Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 1

Money,Macro&Markets
German terms-of-trade 1963 to date
Astheongoingriseinrawmaterialspriceshasbeenbrought
intosharperfocusbytheoilpricespikeoccasionedbythe
Colonelslittlelocaldifficulties,severalvarietiesofmyths,
halftruths,andLaputanimpossibilitieshaveonceagainbe
guntoinfestthepunditospheretothepointwherethestill,
smallvoiceofrationalanalysisisindangerofbeingentirely
drownedout.

Arguablytakingthepalmamongtheseistheludicroussug
gestionthatacountrysuchasJapanalanderroneouslybe
lievedtobelanguishingindeflation(asopposedtobeing
oneenjoyingtheproductivityledbenefitsofmodestly
decliningpricesamidamildlyincreasingnominalsupplyof
moneyandcredit)might,insomeperverse,reverse
causalityway,benefitfromthefactthatoneimportantsubset
ofitsexternalsuppliershassuddenlypresenteditshouse
holdersandbusinessmenwithamuchlargerbillforitswares
thanhasbeenitswont.Indeed,sopowerfulisthetabooasso
ciatedwithafiatmoneynotdeclininginvaluefastenoughto
satisfythebrayingherdofunderconsumptioniststhatital
lowsseeminglysaneindividualstoadvancesuchathesis
eventhoughtheyaresimultaneouslytobeheardexpressing
thefearthatwhentheselfsamemisfortunevisitssomesup
posedlylessblightedpopulationi.e.,theirownthetaxit
representscannotfailtoposeaseverethreattotheircontin
uedwellbeing.

