Sunday, November 29, 2009
Thursday, November 19, 2009
Zinc Dimes, Tungsten Gold & Lost Respect
In 1964 the USGovt introduced the zinc dimes clad with silver. They at least admitted the debauchery publicly. Now pre-1964 silver coins are all considered different, and valued differently too, higher. Rome committed the same coinage fraud 1900 years ago. Their Empire went bust as the city burned almost concurrently. Ayn Rand is a guiding light for Alan Greenspan, the enabling destroyer of the US banking system, destroyer of the US household archipelago, and dispatcher of the US industrial base to Asia. He is the hero icon worshipped by Wall Street. The irony is thick, that his career was spent following Old Europe orders that delivered the slow motion coup de grace to the American Empire. Ayn Rand wrote "If you want to know when a society is set to vanish, watch the money. Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of moral existence. Destroyers seize gold and leave to its owner a counterfeit pile of papers." The Chinese are learning this lesson the hard way, challenged to convert their USTreasury Bonds and USAgency Mortgage Bonds into true wealth before the paper becomes untradable. Actually, the bonds will eventually be redeemed by the USFed with newly printed money, when an avalanche occurs of foreigners seeking redemption en masse. For almost ten years they have been exchanging their finished products to the US & West for paper with ink on it, in questionable stored wealth. The Chinese are cashing in on their paper, trading it for new global power.
NEW TUNGSTEN MINE DISCOVERY
The tungsten deposits come in very high grade ore, located in shallow rectangular deposits dispersed widely across the world, segregated in unusual vault heap leach mineralizations. In October, the Hong Kong bankers discovered some gold bars shipped from the United States were actually tungsten with gold plating. This is the exact same Modus Operandi as the silver clad zinc dimes from 45 years ago. History repeats itself. The parallels to mortgage bond fraud with either subprime borrowers or multiple property titles used in bond securitization is easy to spot. A consistent theme runs through the American management of finance and dissemination of fraudulent assets on a global basis. Tungsten gold bars is a feat difficult to surpass. Credit must be given for not leaving any potential for fraud untapped. Refer to insider flash trading, naked shorting of bank stocks, commodity trading on behalf of the USGovt, and much more. No disrespect is intended for the trillion$ counterfeits of superstar grade. Refer defense appropriations, USTreasury Bond sales beyond issuance, and missing Fannie Mae funds. These are legacy crimes.
The initial discovery was something like four gold bars, which the Hong Kong bankers drilled invasively to test the contents. Reminds me of drilling the earth and measuring how many grams of gold per tonne. The HK bankers hoped to have 99% gold yield in their drill program for the resident bars. They found something like 1% instead and 99% tungsten. By the way, tungsten sells for less than $70 per ton, which makes its swaps for gold to be 60x more profitable than silver bar swaps. Another handy usage for the Gold/Silver ratio in calculations. The hunt was on. Now not a single assayer on the planet is available, as all are tied up. They have been commissioned to test the gold bars shipped from the United States of Fraudulent Banker America in their own bullion vaults. They use basic methods of four drill holes with direct assay of shavings, but also less invasive methods like electro-magnetic waves to examine the metal lattice structure. When highest level methods are needed, they turn to mass spectrometry. NOW ALMOST NO GOLD BARS WILL LEAVE THE LONDON OR NEW YORK METALS EXCHANGES WITHOUT SOME AUTHENTICATION, AS DISTRUST IS WIDESPREAD.
The global bankers must deal with toxic bonds and phony gold bars. Talk circulates that the entire contents of Fort Knox might have swapped a decade ago. Evidence is being accumulated and compiled. The assayers have also been commissioned to assist in authentication of gold bar delivery the world over from the US exchanges. Current estimates among the gold trader community run well past a few hundred thousand 'salted' gold bars, maybe over a million. So the introduction to sophisticated Wall Street methods of currency management during the Decade of Prosperity had a side game running simultaneously. In an age where the lines between patriotism and treason are blurred, this tungsten episode brings new meaning to the word HEIST.
BREAKDOWN AT GOLD EXCHANGES
The bust cometh, and it will be spectacular. The stories told in the press will be peculiar, since not told objectively. The headlines might be a comedy, with phony reports of foreign subterfuge, when the perpetrators are home grown. The focal point for attacks is actually London at their metals exchange. The early October events included numerous offers by exchange officials to settle gold contract deliveries in cash with a 25% extra vig bonus. Much gold was drained from London on demanded delivery, thanks to a small army of lawyers, a small blizzard of contracts, and a few key judges at the courts. They were all Asians, the majority Chinese. Gold was taken, thus enforcing futures contracts, which happen to be binding contracts. The pressure at the end of November will be worse to make good on gold contract deliveries. Recall the stories back in April for a Deutsche Bank rescue by the Euro Central Bank with a very large (over one million oz gold position) provision made. DBank was in trouble. The pressures are mounting every couple months. Next March will be a climax of the breakdown, or else June.
Breakdowns come from extreme pressures. Each delivery month event includes more gold removed from the London exchange, more gold demanded from it, and more movement toward a breakdown. So the next events have even more pressure, with less gold supply and continued relentless demand. Recall also that the exchange, along with the COMEX in the Untied States, exempt certain parties from maintaining 80% collateral when they short gold & silver with paper contracts. Thus the name suppression, or better yet corruption. They are being caught in their naked shorting game. The December 1st events surrounding settlement delivery demands will be more contentious and stressful than October 1st. In sequential manner, the March event will be even more pressure packed, with precious little physical gold in store and more targeted Chinese delivery demanded. The June event will be even more pressure packed still, a backup date for a potential breakdown if it does not occur in March.
The common denominator for the parties demanding gold delivery in London is simple: they are all Asians, all, as in all, and the great majority are Chinese. One can safely conclude that the US and British banks will be broken with the nexus being their gold management, which underpins the USDollar. Other pressure is sure to mount. Not the kind of pressure you might imagine. Pressure is mounting for senior bank executives and politicians to start revealing the identities, deeds, locations, and dates of the gold tungsten swap, the mortgage bond firehose, and other pervasive frauds protected by the USGovt and British Govt.
GOLD & SILVER BREAKOUTS
The gold & silver prices are moving in lead fashion, and have done so among the currencies for at least the last three months. The major currencies fiddle and diddle, but gold & silver continue to rise. The Chinese, according to word from connected sources, intend to push the gold price and the silver price relentless upward without explosive parabolic moves and without painful huge selloff corrections. That way, the army of public investors will not lose heart, and will remain on the path, in full phalanx support of the Chinese Govt initiative. The Euro currency has hit the 150 level in mid-October and in mid-November, only to fall back a little. The Euro is not ready for a powerful move to 160 just yet. Such an advance would bring with it a painful effect to German exporters again, not desired. As a result, the gold price in Europe has made significant moves, and is in the process of challenging the 785 high from February. The key to a massive gold bull market is confirmation in terms of other currencies. The gold breakout is being led globally in US$ terms, since it is the weakest currency among the majors. GOLD IS TAKING ITS RIGHTFUL PLACE AS THE PREMIER GLOBAL CURRENCY, AFTER A BREAKDOWN IN THE MONETARY SYSTEM AND INSOLVENCY IN THE BANKING SYSTEM.
My 1130 midterm target for gold has been hit, stated at least three times this summer and autumn in public articles. One must wonder if a sizeable selloff in gold is coming. My view is that given the lack of sudden sharp upward thrusts in the gold price, the prospect of a sharp correction is lessened. Charts tend to show symmetry oftentimes. Besides, the Beijing Put is becoming well-known in the financial circles. The Chinese are using some reverse technical analysis, buying heavily when the gold chart indicates imminent weakness. That way the clueless Western gold sellers will be denied their cheaper re-entry, and will be forced to buy at higher levels. The Chinese are employing an unusual pattern. They are accumulating gold. The Chinese will continue to buy gold with both hands until the supply is exhausted of turkeys who fail to comprehend the Paradigm Shift, fail to comprehend the USDollar revolt, fail to comprehend the broken Western banks, fail to comprehend the endless stimulus, and fail to dismiss the mindless gold bubble argument that seems to be floating around in recent propaganda ploys. Its author overlooks the USTreasury bubble of gigantic proportions.
Whether or not a notable pullback correction comes for gold, who knows? who cares? This is not a time to go in & out, selling & buying back a gold position. It is a time to acknowledge a powerful global shift that will send the USDollar into the dungeon, and deliver gold to unheardof heights. The next target for gold is 1300. The targets for gold are dictated by the size of the jumps from the head and shoulder of the inverted Head & Shoulders pattern. The lost respect from the gold bullion bar fraud, the Weimar output of printed money, the monetization dependence from global isolation, and the lack of leadership all tend to pull the USDollar down. More accurately, these factors will push gold up into a dominant currency position fully recognized, as nations struggle to rebuild their banks after toxic US infection that does not end.
