An important anniversary slipped quietly by last month without any fanfare, on August 15th, as the anniversary of the day, that President Richard M Nixon, closed the Gold Window, and put the world on the path to financial armageddon.
From that day to this, the U.S. has essentially been able to print up as many dollars as it felt it needed to pay for things it wanted, and forced the rest of the world to accept “funny money” – aka. – Fiat Currency.
The fact that they were able to strengthen the dollar in 1973, temporarily when it convinced Saudi-Arabian leadership to accept an offer it could hardly refuse is still highly relevant…
America would back the House of Saud, with the full military might of its national forces, and the Kingdom of Saudi-Arabia (KSA), would accept only U.S. dollars for its oil, forcing dozens of other countries to trade for dollars, to pay for that oil, and the KSA, would re-invest those surplus dollars in Treasury Bills. Eventually the rest of OPEC would be forced to follow suit or commit commercial suicide.
Over the last 9 months, events in the precious metals markets and geo-political and economic circles, world-wide have been making headlines.
As geo-political tensions rise around the world, I wonder out aloud what is the end game. To learn where we are going, it’s important to know where we’ve been, and we have to look back 40+ years.
If we look at the ageing baby-boomers who are retiring in droves here in the west, (Of which I am one) and as our spending patterns change, we need to understand why this has such a big impact on economies.
In my experience, young people spend their money on a handful of things – Music, Fashion, Booze, travel and generally having fun, primarily in their pursuit of their partner in life – irrespective of their sexual proclivities.
As these people mature, they buy a bike/car, and their first flat or small starter home, and all the essentials of normal urban life – beds, tables, chairs, sofas, kitchen gadgets etc.
Then as they pair and begin to settle down, their partner now safely esconced in their home, perhaps 5 years have passed, and two incomes in one household means for a while they can experience a rise in social status and maybe buy a bigger home or have more expensive holidays. (though things are a little different in recent years as gap year students take the young to the far-flung corners of the globe.)
With women now making up more than half the working population in the west, women are now leaving “bonding” later, and perhaps seeking someone who meets and exceeds their expectations, and thus probably for professional women (i.e. those with degrees and/or professional qualifications) they’re leaving the having of children until they are in their early 30s, or as late as early 40s causing problems for over-stretched maternity departments, and over-stretched National Health Services, as increased age introduces greater risks and higher costs.
By their mid-thirties, people are climbing the corporate ladder, getting increases in pay, generally as their productivity rises in line with their experience.
Output on a national scale rises but this is only temporary unless higher investment in capital goods (new vehicles/machinery etc., that gets goods to market quicker, and/or cheaper) increases productivity further, these gains are not carried through indefinitely though. This is where political mistakes are made, as politicians think that the growth will continue.
As people hit their forties and early fifties, their willingness to learn unless pushed, seems diminished as they become experts in their field, just at the time newer technologies are adopted by the young first.
By the time people hit their mid 50s and early 60s, their abilities are beginning to decline; health issues begin to rise on average and national governments see a fall off in taxes, as some retire early, or die young – though the demands on their national budgets increase as improvements in health-care put additional burdens on national budgets.
Intermittent overseas wars also add to these burdens as those apparently with historical empires adopt the role of world policemen.
This adds further financial burdens on countries, and leads to overspending to maintain prestige, or to appease emotional electorates, or to maintain their leadership role, allowing those with more quiescent military to improve and begin spending in increasing amounts.
This was the nature of things in the west when Britain began losing its pre-eminence, and the U.S. took up the political and economic cudgels.
As a result, we now see the extent to which Britain, and America have over-spent in recent years, as the U.S. deficit grows to 105% of national income, and its budgets become overstretched as its military tentacles have extended now to over 145 countries.
The role of World policeman is an onerous one, and like all great empires this eventually causes a collapse at home, due to excessive spending as tribute (the term used by the Romans to refer to taxes) begins to lessen.
As demographics affects all economies, those with rising populations have greatest demand for housing, food, water and the other essentials of life, and when economics fails to meet those requirements, people look for scapegoats. Those with the most usually get the most scrutiny and criticism.
But to get back to the title of this piece, where will this ultimately lead us?
As Vladimir Putin, and Xi Jinping, grow their economies, and grow increasingly wary of U.S. dollar hegemony their actions have consequences for all of us.