Whatthemainstreamfailstoconsideristhatifhigheroil
pricesareatax,thensoarehigherbananaprices,orhigher
Tshirtprices,orhighersodaprices.Whatitsmembers
thereforeoverlookisthatthedevelopmentofhigherprices
everywhereastateofaffairstowardswhoseattainment German TOT (bl) v IfO EX-CA 2000-to date
theyallmindlesslyapplaudtheFederalReserveforstriving
Material Evidence by Sean Corrigan
isnotablessingofmodernmonetarymanipula
tion,butabane.
Implicitlyamemberofthissameschoolofcart
beforethehorseKeynesiansisformerpresidential
advisor,ChristineRomer.Sheitwaswhousedthe
pagesoftheNYTimeslastweekendtoperpetuate
thefallacythatwhenRooseveltandhispetmonetary
crankswereploughingunderfoodandslaughtering
herdsevenaspeopleinthelandwereliterally
starvingorwhentheywerearbitrarilytinkering
withthepriceofgoldinsemioccultfashionoverthe
greatmansbreakfastegg,theirsoidisantcouragein
abandoningwhatwasthentheeconomicorthodoxy
broughtaboutarapidendtotheDepression.This
convenientlyignoresthefactthattheslump,infact,
turnedouttobemuchmoreprofoundandpro
tractedinNewDealAmericathaninmostotherad
vancednations.Somuchso,indeed,thatadifferent
strainofGeneralTheorycounterinductionistsfre
quentlypopsuptoassureusthatthehorrorsof
WorldWarIIalsohadtheirsilverlininginthatthe
blessedupsurgeinconsumptionassociatedwith
tensofmillionsofdeaths,thereductionofwhole
citiestocinders,andthedeliveryofhalftheglobeto
Communisttyrannydidatleastfinallydispelthe
bogeyofpersistentovercapacity.
Warmingfullytohertheme,Ms.Romerwentmuch
furtherinherharuspications,insistingthatifonly
thehighercouncilsoftheFederalReservewerenot
nowpopulatedexclusivelybymonetaryhawks(sic),
thathideboundbastionofmonetaryrectitudecould
engageinmuchmoreaggressivequantitativeeasing,both
insizeandinscope,tofurtherlowerlongterminterest
4th March 2011
ratesandvalueofthedollar.
Meanwhile,thatgloweringeagleamongthe
preeninghawks,ChairmanBernankehimself(no,
really,thisisjusttoomuchevenforirony!)had
thegalltotellaEuropeanaudiencethatnoneof
theworldspresentproblemswerehisfault.He
evenwheeledoutthehoaryoldfableofthe
globalsavingglutsomethingwethoughthad
beenlaidtorestalongsideitscomplementary,
preCrashidiocyofaglobalassetshortage.
Asthemanbehindthescreenofthemostimpor
tanteconomyintheLandofOz,Bernankeispre
sumablynotunawarethatthesinsofbothomis
sionandcommissionofwhichheisguiltywhen
managingtheworldsreservecurrencymust
havewiderramifications.So,whenwetalkof
savinggluts,whatwereallymeanasnolessa surplusesgeneratedbytheworldssixbiggest,
figurethanOtmarIssingpointedoutafewyears
agoisnotsomuchthevoluntary,exantedesire many,Switzerland,theNetherlands,andTai
toforegoalastnickelanddime,presentcon
sumptionofAmericangoodsandservicesasitis
theunfortunateresultofthepressing,expostdif
ficultyofdisposingofthevastsurplusofnew
dollarsroutinelybeingcreatedwiththefulland
enthusiasticblessingoftheFed.
Itishardlyacoincidencethat,duringadecade
whichwenowratherbelatedlyrecogniseas
oneduringwhichdangerousimbalanceswere
buildingup(evenifwehaveyettoadmitthedi
rectculpabilityforthisoftheillstarredcentral
bankmeasurestakentocompensatefortheCB
seededTechbubblewhichinauguratedthepe
Please see accompanying risk & legal disclaimer 2
riod),theUSrancumulativecurrentaccountdefi
citsofnolessthan$5.8trilliondollars,afigure
equivalenttomorethanafifthofthesimultane
ousriseinglobalGDP.Giventhatthislastmeas
ureisimplicitlybiasedtowardsendconsumption
ofhoweverilljudgedaformitshouldbea
soberingthoughtthatsomuchofitsincreasecan
belaidatthedoorofanAmericanprofligacy
whosebitterlegacyistheincreasinglyunsustain
ableweaknessofthecountrysfinances.
Toputthatenormoussumintoperspective,we
cannotethatthecumulative,tenyeardeficitsrun
upbyallotherOECDmembernationsplusIndia
andBrazilcametoonly$3.8trillion,orfullya
thirdlessthantheUSoverspend.Dependingon
yourtaste,wecansaythattheUSalonewasre
sponsibleforeatinguptheequivalentofallthe
nonoil,exportingnations(China,Japan,Ger
wan),orforalmosttwicethesurplusesrackedup
byOPECandRussia,combined,inaperiodwhen
energypriceshitalltime,nominaldollarhighs.
Itfurthertellsussomethingofhowcorrectlyto
apportiontheblameforthepresentlyinflamed
natureofmarketsforbothgoodsandassetswhen
weseethat,evenintheselasttwoyearsofsup
posedAmericandeleveragingandenforced
creditstringency,theUScurrentaccountgaphas
stillmanagedtoamounttoalmosthalftheoverall
totalregisteredbytheentirerosterofOECDdefi
citnations,takenalltogether.
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 3

Now,itistruethattherecipientsofthatGilgameshlikeflood TheDissavingGlutCurrentAccount(blns)
ofUncleSamssuspectIOUswerenotboundtopilethemup 2010e
inthelocalSWForCB/Treasuryforeignexchangeaccountbut
neitherisitobviousthatsimplytorefuseallassistancetothe 2009

localacquirersofdollarsleavingthesetodisposeofthemin
2008
theirownindividualwaywouldhavegreatlymitigatedthe
subsequentevils.Afterall,therewasnoofficialcurrencypeg 2007
gingatworkinContinentalEurope(notoutsidetheperni
2006
cioussystemwhichbankrolledtheimportunatePIIGS,at
least),yethardwon,TeutonicandSwissexportdollarswere 2005
stillputtoworkbythelocalbanksinfinancingsomeofthe
mostarrantfolliesoftheUScreditbubble. 2004

