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Close Call For US Banks
The Iraqi Dinar
By Vedran Vuk, Casey Research
Every few weeks I receive an email inquiring about the investment-worthiness of the Iraqi dinar. Since multiple subscribers are interested in the topic and US withdrawal from Iraq is in the news, this issue is worth mentioning. The Iraqi dinar promoters seem to push two main ideas:
1. With Iraq free of Saddam Hussein, the economy will boom and as a result the currency will strengthen; and
2. The Iraqi government will revalue the currency to pre-war levels. Instead of over a thousand dinars per dollar, the government could even set a one-to-one exchange rate - making holders of the old notes rich.
What's missing from both of these cases is an understanding of monetary policy.
Either the Iraqi dinar promoters are completely ignorant of the basics of currency markets and monetary policy or they're just plain scammers. I'll let you decide.
Let's start with some common sense. If one thinks the US economy is going to boom, would the dollar be a good investment idea? Well, maybe, but it wouldn't be the best idea. Why not invest directly in the DJIA, Nasdaq, or S&P 500? Currencies and the strength of the country's economy are not perfectly correlated. Just think of the US economy in the past few years. The economy has been in a horrible rut, yet the dollar has been all over the place. Furthermore, as the stock market has plunged, the dollar has strengthened - and vice versa. Many other factors affect a currency other than the strength of the economy. If one really believes that Iraq will become a booming economy, don't buy the currency - buy a diversified portfolio of Iraqi stocks. That might be a little troublesome, but if this is really the trade of the decade in your mind, go for it.
One of the most important factors in a currency's strength is its central bank. A nation can have all the economic growth in the world, but if its central bank is printing money like crazy, the currency will still become worthless. In fact, that growth might be the result of a monetary-induced bubble. Ultimately, a bet on any currency is a bet on its central bank. While many readers are likely familiar with the political situation in Iraq, the vast majority probably don't know anything about the country's central bank. And don't think the connection to oil can save the currency either. Just think about the currency controls and over 30% inflation in Venezuela.
The second case for the Iraqi dinar isn't particularly good either. The central bank doesn't possess a magic wand that revalues the currency. This investment thesis assumes that the Iraqi central bank can just legislate a fixed exchange rate. In reality, it's a process where the central bank must contract the money supply and battle forces on the exchange market. Consider the basic logistical problem here. Currently, 1,170.50 dinars trade for a single US dollar. Suppose the central bank sets a one-to-one exchange for the dollar. What's immediately going to happen? Everyone holding dinars will want to trade them for US dollars, but who will exchange the dinars to dollars? Currency markets always require a buyer and a seller. Will major banks say, "Iraq's central bank told us that the dinar is the same as the dollar, so we are going to assume that's true"? Of course not! No one would trade dollars for dinars based on an arbitrary rate.
Is the central bank completely powerless to fix the rate? No; it can try to convince the market of the exchange rate by purchasing Iraqi dinars on the open market. If the Iraqi central bank agrees to exchange one US dollar for each dinar, market participants may believe the new exchange rate, but that's going to take a lot of convincing - meaning a ton of reserve currency from Iraq's central bank. If the central bank wants to return its currency to a one-to-one relationship with the dollar, it will have to spend billions in the currency market buying up dinars. Why the central bank would want to waste this money is extremely puzzling.
To sum this up, this is a monetary issue, yet the dinar promoters love to discuss anything but the central bank of Iraq. They're on some different planet where the strength of currencies has a perfect correlation with economic growth and where exchange rates can be set with the swish of a magic wand.
By Vedran Vuk, Casey Research
Every few weeks I receive an email inquiring about the investment-worthiness of the Iraqi dinar. Since multiple subscribers are interested in the topic and US withdrawal from Iraq is in the news, this issue is worth mentioning. The Iraqi dinar promoters seem to push two main ideas:
1. With Iraq free of Saddam Hussein, the economy will boom and as a result the currency will strengthen; and
2. The Iraqi government will revalue the currency to pre-war levels. Instead of over a thousand dinars per dollar, the government could even set a one-to-one exchange rate - making holders of the old notes rich.
What's missing from both of these cases is an understanding of monetary policy.
Either the Iraqi dinar promoters are completely ignorant of the basics of currency markets and monetary policy or they're just plain scammers. I'll let you decide.
Let's start with some common sense. If one thinks the US economy is going to boom, would the dollar be a good investment idea? Well, maybe, but it wouldn't be the best idea. Why not invest directly in the DJIA, Nasdaq, or S&P 500? Currencies and the strength of the country's economy are not perfectly correlated. Just think of the US economy in the past few years. The economy has been in a horrible rut, yet the dollar has been all over the place. Furthermore, as the stock market has plunged, the dollar has strengthened - and vice versa. Many other factors affect a currency other than the strength of the economy. If one really believes that Iraq will become a booming economy, don't buy the currency - buy a diversified portfolio of Iraqi stocks. That might be a little troublesome, but if this is really the trade of the decade in your mind, go for it.
One of the most important factors in a currency's strength is its central bank. A nation can have all the economic growth in the world, but if its central bank is printing money like crazy, the currency will still become worthless. In fact, that growth might be the result of a monetary-induced bubble. Ultimately, a bet on any currency is a bet on its central bank. While many readers are likely familiar with the political situation in Iraq, the vast majority probably don't know anything about the country's central bank. And don't think the connection to oil can save the currency either. Just think about the currency controls and over 30% inflation in Venezuela.
The second case for the Iraqi dinar isn't particularly good either. The central bank doesn't possess a magic wand that revalues the currency. This investment thesis assumes that the Iraqi central bank can just legislate a fixed exchange rate. In reality, it's a process where the central bank must contract the money supply and battle forces on the exchange market. Consider the basic logistical problem here. Currently, 1,170.50 dinars trade for a single US dollar. Suppose the central bank sets a one-to-one exchange for the dollar. What's immediately going to happen? Everyone holding dinars will want to trade them for US dollars, but who will exchange the dinars to dollars? Currency markets always require a buyer and a seller. Will major banks say, "Iraq's central bank told us that the dinar is the same as the dollar, so we are going to assume that's true"? Of course not! No one would trade dollars for dinars based on an arbitrary rate.
Is the central bank completely powerless to fix the rate? No; it can try to convince the market of the exchange rate by purchasing Iraqi dinars on the open market. If the Iraqi central bank agrees to exchange one US dollar for each dinar, market participants may believe the new exchange rate, but that's going to take a lot of convincing - meaning a ton of reserve currency from Iraq's central bank. If the central bank wants to return its currency to a one-to-one relationship with the dollar, it will have to spend billions in the currency market buying up dinars. Why the central bank would want to waste this money is extremely puzzling.
To sum this up, this is a monetary issue, yet the dinar promoters love to discuss anything but the central bank of Iraq. They're on some different planet where the strength of currencies has a perfect correlation with economic growth and where exchange rates can be set with the swish of a magic wand.
Risk Management 101 - Why Wall Street Needs To Wake Up & Tell Its Clients To Own Physical Gold
by St. Joseph Partners
Would you agree that the world's financial system is in desperate trouble due to irresponsible debts?
If you have been paying attention whatsoever to global markets over the last couple of years, it is likely you agree. After all, if there was an easy solution to the global debt crisis don't you think it would have been tried by a host of governments by now? Yet despite our problems Wall Street continues to talk down the benefits of physical gold to its clients indicating that "client first" attitudes are as ephemeral as risk management to these behemoths. Here is how your investment bank should be framing a wealth management conversation with you. (Credit for this perspective belongs to Barry Kitt, retired hedge fund manager. This is the classic case of hearing something that is so insightful you ask "Why didn't I think of that?)
If an investor allocates 10% of his net worth to gold at $1600, there are a plethora of reasons to see it going higher. How much higher? Let's give consideration to the investors who have called the cycle right so far instead of looking to Wall Street for target price guidance since the street has missed the cycle so far. Some of those investors include James Turk with an $8,000 target, and Marc Faber with a $10,000 target. In the first scenario let's give those investors the benefit of the doubt that they continue to see things correctly and let's say that gold goes to $8,000. If one invests 10% of a portfolio into gold today at $1,600 per ounce and gold goes to $8,000, then the 10% of your net worth in gold today would expand to 50% of your current net worth.
If these investors who have been prescient in seeing the cycle so far are right and gold goes to $8,000, then the 90% of your current wealth that you didn't invest in gold will probably decrease in value to maybe 50%, given the stresses that will be manifest. Under that scenario, with just 10% of one's current net worth diversified into gold at $1,600, an investor will have maintained 100% of his current net worth. Now let's consider the opposite scenario and that the gold price falls by 50% from $1600 to $800. This would put gold down to its fully loaded extraction costs when financing, government compliance, mine closures, etc. are included.
If gold moves from $1600 to $800 investors would lose 5% of their current net worth, but that will mean that something wonderful has happened in the world. Under such a scenario it is likely conservative to believe that the 90% of one's wealth not invested in gold would probably appreciate by at least 25% from today's levels. Using that potential framework, the net portfolio will have appreciated in value by 20% despite gold's theoretical 50% haircut.
As a rational investor, you buy home insurance, auto insurance, health insurance and life insurance each year - even though the statistical tables tell you that you'll have nothing to show for it at year's end! On the flip side, the statistical tables tell you that it is critical to diversify some of your wealth into gold and silver today because our debts will weigh on equity multiples, cash values, real estate and real bond returns. And if neither of these two extremes occur, you probably will still look back on your decision to diversify into gold as prudent, if not profitable, given the problems that face us today.
by St. Joseph Partners
Would you agree that the world's financial system is in desperate trouble due to irresponsible debts?
If you have been paying attention whatsoever to global markets over the last couple of years, it is likely you agree. After all, if there was an easy solution to the global debt crisis don't you think it would have been tried by a host of governments by now? Yet despite our problems Wall Street continues to talk down the benefits of physical gold to its clients indicating that "client first" attitudes are as ephemeral as risk management to these behemoths. Here is how your investment bank should be framing a wealth management conversation with you. (Credit for this perspective belongs to Barry Kitt, retired hedge fund manager. This is the classic case of hearing something that is so insightful you ask "Why didn't I think of that?)
If an investor allocates 10% of his net worth to gold at $1600, there are a plethora of reasons to see it going higher. How much higher? Let's give consideration to the investors who have called the cycle right so far instead of looking to Wall Street for target price guidance since the street has missed the cycle so far. Some of those investors include James Turk with an $8,000 target, and Marc Faber with a $10,000 target. In the first scenario let's give those investors the benefit of the doubt that they continue to see things correctly and let's say that gold goes to $8,000. If one invests 10% of a portfolio into gold today at $1,600 per ounce and gold goes to $8,000, then the 10% of your net worth in gold today would expand to 50% of your current net worth.
If these investors who have been prescient in seeing the cycle so far are right and gold goes to $8,000, then the 90% of your current wealth that you didn't invest in gold will probably decrease in value to maybe 50%, given the stresses that will be manifest. Under that scenario, with just 10% of one's current net worth diversified into gold at $1,600, an investor will have maintained 100% of his current net worth. Now let's consider the opposite scenario and that the gold price falls by 50% from $1600 to $800. This would put gold down to its fully loaded extraction costs when financing, government compliance, mine closures, etc. are included.
If gold moves from $1600 to $800 investors would lose 5% of their current net worth, but that will mean that something wonderful has happened in the world. Under such a scenario it is likely conservative to believe that the 90% of one's wealth not invested in gold would probably appreciate by at least 25% from today's levels. Using that potential framework, the net portfolio will have appreciated in value by 20% despite gold's theoretical 50% haircut.
As a rational investor, you buy home insurance, auto insurance, health insurance and life insurance each year - even though the statistical tables tell you that you'll have nothing to show for it at year's end! On the flip side, the statistical tables tell you that it is critical to diversify some of your wealth into gold and silver today because our debts will weigh on equity multiples, cash values, real estate and real bond returns. And if neither of these two extremes occur, you probably will still look back on your decision to diversify into gold as prudent, if not profitable, given the problems that face us today.
Global Allocation to Gold Has A Long Way To Go
Here's a chart from Casey Research that points out the current global allocation to gold. CLICK TO ENLARGE.
It is interesting to note that at the height of the gold mania in 1981, that percentage was 26%...and at the height of the depression, it was 20%.
Looks like the gold bull still has a long way to go. Enjoy the ride!
Here's a chart from Casey Research that points out the current global allocation to gold. CLICK TO ENLARGE.
It is interesting to note that at the height of the gold mania in 1981, that percentage was 26%...and at the height of the depression, it was 20%.
Looks like the gold bull still has a long way to go. Enjoy the ride!
China, Solar Energy and Silver
This little excerpt from King World News can be found here.
This is the thing that worries me, everyone talks about inflation and China coming apart, Eric, but no one seems to be talking about the fact that China is planning to spend half a trillion a year on new energy. This includes hydro, wind, nuclear, you name it.
China has well over 50% of the solar industry and no doubt, as part of that strategy, has been accumulating massive amounts of silver and they will continue to do that. This is one reason that silver is certainly headed to three digits.
