The Next BIG Bang?

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A little known U.S. government document spells doom, for the U.S. economy, and where the U.S. goes, so goes the world.

It is said, that when the U.S. sneezes, the world catches a cold, and the U.S., has just advised it is about to come down with a full-on bout of influenza.  The U.S. government, has been able to borrow at record low rates, because it had one thing that the world believed in – GOLD.

12 years after 9/11,  the spending of the U.S. government on all the security and new institutions will blow up in the faces of the Americans, and almost nobody knows it yet.

During the early 20th century the U.S. accumulated a couple of thousand tons of Gold, by 1920, that had risen to 4,000 tons, and by 1930, 6,000 tons.  In 1933 newly elected President Franklin Delano Roosevelt issued executive order 6102 which made it illegal to hold more than a modicum of Gold, and that had to be only in jewelry form – fashion items.  Is that a clue to the future?

A year or so later in January 1934, he made the hoarding of silver illegal also. The nation’s Gold and silver held by private citizens was ceded to the Government at the rather fixed rate of $25.00 per troy ounce for Gold, and for those who didn’t comply, there were fines of upto $10,000 – a HUGE sum at the time, and upto 10yrs in jail.

The vaults at Fort Knox and beneath the Federal Reserve Building in New York bulged with Gold, that gave the government the strength to back its currency, thus making the dollar “As good as gold”,  and by 1940, those vaults held almost 20,000 tonnes.

By 1950, the U.S. had received the gold from several other nations, as those western allies, concerned that Europe might be overrun by Russian tanks, placed their Gold in Paris, London, and New York, for safe keeping.  All told the Fed held over 20,500 tonnes of Gold, which appeared on their balance sheet. (Almost half the world’s supply of above ground stocks.).  But, by 1971 with several governments asking for gold in return for Dollars sent overseas, including France, Spain and Britain, the Fed’s balance sheet was reduced to around 8,500 tonnes.

Of course, so worried by this flight of Gold was Richard Milhous Nixon, that on August 15th 1971, the President announced to the American people, and the world, that he had “Temporarily suspended dollar convertibility to Gold”, and that “Temporary Suspension” has, like all other financial impositions, become permanent.

Since the 1970s, the Fed has claimed that they had 8,133 tonnes of Gold, yet document FT900 – Shows imports and exports – in terms of goods and services, and a line item labelled – Gold, has shown that they have been lying – sorry – being economical with the truth.

Jeff Opdyke, former financial journalist with the Wall Street Journal, and now executive editor of ‘The Sovereign Investor’, has researched this for his research letter, and his discovery shocked him.

He discovered in document FT900, released on 7th January 2014, that the U.S., had been a net exporter of Gold for the period in question, and furthermore, other research revealed it had been since 1991.  Now, after researching in-depth, Opdyke has calculated that there is a supply gap of 5,577 tonnes of Gold meaning, their holdings mentioned in the accounts are dead wrong.

And he calls this: –

“The Biggest Cover-up in U.S. Financial History”

To add to this mystery…

On December 22nd, 1992 at a closed door meeting at the Fed, in the Fed’s own minutes, Alan Greenspan, Chairman, posed the following questions…

“Did I hear you correctly when you said that the gold exports in October appear to have come from the coffers of the Federal Reserve Bank of  New York? Has anyone looked lately?”

Mr Truman (A Fed Official) answered simply:

“Well, I didn’t want to tell too many secrets in this temple! “

Is this the reason why the Fed has steadfastly refused to audit the Gold Reserves?

In fact the last time that the Gold had a full audit was back in 1953, when Dwight D. Eisenhower was President – over 60 years ago.

Governor Ron Paul of Texas and three times a Presidential Candidate introduced an “Audit the Fed”  bill in 2011, but which never became law, and has repeated calls for a full audit of the gold in Fort Knox but these have been steadfastly ignored or refused.

Even a former Federal Reserve official, Karen Hudes has gone on record to say that “The emperor is wearing no clothes” – The Gold has gone.

In fact in the 1970s, a mysterious piece in the New York Times told of a woman who had given an interview with the American “Tattler Magazine” to the effect that all the gold had gone, and had mysteriously fallen from her 10th floor window.