2003
Incidentally,foralltheaccusationsofpolicymanipulation OtherOECD+INR/BRL
beingbandiedabout,weshouldnotethat,notwithstanding USA 2002
therisibledeclarationsofhewingtoastrongdollar,the OPEC&Russia
Top6EXP 2001
Greenbackhasfallenfurtherinvalueoverthedecadeinques
tiononareal,effective,tradeweightedbasisthanallbara $1,000 $750 $500 $250 $0 $250 $500 $750 $1,000
handfulofeconomicbasketcasesandoneovertmercantilist.
B ISRE ERv2 000Base

195.0
NorisitexactlyacoincidencethatanoverlayoftheUScur
rentaccountwiththeGDPfiguresforresidentialinvestment
makessuchaneatmatch.Unabletorenderamaterialsettle
mentforthemanifestoftheRestoftheWorldswaresthey 155.0

desired,duetotheirnationsgrowinglackofindustrialcom
petitiveness,Americanssimplytooktobuyingandselling
eachotherhousesonahighlydisproportionatescale,inadver C NY 115.0
tentlyprovidingthecollateralnecessarytoattractfundsback
intothecountryandsotobalancethebooks,howeverprecari
ously,withoutoverlyscaringthedollarsownerswithan
U SA 75.0
evenfasterpaceofdepreciationthanwasalreadyintrain.

Hereitisnotnecessarytoimaginethatalltheincomingsurfeit
ofconsumergoodswasitselfboughtontick,butonlytocoun 35.0
RUB

BRL

ROL

TRL
IEP
SKK
CZK

CAD

GRD

TWD
NLG
HUF

FRF
SIT
BGL

THB
LTL

PTE

ITL

LVL

VEB
ZAR

MYR

ZAR
EEK

PLZ
NOK

HRK

DKK

SEK

JPY

ISK
PHP

ESP

CYP

MTP

CLP

MXP

GBP
USA
AUD

NZD

SGD

ATS

ILS

DZD

HKD
ARS
PEN

DEM
FIM

KRW
CHF

BEF
IDR

INR

tenancetheideathatsomeoftheproceedsofthecredit CNY
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 4

fuelled,phoneyprosperitybeingfosteredbyBernankes USNonTradableExcess
$810 $810
makingsureitdoesnthappenherewereroutinelyleaking RE
abroad,contributingtoaraftofmisguidedentrepreneurial,as CAC(rhs,inverted)
wellasbanking,decisionsthere,too.
$685 $685
ThinkofitasifasuccessfulUSpropertydeveloper,building
contractor,realtor,mortgagebrokerorCDOpackagerin
additiontoacashoutrefijunkiehadspentanontrivialpor
tionofhisearningsonachunkofChineseelectronicandGer $560 $560

manautomotiveexcellenceshipmentsforwhichtherewere
insufficientlocalgoodseithertoactaspassablesubstitutesor
tobeacceptedinpaymentbytheforeignvendors.Note,in
$435 $435
passing,thatthislackaroseingoodpartfromthefactthattoo
manypeoplehadbecomeinvolvedinnontradable,debt
financedactivities,likehousing,defence,orgovernmentin
generalbecausethepreferentialprovisionofcredittothosesectors $310 $310
madethemseemfarmorelucrativeundertakingsthanthetough 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e
sleddingofoutcompetingoverseasmanufacturerswasdeemedto
holdinprospect. USHousingTurnoveras%ofBusinessSales
17.5
Theviciouscirclewhichallthisentailedwouldthenbecom
pletedwhenthePBOCsequesteredthedollarsfromthefirst
saleandthelocalLandesbankreceivedasadepositthosearis
ingfromthesecond,whereuponeachinstitutionwouldfeed
thembacktothoseprovidingthemortgagefinancefrom
whichourflatscreenwatching,Beemerdrivingherowasei
11.5
thermakinghislivingoreatinghisseedcorn.