G-20 CONFIRMS PARADIGM SHIFT
The Scotland gathering of bankers had some key signals to report. Note the signal how they ignored the USDollar as a topic in the open chambers. Conclude they wish for benign neglect, where the US$ can find its true value much lower, and eventually depart as the global reserve currency. Note the signal how they urged continued global stimulus. Conclude they wish for the major governments to continue to debauch, undermine, and destroy the major currencies such as the USDollar, British Pound, European Union Euro, Swiss Franc, and Japanese Yen. Conclude they wish for the emerging market economies to be given massive assistance by the industrialized submerged market economies. The more the prominent older nations render harm to their banking systems, economies, and balance sheets, the easier it will be for Brazil, Russia, India, and China to conduct the business of walking the earth as new leaders. The new BRIC nations will build their dominant positions one brick at a time. The Paradigm Shift is away from the USDollar, with power shifting from West to East and in particular toward the BRIC nations. Their most recent visible victory is killing off the G-8 Meeting, which does not convene anymore. Not only does the G-20 serve as the global banker conference forum, but the Chinese have a lead voice, precisely as they demanded. Creditors win their way.
The commodity currencies are in a different earth zone. My analysis has stated that the prominent older nations, the so-called industrialized nations, will not raise their official interest rates. They will only talk, since their banks are insolvent and their government debt securities are caught in asset bubbles. The Euro Central Bank is the most likely to raise interest rates, but only as part of a more diverse strategy to split the EU iteself. The German nation has been drained by $40 billion per year for each of the last ten years, and resentment is strong. The Australians and Norwegians hiked their official interest rates in recent weeks. They have commodities to fortify their national economies, and do not concentrate on the sale of inked paper in tainted export.
The Paradigm Shift is toward a more legitimate group of currencies. It is toward currencies backed by hard assets. The currency basket from the Intl Monetary Fund seems like the temporary device. It is actually a Straw Man carrying a straw basket. Before the grand shift is complete to at least one hard asset currency, the doomed currencies will be bound together with IMF twine. The bankers believe the IMF straw basket will give them the power to control the decline of the USDollar, or protect themselves from that decline. The strategy might succeed. It will surely enable the gold price to climb versus all currencies. Gold will be like Moses in a basket as a baby, except moving upstream. The candidates for hard asset currencies are the New Russian Ruble, the Gulf Dinar, maybe even a New Nordic Euro. The process will take time, as some bumpy roads lie ahead, and military protection is required.
EXIT STRATEGY & WEIMAR DOLLARS
No exit strategy is available either to the Untied States or the British. The USFed conducted its helpless display to announce the USEconomy remains weak with slack capacity, and that an ultra-low official interest rate would be firmly fixed for a long time still. No surprise here! What they did not say is that, like with Japan, they have no possible exit plan. Now almost twenty years later, Japan is stuck with a near 0% rate. If the USFed raises interest rates, they pop the biggest financial bubble on the planet, USTreasury Bonds. The USFed is further hindered since Wall Street is playing the Dollar Carry Trade. They are borrowing 0% money in US$ and investing in commodities like crude oil and US stock indexes. Other players are using the free borrowed money to invest in gold. In fact, just today St Louis Fed President Bullard stated his expectation of no further USFed rate hike until year 2012.
The Exit Strategy will lead to a road paved by Weimar Dollars. The world's major financial centers outside the central bank accomplices are ditching their dollars. They are diversifying out of US$-based bonds of all types. They are accumulating gold. Some are investing in facilities that are vertically integrated with commodity production, transport, and trade. Like China! The USGovt is investing, by contrast, in clunker cars, still more houses, dead car industry, spoiled AIG insurer, a mortgage cesspool Fannie Mae, pork projects (see unused airport in Johnstown Pennsylvania), and a dubious war on terrorism. Quite a contrast! With the news spreading globally about tungsten-laced gold bars, or actually gold-plated tungsten bars, the reputation of the Untied States will grow more tarnished.
In time, the only friend of the USDept Treasury to finance its steady stream of Trillion$ in debt will be the Printing Pre$$. Without the printed money to pull off the auctions, they would be utter loud failures. Without the USDollar Swap Facility, foreign central banks would not have funds to use in Treasury auctions. Without the funds from foreign USAgency Mortgage Bonds sold to the USFed for freshly printed USDollars, the foreign central banks would not have funds to use in Treasury auctions. Without the Permanent Market Operations used to scoop up all the unsold bonds stuck with primary dealers, one week routinely after each auction, dealers would be unable to participate in the next Treasury auctions. They would suffer from bond constipation. The key event in the next few months, pushed by the foreign disgust at fraud more pervasive than ever conceived by ordinary man, is THE EXPOSURE OF MONETIZATION for support of the USTreasury Bond. The debt monetization remains a dirty secret, well concealed by the USGovt and the financial press. What comes is isolation, and to those isolated, their best friend will be a Printing Pre$$.
Exposure comes, with detrimental impact to the USDollar. The resulting tarnish to the USGovt image and Wall Street reputation will be reflected on the USDollar. In time it will fully resemble a Third World currency. The process will take time, but hyper-inflation is coming to US shores. Where are the Deflation Knuckleheads who tended to dominate the web journals last spring and summer, in incredible dense vapid clueless fashion??? What a tremendously misguided group. They follow religiously the deteriorating economies, miss the twin storm, ignore the power of the unprecedented monetary inflation, and somehow overlook the entire global movement if not revolt against the USDollar in a grand Paradigm Shift. They represent the worst economists in the alternative media on web journals. Their tunnel vision on the falling asset price effect left them vulnerable to missing a tsunami on their own doorstep, incredibly. They still do not offer an explanation of why crude is at the $80 price level again. Supplies of oil are nowhere as great as the false USGovt statistics indicate, but the entire world is hedging at the same time against the US$ with oil assets.
OBAMA VISITS THE LEAD US CREDITOR
During the president visit to Beijing, Obama has been reminded of who the master creditor is. It is China. In public no discussions are made of the Chinese concentrated pressure in London at the metal exchange. Taboo topic. The US President has slipped on three key topics, with mention of the human rights issue, currency manipulation, and the future of communism. The US has no place to lecture any other nation. China is actually moving toward capitalism, while America has forgotten what capitalism is, and marches with right foot in fascist mud and left foot in communism mud.
The Chinese serve as the spearhead to displace the USDollar from its perch as the global reserve currency. They realize fully that the battle that must be won is over the Gold-Dollar fiery rod. The Chinese might be orchestrating a gold price move to 1150 and a silver price move to 19 just to slap the US face a little during the state visit. Creo que si!
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
From subscribers and readers:
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Jim Willie CB
Editor of the "HAT TRICK LETTER"
Hat Trick Letter
NEW TUNGSTEN MINE DISCOVERY
The tungsten deposits come in very high grade ore, located in shallow rectangular deposits dispersed widely across the world, segregated in unusual vault heap leach mineralizations. In October, the Hong Kong bankers discovered some gold bars shipped from the United States were actually tungsten with gold plating. This is the exact same Modus Operandi as the silver clad zinc dimes from 45 years ago. History repeats itself. The parallels to mortgage bond fraud with either subprime borrowers or multiple property titles used in bond securitization is easy to spot. A consistent theme runs through the American management of finance and dissemination of fraudulent assets on a global basis. Tungsten gold bars is a feat difficult to surpass. Credit must be given for not leaving any potential for fraud untapped. Refer to insider flash trading, naked shorting of bank stocks, commodity trading on behalf of the USGovt, and much more. No disrespect is intended for the trillion$ counterfeits of superstar grade. Refer defense appropriations, USTreasury Bond sales beyond issuance, and missing Fannie Mae funds. These are legacy crimes.
The initial discovery was something like four gold bars, which the Hong Kong bankers drilled invasively to test the contents. Reminds me of drilling the earth and measuring how many grams of gold per tonne. The HK bankers hoped to have 99% gold yield in their drill program for the resident bars. They found something like 1% instead and 99% tungsten. By the way, tungsten sells for less than $70 per ton, which makes its swaps for gold to be 60x more profitable than silver bar swaps. Another handy usage for the Gold/Silver ratio in calculations. The hunt was on. Now not a single assayer on the planet is available, as all are tied up. They have been commissioned to test the gold bars shipped from the United States of Fraudulent Banker America in their own bullion vaults. They use basic methods of four drill holes with direct assay of shavings, but also less invasive methods like electro-magnetic waves to examine the metal lattice structure. When highest level methods are needed, they turn to mass spectrometry. NOW ALMOST NO GOLD BARS WILL LEAVE THE LONDON OR NEW YORK METALS EXCHANGES WITHOUT SOME AUTHENTICATION, AS DISTRUST IS WIDESPREAD.
