How QE3 will save the World

July will be a rotten month for bonds and precious metals, so that everyone gets the message that we need more QE. Once that is agreed, precious metals will rally strongly. In 2009, after the summer doldrums where the gold price fell over June/July, the price rose 15.7% between 1st August and 31st December. Exactly the same pattern occurred in 2010, with an Aug-Dec rise of 15.9%

The silver fraud is approaching the end game. The crooked banks most likely to be the subjects of an Interpol investigation would be the US and Swiss banks JPMorgan Chase, Union Bank of Switzerland (UBS), and Credit Suisse.

The Powers That Be are looking for a calamity situation, where the US Govt will clamour for QE3 (or Operation Twist 2 as it is becoming known) to save them. Likely financial events in July 2011 include stock market drops from June highs, a significant/scary drop in bullion prices, Greek bond meltdown contagion spreading to Europe and possibly USA. Non-financial events include flooding of nuclear power stations, freak tornadoes, earthquakes in active zones and possibly the limited imposition of martial law (for the protection of citizens). Phew! If these things all happened around the same time – what a dreadful coincidence; but surely, that would be disastrous enough to do the trick… however,America’s grain harvest will already be dire, as an enormous swathe of the mid-West is underwater. Food prices will increase to alarming levels, so this could already be bad enough.

Inflation of goods prices will come home to roost in the USA, after a long period when overseas suppliers were content to take US dollars and exchange them for their own currencies, so as to keep their exchange rates constant. They are now revaluing their own currencies so their goods will cost more in US dollars.
Following the legitimisation of the Muslim Brotherhood as political party in Egypt, control of the country will be transferred into their hands in short shrift. The same will soon happen in Libya, Yemen, Oman, Syria and Jordan. US citizens will be able to watch this choreographed political theatre with a sense of detachment until the final domino topples – Saudi Arabia, their main source of oil. Oil prices would probably double; US gasoline would cost $8-10/gallon.

Rumour will start to emerge, very tentatively at first, that there is a small possibility that the US Govt may default on their National Debt. The biggest single holder of US debt is the Federal Reserve Bank, who will act heartily displeased, although this is all going according to plan. The Fed will exercise its right to flex its Balance Sheet, which includes the ultimate rights of ownership over one million homes acquired via their mortgages when the Fed swapped new credit for MBSs held by poorly capitalised banks between 2008 and today. The Fed will become the biggest landlord in the world and would be able to put a large number of US citizens out on the streets, from where it is one short step into a FEMA “emergency” holding camp.