|"Jan 2, 2008 - Gold Breaks above its record high to trade at US$859.30 per ounce."|
|One of the characteristics of commodity money-- one that originated naturally in the marketplace-- is that it must serve as a store of value. Gold and silver meet that test-- paper does not. Because of this profound difference, the incentive and wisdom of holding emergency funds in the form of gold becomes attractive when the official currency is being devalued. It’s more attractive than trying to save wealth in the form of a fiat currency, even when earning some nominal interest. The lack of earned interest on gold is not a problem once people realize the purchasing power of their currency is declining faster than the interest rates they might earn. The purchasing power of gold can rise even faster than increases in the cost of living.|
|This is actually scary... even if you own Gold & Silver! This means that they're preparing us for a complete collapse of the dollar!!|
|This document is mentioned in the podcast above. Grantham says, in this document, that "he is officially scared."|
|Submitted by cpowell |
October 1, 2009
Dear Friend of GATA and Gold:
The September 30 alert of Brien Lundin's Gold Newsletter contained a wonderful endorsement of GATA's work and a call to support GATA financially as we undertake our freedom-of-information lawsuit against the Federal Reserve. Gold Newsletter's endorsement is appended. You can find out about Gold Newsletter and obtain a free sample copy here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Fed Admits Hiding Gold Swap Arrangements
By Brien Lundin
Gold Newsletter Alert 527
Wednesday, September 30, 2009
Our friends at the Gold Anti-Trust Action Committee (GATA) have scored another huge coup: In response to a freedom-of-information request, the Fed has essentially admitted that it has gold swap agreements with foreign banks that it doesn't want publically acknowledged.
GATA had requested from the Fed any information or correspondence on gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks.
But GATA's request was denied. And the organization's appeal was answered by a September 17 letter from Federal Reserve Board member Kevin M. Warsh, who was formerly a member of the President's Working Group on Financial Markets.
Warsh wrote that "in connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."
As GATA secretary and co-founder Chris Powell notes, "The disclosure contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much
involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally."
GATA has the right to further appeal through the legal system, and plans to do exactly that. A federal lawsuit will be quite expensive but well worth it for gold investors who need market transparency to unlock gold's true value in today's uncertain world.
As you may know, I've never been a big believer in day-to-day manipulation of the gold market by the "powers that be." But I do believe that governments have and are acting
over the long term to keep gold in chains. They've done it before, both covertly and openly. And they currently manipulate every other investment market. So why wouldn't they also do it in gold, the very measuring gauge of their performance?
So I urge all serious gold and resource stock investors to help GATA out. It's not just their cause -- it's all of ours.
GATA is recognized by the U.S. Internal Revenue Service as a nonprofit educational and civil rights organization and contributions to it are federally tax-deductible in the United States.
Just as important, you can help by bringing this issue to the attention of news organizations and other investors. With the U.S. dollar at a crucial turning point, and with the International Monetary Fund and other official organs needing to keep the gold price suppressed, it has never been more important to make the gold market open, transparent, and honest again. To learn more about GATA, this issue and how to donate, visit
Nov 13th 2009 at 6:30AM
Leave it to Switzerland's version of Dr. Doom to make the latest apocalyptic pronouncement on the future of the U.S. dollar -- and the outlook for gold prices.
Marc Faber, investment advisor and fund manager to the uber-wealthy, says gold will forever stay above $1,000 an ounce. If you're unfamiliar with Faber's pitch-black outlook for the future of the Western economies and the developed world in general, well, he's probably best known as the author of the Gloom, Boom & Doom report.
"We will not see less than the $1,000 level again," Faber said at a conference in London, Bloomberg reported Thursday. "Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold."
Also bolstering gold prices will be the Beast of the East, according to Faber. "China's demand for commodities [including gold] will go up and up and up," Faber said, Bloomberg reported.
With the yellow metal now trading at nominal record highs of more than $1,100 an ounce, gold bugs have been laughing all the way to Fort Knox. Gold is up about 27% on the year and about 50% in the last 52-weeks.
(The ductile metal would still need to more than double to reach a true all-time high because of a little thing called, ahem, inflation. Why we talk about an inflation hedge without adjusting for inflation is a mystery.)
It's All About the Benjamins
So why has gold been such a sterling investment? (Silver has done even better, by the way.) Because gold is the classic hedge against global inflation (central banks are printing gazillions of dollars as part of their stimulus programs, making fears of future inflation run rampant). More important, gold is denominated in dollars. Any time something is denominated in greenbacks -- like gold or oil -- its price goes up as the buck falls.
Now in case you haven't noticed, the buck is not just falling, it's burning. The U.S. Dollar Index, which measures the greenback against a basket of major currencies, is at a 15-month low and looks to have nowhere to go but down.
As we've written again -- and again -- as long as the Federal Reserve continues to print money through a zero-interest-rate policy, the U.S. continues to run a big trade deficit and other nations move their foreign exchange reserves out of dollars, the buck will remain feeble. After all, if you're a foreign central bank, pension fund, mutual fund or hedge fund, why would you hold onto a massive stash of rapidly depreciating dollars?
If you're India, well, you wouldn't. The nation's central bank purchased almost $7 billion worth of gold from the International Monetary Fund last week, helping to propel prices to their current levels.
What Goes Up . . .
Maybe Faber is right and gold-floor $1,000 is here to stay -- but it's a pretty bold statement. At some point the Fed will have to raise rates. (Let's hope so, anyway, if only because it would mean the economy is growing and unemployment is shrinking.)
Then there's the problem that the weak dollar is traumatic for our trading partners, since a weak dollar makes it harder for them to sell us their stuff. Fed chairman Ben Bernanke apparently doesn't get paid to worry about what governments elsewhere think, and so those governments have begun to take matters into their own hands. Thailand, South Korea, Russia and the Philippines have been sucking up dollars to stop its nauseating slide, The Wall Street Journal reported Thursday.
And if China gets into the act? The call on gold-floor $1,000 could look very foolish, indeed.
Lest we forget, gold is like everything else in the history of commerce: It is worth only what you can get someone else to pay for it.
|Johanna Hoopes | Monday 9th November 2009 |
Last week, the Reserve Bank of India (RBI) purchased 200 tons of gold from the International Monetary Fund (IMF) for $6.7 billion. The transaction increases India's gold holding to the tenth largest among central banks, and brings India's holding from 4 to 6 percent. This is significantly less than the majority of the developed world, but quadruple China's amount. The IMF has agreed to sell 403.3 tons total, or one eighth of its stockpile.