The global bankers must deal with toxic bonds and phony gold bars. Talk circulates that the entire contents of Fort Knox might have swapped a decade ago. Evidence is being accumulated and compiled. The assayers have also been commissioned to assist in authentication of gold bar delivery the world over from the US exchanges. Current estimates among the gold trader community run well past a few hundred thousand 'salted' gold bars, maybe over a million. So the introduction to sophisticated Wall Street methods of currency management during the Decade of Prosperity had a side game running simultaneously. In an age where the lines between patriotism and treason are blurred, this tungsten episode brings new meaning to the word HEIST.
BREAKDOWN AT GOLD EXCHANGES
The bust cometh, and it will be spectacular. The stories told in the press will be peculiar, since not told objectively. The headlines might be a comedy, with phony reports of foreign subterfuge, when the perpetrators are home grown. The focal point for attacks is actually London at their metals exchange. The early October events included numerous offers by exchange officials to settle gold contract deliveries in cash with a 25% extra vig bonus. Much gold was drained from London on demanded delivery, thanks to a small army of lawyers, a small blizzard of contracts, and a few key judges at the courts. They were all Asians, the majority Chinese. Gold was taken, thus enforcing futures contracts, which happen to be binding contracts. The pressure at the end of November will be worse to make good on gold contract deliveries. Recall the stories back in April for a Deutsche Bank rescue by the Euro Central Bank with a very large (over one million oz gold position) provision made. DBank was in trouble. The pressures are mounting every couple months. Next March will be a climax of the breakdown, or else June.
Breakdowns come from extreme pressures. Each delivery month event includes more gold removed from the London exchange, more gold demanded from it, and more movement toward a breakdown. So the next events have even more pressure, with less gold supply and continued relentless demand. Recall also that the exchange, along with the COMEX in the Untied States, exempt certain parties from maintaining 80% collateral when they short gold & silver with paper contracts. Thus the name suppression, or better yet corruption. They are being caught in their naked shorting game. The December 1st events surrounding settlement delivery demands will be more contentious and stressful than October 1st. In sequential manner, the March event will be even more pressure packed, with precious little physical gold in store and more targeted Chinese delivery demanded. The June event will be even more pressure packed still, a backup date for a potential breakdown if it does not occur in March.
The common denominator for the parties demanding gold delivery in London is simple: they are all Asians, all, as in all, and the great majority are Chinese. One can safely conclude that the US and British banks will be broken with the nexus being their gold management, which underpins the USDollar. Other pressure is sure to mount. Not the kind of pressure you might imagine. Pressure is mounting for senior bank executives and politicians to start revealing the identities, deeds, locations, and dates of the gold tungsten swap, the mortgage bond firehose, and other pervasive frauds protected by the USGovt and British Govt.
GOLD & SILVER BREAKOUTS
The gold & silver prices are moving in lead fashion, and have done so among the currencies for at least the last three months. The major currencies fiddle and diddle, but gold & silver continue to rise. The Chinese, according to word from connected sources, intend to push the gold price and the silver price relentless upward without explosive parabolic moves and without painful huge selloff corrections. That way, the army of public investors will not lose heart, and will remain on the path, in full phalanx support of the Chinese Govt initiative. The Euro currency has hit the 150 level in mid-October and in mid-November, only to fall back a little. The Euro is not ready for a powerful move to 160 just yet. Such an advance would bring with it a painful effect to German exporters again, not desired. As a result, the gold price in Europe has made significant moves, and is in the process of challenging the 785 high from February. The key to a massive gold bull market is confirmation in terms of other currencies. The gold breakout is being led globally in US$ terms, since it is the weakest currency among the majors. GOLD IS TAKING ITS RIGHTFUL PLACE AS THE PREMIER GLOBAL CURRENCY, AFTER A BREAKDOWN IN THE MONETARY SYSTEM AND INSOLVENCY IN THE BANKING SYSTEM.
My 1130 midterm target for gold has been hit, stated at least three times this summer and autumn in public articles. One must wonder if a sizeable selloff in gold is coming. My view is that given the lack of sudden sharp upward thrusts in the gold price, the prospect of a sharp correction is lessened. Charts tend to show symmetry oftentimes. Besides, the Beijing Put is becoming well-known in the financial circles. The Chinese are using some reverse technical analysis, buying heavily when the gold chart indicates imminent weakness. That way the clueless Western gold sellers will be denied their cheaper re-entry, and will be forced to buy at higher levels. The Chinese are employing an unusual pattern. They are accumulating gold. The Chinese will continue to buy gold with both hands until the supply is exhausted of turkeys who fail to comprehend the Paradigm Shift, fail to comprehend the USDollar revolt, fail to comprehend the broken Western banks, fail to comprehend the endless stimulus, and fail to dismiss the mindless gold bubble argument that seems to be floating around in recent propaganda ploys. Its author overlooks the USTreasury bubble of gigantic proportions.
Whether or not a notable pullback correction comes for gold, who knows? who cares? This is not a time to go in & out, selling & buying back a gold position. It is a time to acknowledge a powerful global shift that will send the USDollar into the dungeon, and deliver gold to unheardof heights. The next target for gold is 1300. The targets for gold are dictated by the size of the jumps from the head and shoulder of the inverted Head & Shoulders pattern. The lost respect from the gold bullion bar fraud, the Weimar output of printed money, the monetization dependence from global isolation, and the lack of leadership all tend to pull the USDollar down. More accurately, these factors will push gold up into a dominant currency position fully recognized, as nations struggle to rebuild their banks after toxic US infection that does not end.
G-20 CONFIRMS PARADIGM SHIFT
The Scotland gathering of bankers had some key signals to report. Note the signal how they ignored the USDollar as a topic in the open chambers. Conclude they wish for benign neglect, where the US$ can find its true value much lower, and eventually depart as the global reserve currency. Note the signal how they urged continued global stimulus. Conclude they wish for the major governments to continue to debauch, undermine, and destroy the major currencies such as the USDollar, British Pound, European Union Euro, Swiss Franc, and Japanese Yen. Conclude they wish for the emerging market economies to be given massive assistance by the industrialized submerged market economies. The more the prominent older nations render harm to their banking systems, economies, and balance sheets, the easier it will be for Brazil, Russia, India, and China to conduct the business of walking the earth as new leaders. The new BRIC nations will build their dominant positions one brick at a time. The Paradigm Shift is away from the USDollar, with power shifting from West to East and in particular toward the BRIC nations. Their most recent visible victory is killing off the G-8 Meeting, which does not convene anymore. Not only does the G-20 serve as the global banker conference forum, but the Chinese have a lead voice, precisely as they demanded. Creditors win their way.
The commodity currencies are in a different earth zone. My analysis has stated that the prominent older nations, the so-called industrialized nations, will not raise their official interest rates. They will only talk, since their banks are insolvent and their government debt securities are caught in asset bubbles. The Euro Central Bank is the most likely to raise interest rates, but only as part of a more diverse strategy to split the EU iteself. The German nation has been drained by $40 billion per year for each of the last ten years, and resentment is strong. The Australians and Norwegians hiked their official interest rates in recent weeks. They have commodities to fortify their national economies, and do not concentrate on the sale of inked paper in tainted export.
The Paradigm Shift is toward a more legitimate group of currencies. It is toward currencies backed by hard assets. The currency basket from the Intl Monetary Fund seems like the temporary device. It is actually a Straw Man carrying a straw basket. Before the grand shift is complete to at least one hard asset currency, the doomed currencies will be bound together with IMF twine. The bankers believe the IMF straw basket will give them the power to control the decline of the USDollar, or protect themselves from that decline. The strategy might succeed. It will surely enable the gold price to climb versus all currencies. Gold will be like Moses in a basket as a baby, except moving upstream. The candidates for hard asset currencies are the New Russian Ruble, the Gulf Dinar, maybe even a New Nordic Euro. The process will take time, as some bumpy roads lie ahead, and military protection is required.
EXIT STRATEGY & WEIMAR DOLLARS
No exit strategy is available either to the Untied States or the British. The USFed conducted its helpless display to announce the USEconomy remains weak with slack capacity, and that an ultra-low official interest rate would be firmly fixed for a long time still. No surprise here! What they did not say is that, like with Japan, they have no possible exit plan. Now almost twenty years later, Japan is stuck with a near 0% rate. If the USFed raises interest rates, they pop the biggest financial bubble on the planet, USTreasury Bonds. The USFed is further hindered since Wall Street is playing the Dollar Carry Trade. They are borrowing 0% money in US$ and investing in commodities like crude oil and US stock indexes. Other players are using the free borrowed money to invest in gold. In fact, just today St Louis Fed President Bullard stated his expectation of no further USFed rate hike until year 2012.