Another thing about China is they have no tax on gold bullion. There is a tax on jewelry and numismatics but China does not tax gold bullion. This means gold is already a de-facto currency in China....
The implication for gold, given that it is becoming currency in China, given the fact that the Chinese government is doing everything they can to encourage their populace to own it, given that it is the only currency that has a chance of appreciating along with materials over the next three to five years, gold is just something that you’ve got to own.
This little excerpt from King World News can be found here.
This is the thing that worries me, everyone talks about inflation and China coming apart, Eric, but no one seems to be talking about the fact that China is planning to spend half a trillion a year on new energy. This includes hydro, wind, nuclear, you name it.
China has well over 50% of the solar industry and no doubt, as part of that strategy, has been accumulating massive amounts of silver and they will continue to do that. This is one reason that silver is certainly headed to three digits.
Another thing about China is they have no tax on gold bullion. There is a tax on jewelry and numismatics but China does not tax gold bullion. This means gold is already a de-facto currency in China....
The implication for gold, given that it is becoming currency in China, given the fact that the Chinese government is doing everything they can to encourage their populace to own it, given that it is the only currency that has a chance of appreciating along with materials over the next three to five years, gold is just something that you’ve got to own.
Killed Over Gold?
Last week I posted an article entitled The Common Denominator: Gold, in which I suggested that the focus of US military activity abroad may not be oil or terrorism, but gold. I have felt this way for quite some time, but had never heard any "mainstream" comment on this issue.
Well, here is a comment by multi-billionaire Hugo Salinas Price out of Mexico suggesting that Gaddafi was killed over gold:
"Thinking about it a little bit more, what happened to Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar."
No matter what issue you are talking about, economy, war, social unrest, etc. the bottom line is this: When you get down to the root of the problem you find it is a monetary/banker problem and gold will always be right in the middle of it.
Last week I posted an article entitled The Common Denominator: Gold, in which I suggested that the focus of US military activity abroad may not be oil or terrorism, but gold. I have felt this way for quite some time, but had never heard any "mainstream" comment on this issue.
Well, here is a comment by multi-billionaire Hugo Salinas Price out of Mexico suggesting that Gaddafi was killed over gold:
"Thinking about it a little bit more, what happened to Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar."
No matter what issue you are talking about, economy, war, social unrest, etc. the bottom line is this: When you get down to the root of the problem you find it is a monetary/banker problem and gold will always be right in the middle of it.
The Best Mistake You'll Ever Make
By Jeff Clark, BIG GOLD
The following conversation took place between a friend's son and I; he's a bright but relatively young investor. He had purchased some gold based on some things I'd told his father. Shortly afterward, the price dropped hard. As you'll see, he was not very happy with my advice and said so in an email to me. So I called him...
I: Sounds like you're upset.
Friend: Yeah, that's putting it mildly. What the hell am I supposed to do now?
I: Because the gold price has dropped?
Friend: Yes! It's down 15% in a month! I thought you said this was going to be a good investment.
I: It is. And it will be. You might even consider buying more here if you have the funds.
Friend: I have some other money, but why would I put it in gold? It's losing money.
I: Because it's on sale. Because it's cheaper now than when you bought it. And especially because none of the reasons for buying it have gone away.
Friend: That doesn't mean it's going to go back up.
I: As I told your dad, there are no guarantees, but I think it will have to go higher. Either way, it will hold its purchasing power over time. We're holding it as an alternate currency, a more sound form of money that can't be debased.
Friend: Yeah, well, my money just got debased, big time. It needs to go up 20% for me just to get back to even.
I: Five years from now your dollars will have lost at least 10% of their value, based just on current trends. There's a good chance it will lose more than that. And gold will probably rise more than 10% a year. At some point it''s likely to go into a bubble.
Friend: [silence.]
I: Look, I know you're upset, but I'd hate to see you bail. This is one of the best investments we can make this decade.
Friend: [relenting a little bit]: You really believe that.
I: I can't promise you anything, but yes, I do.
Friend: And that's because you think inflation is coming.
I: It's for a lot of reasons, and that's one of them. Inflation is virtually baked in the cake; the dollar's long-term problems will be impractical to resolve; and the global economy is on high alert. This is exactly the kind of circumstances gold is for.
Friend: Then why is it falling?
I: Institutions need cash and liquidity, and gold offers a bid. Besides, nothing goes up in a straight line, and gold had just run up 35%. It was time for a break.
Friend: So this big drop really doesn't worry you.
I: It doesn't. I'm buying. In fact, I'll prove it to you - send me your gold and I'll buy it from you.
Friend: [Silence.]
I: I know it doesn't feel good right now, and it may take some time for it to make another new high, but gold is too important not to own here. It's a long-term trade, so plan on holding it for a while. In fact, if it helps, just forget about the fact that you own it - go do something fun and have a beer at the pub.
Friend: [a little chuckle].
I: I don't think you made a mistake buying at the price you did, in spite of it being lower now. Odds are high you'll be happy in a few years.
Friend: [pause] All right...
I'm glad my son's friend decided to hold on, because that conversation took place in June, 2006. He'd bought gold at around $700 and watched a month later as the price fell to as low as $567.
Gold ended up declining a total of 21% in just five weeks before bottoming, after a run-up of 35% (sound familiar?). And yes, it took over a year before it hit a new high.
Yet my son's friend - now older and wiser - wishes he could go back in time and make the same mistake again and buy gold at $700. His investment is sitting on more than a double, in spite of buying at a temporary peak.
I think that a few years from now we'll all wish we could go "back in time" and buy gold at $1,700. And I believe you'll still feel that way if gold falls to $1,500, as some writers are projecting.
By Jeff Clark, BIG GOLD
The following conversation took place between a friend's son and I; he's a bright but relatively young investor. He had purchased some gold based on some things I'd told his father. Shortly afterward, the price dropped hard. As you'll see, he was not very happy with my advice and said so in an email to me. So I called him...
I: Sounds like you're upset.
Friend: Yeah, that's putting it mildly. What the hell am I supposed to do now?
I: Because the gold price has dropped?
Friend: Yes! It's down 15% in a month! I thought you said this was going to be a good investment.
I: It is. And it will be. You might even consider buying more here if you have the funds.
Friend: I have some other money, but why would I put it in gold? It's losing money.
I: Because it's on sale. Because it's cheaper now than when you bought it. And especially because none of the reasons for buying it have gone away.
Friend: That doesn't mean it's going to go back up.
I: As I told your dad, there are no guarantees, but I think it will have to go higher. Either way, it will hold its purchasing power over time. We're holding it as an alternate currency, a more sound form of money that can't be debased.
Friend: Yeah, well, my money just got debased, big time. It needs to go up 20% for me just to get back to even.
I: Five years from now your dollars will have lost at least 10% of their value, based just on current trends. There's a good chance it will lose more than that. And gold will probably rise more than 10% a year. At some point it''s likely to go into a bubble.
Friend: [silence.]
I: Look, I know you're upset, but I'd hate to see you bail. This is one of the best investments we can make this decade.
Friend: [relenting a little bit]: You really believe that.
I: I can't promise you anything, but yes, I do.
Friend: And that's because you think inflation is coming.
I: It's for a lot of reasons, and that's one of them. Inflation is virtually baked in the cake; the dollar's long-term problems will be impractical to resolve; and the global economy is on high alert. This is exactly the kind of circumstances gold is for.
Friend: Then why is it falling?
I: Institutions need cash and liquidity, and gold offers a bid. Besides, nothing goes up in a straight line, and gold had just run up 35%. It was time for a break.
Friend: So this big drop really doesn't worry you.
I: It doesn't. I'm buying. In fact, I'll prove it to you - send me your gold and I'll buy it from you.
Friend: [Silence.]
I: I know it doesn't feel good right now, and it may take some time for it to make another new high, but gold is too important not to own here. It's a long-term trade, so plan on holding it for a while. In fact, if it helps, just forget about the fact that you own it - go do something fun and have a beer at the pub.
Friend: [a little chuckle].
I: I don't think you made a mistake buying at the price you did, in spite of it being lower now. Odds are high you'll be happy in a few years.
Friend: [pause] All right...
I'm glad my son's friend decided to hold on, because that conversation took place in June, 2006. He'd bought gold at around $700 and watched a month later as the price fell to as low as $567.
Gold ended up declining a total of 21% in just five weeks before bottoming, after a run-up of 35% (sound familiar?). And yes, it took over a year before it hit a new high.
Yet my son's friend - now older and wiser - wishes he could go back in time and make the same mistake again and buy gold at $700. His investment is sitting on more than a double, in spite of buying at a temporary peak.
I think that a few years from now we'll all wish we could go "back in time" and buy gold at $1,700. And I believe you'll still feel that way if gold falls to $1,500, as some writers are projecting.
James Turk Report - Why Gold Will Go Above $11,000
October 24 (King World News) - In one important respect, gold is like any other asset. You want to buy it when it is undervalued, and sell it when the opposite is true – when it becomes overvalued. Thus, knowing how to accurately value gold is essential for sound portfolio management.
Because gold is money, its value cannot be measured with the standard techniques used to evaluate investments. Gold is not an investment because it does not produce any cash-flow. It is a sterile asset. Consequently, gold does not create wealth, nor for that matter, does any national currency create wealth. Currency in all its forms – whether fiat or gold – is wealth, held in the form of deferred purchasing power. This store of value function is one of any currency’s most important tasks.
So when the price of gold rises, wealth is just being transferred to people who own gold away from those people holding the national currency being used to report the rising gold price. Wealth is simply being re-shuffled – as I like to say – to its rightful owners, namely, those who choose wisely among the different currencies available in which to hold their liquidity needs. Their wise choice is simply a matter of recognizing which currencies are overvalued and which are undervalued, so they own the latter and avoid the former.
One of the most trusted models that I use to value gold is my Fear Index, about which I have written extensively. Another trustworthy model is my Gold Money Index, which values gold based on its historical role as international money and global numéraire. Here is the formula.
The following chart illustrates the usefulness of this index.
There are two prices for gold in this chart, the actual price and its “fair value” price, which is calculated by the above formula. Back in the early 1960s when the dollar was still thought to be “as good as gold”, gold’s actual price was above its fair value. In other words, central banks had adequate gold reserves on hand relative to the quantity of dollars and other national currencies circulating in international commerce. But that relationship began to change by the late-1960s.
Because the dollar was being debased, gold’s fair price rose above its actual price, meaning that gold was undervalued. In other words, gold was worth more than the $35 per ounce fixed rate of exchange then prevailing. This $35 price could no longer be maintained because the dollar had become too debased and was overvalued, with the consequence that the dollar’s formal, fixed link to gold was finally abandoned in August 1971.
Thereafter, the gold price began to rise, but gold’s fair price remained above the actual price until 1974. By then gold had become overvalued, with its actual price exceeding its fair value. Gold had reached a point marking the first peak in that decade’s bull market in gold. At the January 1980 peak, which is also clearly seen on the above chart, the actual price again rose above gold’s fair value. The level of overvaluation reached by gold of course was not sustainable. Its price fell back, but remained above fair value until 1984. Gold has been undervalued ever since, as is clear from the following chart, which uses the data from above to show the degree of relative valuation. In other words, this chart presents, as a percent, gold’s actual price divided by its fair value.
The above chart clearly illustrates the extent to which gold is undervalued. As of June 30th, the actual price of gold was only 13.0% of its fair value, barely above its all-time low of 10.3% reached in 2008. Alternatively, this chart is telling us that gold no longer is money, and my valuation method is useless. It has to be one alternative or the other. There are no other explanations to this huge difference between gold’s actual and fair price. In my view, the first alternative is correct.
Having filled the role of international money for 5,000 years, gold has been supplanted by fiat currency for the past 40 years because of government force. However, this nascent experiment with fiat currencies is not going well, as evidenced by growing global imbalances, unchecked increases in debt and financial derivatives, ongoing debasement of currency purchasing power and worsening monetary turmoil. Fortunately, the attributes that made gold money in the first place have not disappeared or been lost; they have only been ignored or forgotten, with the consequence that gold’s unique usefulness as money remains. This usefulness is being rediscovered, as evidenced by gold’s rising price this past decade.
Despite this remarkable rise in the gold price, it is clear from the above chart that gold’s undervaluation has barely budged for more than a decade. The reason of course is the growth in the quantity of national currencies held by central banks (the numerator in the Gold Money Index) is rising about the same rate as the weight of gold held by central banks (the denominator in the Gold Money Index). So gold remains tremendously undervalued.
The logic of the Gold Money Index is founded on one underlying principle – gold still is money. Things have value because of their usefulness, and gold’s value comes from its usefulness as money. It is money because the free-market makes it money. Consequently, governments cannot stop gold from having value, nor even stop gold moving in time from its present undervaluation to a fair valuation, which is presently over $11,000 per ounce.
We today look back at the Tulip Bubble, Mississippi Bubble and the South Sea Bubble with smug amusement and ask ourselves laughingly how could the people back then have been so foolish. No doubt people generations from now will look back at the present era of government-issued fiat currency and ask themselves the same question.
