I’ve been giving some thought to, Monopolies and Oligopolies and Geo-Politics recently.
Many economists will tell you that both Monopolies and Oligopolies are detrimental to the economy. Monopolies generally are not allowed to exist – and where they do exist, they are generally in state control. Mostly in countries with one-party or no-party apparatus, whether that be Fascist, or communist and for many reasons, these two regimes allow or enable them, and share one common thread.
Both state types seek to compel people to do or not to do, things that are, or are not in their own best interests – depending on the “thing” we are referring to.
Communists disallow ownership, and vest almost everything in the state, while the Fascist country vests the wealth of the country in the hands of one or a few “wise men” who own the bulk of the productive assets, and tax the rest of the society to pay for things that are generally considered in the nation’s good.
Oligopolies are a slightly different matter.
These have a tendency to become cartels, and where these organisations secretly work to protect their own interests, while apparently working for the good of the customer and the nation, it is obviously not competetive, so are not in the consumer’s interest, but governments quite like these because it makes taking policy decisions easier to implement, when they can get the heads of these half-dozen or so corporations in one room – after taking their advice of course.
Here in the UK, we have an oligopoly in the energy market, and for this reason it’s heavily regulated, though if the energy regulator wasn’t trying to get them to improve their customer service, they might be focussed on the thing, that consumers worry about more – prices.
But there’s another oligopolistic industry, and monopolistic practice that is at the root of many other problems in Western Societies.
Banking oligopolies, and Monopolistic Central Banks.
The Central Bank determines the supply of the currency, and the governments allow this, in its own self-interest. The government can pay its bills with money it doesn’t have, which it otherwise would have to tax from its taxpayers, instead it borrows from the bankers, and then has to pay interest, which steals from the citizens, silently through the process of price inflation.
But what it takes with one hand, it gives with the other, in higher stock-market values, and rising asset prices – which benefits those wealthier citizens, who own stocks, properties and other financial assets. This makes those on limited incomes fall further back in the “getting on the ladder” rungs of success.
It happens through the agents of the Central Bank, the major clearing Banks, who form an effective oligopoly linked into this nefarious practice, (also as their owners – in this case – of the Fed) while the population are enslaved by debt-slavery, as their taxes are used to pay the interest of the debts to these banks, who buy these Treasuries, using money they don’t really have, but who get it from their paymaster – the Central Bank.
Of course, for all this to work, people have to keep their wealth in cash form, or invested in things – homes, the stock-market, bank deposits etc, that can be manipulated for the ends of the Bankers.
Of course, they would deny this… As Mrs Margaret Thatcher once opined: “They would say that, wouldn’t they?”
But, once people begin saving their wealth in forms that can’t be taxed, or that the authorities – the government, and the Bankers can’t manipulate, they begin to worry.
For example: Crypto-currencies are things that Bankers fear, because they don’t control them, and aren’t taxable – at least not yet. If you have these great. If you haven’t, then perhaps you ought to check them out at Qoinpro. After all, if you can’t beat ‘em, then join ‘em. And numerous Bank employees and senior executives are buying into these – in particular – Bitcoin.
After all, for hundreds of years, the Bankers have controlled the printing presses that gave them immense power over the country and its institutions.
It was President Andrew Jackson of the United States who commented that:
“Banks of issue, are more dangerous than standing armies”
And Thomas Jefferson, who said:
“Paper is poverty. It is not money, it is the ghost of money.”
So what did they mean? As I’ve previously explained, paper currency is a receipt for money. And real money is both Gold and Silver.
So, Why do they fear them?
If we look back into history, a Bank Note once said with authority – “I promise to pay the bearer on demand the sum of …”
The missing words originally were the sum involved – ‘in Gold’, or ‘in Silver’ depending on the country of origin, or as the twenty dollar bill from the early 1900s stated: “There has been deposited twenty dollars in gold at the Federal Reserve”
And this prevented them from printing too many of them, unless they had the gold in the vaults to back that up. It meant they could only lend out “savings”.
But what they now do is lend out debt – because there is no savings, or nowhere near enough at any rate. And when that happens, we are borrowing from the future – Which is fine for investments that add to our stock of goods, but what about those debts used for holidays or other consumption services? And what if they can’t be re-paid?
