, enabling the central banks topurchase them efficiently. Witness the dawn of the everything bond bubbleyielding to the everything bond QE purchase program to save the Westernfinancial system. It has been called the QE FOREVER bond initiative, whichmight be called upon to monetize the entire Western banking system. To be sure,the Gold price will respond with upward jettison to the conclusion of the fullruination of money. They masters must prevent a full banking system collapse.

The world’s financial systemhas become dependent on huge central bank balance sheets. Yet the assets ofcentral banks around the world have begun to contract notably, relative to GrossDomestic Product, for the first time since the 2008 crash. This is important tounderstand and a dangerous risk for both financial markets and real economiesbecause of the key role played by central banks in the funding system. The USFedexpanded its balance sheet in a tremendous burst over the last ten years. Itgrew from $900 billion in 2008 to $4.3 trillion in 2018. They built a dangerouscredit dependence as they staved off collapse. The USTBond lost the majority ofits investors. The official tightening in the last year has causedfinancial market convulsions. A change in the Fed Open Market Committee windshas been duly noted in recent several weeks. They will not only be flexible,but they anticipate QE to become a permanent policy. The United States is freedto embark on a new course, and to avoid further damage from the tightening andlost trade. China did not succumb to the tightening. Next comes the inevitableloosening of monetary policy by the USFed. Welcome QE FOREVER.

Expect to see another roundof central bank asset purchases, which many call QE4, far sooner than manyexpect. The Jackass calls it QE to Infinity again or perhaps QE186 in jest. Otherscall it QE FOREVER, which might be the best name of all. Next comes the inevitableloosening of monetary policy by the USFed. They must avoid an economicdownward spiral. They must avoid a financial system breakdown. The consequenceswill be severe. The policymakers will permit more inflation, both in monetary flowsand in price structures. They must monetize the uncontrolled debt and perhapseven the banking system. The result will be a powerful upward move in the Goldprice. They will make the painful decision sooner or later, since globalcollapse is the alternative. THE KEY POINT IS THAT THE US FEDERAL RESERVE HASNO CREDIBILITY ON THE GLOBAL STAGE. THEY ARE ON THE VERGE OF ANNOUNCING A FULLBLOWN Q.E. TO INFINITY. THEY MUST RESCUE EVERYTHING WITH Q.E. FOREVER. The USTreasuryBond will be widely recognized as the global subprime bond. It will rally from orchestratedpursuit of safe haven, but later break down in a grand default. The default typewill be a restructured debt. The Gold Price will enjoy an enormous lift,with the Silver price rising in lockstep. In this next episode, the safe havenwill be globally recognized as Gold, since the USTBond is subprime,supported by fraudulent derivatives, and dumped the world over.

EXTERNAL – SGE
The China Gold window hasset a trap for the USDollar. A stronger dollar means the Chinese acceleratetheir conversion of USDollars to Gold, even as their trade surplus grows. Aweaker dollar means the entire globe abandons USD-based assets. Amidst thepanic, the Gold safe haven is discovered and embraced. By opening the Gold-RMBwindow, China has assured the death of the toxic USDollar and the death of thecorrupt LBMA Gold market. The sunset of the entire Petro-Dollar defactostandard has arrived in full force. The cooperation, collusion, and supportfrom Saudi Arabia is fast vanishing. The entire OPEC oil cartel is moving underthe Russian Rosneft umbrella, outside the USD control. The East is shiftingquickly away from the USD sphere, and toward the RBM arena, which should act asa caretaker toward passage into the full implementation of the Gold Standard.

Since March 2018, in a hidden manner, the USDollar hasbecome captive to the Shanghai futures contracts that control the Gold-Oil-Yuan.The result is a slow death for either the USDollar or the Gold Market as weknow it, namely the LBMA in collusion with the COMEX. During thesefour decades or more, the USDollar has reigned supreme as the global reserveasset. In recent years, the USD has faced direct challenges with an enormousvolume of USTreasury Bonds having been discharged by the entire set of centralbanks. China strives to achieve more independence from the USD, no longerwilling to operate in the King Dollar shadow. Rather than displace the USD and winequal global reserve status for the Chinese Yuan (CNY) currency, they have employeda different strategy, and it will be successful. China had to open the CNY-Goldwindow to internationalize the CNY, which will drain the USDollar power.

The Chinese Yuan is not backedby Gold, a common error that most analysts and investors make. It means thatnations with credits from the Chinese are given a choice. They can hold the CNYas currency or convert it to Gold, but only at the Shanghai Gold Exchange. Thiswas the first step that China had to take to convince the energy (oil &natgas) exporters to accept CNY and thus to initiate the Petro/NG-Yuan trade.Call it the Petro-RMB trade. It is expanding very quickly in volume, to overtakethe Brent crude oil trade. Nations will accumulate RMB in the energy trade, fromgigantic Chinese oil & gas purchases. They will be led to convert to Gold,and to refuse holding USTBonds. China will only sell Gold in their domesticcurrency (Chinese Yuan) at the SGE. They will not sell Gold in any othercurrency. This opening of the SGE CNY-Gold window has essentially trapped theUS, USD and LBMA. Various alternative paths are presented.