One reason for the purchase may be India's push for greater clout in world economic affairs. As a $1.2 trillion emerging economy, India seeks larger representation in the IMF and has made promises to help shore up its resources for lending to developing countries. Proceeds from the sale will help pay for discounted interest rates on loans to low-income countries, said the IMB in July. The Washington-based institution plans to grant as much as $17 billion in extra loans to developing nations through 2014.
Another motivation behind buying gold may be to diversify its foreign exchange reserves which are closely linked to the U.S. dollar. As the dollar drops against other currencies, many emerging economies are showing increased interest in diversifying out of U.S. assets. But India's Finance Minister Pranab Mukherjee argued that the purchase doesn't signify any loss of confidence in the dollar, or that the precious metal's appeal is increasing.
So how does this powerplay affect us? This vast sum of gold was moved per an off-market transaction, taking place over 11 days at market-based prices. This means that the IMF sale, while bullish for gold prices, has not directly impacted the physical market. That said, the speculation surrounding such a major purchase certainly had a role in a spot price all time-high of over$1100 a troy ounce. Another reason for the increase in price is that half of the gold is still left for sale, and that remainder could potentially be sold on the open market. More pessimistic analysts speculate that these opportunistic buyers may be buying up the gold to prevent the IMF from dumping it on the market and depressing the price of gold. However, this assertion is unproven. According to Bloomberg.com, Russia, China or Brazil arethe most likely buyersfor the restof the gold. Stay tuned to see who will purchase the remaining gold and how those diversified assets will affect the buyers' economic clout.
|Central banks are buying gold for their reserves now!|
Excerpts from GLOBAL WATCH:
THE GOLD FORECASTER
by Julian D.W. Phillips
March 19, 2009
It is clear now that central banks are buying gold for their reserves. Here is a brief history leading to today and the present position of central banks as they turn to buying gold.
Massive Gold Sales!
From the early 1980’s and for the next 20 years gold was under the threat of massive sales from the world’s central banks. Many commentators reported that the overhang of gold above the ‘open’ market was so great that such sales would eventually lead to central bank reserves in the developed world having no gold at all. Central Banks had further worsened the situation by loaning gold to mining companies, through the bullion banks, allowing them to finance gold production to a far greater extent than warranted by the price of gold during that time. This acceleration in the production of gold allowed the gold price to be pressed down $850 to $275, the point at which Britain, at the instruction of the current Prime Minister Gordon Brown instructed that Britain sell the bulk of its gold reserves. From the turn of the millennium this perspective changed dramatically.
Limitation of gold sales by central Banks!
In 1999, through the establishment of the Washington Agreement, the signatories announced to the world that it need not fear uncontrolled sales of gold reserves for the next 5 years. While the U.S. and Japan were not signatories, they gave tacit agreement to such a limitation. Since then neither of them have sold gold on the open market. Following the end of the ‘Washington Agreement’, a second agreement, called the Central Bank Gold Agreement, extended the situation for another five years. This agreement ends on the 26th September this year. Sales were limited to the sales previously announced by the signatories, with the exception of Belgium and Spain who made no prior announcement to their sales. Under the Washington Agreement these were limited to 400 tonnes a year. Under the second Agreement the sales were limited to 500 tonnes a year. These limitations have not been met under the second agreement as sales are below this limit so far.
The halting of Central Bank Gold Sales!
Of great significance has been the actual slowing of gold sales from European banks, which appear to have lost all appetite for gold sales.
Indeed France was an unwilling seller, but under Presidential instruction has done so. Italy has had no plans to sell any of its gold. Germany had the option to sell 600 tonnes but has not taken this option up. Switzerland took some of this but has ceased selling now. It would be surprising if the signatories sold more than 150 tonnes of gold let alone the ceiling amount of 500 tonnes by the 26th of September this year. And next year, we expect no such sales [the I.M.F. sales are potential sales that are not part of a central bank gold selling policy] from central banks.
Central Bank buying of gold for reserves!
Just as the tide turned from damming gold in the monetary system in 1999 it appears we are rapidly approaching another watershed in the history of gold in the monetary system.
Countries not seen as an important part of the global monetary system have, in the last few months, turned buyers of gold. Ecuador [28 tonnes - 920,000 ounces - doubled its reserves from 26.3 tonnes], Venezuela bought gold [ 240,000 ounces - 7.5 tonnes - taking it up from 356.4 tonnes] , but this is not deemed of great significance.
Russia at last, after talking about it for over one year has begun to buy gold. It was reported that Russia has bought as much as 90 tonnes of gold for its reserves, lately [Previously it held 495.9 tonnes]. This is much more significant as it is a large figure in the small gold ‘open market’. Prime Minister Putin is reported to have said that Russia wants to see gold forming 10% of Russia’s reserve. The slow process of getting them up to that level could have begun. Even so Russia has little influence on global central bank thinking, so such increase are not thought to directly influence the principles behind gold as a reserve asset. So as not to minimize such purchases, if Russia were to keep up this pace of acquisition, it would be able to buy 360 tonnes a year and have a very significant impact on the gold price.
But the principles behind gold, as a reserve asset, are affected far more by the following news. Last week the European Central Bank reported that one signatory to the Agreement purchased gold [which for the first time we have seen them do it], because the purchase was not simply of gold coin [which has happened before – seemingly for good housekeeping reasons] but simply “of gold”. In other words the ranks of central bank selling in Europe have been broken and one has turned buyer!
We feel more positive now in our belief that European Central Banks are unhappy sellers and are inclined to change their views to the buy side. The very fact that one central bank in Europe has turned buyer confirms this. There is little doubt in our minds that there are conflicting views now amongst the heads of the leading European central banks on gold now.
Major changes taking place in central bank policies on gold!
According to the World Gold Council’s new chief Executive Aram Shishmanian, in the Middle East the new monetary union there intend to have “gold play a prominent role in Gulf CC economies.” He said, “It may play a role in that basket of currencies on which the GCC common currency will be pegged”. Of course, please bear in mind that the inclusion of gold in a basket of currencies, would simply be for valuation purposes and does not, of itself, imply that these central banks will buy gold for their reserves.
