When Governments Go Bad.

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The civil unrest in Ukraine, these last few weeks is symptomatic of growing unrest around the world, as governments try to move their economies this way and that, as the post world war generation prepare for their impending retirements, and every spare penny gets saved for their retirement accounts.

In China, India, Europe, Japan, the U.S., and even Russia and its satellite nations, together with the British and her Commonwealth nations, who fought for the six or seven years depending on the theatre of war they were in, prepare for this mass retirement event, that nothing except an intergalactic meteor or Asteroid hitting the earth can stop.

Over the next 10-20years, fully 200million people will retire worldwide, and over the following ten years, the vast majority of them, will begin pushing up daisies.

Governments the world over are struggling with this impending crisis.

As people prepare for retirement, their spending habits change, their saving habits change, and where they invest too.

Those who were retiring in the early part of the millennium, bought into the rising housing market looking for their rental properties to pay their mortgages, and provide an income over and above the mortgage payments.

The mortgages given at 4, 6, 8 times the income level of the mortgage applicant, as house prices spiralled upwards, were taken to extremes, and the Bankers who in a rising market have their loans all but guaranteed, given that if the property price exceeds the loan value, they’re in a win-win situation..

Of course when the brown sticky stuff hits the proverbial fan, and a good many of those mortgage loans go bad, then Banks have a tendency to go “Cap in hand” to the government, who underwrite them, at their taxpayers’ expense, and the Bankers can go on living their champagne lifestyles, taking their huge bonuses, and salaries, and wringing their hands in a “it wasn’t me” kind of way.

And yet, according to Max Keiser today, 40 bankers have in recent weeks been found dead. Some in suicide attempts, but there is just the suspicion, that some may not be. And if they are suicides, for what reason? And if they’re not? Who was involved?

Andrew Maguire a precious metals trader knows a bit about such threats, although no hard evidence has been forthcoming, Maguire and his wife were involved in a “Hit and run” accident on a garage forecourt, as a vehicle almost ran him over.

Some weeks previously, in November 2009, Maguire had informed the regulatory authorities, that JP Morgan-Chase signals to the markets that they are going to attack the precious metals prices. Dealers recognise these signals and join in with the “Shooting Fish in a barrel”.

On February 3rd 2010, Maguire informed the authorities, by e-mail two days ahead of time that an attack on the PM space would occur. He even gave the timing of the attack.

On March 23rd 2010, Maguire contacted GATA Director Adrian Douglas (Gold Anti-Trust Action committee) who have been over a number of years attempting to draw attention to these illegal, and anti-competetive manipulations, which are carried out on behalf of the banks’ Federal Reserve paymasters.

On the very day, that the April call options were to expire – April 26th 2010, Maguire’s car was hit in the side by a car which sped onto and off the filling station after hitting his car injuring Maguire and his wife. Perhaps the date was significant. To Maguire his interpretation was crystal clear, “Quit while you’re ahead”.

The offending vehicle was pursued by police helicopter, after attempts by other vehicle owners to coral the car were defeated when it rammed two of them too. Reports suggest that the driver was apprehended, but no further information has been forthcoming, leading to suggestions of a cover up, a threat or bribe being made to those investigating the event…

Those with the deepest pockets, it appears can have someone else get their hands dirty.

As Gold and Silver recently returned to their upward trend, albeit hesitantly, we learn that China became the world’s largest consumer of Gold. China famously imported over 1,000 metric tonnes in 2013, but India too I learned today, has also imported over 900 tonnes.

If we add in the production of China at circa 300million ounces, Russia, and its imports then the price falls in the last two years seem surprising. (shall we say?)

Of course reports abound on the internet that the Gold heading east has come mainly from the vaults of the Federal Reserve in New York, and Fort Knox, and the Old Lady of Threadneedle Street.

As China prepares for the day when it floats its currency on the world’s Foreign Exchange (Forex) markets, and lobbies for a replacement to the Bretton Woods agreement, reached in the dying days of the second world war, we can safely presume that Gold and Silver will play an increasing role in the world’s currency markets.

We also learned today, that demand for silver in industrial uses continues to rise, as the world’s telephone users switch to tablets (or Fablets) Lap-tops, Smartphones, and the like. But also,  Catalysts used in Chemicals, Solar-Cells used in power generation and the thousands of other electronic gadgets that are currently sitting on designer’s drawing boards – or should that be CAD systems. And not forgetting silver’s amazing medical uses, which are growing.

Some 551million ounces of silver is now used in industrial uses per year, leaving around 150 million ounces for coins, jewelry, and investment purposes of the 700million or so ounces produced annually.

As the number of American one ounce silver-eagles produced last year reached an all time high, we have to ask – given that the above ground stocks are now so low – why hasn’t the price risen further?

In fact it recently came to light, that Bank, JP Morgan-Chase had built a 200 million ounce stockpile, in expectation of the rapid rise that has been predicted by many.

And Gold, whilst it is continually being accumulated quietly by many Central Banks the world over, it is expected that China’s announcement which many expect in April 2014, will be the shot that is heard around the world.

China it has been reported intends to accumulate 10,000 tonnes before the end of 2015. If this is even close to being true, then a rapid price spike is a distinct probability.

If you haven’t begun to accumulate even a little, then time is short.

But to return to the problem of bad governance, many governments of all political persuasions since the start of welfare in 1909, when the Liberal Government gave retirees a pension entitlement when they reached 75 years of age, have increased welfare payments to the vulnerable.

Of course it is a necessary evil, if we want to be considered a just and fair society, but we also need to stop governments interfering in markets for temporary benefit, but long term detriment just to fit the political cycle.

Business people will do the maths and invest where they get the best returns, and local, regional, and national governments have to take this into account.

It is impossible to force businesses like putty in a child’s hands, which when squeezed, oozes out in the gaps between fingers.

What we need to do, is ensure that policies can be followed by successive governments, and short-term thinking is eliminated.

Of course as the Ukrainian Police begin firing using sniper rifles at the gun toting rioters, or Ukrainian separatists as they may turn out to be, we can perhaps thank our lucky stars that Britain’s separatists and government – north of the border, are not resorting to the same tactics.

As people move around the world for economic reasons, and others agglomerate into ever larger economic units, such as the European Union, and the United States, there are many regions, and former kingdoms seeking to take charge of their own economic destinations.

In fact there are increasing calls from several of the States of America considering cecession from the union.

Is this merely a stepping stone on the way to more political unrest, and is this why the US Federal government ordered over 600million rounds of ammunition to be delivered over a 6year period starting in 2008 – soft nosed for maximum tissue damage. Perhaps the Federal Government is expecting things to get ugly sometime real soon…

Are you ready yet?

W.

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