It also means the taxpayers of the future – our children, and their children, will have to pay off these debts through higher taxation, and greater control of their lives by a centralising government.
All industries tend to grow towards having a few large entrants, before newer entrants change things and shake up the industry just as Tesla has shaken up the motor industry in the U.S..
As a further example: TESCO, the UK’s largest of the big 4 grocery retailers, has suffered recently in this fall-out, suffering a 50% share-price decline, as new entrant Aldi has grown its profits by 65%.
And to get to the geo-political issues, as ISIS rears its head in the middle-east, and Ukraine hots up, and once more unrest in Libya is raising its ugly head again, and now I hear two nuclear nations are on the brink of a conflagration, as Islam butts up against alternative lifestyles and religions. Many of these wars could embroil the west, and that will mean the amount of money the west needs to spend to fund its military activities, could be the straw that breaks the camel’s back. As stock markets have reeled in recent days, perhaps the market collapse that many predicted is already upon us.
And apparently the Indian and Pakistani peoples are on the verge of yet another major war between these two nuclear powers. And this is over a resource that neither can afford to lose – water.
Of course with both governments in dispute over the region of Kashmir, in the mountains of the north, the two governments came to an agreement over the Indus river many years ago, which allowed for both nations to tap into this resource which flows through the region, and they have already fought four wars over the territory.
But, since the agreement, both nation’s populations have risen exponentially. India now has a population of 1.2BILLION, and Pakistan has 178million, with senior figures in Pakistan now talking of Jihad, as India extracts more water, Pakistan has only 30days supply for the whole country.
The Indus river travels the whole length of the Pakistan, from its source in Kashmir, to emerge near the Capital Karachi, and is responsible for 90% of Pakistan’s water needs. Because it is used to generate electricity, it is also responsible for 50% of Pakistan’s employment.
And it could be used to trigger Pakistan’s “first use” policy, starting a nuclear war, given that many Pakistanis are affiliated to one of eight different radical Islamic organisations, who recently formed a joint committee of Jihad. Kashmir could well be that straw that breaks the world’s financial back, causing relations between allies triggering a new world war.
Rising tensions and a nuclear war could be hugely detrimental to world peace and financial markets, as Pakistan and India fight over this precious liquid.
Prices of stock-markets would go into free-fall, as much as 40% almost overnight, and trigger losses on derivatives, which as some highly influential, and well-informed people now believe, is as much as 10 times the notional value of the world’s economy – or some 700 TRILLION American dollars.
If that happens, then the flight to safe assets will be huge, and if you don’t physically, own either Gold or Silver, your wealth could be totally eliminated. The world’s economy could be so badly damaged, that for a time supply chains break down, and Banking organisations suffer, like Bear Sterns and Lehman Brothers, and are reduced to pennies on the dollar as their chickens come homes to roost.
Indian Gold price premiums were as high as $50+ in 2012, despite government attempts to stem Gold imports, as the populace eschewed rupees for Gold and Silver. Silver, now at prices not seen since 2009/10, could rise over its previous peak of circa $50, and take out a new all-time high.
As Warren Buffet, who has run Berkshire Hathaway since its inception, and where one share currently costs over $200,000, has been repeatedly quoted as saying in relation to markets: “Be fearful when others are greedy, and greedy when others are fearful.”
Now is the time to be greedy where silver is concerned as the world uses approximately 200 million ounces more than it produces. Sometime soon, those who cannot run their businesses without silver, will find they will have to cease operations because there isn’t any available, and the price will have to rise, to enable supply to increase.
And in 2013, not only have the Chinese and Russian Central Banks been buying Gold – But RUSSIAN Banks too bought 181.4 Tons of Gold in 2013. It was more than double that of Russia’s Central Bank additions in 2013.
The biggest buyers according to Finance Ministry include:
– Sberbank (48.5 tons),
– VTB (38.9 tons),
– Gazprombank (29.1 tons),
– Nomos Bank (19.6 tons),
– Lanta Bank (8.6 tons).
And if this has intrigued you, as to WHY? You can learn how these bankers over 2 centuries worked towards enslaving the people of Europe, Britain and America, in my book: “The Coming Battle – 2013″ and how YOU can claim back your freedom.