October 24 (King World News) - In one important respect, gold is like any other asset. You want to buy it when it is undervalued, and sell it when the opposite is true – when it becomes overvalued. Thus, knowing how to accurately value gold is essential for sound portfolio management.
Because gold is money, its value cannot be measured with the standard techniques used to evaluate investments. Gold is not an investment because it does not produce any cash-flow. It is a sterile asset. Consequently, gold does not create wealth, nor for that matter, does any national currency create wealth. Currency in all its forms – whether fiat or gold – is wealth, held in the form of deferred purchasing power. This store of value function is one of any currency’s most important tasks.
So when the price of gold rises, wealth is just being transferred to people who own gold away from those people holding the national currency being used to report the rising gold price. Wealth is simply being re-shuffled – as I like to say – to its rightful owners, namely, those who choose wisely among the different currencies available in which to hold their liquidity needs. Their wise choice is simply a matter of recognizing which currencies are overvalued and which are undervalued, so they own the latter and avoid the former.
One of the most trusted models that I use to value gold is my Fear Index, about which I have written extensively. Another trustworthy model is my Gold Money Index, which values gold based on its historical role as international money and global numéraire. Here is the formula.
The following chart illustrates the usefulness of this index.
There are two prices for gold in this chart, the actual price and its “fair value” price, which is calculated by the above formula. Back in the early 1960s when the dollar was still thought to be “as good as gold”, gold’s actual price was above its fair value. In other words, central banks had adequate gold reserves on hand relative to the quantity of dollars and other national currencies circulating in international commerce. But that relationship began to change by the late-1960s.
Because the dollar was being debased, gold’s fair price rose above its actual price, meaning that gold was undervalued. In other words, gold was worth more than the $35 per ounce fixed rate of exchange then prevailing. This $35 price could no longer be maintained because the dollar had become too debased and was overvalued, with the consequence that the dollar’s formal, fixed link to gold was finally abandoned in August 1971.
Thereafter, the gold price began to rise, but gold’s fair price remained above the actual price until 1974. By then gold had become overvalued, with its actual price exceeding its fair value. Gold had reached a point marking the first peak in that decade’s bull market in gold. At the January 1980 peak, which is also clearly seen on the above chart, the actual price again rose above gold’s fair value. The level of overvaluation reached by gold of course was not sustainable. Its price fell back, but remained above fair value until 1984. Gold has been undervalued ever since, as is clear from the following chart, which uses the data from above to show the degree of relative valuation. In other words, this chart presents, as a percent, gold’s actual price divided by its fair value.
The above chart clearly illustrates the extent to which gold is undervalued. As of June 30th, the actual price of gold was only 13.0% of its fair value, barely above its all-time low of 10.3% reached in 2008. Alternatively, this chart is telling us that gold no longer is money, and my valuation method is useless. It has to be one alternative or the other. There are no other explanations to this huge difference between gold’s actual and fair price. In my view, the first alternative is correct.
Having filled the role of international money for 5,000 years, gold has been supplanted by fiat currency for the past 40 years because of government force. However, this nascent experiment with fiat currencies is not going well, as evidenced by growing global imbalances, unchecked increases in debt and financial derivatives, ongoing debasement of currency purchasing power and worsening monetary turmoil. Fortunately, the attributes that made gold money in the first place have not disappeared or been lost; they have only been ignored or forgotten, with the consequence that gold’s unique usefulness as money remains. This usefulness is being rediscovered, as evidenced by gold’s rising price this past decade.
Despite this remarkable rise in the gold price, it is clear from the above chart that gold’s undervaluation has barely budged for more than a decade. The reason of course is the growth in the quantity of national currencies held by central banks (the numerator in the Gold Money Index) is rising about the same rate as the weight of gold held by central banks (the denominator in the Gold Money Index). So gold remains tremendously undervalued.
The logic of the Gold Money Index is founded on one underlying principle – gold still is money. Things have value because of their usefulness, and gold’s value comes from its usefulness as money. It is money because the free-market makes it money. Consequently, governments cannot stop gold from having value, nor even stop gold moving in time from its present undervaluation to a fair valuation, which is presently over $11,000 per ounce.
We today look back at the Tulip Bubble, Mississippi Bubble and the South Sea Bubble with smug amusement and ask ourselves laughingly how could the people back then have been so foolish. No doubt people generations from now will look back at the present era of government-issued fiat currency and ask themselves the same question.
Look Out Middle Class
I came across this nifty graph released by the IMF. Click on the graph to enlarge it.
It appears that for the first time in our history, the average share of our public debt per person is higher than our average income. This got me to thinking the following: If the average income of Americans is $50,000/year then how are those who are making significantly lower than this figure ever going to pay off their share of the debt? Obviously,they can't.
Also, you can rest assured that those who are making significantly more than this figure aren't going to pick up any more than their share of the debt.
Which leaves you and me.... the middle class, getting stuck with the bill. Look out as higher taxes and/or inflation (the hidden tax) are on the way.
Why are you still putting money in tax deferred retirement accounts only to pay a higher percentage in taxes when you eventually draw that money out? At this point in American history, tax-deferral is not only the wrong thing to be doing.... it is the exact opposite of the right thing!
I came across this nifty graph released by the IMF. Click on the graph to enlarge it.
It appears that for the first time in our history, the average share of our public debt per person is higher than our average income. This got me to thinking the following: If the average income of Americans is $50,000/year then how are those who are making significantly lower than this figure ever going to pay off their share of the debt? Obviously,they can't.
Also, you can rest assured that those who are making significantly more than this figure aren't going to pick up any more than their share of the debt.
Which leaves you and me.... the middle class, getting stuck with the bill. Look out as higher taxes and/or inflation (the hidden tax) are on the way.
Why are you still putting money in tax deferred retirement accounts only to pay a higher percentage in taxes when you eventually draw that money out? At this point in American history, tax-deferral is not only the wrong thing to be doing.... it is the exact opposite of the right thing!
Desperate Acts
from the Casey Daily Dispatch, Oct. 21, 2011
Yesterday, wearing my InternationalMan.com hat, I was having a nice chat with Gordon Chang, author of The Coming China Collapse, and thought to bring up a story that had just hit the wires out of Europe.
"Hey, did you hear that the European Union is thinking about banning rating agencies from rating sovereign bonds?" I asked.
"Yes, but I dismissed it as a hoax, a joke, right?" he replied.
Well, it's not a joke. Rather than let the newly reformed agencies prove their worth by making an attempt to accurately gauge risk, the EU is in fact contemplating to ban such contemplations.
It reminds me of the recent moves by the Argentine government to fine any economic reporting company there that dares to report an inflation figure that exceeds that of the officially sanctioned rate.
Here is an excerpt from an article on the proposed EU measure from Der Spiegel.
The European Commission is particularly concerned about countries that are negotiating financial aid - for example from the euro rescue backstop fund, the European Financial Stability Facility (EFSF), or the International Monetary Fund (IMF). A ban could prevent a rating from coming at an "inopportune moment" and having "negative consequences for the financial stability of a country and a possible destabilizing effect on the global economy," the draft states.
We've said it before, and we'll say it again - at this point no action, no matter how extreme, is off the table for the struggling sovereign deadbeats.
That gives rise to the need for each of us as individuals to take whatever measures we can to avoid the consequences. Internationalizing your assets while you can, buying tangible assets, investing in your own business and in building your own skills are all intelligent moves at this point.
from the Casey Daily Dispatch, Oct. 21, 2011
Yesterday, wearing my InternationalMan.com hat, I was having a nice chat with Gordon Chang, author of The Coming China Collapse, and thought to bring up a story that had just hit the wires out of Europe.
"Hey, did you hear that the European Union is thinking about banning rating agencies from rating sovereign bonds?" I asked.
"Yes, but I dismissed it as a hoax, a joke, right?" he replied.
Well, it's not a joke. Rather than let the newly reformed agencies prove their worth by making an attempt to accurately gauge risk, the EU is in fact contemplating to ban such contemplations.
It reminds me of the recent moves by the Argentine government to fine any economic reporting company there that dares to report an inflation figure that exceeds that of the officially sanctioned rate.
Here is an excerpt from an article on the proposed EU measure from Der Spiegel.
The European Commission is particularly concerned about countries that are negotiating financial aid - for example from the euro rescue backstop fund, the European Financial Stability Facility (EFSF), or the International Monetary Fund (IMF). A ban could prevent a rating from coming at an "inopportune moment" and having "negative consequences for the financial stability of a country and a possible destabilizing effect on the global economy," the draft states.
We've said it before, and we'll say it again - at this point no action, no matter how extreme, is off the table for the struggling sovereign deadbeats.
That gives rise to the need for each of us as individuals to take whatever measures we can to avoid the consequences. Internationalizing your assets while you can, buying tangible assets, investing in your own business and in building your own skills are all intelligent moves at this point.
London Trader - Sovereign Silver Buying, Middle-East Shortages
On the heels of KWN reporting the Chinese buying massive amounts of gold yesterday, King World News has now interviewed the “London Trader” to get his take on the situation in silver. The source stated, “The price of silver has no reality to the paper market at all, absolutely zero reality there anymore. There is extraordinarily tight supply right now in Asia. When you order silver there is so little available at these prices, that’s the trouble. You can order it all day long, but you are going to have to wait for it.”
“Chances are you are not going to get quantity at this price. If people have physical silver they are not selling it at these levels. Supply/demand is tight and you know there is a big wait involved in getting your silver. If I put in an order for tonnage, I have to find a wholesaler that actually can source it at this price and then there is the significant wait time.
On a side note, there is a man in the United States stating publicly that there is no shortage in silver and to go to his silver group where he can get buyers all the silver they need. That is patently false. This same individual said silver was overvalued at $14. I deal in the physical market every day and I can tell you what he is saying is false.
Much of this misinformation is out there because they do not want to have panicked buying from end users because it would send the price of silver skyrocketing. The end users only use a fraction of silver in their products so it is not an issue of cost, but rather if there is a delay in delivery....
“As soon as we see a delay in shipments to end users they will race each other to stock up. This will send the price of silver through the roof and break the backs of the silver shorts. It has already been made public that a firm in Canada had to wait three months for a 15 million ounce order. It was also made public that much of the silver they received was refined after the initial order was placed. So that is the actual fact, that is how tight the silver market is today and has been for some time.
All of the sudden the game has changed because you have actual investment demand increasing exponentially vs industrial demand, competing against industrial demand to buy. All of these sovereign entities buying silver know it's manipulated. There are shortages in the Middle-East in silver, generally it's an incredibly tight market on the physical side. In Shanghai we are seeing $1.50 premiums on silver and that's every single day consistently.
The tightness in the market is the reason why when the Chinese buy massive tonnage of silver they have a long wait to receive physical delivery. The end users are in line in front of them. So now the silver market is on a razor’s edge because they are trying to make sure the industrial users get their silver, otherwise all hell breaks loose.”
On the heels of KWN reporting the Chinese buying massive amounts of gold yesterday, King World News has now interviewed the “London Trader” to get his take on the situation in silver. The source stated, “The price of silver has no reality to the paper market at all, absolutely zero reality there anymore. There is extraordinarily tight supply right now in Asia. When you order silver there is so little available at these prices, that’s the trouble. You can order it all day long, but you are going to have to wait for it.”
“Chances are you are not going to get quantity at this price. If people have physical silver they are not selling it at these levels. Supply/demand is tight and you know there is a big wait involved in getting your silver. If I put in an order for tonnage, I have to find a wholesaler that actually can source it at this price and then there is the significant wait time.
On a side note, there is a man in the United States stating publicly that there is no shortage in silver and to go to his silver group where he can get buyers all the silver they need. That is patently false. This same individual said silver was overvalued at $14. I deal in the physical market every day and I can tell you what he is saying is false.
Much of this misinformation is out there because they do not want to have panicked buying from end users because it would send the price of silver skyrocketing. The end users only use a fraction of silver in their products so it is not an issue of cost, but rather if there is a delay in delivery....
“As soon as we see a delay in shipments to end users they will race each other to stock up. This will send the price of silver through the roof and break the backs of the silver shorts. It has already been made public that a firm in Canada had to wait three months for a 15 million ounce order. It was also made public that much of the silver they received was refined after the initial order was placed. So that is the actual fact, that is how tight the silver market is today and has been for some time.
All of the sudden the game has changed because you have actual investment demand increasing exponentially vs industrial demand, competing against industrial demand to buy. All of these sovereign entities buying silver know it's manipulated. There are shortages in the Middle-East in silver, generally it's an incredibly tight market on the physical side. In Shanghai we are seeing $1.50 premiums on silver and that's every single day consistently.
The tightness in the market is the reason why when the Chinese buy massive tonnage of silver they have a long wait to receive physical delivery. The end users are in line in front of them. So now the silver market is on a razor’s edge because they are trying to make sure the industrial users get their silver, otherwise all hell breaks loose.”
The Common Denominator? Gold
The truth is always hidden in plain sight and is apparent to anyone who dares to look at the world outside of their own comfortable world view. Since we all prefer "comfort," this is an exercise that is rarely undertaken. This little post is one such exercise.