The Exit Strategy will lead to a road paved by Weimar Dollars. The world's major financial centers outside the central bank accomplices are ditching their dollars. They are diversifying out of US$-based bonds of all types. They are accumulating gold. Some are investing in facilities that are vertically integrated with commodity production, transport, and trade. Like China! The USGovt is investing, by contrast, in clunker cars, still more houses, dead car industry, spoiled AIG insurer, a mortgage cesspool Fannie Mae, pork projects (see unused airport in Johnstown Pennsylvania), and a dubious war on terrorism. Quite a contrast! With the news spreading globally about tungsten-laced gold bars, or actually gold-plated tungsten bars, the reputation of the Untied States will grow more tarnished.
In time, the only friend of the USDept Treasury to finance its steady stream of Trillion$ in debt will be the Printing Pre$$. Without the printed money to pull off the auctions, they would be utter loud failures. Without the USDollar Swap Facility, foreign central banks would not have funds to use in Treasury auctions. Without the funds from foreign USAgency Mortgage Bonds sold to the USFed for freshly printed USDollars, the foreign central banks would not have funds to use in Treasury auctions. Without the Permanent Market Operations used to scoop up all the unsold bonds stuck with primary dealers, one week routinely after each auction, dealers would be unable to participate in the next Treasury auctions. They would suffer from bond constipation. The key event in the next few months, pushed by the foreign disgust at fraud more pervasive than ever conceived by ordinary man, is THE EXPOSURE OF MONETIZATION for support of the USTreasury Bond. The debt monetization remains a dirty secret, well concealed by the USGovt and the financial press. What comes is isolation, and to those isolated, their best friend will be a Printing Pre$$.
Exposure comes, with detrimental impact to the USDollar. The resulting tarnish to the USGovt image and Wall Street reputation will be reflected on the USDollar. In time it will fully resemble a Third World currency. The process will take time, but hyper-inflation is coming to US shores. Where are the Deflation Knuckleheads who tended to dominate the web journals last spring and summer, in incredible dense vapid clueless fashion??? What a tremendously misguided group. They follow religiously the deteriorating economies, miss the twin storm, ignore the power of the unprecedented monetary inflation, and somehow overlook the entire global movement if not revolt against the USDollar in a grand Paradigm Shift. They represent the worst economists in the alternative media on web journals. Their tunnel vision on the falling asset price effect left them vulnerable to missing a tsunami on their own doorstep, incredibly. They still do not offer an explanation of why crude is at the $80 price level again. Supplies of oil are nowhere as great as the false USGovt statistics indicate, but the entire world is hedging at the same time against the US$ with oil assets.
OBAMA VISITS THE LEAD US CREDITOR
During the president visit to Beijing, Obama has been reminded of who the master creditor is. It is China. In public no discussions are made of the Chinese concentrated pressure in London at the metal exchange. Taboo topic. The US President has slipped on three key topics, with mention of the human rights issue, currency manipulation, and the future of communism. The US has no place to lecture any other nation. China is actually moving toward capitalism, while America has forgotten what capitalism is, and marches with right foot in fascist mud and left foot in communism mud.
The Chinese serve as the spearhead to displace the USDollar from its perch as the global reserve currency. They realize fully that the battle that must be won is over the Gold-Dollar fiery rod. The Chinese might be orchestrating a gold price move to 1150 and a silver price move to 19 just to slap the US face a little during the state visit. Creo que si!
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
From subscribers and readers:
At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.
"Thanks for the quality of the information you put forth in your newsletter. I read a lot of newsletters, blogs, and financial sites. The accuracy of your information has been second to none over the past couple of years."
(MikeP in Missouri)
"Your October HTL was your best writing since I have been subscribing. It just amazes me how much you write each month, all top-notch stuff."
(DavidL in Michigan)
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Jim Willie CB
Editor of the "HAT TRICK LETTER"
Hat Trick Letter
“Gold Finger - A New Take On Operation Grand Slam With A Tungsten Twist”
By: Rob Kirby
I’ve already reported on irregular physical gold settlements which occurred in London, England back in the first week of October, 2009. Specifically, these settlements involved the intermediation of at least one Central Bank [The Bank of England] to resolve allocated settlements on behalf of J.P. Morgan and Deutsche Bank – who DID NOT have the gold bullion that they had sold short and were contracted to deliver. At the same time I reported on two other unusual occurrences:
1] - irregularities in the publication of the gold ETF - GLD’s bar list from Sept. 25 – Oct.14 where the length of the bar list went from 1,381 pages to under 200 pages and then back up to 800 or so pages.
2] - reports of 400 oz. “good delivery” bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.
Why Tungsten?
If anyone were contemplating creating “fake” gold bars, tungsten [at roughly $10 per pound] would be the metal of choice since it has the exact same density as gold making a fake bar salted with tungsten indistinguishable from a solid gold bar by simply weighing it.
Unfortunately, there are now more sordid details to report.
When the news of tungsten “salted” gold bars in Hong Kong first surfaced, many people who I am acquainted with automatically assumed that these bars were manufactured in China – because China is generally viewed as “the knock-off capital of the world”.
Here’s what I now understand really happened:
The amount of “salted tungsten” gold bars in question was allegedly between 5,600 and 5,700 – 400 oz – good delivery bars [roughly 60 metric tonnes].
This was apparently all highly orchestrated by an extremely well financed criminal operation.
Within mere hours of this scam being identified – Chinese officials had many of the perpetrators in custody.
And here’s what the Chinese allegedly uncovered:
Roughly 15 years ago – during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] – between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA [more than 16 Thousand metric tonnes]. Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day. I know folks who have copies of the original shipping docs with dates and exact weights of “tungsten” bars shipped to Ft. Knox.
The balance of this 1.3 million – 1.5 million 400 oz tungsten cache was also plated and then allegedly “sold” into the international market.
Apparently, the global market is literally “stuffed full of 400 oz salted bars”.
Makes one wonder if the Indians were smart enough to assay their 200 tonne haul from the IMF?
A Slow Motion Train Wreck, Years in the Making
An obscure news item originally published in the N.Y. Post [written by Jennifer Anderson] in late Jan. 04 has always ‘stuck in my craw’:
DA investigating NYMEX executive - Manhattan, New York, district attorney's office, Stuart Smith - Melting Pot - Brief Article – Feb. 2, 2004
A top executive at the New York Mercantile Exchange is being investigated by the Manhattan district attorney. Sources close to the exchange said that Stuart Smith, senior vice president of operations at the exchange, was served with a search warrant by the district attorney's office last week. Details of the investigation have not been disclosed, but a NYMEX spokeswoman said it was unrelated to any of the exchange's markets. She declined to comment further other than to say that charges had not been brought. A spokeswoman for the Manhattan district attorney's office also declined comment.
The offices of the Senior Vice President of Operations - NYMEX – is exactly where you would go to find the records [serial number and smelter of origin] for EVERY GOLD BAR ever PHYSICALLY settled on the exchange. They are required to keep these records. These precise records would show the lineage of all the physical gold settled on the exchange and hence "prove" that the amount of gold in question could not have possibly come from the U.S. mining operations – because the amounts in question coming from U.S. smelters would undoubtedly be vastly bigger than domestic mine production.
We never have found out what happened to poor ole Stuart Smith – after his offices were "raided" – he took administrative leave from the NYMEX and he has never been heard from since. Amazingly [or perhaps not], there never was any follow up on in the media on the original story as well as ZERO developments ever stemming from D.A. Morgenthau’s office who executed the search warrant.
Are we to believe that NYMEX offices were raided, the Sr. V.P. of operations then takes leave - all for nothing?
These revelations should provide a “new filter” through which Rothschild exiting the gold market back in 2004 begins to make a little more sense:
“LONDON, April 14, 2004 (Reuters) - NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild [ROT.UL], will withdraw from trading commodities, including gold, in London as it reviews its operations, it said on Wednesday.”