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An important anniversary slipped quietly by last month without any fanfare, on August 15th, as the anniversary of the day, that President Richard M Nixon, closed the Gold Window, and put the world on the path to financial armageddon.
From that day to this, the U.S. has essentially been able to print up as many dollars as it felt it needed to pay for things it wanted, and forced the rest of the world to accept “funny money” – aka. – Fiat Currency.
The fact that they were able to strengthen the dollar in 1973, temporarily when it convinced Saudi-Arabian leadership to accept an offer it could hardly refuse is still highly relevant…
America would back the House of Saud, with the full military might of its national forces, and the Kingdom of Saudi-Arabia (KSA), would accept only U.S. dollars for its oil, forcing dozens of other countries to trade for dollars, to pay for that oil, and the KSA, would re-invest those surplus dollars in Treasury Bills. Eventually the rest of OPEC would be forced to follow suit or commit commercial suicide.
Over the last 9 months, events in the precious metals markets and geo-political and economic circles, world-wide have been making headlines.
As geo-political tensions rise around the world, I wonder out aloud what is the end game. To learn where we are going, it’s important to know where we’ve been, and we have to look back 40+ years.
If we look at the ageing baby-boomers who are retiring in droves here in the west, (Of which I am one) and as our spending patterns change, we need to understand why this has such a big impact on economies.
In my experience, young people spend their money on a handful of things – Music, Fashion, Booze, travel and generally having fun, primarily in their pursuit of their partner in life – irrespective of their sexual proclivities.
As these people mature, they buy a bike/car, and their first flat or small starter home, and all the essentials of normal urban life – beds, tables, chairs, sofas, kitchen gadgets etc.
Then as they pair and begin to settle down, their partner now safely esconced in their home, perhaps 5 years have passed, and two incomes in one household means for a while they can experience a rise in social status and maybe buy a bigger home or have more expensive holidays. (though things are a little different in recent years as gap year students take the young to the far-flung corners of the globe.)
With women now making up more than half the working population in the west, women are now leaving “bonding” later, and perhaps seeking someone who meets and exceeds their expectations, and thus probably for professional women (i.e. those with degrees and/or professional qualifications) they’re leaving the having of children until they are in their early 30s, or as late as early 40s causing problems for over-stretched maternity departments, and over-stretched National Health Services, as increased age introduces greater risks and higher costs.
By their mid-thirties, people are climbing the corporate ladder, getting increases in pay, generally as their productivity rises in line with their experience.
Output on a national scale rises but this is only temporary unless higher investment in capital goods (new vehicles/machinery etc., that gets goods to market quicker, and/or cheaper) increases productivity further, these gains are not carried through indefinitely though. This is where political mistakes are made, as politicians think that the growth will continue.
As people hit their forties and early fifties, their willingness to learn unless pushed, seems diminished as they become experts in their field, just at the time newer technologies are adopted by the young first.
By the time people hit their mid 50s and early 60s, their abilities are beginning to decline; health issues begin to rise on average and national governments see a fall off in taxes, as some retire early, or die young – though the demands on their national budgets increase as improvements in health-care put additional burdens on national budgets.
Intermittent overseas wars also add to these burdens as those apparently with historical empires adopt the role of world policemen.
This adds further financial burdens on countries, and leads to overspending to maintain prestige, or to appease emotional electorates, or to maintain their leadership role, allowing those with more quiescent military to improve and begin spending in increasing amounts.
This was the nature of things in the west when Britain began losing its pre-eminence, and the U.S. took up the political and economic cudgels.
As a result, we now see the extent to which Britain, and America have over-spent in recent years, as the U.S. deficit grows to 105% of national income, and its budgets become overstretched as its military tentacles have extended now to over 145 countries.
The role of World policeman is an onerous one, and like all great empires this eventually causes a collapse at home, due to excessive spending as tribute (the term used by the Romans to refer to taxes) begins to lessen.
As demographics affects all economies, those with rising populations have greatest demand for housing, food, water and the other essentials of life, and when economics fails to meet those requirements, people look for scapegoats. Those with the most usually get the most scrutiny and criticism.
But to get back to the title of this piece, where will this ultimately lead us?
As Vladimir Putin, and Xi Jinping, grow their economies, and grow increasingly wary of U.S. dollar hegemony their actions have consequences for all of us.
