Bankers

How China is going to make you poor… or rich.

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Sometime in the not-too-distant future, China is going to do something, that will likely directly steal up to 40% of your wealth… IF, you do nothing about it.

It is probably going to affect you, your job, your family, your investments, your savings, your retirement, your home, and your whole future.

What happens, will be like the earthquake that happens 5 miles down on the floor of the Pacific Ocean, that lifts the ocean floor a few feet on one side of the tectonic plate, and that event will not be felt for hours, days or even weeks later. Hardly anyone will notice it immediately. Nobody will wake you up one morning, and say you need to do ‘X’, and no-one will protect you from what is going to happen.

That surge of water, will start out slow at first, but with gathering strength, it will travel across the ocean, and as the sea becomes shallower towards the shore, so the wall of water will rise – higher and higher, until like a Tsunami it eventually crashes ashore. Like the Tsunami, that created the Fukushima disaster in 2011, nothing will be the same ever again.

Interest rates around the world, will probably rise a little at first, then alarmingly. Mortgage rates will go up in the U.S., Europe, and Britain, as the value of the dollar, then your currency –  falls.  House prices – which have risen so much in recent years – will fall, perhaps by 40% in many areas, and as much as 60% or more in the worst affected areas, and the economic turnaround, that so many have pinned their hopes on, will grind slowly to a halt, and possibly even reverse. Bond prices will plummet. And the stock-market will lose the gains made in recent years.

Nothing will stop this, and there isn’t anything you can do to stop it.

A decade in the making, this event will disrupt many aspects of normal British, European and American life, with potentially devastating results.

The United States is stuck with an enormous debt, that they can never realistically repay… and Britain and Europe are almost as bad. China (by far the US’s largest creditor), now holds nearly $1.5 trillion worth of loans to the federal government, and is stuck with an outstanding loan they can neither get rid of, nor collect on. The Chinese and the Americans realize they are both trapped in a mutually executable stranglehold, and neither can easily let go.

So the Chinese government is now taking a somewhat secretive and radical approach.

Maybe you don’t care about international debt, currency wars, or battles between the world’s most powerful central bankers. (And if so – why have you read this far?) But this is one time you should.

There’s one very important reason for you to be concerned about what China is planning next. This plan will extract enormous sums from both the United States government, and ordinary hard-working, mortgage paying, credit-card spending people like you.

And you may be thinking, “How could the Chinese government actually keep something as big, important and potentially game-changing as this a secret?”

Well, the truth is, they haven’t.

And pretty soon, the world will see that China has been playing the U.S. like a fiddle.

For more than a decade, the Chinese government has published reports about the existence of this secret program in official, state-controlled newspapers and wire services. Officials have even publicly demanded more money for its development.

In fact, in early 1990s, the Chinese government began quietly laying the groundwork for their new financial weapon, making a series of dramatic changes to their financial system. The moves were announced in China’s official newspaper, but were barely noticed in the West. In a review of hundreds of articles in a historical database, the only mention was a 148-word item published in the Wall Street Journal on October 1st, 1993.

In 2000, they made the development official as part of China’s Quinquennial [five-year] plan, the country’s most important policy document. China’s CCTV called it a “pivotal year”.

A top private sector official with close ties to the government program called the developments from 2000-2008 “staggering.” Then came the biggest announcement

In April 2009, Chinese officials shocked the world with their announcement of the advancement of this new financial weapon, which had all but doubled its capabilities in six years, taking its place as one of the most powerful weapons of its kind in the world.

In 2011, the People’s Daily – an official propaganda mouthpiece for the Communist Government – reported plans for the program to accelerate even further.

In January 2013, a senior Chinese official was quoted by Bloomberg as saying the already powerful financial weapon was “too small” and should be built up further.

And, in October 2013, the Chinese government made its most shocking statement yet. The government used an editorial in its state-run news agency, Xinhua, to call for a “de-Americanised world” – a thinly veiled message about its intent to use this new and radical weapon against the United States – and with it – Europe and Britain.

But here’s what the Chinese government DOES NOT want you to know and what most major news outlets are afraid to tell you…

I believe that China could unveil this powerful “secret weapon” sometime in late 2014 or early 2015, but probably when they’ve achieved their interim goal of 10,000 tonnes. (All gold imported, is currently re-cast into 1Kilo bars)

Some financial commentators have said China’s financial attack will be “an earthquake.”

Business Insider called it “the elephant in the room” for one of the world’s most powerful market forces.

The Huffington Post wrote, “It’s amazing how little of the wider public are aware of what China is really up to here.”

Barron’s reports that the idea that China is developing this “ultimate stealth weapon” – once limited to a few obscure blogs – now “has a mainstream following.”

The US. government has essentially backed the Chinese into a corner, and they have left them no choice. The main thing the Chinese have kept secret is just how big their secret weapon is.

It is revealed in government documents that must be published, by law, in Hong Kong (now a Chinese territory) and by looking at where billions, even trillions of dollars are being shifted inside China – As any journalist will tell you, “Follow the money.”

Many believe we’ll see a major shift in the world’s monetary system. We will probably see a precipitous fall in the U.S. stock market, and a major disturbance of the U.S. mortgage and bond markets.

Most people are either too young to know, or too old to remember this, but the US., experienced something similar (although on a much smaller scale) in the late 1960s and early 1970s

After World War II, the U.S. dollar was actually backed by something real – instead of just a government promise. Back then, their currency was backed by real gold, and as a result, the U.S. government-owned two-thirds of the world’s gold – over 20,000 tons.