Interestingly, GATA’s Bill Murphy speculated about this back in 2004;
“Why is Rothschild leaving the gold business at this time my colleagues and I conjectured today? Just a guess on my part, but suspect:”
*SOMETHING IS AMISS. THEY KNOW A BIG GOLD SCANDAL IS COMING AND THEY WANT NO PART OF IT. …”
“ROTHSCHILD WANTS OUT BEFORE THE PROVERBIAL "S" HITS THE FAN.” BILL MURPHY, LEMETROPOLE, 4-18-2004
Coincidentally [or perhaps, not?], GLD Began Trading 11/12/2004
In light of what has occurred – regarding the Gold ETF, GLD – after reviewing their prospectus yet again, it becomes pretty clear that GLD was established to purposefully deflect investment dollars away from legitimate gold pursuits and to create a stealth, cesspool / catch-all, slush-fund and a likely destination for many of these “salted tungsten bars” where they would never see the light of day – hidden behind the following legalese “shield” from the law:
Excerpt from the GLD prospectus on page 11:
http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus.pdf
Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian independently confirms the fineness of the gold bars allocated to the Trust in connection with the creation of a Basket. The gold bars allocated to the Trust by the Custodian may be different from the reported fineness or weight required by the LBMA’s standards for gold bars delivered in settlement of a gold trade, or the London Good Delivery Standards, the standards required by the Trust. If the Trustee nevertheless issues a Basket against such gold, and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.
The Fed Has Already Been Caught Lying
Liberty Coin’s Patrick Heller recently wrote,
Earlier this year, the Gold Anti-Trust Action Committee (GATA), filed a second Freedom of Information Act (FOIA) request with the Federal Reserve System for documents from 1990 to date having to do with gold swaps, gold swapped, or proposed gold swaps.
On Aug. 5, The Federal Reserve responded to this FOIA request by adding two more documents to those disclosed to GATA in April 2008 from the earlier FOIA request. These documents totaled 173 pages, many parts of which were redacted (covered up to omit sections of text). The Fed's response also noted that there were 137 pages of documents not disclosed that were alleged to be exempt from disclosure.
GATA appealed this determination on Aug. 20. The appeal asked for more information to substantiate the legitimacy of the claimed exemptions from disclosure and an explanation on why some documents, such as one posted on the Federal Reserve Web site that discusses gold swaps, were not included in the Aug. 5 document release.
In a Sept. 17, 2009, letter on Federal Reserve System letterhead, Federal Reserve governor Kevin M. Warsh completely denied GATA's appeal. The entire text of this letter can be examined at http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf.
The first paragraph on the third page is the most revealing. Warsh wrote, "In connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."
This paragraph will likely be one of the most important news stories of the year.
Though not stated in plain English, this paragraph is an admission that the Fed has in the past and may now be engaged in trading gold swaps. Warsh's letter contradicts previous Fed statements to GATA denying that it ever engaged in gold swaps during the time period between Jan. 1, 1990 and the present.
[Perhaps most importantly], this was GATA's second FOIA request to the Federal Reserve on the issue of gold swaps. The 173 pages of documents received for the 2009 FOIA request all pre-dated the 2007 FOIA request, which means they should have been released in the response to the earlier FOIA request. This establishes a likelihood that the Federal Reserve has failed to adequately search or disclose relevant documents. Further, the Fed response admitted that it had copies of relevant records that originally appeared on the Treasury Department Web site, but failed to include them in its response.
Now that Federal Reserve governor Warsh has admitted that the Fed has lied in the past about the Fed’s involvement with gold. It should now be very clear to everyone why the Fed is lying and the true nature of what they are hiding / withholding.
On Doing God’s Work
An important footnote to consider is the inter-twined-ness of the U.S. Federal Reserve and the U.S. Treasury [can anyone really tell them apart?] as well as this duopoly’s two principal agents – J.P. Morgan-Chase and Goldman Sachs. When one truly grasps the nature of these highly conflicted relationships it gives a fuller meaning to words recently uttered by Goldman head, Lloyd Blankfein, who claimed,
“I’m doing god’s work”
Does this really mean that Mr. Blankfein believes that the Federal Reserve is god? You can judge for yourself. While the Fed prints money like no one else could - except god almighty himself [or Gideon Gono, perhaps?] – I really doubt that was the intent back in 1864, when the U.S. adopted “In God We Trust” as their official motto
I’ve already reported on irregular physical gold settlements which occurred in London, England back in the first week of October, 2009. Specifically, these settlements involved the intermediation of at least one Central Bank [The Bank of England] to resolve allocated settlements on behalf of J.P. Morgan and Deutsche Bank – who DID NOT have the gold bullion that they had sold short and were contracted to deliver. At the same time I reported on two other unusual occurrences:
1] - irregularities in the publication of the gold ETF - GLD’s bar list from Sept. 25 – Oct.14 where the length of the bar list went from 1,381 pages to under 200 pages and then back up to 800 or so pages.
2] - reports of 400 oz. “good delivery” bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.
Why Tungsten?
If anyone were contemplating creating “fake” gold bars, tungsten [at roughly $10 per pound] would be the metal of choice since it has the exact same density as gold making a fake bar salted with tungsten indistinguishable from a solid gold bar by simply weighing it.
Unfortunately, there are now more sordid details to report.
When the news of tungsten “salted” gold bars in Hong Kong first surfaced, many people who I am acquainted with automatically assumed that these bars were manufactured in China – because China is generally viewed as “the knock-off capital of the world”.
Here’s what I now understand really happened:
The amount of “salted tungsten” gold bars in question was allegedly between 5,600 and 5,700 – 400 oz – good delivery bars [roughly 60 metric tonnes].
This was apparently all highly orchestrated by an extremely well financed criminal operation.
Within mere hours of this scam being identified – Chinese officials had many of the perpetrators in custody.
And here’s what the Chinese allegedly uncovered:
Roughly 15 years ago – during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] – between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA [more than 16 Thousand metric tonnes]. Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day. I know folks who have copies of the original shipping docs with dates and exact weights of “tungsten” bars shipped to Ft. Knox.
The balance of this 1.3 million – 1.5 million 400 oz tungsten cache was also plated and then allegedly “sold” into the international market.
Apparently, the global market is literally “stuffed full of 400 oz salted bars”.
Makes one wonder if the Indians were smart enough to assay their 200 tonne haul from the IMF?
A Slow Motion Train Wreck, Years in the Making
An obscure news item originally published in the N.Y. Post [written by Jennifer Anderson] in late Jan. 04 has always ‘stuck in my craw’:
DA investigating NYMEX executive - Manhattan, New York, district attorney's office, Stuart Smith - Melting Pot - Brief Article – Feb. 2, 2004
A top executive at the New York Mercantile Exchange is being investigated by the Manhattan district attorney. Sources close to the exchange said that Stuart Smith, senior vice president of operations at the exchange, was served with a search warrant by the district attorney's office last week. Details of the investigation have not been disclosed, but a NYMEX spokeswoman said it was unrelated to any of the exchange's markets. She declined to comment further other than to say that charges had not been brought. A spokeswoman for the Manhattan district attorney's office also declined comment.
The offices of the Senior Vice President of Operations - NYMEX – is exactly where you would go to find the records [serial number and smelter of origin] for EVERY GOLD BAR ever PHYSICALLY settled on the exchange. They are required to keep these records. These precise records would show the lineage of all the physical gold settled on the exchange and hence "prove" that the amount of gold in question could not have possibly come from the U.S. mining operations – because the amounts in question coming from U.S. smelters would undoubtedly be vastly bigger than domestic mine production.
We never have found out what happened to poor ole Stuart Smith – after his offices were "raided" – he took administrative leave from the NYMEX and he has never been heard from since. Amazingly [or perhaps not], there never was any follow up on in the media on the original story as well as ZERO developments ever stemming from D.A. Morgenthau’s office who executed the search warrant.
Are we to believe that NYMEX offices were raided, the Sr. V.P. of operations then takes leave - all for nothing?
These revelations should provide a “new filter” through which Rothschild exiting the gold market back in 2004 begins to make a little more sense:
“LONDON, April 14, 2004 (Reuters) - NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild [ROT.UL], will withdraw from trading commodities, including gold, in London as it reviews its operations, it said on Wednesday.”
Interestingly, GATA’s Bill Murphy speculated about this back in 2004;
“Why is Rothschild leaving the gold business at this time my colleagues and I conjectured today? Just a guess on my part, but suspect:”
*SOMETHING IS AMISS. THEY KNOW A BIG GOLD SCANDAL IS COMING AND THEY WANT NO PART OF IT. …”
“ROTHSCHILD WANTS OUT BEFORE THE PROVERBIAL "S" HITS THE FAN.” BILL MURPHY, LEMETROPOLE, 4-18-2004
Coincidentally [or perhaps, not?], GLD Began Trading 11/12/2004
In light of what has occurred – regarding the Gold ETF, GLD – after reviewing their prospectus yet again, it becomes pretty clear that GLD was established to purposefully deflect investment dollars away from legitimate gold pursuits and to create a stealth, cesspool / catch-all, slush-fund and a likely destination for many of these “salted tungsten bars” where they would never see the light of day – hidden behind the following legalese “shield” from the law:
Excerpt from the GLD prospectus on page 11:
http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus.pdf
Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian independently confirms the fineness of the gold bars allocated to the Trust in connection with the creation of a Basket. The gold bars allocated to the Trust by the Custodian may be different from the reported fineness or weight required by the LBMA’s standards for gold bars delivered in settlement of a gold trade, or the London Good Delivery Standards, the standards required by the Trust. If the Trustee nevertheless issues a Basket against such gold, and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.