He continued, “Gulf central banks, along with the central banks of Brazil, Russia, India and China are expected to increase their gold reserves. Central banks with low reserves of gold are looking to increasing their reserves. They are trying to analyze what the right balance should be. They are becoming aggressive. Currently the belief is that if more than 20% of a central bank’s reserves are in gold, it is overweight, but this perception is changing! The metal is becoming an assert class in the region and Gulf investors are looking at long-term investments in gold as a hedge against inflation.” We are certainly not in a position to contradict what he says. After all he has the resources and contacts to be authoritative on the matter.
However after nearly 30 years of opposition to gold by central banks ands occasionally governments, it is a remarkable turnaround that tells us that gold is returning to the monetary arena again! [The gold world has expected this for so long it feels a bit like seeing an oasis in the desert.]
If right, expect to see both Russian and Chinese gold production go straight into those countries reserves and not even reach the open market. That will account for nearly 600 tonnes of supply disappearing. Now add to that the halting of sales from European central banks, a perceived 500 tonnes a year. If this trend continues gold, as an investment, will be fully rehabilitated.
Institutional demand will follow!
But this is by no means the largest effect that this change of heart will bring about. The recognition by central banks that gold has a role in the monetary system will influence investors, both institutional and individual. Should that happen and say 5% of funds placed in gold by funds such as Pension funds, then an amount of $920 billion, in the States alone, could head gold’s way. Only a five figure gold price could accommodate that volume of money in the gold market. Now add to that the same inclination in the rest of the world. Any such rise in price will stunt the demand for sure, but be certain that gold is not simply in a bull market.
If the World Gold Council’s CEO is correct, then he will have confirmed that 2009 and 2010 will be the year that heralds the return of gold to the global monetary system!
“Gold is always accepted and is the ultimate means of payment and is perceived to be an element of stability in the currency and in the ultimate value of the currency and that historically has always been the reason why governments hold gold.”
Fleets of armoured trucks piled with gold bars and coins have been streaming out of midtown Manhattan in one unexpected consequence of the gold craze.
Amid gold’s rise – it has gained 32 per cent this year and reached a record yesterday – investors have been loading up on bullion and coins. One big problem now is where to store it. The solution from HSBC PLC, owner of one of the biggest vaults in the United States – somewhere else.
HSBC has told retail clients to remove their small holdings from its fortress beneath its tower on New York City’s Fifth Avenue. The bank has decided retail customers aren’t profitable enough and is demanding those clients remove their gold to make room for more lucrative institutional customers.
An HSBC spokeswoman said the firm doesn’t comment on its vault, owing to “security concerns.”
HSBC’s decision has created a logistical nightmare for both the investors and the security teams in charge of relocating the gold, silver and platinum to new vaults across the country. Many of those vaults are also feeling pressure from the surge in demand for space from clients that have stocked up on metal.
Investors have been loading up on gold this year amid worries about inflation and the stability of the U.S. dollar. The metal gained $17.90 (U.S.), or 1.6 per cent, to $1,164.30 an ounce yesterday. As gold has continued to set new records, other investors have flooded in. Many of them are taking possession of the metal, rather than just trading financial contracts linked to it.
Demand for physical gold, including bars and coins, is projected to rise 21 per cent this year to 52.3 million troy ounces, the highest in history, according to CPM Group. Based on today’s price, the total value would amount to about $61billion.
The movement of gold from HSBC has created a stir not only among the bank’s clients, but also among owners of warehouses and vaults around the country.
“I have never seen any relocation like this,” says Jonathan Potts, managing director of FideliTrade, the parent company of the Delaware Depository Services Co., which has two warehouses in Wilmington, Del. FideliTrade’s two vaults have been filling up at an unprecedented pace, in part because it is taking in metal that has been ejected by HSBC.
Dealing with the fallout from HSBC’s decision has become a full-time job for David Norris, executive vice president of GoldStar Trust Co., a Canyon, Tex.-based retirement-account trustee, which organizes metal storage for its clients.
Mr. Norris says HSBC told GoldStar in July to immediately cease sending coins for storage. GoldStar, which had sent clients’ holdings to HSBC for at least 15 years, is now figuring out how to get the coins out of the HSBC vault and down to the Delaware facility. “I can jump up and down and scream all day long about how much I don’t like it. But it’s their business decision,” Mr. Norris says.
Moving the metal is like “a big military operation,” he says. Precious metals are typically shipped by insured carrier services or armoured trucking companies. Carriers sometimes ship the metals in plain boxes so as not to attract attention. Trucks are guarded by a team of two or three armed personnel.
Bradley Beyer, a GoldStar customer in Kewaunee, Wis., has 50 100-ounce silver bars stored with HSBC waiting to be moved. “My only concern is that the bars will be moved safely,” he says.
HSBC is telling clients to either move their metal, or prepare for it to be delivered to their doorsteps. In a July letter, seen by The Wall Street Journal, HSBC said the precious metal “will be returned to the address of record … at your expense,” unless instructed otherwise. HSBC recommended clients move their holdings to Brink’s Global Services USA Inc., which has a vault in Brooklyn, N.Y. Brink’s didn’t return calls and e-mails seeking comments.
Like Mr. Beyer, many investors have recently added precious metals to their retirement accounts. At GoldStar, more than 1,000 new accounts are opened each month to purchase coins in retirement plans, compared with about 100 a month in 2006. Sales of American Eagle gold coins jumped 65 per cent so far this year, according to the U.S. Mint.
“Many facilities are overloaded,” says Bob Coleman, director of customer relations at Gold Silver Vault, a depository in Nampa, Idaho. Mr. Coleman says his vault has taken in several HSBC customers, contributing to the 500-per-cent growth in new metal coming in over the past quarter.
Vault and warehouse owners say retail customers tend to be more expensive in part because of their diverse holdings. They usually buy American Eagle or Canadian Maple Leaf coins, and bars of various weights and sizes, all of which need to be categorized and stored separately. In contrast, institutions typically buy standardized bars of 100 or 400 ounces, making them easier to store. Institutions also tend to hold the metal for long periods.