As reported by Tom Brokaw on NBC Nightly News, over $200 million in gold was recovered from beneath the World Trade Center rubble. Interestingly, the value of the gold reported to have been housed there prior to the 911 attacks was in excess of $2 billion at the time. Today, that same stash would be valued are approximately $14 billion.
Interestingly, no one knows where the balance of the gold ended up. By the way, the gold was recovered from underneath tower 5, which was adjacent to the twin towers. You may remember, this tower was not hit by the planes, but was mysteriously taken down anyway, after-the-fact. Hummm???
Of course, it was the 911 incident that gave the US the excuse to ultimately invade Iraq. Many who question the events of 911 believe that it was simply the excuse the West was looking for to go in and control the Arab oil. But could it be that even that explanation is lacking? Could it be that it was not oil, but gold, that was the ultimate purpose of the invasion? (If you think it was really about terrorism then stop reading right now and go buy stocks and real estate and stay in your mass-media induced slumber.)
Turns out, reports have steadily leaked out that gold bullion is being steadily seized by the US military in Iraq.
The BBC reported in 2003 that "American soldiers in Iraq have seized what they believe is gold with an estimated value of $500m from a lorry at the border with Syria, US authorities have said." Source
Previously, American forces were reported to have taken in a $600 million gold stash from near a palace in Baghdad.
I wonder how many billions in gold have been stolen that we know nothing about?
Then, just this August we read this report entitled BOOTS ON THE GROUND? NATO Prepares “Humanitarian” Occupation Of Libya:
"Preparing to head off any potential counter-attack by Gaddafi forces, NATO powers are readying a “humanitarian” occupation of Libya with thousands of British and American soldiers, risking the possibility that troops could be sent into yet another quagmire to rival Afghanistan and Iraq.
Eager to control the country’s vast oil resources and its 144 tons of gold bullion, a plan to send in troops would represent a complete violation of the UN’s own resolution authorizing military intervention, unless of course the soldiers were labeled “peacekeepers” and inserted under humanitarian cover."
Did you catch that little snippet in there about gold? The truth is there for all to see, but most just gloss right over it.
A History Lesson
Unlike the Chinese, the Arabs have never trusted the West, and rightly so. They have never trusted the US. When the US went off the gold standard in 1971 and began paying the Arabs for their oil with non gold-backed dollars, the Arabs simply converted those dollars to gold as fast as they could. Unlike China, which holds most of its reserves in worthless paper dollars (Because the foolishly have trusted the US government), the Arabs hold most of their wealth in gold.
When the unsubstainability of the US deficit spending spree became evident to the world, the dollar began to tank. This is where inflation comes from. It was managable for about 30 years until the politicians began to outspend our ability to manage it. To shore up confidence in our currency, the US has had to undergo a rebacking of our dollar with gold. The public is unaware of this, but other governments and central banks are not in the dark. Probably as far back as 15 - 20 years ago, there was obviously a decision made at the highest levels of our government to begin to covertly accumulate gold.
So, in need of gold, the US simply began to confiscate other people's gold as it had done previously in the 1930's from its own citizens. However, today, the US citizenry has no gold. So, you go to where the gold is: the Middle East. But, it would not be good form to perform an outright theft of the Arab gold, so the US had to create a cover story to legitimize their actions. Enter, the war on terrorism.
The bottom line is this: There is a global scramble going on right now for gold. EVERYBODY except the American public knows it. It is a grand game of musical chairs with not enough gold to go around. When the music stops, those who own no gold, lose.
Will you be a winner, or a loser?
The truth is always hidden in plain sight and is apparent to anyone who dares to look at the world outside of their own comfortable world view. Since we all prefer "comfort," this is an exercise that is rarely undertaken. This little post is one such exercise.
As reported by Tom Brokaw on NBC Nightly News, over $200 million in gold was recovered from beneath the World Trade Center rubble. Interestingly, the value of the gold reported to have been housed there prior to the 911 attacks was in excess of $2 billion at the time. Today, that same stash would be valued are approximately $14 billion.
Interestingly, no one knows where the balance of the gold ended up. By the way, the gold was recovered from underneath tower 5, which was adjacent to the twin towers. You may remember, this tower was not hit by the planes, but was mysteriously taken down anyway, after-the-fact. Hummm???
Of course, it was the 911 incident that gave the US the excuse to ultimately invade Iraq. Many who question the events of 911 believe that it was simply the excuse the West was looking for to go in and control the Arab oil. But could it be that even that explanation is lacking? Could it be that it was not oil, but gold, that was the ultimate purpose of the invasion? (If you think it was really about terrorism then stop reading right now and go buy stocks and real estate and stay in your mass-media induced slumber.)
Turns out, reports have steadily leaked out that gold bullion is being steadily seized by the US military in Iraq.
The BBC reported in 2003 that "American soldiers in Iraq have seized what they believe is gold with an estimated value of $500m from a lorry at the border with Syria, US authorities have said." Source
Previously, American forces were reported to have taken in a $600 million gold stash from near a palace in Baghdad.
I wonder how many billions in gold have been stolen that we know nothing about?
Then, just this August we read this report entitled BOOTS ON THE GROUND? NATO Prepares “Humanitarian” Occupation Of Libya:
"Preparing to head off any potential counter-attack by Gaddafi forces, NATO powers are readying a “humanitarian” occupation of Libya with thousands of British and American soldiers, risking the possibility that troops could be sent into yet another quagmire to rival Afghanistan and Iraq.
Eager to control the country’s vast oil resources and its 144 tons of gold bullion, a plan to send in troops would represent a complete violation of the UN’s own resolution authorizing military intervention, unless of course the soldiers were labeled “peacekeepers” and inserted under humanitarian cover."
Did you catch that little snippet in there about gold? The truth is there for all to see, but most just gloss right over it.
A History Lesson
Unlike the Chinese, the Arabs have never trusted the West, and rightly so. They have never trusted the US. When the US went off the gold standard in 1971 and began paying the Arabs for their oil with non gold-backed dollars, the Arabs simply converted those dollars to gold as fast as they could. Unlike China, which holds most of its reserves in worthless paper dollars (Because the foolishly have trusted the US government), the Arabs hold most of their wealth in gold.
When the unsubstainability of the US deficit spending spree became evident to the world, the dollar began to tank. This is where inflation comes from. It was managable for about 30 years until the politicians began to outspend our ability to manage it. To shore up confidence in our currency, the US has had to undergo a rebacking of our dollar with gold. The public is unaware of this, but other governments and central banks are not in the dark. Probably as far back as 15 - 20 years ago, there was obviously a decision made at the highest levels of our government to begin to covertly accumulate gold.
So, in need of gold, the US simply began to confiscate other people's gold as it had done previously in the 1930's from its own citizens. However, today, the US citizenry has no gold. So, you go to where the gold is: the Middle East. But, it would not be good form to perform an outright theft of the Arab gold, so the US had to create a cover story to legitimize their actions. Enter, the war on terrorism.
The bottom line is this: There is a global scramble going on right now for gold. EVERYBODY except the American public knows it. It is a grand game of musical chairs with not enough gold to go around. When the music stops, those who own no gold, lose.
Will you be a winner, or a loser?
Don't Listen To the Daily Noise
Here's a paragraph from silver analyst Ted Butler's weekly commentary on Saturday.
"Most disturbing of all of this deliberate day to day manhandling of the silver price, is that it is occurring under the constant watch of the regulators, both the criminal enterprise also known as the CME Group and the federal watchdog, the CFTC. Only they seem to be oblivious to what many can see with their own eyes. The regulators’ failure to perform their most basic mission should not, however, dissuade investors from owning silver. There has been a consistent effort by the commercials for more than a decade or two to discourage outside investors from buying silver. Despite this discouragement, owning silver has been among the very best of investments to own. Instead of fretting about the rotten daily price action, focus on why anyone would go to such lengths to make any investment look bad. The only plausible answer is because the commercials don’t want you to buy silver so that they can buy it in your place. That has been the long-term mess age from COT data. I wish we could snap our fingers and cause JPMorgan and the CME to cease and desist from their manipulative activities, but the most effective remedy is to do the opposite of what they intend you to do. Look to the real facts surrounding silver and not to the false-flag agenda of the crooked COMEX commercials."
Here's a paragraph from silver analyst Ted Butler's weekly commentary on Saturday.
"Most disturbing of all of this deliberate day to day manhandling of the silver price, is that it is occurring under the constant watch of the regulators, both the criminal enterprise also known as the CME Group and the federal watchdog, the CFTC. Only they seem to be oblivious to what many can see with their own eyes. The regulators’ failure to perform their most basic mission should not, however, dissuade investors from owning silver. There has been a consistent effort by the commercials for more than a decade or two to discourage outside investors from buying silver. Despite this discouragement, owning silver has been among the very best of investments to own. Instead of fretting about the rotten daily price action, focus on why anyone would go to such lengths to make any investment look bad. The only plausible answer is because the commercials don’t want you to buy silver so that they can buy it in your place. That has been the long-term mess age from COT data. I wish we could snap our fingers and cause JPMorgan and the CME to cease and desist from their manipulative activities, but the most effective remedy is to do the opposite of what they intend you to do. Look to the real facts surrounding silver and not to the false-flag agenda of the crooked COMEX commercials."
Lessons From Jesse
I just finished reading Reminiscences of a Stock Operator, by Edwin Lefèvre. It is a biography of Jesse Livermore, a depression-era securities trader, who made and lost millions over his stock trading career.
The striking thing about this book is the fact that it's truths are timeless and still apply today. This book could easily have been written today and not 70 years ago.
One particular section caught my eye with regard to the current gold market is the following. Though he is talking specifically about stocks, the same applies to any commodity, including gold:
As I have said a thousand times, no manipulation can put
stocks down and keep them down. There is nothing mysterious
about this. The reason is plain to everybody who will take the
trouble to think about it half a minute. Suppose an operator
raided a stock -- that is, put the price down to a level below
its real value -- what would inevitably happen? Why, the raider
would at once be up against the best kind of inside buying. The
people who know what a stock is worth will always buy it when it
is selling at bargain prices. If the insiders are not able to
buy, it will be because general conditions are against their
free command of their own resources, and such conditions are not
bull conditions. When people speak about raids the inference is
that the raids are unjustified; almost criminal. But selling a
stock down to a price much below what it is worth is mighty
dangerous business. It is well to bear in mind that a raided
stock that fails to rally is not getting much inside buying and
where there is a raid, that is unjustified short selling --
there is usually apt to be inside buying; and when there is
that, the price does not stay down. I should say that in
ninety-nine cases out of a hundred, so-called raids are really
legitimate declines, accelerated at times but not primarily
caused by the operations of a professional trader, however big a
line he may be able to swing.
For over 10 years now I have watched the gold market get taken down almost daily by central banks who do not want a rising gold price to spell an end to their money printing cartels. And inevitably, the price continues to bound back, even higher after every crash. I think the above explains beautifully why that is.
With every massive sell-off of gold, such as the most recent which set the price back from $1900/oz. to $1600/oz., the insiders who know what gold is "really" worth simply begin buying it again at these artificially low prices. This of course forces the price up again.
Who are these insiders? China, Russia, India, the Arabs and Japanese. They know the dollar is toast and therefore gold is undervalued in dollar terms. These "insiders" are more than happy to buy all the gold they can get their hands on as they know the world is heading toward some sort of a gold-backed monetary system. The global rush to accumulate gold is over 10 years old with no end in sight.
As Jesse states above, no man or government can hold a market down forever. And to those who know the true value of that market, these short term take-downs are nothing but gift-wrapped buying opportunities.
Thanks Jesse for the reminder that the more things change, the more they stay the same.
I just finished reading Reminiscences of a Stock Operator, by Edwin Lefèvre. It is a biography of Jesse Livermore, a depression-era securities trader, who made and lost millions over his stock trading career.
The striking thing about this book is the fact that it's truths are timeless and still apply today. This book could easily have been written today and not 70 years ago.
One particular section caught my eye with regard to the current gold market is the following. Though he is talking specifically about stocks, the same applies to any commodity, including gold:
As I have said a thousand times, no manipulation can put
stocks down and keep them down. There is nothing mysterious
about this. The reason is plain to everybody who will take the
trouble to think about it half a minute. Suppose an operator
raided a stock -- that is, put the price down to a level below
its real value -- what would inevitably happen? Why, the raider
would at once be up against the best kind of inside buying. The
people who know what a stock is worth will always buy it when it
is selling at bargain prices. If the insiders are not able to
buy, it will be because general conditions are against their
free command of their own resources, and such conditions are not
bull conditions. When people speak about raids the inference is
that the raids are unjustified; almost criminal. But selling a
stock down to a price much below what it is worth is mighty
dangerous business. It is well to bear in mind that a raided
stock that fails to rally is not getting much inside buying and
where there is a raid, that is unjustified short selling --
there is usually apt to be inside buying; and when there is
that, the price does not stay down. I should say that in
ninety-nine cases out of a hundred, so-called raids are really
legitimate declines, accelerated at times but not primarily
caused by the operations of a professional trader, however big a
line he may be able to swing.