It wasn’t just a powerful national asset… It also formed the basis of the world’s financial system.

Every world currency was defined in terms of the dollar. And the dollar, in turn, was defined as 1/35th of an ounce of gold. In other words, it took 35 dollars to buy one ounce of gold.

This was supposed to keep the US., government from money-printing: Since dollars could literally be exchanged for gold, the government couldn’t just print all the money it wanted.

After the Kennedy administration, the Fed and the Treasury, asked the European Central Banks, to help prevent the dollar price of gold bullion on the open market from rising above $35.20. That is, whenever the free market price of bullion threatened to hit $35.20 the United States and the West European central banks would sell gold. If the price of bullion fell below $35 an ounce, they would buy gold.

But France would be the first to leave this pool.

It began in 1965, when French President Charles de Gaulle in a speech in February of that year, said that the US. owed the rest of the world a duty of care, to maintain its currency in parity with the agreed dollar price, and to not produce too many dollars. He later took $150 million of his country’s dollar reserves, and demanded that the paper currency be exchanged for U.S. gold from Ft. Knox.

(Here he predicts the crisis in 1965)

Of course, De Gaulle was simply doing the rational thing. even though he knew it would financially hurt so close an ally.

In 1971, De Gaulle actually sent a French battleship to New York, loaded with $191 million in cash to withdraw gold from the New York Federal Reserve bank vault.

And France was not alone. Spain also, redeemed $60 million of U.S. dollar reserves for gold. And many other nations followed suit. By March of 1968, gold was flowing out of the United States at an alarming rate.

It’s estimated that during the 1960s and early 1970s, the US., essentially gave away about 2/3rds of the nation’s gold reserves – around 400 million ounces.

And the news didn’t stop there…

On August 11th 1971, the British ambassador in Washington received instructions from London to redeem $3 billion of gold from the United States Bullion Depository at Fort Knox.

Then just four days later, August 15th, 1971, President “Tricky Dickie” Nixon, made an announcement that would send shockwaves around the world.

He announced to the American population, that he would “Close the Gold Window – Temporarily” and this Temporary Suspension notice has lasted 43yrs – so far.

Within about three years, America was in its worst recession since WWII, with an oil crisis, skyrocketing unemployment, a 30% drop in the stock market, and soaring inflation. And millions of Americans got a lot poorer, practically overnight.

In Britain in 1973, Labour Unions such as the Mineworkers, and Electricity power generation unions went on strike. Power cuts became commonplace as the three-day week took its toll on the British economy.

Inflation raged, reaching 26.9% in late 1974, just as the new Labour and Liberal government started their period in office – the Lib-Lab pact… Does this sound vaguely familiar?

By the end of the decade, Britain was watching helplessly, as government workers tried to maintain their living standards, and bodies piled up in morgues, while council workers let rubbish pile up over 3-4 feet high in London’s streets.

Shell Tanker drivers were the first to then beat the government’s pay restraint agreements, followed quickly by Ford’s car workers, and others would follow.

And the events of the 70s will probably be repeated, as that is EXACTLY what China is doing today, except this time, the stakes are much, much higher, because China is a much more powerful adversary.

China is now engaged in a fully-fledged “currency war” with the United States and the U.S. dollar.

China isn’t hiding this fact at all. A top Chinese central banker recently told China’s official, state-run news agency that the country is “fully prepared” for the coming currency war.

The ultimate goal, as the Chinese have publicly stated, is to create a new financial system, to dislodge the U.S. dollar from its current reserve role. Doing so will enable the Chinese to get back as much of that $1.5 trillion that the U.S. government has borrowed.

And here’s the most important part…

Understanding how the Chinese will execute this “currency war” over the next few years will likely mean the difference between the opportunity to make extraordinary sums of money, and potentially losing a fortune.

For the past 30 plus years, China has piled up a MASSIVE amount of U.S. dollars and other foreign currency reserves.

At first, the dollar inflows were small because trade between the two countries was tiny. In 1980, for example, China’s foreign currency reserves stood at approximately $2.5 billion. But since then, the amount of foreign currency held by the Chinese government has gone up nearly every year… and now stands at $3.7 TRILLION.

That’s a 146,300% increase! It’s simply astonishing, to look at the chart of the increase in currency reserves since the early 1980s…

When a Chinese business earns dollars by selling overseas, it hands that money over to the People’s Bank of China (or PBOC, the country’s central bank), in exchange for Chinese currency (called either the ‘Yuan’ or the ‘Renminbi’) at a fixed rate.

The group that manages these massive reserves is the “State Administration of Foreign Exchange” or SAFE.

And for the past few years, SAFE has had one big problem: What to do with so much money?

What SAFE decided to do with most of these reserves is to buy U.S. government securities (notes, bills, and bonds). Since 1980 their currency reserves have ballooned by 146,300%. Digest that figure…

China knows that as long as the US., continues to print and borrow unfathomable amounts, their U.S. dollar holdings will be worth less and less.  So the Chinese want to trade their depreciating dollars for any “real” asset they can find that will better hold its value.

In 2013, SAFE did something absolutely remarkable.

They opened an office on Fifth Avenue in New York. This office had one purpose: “To invest in private equity, real estate and other U.S. assets.”

Not paper promises, but real things with real value that can’t be manipulated.

“The move by [SAFE], which oversees the world’s largest stockpile of foreign-exchange holdings, comes as it steps up its diversification away from U.S. government debt,” the Wall Street Journal reported.

