Observation

I believe that most asset markets topped last week in anticipation of the end of QE2 in June. I could see rounded tops or similar patterns in the various markets that I follow. The banking cartel is now going to give the politicians a preview of how things will look without quantitative easing in order to build the political consensus for QE3.

The slant on this sell off seems to stem from the growing concern that the Fed stops buying bonds after QE2,.. A lot has been made of Pimco's sale of all it's bond holdings,.. It seems the city is beginning to finally grasp what a difficulty the US government is going to have raising capital without the direct support of Ben's printing press,.. And then the fear of what rising rates will do to the equity and commodity markets,.. So what do the the lemmings go and do?.

They rush straight into treasury bonds?..

You just can't make this up!..

I can't wait to read the headlines tomorrow,.. 'The fear of rising rates, pushes down rates'!?!..

Did he just scream FIRE!....?

http://www.bloomberg.com/news/2011-03-09/gross-drops-government-debt-from-pimco-s-flagship-fund-zero-hedge-reports.html

To all; the link above is a story of how Bill Gross of PIMCO has cut it's entire holding of U.S. Treasury debt to ZERO. Mr. Gross makes the argument that the Treasury yield curve is overvalued by 150 basis points which is a step in the right direction and certainly will prod some investors to withdraw funds which is a good thing. His premises that the government is understating inflation by stripping out food and energy, future massive Treasury borrowing needs just to keep the doors open and of course the fact that the Fed (through Quantitative Easing) is now the biggest buyer of Treasuries are all correct but he just can't get himself to commit suicide. Can you imagine the "accidental" car crash, airplane falling from the sky or the the suicidal gunshot to the back of the head were he to really tell the truth? ie.... the U.S. Treasury and thus the entire system from A to Z is a bankrupt walking corpse that makes Madoff, John Law and even Mr. Ponzi himself look like upstanding fiscally responsible individuals!

In reality I know he knows this to be fact, I am also sure that he has been purchasing Gold and Silver related assets personally for several years. Maybe it took him until 2008 or when QE was first officially announced in 2009 to start but he knows it now for sure! Of course he can't say this because he doesn't want his car to crash but I believe he would like to. The bottom line is that Bill Gross just stood up in the theatre and screamed FIRE! at the top of his lungs which IS very dangerous because of who he is. He manages more money than any other single money manager in the world, Bloomberg, CNBC and the rest drool and fawn to have him on as a guest and what do they do now? Does Bill Gross get pooh poohed or "blackballed" like the many other "conspiracy theorist tin foil hat nuts" that spoke the truth before him? Yes, I can hear CNBC already (I am still in Brazil with no CNBC, only Bloomberg) "Bill Gross sold his Treasury securities because he thinks rates are too low given the bright prospects for continued strong and sustained recovery and growth in the U.S. He will be a buyer if and when rates move up a point and a half". (I am half expecting a call for employment from the White House, CNBC, Bloomberg or whoever for my "spin" prowess but won't hold my breath!).

All joking aside, the statements from Bill Gross is no joke at all. He very well may go down in history as the one who started a global stampede out of U.S. Treasuries. This all could have happened so much sooner if Warren (I sold my Silver too soon) Buffet had stuck to his guns and not given his metal back when threatened with General Re suits back in 1998 but that is just 12 years water over the dam. Investors are a funny (and scary) lot, they can remain calm and tranquil for a long time even when faced with undeniable facts but once they start moving they MOVE, and all at once I might add! Which brings me back to Mr. Gross screaming FIRE! Maybe he is the catalyst and maybe he is not but only a fool would gamble that the "crowd" doesn't move in the face of undeniable facts AND someone of his stature speaking of them VERY publicly!

I have written many times and linked many pieces (articles) to support my views that the end game (Treasury and systemic bankruptcy) was arriving. How much more proof does the herd need? Between The Fed becoming THE biggest buyer of debt from THE biggest borrower in the world and then THE biggest money manger screaming FIRE! louder than any little boy in the street pointing at the naked King ever could, what more could the herd need? It can't and certainly will not be a failed auction (which I did believe a year or two ago) because The Fed will simply not allow it. Will it be because of just one man? Maybe the herd will move "when the herd moves" as in picketing and rioting begin? Which IS already beginning to happen in the U.S. Maybe a Constitutional crisis as in our President is not a U.S. citizen or some other "unimportant detail". Who knows and who cares? Just knowing that it is coming is enough as long as you do and have already done to the best of your ability what you need to, to protect yourselves and families! Regards, Bill H. P.S. while writing this in the early morning access hours I am watching the Dollar move up while Gold and Silver get smacked (can't get Treasury yields for some reason). In the past, were some obvious and fundamental truth be laid bare as Bill Gross has started to do, the metals would be strafed by a barrage of paper contracts just like this morning. It will be interesting to see whether or not Blythe Masters brigade can keep it up all day or even into tomorrow, just know that "paper bullets" can only kill if you have margin and allow yourself to be killed! The messenger has been "shot" many times before and has risen to over$1,400, an infinite amount of "paper bullets" guarantees an infinite Dollar price for Gold! Understand this and you understand it all!



options OI

Dear Bill,
someone requested the options OI update in Midas, so there you go :

For Silver May in the last 10 trading days, the CALL open interest dropped by 5.7% and the PUT OI was increased by 22%! :
http://mamrdi.ideapc.sk/bb.php?metal=SILVER&contract=MAY11&type=history&
ma
xh=10&onlybig=3&submit=Show

The Cartel's wanna-be strike price lies at 27.5 where only 21% of contracts are ITM, at the current levels, more probably is a destination of 32-34 where about 30% are ITM:
http://mamrdi.ideapc.sk/bb.php?metal=SILVER&contract=MAY11
&type=normal&maxh=10&onlybig=3&submit=Show

In April Gold, the Cartel's destination lies at 1400, which is very a
possible outcome and there are 17% ITM:
http://mamrdi.ideapc.sk/bb.php?metal=GOLD&contract=APR11&type=normal&maxh=10&
onlybig=3&submit=Show

In the last 10 days, there was a 5% CALL increase and 11% PUT increase, so the difference is not as big as in Silver.A big position in CALLS lies at 1500 (13000+contracts) and at 1250 in PUTS where is the OI 23400 contracts.