If the USD strengthens versus the CNY, then the Chineseand other nations rush to the LBMA in London to purchase Gold in USD terms. Theybankrupt the LBMA and wreck the Gold Market, which is corrupted byWestern paper contracts. The other nations would suffer economic turmoil fromthe continually rising USD, and then turn to Gold as refuge. Worse, the cheaperChinese CNY currency leads to continued outsized US trade deficit with respectto China. In turn, China will convert its growing USTreasurys stash won in tradeto Gold holdings even faster.

If the USD weakens versus the CNY, then the entire setsof foreign holders of USD assets (stocks, bonds, property) move to exit theseUSD assets. Gold moves in the opposite direction. The weaker USDollar alsowould indicate price inflation as a standard signal, leading to more Gold demandas hedge. Amidst USD price declines in a broadbased manner, the USD-basedfinancial markets begin to experience a collapse, while panic rises. In turn, themasses are encouraged and directed into the safe haven of Gold. The run onbullion bankrupts the LBMA.

The introduction of the SGECNY-Gold window in Shanghai has guaranteed the bankruptcy of the LBMA. The ruinand bust of the US-UK Gold market, steeped in corruption, is assured. There is notenough gold at current price to satisfy demand. In fact, the demand can only bemet with a higher Gold price which destroys the USDollar as a Global ReserveAsset. The ongoing operation of the SGE CNY-Gold window, compounded by its risingvolume, has signaled the end of the USD as a global currency reserve and the deathof the LBMA. It also means China can buy all commodities in CNY terms andcan run a monetary policy independent of the USFed. China no longer needs toacquire more USTreasurys, or to hold them in reserves. They are spending theirUSTBonds in great volume in the funding of third party projects, calledIndirect Exchange. It has been a major dumping exercise for the last four orfive years. After accounting for USTBond swaps, the Chinese rank behind the Japanesein USTreasury holdings.

The Chinese will observe theUS-UK bankster tagteam struggle sweat and squirm. As the USFed, with approval bythe London banker set, embark upon the QE FOREVER policy, the Chinese willdictate the terms of the Gold market. It is simply a case of when not if theUSD and LBMA die a slow death. China can go about its business while observingthe process, since it has made all the requisite steps in Shanghai. The Gold Pricewill enjoy an enormous lift, with the full adoption of trade payment systemsled by China, to be executed in Gold terms. The entire Eurasian Trade Zone, integratingthe entire Belt & Road Initiative with its $4 to $6 trillion in projects,has no more linkage to the USDollar orbit. In this next episode, the Gold TradeNote will become a standard.It will be first seen in the energy tradepayments, then in commodities generally, and finally in consulting servicework.

SYSTEMIC – BIS (Basel Rules)
The new Basel rules make physical Gold a Tier-1,riskless asset starting the end of March. The impact will be realized on big bankbalance sheets. For years, a ban hasbeen in place on Gold as a reserve asset. No more!! Combined with the substantialaccumulation by central banks in gold reserves over the last 12-18 months, thesignal is clear. The insolvent central banks have a plan. It is not a newplan, but rather one promoted by Zijlstra and White, two heavyweights at the Bankfor International Settlements (BIS) in Basel Switzerland. The Dutch-born Jelle Zijlstraserved as the chairman from 1967 to December 1981. William White was the BISChief Economist in the last decade. The elite and highly respected chairman wrotebooks on monetary policy. In Zijlstra’s second book, “Per Slot Van Rekening,” onesees a very candid man, even a contrarian who would win favor from Von Mises atthe Austrian School of Economics. Zijlstra gives a very precise description ofhow central bankers conduct their business and maintain their independence fromgovernment interference. Whereas conventional monetary debasement is described inpolite terms, Zijlstra explains what central bankers actually do in policy actions. Zijlstra acknowledges that the Gold priceis kept far too low. Consider his pronouncements as blasphemy from Basel, inopposition to the US-UK bankster crowd. The Jackass believes Basel will notpermit its own failure, in order to follow the Anglo-Americans down the path toruin. Over a year ago, Basel began to refuse to supply London its endless demandsfor gold bullion. Instead, the Vatican has satisfied the large demand whichkeeps the ruinous game going.

In going much further, Zijlstra explains hisperceived role of Gold in what he eloquently calls the international Monetary Cosmos.He stated that “Gold functions like the sun, with all currencies as planetsorbiting around it, with only the sun in fixed position. It is perhaps nice toget into the role of Gold and its meaning in the time before the monetarycosmos collapsed into more chaotic conditions. Throughout centuries Gold was aprotection against [natural] disasters, arbitrariness, and persecution. Becausenatural production levels hardly allow overproduction with substantialdepreciating values as result. Because it does not rust and, once produced,never perishes, excessive scarcity can never occur. That is why Gold developedits image of solidity, stability, and reliability. [In reference to monetary policyduring past crises…] A good solution would have been to drastically raise theprice of Gold, since it was extraordinarily peculiar that in the post-World WarII world, in which everything became more than three to four times moreexpensive than in the 1930s, the price of Gold remained the same. Actually, twothings had to be done. The official Goldprice in all currencies had to be raised and, besides this, the official dollarprice of Gold had to be raised extra, to allow the dollar to devalue againstall other currencies.” The Americans rejected his proposals, finding his ideaslike high pitched swearing in a cathedral church. They refused to permit the USDollarto become of second rank to Gold.