Precious metal storage isn’t as lucrative as it may sound. Many vaults are run on thin margins. The Delaware depository, one of the five major ones in the country, charges $6 a month for a 1,000-ounce silver bar and $12 for a 100-ounce gold bar.
|Chris Waltzek said the following (at TIME 26:33):|
"Not in our lifetimes will we ever see gold south of $1,000 per ounce again. I am very comfortable saying this."
|Posted: May 30 2009|
Threats of devaluation and harder times are to be considered seriously, big players have reasons to acquire more gold, Large gold holdings have a history of their own, China caught in a dollar trap, Russia in an oil trap, America in a debt trap What we are about to tell you may be the most important information that we have imparted in almost 50 years. something very bad is looming – we don’t know the exact configuration yet, but we think the key is the collapse of the dollar, which will send gold and silver to considerably higher prices. These events could unfold over the next 2 to 4 months. There could be devaluation and default of the US dollar and American debt. You must have at least a 6-month supply of freeze dried and dehydrated foods, a water filer for brackish water, and assault weapons with plenty of ammo and clips. You should put as much of your wealth as you can in gold and silver coins and shares. You should not own any stocks in the stock market except gold and silver shares, you should not own bonds the exception being Canadian government securities, you should not own CDs, cash value life insurance policies and annuities. And, needless to say, except for your home you should be totally out of real estate, residential and commercial because it will remain illiquid for many years to come. Continue to pay your normal debts down because we do not know how they will be treated when we arrive at devaluation and default. We certainly don’t want to have to tell you this, but the way things are shaping up it doesn’t look good. As we write this the dollar is breaking 80 on the USDX. Interest rates are climbing, and have broken out to the upside. Gold and silver are poised to break into new high territory and the stock market is preparing to retest 6,600 on the Dow. You have been warned, act accordingly.
The Chinese and Russians are the laughing stock of the US and European Illuminists at the G-20 meetings concerning talk about a new world reserve currency to supplant the dollar. With China's gold reserves of about a thousand tons and Russia's five hundred tons, they are like penny ante poker players trying to get in on a thousand dollar ante game. They need five to ten thousand tons of gold reserves just to be an average player in "The Big Game," much less a leading and influential player. The rest of their foreign exchange reserves are denominated in fiat currencies, which are all practically worthless except for the euro and Swiss franc. The euro has about 5% backing of gold and the Swiss could have 25% backing if they again desired gold backing. China has about two trillion dollars worth of foreign exchange reserves, while Russia has about 400 billion dollars worth. It does not take a math genius to figure out that two trillion times nothing is still nothing. They are creditors who hold worthless bonds and notes. Big deal. Their only trump card is that they can make gold skyrocket and the dollar tank before the Illuminists are ready to take our financial system down. This is where their real leverage lies.
The talk about yuan and rubles as part of a world currency basket is just noise, like a bunch of clanging cymbals making cacophonous sounds, because they have very little gold backing. At best, unless China and Russia add many thousands of tons of gold to their reserves to back up their currencies, the yuan and ruble will get some regional play, as a run-up to a world currency. This is just hubris to distract us from the true agenda, which is the formation of a single world currency.
While gold suppression is the Fed and the US Illuminists' number one priority, it is not their number one problem. So what is their primary problem? It is how to transition from the dollar to a world currency without losing too much of the powers and privileges that can only be attained by having sole control over the world's reserve currency. They can't figure out how to share this power with the other Illuminist enclaves in setting up a new world currency without substantially reducing their own power. This is a conundrum for them.
China and Russia are both well aware that they must acquire substantially more gold if they want to have any say on the matter of a world currency. The trick is, how to acquire new gold reserves without sending gold on a moon-shot or causing harm to the dollar by dumping dollars for gold. This is the opposite of what the Fed and US Treasury want, at least for now, until they are ready to take the system down to pave the way for a world currency and a one world government. So the Chinese and Russians are now at loggerheads with the US and European Illuminists. What China and Russia need to do in their own best interests is an anathema to the Fed and the US Treasury. This may explain the IMF gold sale rumors. China wants more gold, and this would be a way to grab a large chunk without running the gold price up, which would make the Fed go ballistic.
The US and European Illuminists are also in a cat fight, because the European enclave controls more gold than the US elitists, so naturally they do not believe that the system of dollar hegemony, and all the privileges that go with it, should be continued any longer
You might be tempted to think that, in reality, the US gold reserves and, for that matter, central bank gold reserves around the world, are not what the central banks claim them to be, due to leasing and outright sales, so the US and European Illuminists are in no better position than the Chinese and Russians with respect to the debate about a new world reserve currency. You would be dead wrong if you thought that. Why, you might ask? Let's discuss that.
Never mind that the roughly eight thousand tons of US gold is stolen or hypothecated, because the US and European Illuminists stole a large portion of it, or they bought it at fire-sale prices and still have it in their secret vaults in Switzerland and off-shore in safe-haven countries. Who do you think was doing all the buying during the London Gold Pool of the late 1960's, just for starters, which was fueled by Fort Knox gold provided courtesy of President Johnson, who was an elitist bootlicker and one of the most evil men of the 20th century? Why do you think US coin melt from the Depression is showing up in London gold vaults? Rumors still abound that the Rockefellers, with President Johnson's help, stole a large portion of the Fort Knox gold during the London Gold Pool days, and those rumors could well be true based on what we have heard from some of our subscribers who used to work at Fort Knox. Could that explain why one of Rockefeller's secretaries, who blabbed about them acquiring some of the US gold, "accidentally" fell out of a high rise building? Could it be that President Johnson was grateful for Rockefeller's help in eliminating the pesky President Kennedy when he tried to put their precious Fed out of business via Executive order 11110? We'll let our subscribers decide!
The same is true for the European gold holdings and the holdings of other central banks around the world, which are a fraction of what they claim, perhaps with as little as five thousand tons remaining out of some thirty thousand tons officially claimed by all central banks, including the privately owned US central bank, the Fed, via its so-called gold certificates, which are claims on the US Treasury gold. Rest assured that much of this gold was leased out and sold not just to jewelers, but to the US and European Illuminists as well. In addition, much of this central bank gold was either pilfered outright, or was virtually given away by people like Gordon Brown of England, the King of Fire-Sale Gold, who sold half of the UK national gold reserves to the Rothschilds and other Illuminists at the bottom of the gold market. The remainder of the UK gold reserves is probably leased out and gone to oblivion like the US gold. The people in the UK are minus eight billion and counting on that one, while the Rothschilds are on the plus side of that equation.
And who do you think were buying a large portion of the gold sold under the Washington Agreement and its various renewals? We'll give you three guesses.
And who owns all the secret gold that has been stolen in various wars, conquests, pogroms, genocides and religious inquisitions over the many centuries, that don't show up in the World Gold Council's figures? And who owns all the scrap gold that was melted down in the last gold craze of the late 1970's and early 1980's for which no records were kept? And who owns all the old investment gold held by families of old wealth that was secretly moved from the US to Europe after the Great Depression on a tip-off from FDR that he was going to render gold ownership illegal in the US. They got a nice profit when FDR bumped the gold price from $20 an ounce to $35 dollars an ounce, didn't they? Who owns all this unaccounted for gold. Again, we'll give you three guesses. We can assure you that it is more than the 2% unaccounted for by the World Gold Council.