Donotmisconstruetheargumenthere:thenaturalexpansion
ofmonetarymeansinthesurexportingnationisnotinitself
anevilthisis,afterall,exactlywhattheclassicpricespecie
mechanismofselfregulating,negativefeedbackscomprises.
Nordowewishtosuggestthattomakesalesoncreditis 5.5
somehownotavitalpartofafunctioningeconomy,orthatit
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isinherentlyreprehensible.True,suchbusinessshouldbe
Material Evidence by Sean Corrigan
conductedjudiciouslywithacarefuleyetothe
chancesofrepaymentandawiseconsiderationof
whattherealvalueoftherepaidmoniesislikelyto
buy,butwithoutanysuchfacility,theworldwould
undoubtedlybeamuchpoorerplace.
Wherethesebothgowrong,however;wherethey
becomedetrimentaltothechancesofsustainedma
terialprogressiswhentwointertwineddistortions
areintroducedbyourmodernday,statedirected,
financialapparatus.
Thefirstoftheseoccurswhenwhatstartedascredit
i.e.,thewilling,contractualsurrenderofthelenders
abilitytobuypresentgoodsinfavourofanacceler
atedcapacitytoacquirethemonthepartofthebor
roweristurned,bythechicaneryoffractionalre
servebanking,intomoney.Now,Adoesnotcedehis
ownabilitytobuytoacashstrappedB,butrather
hashisbankalchemicallytransmutethenarrowear
nestsoffuturepaymentwhichAcautiouslyac
ceptedfromBpresumablyinaccordwithhisspecific
knowledgeofhiscounterpartyintothefreely
employable,instantlytransferrable,generalmedium
ofexchangewecallmoney.
Inthisway,AnolongerhastowaitforBtoredeem
hispromisesbyofferingsomethingofequal,pro
ducedvalueeitherdirectlytoA,ortotheworldat
largeinexchangeforitsmoneybeforehe,A,can
enjoymoregoodsforhimself.Thismeansthatadis
crepancyhasarisenbetweenthequantityofgoodsat
handandtheamountofthemoneywithwhichto
competeforthem,allthankstothelegallyunexcep
tionable,butlogicallyinvalidtransmogrificationun
4th March 2011 Please see accompanying risk & legal disclaimer 5
dertakenbytheCBbackstopped,fractionalbank soundanddefinitionallyilliquidsystem,as
ingsystem.Thismayormaynotmanifestitselfas wellasitspartindistributingtheDanegeldby
whatistodaycalledinflationi.e.,ariseina whichitpropsupthoseTooBigToFailwhen
statisticallymassagedindexofconsumergoods theirownmaraudingthreatenstheirsurvival,it
andservicesbutitineluctablypervertsthemar anditaloneiswhatpromotesthefinancial
ketsignallingprocessbyalteringtherelative engineersgross,debilitatinghypertrophy.
pricesofpresentgoodsandbyintroducingan Thus,theblameforalltheconsequentillsof
artificialelementofpresumedcapitalavailability thisfundamentalviolationoffreemarketprin
intothediscountaffordedtofuturegoods. ciplesmustliewithitandwithitaloneThe
moreimportantthecentralbank,therefore,the
Nordoitsevilsendthere,forthisoverlapof largeritsdegreeofincriminationinthisdestruc
claimstoinstantsatisfactionalsoimbuethe tionofwealth,whatevercasuisticpleadingMr.
wholeedificewithanalarmingdegreeofinstabil Bernankemayadvancetothecontrary.
ityduetothefactthat,shouldtoomanypeople
seeksimultaneouslytoexercisesuchtheoretically Thisfirst,disastrousactofinterventionismisfur
validclaims,theirpracticalillegitimacywillbe thercompoundedbythecollusionbetweencen
revealedandthewholeshameedificeofmodern tralbanksbywhichtheyagreetotreateach
bankingwilltumble,spreadingruinfarand othersinfinitelyreproducibleliabilitiesaspartof
wide. thefoundationfortheissueofthoseverysame
liabilities.Hereweelevatetheperilsoffractional
Here,too,adreadfulinteractionprevailsbetween reservebankingtotheverypinnacleofoursys
thesetwinshortcomings,forthemassscrambleto tem,entanglingboththechronicreserveacquirer
secureonesliquidassetsfromtheperilofabank andthechronicreserveoverissuerinacloying
ingfailure(whichis,perversely,foredoomedto webofmutualfearandtemptationwhileper
bringthatveryexigencyabout)ismostlikelyto petuatingonatransnationalscalewhatshould
betriggeredbytheeconomicembolismbrought havebeenatransientgapbetweentheendsand
aboutbythepersistentcounterfeitingofcredit meansofcrossborderbuyersandsellers.
intomoneyandtheconcomitantconfusionof
capitalmeans(i.e.,purelyfinancialentities)with Asanhistoricalaside,itwastherupturewhich
actualemployablecapital(i.e.,goodssusceptible tookplacealongthesimilarfaultlineofpigon
ofuseinthecreationofadditionalvalue)asper pork,reservedoublecountinginherentinthe
AustrianBusinessCycleTheory. intrawargoldexchangestandardaspreached
byKeynesbeforehedegeneratedintoanautarki
GiventheCBsprimeagencyingivingtheillu calinflationistandnotthefailureofaproperme
sionofstabilitytowhatisaninherentlyun tallicstandardwhichsomagnifiedboththeinitial
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 6