For over 10 years now I have watched the gold market get taken down almost daily by central banks who do not want a rising gold price to spell an end to their money printing cartels. And inevitably, the price continues to bound back, even higher after every crash. I think the above explains beautifully why that is.
With every massive sell-off of gold, such as the most recent which set the price back from $1900/oz. to $1600/oz., the insiders who know what gold is "really" worth simply begin buying it again at these artificially low prices. This of course forces the price up again.
Who are these insiders? China, Russia, India, the Arabs and Japanese. They know the dollar is toast and therefore gold is undervalued in dollar terms. These "insiders" are more than happy to buy all the gold they can get their hands on as they know the world is heading toward some sort of a gold-backed monetary system. The global rush to accumulate gold is over 10 years old with no end in sight.
As Jesse states above, no man or government can hold a market down forever. And to those who know the true value of that market, these short term take-downs are nothing but gift-wrapped buying opportunities.
Thanks Jesse for the reminder that the more things change, the more they stay the same.
A History Lesson
Here's an interesting article I ran across that gives a pretty good history lesson on the Fed. Take 10 minutes and learn the real truth that they didn't teach us in school. Enjoy.
Nationalize The Federal Reserve
October 14, 2010 — Dean Henderson
It’s clear that the gold-hoarding international bankers are bent on destroying America. They are Nazis, so the black, left-leaning Obama provides the perfect fall guy. There is only one rabbit which Obama can pull out of the hat to prevent both his and our demise. He must nationalize the Federal Reserve. And he must do it now.
In 1789 Alexander Hamilton became the first Treasury Secretary of the United States. Hamilton had close relations with the Rothschild family which owned the Bank of England. With Rothschild financing Hamilton founded Bank of New York. He died in a gun battle with Aaron Burr, who founded Bank of Manhattan with Kuhn Loeb financing.
Hamilton exemplified the contempt which the Eight Families hold towards common people, once stating, “All communities divide themselves into the few and the many. The first are the rich and the well born, the others the mass of the people…The people are turbulent and changing; they seldom judge and determine right. Give therefore to the first class a distinct, permanent share of government. They will check the unsteadiness of the second.”
Hamilton was only the first in a series of international banker cronies to hold the key position of Treasury Secretary. In recent times Kennedy Treasury Secretary Douglas Dillon came from Dillon Read, Nixon Treasury Secretaries David Kennedy and William Simon came from Continental Illinois Bank and Salomon Brothers respectively, Carter Treasury Secretary Michael Blumenthal came from Goldman Sachs, Reagan Treasury Secretary Donald Regan came from Merrill Lynch, Bush Sr. Treasury Secretary Nicholas Brady came from Dillon Read and both Clinton Treasury Secretary Robert Rubin and Bush Jr. Treasury Secretary Henry Paulson came from Goldman Sachs.
Thomas Jefferson argued that the United States needed a publicly-owned central bank so that European monarchs and aristocrats could not use the printing of money to control the affairs of the new nation. Jefferson argued, “A country which expects to remain ignorant and free…expects that which has never been and that which will never be. There is scarcely a King in a hundred who would not, if he could, follow the example of Pharaoh-get first all the people’s money, then all their lands and then make them and their children servants forever…banking establishments are more dangerous than standing armies. Already they have raised up a money aristocracy.”
Jefferson watched as the Euro-banking conspiracy to control the United States unfolded, weighing in, “Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions begun at a distinguished period, unalterable through every change of ministers, too plainly prove a deliberate, systematic plan of reducing us to slavery”.
But Rothschild-sponsored Hamilton’s arguments for a private US central bank carried the day. In 1791 the Bank of the United States (BUS) was founded, with the Rothschilds owning the lion’s share. The bank’s charter was to run out in 1811. Public opinion ran in favor of revoking the charter and replacing it with a Jeffersonian public central bank. But the debate was postponed as the nation was plunged by the Euro-bankers into the War of 1812. Amidst a climate of fear and economic hardship, Hamilton’s bank got its charter renewed in 1816.
In 1828 Andrew Jackson took a run at the US Presidency. Throughout his campaign he railed against the international bankers who controlled BUS. Jackson ranted, “You are a den of vipers. I intend to expose you and by Eternal God I will rout you out. If the people understood the rank injustices of our money and banking system there would be a revolution before morning.”
Jackson won the election and revoked the bank’s charter stating, “The Act seems to be predicated on an erroneous idea that the present shareholders have a prescriptive right to not only the favor, but the bounty of the government…for their benefit does this Act exclude the whole American people from competition in the purchase of this monopoly. Present stockholders and those inheriting their rights as successors be established a privileged order, clothed both with great political power and enjoying immense pecuniary advantages from their connection with government. Should its influence be concentrated under the operation of such an Act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the independence of our country in war…controlling our currency, receiving our public monies and holding thousands of our citizens independence, it would be more formidable and dangerous than the naval and military power of the enemy. It is to be regretted that the rich and powerful too often bend the acts of government for selfish purposes…to make the rich richer and more powerful. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by acts of Congress. I have done my duty to this country.”
Jackson’s undertaking was wildly popular and he was re-elected. In 1835 became the target of the first assassination attempt on a US President. The gunman was Richard Lawrence, who admitted that he was, “in touch with the powers in Europe”. Still, in 1836 Jackson refused to renew the BUS charter. Under Jackson’s reign the US national debt went to zero for the first and last time in our nation’s history. This angered the international bankers whose primary income is derived from interest payments on debt. BUS President Nicholas Biddle cut off funding to the US government in 1842, plunging the US into a depression. Biddle was an agent for Paris-based Jacob Rothschild.
The Mexican War was simultaneously sprung on Jackson and a few years later the Civil War was unleashed. The Lehman family made a fortune smuggling arms to the south and cotton to the north. By 1861 the US was $100 million in debt. New President Abraham Lincoln snubbed the Euro-bankers again, issuing Treasury Department Greenbacks to pay Union Army bills. The Times of London now called for the “destruction of the US government”.
The Euro-banker-written Hazard Circular was exposed and circulated throughout the country by angry populists. It stated, “…the European Plan is that capital money lenders shall control labor by controlling wages. The great debt that capitalists will see is made out of the war and must be used to control the valve of money. To accomplish this government bonds must be used as a banking basis. We are now awaiting Secretary of Treasury Salmon Chase to make that recommendation. It will not allow Greenbacks to circulate as money as we cannot control that. We control bonds and through them banking issues”.
The 1863 National Banking Act reinstated a private US central bank and Chase’s war bonds were issued. Lincoln was re-elected the next year, vowing to repeal the act after he took his January 1865 oaths of office. Soon he was assassinated at the Ford Theatre by John Wilkes Booth. Booth had major connections to the international bankers. His granddaughter wrote This One Mad Act, which details Booth’s contact with “mysterious Europeans” just before Lincoln’s assassination.
Following the Lincoln hit, Booth was whisked away by members of a secret society known as Knights of the Golden Circle (KGC). KGC fomented much of the tension that caused the Civil War and President Lincoln had targeted the group. Booth was a KGC member and was connected through Confederate Secretary of State Judah Benjamin to the House of Rothschild. Benjamin fled to England after the war.
Now the bankers wanted to etch their private banking monopoly in stone. The Aldrich Plan was hatched at a secret 1910 meeting at JP Morgan’s private resort on Jekyl Island, SC. Present were Rockefeller lieutenant Nelson Aldrich and Paul Warburg of the German Warburg banking dynasty. Aldrich, a New York Congressman, later married into the Rockefeller family. His son Winthrop Aldrich chaired Chase Manhattan. While the bankers met, Colonel Edward House, another Rockefeller stooge and close confidant of President Woodrow Wilson, was busy convincing Wilson of the importance of a private central bank and the introduction of a national income tax.
(The above cartoon from 1912, representing what would happen to the US with the creation of a central bank. The picture says it all. That's essentially what did happen.)
Wilson didn’t need much convincing, since he was beholden to copper magnate Cleveland Dodge, whose namesake Phelps Dodge is one of the biggest mining companies in the world. Dodge bankrolled Wilson’s political career and Wilson wrote his inaugural speech on Dodge’s yacht. Wilson was a classmate of both Dodge and Cyrus McCormick at Princeton. Both were directors at Rockefeller’s National City Bank (now Citigroup). Wilson’s main focus was on overcoming public distrust of the bankers which New York City Mayor John Hylan echoed in 1911 when he argued, “The real menace to our republic is the invisible government which, like a giant octopus, sprawls its slimy length over our city, state and nation. At the head is a small group of banking houses generally referred to as the international bankers.”
In 1913 the Federal Reserve Act passed. Colonel Ely Garrison, a close friend of both Teddy Roosevelt and Woodrow Wilson, wrote in Roosevelt, Wilson and the Federal Reserve, “Paul Warburg was the man who got the Federal Reserve Act together after the Aldrich Plan aroused such nationwide resentment and opposition. The mastermind of both plans was Baron Alfred Rothschild of London.”
Nearly a century after Lincoln was assassinated for issuing Greenbacks, President John F. Kennedy suffered the same fate for issuing silver-backed United States Treasury Notes to counter the Federal Reserve. The US sank further into debt and US citizens were terrorized into silence, knowing that if “they” could kill the President “they” could kill anyone.
Obama must nationalize the Federal Reserve. And he needs to know that we have his back.
www.deanhenderson.wordpress.com
Here's an interesting article I ran across that gives a pretty good history lesson on the Fed. Take 10 minutes and learn the real truth that they didn't teach us in school. Enjoy.
Nationalize The Federal Reserve
October 14, 2010 — Dean Henderson
It’s clear that the gold-hoarding international bankers are bent on destroying America. They are Nazis, so the black, left-leaning Obama provides the perfect fall guy. There is only one rabbit which Obama can pull out of the hat to prevent both his and our demise. He must nationalize the Federal Reserve. And he must do it now.
In 1789 Alexander Hamilton became the first Treasury Secretary of the United States. Hamilton had close relations with the Rothschild family which owned the Bank of England. With Rothschild financing Hamilton founded Bank of New York. He died in a gun battle with Aaron Burr, who founded Bank of Manhattan with Kuhn Loeb financing.
Hamilton exemplified the contempt which the Eight Families hold towards common people, once stating, “All communities divide themselves into the few and the many. The first are the rich and the well born, the others the mass of the people…The people are turbulent and changing; they seldom judge and determine right. Give therefore to the first class a distinct, permanent share of government. They will check the unsteadiness of the second.”
Hamilton was only the first in a series of international banker cronies to hold the key position of Treasury Secretary. In recent times Kennedy Treasury Secretary Douglas Dillon came from Dillon Read, Nixon Treasury Secretaries David Kennedy and William Simon came from Continental Illinois Bank and Salomon Brothers respectively, Carter Treasury Secretary Michael Blumenthal came from Goldman Sachs, Reagan Treasury Secretary Donald Regan came from Merrill Lynch, Bush Sr. Treasury Secretary Nicholas Brady came from Dillon Read and both Clinton Treasury Secretary Robert Rubin and Bush Jr. Treasury Secretary Henry Paulson came from Goldman Sachs.
Thomas Jefferson argued that the United States needed a publicly-owned central bank so that European monarchs and aristocrats could not use the printing of money to control the affairs of the new nation. Jefferson argued, “A country which expects to remain ignorant and free…expects that which has never been and that which will never be. There is scarcely a King in a hundred who would not, if he could, follow the example of Pharaoh-get first all the people’s money, then all their lands and then make them and their children servants forever…banking establishments are more dangerous than standing armies. Already they have raised up a money aristocracy.”
Jefferson watched as the Euro-banking conspiracy to control the United States unfolded, weighing in, “Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions begun at a distinguished period, unalterable through every change of ministers, too plainly prove a deliberate, systematic plan of reducing us to slavery”.
But Rothschild-sponsored Hamilton’s arguments for a private US central bank carried the day. In 1791 the Bank of the United States (BUS) was founded, with the Rothschilds owning the lion’s share. The bank’s charter was to run out in 1811. Public opinion ran in favor of revoking the charter and replacing it with a Jeffersonian public central bank. But the debate was postponed as the nation was plunged by the Euro-bankers into the War of 1812. Amidst a climate of fear and economic hardship, Hamilton’s bank got its charter renewed in 1816.
In 1828 Andrew Jackson took a run at the US Presidency. Throughout his campaign he railed against the international bankers who controlled BUS. Jackson ranted, “You are a den of vipers. I intend to expose you and by Eternal God I will rout you out. If the people understood the rank injustices of our money and banking system there would be a revolution before morning.”
Jackson won the election and revoked the bank’s charter stating, “The Act seems to be predicated on an erroneous idea that the present shareholders have a prescriptive right to not only the favor, but the bounty of the government…for their benefit does this Act exclude the whole American people from competition in the purchase of this monopoly. Present stockholders and those inheriting their rights as successors be established a privileged order, clothed both with great political power and enjoying immense pecuniary advantages from their connection with government. Should its influence be concentrated under the operation of such an Act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the independence of our country in war…controlling our currency, receiving our public monies and holding thousands of our citizens independence, it would be more formidable and dangerous than the naval and military power of the enemy. It is to be regretted that the rich and powerful too often bend the acts of government for selfish purposes…to make the rich richer and more powerful. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by acts of Congress. I have done my duty to this country.”