China has in recent years agreed bi-lateral trade deals with a rising number of countries to reduce the dollar from its trading, and China in particular has used its excess dollar reserves to buy increasing amounts of Gold and Silver, and overseas resource assets with precious metals and other precious resources for its industries.
Russia too has sought to lessen its dependence on dollars, and the BRICS Development Bank recently announced, will wean these emerging economies off the dollar as the $100billion in Capital gets used to help out economies in difficulties. Will some of this capital be used to buy Precious Metals? It would appear so, as China now trades more Silver in physical metal form, than the COMEX, the former leader in precious metals derivatives trading.
This will ultimately lead to a dollar collapse, and like a wounded animal, this may lead to the U.S. lashing out to protect its interests, as it has been in the middle-east and in Ukraine, where fights to protect access to middle-eastern oil, paid for with dollars, and for access to Ukrainian agricultural land are being waged by proxy military. But the collapse of the dollar unless mitigated by the increasing energy production, may cause the whole world economic woes, or worse.
This involvement in the middle-east has caused many of the problems as those with a different view of the world seek to eliminate western ideologies from their countries. These skirmishes though, may grow to encompass those other major economies – China and Russia.
James Dines, the economic mind behind the Dines Letter and Dr Paul Craig Roberts former adviser to Ronald Reagan, also thinks that we are on the verge of a major conflagration and James Rickards a CIA adviser on financial matters, in a recent interview claims the U.S. is staring down the barrel of an economic gun.
But also in January 2014, the United States government entered into a deferred prosecution agreement with JPMorgan Chase which is the biggest bank in the United States and one of if not THE biggest banks in the world giving those who have benefitted most from the financial mess the U.S. has gotten itself into essentially a free pass.
The recent prosecutions of Financial Institutions has resulted in fines being paid, and JPM – probably the biggest offender, has paid approximately $29 billion in fines – yet not one senior banker has done any jail time.
When Janet Yellen begins the next round of Quantitative Easing (which might be called something else) all hell will break loose in the precious metals markets.
Buying Silver… Why NOW?
The reasons are not so obvious.
Silver is collectively, a monetary metal, an investment vehicle, and an industrial material.
Silver’s role in international finance has been prominent over several millennia, as this shiniest of metals was used in Roman currency, and only when Emperors devalued the money by reducing the silver content of coins, did they suffer the wrath of the people. (See: The Coming Battle – 2013)
Industrially, silver is the most widely used commodity on the planet, reputedly used in 10,000 applications and rising. Second only to oil in importance, but its price has been walked lower for decades, as silver was first taken from its pre-eminent role in both American and Chinese money with its removal from the dollar, to junior partner, to minimalist role, and finally in 1964 to negligible role as U.S. currency removed the last remnants of the metal from American currency.
Is it significant, that just 7 years later, on August 15th 1971, the last vestige of precious metals, was removed from the American financial system?
If the death of President Kennedy, and Louise Auchincloss Boyer are anything to go by, I think so.
But silver’s western denouement, means that the East has been able to accumulate this most precious of precious industrial commodities at prices unlikely to be seen again, after this financial collapse begins in earnest.
Silver historically was bought in ratios circa 16:1, compared to gold. We see evidence of this still all around us – 16 ounces to the pound, in the U.S. – 16 fluid ounces to the Pint and this ratio has varied in recent years as silver’s role in monetary matters has been slowly extracted, but its time will come again – it always does…
And with the current Silver/Gold ratio of circa 65:1 when it does go up, because it currently comes from the earth at circa a 9:1 ratio, then its rise will be meteoric.
And if that wasn’t reason enough to be accumulating…
These links should help you make up your mind…
And this page shows you were you can STILL buy silver coins and bars at VAT free prices, and have them discreetly shipped to your door.
And you can get further news on these matters at:
Anyone old enough to remember that catch-phrase in the title, is old enough to remember: “The Lone Ranger” in monochrome on old Black and White TV’s, back in the sixties.
And silver, in this case, was the Lone Ranger’s horse.
But the catch-phrase is also a likely predictor of where the price of silver is going to go.
We know that the silver annual supply is shy by about 200 million ounces a year. The world uses about 900million ounces per year (for both industrial and investment purposes), but supply is currently only around 700million ounces.
