As well as this chart of sovereign interest to revenue, in which Japan is also an outlier:

And certainly this chart showing Japan’s straight diagonal line of debt/GDP:

But how many have seen this chart showing global sovereign debt as a percentage of total government revenues?

Is there now any doubt after seeing this why the proverbial four horseman are really just one giant black swan, only not one of failed bond auctions or something quite as dramatic, but something as simple and mundane as the smallest uptick higher in rates which would blow up the entire global financial farce, starting with the most imbalanced domino of all – the land of the rising sun?… And that at least Greece is not Japan?

Source: Harvard Business School, 9-212-091, Hayman Capital Management,

“This makes me very uncomfortable because I’ve always been very wary of the whole derivative situation. I believe the notional value of the outstanding derivatives is comfortably north of one quadrillion dollars. The Bank of International Settlements changed the definition, so they said there is only $700 trillion worth of them, rather than one quadrillion.”

But it doesn’t make any difference, these (derivatives) are many, many multiples of the world GDP. If these things get in any trouble, and I think the JP Morgan thing may be the first sign of significant trouble again, it’s fantastically important to the whole financial situation. In a rational market the gold price should have been up $100, not down $40 in the wake of this.

I would defer to Jim Sinclair, who I have the utmost respect for on this one. He has said for a long time that the derivative situation ‘guarantees quantitative easing to infinity,’ which is one of the great statements of all-time….

“I think this JP Morgan revelation just confirms that everything Jim’s been saying for a long time on this subject is dead right. The fact that we will have QE to infinity would suggest that an intelligent person would be buying every single ounce of gold and silver he can get his hands on at these prices.

They are trying to sell this idea that gold goes down on the ‘risk off’ trades that we are experiencing now. And that the ‘risk off’ buyers all go running into the US dollar and the US bond market. I think those are two of the riskiest things on the planet. But somehow they are still getting this ‘Pavlovian response’ that when things are bad out there, you should sell your gold and buy US bonds. It’s ridiculous.

It’s important, at this time, that people who have been around, and have a pretty good grasp of what’s unfolding, should express their views to the public just to counteract the propaganda they are receiving from mainstream media. It’s tough enough out there without being lied to all of the time.”

Embry had this to say regarding gold: “What they want to do is keep it (gold) in a range. Right now that range is $1,550 to $1,900. Can it go below $1,550? Sure, in the short-run it could. But the fact is the big move coming from these levels is going to be to the upside.

Trying to pick a bottom is always a difficult thing to do. Put it this way, you’re a lot closer to a significant bottom than you are to a top.”

I see no reason for gold /silver to be getting hammered this badly, as fundamentally the debt keeps rising by about 100 billion a month in the USA alone. However due to operation Twist this is not showing up now on the Feds balance sheet. Op Twist is where the Fed buys long term bonds and keeps rates at zero for the banks to artificially create a no lose carry trade for themselves.  Banks can buy Short dated bonds and are guaranteed to make 20-30 Basis points with no risk as the Fed has told them rates will stay at zero till 2014  . . .

The only reason for gold to fall is the slight strength in the US$ index.  But the move does not / should not mean gold and silver should be getting this badly whacked! Especially given the multiple issues in Europe and Japan Debt load.

U.S. Dollar Index Daily Chart  

Gold

  The recent price action in gold has been quite ugly and price is resting at key support stemming from an intermediate-term descending channel shown above. Should the lower bound break to the downside a sharp move lower could play out.

It is important to remember that gold is coming off a monster multi-year bull run and it only serves to make sense that a nasty pullback that shakes out the bulls would be forthcoming.

Gold and silver both are starting to become oversold on the daily time frame. While the gold bugs have been feeling pain the past few weeks, the gold miners have been taken out back to the woodshed for a good whipping. The miners have been absolutely crushed in 2012 .

Gold Bugs Index Weekly Chart 

 As can be seen above, the Gold Bugs Index (HUI) has been under considerable selling pressure since early September of 2011. However, note how low the True Strength Index is based on 5 years of price data. We are nearing the same level that we saw back in 2008 which marked a major bottom that ultimately resulted in a monster move to the upside for the gold miners.

I am of the opinion that this chart demonstrates quite clearly that a great buying opportunity for gold, silver, and the miners is likely going to present itself in the near future. I will be watching this price relationship over the next while waiting for a strong entry point for a longer-term purchase. After this pullback concludes, the potential returns that could occur in gold, silver, and the miners could be breathtaking. 

The start of this week has been ugly so we may very well be there this week and with the bottom in place !

The USA adds $3.8 bil­lion of debt to this fig­ure each and every day. This is adding $158 mil­lion to this fig­ure each and every hour. The inter­est on the Nation­al Debt reached an all-time high of $454 bil­lion in 2011 with an effec­tive inter­est rate of about 3%. Much of this inter­est is paid to for­eign gov­ern­ments like China, Japan and OPEC nations. This is $1.2 bil­lion per day of inter­est paid most­ly to for­eign­ers. With just the slight­est bit of crit­i­cal think­ing one could eas­i­ly per­ceive that with a Nation­al Debt of $25 tril­lion and a like­ly increase in inter­est rates to at least 6%, our annu­al inter­est costs would increase to $1.5 tril­lion per year. The Unit­ed States need­ed to imple­ment a long-term plan ten years ago to address the impos­si­ble to ful­fill promis­es made by its cor­rupt, men­tal­ly bank­rupt politi­cians.

The Fund continues its strong track record of consistent returns since launch in 2000 and is now in it’s12th year and I am pleased to include the latest Brandeaux Student Accommodation Fund Current Performance for BSAF£ at a glance as at 31st March 2012:

• Latest 12 month return +9.59%
• 3 Years total return +32.59%
• 5 Years total return +62.30%

Puts things into a bit of perspective. . . now about gold, do you have any?

Why has Japan been able to sustain its deflationary collapse for over 3 decades? Simply – an ever rising currency.