Jackson’s undertaking was wildly popular and he was re-elected. In 1835 became the target of the first assassination attempt on a US President. The gunman was Richard Lawrence, who admitted that he was, “in touch with the powers in Europe”. Still, in 1836 Jackson refused to renew the BUS charter. Under Jackson’s reign the US national debt went to zero for the first and last time in our nation’s history. This angered the international bankers whose primary income is derived from interest payments on debt. BUS President Nicholas Biddle cut off funding to the US government in 1842, plunging the US into a depression. Biddle was an agent for Paris-based Jacob Rothschild.
The Mexican War was simultaneously sprung on Jackson and a few years later the Civil War was unleashed. The Lehman family made a fortune smuggling arms to the south and cotton to the north. By 1861 the US was $100 million in debt. New President Abraham Lincoln snubbed the Euro-bankers again, issuing Treasury Department Greenbacks to pay Union Army bills. The Times of London now called for the “destruction of the US government”.
The Euro-banker-written Hazard Circular was exposed and circulated throughout the country by angry populists. It stated, “…the European Plan is that capital money lenders shall control labor by controlling wages. The great debt that capitalists will see is made out of the war and must be used to control the valve of money. To accomplish this government bonds must be used as a banking basis. We are now awaiting Secretary of Treasury Salmon Chase to make that recommendation. It will not allow Greenbacks to circulate as money as we cannot control that. We control bonds and through them banking issues”.
The 1863 National Banking Act reinstated a private US central bank and Chase’s war bonds were issued. Lincoln was re-elected the next year, vowing to repeal the act after he took his January 1865 oaths of office. Soon he was assassinated at the Ford Theatre by John Wilkes Booth. Booth had major connections to the international bankers. His granddaughter wrote This One Mad Act, which details Booth’s contact with “mysterious Europeans” just before Lincoln’s assassination.
Following the Lincoln hit, Booth was whisked away by members of a secret society known as Knights of the Golden Circle (KGC). KGC fomented much of the tension that caused the Civil War and President Lincoln had targeted the group. Booth was a KGC member and was connected through Confederate Secretary of State Judah Benjamin to the House of Rothschild. Benjamin fled to England after the war.
Now the bankers wanted to etch their private banking monopoly in stone. The Aldrich Plan was hatched at a secret 1910 meeting at JP Morgan’s private resort on Jekyl Island, SC. Present were Rockefeller lieutenant Nelson Aldrich and Paul Warburg of the German Warburg banking dynasty. Aldrich, a New York Congressman, later married into the Rockefeller family. His son Winthrop Aldrich chaired Chase Manhattan. While the bankers met, Colonel Edward House, another Rockefeller stooge and close confidant of President Woodrow Wilson, was busy convincing Wilson of the importance of a private central bank and the introduction of a national income tax.
(The above cartoon from 1912, representing what would happen to the US with the creation of a central bank. The picture says it all. That's essentially what did happen.)
Wilson didn’t need much convincing, since he was beholden to copper magnate Cleveland Dodge, whose namesake Phelps Dodge is one of the biggest mining companies in the world. Dodge bankrolled Wilson’s political career and Wilson wrote his inaugural speech on Dodge’s yacht. Wilson was a classmate of both Dodge and Cyrus McCormick at Princeton. Both were directors at Rockefeller’s National City Bank (now Citigroup). Wilson’s main focus was on overcoming public distrust of the bankers which New York City Mayor John Hylan echoed in 1911 when he argued, “The real menace to our republic is the invisible government which, like a giant octopus, sprawls its slimy length over our city, state and nation. At the head is a small group of banking houses generally referred to as the international bankers.”
In 1913 the Federal Reserve Act passed. Colonel Ely Garrison, a close friend of both Teddy Roosevelt and Woodrow Wilson, wrote in Roosevelt, Wilson and the Federal Reserve, “Paul Warburg was the man who got the Federal Reserve Act together after the Aldrich Plan aroused such nationwide resentment and opposition. The mastermind of both plans was Baron Alfred Rothschild of London.”
Nearly a century after Lincoln was assassinated for issuing Greenbacks, President John F. Kennedy suffered the same fate for issuing silver-backed United States Treasury Notes to counter the Federal Reserve. The US sank further into debt and US citizens were terrorized into silence, knowing that if “they” could kill the President “they” could kill anyone.
Obama must nationalize the Federal Reserve. And he needs to know that we have his back.
www.deanhenderson.wordpress.com
Must Hear Interview
Financial repression means long-term inflation, steadily rising gold, Rickards says Geopolitical analyst James G. Rickards told King World News yesterday that the U.S. government policy of financial repression will force major banks to stop trading for their own accounts and buy mostly U.S. government bonds at negative real interest rates, engineering long-term inflation of 5 percent per year to devalue the dollar by half over 15 years. Meanwhile, Rickards says, governments around the world will buy gold stealthily, pushing the price up, but also cautiously, lest their buying push the price up too fast.
Click here to listen.
Financial repression means long-term inflation, steadily rising gold, Rickards says Geopolitical analyst James G. Rickards told King World News yesterday that the U.S. government policy of financial repression will force major banks to stop trading for their own accounts and buy mostly U.S. government bonds at negative real interest rates, engineering long-term inflation of 5 percent per year to devalue the dollar by half over 15 years. Meanwhile, Rickards says, governments around the world will buy gold stealthily, pushing the price up, but also cautiously, lest their buying push the price up too fast.
Click here to listen.
Gold $10,000
This from an article over on the CNBC site entitled: Return to Gold Standard? Why Price Would Hit $10,000
The country’s monetary base (currency in circulation plus bank reserves held at the Fed) has tripled to $2.68 trillion, following the completion of QE2. Dividing this monetary base by the approximate 261.5 million ounces gold the U.S. Treasury is believed to own gets Brodsky to the $10,000 an ounce figure.
While “politics are likely to intervene” to stop gold from skyrocketing to this destabilizing price, that doesn’t mean bullion can’t keep surging from current levels as the devaluations continue, said Brodsky.
I'm not exactly sure how a pro-gold article made it onto CNBC but I thought it was worth passing on as it might help answer the questions we all ask as we consider buying gold: "Should I buy now," and "is the price of gold going higher?"
This from an article over on the CNBC site entitled: Return to Gold Standard? Why Price Would Hit $10,000
The country’s monetary base (currency in circulation plus bank reserves held at the Fed) has tripled to $2.68 trillion, following the completion of QE2. Dividing this monetary base by the approximate 261.5 million ounces gold the U.S. Treasury is believed to own gets Brodsky to the $10,000 an ounce figure.
While “politics are likely to intervene” to stop gold from skyrocketing to this destabilizing price, that doesn’t mean bullion can’t keep surging from current levels as the devaluations continue, said Brodsky.
I'm not exactly sure how a pro-gold article made it onto CNBC but I thought it was worth passing on as it might help answer the questions we all ask as we consider buying gold: "Should I buy now," and "is the price of gold going higher?"
You Are Being LIED To
Here's a few paragraphs from an article entitled Patrick Cockburn: This bizarre plot goes against all that is known of Iran's intelligence service that plainly states that everything the US Government has said about the supposed Saudi ambassador assassination attempt is a lie.
The claim that Iran employed a used-car salesman with a conviction for cheque fraud to hire Mexican gangsters to assassinate the Saudi ambassador in Washington goes against all that is known of Iran's highly sophisticated intelligence service.
The confident announcement of this bizarre plot by the US Attorney General Eric Holder sounds alarmingly similar to Secretary of State Colin Powell's notorious claim before the UN in 2003 that the US possessed irrefutable evidence Saddam Hussein was developing weapons of mass destruction.
None of this makes sense. The IRGC is famous for making sure that responsibility for its actions can never be traced to Iran. It usually operates through proxies. Yet suddenly here it is sending $100,000 (£63,000) from a known IRGC bank account to hire assassins in Mexico. The beneficiaries from such a plot are evident.
Just like the government's explanation of the events of 911, this "story" instantly becomes suspect once one actually stops and takes a minute to examine the evidence for themselves. Likewise, the same "spin" that our foreign policy wonks use every day, knowing that the dumbed-down masses will just swallow the official party line hook-line-and-sinker without closer inspection, is also used in the domestic economy arena to keep the sheeple in the dark about the true state of affairs.
The marriage of the mass media and government, funded by banker dollars, will keep the sheeple steadily marching to mass slaughter as they will see their wealth eventually evaporate as paper assets become worthless.
(About once a week I tend to go off the deep end and have a little rant. It's a genetic deficiency. Well, here it is for this week. LOL!)
Wake up neighbors! Think for yourselves! Do a little studying and digging. Ask questions for yourselves and consider the possibility that behind that establishment curtain is not an all-knowing wizard, but a little group of men (the bankters!)pulling the strings on this grand illusion by lying to you about the true state of affairs.
2 Thess 2:11-12 And for this cause God shall send them strong delusion, that they should believe a lie: That they all might be damned who believed not the truth, but had pleasure in unrighteousness.
Is the truth of the above verse relagated to only eschatology, or could it have a practical application as well? Choose your answer to that question carefully. Your financial life depends on it. Our leaders are lying to us and we must awake from our slumber to have any prayer of survival.
We are NOT in an economic recovery. All is NOT well. Washington does NOT have your best interests in mind, and the bailouts are NOT working. Continuing to borrow to get out of debt, which is the root problem, can only end bad.
Protect yourself and your family by storing up for the future. Your 401k's, dollars, annuities, stocks, bonds, bank accounts and mutual funds are going to be wiped out. They are NOT where you need to be storing your wealth. They are part of the illusion. Only gold is real. It cannot be counterfeited. It is the embodiment of truth.
Dare to look behind the curtain, Dorothy. Dare to discover the truth. Dare to be different and independent, using the brain God gave you to use.
As Bennie and the Inkjets print our currency into oblivion, dare to follow the yellow brick road of gold. (Like those Elton John references? hehehe) It is the enemy of the lies. It reveals truth, and those who don't want truth deserve to be deceived.
Why does God Himself allow a lie to be sent? Because they received not the love of the truth, that they might be saved.
This verse is as true in the physical realm as it is in the spiritual.
In Revelation we find the following verse:
Rev 3:18 I counsel thee to buy of me gold tried in the fire, that thou mayest be rich; and white raiment, that thou mayest be clothed, and that the shame of thy nakedness do not appear; and anoint thine eyes with eyesalve, that thou mayest see.
John is using a physical truth to make a spiritual point, and we overlook the fact that the truth of the spiritual is hinted at by the truth of the physical fact that gold is wealth. If God Himself didn't view gold as wealth, then John chose a poor object to make his illustration with.
God created gold as the ultimate store of wealth. The truth has not changed for 6,000 years. There are periods of time in which ignorance of that truth will not cost you anything. But the reality of this point in history is this: Ignorance of this truth going forward will cost you everything.
Okay, rant finished.
Here's a few paragraphs from an article entitled Patrick Cockburn: This bizarre plot goes against all that is known of Iran's intelligence service that plainly states that everything the US Government has said about the supposed Saudi ambassador assassination attempt is a lie.
The claim that Iran employed a used-car salesman with a conviction for cheque fraud to hire Mexican gangsters to assassinate the Saudi ambassador in Washington goes against all that is known of Iran's highly sophisticated intelligence service.
The confident announcement of this bizarre plot by the US Attorney General Eric Holder sounds alarmingly similar to Secretary of State Colin Powell's notorious claim before the UN in 2003 that the US possessed irrefutable evidence Saddam Hussein was developing weapons of mass destruction.
None of this makes sense. The IRGC is famous for making sure that responsibility for its actions can never be traced to Iran. It usually operates through proxies. Yet suddenly here it is sending $100,000 (£63,000) from a known IRGC bank account to hire assassins in Mexico. The beneficiaries from such a plot are evident.
Just like the government's explanation of the events of 911, this "story" instantly becomes suspect once one actually stops and takes a minute to examine the evidence for themselves. Likewise, the same "spin" that our foreign policy wonks use every day, knowing that the dumbed-down masses will just swallow the official party line hook-line-and-sinker without closer inspection, is also used in the domestic economy arena to keep the sheeple in the dark about the true state of affairs.
The marriage of the mass media and government, funded by banker dollars, will keep the sheeple steadily marching to mass slaughter as they will see their wealth eventually evaporate as paper assets become worthless.
(About once a week I tend to go off the deep end and have a little rant. It's a genetic deficiency. Well, here it is for this week. LOL!)
Wake up neighbors! Think for yourselves! Do a little studying and digging. Ask questions for yourselves and consider the possibility that behind that establishment curtain is not an all-knowing wizard, but a little group of men (the bankters!)pulling the strings on this grand illusion by lying to you about the true state of affairs.
2 Thess 2:11-12 And for this cause God shall send them strong delusion, that they should believe a lie: That they all might be damned who believed not the truth, but had pleasure in unrighteousness.