The difference is made up by the stockpiles of U.S. silver in coins and bullion that have been in storage since 1934 (in the case of bullion) which was seized – I don’t think that’s too strong a word – on the back of President Eisenhower’s Executive Order 6102, on 3rd April 1933, and in 1934, in which he seized the silver too, and in 1964 (in the case of coins), when silver was removed from coins by President Lyndon Baines Johnson, and the Federal Reserve.
Incidentally, just a few months before in November 1963, if we recall the President Kennedy, was fatally shot in Dallas, Texas, in the Deeley Plaza. Perhaps unknown to many just a few weeks prior to that shooting, on June 4th, 1963, President John Fitzgerald Kennedy quietly issued executive order 11110, that created a right for the treasury to issue a currency backed by precious metals, and that would have meant the money of America, would have to be further backed by Gold and Silver, and not purely credit based, which would have seriously hurt the Federal Reserve, and the Banking families that own that private organisation.
At any rate, we also know that just ten years’ later, a story emerged in the U.S. Tattler magazine, while the Vietnam war was raging, that all the Gold in the Federal Reserve’s Vaults was gone. Was this the reason President Nixon closed the “Gold window” on August 15th, 1971?
[Edit] And then I found this…
At this time, the Fed claimed to still have 8,700 tons of gold, though whether it was there or not is moot – a full audit of the Federal Reserve has not been carried out since 1953, and as a result of the article, a partial audit in front of cameras and the press was carried out – for public consumption… (Was this similar to the recent image of her Majesty Queen Elizabeth, visiting the vaults of the Bank of England, where she was pictured walking past surried ranks of gold bars – whose ownership is unknown?)
At any rate, just three days after the story was printed, – one Louise Auchincloss-Boyer, who was revealed as the source of this story, died after falling from the window of her 10th-floor apartment situated at 530, East 86th Street. The event was ruled a probable suicide and duly reported in the New York Times the following day.
Note: 59-year-old, Mrs. Boyer who died On July 3, 1974, was the grand-daughter of none other than Col. House, the man who guided the Federal Reserve Act through Congress way back in 1913, for J.P. Morgan, the Rockefellers, and Henry Warburg and company. Although to date it has not been determined whether there was a relationship, Jackie Kennedy’s father was Hugh Auchincloss. It is also known that Jackie’s grandfather helped John D. Rockefeller found Standard Oil.
Mrs. Boyer’s death lit the blue touch-paper of a firestorm of controversy and rocked a previously inviolable element of Americana — the security of the nation’s gold reserves held at Fort Knox.
Perhaps not coincidentally, Mrs. Boyer, stated that the Federal Reserve System was charged with the secret sale of U.S. Gold supplies overseas to super-rich David Rockefeller at below market rates.
The story stated that the Rockefeller family was manipulating the Federal Reserve to sell off Fort Knox gold at low prices to anonymous European speculators who were really fronting for them.
Mrs. Boyer was the executive assistant to former Gov. Nelson Aldrich Rockefeller (Remember where that name, Aldrich, came from?) Nelson’s grandfather, Senator Aldrich, was one of the founders of the Fed), and she had served him in various ways since 1944, as her husband had served Laurence S. Rockefeller for many years before his death two years earlier.
So if the Fed’s Gold, really has gone? What price gold on the open market?
Silver also has suffered a similar fate.
In between 1927 and 1938 (The Depression years), The U.S. Government and Federal Reserve Paymasters, purchased 50million ounces of silver, from the remnants of the Chinese dynasty – who would go on to form the government of Formosa, now known as Taiwan.
The price was paid in Federal Reserve Bonds – known as: “Federal Reserve Notes” Each note was for $500,000,000, and the series accrued interest at the prevailing rate.
Some years later in 1963, on November 11th, an agreement by President Kennedy, was made to pay the interest by issuing a series of new FRNs, known as “Kennedy Bonds”. The Silver thus bought, was never really paid for as to-date, these bonds have not been redeemed. (You can read the full-story in “The Coming Battle” available on www.scribd.com)
Are Kennedy’s death, and the two events mentioned above related? Perhaps… We can but speculate. But 1964, was the final year in which precious metals appeared in U.S. money.