The Fed Has Already Been Caught Lying
Liberty Coin’s Patrick Heller recently wrote,
Earlier this year, the Gold Anti-Trust Action Committee (GATA), filed a second Freedom of Information Act (FOIA) request with the Federal Reserve System for documents from 1990 to date having to do with gold swaps, gold swapped, or proposed gold swaps.
On Aug. 5, The Federal Reserve responded to this FOIA request by adding two more documents to those disclosed to GATA in April 2008 from the earlier FOIA request. These documents totaled 173 pages, many parts of which were redacted (covered up to omit sections of text). The Fed's response also noted that there were 137 pages of documents not disclosed that were alleged to be exempt from disclosure.
GATA appealed this determination on Aug. 20. The appeal asked for more information to substantiate the legitimacy of the claimed exemptions from disclosure and an explanation on why some documents, such as one posted on the Federal Reserve Web site that discusses gold swaps, were not included in the Aug. 5 document release.
In a Sept. 17, 2009, letter on Federal Reserve System letterhead, Federal Reserve governor Kevin M. Warsh completely denied GATA's appeal. The entire text of this letter can be examined at http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf.
The first paragraph on the third page is the most revealing. Warsh wrote, "In connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."
This paragraph will likely be one of the most important news stories of the year.
Though not stated in plain English, this paragraph is an admission that the Fed has in the past and may now be engaged in trading gold swaps. Warsh's letter contradicts previous Fed statements to GATA denying that it ever engaged in gold swaps during the time period between Jan. 1, 1990 and the present.
[Perhaps most importantly], this was GATA's second FOIA request to the Federal Reserve on the issue of gold swaps. The 173 pages of documents received for the 2009 FOIA request all pre-dated the 2007 FOIA request, which means they should have been released in the response to the earlier FOIA request. This establishes a likelihood that the Federal Reserve has failed to adequately search or disclose relevant documents. Further, the Fed response admitted that it had copies of relevant records that originally appeared on the Treasury Department Web site, but failed to include them in its response.
Now that Federal Reserve governor Warsh has admitted that the Fed has lied in the past about the Fed’s involvement with gold. It should now be very clear to everyone why the Fed is lying and the true nature of what they are hiding / withholding.
On Doing God’s Work
An important footnote to consider is the inter-twined-ness of the U.S. Federal Reserve and the U.S. Treasury [can anyone really tell them apart?] as well as this duopoly’s two principal agents – J.P. Morgan-Chase and Goldman Sachs. When one truly grasps the nature of these highly conflicted relationships it gives a fuller meaning to words recently uttered by Goldman head, Lloyd Blankfein, who claimed,
“I’m doing god’s work”
Does this really mean that Mr. Blankfein believes that the Federal Reserve is god? You can judge for yourself. While the Fed prints money like no one else could - except god almighty himself [or Gideon Gono, perhaps?] – I really doubt that was the intent back in 1864, when the U.S. adopted “In God We Trust” as their official motto
Tuesday, November 17, 2009
Wednesday, November 4, 2009
What "Sources" are Really Taxed ?
Do our law books tell us where we can clarify this 'source' stuff??
Indeed they do!... sources are described by the Secretary of the Treasury in the Code of Federal Regulations and are the legally binding definition of 'sources' that must apply to an income for it to be classified as 'Gross Income'..
Code of Federal Regulations § 1.861- 8(a):
"...The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections." (Emphasis added)
Would you like to look at paragraph (f)(1) mentioned above?
We thought that you might!
(be forewarned, they do not look like much, but then, that's good!)
The Federal Regulations make reference to 'sources' within the United States.. these are the only sources listed from which income must derive in order for it to be taxable for the purpose of the Income Tax.
Certain editorial contributions made by John Gill CPA & Associates
Code of Federal Regulations 1.861-8(f)(1)
(NOTE: Each of these 'sources' will be elaborated upon soon)
(i) Overall limitation to the foreign tax credit.
(ii) [Reserved]
(iii) DISC and FSC taxable income.
(iv) Effectively connected taxable income. Nonresident alien individuals and foreign corporations engaged in trade or business within the United States,...
(v) Foreign base company income.
(vi) Other operative sections.
(A) ...foreign source items of tax...
(B) ...foreign mineral income...
(C) [Reserved]
(D) "...foreign oil and gas extraction income..."
(E) "...citizens entitled to the benefits of section 931 and the section 936 tax credit..."
(F) "...residents of Puerto Rico..."
(G) "...income tax liability incurred to the Virgin Islands..."
(H) "...income derived from Guam..."
(I) "...China Trade Act corporations..."
(J) "...income of a controlled foreign corporation..."
(K) "...income from the insurance of U.S. risks..."
(L) "...international boycott factor...attributable taxes and income under section 999..."
(M) "...income attributable to the operation of a agreement vessel under section 607 of the Merchant Marine Act of 1936..."
This is very important in light of the fact that the U.S. Supreme Court has determined that the Congress acts intentionally and purposely in the inclusion or exclusion of something in a law. Or simply, if a particular source is not on the list, it is effectively 'excluded' from 'Gross Income'.
Which of the above 'sources' does your, your employees, or your clients 'income' or 'items' derive from?...
It is not always what is in a law that is important. Sometimes what is not stated in a law is also equally important.
Especially if you're assuming something is in a law, when it clearly is not.
1.) Section 61 states that gross is income from 'sources' which are taxable.
2.) Section 861 states the 'sources' from within the U.S. are taxable in relation to foreigners.
3.) Code of Federal Regulations 26 § 1.861 only cites U.S. Citizens earning foeign income as having income from a taxable source under the law.
Let's take a look at 861. When you examine 861's regulations, you find the admission in 1.861-8 (a)(4), that income must come from a specific source to be taxable. If you examine the sources in 1.861-8 (f)(1), you will find that the domestic sources are only applicable to non-resident aliens and foreign corporations. The others listed are foreign sources that U.S. citizens would definitely be taxed upon.
To wrap up the thesis, the five sources listed in (f)(1), four of them are repeated as non-exempt income pursuant to 26 CFR section 1.861-8 (T)(d)(2)(iii). And pursuant to 1.861-8 (T)(d)(2), all income that is exempt, excluded (not listed), or eliminated from the law, is exempt income.
Since the law is so plainly structured to be taxing foreigners, and foreign earned income, we must have some specific citation of law specifically taxing U.S. citizens on their domestic source income, as the Secretary has made the list of U.S. sources that are taxable in 26 U.S.C. § 861, applicable only to foreigners.
Remember, the only form required to be filed by U.S. Citizens, pursuant to section 1.1-1 of the Code of Federal Regulations, is Form 2555 Foreign Earned Income !
Added support below...
'Exempt Income'
26 CFR § 1.861-8T(d)(2)(ii)(A)
"In general. For purposes of this section, the term "exempt income" means any income that is in whole or in part, exempt, excluded, or eliminated for federal income tax purposes." (Emphasis added)
"Exclusion" which is defined in Black's Law Dictionary, in part, as follows:
'Denial of entry or admittance.'
This law confirms our position, in simple terms according to Black's Law Dictionary, that if the income in question comes from a source 'excluded' from the law, and thus not mentioned within the law as being taxable, it cannot then meet the source requirement of section 61(a) to be "Gross income" and is by definition EXEMPT.
This is a prime example of what we mean by the statement that... What is not within a law is just as important as what is!
The simple 'rule of thumb' to remember about 'tax law' is that the entire 'Tax Code' and the topic of 'Income Tax' is built on the foundation of 'Gross Income' as defined in § 61 of the Internal Revenue Code...
************
It is widely accepted by the courts and most Americans who will comprise a jury, that in 1913 the U.S. Congress enacted the 16th Amendment to lay a tax upon incomes from "…whatever source derived…" In the case of James v. U.S. the U.S. Supreme Court has determined that the Amendment means exactly what it says, and that "source" is important.