China has in recent years agreed bi-lateral trade deals with a rising number of countries to reduce the dollar from its trading, and China in particular has used its excess dollar reserves to buy increasing amounts of Gold and Silver, and overseas resource assets with precious metals and other precious resources for its industries.
Russia too has sought to lessen its dependence on dollars, and the BRICS Development Bank recently announced, will wean these emerging economies off the dollar as the $100billion in Capital gets used to help out economies in difficulties. Will some of this capital be used to buy Precious Metals? It would appear so, as China now trades more Silver in physical metal form, than the COMEX, the former leader in precious metals derivatives trading.
This will ultimately lead to a dollar collapse, and like a wounded animal, this may lead to the U.S. lashing out to protect its interests, as it has been in the middle-east and in Ukraine, where fights to protect access to middle-eastern oil, paid for with dollars, and for access to Ukrainian agricultural land are being waged by proxy military. But the collapse of the dollar unless mitigated by the increasing energy production, may cause the whole world economic woes, or worse.
This involvement in the middle-east has caused many of the problems as those with a different view of the world seek to eliminate western ideologies from their countries. These skirmishes though, may grow to encompass those other major economies – China and Russia.
James Dines, the economic mind behind the Dines Letter and Dr Paul Craig Roberts former adviser to Ronald Reagan, also thinks that we are on the verge of a major conflagration and James Rickards a CIA adviser on financial matters, in a recent interview claims the U.S. is staring down the barrel of an economic gun.
But also in January 2014, the United States government entered into a deferred prosecution agreement with JPMorgan Chase which is the biggest bank in the United States and one of if not THE biggest banks in the world giving those who have benefitted most from the financial mess the U.S. has gotten itself into essentially a free pass.
The recent prosecutions of Financial Institutions has resulted in fines being paid, and JPM – probably the biggest offender, has paid approximately $29 billion in fines – yet not one senior banker has done any jail time.
When Janet Yellen begins the next round of Quantitative Easing (which might be called something else) all hell will break loose in the precious metals markets.
Buying Silver… Why NOW?
The reasons are not so obvious.
Silver is collectively, a monetary metal, an investment vehicle, and an industrial material.
Silver’s role in international finance has been prominent over several millennia, as this shiniest of metals was used in Roman currency, and only when Emperors devalued the money by reducing the silver content of coins, did they suffer the wrath of the people. (See: The Coming Battle – 2013)
Industrially, silver is the most widely used commodity on the planet, reputedly used in 10,000 applications and rising. Second only to oil in importance, but its price has been walked lower for decades, as silver was first taken from its pre-eminent role in both American and Chinese money with its removal from the dollar, to junior partner, to minimalist role, and finally in 1964 to negligible role as U.S. currency removed the last remnants of the metal from American currency.
Is it significant, that just 7 years later, on August 15th 1971, the last vestige of precious metals, was removed from the American financial system?
If the death of President Kennedy, and Louise Auchincloss Boyer are anything to go by, I think so.
But silver’s western denouement, means that the East has been able to accumulate this most precious of precious industrial commodities at prices unlikely to be seen again, after this financial collapse begins in earnest.
Silver historically was bought in ratios circa 16:1, compared to gold. We see evidence of this still all around us – 16 ounces to the pound, in the U.S. – 16 fluid ounces to the Pint and this ratio has varied in recent years as silver’s role in monetary matters has been slowly extracted, but its time will come again – it always does…
And with the current Silver/Gold ratio of circa 65:1 when it does go up, because it currently comes from the earth at circa a 9:1 ratio, then its rise will be meteoric.
And if that wasn’t reason enough to be accumulating…
These links should help you make up your mind…
And this page shows you were you can STILL buy silver coins and bars at VAT free prices, and have them discreetly shipped to your door.
And you can get further news on these matters at:
“The financial illiteracy of the uneducated lower classes and the willful ignorance of the supposedly highly educated classes has never been more evident than when examining the concept of Federal Reserve created currency debasement – also known as inflation.
The insidious central banker created monetary inflation is the cause of all the ills in our warped, deformed, rigged financialized economic system.
The outright manipulation and falsity of government reported economic data is designed to obscure the truth and keep the populace unaware of the deception being executed by the owners of this country. They have utilized deceit, falsification, propaganda and outright lies to mislead the public about the true picture of the disastrous financial condition in this country.”