The 50 million ounces, together with U.S. bullion, and the Treasury silver coinage amounted to a huge money supply, that for the Fed’s dominance to work as planned, had to be eliminated.
By all accounts 10 billion ounces have gone from the vaults over the last 70+years, and that over-supply has helped keep the price of silver depressed over that time period. But it has all but gone. And, as to the future price? Who knows?
It depends on how mission-critical silver is to business operations, and what percentage of that is required of the total value of their products, and whether the world supply can quickly rise to meet demand (or not).
If a business needs say 5 million ounces per year – highly possible, given that according to some reports, 15Kg is used in one Pershing II cruise missile… and it is used in tiny amounts, so a 100% rise might not matter much – neither might a 500% rise in price, but if you can’t GET ANY, at ANY PRICE… and your business has none, and there are NO substitutes…
Then the price is irrelevant… YOU WILL PAY… and for many applications… THERE ARE NO SUBSTITUTES. (Except Gold for some)
And the price of gold is currently 65x that of silver…
That’s one heck of a price jump. And when that happens – the dollar is toast.
And as yet another Bank is at risk of failure – Banco Espirito Sainto, in Portugal, and the Argentinian government defaults on its bond payments, is “The End” I spoke of recently upon us?
To paraphrase Churchill in 1940 after the Battle of Britain…
“It is not the end, it is not even the beginning of the end, but it is perhaps, the end of the beginning.”
As the British and American Media outlets focus on the downed Malaysian Airlines aeroplane, flight MH17, we have to look beyond the headlines, and the claims and counter-claims to look at the why…
The issue might even be taken to the United Nations. Words expressed. Actions condemned. Grand Speeches spoken. Accusations made and fingers pointed.
As I said in a former post, the crisis in Ukraine, may be the flashpoint that triggers the next round of the global currency war. And when we have currency wars, they usually end in hot wars.
(See here: http://moneymatterstoo.wordpress.com/2014/06/09/revenge-on-the-bankers/)
The events in the Ukraine, may be the prelude to a new hot war, just as in 1914 on 28 June 1914 the assassination of Franz Ferdinand sparked the First World War almost exactly one hundred years ago.
Archduke Ferdinand, (1863-1914) was born in Graz, Austria. As the heir to the Austro-Hungarian empire, he and his wife Sophie’s assassination, in an open topped car in Bosnia ended the attempts by Ferdinand to make European reforms.
Ferdinand, was asked to visit the capital of Bosnia, Sarajevo, to inspect army manoeuvres by General Oskar Potiorek of the Austro-Hungarian Army. Bosnia and Herzegovina were provinces that had been under Austro-Hungarian administration since 1878, by international agreement. Austria annexed the provinces outright in 1908, a controversial move which upset many governments in the west; however, some in Greater-Serbia were outraged.
They wanted the provinces to be part of a Serbian led pan-Slav state, (as finally actioned by Marshall Josip Broz Tito after WWII in the state of Yugoslavia) rather than part of the Austro-Hungarian empire. Ferdinand was also considering the idea of a federalism made up of 16 European states – an early version of the Euro Area perhaps?
A Serbian terrorist group, the Black Hand, resolved to assassinate Franz Ferdinand during his visit to Sarajevo on 28 June, thereby stalling his proposed reforms.
While riding in the motorcade through the streets of Sarajevo, Franz Ferdinand and his wife Sophie were shot and killed by Gavrilo Princip, a Bosnian member of the Black Hand; and due to alliances across Europe, the continent was dragged into a war, it could neither afford, nor avoid. Britain was forced to leave the Gold standard to pay for munitions, without giving up the Gold it held, it would not be able to buy the equipment and train its army.
BUT, the bankers got their pound of flesh… They always do. Notice something here?
Without Bankers and their flexible currencies, governments of all political persuasions, would have to balance their budgets and pay for things with real money – Gold and Silver. And if governments don’t have that gold or silver, they have to pay with promissary notes – a kind of I.O.U.
That’s what the origins of paper currency were… you can tell by the words on them…
“I promise to pay the bearer on demand the sum of…” It used to say “in gold” or “in silver”.