tremorsandpolicyerrorsof192930thattheshockmounted
UK PPI Input YOY% 1975-to date
farupthefinancialRichterscaleandsoresultedintheworld
widecalamitiesof19313.

Inawellfunctioningsystemapreciousmetalspeciestan
dard,forexamplematterswouldproceedatthemacroscale
justastheyordinarilydoatthepersonal(micro)level.The
greaterabundanceofmoneyinthe(net)exporterspockets
wouldtendtoreduceitsmarginalutilitytohim,leadinghim
tovaluebothgoodsandthelabourheexpendstoacquire
themcorrespondinglyhigherincomparisontoit,thusraising
theirpriceandgraduallyloweringhiscompetitiveness.

Conversely,areducedquantityofmoneyinthepocketsofthe
(net)importerwouldleavehimfeelingalackwhichshould
bringaboutanequalandoppositerestorationofrelative
valuationandpricing.Actingbothtogether,theseshifts
wouldprovideanongoingimpetusbacktowardsadynamic PhillyFedOutlookforPricesPaid
100
balance,wellbeforethewholeproductiveapparatusbecame
lockedintoahighlysuboptimalpatternofoverexposureto
aneverlesscreditworthy,foreigncustomerbasewhichrelies 80
toolittleonitsown,savingsstarvedindustrytogenerateex
changeableworthandtoomuchonaddingtothecrushing
60
burdenofassociated,offshoreobligationsithasissued.

Restassured,therewouldstillbetradesurplusesandtrade 40
deficitsunderanunhamperedsystemofpayments,butthey
wouldneverloomanywheresolargeiftheadditiontothe
20
moneybackingreservesofthoseincreditcouldonlycome
aboutbymeansofanequalandoppositereductioninthe
reservesofthoseindebtanaturalmotionforwhichthe 0
overoptimisticdependenceonacommensurateadjustment
takingplaceinunanchored,oftenwildlyfluctuating,ex
20
changerateparitiesisaverypoorsubstituteaswellas
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impracticablybadpolitics.Thenagain,suchaneconomicsof
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 7

illusioninpreferringastealthyerosionofthecapitaleaters 14.0
Th eOn ly G am einTo wn :realU SA M SE ZM 1yo y%
livingstandardsviaexternaldevaluationtoamorehonestrec
ognitionoftheeffectsoftheirprofligacythroughinternalre Diff(rhs)
E ZM 1
valuationisparforthecoursefortheKeynesinspiredmain
US A M S
streamofinveteratemoneyillusionists 10.0

Bycontrastwiththenatural,Humeanprocessofzerosum
reserves,thepresentsystemrepresentsnothinglessthana
6.0
schemeofPerpetualQEonthepartofdollarbuyingcentral
banks;onewhichthereforeexertslittleornodisciplineonthe
politicallypliableproclivitiesofthedollarissuingcentral
bank,asJacquesRuefffamouslyrecognisedwithhisallusions 2.0
tothedeficitwithouttears,thechildishgameofmarbles,
andinhisfableofthefoolishtailoreverwillingtoswapsuits
forhiscustomersfreelyissuedIOUs.
2.0