Then there is the 26,500 tons of gold which the World Gold council allocates to private investment. Just who do you think most of those private investors are anyway? They are US and European Illuminists, that's who. They own tens of thousands of tons. Either they own it, or their central banks own it. The US and European Illuminists can shuffle their gold back and forth between themselves and their central banks as they see fit, since none of them are ever meaningfully audited. So if the Chinese and Russians want to play in this high stakes game, they need to buy lots of gold, and very quickly. The window of opportunity to buy gold on the cheap has already closed. Hyperinflation is on its way. They are too late to the cheap gold party. Buy gold now, before China and Russia try to accrue the amount of the gold required to ante up in "The Big Game" so they can have a say on the new world economy that will emerge in the aftermath of the current catastrophe.
China is caught in a dollar trap. If they try to unload dollars, they destroy the remainder of their holdings, so they have to keep vacuuming up a large portion of the dollars that are being dumped in the form of treasury bonds to support criminal zombie bank bailouts and rampant socialistic welfare spending which the US government euphemistically calls a stimulus package. If China doesn't keep sucking up dollars, the US will have to monetize more and more treasury bonds to "save the economy," which is another euphemism for the socialization of Wall Streets losses courtesy of the US taxpayer. The top 19 banks, including the legacy banks, get all the money they want to shore up balance sheets and to take over the smaller fry, while the smaller fry get nothing, not even loans from the larger criminal zombie institutions who can't wait until they fail so they can absorb them at pennies on the dollar. The Fed now determines which financial institutions live or die by bestowing taxpayer largesse on who they may, but heaven forbid that they should have to account for what they are doing with that largesse. We need to audit and end the Fed, just as Ron Paul has requested via new legislation that is getting ever more sponsors.
China and Russia are in a very poor position monetarily, at least as bad as Europe and the US, perhaps even worse. They have no business pushing their weight around when they their gold reserve holdings are inconsequential. So what if they are creditors. The debts owed to them are denominated mostly, or at least substantially, in dollars, which are becoming ever more worthless as Emperor Obama throws lavish dollar bailout parties for the rich bankers and the social welfare recipients, while the middle class and non-anointed upper class, which could reduce the ensuing inflation caused by these lavish dollar parties via increased production, are given token relief.
China has tens of millions of young men out of work, and if the US dollar, US treasuries and US economy go down, and inflation shows its ugly head due to dollar dumping and/or US treasury-shunning, we can assure you that the US consumers' demand for Chinese goods will drop off a cliff. You haven't seen anything yet when it comes to reductions in consumer demand. Wait until hyperinflation and double digit interest rates hammer the world economy. When the US consumer finally goes south for the last time, this will put tens of millions more out of work in China, and there will be violence and revolution if that happens. De-coupling is a myth that has been thoroughly shattered.
While China is in a dollar trap, Russia is in an oil trap. The Illuminati still control the price of oil, so Russia is at their mercy as well. There recent financial market experience was an absolute disaster as oil tanked. Their markets were a shambles, and had to be closed down many times to stop panic selling and to control speculative short-selling. They had to spend down a large portion of their reserves to support the ruble and their financial markets. They are hardly in a position to dictate terms regarding a world currency. If they try to bully Europe with natural gas, this will backfire. The price of oil will then drop to $15 a barrel.
Why are we paying interest to the Fed on money that is being created out of thin air to save the privately owned Fed itself, as well as its member institutions, which are receiving interest themselves from the Fed on the taxpayer money being loaned to them to shore up their balance sheets so they can continue to function without being shut down? We're paying interest while they're earning interest? Does that sound fair to you? Talk about moral hazard! And these are the same institutions that have conspired with the Fed to destroy our financial system to make way for a one world government, which is a euphemism for an Orwellian police state. We are certainly not paying this interest to ourselves as the media morons would have us believe, but to the anointed Illuminist financial institutions, which continue to privatize profits even while losses are being socialized to bail them out. The common and preferred stock which taxpayers own in these companies is worthless, a fact which is being covered up and hidden from investors by use of deceitful financial statements that allow assets, with the blessing of our "regulators," to be carried at mark-to-model values, meaning that these assets are whatever the criminal zombie financial institutions say they are.
Friday, Jan 1st, 2010
The rally in the dollar and the problems for other currencies prove what we have been saying and that is all currencies will continue to fall vs. gold. The impetus for the dollar rally originates as usual with the government and is added to by the disarray in the economies worldwide, particularly in Europe. One of the things central banks have never learned is that financial engineering only works for a short duration, after that the problem worsens. Even the world’s strongest currencies, the Swiss, Canadian, Aussie and Norwegian, are only holding their own versus gold. The reason why is almost all central banks have done the same thing and that is create money and credit recklessly at the behest of the US government. The US and British financial systems are insolvent. The euro is under severe pressure, because of problems in Greece, Spain, Ireland, Portugal and Italy, and every other central bank is jockeying for position via competitive devaluation. The public may not notice it but the situation is really chaotic. As you can see, the US is never allowed a level playing field, but that is part of what comes with being the international reserve currency. Banks in Britain, Europe and the US continue to take losses, sometimes-severe losses. There is no intermediation going on with the dollar. Its rally is founded on manipulation. We suspect in the future we will have an interesting phenomenon and that is a fall in the dollar, pound and the euro, as gold moves higher as the only viable alternative. The world is going to be shocked when the euro collapses. It won’t happen overnight. It will take a year or two, but it has a good chance of happening. The US dollar cannot and will not for some time to come be a safe haven for wealth. That is because the dollar and the US economy have been deliberately destroyed.
The flight into gold that we have seen has not been sparked by anticipation of inflation, but by a flight caused by a lack of confidence and trust in central banks. If other major governments have monetary problems they cannot be buyers of US Treasuries. They will have to be sellers of dollars. That will drive the dollar lower, further reduce the demand for US funding, force the Fed to further monetize and create more inflation. That in turn drive the dollar lower, but more importantly it will give gold a life of its own. We have found that this is something the public ad professionals refuse to accept. There is going to be a devaluation of the dollar no matter what people think, or want to think in their world of denial and fantasy. Other letter writers who disagree have recently attacked us. They can disagree and that is fine, but we might remind them that we are the ones who have been correct in our predictions 98% of the time, not them.