The woman an executive secretary to Nelson Aldrich Rockefeller was also the grand-daughter of Colonel House – who with Nelson Aldrich, shepherded the National Monetary Commission to its ultimate conclusion – the creation of the Federal Reserve, which suggests she had inside connections to the truth.

The Bank of England too, holds a similar secret…

As Germany blitzkreiged its way across the Rhineland and into Poland, in the summer of 1939 the Polish Central Bank had just one thought… Get the Gold out of Poland to safety.

In September 1939, on  the eve of World War II, in the dark of night, Polish officials secreted their country’s gold – estimated at between 75 and 83 tons – onto trucks and sent them packing to a port on Romania’s Black Sea coast 1,000 miles to the south.

All along the way, the Nazis tried to intercept the shipment as it switched between trucks, buses and trains. Through sheer luck, the Poles managed to sneak their valuable cargo onto a British tanker that had been diverted to Romania to help Poland protect its national treasure from the fascists.

Over the next several weeks Poland’s gold landed in Istanbul, Beirut and the vaults of Banque de France in Paris before ultimately coming to rest at Threadneedle Street, London, the address of the Bank of England, where Poland’s gold reserves have spent the last 74 years.

And now, after all these years, Poland wants its gold back.

In the last few years, Finland, Germany, Switzerland, Venezuela, Ecuador, Mexico, Romania and Poland: They’re all either talking about repatriating national gold, or they’ve already done so.

Some are clearly countries run by leaders with an anti west agenda – i.e., in Venezuela – former President Hugo Chavez, famously asked for his country’s 90 tonnes back from the U.S. in 2012 and Ecuador too, also not aligned with the U.S. hegemony also asked for their gold back.

Others, such as Germany, Finland et-al, are run by sober governments making sober decisions about their nation’s wealth.

The German Politicians even asked the Bundesbank to audit their gold, and the Fed at first said, “Nein!”.

Germany, stalwart ally of the U.S. since the end of the second World War, subsequently asked for its Gold back from the Fed.

The Fed at first agreed it would send 300 tons, but that it would take 6-7 years to send back. Despite the fact that China last year imported over 1,000 tonnes, and has, since 2011, imported over 2,200 tonnes.

Since the German request, the Fed has managed to send back just 35 tons, meaning it will take at the present rate 21 years to send back all of Germany’s Gold.  And we have to ask – “Why?”

These countries want their gold back because they’ve lost or are losing trust in the U.S. and the U.K. banking authorities.  Better to have local gold in local banks than exposed to the shady finances of the world’s greatest Ponzi schemes. Taking back their own gold is, effectively, a vote of no confidence in the monetary policies pursued by the U.S., in particular.

And who can blame them?

Consider the state of the global union. The West has accumulated so much debt that the International Monetary Fund now says that meaningfully large, one-off levies that tax every Westerner’s wealth are the only way to save the world from financial calamity.

Politicians in too many Western nations – except maybe the Germans – have reached the point that French political philosopher Alexis de Tocqueville predicted in the middle of the 19th century – namely that democracy will survive only to the point that lawmakers discover they can only bribe the public with the public’s own money before the public realise too-late.

We have reached that point in much of Western society, most ominously in America. Politicians no longer press for any semblance of financial prudence, only for the preservation of personal power by spending ever larger sums of public money on various forms of welfare and regulation that hurt one class over another.

This will not end well for anyone who has savings or a pension to protect.

That so many nations are now seeking to repatriate gold is the canary in the proverbial coalmine.  The end might not come today – it might not come tomorrow or even next month.  But it will come.  It always does. And it will come in my and your lifetimes.

Will You Be on the Wrong Side of History?

To anyone who has sold their physical gold or silver in recent months, I say that was a: Big Mistake.

Why is it that central banks the world over refused to sell their gold reserves? Why is it that so many, continue to add to their holdings, – officially: Russia, Turkey, Kazakhstan and Indonesia, and, unofficially, China.  Of course, Iran has also been accumulating Gold in its attempts to get round the sanctions imposed by western nations, but Turkey, a muslin ruled country has been purchasing its citizen’s gold and this has been used to pay for oil from its main muslim supplier – Iran.

