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PRIVATE PENSION FUNDS
A jet assist will be given to the Black Hole swirl when the USGovt makes its next horrendous decision on treatment of private pension funds. The mass of 401k, IRA, and Keough funds enjoys a tax deduction benefit on much of the incoming investments from the payroll side. That might soon end with a forced directive by the USGovt in all its limitless short-sightedness, if not stupidity, surely desperation. They must find buyers of USTBonds, just like Japan twenty years ago. Japan forced all public pension funds, postal also, into Japanese Govt Bonds, even though they earned squat for interest. The same will happen in the United States. The discussion has been tossed around for months, a very tempting concept indeed. Imagine the $16 trillion in US retirement funds being redirected in part into USTBonds. Just attacking the personal 401k, IRA, and Keough funds would bring a cool $2 trillion at least, maybe more. They would declare the tax benefit as lost on new income entering the private pension funds, unless they purchased USTBonds. A more extreme decision would be to force old money in the funds to exit their stock investments and enter USTBond investments instead. Even if only on the margin of new entering funds, the effect would be huge. A backfire on the stock market would occur, to be sure. If the extreme option were declared law, then the stock market effect could be another 10% sudden decline or worse. My point is that forced personal pension funds into USTreasury Bonds would add considerable new force to the Black Hole that sucks capital from the system, and pushes it into the natural toilet.

CAPITAL DESTRUCTION FROM 0%
For some reason, after considerable observations, the Jackass has been unable to find more than one or two other analysts that pay any attention whatsoever to the very important effect of 0% official rate. The Capital Destruction effect is profound and damaging. Few if any economists or financial analysts seem to comprehend that a sustained 0% rate kills capital. The dynamic is simple, mentioned every third or fourth public article by the stubborn Jackass. As 0% prevails for the return on money, the investment community pursues alternatives to the empty USTBond savings window. The investors seek out investment alternatives like commodities, while others rely upon the commodity sector as a hedge against inflation. Whichever the point of view, the result is that commodity prices rise and the cost structure rises. The brunt is felt in higher industrial feeder system costs, and higher household costs like with food and utilities. The profit margins shrink for businesses, and for the diverse business segments. The final product price cannot keep pace with a rising pattern, not with the intense competition in China, as well as Japan and the entire Pacific Rim. Product prices cannot rise to maintain a constant profit margin. So capital dies in a vicious cycle as the USEconomy weakens further with each passing month.

As the profit margins are reduced, entire businesses along with certain business segments shut down. They take their equipment off line. They retire their capital. In some cases after a period of time, they liquidate their equipment in order to raise needed cash. The result overall is a destruction of capital, a retirement of capital, a shrinking of the economic capital base. This is the biggest blind spot in the collection of American, British, and Western European economists. They believe the ZIRP is a stimulus. It is a stimulus only to speculation, which has turned on its masters to destroy their ill-fated elaborate but flimsy structures. ZIRP has systematically been destroying working capital. The standing permanently declared 0% monetary policy assures an endless recession, and no recovery ever. Worse, the free cost of money distorts all financial markets, all asset pricing, everything. It is an epitaph on monetary rule.

The ZIRP will continue forever, or until the USGovt debt default, or until the systemic failure signaled by the JPMorgan major losses. The two major reasons why no Exit Strategy is available to the USFed and USDept Treasury are that 1) USGovt borrowing costs would rise to uncontrollable levels, adding to already unmanageable deficit levels, and 2) the Interest Rate Swap control apparatus would implode, leading to $100 trillion in losses or more. So the Zero Interest Rate Policy will go on forever, until the USTBond Tower of Babel falls, or until the entire financial structure based on the fiat USDollar collapses. Arguments to the contrary are both baseless and have been proved wrong by events of the last four years. No recovery, no remedy, no liquidation, endless war, deficits to the sky. Systemic failure awaits.

GOLD RISE DURING SYSTEMIC BREAKDOWN
The official ZIRP is the calling card of the Gold Bull Market. What commodities are for investments and hedges in the tangible arenas, Gold & Silver are to the financial arena. As long as the Zero Percent Interest Policy is in force, the Gold Bull Market will persist and thrive. The ZIRP assures that the inflation adjusted real interest rate, like with the 10-year bond or 30-year bond, will remain negative. Take the 2.5% yield or 1.5% yield, subtract the actual price inflation of 7% to 9% in order to arrive at a negative 6% interest return in real terms. The negative real rate has persisted for over ten years, and assures an ongoing Gold Bull Market. It requires repeating. The official ZIRP is the calling card of the Gold Bull Market.