Chinese companies are wise to this strategy, too. In 2012, the Chinese conglomerate Dalian Wanda bought AMC theaters for $2.6 billion. In September 2012, a Chinese company bought America’s largest pork producer, Smithfield, for a whopping $7 billion.

And now they have changed their target. Starting from a low base, the Chinese have been quietly accumulating Gold, to the point that in 2011, China became the world’s biggest Gold producer – producing 400 tons per year, and the world’s biggest consumer, importing more Gold than India, which has for generations been the world’s biggest consumer of Gold.

And every single ounce that gets produced in China – whether it’s dug out of the ground by the government or by a foreign company – must by law be sold directly back to the government.  Not one ounce legally leaves their shores.

I believe China is trying to “corner” the gold market. Remember: “He who owns the gold, makes the rules.”

Richard Russell, a great financial historian, recently wrote: “China wants the Renminbi to be backed with a huge percentage of gold, thereby making the renminbi the world’s best and most trusted currency.”

The scale of China’s gold initiative is unprecedented in world history. This alone should make YOU take notice. And, China is signalling that the currency wars of the past decade are changing. Soon, the battle will be influenced by gold.

Here in Britain, America and Europe, Politicians and Central Bankers cling to the notion that their experiment with floating exchange rates and unbacked currencies will somehow save the day – but China suffers from no such delusion. It is voting with its wallet that the experiment has failed. It is preparing for the demise of the U.S. dollar, and with it the British Pound, and the Euro.

And what the Chinese government is doing right now will affect nearly EVERY Briton, European and American, in a big, big way.

Over the next few years, this may cause some assets to skyrocket, and others to plummet. Even if you decide to buy some gold itself, you need to know what to buy and this will obviously have major implications for you and me.

I believe with 100% certainty that the Chinese are now clearly on a path to accumulate as much gold as possible – as much as 10,000 tonnes, so that one day soon they will be able to restore the convertibility of their currency into a precious metal,  just as they were able to do a century ago when the country was on the silver standard.

And China’s increased gold reserves will act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the Renminbi. [RMB – China’s currency].

China’s entry into the World Trade Agreement meant they have to float their currency by 2015, and the strength of that currency will depend to a large extent on how it is perceived on international currency exchanges.

China imports food, wheat, metals, oil and gas from all over the world, and a weak currency would sky-rocket inflation in the country, making angry Chinese people turn on their government in riots and with major social unrest. A strong currency will make food and raw materials cheaper, and Chinese autocrats fear the uprising of 1.4 billon people more than they fear anything or anyone else – which is why they crushed the Tiananmen Square riots with such ferocity in 1989.

In November 2010, China signed a currency deal with Russia for bi-lateral trade in their respective currencies, and in July 2014, signed a deal to buy Russian Gas. China has signed similar currency agreements with a rising number of other countries – UAE, Australia, Hong-Kong, Turkey, Japan, South-Africa, and Brazil to name but a few. And as of 19th March 2014, China added in the New Zealand dollar, as China begins trading in the national currency of yet another trading partner.

In a November 2010 report, HSBC, reported that by 2015, fully 50% of Chinese trade with emerging nations, will be conducted in their own currencies.

And to fully internationalize, their currency, China is importing over 100 metric tons of gold a month through Hong Kong. As Reuters reported, “China’s net gold imports from Hong Kong hit a record high of 136.185 tonnes in March. 2013”

Net Imports through Hong Kong exceeded 100 tons a month almost every single month in 2013.

They also imported well over 1,000 tons of gold from Hong Kong alone in 2013 – not including Shanghai. That number is up from 2012, when China imported a record 834 tons – in turn, nearly double the imports in 2011.

This data, of course, comes from the Census and Statistics Department of the Hong Kong government. The Chinese government, on the other hand, does not make such information public.

As Mineweb puts it: “China also imports gold through other routes, and total import figures now look likely to be nearer 2,000 tonnes. Some analysts put them even higher.”

When China last reported their gold reserves in 2009, they had “official” holdings of 1,054 tons. They’re now importing nearly double that amount in a single year.

And that doesn’t include the Gold purchased from the mining outfits that Chinese investment houses own outside of China, nor the alleged purchases from artisanal miners throughout sub-Saharan Africa, reputedly at 40 tonnes per month.

And as Business Insider put it last year, “China’s undeclared official gold reserve purchases remains an elephant in the room in the gold market with very little coverage of or analysis of the People’s Bank of China’s quiet and un-transparent accumulation of gold.”

China even had the audacity to partner with a U.S. company as it builds the gold stockpile that will torpedo the dollar. A company called Coeur d’Alene mines is selling gold produced at a huge new Alaskan mine directly to the Chinese.

“The gold concentrates produced at Kensington will be processed by China’s largest gold producer China National Gold through an agreement that is the first of its kind between a state-owned corporation of the People’s Republic of China and a U.S. precious metals mine,” Mineweb reports.

Keep in mind, Coeur d’Alene isn’t doing anything unpatriotic. They’re just selling their gold where it’s most in demand – China.

In fact, China offered the company a very sweet deal. Most gold producers have to wait 3 months while gold is processed and refined to receive payment. Coeur d’Alene is getting paid just seven days after shipment for raw “gold concentrate.”

Of course, not every ounce of gold that’s imported goes directly into the People’s Bank of China’s storage vaults. Some of it goes to industrial uses, individual investors, and China’s flourishing  jewelry trade almost exclusively in 24 carat gold.