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If,innormalcircumstances,eventhemostdyedinthewool
inflationistscanrecognisetheinadvisabilityofpursuing
orthodoxQE(adenominationtowhichweareforcedsince
ChineseM1YOY%USAMSYOY%:Outright&weightedbyTrade(China)&Sales
adeviancysowidelypractisedcanhardlynowmeritthe (US)
30.0
adjective,heterodox),becauseofthelackofrestraintitim
pliesuponallthosewishingtoborrowmoneynotleast
amongthemtheinsatiableJacobinmeddlerswhotoilinfer 20.0
nallyinthebowelsoftheProviderStatetofenceinourfree
domssoweshouldcondemn,outofhand,thiswhole,on
10.0
goingbusinessofQEbyproxyinnolessvehementaman
ner.
0.0
Thatdoesnot,however,leadtotheverdictthatitisallthe
faultoftheOthersandthattheFedstandspristinelyabsolved
ofallcrimes.Afterall,theOthersareperforceoperatingun 10.0
RevWTDYO Y%
derdoctrinespromulgatedby,andwithinaninstitutional
OutrightYOY%
frameworkminutelydevisedby,theglobalhegemon;anad
20.0
mixturewhichconsistsoferroneousconclusions,falsely

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drawnlaRomerfromthetraumaoftheGreatDepres
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 8

sion,andvenal,fullspectrumdominance,selfinterest.

Thus,thoughneitherthediligentMr.Wunortheassiduous
HerrMeyercouldhavebeenexpectedtorealiseit,whatthey
wereengagedinwasnottheinvestmentofsomeofthefruits
oftheirsuccessful,overseasbusinessendeavoursinthe
Americanpropertymarket,asmuchasintheoftenindirect
provisionoffinancetotheirowncustomersaffordingthese
themeanstocontinuetobuytheirgoodsalbeitinaform
issuedagainstthedubioussecurityofacondopossibly
Value of NYMEX Crude Net Spec
ownedbyanentirelyunrelatedthirdpartyofincreasingly long >> $30 billion
questionablestanding.

Hence,whentheChuckPrinceCharlestonsuddenlystopped
in2008,theinitialimpactwasjustasdramaticonthemarket
formachinetools,ceramicmagnets,andsiliconwafersasit
wasonlumber,carpets,anddishwashersand,so,theshock
hitthesurplusnationseverybitashardasthedeficitonesas
theyallrealised,totheirhorror,thattheyhadallbecome
nothingmorethanimprudent,Rueffiantailors.

Sincethen,ofcourse,thegamehasbeenreplayedataneven Brent Profile from the 24/2 highs.

Huge, $1.65 selling tail above $118
morefranticpace,withgovernmentslargelytakingpoleposi
bars further upside for now
tionasthedriversofdeficits,themediaofmonetizationand,
hence,theinflamersofinflation.Nooneiswhollyinnocentin
thisregard,butitisclearthat,ifthePBoChasviedmanfully
withtheFedforthelaurelsformuchofthecourseofthis
dreadfulracetothebottom,onlythelatterinstitutionwas
guiltyofredoublingitseffortsatjustthewrongmomentlast
yearandonlythisinstitutionwashubristicenoughtoac
companyitsoutragewiththenakedlyinflationistmanifesto
issuedbyitsChairmanamidthehighprofilemediafestofthe
JacksonHoleconfabulation.

Bythetimethislastblunderworksitswaythroughthesys
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 9

tem,itwillnotjustbetheworldstinpottyrantsandbid
PEXDAX v DCIIM-TWI 2007-td
dableclientkingswhowillpaythepricefortheFedsrepre
hensiblepolicyofaprsmoiledluge,butitwillbethe
ordinarymanandwomanwhowillhaveoccasiontoruea
programmesorepletewithintellectualarrogance,power
worship,andawilfulblindnesstoitsawful,unintended
consequencesthatonlyaKrugmancouldapproveofit.

CommodityCorner

Atthispoint,nodiscussioncantakeplacewithoutoffering
someprognosticationontheoilprice.Sufficeittosaythatthis
isdefinitelyacaseofKnightianuncertainty,ratherthan
merelyoneofrisk.OnecannotknowwhattheQadhaficlan PEX/DAX TR - last 12 months
willdoprevailorturntailand,ifthelatter,simplydepart
ortaketheSamsonoptionastheyflee.Thus,theimmediate
fateof~5%ofOPECsuppliesandperhaps2%oftheglobal
outputofoilmustremainindoubt.