The British Pound was once literally a receipt for a one pound weight of Sterling Silver. And the British Guinea was a one ounce coin of pure gold. Latterly the gold sovereign, that became popular in the 1800s, and made the British Empire, was seen in the film: “From Russia With Love”. James Bond played by Sean Connery, is given 50 gold sovereigns to take on assignment, and this became the coin of choice for international transactions.
And Foreign governments, they want paying in Gold or Silver too, especially as paper currencies can be manipulated – devalued. You buy things with paper currency, then you devalue that currency, and the foreign nation feels aggrieved because it thought it was going to get full value for its goods supplied.
Just as President de Gaulle in 1965 sent his dollars to the Gold window to “cash them in” and Britain too requested $3billion in gold in 1971 just days before President Richard Milhous Nixon, announced to the world, that he was closing the Gold Window on August 15th, 1971.
As the BRICS nations – Brazil, Russia, India, China and South-Africa last week on 16th July, held a conference in Brazil, where they unveiled a new financial institution, as they had signed a deal to create a new $100bn (£58.3bn) development bank and emergency reserve fund – Is this the first volley in the battle against the U.S. and the Dollar hegemony, with its puppet-masters the IMF and Worldbank? Or is it just one of many recent nails in the dollar’s coffin?
The New Development Bank’s first president will be from India while the board’s chairman will be Brazilian, according to the declaration released at a summit in Fortaleza, Brazil.
Tuesday’s deal was reached after intense last-minute negotiations to settle a dispute between India and China over the headquarters of the new bank.
Brazilian President Dilma Rousseff, said setting up the currency reserve was a priority for the countries to protect themselves from crisis scenarios: “It will be a kind of security net to increase protection for BRICS countries as well as other countries. It’s a question of our security.” Those other members are expected to be many of the South American nations, with the number of citizens involved over half the world’s population.
The other four leaders present were Russian President Vladimir Putin, Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and South African President Jacob Zuma.
The bank and fund are seen as counterweights to the U.S. dominated World Bank and International Monetary Fund, which BRICS nations say needs more reform to give emerging nations more voting rights.
India’s presidency of the new BRICS bank will be for five years, according to Reuters, but no decision has been made yet regarding which country will hold the next presidency.
The bank is expected to make its first loans in 2016. Is that date significant?
The BRICS countries have a shared desire for a bigger voice in global economic policy, given that they now account for 21 percent of global economic output and have contributed 50 percent to world economic growth these last ten years.
Given China’s entry to the World Trade Organisation, which requires a freely floating currency, by 2015, will China’s gold acquisitions mean that it will gravitate towards Global Reserve Currency? I suspect so, and that might mean that the 2016 date IS significant.
India, in 2009, bought over 200 tons of Gold from the IMF at market rates to provide liquidity for the bank. So is the next volley to be fired in this global currency war likely to be this year?
And is the downing of the plane in Ukraine, and the political commentary, especially by David Cameron, a timely reminder of events in Europe of a hundred years ago?
It is just possible that Ukrainian forces might have deliberately targetted the plane to engage outside forces in a military campaign for their own ends. The “Why” is the question. “Qui Bono?”
And if this does become a hot war, between east and west, what price Gold and Silver, as hard up western governments have little or no gold left to sell. And most of the existing Gold has headed east. So, if you were trying to limit your opponents military, which minerals would you be stockpiling or removing from global markets? And what price on world markets? (See my previous post: Revenge on the Bankers)
As I’ve said before, when any currency falls due to banking madness and political lunacy, there’s only one solution really…
Those who have been reading this blog for some weeks or even months now, have perhaps lost interest in the machinations of the Federal Reserve, or the Chinese accumulation of Gold and Silver.
But if what I’ve been reading in recent days is even half-way true, then the next two years will reveal how the Chinese have been playing America for a “CHUMP” as the Americans might say.
If you’ve been reading my missives over the last 6 months, you will have learned that in 2012, China imported over 2,000 tons of Gold, and a similar amount last year. James Rickards thinks the Chinese have accumulated over 5,000 tons since they began their buying spree, which took on a life of its own in 2004, after modest accumulations in the preceding 30 years, sourced mainly from internal mining.
In the late nineties, the U.S. had lost approximately 200+ tons per year to overseas buyers. This little detail was discovered in document FT900.
And the Chinese have been accumulating through several import routes, though apart from their pronouncement in 2009 that they had over 1,000 tons, they have been remarkably silent on their current Gold holdings.