Is the truth of the above verse relagated to only eschatology, or could it have a practical application as well? Choose your answer to that question carefully. Your financial life depends on it. Our leaders are lying to us and we must awake from our slumber to have any prayer of survival.
We are NOT in an economic recovery. All is NOT well. Washington does NOT have your best interests in mind, and the bailouts are NOT working. Continuing to borrow to get out of debt, which is the root problem, can only end bad.
Protect yourself and your family by storing up for the future. Your 401k's, dollars, annuities, stocks, bonds, bank accounts and mutual funds are going to be wiped out. They are NOT where you need to be storing your wealth. They are part of the illusion. Only gold is real. It cannot be counterfeited. It is the embodiment of truth.
Dare to look behind the curtain, Dorothy. Dare to discover the truth. Dare to be different and independent, using the brain God gave you to use.
As Bennie and the Inkjets print our currency into oblivion, dare to follow the yellow brick road of gold. (Like those Elton John references? hehehe) It is the enemy of the lies. It reveals truth, and those who don't want truth deserve to be deceived.
Why does God Himself allow a lie to be sent? Because they received not the love of the truth, that they might be saved.
This verse is as true in the physical realm as it is in the spiritual.
In Revelation we find the following verse:
Rev 3:18 I counsel thee to buy of me gold tried in the fire, that thou mayest be rich; and white raiment, that thou mayest be clothed, and that the shame of thy nakedness do not appear; and anoint thine eyes with eyesalve, that thou mayest see.
John is using a physical truth to make a spiritual point, and we overlook the fact that the truth of the spiritual is hinted at by the truth of the physical fact that gold is wealth. If God Himself didn't view gold as wealth, then John chose a poor object to make his illustration with.
God created gold as the ultimate store of wealth. The truth has not changed for 6,000 years. There are periods of time in which ignorance of that truth will not cost you anything. But the reality of this point in history is this: Ignorance of this truth going forward will cost you everything.
Okay, rant finished.
What The Experts Buy
This is an excerpt from a recent interview with Doug Casey of Casey Research.
Louis: Okay; so when you go shopping for gold, what do you buy? Bars? Bullion jewelry? Coins?
Doug: I buy bullion coins, almost exclusively. American Eagles are now probably the most widely recognized and readily accepted bullion coin in the world – they’re becoming mainstay of my stash. But I also have a lot of Canadian maple leafs, Austrian philharmonics, South African krugerrands, Mexican 50-peso coins, and the like.
The Mexican coins usually have the lowest premiums, by the way, and they’re also the largest common coin, in that they contain 37.5 grams of gold, which is, not just coincidentally, equal to a Chinese tael (which is in turn equal to 1.2 troy ounces). In the Orient, people think of gold as much in taels as they do in grams or ounces. The Mexican 50 peso is perhaps the most popular coin in Latin America, especially in Argentina, where I spend a lot of time, because it’s minted in grams. Krugerrands used to be the bullion standard, but they’ve fallen from favor.
The British sovereign is perhaps the most common gold coin, and there are several hundred million out there. It’s also got a low premium, and is worth owning, since it’s only 0.2354 ounces of gold – it’s convenient having something about the size of a nickel that’s worth around $450.
Right now there’s a good opportunity in semi-numismatic gold coins too – not rare collectibles, but pre-1933 US bullion coins, like the Saint-Gaudens and other double eagles.
Louis: So, once you buy your coins, what do you do with them? You can’t stuff them all in your mattress…
Doug: I usually try to dodge that question, in part because I don’t want to publish the details of my own arrangements, and in part because the answer is different for different people in different circumstances. But first and foremost, I have to warn people not to use bank safe-deposit boxes. They are typically not insured, and they put your valuables on record – the last time the US government stole private citizens’ gold, the first thing they did was seal all the bank vaults.
This is an excerpt from a recent interview with Doug Casey of Casey Research.
Louis: Okay; so when you go shopping for gold, what do you buy? Bars? Bullion jewelry? Coins?
Doug: I buy bullion coins, almost exclusively. American Eagles are now probably the most widely recognized and readily accepted bullion coin in the world – they’re becoming mainstay of my stash. But I also have a lot of Canadian maple leafs, Austrian philharmonics, South African krugerrands, Mexican 50-peso coins, and the like.
The Mexican coins usually have the lowest premiums, by the way, and they’re also the largest common coin, in that they contain 37.5 grams of gold, which is, not just coincidentally, equal to a Chinese tael (which is in turn equal to 1.2 troy ounces). In the Orient, people think of gold as much in taels as they do in grams or ounces. The Mexican 50 peso is perhaps the most popular coin in Latin America, especially in Argentina, where I spend a lot of time, because it’s minted in grams. Krugerrands used to be the bullion standard, but they’ve fallen from favor.
The British sovereign is perhaps the most common gold coin, and there are several hundred million out there. It’s also got a low premium, and is worth owning, since it’s only 0.2354 ounces of gold – it’s convenient having something about the size of a nickel that’s worth around $450.
Right now there’s a good opportunity in semi-numismatic gold coins too – not rare collectibles, but pre-1933 US bullion coins, like the Saint-Gaudens and other double eagles.
Louis: So, once you buy your coins, what do you do with them? You can’t stuff them all in your mattress…
Doug: I usually try to dodge that question, in part because I don’t want to publish the details of my own arrangements, and in part because the answer is different for different people in different circumstances. But first and foremost, I have to warn people not to use bank safe-deposit boxes. They are typically not insured, and they put your valuables on record – the last time the US government stole private citizens’ gold, the first thing they did was seal all the bank vaults.
James Turk - More Bank Collapses to Cause Gold & Silver Spike
With gold up roughly $20 trading at $1,680 & silver near $33, today King World News interviewed James Turk out of London to get his take on the ongoing financial crisis and where gold and silver are headed from here. When asked about the increasing fear surrounding municipal bankruptcies in the United States, Turk responded, “The surprises keep coming, Eric, but we really shouldn’t be surprised. The warning signs have been flashing for a few years. Yesterday Harrisburg, Pennsylvania, which in 2010 Forbes rated Harrisburg as the second best place in the U.S. to raise a family, just declared bankruptcy. The implications will play itself out in the months and years ahead, but two things are immediately clear.”
James Turk continues:
“This has dramatic implications for gold and silver, but first, the ongoing financial bust is taking more victims, namely everybody who loaned money to the City of Harrisburg. Second, other over-indebted municipalities and companies will see bankruptcy as a viable alternative to get out from under their debt load.
Harrisburg is doing what Greece should do, which is to basically recognize they do not have the financial capacity to repay all of the debt obligations they foolishly entered into during the boom years.
Here is another surprise. Over here in Europe, the Slovakian government voted against the expanded EU bailout package. It appears, however, the politicians will resubmit the proposal with the hope of getting it passed the next time around.
The Dexia Bank failure is not the Lehman event I have been anticipating. While the repercussions of Dexia are still being felt, it seems inevitable that more bank collapses are coming. As a consequence, it appears one really needs to question how much governments are willing to fight the inevitable trend that is knocking out the props from insolvent institutions....
“The world’s financial system is careening towards another Lehman moment. A major institution will fail and the resulting contagion will be beyond the capacity of governments to contain it. What that means is financial repression. At that point you will see various capital controls in an attempt to keep the broken system going.
This gets back to a point that I like to make time and time again, and this is something that investors should never lose sight of, that physical gold and physical silver are the ultimate safe havens for your wealth because they do not have counterparty risk.
I am very encouraged by what gold and silver are doing here. Both metals are building up support after the big hit they took three weeks ago. I don’t think we are out of the woods just yet as we may need more backing and filling. A retest of $1,600 on gold and $30 for silver may well be in the cards.
As is clear from my earlier comments, what is important here is not so much the price of the precious metals, but rather making sure that you own them. When this Lehman moment occurs in the future, not only will you be glad you own physical gold and silver, but at that point you will see oceans of paper money coming into the market driving the price of both metals much, much higher.”
With gold up roughly $20 trading at $1,680 & silver near $33, today King World News interviewed James Turk out of London to get his take on the ongoing financial crisis and where gold and silver are headed from here. When asked about the increasing fear surrounding municipal bankruptcies in the United States, Turk responded, “The surprises keep coming, Eric, but we really shouldn’t be surprised. The warning signs have been flashing for a few years. Yesterday Harrisburg, Pennsylvania, which in 2010 Forbes rated Harrisburg as the second best place in the U.S. to raise a family, just declared bankruptcy. The implications will play itself out in the months and years ahead, but two things are immediately clear.”
James Turk continues:
“This has dramatic implications for gold and silver, but first, the ongoing financial bust is taking more victims, namely everybody who loaned money to the City of Harrisburg. Second, other over-indebted municipalities and companies will see bankruptcy as a viable alternative to get out from under their debt load.
Harrisburg is doing what Greece should do, which is to basically recognize they do not have the financial capacity to repay all of the debt obligations they foolishly entered into during the boom years.
Here is another surprise. Over here in Europe, the Slovakian government voted against the expanded EU bailout package. It appears, however, the politicians will resubmit the proposal with the hope of getting it passed the next time around.
The Dexia Bank failure is not the Lehman event I have been anticipating. While the repercussions of Dexia are still being felt, it seems inevitable that more bank collapses are coming. As a consequence, it appears one really needs to question how much governments are willing to fight the inevitable trend that is knocking out the props from insolvent institutions....
“The world’s financial system is careening towards another Lehman moment. A major institution will fail and the resulting contagion will be beyond the capacity of governments to contain it. What that means is financial repression. At that point you will see various capital controls in an attempt to keep the broken system going.
This gets back to a point that I like to make time and time again, and this is something that investors should never lose sight of, that physical gold and physical silver are the ultimate safe havens for your wealth because they do not have counterparty risk.
I am very encouraged by what gold and silver are doing here. Both metals are building up support after the big hit they took three weeks ago. I don’t think we are out of the woods just yet as we may need more backing and filling. A retest of $1,600 on gold and $30 for silver may well be in the cards.
As is clear from my earlier comments, what is important here is not so much the price of the precious metals, but rather making sure that you own them. When this Lehman moment occurs in the future, not only will you be glad you own physical gold and silver, but at that point you will see oceans of paper money coming into the market driving the price of both metals much, much higher.”
Harrisburg, Pa. Files For Bankruptcy
(Bloomberg) Harrisburg, Pennsylvania, facing a state takeover of its finances, filed for bankruptcy protection after failing to pay the debt on a trash-to-energy incinerator.
The council made its 4-3 decision against the advice of a city attorney who said the panel did not follow proper procedure. It’s the ninth bankruptcy filing this year by a municipal-bond issuer, and the first by a U.S. state capital since 1980 when the municipal bankruptcy laws were overhauled, said James Spiotto, a partner at Chapman & Cutler in Chicago who tracks such cases.
“This was a last resort,” Mark D. Schwartz, the council’s Bryn Mawr-based lawyer, said after he faxed the documents to a federal court yesterday. “They’re at their wits’ end.”
Harrisburg is the biggest city to file for bankruptcy since Vallejo, California, filed in 2008, according to a ranking by Municipal Market Advisors, a research firm in Concord, Massachusetts. Municipalities across the nation have been battered by the financial crisis. Harrisburg’s filing came less than a month after Alabama’s Jefferson County Commission voted to try to avert what would have been the nation’s biggest municipal bankruptcy, and nine months after Vallejo emerged.
(Bloomberg) Harrisburg, Pennsylvania, facing a state takeover of its finances, filed for bankruptcy protection after failing to pay the debt on a trash-to-energy incinerator.
The council made its 4-3 decision against the advice of a city attorney who said the panel did not follow proper procedure. It’s the ninth bankruptcy filing this year by a municipal-bond issuer, and the first by a U.S. state capital since 1980 when the municipal bankruptcy laws were overhauled, said James Spiotto, a partner at Chapman & Cutler in Chicago who tracks such cases.
“This was a last resort,” Mark D. Schwartz, the council’s Bryn Mawr-based lawyer, said after he faxed the documents to a federal court yesterday. “They’re at their wits’ end.”
Harrisburg is the biggest city to file for bankruptcy since Vallejo, California, filed in 2008, according to a ranking by Municipal Market Advisors, a research firm in Concord, Massachusetts. Municipalities across the nation have been battered by the financial crisis. Harrisburg’s filing came less than a month after Alabama’s Jefferson County Commission voted to try to avert what would have been the nation’s biggest municipal bankruptcy, and nine months after Vallejo emerged.
CNBC Propaganda At It's Finest
Here's a clip from the banker mouthpeice media outlet CNBC trying to scare the public into supporting yet another bailout for yet another bank. (This time Dexia in Europe.) In a statement obviously calculated to scare the average Joe into supporting more bailouts, Larry Kudlow said "Jim, you know full well, if they let these banks fail without any backstop, without any guarantees, then the whole world will go down."
Of course, to his credit, Jim Rodgers stood his ground and simply replied "Let 'em fail."
Here's a clip from the banker mouthpeice media outlet CNBC trying to scare the public into supporting yet another bailout for yet another bank. (This time Dexia in Europe.) In a statement obviously calculated to scare the average Joe into supporting more bailouts, Larry Kudlow said "Jim, you know full well, if they let these banks fail without any backstop, without any guarantees, then the whole world will go down."