The same phraseology is applied in 26 United States Code (Internal Revenue Code) § 61(a), which defines the "Gross income, which is ultimately taxed as "Taxable income" (26 U.S.C.§ 63) in 26 USC § 1 and a return is required to be filed on as set forth in 26 § 6012, to the effect that the actual statute states that "gross income" is income from whatever 'source' derived. This is also confirmed by the U.S. Supreme Court in the case of U.S. v. Burke as the Court again has included the stipulation of "source" in its legal determination that all of the words in the law exist within the law with purpose and authority.
Before we continue, we must examine the legal definition of "source" as set forth in Black’s Law Dictionary. The legal definition reveals that a "source" is not a thing, but is a place or circumstance.
It is at this point that the first crucial error is made by the reader of the law as the reader usually does not understand that the law means exactly what is says and is not subject to anyone’s interpretation, as even the U.S. Supreme Court lacks any such power. The error is one reading the remainder of § 61 before the list of the items 1 to 15. These items 1 through 15 have been read by millions to be "sources" of "gross income" when in fact, as set forth in the rules promulgated by the Secretary of the Treasury in 26 CFR § 1.861-8(a)(3) these items listed are not "sources" as set forth under the law but are merely "items".
Most accountants refuse to even see the word "source" in the law and thus avoid its very significance. This was done by one accountant recently, despite his pointing out that the word "source" reportedly appears 214 times in the United States Code. Such an approach renders the word "source", as employed by the Congress superfluous (of no effect) in the face of the fact that the law states that ‘items’ come from a ‘source’.
In our search for ‘sources’ we came upon 26 CFR § 1.861, the Regulations for § 861 Sources of Income from within the United States. This was the only section of law addressing U.S. source income and we hoped to find the taxable U.S. sources here. In the process we learned that we were further correct, as our understanding of the law is supported by the next rule as shown in 26 CFR §1.861-8(a)(4). This law states that in order to have taxable income, one must have items of gross income from a taxable "source" as listed in 26 CFR §1.861-8(f)(1). This next law lists all of the taxable ‘sources’ from which one must have items of income in order to have a taxable income for the purpose of the federal income tax. Upon review of this list, it should be clear to most U.S. Citizens that they never made any gross income as they never made any income from any of the taxable sources as set forth under 26 CFR § 1.861-8(f)(1).
Now, for the doubters in the crowd, it has been set forth by the Secretary of the Treasury in the Code of Federal Regulations at 26 CFR § 1.861-8(a)(1) that these are the rules that his office has set forth to be used for the purpose of determining income which is taxable for the purposes of the federal income tax.
Follow this next point...
The Congress wrote in the Amendment "…whatever source derived…", after which, the Secretary made a list of specific "sources" in the Code of Federal Regulations, the Regulation was then published in the Federal Register for correction before becoming the law as agreed to between the Congress and the Administration. Therefore, it is plain to see the legal fact that the Secretary has limited the taxable sources to those that are clearly listed in 26 CFR § 1.861-8(f)(1) for the law means exactly what it says, and the Congress has not protested the Secretary’s actions.
Furthermore, the Secretary has set this fact into stone so to speak. The fact that 26 CFR 1.861 sets forth the rules for determining taxable income for the income tax, this section of the regulations are the only such rules, there are no others. So, it is equally revealing in the Temporary Regulation of 26 CFR § 1.861-8T(d)(2)(ii)(A) that "exempt income" means income which is "excluded" from the law, and that § 1.861-8T(d)(2)(iii) lists the "Income that is not considered tax exempt". Between these two sections of regulations, that which is to be taxed is by law very limited.
Black’s Law Dictionary 6th Edition plainly states what the legal definition for an exclusion is therefore that which is denied entry under the law is "exempt income", as least in accordance with the instructions given to the IRS by the Secretary of the Treasury.
Here you have it. In the most simplistic terms available and free to all. The root of the 'income tax' is in "gross income" as defined by law. The root of "Gross income" is a specific taxable source as set forth in the law. Exempt income is income which is "exempt" (an exemption is made or given) "eliminated" (was there but is no longer as it was repealed), or "excluded" (denied entry or admittance into the law). Non exempt as set forth in the Secretary’s rules is income is that income earned by foreigners here in the U.S. and foreign earned income by U.S. Citizens.
Can you see how the claim that all U.S. Citizens are not subject to the income tax is legally incorrect? If a U.S. Citizen has 'income' from the listed 'source', then that income is then subject to the 'income tax'.
Can you see how the claim that 'the income tax' is 'unconstitutional' is legally incorrect? The 'income tax' is perfectly constitutional... and it is limited in application.
The facts reveal that most American’s income has always been "exempt income" as defined by the Secretary of the Treasury. Since we were intimidated by the volumes and volumes of words which make up all of the internal revenue laws (26 USC and CFR), abided in a belief that the government could and do us no wrong, and were terrified of the idea that we could have been acting under a law incorrectly for so long, we have not seen this simple truth that there are no U.S. taxable sources for U.S. Citizens living and working in the U.S.
We say this with renewed vigor as our position has recently undergone scrupulous examination by two CPA’s, one also being a Professor. Both were asked to provide citations of the taxable U.S. sources for U.S. Citizens living and working in the U.S., as the Secretary had set forth rules regarding Foreign income and Foreigners. Neither has bothered, or more likely, has been able to provide the law. Our position is that it doesn't exist.
Did the Secretary fail to provide such rules, or did he not have a statute to begin from?
So it is very important to understand that it is not only what a law says that is important, but also what it does not say. For what it legislates over is included in the law, that which the law does not legislate over is excluded from the law.
Indeed they do!... sources are described by the Secretary of the Treasury in the Code of Federal Regulations and are the legally binding definition of 'sources' that must apply to an income for it to be classified as 'Gross Income'..
Code of Federal Regulations § 1.861- 8(a):
"...The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections." (Emphasis added)
Would you like to look at paragraph (f)(1) mentioned above?
We thought that you might!
(be forewarned, they do not look like much, but then, that's good!)
The Federal Regulations make reference to 'sources' within the United States.. these are the only sources listed from which income must derive in order for it to be taxable for the purpose of the Income Tax.
Certain editorial contributions made by John Gill CPA & Associates
Code of Federal Regulations 1.861-8(f)(1)
(NOTE: Each of these 'sources' will be elaborated upon soon)
(i) Overall limitation to the foreign tax credit.
(ii) [Reserved]
(iii) DISC and FSC taxable income.
(iv) Effectively connected taxable income. Nonresident alien individuals and foreign corporations engaged in trade or business within the United States,...
(v) Foreign base company income.
(vi) Other operative sections.
(A) ...foreign source items of tax...
(B) ...foreign mineral income...
(C) [Reserved]
(D) "...foreign oil and gas extraction income..."
(E) "...citizens entitled to the benefits of section 931 and the section 936 tax credit..."
(F) "...residents of Puerto Rico..."
(G) "...income tax liability incurred to the Virgin Islands..."
(H) "...income derived from Guam..."
(I) "...China Trade Act corporations..."
(J) "...income of a controlled foreign corporation..."
(K) "...income from the insurance of U.S. risks..."
(L) "...international boycott factor...attributable taxes and income under section 999..."
(M) "...income attributable to the operation of a agreement vessel under section 607 of the Merchant Marine Act of 1936..."
This is very important in light of the fact that the U.S. Supreme Court has determined that the Congress acts intentionally and purposely in the inclusion or exclusion of something in a law. Or simply, if a particular source is not on the list, it is effectively 'excluded' from 'Gross Income'.
Which of the above 'sources' does your, your employees, or your clients 'income' or 'items' derive from?...
It is not always what is in a law that is important. Sometimes what is not stated in a law is also equally important.
Especially if you're assuming something is in a law, when it clearly is not.
1.) Section 61 states that gross is income from 'sources' which are taxable.
2.) Section 861 states the 'sources' from within the U.S. are taxable in relation to foreigners.
3.) Code of Federal Regulations 26 § 1.861 only cites U.S. Citizens earning foeign income as having income from a taxable source under the law.
Let's take a look at 861. When you examine 861's regulations, you find the admission in 1.861-8 (a)(4), that income must come from a specific source to be taxable. If you examine the sources in 1.861-8 (f)(1), you will find that the domestic sources are only applicable to non-resident aliens and foreign corporations. The others listed are foreign sources that U.S. citizens would definitely be taxed upon.
To wrap up the thesis, the five sources listed in (f)(1), four of them are repeated as non-exempt income pursuant to 26 CFR section 1.861-8 (T)(d)(2)(iii). And pursuant to 1.861-8 (T)(d)(2), all income that is exempt, excluded (not listed), or eliminated from the law, is exempt income.
