As governments have used their ammunition in fighting to retain power for their Fiat currencies, the price of Gold and the Exchange Traded Product (ETP) or Exchange Traded Fund as it is more commonly called for Gold – the GLD has fallen.
But there comes a time in every charlatan’s performance when those watching no longer believe in the power of the magician pulling the strings behind the scenes.
In this case the arm of power behind the throne – the Central Banks – have sold or leased much of their Gold to Bullion Banks, who have sold this gold on the markets as their futures contracts came to an end, and the buyers took delivery, rather than as might have happened previously – settled in cash – it is increasingly obvious that as the number of contracts increase and more and more gold heads east to China and India, and north to Russia, and to numerous other central banks worried about their gold held in U.S. vaults, and have begun to increase their holdings, and repatriate their gold from overseas vaults, that it couldn’t go on forever.
And then this piece caught my eye…
So what will happen when the gold does really run out?
Initially, I suspect Bankers will settle for cash, but probably have to pay a premium to do so, as those who own the metals contracts extract their pound of flesh. This will probably be under the radar, at first, but it will eventually leak out, and as more and more people have to settle for cash, the premiums will rise. This will feed through into the published prices, as the disconnect between the paper price and the settle price increasingly becomes obvious.
According to figures I’ve seen there are between 100 and 200 contracted ounces, for every real ounce in existence. This is how the Bankers came to dominate the world and its economies. The left hand not letting the right hand know the truth or what it was upto.
Fractional Reserve Lending meant lending out upto 10times the amount held on deposit. Of course this assumes they hold ten per-cent in reserve. BUT in the last ten years, those same bankers have had as little as 3 per-cent and that means they were lending out in excess of 30x their reserves. And that is the reason for the boom, and the bust when we had our Bear Sterns and Lehman moments.
If the Bankers persist in this lending and futures contracts binge, then it will end in disaster for the banks (and us) but at that point, the price of gold – both official and unofficial, will explode to the upside.
Of course in the meantime, as Harry Dent has stated on several occasions, the price may fall in the meantime, as first deflation due to demographics, and his convergence waves take hold, but as has been mooted on Bloomberg today, perhaps QE4 is but a printing press away?
And if it happens, when all that money leaks into the economy?
Can you say Boom?
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Some weeks ago, before Xmas, I floated the proposition that “The West” might be about to shoot itself in the head, heart, AND foot, just to make sure.
My reasoning was that Russia, might be about to demand payment in Rubles for their gas and oil and other things, which would effectively shoot the west in the aforementioned organs, as they sought to ratchet up pressure on President Vladimir Putin.
The U.S. through its monetary influences and power in International Organisations – the World Bank, the IMF, BIS, Federal Reserve, and of course the ECB, Bank of England, U.N. and Bank of Japan etc, is waging a war against Russia, in a vain attempt at defending and extending its influence in the middle-eastern region, and throughout the near east, ostensibly to protect itself from the rise of China and a resurgent Russia. (more of which later)
The beginnings of this madness began with the end of the Soviet Union. The west in NATO, and through European organisations made agreements with the Soviets, to not encroach into former soviet countries, yet many of those countries, in order to avoid the risk of re-colonisation, chose to join the North Atlantic Treaty Organisation (NATO) and/or the European Union. (E.U.). This was also of course to strengthen the U.S’s Federal Reserve backed monetary system, which as I’ve mentioned numerous times is now no longer backed by physical precious metals.
Of course, when the U.S., under its attempt to extend its influence in the region, encouraged the western larger part of Ukraine to throw off its recently elected leader as it were, to rub Putin’s nose in it, and incurred the wrath of the Crimean Russians, and the Russian speaking ethnic Russians east of the Dneiper River, it essentially wandered into Russia’s back-yard, and that was the straw that broke the camel’s back.
The Crimeans, who are predominately ethnically Russian, were backed into a corner, as the new western backed government in Kiev, made the Russian language illegal.
Imagine if you were a Welsh speaking Welsh person, and the incoming British government, made your language illegal? Or Irish? or Highland Scottish and they tried to make Gaelic illegal?
You’d be pretty PO’d too…
The Crimeans, who felt Russian, spoke Russian, and historically WERE Russian – If we remember our history – Balaclava, near to Sevastopol, on the western coast of Crimea, is where the British Light Brigade, charged the Russian guns, to such detrimental effect, in 1854, and it is remembered in the rousing poem by Alfred, Lord Tennyson. So, a hundred and fifty years ago, this part of the world, was as Russian as it surely is today.