We believe the current dollar rally is unsustainable. If you remember we recommended a short on the dollar at 89.5 on the USDX. It fell to 74. We have just seen a two-week rally from 74 to 78 on very low volume. We had said the rally when it began at 74 could go to 78 to 80. Several more days of trading over the holidays could take it deep within that zone. This is just another rally conjured up by our government led by Goldman Sachs and JP Morgan Chase, which will be doomed to failure. The rally is aided by unsettled conditions in Dubai, Greece, Spain, etc., and the continued viability of the eurozone. In addition, the same groups of criminals have viciously attacked gold and silver in an attempt to take gold below $1,033 and silver below $17.00. That completes the circle of attack. The SEC and the CFTC simply look the other way aiding and abetting the criminals that run our government and markets from behind the scenes.
It is not surprising that 320 members of the House passed legislation to audit the Fed to find out where trillions of dollars have gone and what the Fed and the Treasury have done to manipulate markets. Just how much monetization is really going on? Has the Fed been buying more than half the Treasuries issued via stealth activity and how long will this continue? Will the Treasury default and officially devalue? Of course they will, it is only a question of time. What will the Fed do with bonds issued by agencies and toxic waste CDOs, and what did they pay for all this garbage? Have they been paying the banks, Wall Street and insurance companies 80% instead of 20% on the dollar, so that taxpayers can pay the bill and these entities, which are insolvent, can be kept functioning? Why is it we could forecast all these events and very few others could? It is because if they did they would be ostracized and they would lose their jobs. That is how systems like this always work. You cannot lay a normal yardstick to what we have seen and what will be an unprecedented future. When the dollar officially devalues in a year to a year and a half, the shock will shake America and the world to its very foundations.
An audit and investigation of the Fed is on the way and the American public is not going to like what they find. All the failures and criminal activity of the past 96 years will become reality. This coming year will see the Fed forced to monetize massive amounts of government paper, all of which will lead to massive inflation. Inflation will move up very quickly. The groundwork began last May and over the past two months we saw official inflation rise to 1.2% and then 2.4% as real inflation moved up over 8% again. Will we see something similar to what happened in Argentina, Zimbabwe or in the Weimer Republic We do not know. What we do know is it is not going to be good. All the telltale signs are being ignored and for such duplicity a high price will be paid. That is why we predict official devaluation and default. History is explicit; monetization cannot go on forever. Over the last two years the Fed has purchased trillions in what is essentially worthless paper from banks, Wall Street and insurance companies.
The rally in the dollar is transitory, because at the moment Europe’s problems seem greater than ours.
You have to ask yourself how does a stock market trade within 500 points for three months, when trading volume has fallen? There have been material withdrawals from mutual funds and 73% of trades are of the black box front running variety. The answer is the trading after hours, which has been dominated by your government’s plunge protection team. They cannot continue that indefinitely. There is lots of bad news coming in 2010.
The November medium home price rose 3.8% to $217,400, the highest level since May reflecting the $8,000 tax credit and growing inflation. Year-on-year prices fell 1.9%. The number of new homes on the market fell 235,000, the lowest since April 1971. There are now 7.9-months’ worth of homes for sale, up from 7.2% in October. What has to be added to that is discouraged sellers who have taken their homes off the market, and lenders that have been withholding inventory for sale – a bottoming market is years away.
Loan demand fell 5% last month. Mortgage applications fell 10.7%, the lowest level in two months. Refi loans fell 10.1% and mortgages fell 11.6%.
This as foreclosures topped one million. As a result home construction has fallen 83% from its peak. We projected 75% in June of 2005. The decline in building is probably bottoming, but with the inventory overhand it could be many years until we could see a recovery.
Durable goods orders rise of 0.2% were very disappointing. The experts expected a rise of 0.5%. Wrong as usual.
For the week ended 12/23 the commercial paper market rose $9.3 billion to $1.160 trillion, still a ghost of its former self.
Congress, the SEC and FINRA are investigating Goldman Sachs and others in the use of synthetic CDOs, collateralized debt obligations, that we have been hammering for since 2006. Not only were the laws of fair dealing violated, but they were shorting the deals they sold to clients, which they knew had to fall in value, because the ratings they arranged with the raters, S&P, Moody’s and Fitch, were phony from the outset. Yet if you notice there hasn’t been a lawsuit, civil investigation, or criminal charges. The exposure of this activity allowed the banks to profit from the housing collapse, which they deliberately created. Again, another fine and no criminals go to jail. They simply own Washington.
The 10-year T-note yield just rose from 3.20% over the past 18 business days to 3.80%. Look at a chart and it is ominous. The yield is on long-term trend lines that go back to June 2007. It looks like that line could be broken to the downside. The chart is very jagged giving it all the earmarks of manipulation. Our guess is that something happened three weeks ago that we don’t yet understand, but whatever it was foreigners are running away from US sovereign debt, just as we forecast they would. This means the fed could be taking down more than 60% of the auctions of US debt, which means more monetization and more inflation. If the Fed does not continue buying, by creating money out of thin air, support will be broken and yields could quickly move up to 5%, which would further destroy the retail housing market. Such a move would send gold to $1,550 to $1,650. Incidentally, over the past 50 years we have observed that as interest rates rise so does gold and silver, up to a certain point. In this case bank discount rates could move from zero to 5% and gold would rise. After that gold becomes the only vehicle that preserves assets.
America and England are facing a credit crisis again, as interest rates rise and the Fed feebly attempts to remove quantitative easing, and beginning by withdrawing funds from its various programs. Rating services tell us that if the Fed does not do so the US and UK credit ratings will be lowered. These funds put into the system by the Fed and the Treasury aggregate about $12.7 trillion. We might add the US and the UK are not the only countries enveloped in this situation. We have seen the US ten-year Treasury note yield move from 3.20% to 3.80%. This is the markets way of telling the Fed and the Treasury, that if you continue to do what you have been doing then you will have to pay more interest to do so. Those 10s could easily move to yield 5% in this coming year, putting the 30-year fixed rate mortgage over 6%. That in finality puts the last nail in the coffin of the residential housing market. At the same time since last May inflation has been building and now is at an official 2.4% and unofficially 8-1/4%. The Fed and other major nations are now attempting to hold up the dollar, it having rallied just recently from 74 to 78 on the USDX. Aligned against these nations are a group of commercial currency market makers, who are shorting the dollar in response to its phony rally. The pros will win and the governments will lose. That is a $4.3 trillion a day market of which $2.5 trillion trades in dollars. Not even Superman can control that massive amount of money. Due to the Treasury’s profligacy the Fed we suspect has already bought more than $600 billion in Treasuries; $300 billion that they admit too and $300 billion or more they refuse to tell you about. That is why we need an audit of the Fed.