Since the law is so plainly structured to be taxing foreigners, and foreign earned income, we must have some specific citation of law specifically taxing U.S. citizens on their domestic source income, as the Secretary has made the list of U.S. sources that are taxable in 26 U.S.C. § 861, applicable only to foreigners.
Remember, the only form required to be filed by U.S. Citizens, pursuant to section 1.1-1 of the Code of Federal Regulations, is Form 2555 Foreign Earned Income !
Added support below...
'Exempt Income'
26 CFR § 1.861-8T(d)(2)(ii)(A)
"In general. For purposes of this section, the term "exempt income" means any income that is in whole or in part, exempt, excluded, or eliminated for federal income tax purposes." (Emphasis added)
"Exclusion" which is defined in Black's Law Dictionary, in part, as follows:
'Denial of entry or admittance.'
This law confirms our position, in simple terms according to Black's Law Dictionary, that if the income in question comes from a source 'excluded' from the law, and thus not mentioned within the law as being taxable, it cannot then meet the source requirement of section 61(a) to be "Gross income" and is by definition EXEMPT.
This is a prime example of what we mean by the statement that... What is not within a law is just as important as what is!
The simple 'rule of thumb' to remember about 'tax law' is that the entire 'Tax Code' and the topic of 'Income Tax' is built on the foundation of 'Gross Income' as defined in § 61 of the Internal Revenue Code...
************
It is widely accepted by the courts and most Americans who will comprise a jury, that in 1913 the U.S. Congress enacted the 16th Amendment to lay a tax upon incomes from "…whatever source derived…" In the case of James v. U.S. the U.S. Supreme Court has determined that the Amendment means exactly what it says, and that "source" is important.
The same phraseology is applied in 26 United States Code (Internal Revenue Code) § 61(a), which defines the "Gross income, which is ultimately taxed as "Taxable income" (26 U.S.C.§ 63) in 26 USC § 1 and a return is required to be filed on as set forth in 26 § 6012, to the effect that the actual statute states that "gross income" is income from whatever 'source' derived. This is also confirmed by the U.S. Supreme Court in the case of U.S. v. Burke as the Court again has included the stipulation of "source" in its legal determination that all of the words in the law exist within the law with purpose and authority.
Before we continue, we must examine the legal definition of "source" as set forth in Black’s Law Dictionary. The legal definition reveals that a "source" is not a thing, but is a place or circumstance.
It is at this point that the first crucial error is made by the reader of the law as the reader usually does not understand that the law means exactly what is says and is not subject to anyone’s interpretation, as even the U.S. Supreme Court lacks any such power. The error is one reading the remainder of § 61 before the list of the items 1 to 15. These items 1 through 15 have been read by millions to be "sources" of "gross income" when in fact, as set forth in the rules promulgated by the Secretary of the Treasury in 26 CFR § 1.861-8(a)(3) these items listed are not "sources" as set forth under the law but are merely "items".
Most accountants refuse to even see the word "source" in the law and thus avoid its very significance. This was done by one accountant recently, despite his pointing out that the word "source" reportedly appears 214 times in the United States Code. Such an approach renders the word "source", as employed by the Congress superfluous (of no effect) in the face of the fact that the law states that ‘items’ come from a ‘source’.
In our search for ‘sources’ we came upon 26 CFR § 1.861, the Regulations for § 861 Sources of Income from within the United States. This was the only section of law addressing U.S. source income and we hoped to find the taxable U.S. sources here. In the process we learned that we were further correct, as our understanding of the law is supported by the next rule as shown in 26 CFR §1.861-8(a)(4). This law states that in order to have taxable income, one must have items of gross income from a taxable "source" as listed in 26 CFR §1.861-8(f)(1). This next law lists all of the taxable ‘sources’ from which one must have items of income in order to have a taxable income for the purpose of the federal income tax. Upon review of this list, it should be clear to most U.S. Citizens that they never made any gross income as they never made any income from any of the taxable sources as set forth under 26 CFR § 1.861-8(f)(1).
Now, for the doubters in the crowd, it has been set forth by the Secretary of the Treasury in the Code of Federal Regulations at 26 CFR § 1.861-8(a)(1) that these are the rules that his office has set forth to be used for the purpose of determining income which is taxable for the purposes of the federal income tax.
Follow this next point...
The Congress wrote in the Amendment "…whatever source derived…", after which, the Secretary made a list of specific "sources" in the Code of Federal Regulations, the Regulation was then published in the Federal Register for correction before becoming the law as agreed to between the Congress and the Administration. Therefore, it is plain to see the legal fact that the Secretary has limited the taxable sources to those that are clearly listed in 26 CFR § 1.861-8(f)(1) for the law means exactly what it says, and the Congress has not protested the Secretary’s actions.
Furthermore, the Secretary has set this fact into stone so to speak. The fact that 26 CFR 1.861 sets forth the rules for determining taxable income for the income tax, this section of the regulations are the only such rules, there are no others. So, it is equally revealing in the Temporary Regulation of 26 CFR § 1.861-8T(d)(2)(ii)(A) that "exempt income" means income which is "excluded" from the law, and that § 1.861-8T(d)(2)(iii) lists the "Income that is not considered tax exempt". Between these two sections of regulations, that which is to be taxed is by law very limited.
Black’s Law Dictionary 6th Edition plainly states what the legal definition for an exclusion is therefore that which is denied entry under the law is "exempt income", as least in accordance with the instructions given to the IRS by the Secretary of the Treasury.
Here you have it. In the most simplistic terms available and free to all. The root of the 'income tax' is in "gross income" as defined by law. The root of "Gross income" is a specific taxable source as set forth in the law. Exempt income is income which is "exempt" (an exemption is made or given) "eliminated" (was there but is no longer as it was repealed), or "excluded" (denied entry or admittance into the law). Non exempt as set forth in the Secretary’s rules is income is that income earned by foreigners here in the U.S. and foreign earned income by U.S. Citizens.
Can you see how the claim that all U.S. Citizens are not subject to the income tax is legally incorrect? If a U.S. Citizen has 'income' from the listed 'source', then that income is then subject to the 'income tax'.
Can you see how the claim that 'the income tax' is 'unconstitutional' is legally incorrect? The 'income tax' is perfectly constitutional... and it is limited in application.
The facts reveal that most American’s income has always been "exempt income" as defined by the Secretary of the Treasury. Since we were intimidated by the volumes and volumes of words which make up all of the internal revenue laws (26 USC and CFR), abided in a belief that the government could and do us no wrong, and were terrified of the idea that we could have been acting under a law incorrectly for so long, we have not seen this simple truth that there are no U.S. taxable sources for U.S. Citizens living and working in the U.S.
We say this with renewed vigor as our position has recently undergone scrupulous examination by two CPA’s, one also being a Professor. Both were asked to provide citations of the taxable U.S. sources for U.S. Citizens living and working in the U.S., as the Secretary had set forth rules regarding Foreign income and Foreigners. Neither has bothered, or more likely, has been able to provide the law. Our position is that it doesn't exist.
Did the Secretary fail to provide such rules, or did he not have a statute to begin from?
So it is very important to understand that it is not only what a law says that is important, but also what it does not say. For what it legislates over is included in the law, that which the law does not legislate over is excluded from the law.
Excluded income
Have you searched Income tax law
for Excluded income?
A. Go to http://ecfr.gpoaccess.gov
B. Click on "Simple Search"
C. Enter Title 26 and Search for:
1. excluded income
2. eliminated income
3. eliminated items
4. specific sources
5. specific guidance
6. how to determine taxable income
7. the sources of income for purposes
of the income tax
8. income that is exempt or excluded
9. exempt, eliminated, or excluded income
10. exempt income (include HTML)
11. “exempt income” (include all)
12. “deductions” (include all)
13. deductions to excluded income
14. income that is not considered tax exempt
* RESULT - All located in Section 861
* Specifically, see Sec. 861-8T(d)(2)(ii), & (iii)
More info at http://WhatisTaxed.com
"Ignorance of the law is no excuse."
for Excluded income?
A. Go to http://ecfr.gpoaccess.gov
B. Click on "Simple Search"
C. Enter Title 26 and Search for:
1. excluded income
2. eliminated income
3. eliminated items
4. specific sources
5. specific guidance
6. how to determine taxable income
7. the sources of income for purposes
of the income tax
8. income that is exempt or excluded
9. exempt, eliminated, or excluded income
10. exempt income (include HTML)
11. “exempt income” (include all)
12. “deductions” (include all)
13. deductions to excluded income
14. income that is not considered tax exempt
* RESULT - All located in Section 861
* Specifically, see Sec. 861-8T(d)(2)(ii), & (iii)
More info at http://WhatisTaxed.com
"Ignorance of the law is no excuse."
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