But no one knows how much the PBOC is absorbing. I believe it is at least 5,000 tonnes in total, since 2009, but could be as high as 7,000 tonnes.

What the markets do know is that China is importing thousands of tonnes and exporting ZERO. Every ounce of gold that goes into China stays there, like a black-hole, it just swallows up all that goes there..

And the Chinese government is now in the process of quietly buying up part or all of dozens of the best gold mining companies around the globe.

The government basically has a slew of investments in the gold markets, which it reveals as little information about, as possible.

For example, very few investors realize that China National Gold Group Corp (CNGGC) owns circa a 40% stake in an overseas investing arm, China Gold International. Resources Corp (listed in Toronto: CGG).

China National Gold Group is trying to vacuum up gold assets in Canada, Australia and Africa. Its latest move is a potential bid to take over the $1.7 billion Platreef mine in South Africa from a Canadian company, Ivanhoe Mines.  It also bought a 95% stake in another Canadian company, Mundoro Mining, a few years ago.  Even tiddler companies like Mwana Africa – quoted on the AIM Market in London, received a large investment for its Zimbabwean operations from the Chinese Gold investment community and investing in infrastructure to enable these reserves to be got to market – Chinese markets…

Most investors also don’t know that the China Investment Corporation, which manages $575 billion worth of government money, has major stakes in some of the best mining companies in the world, including:

* Anglogold Ashanti: 100,000 shares

* Kinross Gold Corp: 250,000 shares

* Gold fields Ltd: 350,000 shares

* Teck Resources: 101 million shares

Forbes ran a story following China’s 2009 announcement that stated China could amass some 5,000 tons of gold over 5 years. I would not be surprised if China amasses double that amount.

And, Jim Rickards, the currency expert who called China’s coming gold announcement “an earthquake,” believes they’ve already surpassed 5,000 tons.

He told an interviewer on RT:

“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 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.”

The point is, when you look at the gold China already has in reserve… and look at what it controls that’s still in the ground… the Chinese might already have more gold than any other nation on Earth.

And , the Chinese government is reinventing both their own internal gold markets and also the international gold markets as well. Over the last few years they’ve purchased the London Metals Exchange, home of Gold and other metals buying, for over 120 years.

Also, in 2011, the Chinese made available the first yuan-denominated spot gold contract, called the Renminbi Kilobar Gold. Dow Jones MarketWatch reported that analysts see it as “a step toward making the Yuan a global reserve currency.”

In 2012, the Shanghai Gold Exchange (SGE) became the largest trading platform for physical gold in the world.

And in the last two years, they bought the LME for $2.1 billion, and even the former Headquarters of Chase Manhattan Bank – Chase Manhattan Tower, built in the 1950s by David Rockefeller.

What you might also not know, is that the building houses the largest gold vault in the world. Longer than a football field and anchored to the bedrock five stories beneath the city’s streets – and stong enough to withstand a nuclear hit.

How much more evidence do you need?

And when the inevitable happens, the price of gold will soar in all currencies. And now that more than 7/9ths of the world’s silver’s usage is for industrial use, the limited amount of available silver for investment purposes, will mean that when Gold rises, as it inevitably must, the silver price will be like it is attached on an elastic band to Gold’s coat-tails.

You can get a fuller picture of this in “The Coming Battle – 2013”, and you can still buy silver at VAT free prices from Here. And many expect silver to be an even better investment than Gold, with a climb towards a 10:1 price ratio between Silver and Gold a distinct probability – ten ounces of silver equal to one ounce of Gold.

Once China announces its Gold reserves, the blue touch-paper will have been lit, and the explosion that follows, is all but guaranteed.

Gold will rise inexorably like it did 40+ years ago, and silver, platinum, and other commodities will follow suit, including: wheat, corn, oil, gas, tin, lead, copper and all the other precious, and semi-precious metals that make up this modern world, and for a time, it will be hell, before the world adapts, just as it did almost 6, and 40 years ago.

But those banks that have extended mortgages in their tens of thousands, since 1998, may be forced to go to their respective depositors, investors and capital markets, “Cap in hand” or face the same fate as Bear Sterns and Lehman Brothers in 2008. The bail-outs of 2008, will become “Bail-ins” as happened in Cyprus. Money on deposit in these banks will become just part of the capital base of the Bank. Your deposits, will be their deposits, and the so-called insurance of governments on depositor’s money may be un-backed as governments are unable to cope in a world where Gold or silver has to back the currency.

And if you look at the image below, the chart of the Gold price, in the last fourteen years, is almost identical in shape to the chart of the mid-1960s to 1970s.  And if the chart continues its replication, until 1980 and beyond… then you should be able to guess where the Gold price is heading next.

Image

The time to act is now.

W.

Until next time…

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Crypto-Currencies and the end of Dollar Hegemony

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ImageWhen I first learned of crypto currencies, some 3 years ago, I have to admit, I was skeptical.

However, I have also been critical of Governments who use legitimized counterfeiting (QE) to stem the natural economic downturns that occur in all mature markets as producers fight for market share, and prices are forced down as a result when the growth in incomes is stagnant, or falling, or savings rise in preparation for retirement, because this fixes one part of the economy at the expense of others, and that is never a good thing, as it merely transfers wealth to the few from the many.

The markets boom or bust as people switch their buying habits, change their tastes, or prepare for their retirements, and either begin borrowing, or saving at different times in their lives. And the demographics of the population (the birth rate, average age, sex and range) determines what is likely to happen and when.