The Fed, the Bank of England, and others will not be able to ease funds out of the system without allowing deflationary forces to take over. The result will be a downgrade, a run on the dollar and official devaluation and default within the next 1-1/2 years. There is no other way out, as other nations are forced to do the same thing, leaving the only safe haven of wealth preservation in gold and silver related assets. Nothing will compare. All world currencies will fall versus gold. In the meantime, the wages of easing and the inability to withdraw these funds, will lead to a period of inflation if not hyperinflation beginning with a real 14% plus in 2010. After that it is anyone’s guess where inflation will be headed.
The present administration is headed in the wrong direction on everything, particularly on spending. Their actions have resulted in short-term bills yielding from zero to .65%, hardly an incentive to own such debt, as the Fed must issue and or roll this debt daily. A bogus temporarily strong dollar supplies a lift and respite for treasury debt for which the only solution is higher rates that are already being anticipated. Some have seen our ideas on this issue as faulty, all we can say is we are the ones with the 98% track record.
An index of home prices in 20 U.S. cities rose in October for a fifth consecutive month, putting the housing market and economy farther down the path to recovery.
The S&P/Case-Shiller home-price index increased 0.4 percent from the prior month on a seasonally adjusted basis, after a 0.2 percent rise in September, the group said today in New York. The gauge was down 7.3 percent from October 2008, the smallest year-over-year decline since October 2007. The median forecast of economists surveyed by Bloomberg News anticipated a 7.2 percent drop.
If Morgan Stanley is right, the best sale of U.S. Treasuries for 2010 may be the short sale.
Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.
Investors are demanding higher returns on government debt, boosting rates this month by the most since January, on concern President Barack Obama’s attempt to revive economic growth with record spending will keep the deficit at $1 trillion. Rising borrowing costs risk jeopardizing a recovery from a plunge in the residential mortgage market that led to the worst global recession in six decades.
“When you take these kinds of aggressive policy actions to prevent a depression, you have to clean up after yourself,” Greenlaw said in a telephone interview. “Market signals will ultimately spur some policy action but I’m not naive enough to think it will be a very pleasant environment.”
Yields on the 3.375 percent notes maturing in November 2019 climbed 4 basis points to 3.84 percent at 11 a.m. in London today, according to BGCantor Market Data. The price fell 10/32 to 96 5/32. They have risen 65 basis points this month, the most since April 2004, as government efforts to unfreeze global credit markets lessened the appeal of the securities as a haven.
Personal incomes rose in November at the fastest pace in six months while spending posted a second straight increase, raising hopes that that the recovery from the nation’s deep recession might be gaining momentum. [It also should be noted that inflation rose 2.4% on an annualized basis as well, and these are official figures.]
The Commerce Department says personal incomes were up 0.4 percent in November, helped by a $16.1 billion increase in wages and salaries, reflecting the drop in unemployment that occurred last month.
The gain in incomes helped bolster spending, which rose 0.5 percent in November. Both the income and spending gains were slightly less than economists had expected.
Want to keep IRS auditors away? Keep your earnings under $200,000 and they won’t bother you 99 percent of the time.
IRS enforcement numbers, released Tuesday, show that returns under that amount have a 1 percent chance of getting audited.
Returns showing income of $200,000 and above have a nearly 3 percent audit chance. The percentage jumps to more than 6 percent for returns showing earnings of $1 million or more.
New-home sales plunged to their lowest in seven months during November, a bigger-than-expected drop that might have been caused by uncertainty over a government tax incentive.
Sales of single-family homes decreased 11.3% to a seasonally adjusted annual rate of 355,000, the Commerce Department said Wednesday.
The level was the lowest since 345,000 in April. The plunge wiped out much of the gain made in the new-home market since the January bottom.
Economists surveyed by Dow Jones Newswires estimated a 1.2% drop to a 425,000 annual rate for November.
New-home sales, unlike sales of existing homes, are recorded with the signing of a sales contract and not the closing. A big tax credit for first time buyers was due to expire at the end of November and caused concern in the housing sector. It was extended in November by Congress to next spring.
Another reason for the big drop in new-home sales could be strong demand for used homes. Data this week showed existing-home sales are up more than 40% since the end of last year, with many purchases made for foreclosed property carrying a discounted price tag.
Wednesday’s report said new-home sales in October rose 1.8% to 400,000, revised from an originally reported 6.2% increase to 430,000.
Year over year, sales were down 9% since November 2008.
The median price for a new home dropped in November – but not by much. It was down 1.9% to $217,400 from $221,600 in November 2008.
Inventories shrank. There were an estimated 235,000 homes for sale at the end of November. That represented a 7.9 months’ supply at the current sales rate. An estimated 240,000 homes were for sale at the end of November, a 7.2 months’ inventory.
Commerce’s report Wednesday showed November new-home sales fell in three of four regions in the U.S.
US consumers are increasingly confident about the economy, according to the most recent Reuters/University of Michigan Consumer Sentiment Index, which gave a score of 72.5 for the month of December, up from 67.4 in November. The preliminary mid-month index had registered a slightly higher score of 73.4, but the end-of-the-month result shows a continuing upward swing in consumer confidence since October.
US MBA Mortgage Applications declined by 10.7% on December 18 week.
U.S. overall consumer confidence improved last week to match its best level of the year, according to an ABC News poll released Tuesday.
The consumer comfort index rose three points to -42 in the week ended Dec. 20.
Still, according to the survey, just 7% of respondents expressed confidence in the economy, the same as last week. But 50% of those polled said their own finances were in good standing, up from 47% the prior week. In assessing the buying climate, 30% of respondents said it was good, up from 29% the week before.
|(Time 5:30) When fighting about gold....Rick Santelli said something along the lines of, "The price of gold itself for whatever reason is telling us something is wrong. The problem is, as people run into these ETF's like GLD and push the prices up....what happens when they find out that there isn't enough physical gold to back all the paper they are buying?"|
|He said, “Fiat money has no place to go but gold.”|
|16/09/2010 1:15:02 PM|
By Greg Peel
Since the Washington Agreement was first signed in September 1999, the central bank “gold year” has begun and ended in September. With this gold year almost at an end, gold consultant GFMS anticipates that global central banks will have net bought around 15 tonnes. The last time the world's central banks were net buyers rather than net sellers was in 1988.