In 2009, when they made their last pronouncement along with it, they made what perhaps at the time seemed an unusual statement.
According to a Reuters article:
“China’s SOE regulator, the State-owned Assets Supervision and Administration Commission (SASAC), had told the financial institutions that SOEs reserved the right to default on contracts”
SOEs for those not familiar, are “State Owned Enerprises”, and includes Banks, and other large commercial organisations still under public, and thus communist party control.
SASAC took over the job of overseeing SOEs’ derivatives trading from the securities regulator in February 2009, after several Chinese firms reported huge losses from derivatives, and quickly tightened the rules, ordering firms to quit risky contracts and report their positions on a quarterly basis.
As I have discussed before, China has been importing gold at a sprint since 2004, and increasing amounts.
China’s Yuan – New global reserve currency?
As well as this they have been for some time the world’s biggest producers of Gold.
Rumours abound of Chinese officials scouring West African nations, but particularly Democratic Republic of Congo, and Ghana, buying up Gold at the spot price from artisanal miners, and tales of Chinese miners with guns to protect themselves, and to intimidate local officials have come to light too, and those miners are sending their recovered gold back to China to support families back home, who will send it to the Chinese Central Authorities to add to their stock-piles.
These resources are perhaps approximately another 40 tons per month back home.
And there’s more – I also learned last week, that Russian junior Gold miners who have been mining small claims, are also sending their Gold to China, and because of export restrictions from the Soviet era, have been turning their gold into knives and forks to get through customs restrictions, (albeit illegally) and this too has been exporting several tons per annum.
When you add in the gold that comes from Canadian, African, Australian, and South American mines that the Chinese have bought in recent years, their Gold holdings could be now even bigger than the alleged 8,100 tons that the Fed claims to have, but which few in the Precious Metals sphere believe is still there.
So what is the Chinese game plan?
The statement made above by the SASAC could be a clue.
Ever since 2008, and even in 2003, the Federal Reserve have been expanding the money supply, according to some reports I’ve read this could be as much as $4 trillion since the end of the tech-boom, that fuelled the biggest stock-market rally in history.
The recent rally in 2014, in which the DOW climbed to 17,000 was largely pumped up because of the cheap money being pumped into the economy.
And the Chinese have stated that they “MAY” default on derivatives. Is this because they expect the Fed to default on its Gold supply, which according to several reports – using a motoring analogy – is on fumes. It has been stated by several experts, that the supply in the vaults at JPMorgan, Goldman-Sachs and the other large American Bullion banks are down to the tens of tons, at least according to Harvey Organ’s Blogspot.
Indeed according to figures provided by Harvey Organ, the American bullion banks have already defaulted on many of their contracts, but the parties to those contracts have been bought out.
And we know that ABN Amro the largest Dutch bank has already informed its clients that they will not be supplied with their precious metal, but the cash equivalent. What will happen if all those derivatives contracts decide they want their precious metals, and the cupboards are bare?
Can you say – KABOOM?
And to add one more piece to this particular jigsaw, I recently learned that the Federal Reserve, is planning to cut the cord between real money and those numbers on the bank’s ledgers, even further. The story goes that the Federal Reserve will stop the use of American paper currency in the very near future. Quite possibly as early as September 2014, which would mean that all those paper dollars sitting in private vaults, household safes, overseas corporate and money-laundering crime bosses’ underworld slush-funds, and drug-dealers’ suit-cases, will have to be spent, or deposited in bank accounts somewhere in the world or risk being lost.
The amount of paper currency in circulation, if spent in a wild spending spree could be the trigger point, that sends the value of the dollar into a tailspin, or more likely inflation into the hyper-sphere – giving the Feds, a huge problem as the US economy balloons and then busts taking the world with them.
And China’s gold reserves, would then become the hard asset backing that the United States currency used to have, and has used to attain global reserve currency status, and this will allow the Chinese the opportunity to become global overlords as the American Military became on the back of their free spending ways.
So is there an antidote to this forthcoming mayhem?
When any currency falls due to banking madness and political lunacy, there’s only one solution really…
Buy Gold, Silver and Crypto-currencies young man, and soon – It’s gonna get a lot more expensive.