For those with pension plans, their savings build up on Pension Company books increasing that company’s liabilities, and if the investments they’ve chosen fall significantly (such as during a stock market correction) then they risk not having the liquidity to pay out for those retirees when their bills come due, and in April 2012, that reached 10,000 people per day – in just the U.S. alone.

I am prepared to admit, that the Central Bankers, may, MAY, be raising the base money level for perceived socio-economic reasons, but the people who benefit most from such actions are always the Central Bankers, and those closest to them in the Banking Elite, as they receive the money first, enabling them to buy government securites, and draw huge salaries, while securing a steady income from future tax-collection.

Of course future taxes MAY or may not, cover the government’s debt obligations, as economies shrink or change shape, when the buying public changes its tastes and some industries prosper, as others decline, perhaps at just the point when welfare payments rise due to a faltering economy, but raising taxes on the apparently wealthier members of society is not always the way to go, as this discourages further investment, which of course is the best way to create meaningful jobs.

The problem for economists and politicians alike, is that the world is changing, and in ways we are only just beginning to perceive.

A CHANGING WORLD – NEW INDUSTRIES

Robots and other programmable production machines have capital costs – Eg: Robots, 3D-Printers, CNC & DNC machines etc, (you need to buy them) and they have operational costs, in the materials they use, or financial costs because you need to depreciate that capital cost over time, to ensure you have sufficient capital to replace it at some future point in time, whether to replace it on a like for like basis, or whether you want to, or need to improve its functionality.

But robots don’t have an income (except to the owner) and that income doesn’t always get spent in the location of the factory, typically like the human capital does – the worker’s wages. Which means the benefits don’t always flow equally in the factory location. The owner benefits – perhaps from a low taxation status in one country, and the factory produces little in economic benefit in the country in which it operates. A problem for governments the world over.

And, in a zero-sum economic world, there will always be winners and losers (Until we start trading with Martians, or Venusians if you prefer.) the trick is to not be on the losing side.

Money was invented to facilitate trade, and to ensure that value for value was transferred. Money is really – savings – and was initially just Gold and Silver as well as copper for small transactions – the origin of the British £,s,d (Pounds, Shillings, and Pence, which were gold, silver and copper respectively) because when I trade my wheat or sheep, or cows, maybe I want to buy something not now, but in 3 months or 3 years time perhaps: seed or fertilizer or a new Barn, for the new industry I want to create, and Gold and Silver retain their value over time, making saving possible and these metals perfect for money purposes.

The first currencies, were Gold and Silver certificates of deposit, as Mike Maloney of GoldSilver.com outlines – A currency is a receipt for money. Certificates of Deposit which were a claim on the gold and silver that was in the vault (the money was in the vault, the currency was in circulation) then began circulating in trade and the Bankers hit on a wonderful idea – they could make more of these certificates than there was Gold and Silver available to back them. Thus modern Banking was born, and bankers became richer than Midas. But if there’s no money there in the vault when people want it… Then what?

Now in recent years the world’s Central Banks have been inflating their Fiat currencies (Money dictated by government, and NOT backed by metal) which means that the value of currencies fall, as the amount or quantity of currency now rises – through QE., (Quantitative Easing) and the purchasing power falls. (the cause of Price-inflation)

ANTIDOTE TO QE – CRYPTO-CURRENCY

As an antidote to this debasement of the currency supply, Satoshi Nakamoto (If you want to read more on this person – Click  HERE – Who is Satoshi Nakamoto) developed a series of pieces of software to create a digital currency, with a fixed supply of 21,000,000 units and a system for transferring that value to others by digital means. Currency is initially earned by “mining”, which is a way of linking the world’s networks together to transfer the currency between users, and earning credits along the way. Or you can buy them, and transfer them to your digital wallet.

Of course the value of these digital currencies will rise and fall, like any commodity or currency, and one of these currencies is, if you have not already deduced – BITCOIN.

As Bitcoin has grown, and others have realised its features, there have been many who have emulated it. Max Keiser, of RT fame, has already launched MaxCoin, and there are dozens of others – upto 80 as I recently read, However, it is also obvious that governments have now decided that it is time to legislate these digital currencies for political reasons – some valid, others less so. The perhaps valid reasons are that it has been used to purchase goods and services, that the government would rather you didn’t, such as: Drugs, Ammunitions, Firearms, and other items of dubious morality.

In use, no means of identification is necessary, though the block chain can be followed to trace ownership, however, this means that to all intents and purposes it is a private transaction, but increasingly governments want to track ALL transactions so that they can extract their pound of flesh (to pay off the debts to their banker paymasters amongst others.)

Mount Gox, a Japanese built business in Shiboya, acted as a coin exchange has been recently attacked several times, and money stolen by attackers, such that Mt Gox had to file for bankruptcy protection in Japan. Was this government sanctioned or controlled? Was it the Banker elite fighting back? Time will only tell. Though as in all financial systems, fraud is a possibility. However, much has been made that the Banks received Billions in subsidies to stave off bankruptcies, and little has been made of that wealth stolen from the citizens of various countries.

However, while researching this article, I found other web-sites that will perhaps replace Mt Gox, but one that is still in the early stages of development is QoinPro. The business strategy is unclear (and I asked them, but was unable to get a straight answer) however I suspect they will become a coin exchange, and trading house for which they will charge transaction fees as Mt Gox, They are registered in the Netherlands, and Hong Kong, so appear legitimate. To encourage memberships, they apparently mine for coins of several crypto-currencies, and for those participants they deposit sums directly into their accounts on a daily basis. So no mining fees, or set-ups for those who become members, and they have an affiliate system, whereby you receive between 7.5% and 16.5% on all currencies issued to those who you recommend, and who sign up under you. (dependent on the number of people at each level)

That means you get an initial deposit just for joining, but you also get daily top-ups, which though low at the moment, are designed to rise as they iron out any wrinkles over the coming months.

