An article posted today on the Kitco website by economic analyst and newsletter writer, Gary Dorsch, explains why he believes major U.S. bank, Wells Fargo, was able to recently report a large 1st quarter profit and announce that it was going to repay bailout funds it had received. Here are several of the most important paragraphs in that regard:

“We cannot settle for a return to the status quo. We must put an end to the reckless speculation, spending beyond our means; bad credit, over-leveraged banks, and the absence of oversight that condemns us to bubbles that inevitably bust,” Obama added. Yet only a few days earlier, Obama exerted maximum pressure on the Financial Accounting Standards Board (FASB) to let Wall Street bankers set their own prices for toxic assets in earnings reports, regardless of market prices."

"By suspending the so-called “mark to market” accounting rules, concerning the value of toxic securities they hold, FASB’s new guidance would allow American banks to value assets using their own internal “mark-to-myth” models. This is, in fact, the creation of a loophole allowing bankers to conceal their true losses and cook their financial books. By allowing the banks to claim their assets as fundamentally sound, the ruling elite expect the panic selling in the stock market will subside, banks will start lending again, and the US-economy will gradually recover."

"So far, all the measures taken by Obama’s economic team in response to the financial crisis, have pointed their aim at protecting the wealth of the Wall Street aristocrats. Treasury Secretary Geithner announced a scheme to enable the banks to offload their toxic assets by subsidizing hedge-funds and private-equity firms to purchase them at inflated prices, using hundreds of billions of taxpayer money to cover any losses, and insure double-digit profits for the speculators."

"The masters of Wall Street erupted into great euphoria and jubilation over the death of FASB #157, and Geithner’s scheme to loot taxpayer funds and offload the toxic assets of the financial oligarchs, - creating illusions of new found wealth. Obama himself went a step further to reassure the Wall Street titans, by quietly killing a bill passed by the House of Representatives that would have taxed 90% of the bonuses of wealthy executives and traders at AIG and other bailed-out firms."

"By obscuring the accuracy of bank balance sheets, mixed with the Fed’s zero-percent interest rate policy, and the hallucinogenic “Quantitative Easing” drug, traders are taking collective leave of their senses, succumbing to delusions of ever-expanding wealth, and actively participating in the creation of new bubbles. And by definition, market bubbles can expand much farther than most traders can imagine."

"Nobody bothered to ask how Wells Fargo (WFC) could post a record $3-billion profit in the first quarter, at a time when one in eight US-homeowners with mortgages, are behind on their loan payments, or in the foreclosure process as job losses intensifies, and California home prices are 40% below their peak levels. Instead, operating under the illusions of “mark-to-myth” accounting, and the hallucinogenic “QE-drug,” administered by the Fed, hedge-fund traders accepted the WFC earnings report at face value, bidding its share price 30% higher." (emphasis added)

How will this, among the many other goings-on, affect Noront, one might wonder. It appears that if the 'new financial figures' of the major U.S. banks continue to be believed (which seems likely), that, instead of people conserving their cash in their bank accounts, they will want to invest in what they perceive as an economy that is starting to come out of a recession and will be expanding.

Though the financial health of the banks may be a myth, the perception by the public that the banks have turned around and are making money will likely bring lots of investors back into the market. How long this lasts, it is hard to guess. Nevertheless, those who had previously seen their investments rapidly grow with stocks like Noront may decide it is time to get back on board that same train before it leaves the station again.