Zijlstra and White havewritten about the Basel Plan for restoring the financial health of the majorcentral banks. They are now hopelessly insolvent, having served as buyers of lastresort for sovereign bonds which the market rejected. No buyers were found. As chronicblind bond buyers of junk, the central banks built gigantic toxic paper wastecenters. Due to their unending bond purchases, they have accomplished twothings. They have rendered their institutions insolvent. They have forced thesituation where Gold must bail them out. Themajor central banks, according to the Basel BIS Plan, must accumulate large volumesof Gold bullion, count it as reserves, build the solid foundation, then permit(push) the Gold price to rise 3-fold, then 5-fold, then 10-fold. Indoing so, the Gold price will compensate finally for the fast rise in the USDmoney supply from the last decade. The result will be the revitalization of thecentral bank balance sheets, the exit from insolvency, and the restoration of theirfinancial health. In short, if the central banks do not endorse Gold and leadthe path to a $5000 Gold price, then later a $10,000 Gold price, then these samecentral banks will be destroyed and with it the banker cabal power. THE MOVE TOMAKE GOLD A TIER-1 ASSET IS THE FIRST STEP TO EXECUTE THE END GAME PLAN. Thencomes large volume accumulation by the entire central bank franchise system.They will sell USTreasury Bonds and buy Gold bullion, but quietly with nofanfare or publicity. Then they will assist in the significant rise in the Goldprice. It is written in the Basel BIS manual. It will be done.

BULLISH GOLD CHARTS
The Gold price is showing a strong bullishpattern in the short term, the intermediate term, and the long term. All chartsare bullish. Except for certain rigged USTreasurys, the asset Gold was the bestperforming of all global assets in full year 2018, gaining good attention. Thecurrent Gold charts are showing strength in USD terms, but also in EUR terms, inBritish Pound terms, in Swiss Franc terms, in Japanese Yen terms, and inCanadian Dollar terms. The perfect storm is aligning to produce a wonderfulyear for Gold, with global recognition that it is the center of the solutionfor the blossoming global financial crisis. The USTreasury Bond will lose itssafe haven status, and Gold will capture it. The Chinese must take the leadingrole in pushing up the Gold price. The trade war and growing Eastern consensuswill enable China to take this role with enthusiasm, gusto, and vigor.

The intermediate Gold chart shows a clearCup & Handle reversal bullish pattern. It is a highly reliable pattern. Thetarget is $1520, bolstered by the bullish crossover of the Moving Averages. Expecta battle for consolidating gains at this right side of the handle, which couldlast another month. Refer to the $1320 to $1350 interval. Then comes thebreakout to jump past $1400 and sure to attract global attention. Theintermediate term is the dominant perspective at this time.

The very short-term Gold chart is a stair-steprise. It is justified by the bullish Moving Average crossover seen in earlyJanuary. Technical traders lock on such signals, with confirmation of daily MAseen in the weekly MA also. The pennant pause pattern in January resulted in afall but quickly a powerful rise, as fundamentals coincided with the technicalpattern. The bull flag pattern in February resolved easily in the upward direction.It is not clear what comes next. Therefore expect some consolidation, beforefurther upward movement.

The long-term weekly Gold chart offers somevery good clarity. The Cup & Handle reversal will provide the lift forovercoming the $1365 resistance, which has several touch points. When it isovercome, the lift will thus be powerful. The longer-term look is dominated bythe bullish triangle formed in the last three years. It has a sizeable 250-pointpotential, which indicates a target of $1600. It is a reliable pattern also.Watch the fundamentals accelerate in the confirmation process, as the KingDollar loses its luster, as its integrity is undermined by unbridled debt, as warwith sanctions are the primary defense mechanisms. The USDollar is no longerdefended by economic strength, or banking integrity, or industrial vitality, oreven political leadership. In fact, no nations pay much attention to what theUS Government says anymore, their policies largely ignored. Gold will takecenter stage in 2019 and 2020.

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Jim Willie CBis a statistical analyst in marketing research and retail forecasting. He holdsa PhD in Statistics. His career has stretched over 25 years. He aspires tothrive in the financial editor world, unencumbered by the limitations ofeconomic credentials. Visit his free website to find articles from topflightauthors at  www.GoldenJackass.com.For personal questions about subscriptions, contact him at  JimWillieCB@aol.com

Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

Jim Willie CBis a statistical analyst in marketing research and retail forecasting. He holdsa PhD in Statistics. His career has stretched over 25 years. He aspires tothrive in the financial editor world, unencumbered by the limitations ofeconomic credentials. Visit his free website to find articles from topflightauthors at  www.GoldenJackass.com,which includes a Squirrel Mail public email facility.

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