As a devout skeptic, I could not see the value of these crypto-currencies, but as I have given it some thought, it is just possible, that all existing fiat currencies will disappear, and be replaced by cryptographic-currencies. That will mean the banks will suffer as they will not have control of the money supply, and essentially the banking system becomes the network. However, we can expect them to fight back. Governments will not have control, as these are essentially stateless currencies, and the currency will be resistant to legislative processes, and these new currencies will circumvent legislation as it tries to keep up. Evolution happening faster than the bureaucrats can keep up. The Chinese recently made trading of BitCoin illegal, though it can still be used for purchases, but will the legislation stop other currencies from emerging? It has not so far. And will it stop peer to peer transactions?

Having thought extensively through the implications, it is clear, that crypto-currencies are here to stay. So what happens if crypto-currency exchanges begin, backing the digital currency with real money – Gold and Silver, and the crypto-currency digital wallet becomes in effect a bank account?

Then we have a parallel banking and finance system outside the control of any government, and true free-market principles will flourish. Having become a member of this web-site, I have to-date in a little over a week received over 100 coins split amongst 5 currencies, and two more currencies to be added shortly.

That end result, may be a few years away, so in the absence of monetary metal backing, it is safe to say, that you will still need to use some of your savings for Gold and/or Silver, and use the crypto-currency (or currencies) of your choice perhaps for everyday transactions – Of course, eventually it may be possible to buy these precious metals with them.

If you want to find out more, click the links – HERE  or HERE and help spread the word.

The following tables are not exhaustive and only serve to give an impression about coins available. Some of these coins can also be collected through QoinPro.

Abbreviation Name Algorithm Total Coins Retarget Reward
NMC Namecoin SHA256 21,000,000 2,016 50 NMC / Block
PPC Peercoin SHA256 No Limit 1 103.10 PPC / Block
DVC Devcoin SHA256 No Limit 2,016 5000 DVC / Block
TRC Terracoin SHA256 42.000.000 540 Blocks 20 TRC / Block

List of Scrypt based Alt-coins

There are many Scrypt based altcoins.

Abbreviation Name Algorithm Total Coins Retarget Reward
LTC Litecoin Scrypt 82,000,000 2,016 50 LTC / Block
DOGE Dogecoin Scrypt 100,000,000,000 240 250,000 DOGE / Block
WDC Worldcoin Scrypt 265,420,800 120 50.79 WDC / Block
FTC Feathercoin Scrypt 336,000,000 504 Blocks 200 FTC / Block

The last three were discovered on another coin exchange – McxNOW., which offers exchange of some of the above, but also offers interest on deposits, based on the value of the trades conducted on the exchange for each of the currencies – So if you hold BTC, your interest gets paid in BTC, and if you hold one of the others, in that too.

This video tells you a little more.

And if the currency or the alternatives listed above follow the path of Bitcoin, their value wil rise in line with it.

BUT it won’t be a straight line, and the unpredictability for some will be too much to handle.

However, in time, they may, just MAY replace currencies created by the Banks. And unlike those currencies, they are not simultaneously a debt to the Banker class.

You can find out more HERE –  or HERE

In Africa, already many people now use these crypto-currencies exclusively for daily transactions, perhaps because of the distances involved, and the costs of installing fixed line telecommunications systems, is such that the newly emerging technologies in wireless telephone masts have been the engine of growth, and as banks were only available in cities,  this has meant many Africans have leap-frogged the west as these technologies have become actively entrenched in the economy, allowing that continent to develop at a much faster pace than hitherto.

The West may have to run to catch up. YOU can begin your journey HERE

And if you wish to learn why Bankers are a menace… Watch This.

Addendum. 23rd April.

And is it all about to come crashing down around their ears?

This video page of the End of the Bankers might just be the Clue…

W.

Crisis? What crisis?

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Housing Crisis? What crisis?

To paraphrase Mrs Thatcher in one of her parliamentary exchanges in the early years of her premiership, many people feel that there is a housing crisis in Britain.

Of course rising prices generally are indicators of increasing demand – at least that is the classical theory of economics that says that in the normal case, rising demand for a good (a product or a service) will initially lead to higher prices, the rising prices will in the normal course of events lead to rising profits, and rising profits will encourage entrants into the industry, or existing providers to produce more, which should over time lower prices. The invisible hand of the market, as Adam Smith – author of  “The Wealth of Nations” might have put it.

The problem with this view is of course the historical view by many that house prices can only rise over time. Perhaps that is true in most time periods, but that demand will be driven by population movement into and out of localities, and age and income demographics.  As people age, their needs for housing change, and there are times such as recently, when house prices fall, despite increasing demand from a demographic point of view, because of a lack of available finance.

The rise in UK population over the last 30 years has taken population from circa 56 million in the mid nineteen-eighties, to 62 million recently. Of course the changes to EU legislation allowing continent wide migration will inevitably cause problems for governments in the whole of Europe, but especially those countries that have a booming economy.

When people move to a country, the net effect is to increase demand for goods and services, and this stimulates further economic growth, which further encourages migration – it becomes like a fast breeder reactor, feeding on itself, causing house price rises, particularly in population dense countries like Britain.