Imports into Turkey over the last few years therefore, have risen, while the villains on Wall Street, inside the Fed, and the Bank of England allow the nation’s wealth to dissipate.  Is this a cynical ploy to allow their respective currencies to fall?  And if so, by how much?

China has already mooted that it is worried that the U.S. will re-value its currency by lopping off a nought.  Any item at $100, becomes 10 new dollars.  Any item at $10, would become 1 new dollar,and lesser amounts, mere new cents.  Britain effectively re- valued its currency downwards, twice in recent history – once in 1967, when Prime Minister Harold Wilson, imposed currency controls, and devalued the pound when it went from $2.80 to the pound, to $2.40, and again when it abandoned its old currency on February 15th, 1971, getting rid of  the old Pounds, Shillings and Pence, which became simply Pounds and New Pence.

France in the 1940s reduced the value of its currency and again in 1960 by dividing by 100. In the mid 1980s, older age residents, still referred to the 10 Franc piece as mille-Francs, accustomed as they were to the old currency.

And the Germans of course abandoned their Reichsmarks in the 1940s after their war debt was restructured, and the Deutschmark replaced it.

The unification of Europe and its move to a central currency allowed this trick to be pulled on its European citizens once more when they introduced the “Euro” on January 1st 1999, and the French, Italian, Spanish, Portuguese, and several other nation’s currencies were consigned to the history books. Forcing those who held even small reserves outside the banking system to either spend them or cash them in, leading to a temporary boom in those economies.

Will the U.S. follow the same well-worn route?

Yet all over the world, central banks in countries large and small cling to their gold, or are adding to their gold reserves and are increasingly demanding that their gold be returned to national treasuries.

Those that have parted with any gold have sold off just the tiniest fractions of what they own. India who bought over 200 tonnes from the IMF back in 2009,  has reputedly been pressured to stem the flow of gold into the country by the raising of duties…

No countries except, Turkey which used Gold to buy oil, from Iran;  Britain or the U.S., has sold a meaningful amount of its gold reserves, and the bet is that the U.S. has sold a very large amount of gold from Fort Knox that, to date, has gone unreported by the Federal Reserve, but which will one day soon, come to light.

The last time the Chinese officially announced the size of the country’s gold reserves was on April 24, 2009.  The People’s Bank of China, (PBoC) the Chinese version of the U.S. Federal Reserve, told the world that China’s gold reserves had grown to 1,054 tons from just 600 tons five years earlier. And that’s the last official word from the Chinese.

So, the market still operates under the assumption that the Chinese central bank controls 1,054 tons of gold. But it’s about time for China to make a new announcement. I think it will happen by the end April 2014.

And that announcement when it happens, will be, the BIG BANG, heard around the world!

According to research by Opdyke, China has a gold hoard of at least 5,000 tons. Jim Rickards, hedge fund manager and author of the best-selling book Currency War, has come to the same conclusion.

He recently said:

“Come April 2014, China will announce that they own 5,000 tons of gold. That should be an earthquake.     I have spoken to a number of sources in Asia. I’ve spoken to a number of people who are very close to the physical [gold] market, I’ve done my own investigations, etc. Every time I have an estimate and try to verify it, what I get back is that I’m wrong on the low side.”

By my calculations, in the last 10 years, China has imported in excess of 7,000 tonnes, though how much of that is held in private hands, and how much the PBoC has is anyone’s guess.  Is owning gold or silver, such a crazy notion that central bankers in 100 countries are all delusional?

Or, might it be that gold really is of value as the ultimate insurance policy against the destruction of fiat money that is now necessary to help the West manage a half-century’s worth of excesses?

Poland went to extraordinary lengths to protect its gold from fascists and communists in the late 1930s. Now, it’s going to extraordinary lengths to protect it from Western financial decay. Even the U.S. Treasury is concerned that the elimination of Gold from the Fed’s vaults would be disastrous, saying:

“[It] has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse.”

This is a game where, ultimately, you have to pick sides. Do you side with U.S. officials who talk down gold as a quaint tradition out of step with modernity? Or do you side with 100 central banks around the world that are increasingly putting their reserves in gold and silver rather than fiat currency?

I know which side I’m on…

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