Looking at the below graph, since gold has been considered a currency for thousands of years, if we price the behavior of the S&P 500 in terms of gold, the gain in the S&P 500 since the beginning of the year shrivels to a 3.92% rise.

Though this term has primarily been used to describe the consequences of covert military operations, “blowback” is an appropriate term to use to describe the coming consequences of banking fraud because the US government, US Federal Reserve, Wall Street, the US Treasury, and the Exchange Stabilization Fund have all engaged in domestic and international financial and monetary transactions that have been kept secret from the world, and that will have severe and negative consequences in the not so distant future. In fact, I predict that the blowback of these activities will not only exceed, but far exceed, the fallout the world experienced in 2008 at the prior apex of this current crisis. Most people today can not even fathom how bad the situation will become primarily because of all the secrecy that the banksters have engaged in – in US Treasury markets, the gold markets, the US dollar markets, agriculture commodities, stock markets, and financial markets – in hiding reality from the people.

Washington, DC – The U.S. Commodity Futures Trading Commission today announced that it is withdrawing two no-action letters that provided relief from federal agricultural speculative positions limits set forth in CFTC regulations (17 C.F.R §150.2). “I believe that position limits should be consistently applied and vigorously enforced,” CFTC Chairman Gary Gensler said. “Position limits promote market integrity by guarding against concentrated positions.” In CFTC Letter 06-09 (May 5, 2006), the agency’s Division of Market Oversight (DMO) granted no-action relief to DB Commodity Services LLC, a commodity pool operator (CPO) and commodity trading advisor (CTA), permitting the DB Commodity Index Tracking Master Fund to take positions in corn and wheat futures that exceed federal speculative position limits set forth in CFTC Regulation 150.2. Subsequently, in CFTC Letter 06-19 (September 6, 2006), DMO granted similar no-action relief to a CPO/CTA employing a proprietary commodity investment strategy that includes positions in Chicago Board of Trade corn, soybeans and wheat futures contracts. Among other things, DMO’s no-action position in both cases stated that any change in circumstances or conditions could result in a different conclusion. DMO has previously stated that the trading strategies employed by these entities would not qualify for a bona fide hedge exemption under the Commission’s regulations. DMO will work with each of these entities as they transition to positions within current federal speculative limits. The withdrawal of these no-action positions is very specific and limited and does not affect any other no-action or regulatory positions taken by the CFTC or its staff with regard to these entities or other market participants.

The last time I specifically wrote an article about an imminent US market crash titled, “Will US Markets Crash Now – or Later?” on April 23, 2008, the S&P 500 peaked just 17 business days after I made that call, at about 1,440, and then proceeded to fall until it bottomed at about 673 in early March of the following year. I think that we would all agree that a plunge of more than 50% aptly qualifies as a crash, yet if you visit that article, you will see that the bulk of comments that followed my article ridiculed my prediction back then, even though I was supremely confident of that my prediction would manifest itself. Today, by my estimation, there are just two possibilities to a global stock market rally that has occurred on the backs of government deception and financial industry executive lies.

This historical phenomenon, in fact, birthed the coining of a new term, “irrational exuberance”, by the ultimate insider, former Federal Reserve Chairman Alan Greenspan. Of all people, it is no shock that Alan Greenspan perhaps understood this concept better than anybody else for it is the firm that he worked for, the US Federal Reserve, that largely continues to create such dissonance in markets today. In fact, today, dissonance in stock market behavior and economic reality may be at one of the highest peaks since the period that preceded the Great Depression. In the absence of free markets, rising stock markets and declining economic conditions are entirely feasible.

“Four weeks have passed since American bonds were confiscated from two Japanese men who were traveling on a direct train to Chiasso, Switzerland, and while there has been clarification of some – very few -points, Italian authorities have remained silent on the rest of the episode…The major English-speaking newspapers ignored the story for a couple of weeks. They only started to report on it after the Bloomberg agency carried a story on June 18th, in which a spokesman for the Treasury, Meyerhardt, declared that the bonds, based on photos available on the Internet, were ‘clearly false’. The same day, the Financial Times [FT] published an article whose title laid the blame for the (alleged) infringement at the feet of the Italian Mafia, despite the fact that the article failed to make even one possible connection with the episode in Chiasso.”

Ever since the launch of the US gold ETF, GLD, in November, 2004 and the launch of the US silver ETF, SLV, April 2006, a debate has raged in analyst circles regarding the legitimacy of these two investment vehicles as a proxy for physical gold and physical silver. Though all evidence against investing in these two trusts has been entirely circumstantial, plenty of red flags exist in both the GLD and SLV prospectuses that should steer any logical, rational human being that wishes to own gold and silver away from these two investment vehicles.

Though decades late, such new regulations, if they pass, will be a monumental victory against the big banks and in favor of free markets. The pertinent points of this plan are as follows:

NEW YORK (Reuters) – Laid off from Wall Street? The CIA wants you — as long as you can pass a lie detector test and show that you are motivated by service to your country rather than your wallet. The Central Intelligence Agency has been advertising for recruits and will be holding interviews on June 22 at a secret location in New York.

Sergey Aleynikov, an ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, U.S. officials said. Aleynikov, 39, who has dual American and Russian citizenship, is charged in a criminal complaint with stealing the trading software. At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft poses a risk to U.S. markets. Aleynikov transferred the code, which is worth millions of dollars, to a computer server in Germany, and others may have had access to it, Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated.

(1) Dump many of the worst performing stocks in their portfolios; and/or

During research for my Public Policy graduate thesis, I discovered that politicians often granted legislation misleading names or purposefully released misleading sound bites because they realized that in an attention deficit world driven by immediate gratification, headlines and the first three sentences of any leading story could effectively sell deception. I discovered that bills designed to make development of wetlands easier were given names like the Wetlands Conservation bill. I discovered anti-immigration bills that had been sold to the masses with promises to save billions in taxpayer money by denying schooling to immigrant children, when legal precedent had already been set at the highest levels of state court that education could not be denied to any child, legal or illegal. And I discovered that these shenanigans that markedly deviated from reality were not uncommon.

“Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollars each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.”

Since losses created by crashing stock markets are self-explanatory, let’s consider the opposite possibility of a continuation in the current global stock market rally. I’ve admittedly devoted few very articles to the possibility of a continued rally in US and European markets not because I don’t believe that this is a credible possibility but simply because the direction of the US stock market is largely irrelevant to my overall investment strategy (I’ll explain what I mean by that comment later in this article).

The latest example of this is the following. On May 6, Friedman, Billings, Ramsey Group analyst Paul Miller stated that J.P. Morgan Chase & Co. (JPM) “would probably be the only one of the 12 commercial banks submitting to the stress tests that won’t need more capital.” Several weeks later, on June 1st, J.P. Morgan Chase (JPM) announced that it planned to raise $5 billion in a secondary offering.

However, it is important for an investor to understand that due to the not-so-invisible hands of Goldman Sachs (GS), JP Morgan (JPM) and the Plunge Protection Team, quite often, the US market can move higher for sustained periods of time even when the fundamentals of the US economy at large are atrocious. This is the fiat money-induced phenomena otherwise known as irrational exuberance. In the long run, the fundamentals of the economy at large will catch up and drive US stock market behavior once again.