The resulting crisis is almost inevitable,  booms in lending, and rising house prices, with a bust following in direct proportion to the size of the previous boom.

For the Banks, protected by the underwriting of their loan book, by governments keen not to have the economy collapse on their watch, it is Nirvana.  Over decades the banking sector then grows in importance to the point where we are today.  If you are a bank and you have two people competing for financial resources: One a mortgagee who has a rising asset like a house, and the other a new entrepreneur, who has more than an eighty per-cent chance of folding in the first five years of business – which would you choose?

But the banker’s logic must be tempered by the nation’s need for a robust economy.  Is therefore, legislation the answer? Or should the market be the only arbiter?

The Banks need for profits to meet increasing profit demands by shareholders, must be also tempered by the wider economy’s needs, and politicians who are keen to attempt to meet their voter’s understandable concerns, need to fully appreciate the effect of their legislative actions.

Of course, for the international investor, Britain’s historical legal system, political stability, strong economy and thus the currency, and the widely held view of Britain being a fair and tolerant multi-cultural society – especially in London, make buying property here an investor’s dream – especially at the upper end of the price range.

But pity the modest retail worker, the local street-sweeper, council clerical worker, or market-stall holder… Where do they live, when property and land prices get driven up to unprecedented levels as a result of such speculation? And how does this speculation not increase the start up costs of new businesses fighting for a foothold? Or their operation costs  making them internationally uncompetetive?

And what happens when the money spigot gets turned off, or even down a little, as the Fed’s taper programme begins to take effect, raising interest rates and slowing house price inflation, or worse?

Those naïve ordinary men and women who have been encouraged to buy a new home on the back of a finance scheme, which the government must surely knows will drive up property prices – the taxpayer money backed “Help to Buy” scheme, will suffer the most when the inevitable bust happens, as I believe is coming within the next few years.

As China now struggles with asset bubbles,  and unrest grows around the world as inflation particularly in the basics, leads those on modest incomes into penury,  the world economy teeters on the edge of a financial precipice, and when we fall off it, as we inevitably must, the financial calamity will be a lot wider, and deeper than many anticipate, and governments around the world may lurch into military conflicts as they strive to stop their own economy from spiralling downwards.

Just the conditions that led us into global conflict a hundred years ago, as those who seek power, point the finger of blame at one country, culture or social class.

As this unfolds, those with the only asset class that is not simultaneously a liability of someone else, will have the best insurance.  And the name of this asset? Gold. (& by inference – silver).

And if you haven’t got the message yet?

Click Here! Especially as the last seven months have seen both Gold and silver rise from their interim lows. Silver bottoming out at $18.52/oz, and now just over $21, giving those brave ones who bought an already nice profit of circa 20%.  And Gold, rising from its lows of below $1200, to the current $1320 area.

And for those who take the time to study the price action  in the 1970s, this is quite likely the shape of things to come over the next five years. (See image below) And if you want to read more of how we arrived here, the free e-book – “The Coming Battle” is still available.

Gold-Price, The charts never lie...
Look at the price action between 1968-1976, and compare it with the price between 2001 and today? Then look forward five years to 1980…

Sorry – We don’t need you now – You’re Redundant!

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The words you don’t want to hear.

Like many before you, imagine hearing those words, just as many do each year usually
when they least expect or need it – like just before Xmas in December 1999, as
happened to me, and again after I and two others completed the project we’d been
working on for 6months, just 8months later, I heard those words a second time…

And less than 18months later as my employer Marconi Software Solutions was closed
down by its parent corporation, GEC-Marconi, as the then parent company reduced its
workforce from 55,000 employees to just 12,000 in a worldwide re-organisation.

I was a software specialist – a “Techie” who worked in and for, some of the biggest
corporations in the world. and the life I had worked for 20years to make, was
gone…

Within the next 5years, if you don’t work for one of the many organisations who make
at least some of their living via the internet, or run one of these organisations
yourself, then you may be destined to hear those same words for yourself.

How would that affect YOUR life?

How would having no visible means of earning a living affect you? Your mortgage?
Your kids? Your spouse or partner? Your retirement? How would that affect your
relationship if you’re supporting another individual for years, or if that someone
was supporting you?

I understand, its difficult to see things when they’re far away, when you can’t see
the direct impact on you. BUT we’re in the early stages of another part of the
Digital Revolution.

Don’t believe me?

The Western democracies are experiencing the biggest financial upheaval since the
dawn of the Industrial Revolution. They might not know it yet, but they are.

How so?

When I was a much younger man, I read a couple of books by a man called Alvin
Toffler, the first called “Future Shock” and the other “The Third Wave” were a
visionary’s peep into the future.

His style, though eclectic, served up a vision of the future, that might just
finally be arriving.

At the time, we were experiencing the start of the digital revolution – a transition
if you will, from an analogue world to the digital world we now enjoy.

Just like the Industrial revolution that had two major waves – initially coal and
steam engines, then later oil, and petroleum production which ushered in a huge new
wave of industries, and the motor-vehicle, we are now experiencing the second phase
of the digital revolution.

The first phase shrunk the huge mainframe computers used by the military, and Universities – first to mini-computers, and then to micro-computers; it saw the end of the “typing pool”, and secretaries, and they all became admin personnel, or administrators.