Of course, to his credit, Jim Rodgers stood his ground and simply replied "Let 'em fail."
Bankers Are The Problem
The following is from the most recent issue of The Delaire Report. Why haven't you heard of any of this? Because the banks own the press and the politicians, and when they get caught they simply pay a fine and move on to the next scheme.
Political action won't do a bit of good unless you strike at the money-root of the problem.... the bankers.
Vote in the ballot box if it makes you feel better, but the only vote that really counts is how you vote with your money. Keep playing the paper-money game and nothing will change. Only when you opt out of THEIR system by storing your wealth in gold can you ever hope to make a difference.
Wake up Dorothy, we're not in Kansas anymore.
The Delaire Report, Oct. 11, 2011
In recent years, the amount of bank fraud going on, particularly in the USA, is unbelievable. Well-known banks are being sued for securities fraud, mortgage backed securities fraud, insider dealing, lying to clients… the list of claims is endless.
In June of 2007, Morgan Stanley agreed to pay $4.4 million to settle a class-action lawsuit with brokerage clients who bought precious metals and paid storage fees, when in fact it was alleged that Morgan Stanley wasn't physically storing their gold and silver at all.
Last April, the Securities and Exchange Commission (SEC) targeted Goldman Sachs in a civil fraud case. The lawsuit alleged Goldman sold investors a synthetic collateralized debt obligation (CDO) linked to the performance of certain mortgages without disclosing that John Paulson's hedge fund, Paulson & Co., helped design the CDO (named Abacus) and was shorting it. As mortgage prices collapsed, the buyers of Abacus – including ACA Financial and German bank IKB – lost nearly $1 billion.
On July 15, 2010, Goldman settled with the SEC for $500 million. The bank neither admitted nor denied the allegations. It said the marketing materials for Abacus contained "incomplete" information.
JP Morgan Chase was fined $228 million for a bid-rigging scheme involving municipal bonds. The Chase ruling is the latest to come down in a series of fines involving a number of banks, including Bank of America and UBS. This scam that Chase, Bank of America and UBS were involved with was no different in any way, really, from old-school mafia-style bid-rigging scams.
What these banks did is they got together and carved up territory between them, arranging things so that they wouldn’t be bidding against each other in municipal debt auctions. That means the 18 different states involved in these 93-odd deals all got screwed out of the best prices, leaving the taxpayers in those places severely overcharged for their public borrowing.
A few months ago, the Federal Reserve slapped an $85 million fine on Wells Fargo & Co for allegedly steering borrowers into high-cost subprime mortgage loans even though they qualified for safer loans. The fine is the largest civil monetary penalty the Fed has ever assessed in a consumer-protection enforcement action, the central bank said.
Only last week, Harry Markopolis the man who brought down Bernie Madoff’s $65 billion Ponzi scheme, told King World News that, “Bank of New York is going to go down, Eric. Between Bank of New York Mellon and State Street, these two institutions have stolen between $6 to $10 billion from tens of millions of Americans retirement savings accounts. It’s been a hell of a crime spree for the bank, but now they are being brought to justice.”
Markopolos has led the team that spearheaded this investigation from the beginning. Harry and his team were the first to expose this fraud. Markopolos also told KWN, “The New York Attorney General filed suit on Tuesday (against Bank of New York Mellon) for stealing money from pension funds on currency transactions. This theft has been from tens of millions of Americans, policemen, firemen, librarians, municipal workers, judges and the list goes on and on and they’ve been doing it for decades.
The following is from the most recent issue of The Delaire Report. Why haven't you heard of any of this? Because the banks own the press and the politicians, and when they get caught they simply pay a fine and move on to the next scheme.
Political action won't do a bit of good unless you strike at the money-root of the problem.... the bankers.
Vote in the ballot box if it makes you feel better, but the only vote that really counts is how you vote with your money. Keep playing the paper-money game and nothing will change. Only when you opt out of THEIR system by storing your wealth in gold can you ever hope to make a difference.
Wake up Dorothy, we're not in Kansas anymore.
The Delaire Report, Oct. 11, 2011
In recent years, the amount of bank fraud going on, particularly in the USA, is unbelievable. Well-known banks are being sued for securities fraud, mortgage backed securities fraud, insider dealing, lying to clients… the list of claims is endless.
In June of 2007, Morgan Stanley agreed to pay $4.4 million to settle a class-action lawsuit with brokerage clients who bought precious metals and paid storage fees, when in fact it was alleged that Morgan Stanley wasn't physically storing their gold and silver at all.
Last April, the Securities and Exchange Commission (SEC) targeted Goldman Sachs in a civil fraud case. The lawsuit alleged Goldman sold investors a synthetic collateralized debt obligation (CDO) linked to the performance of certain mortgages without disclosing that John Paulson's hedge fund, Paulson & Co., helped design the CDO (named Abacus) and was shorting it. As mortgage prices collapsed, the buyers of Abacus – including ACA Financial and German bank IKB – lost nearly $1 billion.
On July 15, 2010, Goldman settled with the SEC for $500 million. The bank neither admitted nor denied the allegations. It said the marketing materials for Abacus contained "incomplete" information.
JP Morgan Chase was fined $228 million for a bid-rigging scheme involving municipal bonds. The Chase ruling is the latest to come down in a series of fines involving a number of banks, including Bank of America and UBS. This scam that Chase, Bank of America and UBS were involved with was no different in any way, really, from old-school mafia-style bid-rigging scams.
What these banks did is they got together and carved up territory between them, arranging things so that they wouldn’t be bidding against each other in municipal debt auctions. That means the 18 different states involved in these 93-odd deals all got screwed out of the best prices, leaving the taxpayers in those places severely overcharged for their public borrowing.
A few months ago, the Federal Reserve slapped an $85 million fine on Wells Fargo & Co for allegedly steering borrowers into high-cost subprime mortgage loans even though they qualified for safer loans. The fine is the largest civil monetary penalty the Fed has ever assessed in a consumer-protection enforcement action, the central bank said.
Only last week, Harry Markopolis the man who brought down Bernie Madoff’s $65 billion Ponzi scheme, told King World News that, “Bank of New York is going to go down, Eric. Between Bank of New York Mellon and State Street, these two institutions have stolen between $6 to $10 billion from tens of millions of Americans retirement savings accounts. It’s been a hell of a crime spree for the bank, but now they are being brought to justice.”
Markopolos has led the team that spearheaded this investigation from the beginning. Harry and his team were the first to expose this fraud. Markopolos also told KWN, “The New York Attorney General filed suit on Tuesday (against Bank of New York Mellon) for stealing money from pension funds on currency transactions. This theft has been from tens of millions of Americans, policemen, firemen, librarians, municipal workers, judges and the list goes on and on and they’ve been doing it for decades.
What The Miners Expect
As you very well know, the price of gold can be quite volitile. In a business such as gold mining, the price of gold, from the time a mine decides to begin production until the time in which that gold is actually brought to market, can go up or down substantially.
For example, let's suppose you are a mine and you have located a gold deposit that you want to mine and you calculate that the cost per ounce to get that gold out of the ground is going to end up being around $1400/ounce. Further, you know that the price of gold today is $1600/ounce so you stand to make a $200/ounce profit. The problem is though, is that by the time you actually get that gold out of the ground and to the market, the price of gold could drop below your cost, thereby saddling the company with a loss.
To prevent such a scenario, gold miners engage in what they call "hedges." Simply put, a hedge is a contract that a miner enters into that locks in the future price at which that miner will be able to sell his gold. When miners are expecting lower gold prices, they enter into hedges. When miners are expecting higher future prices, they don't enter into hedges.
Now, take a look at the following chart that shows the decreasing number of hedges that miners have been entering into over the last 10 years. It is a very loud statement that the experts, the miners themselves, expect gold prices to continue to increase.
As you can clearly see, the experts, the miners, expect higher prices going forward as they have significantly reduced their hedge positions. In fact, let's hear it directly from the miners themselves. Here's a little excerpt discussing their expectations.
We know that Newmont Mining (NYS: NEM) CEO Richard O'Brien believes gold will reach $2,300 per ounce next year. Kinross Gold (NYS: KGC) CEO Tye Burt believes that conditions for gold have "never been better," and adds: "Not only is it a safe haven for investors and offers a unique alternative to currencies, but the fundamentals of supply and demand are extremely strong." Barrick Gold CEO Aaron Regent recently stated: "Directionally, the factors that have basically caused the gold price to perform the way it has are still in place. If anything, they're intensifying." Source
As you very well know, the price of gold can be quite volitile. In a business such as gold mining, the price of gold, from the time a mine decides to begin production until the time in which that gold is actually brought to market, can go up or down substantially.
For example, let's suppose you are a mine and you have located a gold deposit that you want to mine and you calculate that the cost per ounce to get that gold out of the ground is going to end up being around $1400/ounce. Further, you know that the price of gold today is $1600/ounce so you stand to make a $200/ounce profit. The problem is though, is that by the time you actually get that gold out of the ground and to the market, the price of gold could drop below your cost, thereby saddling the company with a loss.
To prevent such a scenario, gold miners engage in what they call "hedges." Simply put, a hedge is a contract that a miner enters into that locks in the future price at which that miner will be able to sell his gold. When miners are expecting lower gold prices, they enter into hedges. When miners are expecting higher future prices, they don't enter into hedges.
Now, take a look at the following chart that shows the decreasing number of hedges that miners have been entering into over the last 10 years. It is a very loud statement that the experts, the miners themselves, expect gold prices to continue to increase.
As you can clearly see, the experts, the miners, expect higher prices going forward as they have significantly reduced their hedge positions. In fact, let's hear it directly from the miners themselves. Here's a little excerpt discussing their expectations.
We know that Newmont Mining (NYS: NEM) CEO Richard O'Brien believes gold will reach $2,300 per ounce next year. Kinross Gold (NYS: KGC) CEO Tye Burt believes that conditions for gold have "never been better," and adds: "Not only is it a safe haven for investors and offers a unique alternative to currencies, but the fundamentals of supply and demand are extremely strong." Barrick Gold CEO Aaron Regent recently stated: "Directionally, the factors that have basically caused the gold price to perform the way it has are still in place. If anything, they're intensifying." Source
A Banker's Dream
The premise behind the low Fed interest rates is to get banks lending to stimulate the economy. However, that's not what is happening. Consider the following overview by Peter Schiff, CEO of Euro-Pacific Capital.
“The Fix is In. It was bad enough that the Fed held rates far too low, but at least a fig leaf of uncertainty kept the most brazen speculators in partial paralysis. But by specifically telegraphing policy, the Fed has now given cover to the most parasitic elements of the financial sector to undertake transactions that offer no economic benefit to the nation. Specifically, it will simply encourage banks to borrow money at zero percent from the Fed, and then use significant leverage to buy low yielding treasuries at 2 to 4 percent. The result is a banker’s dream: guaranteed low risk profit. In other words it will encourage banks to lend to the government, which already borrows too much, and not lend to private borrowers, whose activity could actually benefit the economy.”
Bankers do not care about the economy. Bankers do not care about America. Bankers do not care about you. They care about bottom line profits, and this zero interest rate environment that the Fed has created will guarantee that our economic problems will get much worse before they get better by starving the nation of cash which could be used to stimulate the economy. You can bet on it! In fact, you already HAVE bet on it. By continuing to invest in paper investments, you are betting that things will get better. By investing in gold and silver, you are betting they won't. Which way did you bet? There can only be one winner, and if you are doing what all of your co-workers are doing, and staying invested in the traditional financial paper markets, you can be sure that you will be the loser. Following the crowd always leads to ruin.
The premise behind the low Fed interest rates is to get banks lending to stimulate the economy. However, that's not what is happening. Consider the following overview by Peter Schiff, CEO of Euro-Pacific Capital.
“The Fix is In. It was bad enough that the Fed held rates far too low, but at least a fig leaf of uncertainty kept the most brazen speculators in partial paralysis. But by specifically telegraphing policy, the Fed has now given cover to the most parasitic elements of the financial sector to undertake transactions that offer no economic benefit to the nation. Specifically, it will simply encourage banks to borrow money at zero percent from the Fed, and then use significant leverage to buy low yielding treasuries at 2 to 4 percent. The result is a banker’s dream: guaranteed low risk profit. In other words it will encourage banks to lend to the government, which already borrows too much, and not lend to private borrowers, whose activity could actually benefit the economy.”
Bankers do not care about the economy. Bankers do not care about America. Bankers do not care about you. They care about bottom line profits, and this zero interest rate environment that the Fed has created will guarantee that our economic problems will get much worse before they get better by starving the nation of cash which could be used to stimulate the economy. You can bet on it! In fact, you already HAVE bet on it. By continuing to invest in paper investments, you are betting that things will get better. By investing in gold and silver, you are betting they won't. Which way did you bet? There can only be one winner, and if you are doing what all of your co-workers are doing, and staying invested in the traditional financial paper markets, you can be sure that you will be the loser. Following the crowd always leads to ruin.
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