Just sat down to try to assess a smattering of the comments of yesterday. (Expecting a market rally next week see below)

Whew! So, what was the reason the PMs got hammered Friday? In gleaning through MIDAS I see that funds like Pimco and many hedge funds are on the tab for about $360 billion CDS insurance for Lehman defaults. Apparently, this has resulted in forced selling of mining stocks from the likes of Citadel to raise cash. I can’t imagine who is doing the buying here, but they sure will be the big winners of the year in my HO. Bill Murphy thinks many hedge funds will be bust because of this today. Of course, the Cartel was also doing its thing as we saw gold lose over $100 from its overnight high, silver 25%. The possibility for a Comex gold default for October exists…almost certainly for December. Settlements will be in cash....as we all know there is no physical for Comex delivery…just BS bullion (BSB). Big banks made margin calls on broker dealers and hedge funds that caused even more selling in a run on the market. Rumors are that the most massive of the calls are due on Monday, the 13th….so, hold on to your hats.

Dan Norcini points out once again how gold was attacked by Paulson’s perverts as the US monetary authorities and the bullion banks made history with their smash antics reinforcing Bill Murphy’s mantra that perception makes markets. Silence the truth and hope to keep the public in the dark. On the other hand, the credibility of the perpetrators and the Comex, and the confidence in the integrity of the markets has been indelibly soiled, emanating a stench that must be gagging to even the perception puppets as real gold trades at real prices and rises in all currencies.

In another world, Adrian Douglas is adamant that gold is about to explode as Goldman Sachs has now reduced its short gold position on the TOCOM to only 885 contracts. His latest “Market Force Analysis” is an eye opener. Bullion is rapidly decoupling from paper gold. Australians are lining up in the street at the Perth Mint to buy gold while another poster to MIDAS reports that there is now a buying panic for Gold Eagles/bullion and coins all over the world. If perception makes the markets, what will reality do?

Jim Sinclair reminds us (as he has reminded us for quite some time) that: “I told you that you would see volatility in gold beyond your wildest imagination. That statement usually went along with my warning that by margining anything gold you were putting yourself in great financial risk…..Today has to seal the veracity of that advice. Now get a hold of yourself. There is absolutely no way governments can make a problem of this size go away over a weekend. Those that question me on this issue are the same ones that laughed in 2000 when I said the growth of OTC derivatives was going to break the world. I told the lead director of Bear Stearns at the time that OTC derivatives were going to break his firm but the profits from them was simply too intoxicating for anyone to listen. Now I am asking you to listen.”

Meanwhile, more drama unfolds. Looking behind the curtains …that are behind the curtains… is yet another play being acted out? A play on panic? The plot thickens with William Engdhal’s 321gold piece (pointed out by Elprimo) on the war over future of global banking. Seems he thinks Paulson, Rubin, Bolton, Greenspan, and others that think they hold the power behind the throne have planned this global market conundrum for quite some time. They (Paulson crew) have an opportunistic plan to dominate the world banking system. Meanwhile the Bush Admin. arranged for reduced regulation over ABS. Engdahl purports that “they apparently determined to spread the so-called 'toxic waste' ABS securities as globally as possible, in order to seduce the big global banks of the world, most especially of the EU, into their honey trap.” What are we to believe? Apparently the Germans are on to this little ploy and have thrown a monkey wrench into the grand scheme with a better structured credit rescue plan that drastically limits government exposure while Britain has a different angle again. Their “… new nationalization policy is a dramatic contrast to the Paulson ideological 'free market' approach of buying the worthless bonds held by the select banks Paulson chooses to save, rather than recapitalize those banks to allow them to continue to function”. There is much more to this but you get the picture.

So what will the U.S/.Paulson crew’s arm twisting result in this week-end with the G7-(come-20) meeting in Washington to fix everything? Will the world rejoice on Monday? Will the markets soar? My bet is they will. I will now probably eat those words. I wonder if they will institute Roubini’s recommended action list of at least 8 initiatives including 150 basis point rate cuts, guarantee of deposits, nationalization of solvent institutions, reduction of household debt burden, unlimited liquidity for solvent institutions, agreements between debtor and creditor countries and much more. Looks like the US is already going to invest in banks (again) and insure all bank deposits. Where does the illusive “Amero” figure into all this down the road? Life is tough for the G7 but as John Wayne said, “it’s even tougher when you’re stupid”. Are they going to be stupid?

Off balance sheet transactions re derivatives are beyond belief at 615 $trillion or, around that. CDS losses via Lehmann’s selling at 13 cents on the dollar means that there is a huge loss upcoming. No one can get a handle on valuations. Veneroso hints at a $5 billion hedge fund which will soon be exposed for being a total fraud (probably after the upcoming rally). This will shock the hedge fund markets even more and cause huge problems for them re redemptions as they are already reeling from the ongoing panic.

We are at historic extremes in the markets. We had three 90% downside days this week. This hasn’t happened since WW11.

We should get an enormous rally soon/this week in this brutal bear market upon us. Bearish sentiment is at all time highs. Everything is red. A snapback rally is due…of at least 10%.With a 2.06 put/call (206 puts to 100 calls) ratio the bears are due for a licking. The news out of the G- “you guess it” meeting this week-end will prime the pump for a bear relief rally... however brief and high. In my own humble, amateur estimation, this would be a good time to sell all but the PMs. JMHO.

I also suspect that gold will soar in another series of volatility that will base at much higher levels. When the media puppets start talking up gold, as Ali (Balshi?) just did on CNN (Sat noon), I become suspicious that the ass covering offence has officially begun. Guess they took a hint from Goldman.

Why has the Canadian Gov. backed $25 billion of Canadian mortgages if our banks are s strong? What surpising "assets" are yet to pop up in Canada? Why are the US banks coming to Canada for help…bail out due to the reckless behavior of the U.S. Fed?

Will Canada get sucked in by the Wall St. boys just before the $U.S takes a massive dump? Hope not.

Try to have a “Happy Thanksgiving” everyone in “my home and native land”.