Thesmallpercentageshereshouldmeanthatthethreatof
actual,physicalshortagesshouldbereadilydispelledbutthis
isnottotrivialisewhatmaybeadisproportionate,marginal
effectonperceptionsofenergysecurityandhenceonboth
outrightpricesandcurveshapes. DCI Ind Metal x TWI - last 12 months

Withfewotherformsofanalysistofallbackon,wecanonly
notethatthespikehastakenBrentTWIupsome13%since
lastwewrote,tohitourintermediate,lineartarget.Wecan
alsopointoutthatthesizeablesellingtailmappedoutonthe
24thspossiblytrendcompletingneutraldayisthemark
againstwhichthebravebearcansell,especiallyifheiscogni
santofthetrulyunprecedentedvolumeandvalueoflongsin
themarketwhichstandatsome21/2times2008speaklevel.

Ifheacts,heshouldfeeldoublyconfidentofhisstanceifthe
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 10

contractrotatesbacktoandthendipsbelowthehighvol
umepricearound$112.00.Conversely,hemustbeawarethat
Silver lease rate2006-td
themovehigherintheLibyanlongestlineto$115.87couldbe
signallingamovetotheupperextremeofthepostCrash
rangeat$131.00andsoheshouldbeoutofhiswagerassoon
asthelastsingleprintisfilled.

Whatevertheupheavalanditsimpliedthreattoworld
growth,beawarethatindustrialmetalshavenotyetthreat
enedtheirbullishchannel,noreventheacceleratedtrendline
therein,inplacesinceNovember.Thisisallthemoreimpres
sivesincecopperinventoriesareup30%inthreemonthsin
LMEandShanghaiwarehouseswiththecurvemovingtoa
frontendcontangoandwiththeChineseoffshoreratiodown
inthe15thpercentileofits111/2yearrangeandthusnotcon
ducivetospeculativeimports.

Whatisalsoofnoteisthat,insupportofourthesisthat
growthispricedviaabroadcomovementofindustrialcom
moditiesandequitiesandtheiroppositiontobondprices(i.e.,
theirprogressionwithbondyields),wecanhereseethesimi
laritiesbetweenthebehaviourofthemetalswiththeratioof
totalreturnsintheGermanPfandbriefemarketvthataccru
Brent Crude2003-to date
ingtotheDAX.Trendsarebeingvisiblytestedhere,but,con
versely,anunequivocalbreakdownisnotyetinevidence,
meaningthatwhilecautionisdecidedlyinorder,itisstilla
touchprematuretobetonafullreversionoftheBernanke
Bubblerally.

Agrihasalsomanagedabouncefromanoldhighandaputa
tivevalueextremeintheprofile,withthemainsupportline
beingleftintact.Thebullshavebeengivenashock:some,no
doubt,havebeenshakenlooseanddragged,cursing,backin
again,allofwhichmakesforapotentiallyunhealthymarketif
notyetonetobetthefarm(!)onretracingmoremeaningfully.
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 11

Finally,eventhoughleaserateshavedroppedbackfrom2
yearhighs,silverisstilloncoursetoattempt$40andtoseta
newsilver:goldhighalongtheway,whilegoldthough
clearlybetteroutrightandsostillnotdebarredfromour
$1,560objectiveislaggingindustrials,theusuallyhelpful
dropinbondyieldsandthepickupinmarketriskmeasures,
notwithstanding.

Thesearenervoustimes,buttheresiliencetothispointis
testimonytothebullsreluctancetogiveupontheeasy
moneytrendoffollowingtheFedhigher.Thatsheerdog
gednessorrealitydenial,ifyoupreferislikelytointen
sifythereactiontothemovewhichsucceedsthecurrentin
decision,nomatterwhatthedirectionalongwhichthat
changeoverbegins.
Shanghai (bl) & LME Copper inventories

DCI Agri x USDTWI2008-to date

Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 12
Material Evidence by Sean Corrigan 4th March 2011 Please see accompanying risk & legal disclaimer 13

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