The Washington Agreement was signed between European Union members ahead of the launch of the euro to prevent the indiscriminate selling of gold by any individual member which would impact on the value of the common currency. It has nothing to do with the US, it's just that all members were in Washington for an IMF meeting at the time. And it was important given Europe is by far the biggest holder of gold outside the US – a legacy of thousands of years of history.
The Agreement was also a rapid response to the Bank of England's selling of over half its gold to the lowest bidder (~US$250/oz) on instruction from Washington in order to support the US dollar in the wake of the Long Term Capital Management hedge fund collapse. It is almost laughable to think now that LTCM was the last time a GFC was truly threatened and all for a paltry US$6bn. These days if Timothy Geithner dropped US$6bn out of his pocket on the way up Capitol Hill, he wouldn't bother bending to pick it up. But the eurozone did not want any further such sales to be a possibility, so it imposed a limit.
That limit was a collective 400 tonnes of gold sales per year for five years. In 2004 the Agreement was rolled for another five years with a limit of 500 tonnes, and it was rolled again in 2009 with the 400 tonne limit reimposed. On average, net sales from central banks over the past decade have totalled 442 tonnes. But by 2009, the picture had changed. Eurozone countries in difficulty such as Spain were selling large amounts of gold, but stronger nations such as Germany and France elected to hang on. In previous years, gold had been seen as an anachronism compared to the new world of debt-backed paper currency given it offers no yield. Post-GFC, gold has regained its safe haven status at a time when paper currencies are looking more paper than currency.
The result is very little gold was sold in 2009, and the new 400 tonne limit seemed almost unnecessary. On the flipside, the developing BRIC economies realised they had very little in the way of gold to back their own currencies, or to hold as protection against a wobbly reserve currency. Thus we've seen China move to be a major gold buyer (albeit contained to its own production), Brazil and particularly Russia upping their holdings, and India taking out half of the IMF's available gold in one fell swoop. And Saudi Arabia has also been in on the game, as well as a number of smaller nations.
The European crisis has since hit, and while it may be tempting to the PIIGS to sell some more gold to prop up distraught sovereign balance sheets, now is not a good time to throw away the only asset that might have true value. So it is of little surprise that the world's central banks have now swung from being net sellers to net buyers.
Which is clearly another reason why gold is currently at an all time high (on a nominal basis – in real terms gold hit about US$2300/oz in 1980), alongside the private sector's thirst for gold ETFs and the ongoing downtrend in global new gold production.
Where to from here? Well on the one hand, the level of gold held in ETFs has never been this high, meaning a sudden panic sell-off is not a remote possibility. There is also concern as to whether traditional Asian jewellery buyers will pay up to new highs this season. Occasionally this century they have baulked. But with the ECB propping up European sovereign debt with printed euros, the Bank of Japan now holding down its currency with printed yen, and the Fed threatening to once again start printing greenbacks, it's little surprise GFMS suggests gold can trade at US$1300/oz in the near term.
|By Dominic Frisby Oct 06, 2010 |
Gold and silver have broken out to new highs yet again. It seems to be happening almost every day now.
Yesterday, gold broke new records, closing in the US at $1,340 per ounce, while silver is now through its 2008 peak, closing at $22.80 an ounce, also an all-time high, except for a few crazy days in 1980.
In short, it's been an amazing couple of months for precious metals. So where is it all going to end?
While the dollar keeps falling, gold will keep rising
These new highs in gold and silver are as much a function of US dollar weakness as anything else. The US dollar is capitulating. In barely six trading days it has fallen from 83 on the index (measuring the dollar against a basket of other major currencies) to 77.75.
It looks as though we're going to at least test the blue trend line that I have drawn on the chart below. If that doesn't hold, I daresay we will head pretty sharply back down to those all-time lows of 2008. And if they don't hold, well – gold will be at silly numbers and US deflationists will be eating crow (a weak dollar will send US inflation surging).
Yet, if you look at how many euros it takes to buy an ounce of gold (the chart below), you can see that, amazingly, gold is still about 8% off its highs of June this year. Gold is also trading below its highs against the pound and the yen, albeit by just a few points.
That should put things into some kind of perspective. This rally is about US dollar weakness. So going back to my original question – 'Where is this all going to end?' – the answer is: when the US dollar finds support.
Bad news for savers across the world
Central bankers have ushered us into an era of global currency wars, as they race to debase their currencies fastest. It's a battle that the US Federal Reserve is currently winning (and what good has it done them?).
But this week, just as gold made new records, the Bank Of Japan took fiscal insanity to a whole new level, slashing interest rates to 0% and then announcing a newly printed pool of ¥5trn (c. £40bn) to buy all sorts of assets – Japanese government bonds, commercial paper, asset-backed commercial paper, corporate bonds, exchange-traded funds and Japanese real estate investment trusts.
I have some old junk that I was planning to sell on eBay. I'm wondering if I should just cut out the middle man and contact the Bank of Japan directly.
This, of course, follows the Fed's increasingly strong hints over the past fortnight or so that it is moving towards further conventional easing. Up until this point, it looked as though gold and silver were topping – the news gave the precious metals new impetus. And today the Bank of England meets to consider further stimulus. Will they take a leaf out of the coalition government's move towards tightening and austerity? Or will they undermine it completely, further driving up asset prices?
We know that savers are currently being robbed, deliberately so, by low rates and other forms of loose monetary policy, as central bankers pursue their, in my view, needless obsession with staving off deflation and 'kick-starting the economy'. With savers effectively losing money through inflation by sitting in cash, they are being driven out of bank deposits as they search for yield or capital appreciation. In short, people are being forced to speculate. What right does a central bank have to rob the prudent in such a fashion?
Another bubble is being blown
You might well be wondering – how can the stock market be doing so well when the economy is apparently in such dire shape the central bankers believe they need to act? The answer lies in this loose policy of central banks. By forcing money out of savings, it is creating distortions and blowing up yet another bubble. Is it any wonder that stock markets have had their best September since 1939? Is it any wonder that amid all this, gold and silver are breaking out to new highs?
You can't help but think that this is all heading towards some insane inflationary melt-up, or yet another deflationary bust. My strategy is to keep my core long position in gold and silver and gently take profits in the more speculative part of my gold and silver portfolio. Thus I still benefit from further price rises, should they happen, but I'm also in a position of strength to act when we get the inevitable correction.