The President, of Russia, kept a low profile recently, and even disappeared from view for ten days, prompting mass media speculation by western media about his health. Of course, when he reappeared, the President issued a wry smile, and joked about “gossip”.
But behind the scenes, the Russian bear is fighting back against the Dollar hegemony. Of course the war of words is being ratcheted up as American military conduct war games in Estonia, this week-end, a former Soviet satellite nation, and right next to the Russian mainland.
Guyane Chichakyan a journalist for RT, posed an interesting question to one of the U.S. government’s PR spokespersons today (Saturday) when she asked Jeff Rathke of the U.S. State Department: Why was it that when Russia conducted military exercises on their own soil, it was supposedly raising tensions, but when Americans conducted military exercises several thousand miles away from home on Russia’s borders, it was in the guise of international peace and security.
The PR guy nearly choked on his reply, denying that they had ever said such a thing, to which, RT showed a clip of Jen Psaki of the U.S. State Department, on August 14th, 2014, doing just that, when referring to events in Ukraine and close to the Ukrainian border. As I mentioned some months ago, the next world war has already begun as a war of words, and for people’s hearts and minds. Every channel, both public and private will be used. It will in all inevitability end in a military war, though perhaps not on such a full-scale as the last one in 1939.
But perhaps also the anti-U.S. state of mind is gathering steam… As I mentioned some weeks ago, Britain applied to become a founding member of the AIIB (Asian Infrastructure Investment Bank) the alternative to the U.S. dominated World Bank and IMF, and we hear from the New York Times, that now Germany, France and Italy wish to join in defiance of U.S.’s (cough) “requests”.
Perhaps the dollar’s end as a major world currency is finally coming to an end, as a result of the mass Q.E. exercise of recent years.
It is time we all engaged our brains.
And then last week, I read this… http://russia-insider.com/en/2015/03/19/4696 which discusses just that.
If a shooting war does begin in earnest, money – hold in your hands money – will allow you to survive the inevitable inflation that will ensue, and the grey market will offer up far more than the government enforced, and controlled ones. If you value your freedoms, liberties, and the health and well-being of your family and friends, I strongly suggest you begin preparing – if you haven’t already.
Gold and Silver coins and widely accepted silver and gold ingots of widely known mints will prove to be good ways to secure your own future “essentials”. And Bitcoin, and other [Alt-coins] will enable international transactions. You can begin your own FREE collection of these precious [Alt-coins], when you set up an account by merely supplying an e-mail address.
So, who’d have thought it? Our very own Guy (Guido) Fawkes being raised as the flag-bearer against oppressive and unjust governments. In the U.S., people have been wearing the Guy Fawkes mask and adopted it for their Occupy Wall Street protests, against what they see as an oppressive Executive, Congress and Senate that exists merely to serve the interests of the Corporate State – BIG Business and Big Banks…
It is perhaps too easy for Governments, eager to please their political pay-masters, to believe that serving business, serves wider society’s interests too…
It seems so nice and simple.
The President can have a nice cosy fireside chat with the CEO of one large company or other, and reach a conclusion and both part feeling like they’ve resolved or headed off some crisis or other.
Rather than consult more widely, making laws or giving access to one or other CEO, can help one company at the demise or sufferance of thousands of others who, because they don’t command major public presence on National Newspapers or in National Media Corporations, don’t have their particular problems addressed.
When one company has a large dominant position in the economy, political figures can occasionally appear to bend over backwards trying to protect that business, because headlines that shout “1,000 employees to be laid off” as happened here in the UK by BAe, can drive many people, ignorant of the bigger picture that is being hidden behind the financial news, to seek simplistic solutions.
Charles Mackay’s Book, “The Madness of Crowds” should be required reading for all – especially politicians.
And Banks and Senior Bank Executives and those who ultimately decide the fate of Governments through their control of the Money supply with their claim on your taxes via the national debt is just one more example of this, as people scream: “The government must do something to help”, when quite often the actual long term solution is to do precisely the opposite.
In Britain we the people owe over £1 TRILLION and Central Bank Governor Carney, seems only too keen to add to this.
To use that American Phrase – Economics 101 (meaning the first course of an economics degree at level 1, year 1) teaches us that our income equals our expenditure over our lifetime, I = E.