The battles on the ground are more full of intrigue. One should never lose sight of the sinister motive to disrupt nations, to enable overthrow of tyrant leaders, with the side benefit to capture their gold as booty. The raid in Libya of 144 tons, the raid in Greece of 112 tons, cannot be dismissed as asterisks when they might have been the primary objective. The Arab Spring saw other gold released from vaulted bases, like in Tunisia, a story long forgotten. The capture of gold bullion in movement from political instability occurs on the periphery of the black hole. Almost no central bank gold remains from any major country, as almost none is left in any central bank vault. The Bank of England attracted attention several months ago by sending into circulation very old gold bars, easily identified by markings. Switzerland has a different problem, caught in their own web of deceit and fraud. They have been ransacking private Allocated accounts for years. Von Greyerz has pointed out how investors wishing to transfer their gold bars find themselves wrestling with bullion bankers who do not any longer have the bars in possession. Proof is the new serial number stamps on bars, whose dates make liars out of the bullion bankers, since those dates are newer than the accounts. The bars held are a few years younger than the initial investment time frames. Only the smaller countries seem to have gold, along with Russia and China and India. These small countries are vulnerable, subject to raids.

The SPDR Gold Trust will be the final gold victim of the black hole forces. It has been dubbed the central bank of gold bullion bankers. It recently saw a reduction in bar volume equal to the amount that was just increased in the Sprott Gold Fund (symbol PHYS). The Sprott Funds are loaded with integrity, as honest as the GLD fund is dishonest and corrupted. As the flight to true safety increases, money (in form of gold bars) will fly out of the GLD corrupt corner caves. The hapless clueless dumbfounded GLD investors will be holding paper certificates in their empty hands. They will pursue legal avenues, replete with lawsuits, seeking clawbacks from emptied vaults. In time, the GLD share price will be 20% to 30% below the gold spot price. The proof lies in its price discount relative to spot. Take the GLD quoted price today at 158.9 per share and compare to the gold spot price of 1637 per ounce. Factor in the 10:1 ratio, and arrive at a hefty 3.0% discount of GLD to spot gold price. The Sprott Funds typically have a notable premium in price since they actually purchase the gold bars. The SPDR Gold Trust relies heavily upon paper certificates, and permits routine and frequent short raids out its back door that drag down the share price.

My position has been laid out clearly in recent weeks. The biggest factor behind the gold price (with corrupted paper futures discovery aspect) is the Eastern Coalition. Their grand raids have resulted in 5000 metric tons pulled out of New York, London, and Swiss banks, and sent East, principally China, but not exclusively China. Their motivated raids are intended to weaken the Anglo bankers to the point that they are rendered toothless to defend their massive naked short positions. My excellent reliable gold trader source has pounded the table for over a year, that the gold cartel is net short over 20 thousand tons from improper illicit illegal usage of Allocated accounts. Their nightmare is only beginning.

The gold price can be viewed apart from the background wartime battles, which have left plenty of blood on the fields, offices, and delivery ramps alike. The JPMorgan troubles have underscored the vulnerability of the USTBond complex, and exposed the Interest Rate Swap as a reinforcement device. The truth is slowly emerging. The declared JPMorgan losses are soon to exceed $20 billion. CEO Dimon has admitted the Delta Hedge strategy that manages the Interest Rate Swaps has gone somewhat out of control. His tormented elite financial engineer staff cannot even estimate the losses. During the lifting of the curtain to show the world the vast machinery at work creating a facade of safety and security in the USTreasury Bonds themselves, money moves into Gold. During the last few weeks, anyone with an IQ greater than the Bush family can notice the USEconomy is hurtling into a recession. All indicators scream recession. With strained facial expressions and almost apologetic tone for reporting a more truthful picture, the financial news networks cannot avoid the reality of a recession. They report the dire stream of economic news with sheepish regret.

The USTBonds will benefit from the recession outlook, but talk has already begun in two important messages. First, that the strong performance of the USTBonds signals a recession and widespread damage to the USEconomy, along with even greater USGovt deficits. Second, that the USTBonds might be the only successful investment in town. The latter speaks directly to my point of the USTreasury Bond sucking all capital, inducing sales of all asset classes, and purchasing the US sovereign bond since it is the supposed safe haven, the only asset that is not losing value. The USTBonds will fail from their own success, as instability enters the base while the Tower of Babel goes higher. Again, the biggest question in my mind is whether the 10-year USTBond yield (the TNX) will reach the next important target of 1.0% before the systemic breakdown. My intermediate target of 1.25% will be achieved, but only after the USEconomy is recognized by the dumbest people in the room, the USGovt stat rats. As the USTBonds continue to rally, the Gold price will rally alongside it. Eventually, the USTBonds will be regarded as toxic paper, the cause of a Black Hole, subject to severe default writedowns in a debt restructure. Then Gold will rise without competition, unimpeded by a phony USTreasury safe haven.
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