Gold Finds Support As Fiscal Cliff Talks Turn Sour

Discussions on the Fiscal Cliff crisis soured on Wednesday as President Barack Obama accused Republicans of digging in their heels due to a personal grudge against him, while a top Republican called the president irrational.

Obama said he was puzzled over what was holding up the Fiscal Cliff talks and told Republicans to stop worrying about scoring “a point against the president” or forcing him into concessions “just for the heck of it.” “It is very hard for them to say yes to me,” he told a news conference in the White House. “At some point, you know, they’ve got to take me out of it."

The rise in tensions threatens to unravel significant progress made over the last week in the so-called Fiscal Cliff talks, reported Reuters. Boehner and Obama have each offered substantial concessions that have made a deal look within reach. Obama has agreed to cuts in benefits for seniors, while Boehner has conceded to Obama’s demand that taxes rise for the richest Americans. However, the climate of goodwill has evaporated since Republicans announced plans on Tuesday to put an alternative tax plan to a vote in the House this week that would largely disregard the progress made so far in negotiations.

Obama threatened to veto the Republican measure, known as “Plan B,” if Congress approved it. Boehner’s office slammed Obama for opposing their plan, which would raise taxes on households making more than $1 million a year and is a concession from longstanding Republican opposition to increasing any tax rates.

“The White House’s opposition to a backup plan … is growing more bizarre and irrational by the day,” Boehner said through his spokesman, Brendan Buck. John Boehner expressed confidence the House would pass the legislation, known as “Plan B,” on Thursday. He urged Obama to “get serious” about a balanced deficit reduction plan. Global investors are on edge over the Fiscal Cliff talks, and U.S. stocks fell on Wednesday following Boehner’s comments. An acrimonious presidential campaign that culminated in Obama’s re-election on November 6 has added to the bad blood in Washington between Obama and congressional Republicans.

The two sides also clashed bitterly last year over the government’s limit on borrowing – known as the Debt Ceiling – an episode that nearly led the nation to default on its debt. On Wednesday, Obama said the fiscal cliff must not get bogged down with negotiations over the debt ceiling, an issue that must be dealt with again early next year. Obama and Boehner appear to have bridged their biggest ideological difference but remain hung up on the mix of tax hikes and spending cuts meant to narrow the budget gap.

If a Fiscal Cliff deal is not reached soon, some $600 billion in tax hikes and spending cuts are set to begin next month. Senior administration officials described negotiations as at a standstill and Obama warned he would ask everyone involved in the talks, “what it is that’s holding it up?” Still, the top Republican in the Senate said resolution could come by the end of the week. “There’s still enough time for us to finish all of our work before this weekend, if we’re all willing to stay late and work hard,” said Senate Republican leader Mitch McConnell.

Any Fiscal Cliff deal by Obama and the Republican leadership would need the support of their parties’ rank and file. Many Democrats dislike the president’s offer to reduce benefits to seniors, although some political allies of Obama have given signs they feel they could swallow this concession.

$3.5 Billion of Paper used to Smash Gold Price:
Renowned Silver Market whistleblower Andrew Maguire spoke with King World News about the state of the physical Gold Market and said that several billion dollars of paper selling from government agents was used to smash the Gold Prices yesterday. Here is what whistleblower Maguire had to say: “Gold is actually a currency, and it’s (the gold market is) intervened (in) by the government agents, which are the bullion banks. Yesterday, clearly they (the bullion banks) sold Gold in defense of the Dollar.”

Maguire continues: “Keep in mind that $3.5 billion of paper Gold was actually cleared in London yesterday. This selling was coordinated by the same bullion banks that are also active in the Comex. At the same time, they are rigging enough of a decline to cover shorts into capitulating longs on the Comex Gold market.

But the Eastern central banks are simply sitting back and allowing this defense of the dollar to occur. They know what’s going on….

“They know that the (US) government is shorting foreign exchange gold and they are long the dollar. So they (the Chinese) simply scoop up what (gold) they can at the resulting discounted price. What is astounding is that the price of world Gold and Silver is actually established in that manner because it has nothing to do with the physical market at all. Essentially what they (the Chinese) are trying to do is divest themselves of their dollars, euros, yen and any other fiat currency as fast as they can. They are not stupid, they are going to sit back and allow the governments to defend these (paper) currencies.

So their bids are in the market and they are totally flexible at every discounted fix price. There does, however, reach a point where these leveraged paper sales simply run out. Physical allocations force the selling bullion banks to actually buy back some of these physical allocations. You just have to look at the current backwardation. It offers a good window into what is actually occurring right now.

A lot of people might ask, "Where are we?" It’s just a question of how much physical (gold) is made available, leased to the bullion banks, to meet these allocations. That’s why I monitor this wholesale market so closely and what I see currently is this paper is rapidly being converted into (physical) gold at a totally unsustainable rate. So this stair-step higher (we have been seeing in the gold market for so long) is these Eastern central banks capitalizing on this discount.

The above information was just a small portion of what whistle blower Maguire had to say. This tremendous segment provides a fascinating look at what is really taking place behind the scenes in the Gold war. Courtesy – Kingworldnews

Fitch Warns the US of a Rating cut on Fiscal Cliff:
Ratings firm Fitch said on Wednesday it is more likely to strip the United States of its triple-A status if a political deal on the Fiscal Cliff is not reached to halt $600 billion of spending cuts and tax hikes set for early next year. “Failure to avoid the Fiscal Cliff … would exacerbate rather than diminish the uncertainty over fiscal policy, and tip the U.S. into an avoidable and unnecessary recession,” Fitch said in its 2013 global outlook, published on Wednesday. "That could erode medium-term growth potential and financial stability. In such a scenario, there would be an increased likelihood that the U.S. would lose its AAA status."

Fitch currently assigns the United States its highest rating but with a negative outlook. Peer Standard & Poor’s has already downgraded the world’s biggest economy, lowering the United States to AA+ in August 2011 – a move which appears to have done little to dull the attraction of U.S. bonds for investors. Fitch added that an agreement on a multi-year deficit reduction plan to stabilize U.S. debt and public finances was likely to see the country keep its triple-A rating. However, it went on to say that: “failure to put in place a credible fiscal consolidation strategy during 2013 would be likely to result in the US losing its AAA status.”