The only way we can spend more than we earn is by borrowing, and that borrowed money takes spending power away from the person or institution from whom the money is borrowed. If we borrow at the national debt level, we borrow not from rich people who have the money sitting idle, but we borrow from our children.
And in so doing we impoverish THEM.
THEY will have to work, and pay taxes to pay the Principal plus the Interest (P+I) the principal being the sum borrowed, for those not familiar with the term. The plutocracy (those with immense wealth who influence the political systems from behind the curtains) merely watch their immense wealth grow, as THEY OWN THE BANKS.
The Federal Reserve – set up in 1913, was deliberately so named to avoid the name “Central Bank” and is owned by these plutocrats. Those who were involved were the immensely wealthy Banking families of early 20th Century America, – JP Morgan, the Seif family of Israel, the Warburgs of Switzerland, the Baker, Rockefeller and Rothschild Banking families of Europe.
These powerful interests were whisked off in a private rail-car in the dead of night on November 22nd 1910 and then onto a motor launch to a small Island – Jekyll Island, off-shore Virginia where they could plot their Banking futures – sorry – they could devise a system, and drive the legislation to create the most powerful organisation on the Planet – The Federal Reserve.
At the head of this cabal of Bankers was a politician, Senator Nelson Aldrich who had been tasked with setting up a system to manage the currency of the U.S. by being appointed head of the National Monetary Commission.
A system that had already been decided upon in its founding constitution was to have ONLY GOLD AND SILVER as money, and Certificate’s of Deposit (CODs) and Gold and Silver Certificates as its currency.
BUT, Gold and Silver don’t grow on trees, and these metals merely hinder wealth creation when you don’t control the supply of them – as the Bankers don’t.
So, the goal of the Federal Reserve was to rid the world of monetary metals.
Its true goal was best summed up by George Howard Earle, Jr. of the Real Estate Trust Company.
In 1908 he wrote:
A Central Bank as a Menace to Liberty
The solution of the problem of a central bank, with power to control the currency of the United States, to be at all adequate, must depend upon and be controlled by ultimate political principles.
The same principle that underlies the never-ending conflict between the advocates of a strong centralized government and what are called “states rights,” governs this question.
Taught in the school of experience and adversity, the early English and American patriots learned the salutary lesson that the development of peoples, as well as their happiness, depended more upon liberty – that is, the power to control and govern themselves, rather than to be controlled or governed by anybody else – than upon any other single thing; and they, therefore, in drafting our Constitution, always viewed government as an evil made necessary by the weakness and defects of human nature, and never extended it beyond that necessity.
Under the plan of freedom, of self-reliance, self-dependence, self-government, we have become the greatest, the happiest, the most powerful people of the world.
So without freedom, without liberty, there is no happiness. (I will return to this in a future post)
But by giving one segment of the population a clear preference, a clear assistance or help, you inevitably steal a little from someone else.
By giving the NSA the power to snoop, into people’s lives, you force people who wish, for whatever reason, to remain private, to use less efficient methods of communication or to be devious in other ways.
And that can only end one way, with the slow strangulation of the economy.
Ultimately, this will end in the demise of the currency as it is currently operated. people will always strive for freedom and liberty.
China has been steadily accumulating Gold and Silver since the mid 1970s, and they have been producing Gold in increasingly larger quantities for themselves. In 2012, they mined over 300 million ounces of Gold, and imported over 1,000 metric tonnes of the yellow metal in preparation for the currency being internationalised. When that happens, the dollar will be replaced as an international reserve, and the price of all commodities will rise significantly.
People adapt to laws, and people use their ingenuity to sidestep legislation they deem unworkable, unjust or just plain not in their interests. The changes take effect over time as people adapt their behaviours, and it is changes like these that slowly affect the economy then the elastic snaps causing the unemployment we see today. A free currency system that allows people to use the monetary metals as they were intended, will raise all ships. But that will take the people by surprise as politicians and the media hide the realities from the people.
As Mao Tse Tung once cleverly stated – “A journey of a thousand miles, begins with a single step”
The battle between east and west may be bloody, and at its heart will be the value of money. A fiat currency like the dollar? Or one backed by precious metals, as used for upto 5,700years?
Until next time.
PS: You can read more on this topic in my e-book “The Coming Battle”.