The tail end of this phase ushered in inter connectivity of computers beginning in 1969,
as they connected four Universities in DarpaNet, (Defence Advanced Research Projects
Agency NETwork) and later Arpanet in 1976 as Unix became the Education sector’s
Operating System platform of choice, and ‘C’ became the third of a trio of
programming languages that were readable by humans. – The first being A and B.

But that was then, and this is now.

The end of the PC era effectively began towards the end of the millennium, as the
world’s computer hardware manufacturers realised they needed 32bits to store a
“Date”, and a 32-bit software environment to run it all, just at the time that Tim
Berners-Lee was working in the Hadron Collider and wanted to share industry files
with others in the Physics community, and came up with the World-Wide Web.

That little way to allow people to find documents on other computers without needing
to know what they’re called, or even where they are, coupled with the extensions to
embed pictures, and later videos, and then a new wave of this digital revolution
started, as it merged the web with the phone, shrinking it and making it wireless,
putting the power of a mainframe into your pocket.

That was the final stage of the communications revolution, but now the real changes
will sweep away whole industries, put millions of Chinese factory workers, out of
jobs, send Bankers into a tailspin, shrink some of the biggest companies on the
planet to the size of a handful of people, and enrich their owners like the wealth of
Kings and Queens of the early rennaissance.

How so I hear you ask?

Just as the printing press put scriveners out of work, and ushered in the publishing
industry, and the PC put secretaries out of work, so the 3D-Printing Press will
revolutionise manufacturing.

3D Printing

Software supplier Dassault Systemes of France and 3D Systems Corp are among the
leaders in this 3D-Printing revolution. According to the Motley Fool web-site, we are at the beginning of the end of Chinese manufacturing dominance, but will it be also a revolution in other industries.

Imagine, if you will, having one of these $1200 printers in your garage – just like
the one found in a Manchester out-building late last year, which had the designs and
a partially completed functioning gun.

The same gun design which an Austin, Texas, University student, video’d firing at a
rifle-range. The magazine was also manufactured on that same printer.

Now, we learn that these 3D-printers can manufacture – print – live cells creating
live organs such as the kidney used in a live organ transplant, rubber, plastics,
metals, even building materials in upto 99 different materials.

If you work in the building industry and the housebuilder you work for doesn’t use
this technology, how will they compete with a company that manufactures 40 storey
tower blocks in a factory and builds them in sub-assemblies to be assembled on site
in days, rather than weeks. If you’re an administrator, brickie, techie, plumber
electrician or driver, where’s your JOB if the company you work for no longer
exists?

Of course, designers, architects and engineers, will also find this technology a blast.,
just as many already are. Printing in glass, wood, rubber, steel, concrete, or even
a combination of materials.

For the ladies, you might be pleased to learn they can even print chocolate.

BUT, if we can produce a design in one part of the world, and print it off on the
other side of the world, where does that leave the transport and logistics
industries? And if designs are everywhere, then where does that leave factory
workers if components can be manufactured -printed – as and when needed? A complete car has already been produced using this technology.

If you work in the minerals industry – producing the raw materials for this
brave new world then you would appear to be relatively safe perhaps even increasingly in demand – for now.

If you don’t need a refinery to make things, what happens to those workers who work
in those industries?

And if China and India have several hundred million, perhaps a billion people
between them unemployed, what will those two countries do to employ their hundreds
of millions of unemployed, and angry young men?

The last time this happened was after the 1908 Banking crisis, leading ultimately to
the first world war, and we all know what that outcome was.

The Banks though too, need to be concerned at these changes, as the crypto-
currencies previously mentioned replace real folding paper money, and everyone’s
computer or smart-phone can be a bank vault, how will Banks make money?

Perhaps the GRG (Global Restructioning Group) of RBS which was recently criticised
for aggressive tactics, when it “pulled the rug from under” the feet of dozens of
small businesses, is the way they’ll do it, making everyone a rent or debt slave.

A report on RT today told of a hotelier, who was just 11 days from re-opening a hotel
after a major refurbishment, when their Bank Manager rang and said that the £1.6m of
their loan agreed and still outstanding, couldn’t be paid, as they had run out of money, and the business was effectively bankrupt.

As the man told of losing his hotel, and the Bank taking it into their property division, the hotel opened on the day his wife was diagnosed with cancer except now the Bank owns it.

The Banks who enslave people with mortgage debt are using the original old french
meaning of the mortgage – the “DEAD-HAND” of the mortgagor, who controls the life of
the mortgagee. Only the elimination of the debt can free the energies of the world,
and this means taking away the power of the Central Bankers to create money out of
thin air.

Gold, Silver and even Bit-coin may be the tools of retribution. However, in 1933,
President Franklin Delano Roosevelt, issued executive order 6102, which made the
ownership of Gold a criminal offence punishable by upto a fine of $10,000 – a HUGE sum at that time, or a period of upto 5years in prison. Silver was added to this list in 1934.

It has just been made illegal in China to trade bit-coin, how long before other
autocratic governments do the same?

But this new industry can’t be un-invented.

Business Insider research analyst – Pascal Gobry calls it:

“THE NEXT TRILLION  DOLLAR INDUSTRY.”

If you are at risk, maybe the answer is to start your own business, and accumulate Gold or silver.  Just make sure you keep it under wraps, and out of the hands of Bankers.

As Long-Term Capital Management, MF-Global, Lehman Brothers, Bear Stearns, and others have left so-called gold owners without their physical metal, meaning they are just another creditor of these now defunct Institutions and Banks. It seems as if Cyprus is the model of the future…

How will you pay for food if your savings go the way of the Dodo?

Until Next time…

W.