– James Quinn
James Quinn is a Senior Director of Strategic Planning for a major university. He has held financial positions with a retailer, a homebuilder and university in his 25-year career. He earned a BSc in Accounting from Drexel University and an MBA from Villanova University. He is a Certified Public Accountant (CPA).
Do James Quinn’s comments make you see red? Either for or against Bankers who buy politicians, and manipulate reality, to suit themselves?
If so… Do you want revenge on the Bankers?
Well to do that, the short answer is to get a whole lot more money than you currently have.
Are you asking: “How do I do that?”
Depending on where you’re starting from, that can be a lot easier than you think.
It’s a truism, that to become rich, you have to spend less than you earn, and invest the difference. If you have excess finance, in a low interest environment, it can pay to borrow to invest, and use the additional leverage to make money faster. Provided you can get a better return than the cost of borrowing. (But you have to watch borrowing costs carefully, as things can change quickly.)
And, it doesn’t matter how much you earn, it all starts with savings. BUT if the value of your savings are being stolen, time after time, by Central Bank induced price inflation, then what better revenge on those central bankers than to become rich using the very things that they seek to hold from you.
Twenty Five years ago, I was a Business Studies Lecturer in several Community Colleges, before the technology bug bit me, and I moved into the field of Computing, building PCs, PC Networks, and eventually writing Software in over 33 different computing languages and variants. I even went on to work at Dell Headquarters in Roundrock near Austin, Texas. However, about the same time I began teaching, a fourteen year old school-kid found an old Golf Cart in Wisconsin, abandoned from a nearby Golf resort, and the birth of a new technology had found its roots.
Like many 14yr old boys, J. B. Straubel, began playing about with this old vehicle, and “tinkering”; like I did at a similar age, when I bought a second hand Motor-Scooter to ride off-road on the local wasteground near my home. But, Straubel, was no ordinary kid. This boy was to become a technology genius.
The abandoned golf kart, had an 11 brake horse power motor, and a flat out top-speed of 15mph (24kph), if you took it on the open road; and like many teenagers enamored with their latest vehicle… Straubel asked the question, “How can I make it better; go faster?”
Straubel’s tinkering, resulted in him retro-fitting a “micro-turbine” and a high-speed flywheel, to assist in re-charging the battery, and this tinkering, eventually led him to two technology giants – the Rosen Brothers.
Harold Rosen, and his brother Ben.
Harold Rosen, is an aeronautical engineer, who had been instrumental in launching America’s first geo-stationary orbital satellite, in 1963.
Ben Rosen, had been the Chairman of Compaq Computers. Together they funnelled money to Straubel who by now had a Bachelor’s Degree in Energy Systems Engineering and a Master’s Degree in Energy Engineering from Stanford University, and a $24million research project. This led to the development of a Gas-turbine engine, which was coupled with a hybrid power-train with an energy storage sub-system that used regenerative braking. In plain English – A Hydrogen powered fuel-cell, with Batteries to store the energy which is also generated by the braking system.
This technology is expected to double the range of existing technologies, and uses can be found in the military sphere. The Company founded to produce this technology was Volacom, which Boeing eventually bought.
However, the technology led to NASA’s Phantom Eye project, which led to development of a Hydrogen Powered Aircraft, whereby an un-manned aerial vehicle could fly to 65,000 feet, and stay airborne for FOUR WHOLE DAYS! Imagine the military uses for an aerial vehicle that can stay aloft for that long? Weather Reports? Reconnaisance? Spy-Cameras? And no pilots to be shot down… And that was just the start…
The Phantom Eye project from NASA, led to a project codenamed “Vulture” which led to the development of a similar vehicle, but this time Solar-powered, that will fly to 90,000 feet and stay afloat for FIVE WHOLE YEARS… Now imagine the possibilities of THAT?
Straubel even went on to turn an old Porsche 944, from the 1980s into an electric vehicle, and briefly claimed the world record, for an electric vehicle using it.
But where is all this technology taking us?
In order for TESLA Motors, (TSLA:NYSE) to achieve their goals, to produce an electric car for the masses, they will have to get the price down to around $30,000. (circa £18,000)
To do that, they will need to build around half a million vehicles a year, at their so-called “Gigafactory”, and that’s where J. B. Straubel comes in.
Most of the patents filed by TESLA, have Straubel’s name on them, not CEO Elon Musk’s. Straubel is co-founder, and their Chief Technology Officer, and their Gigafactory whose intended location is still to be disclosed will be announced later this year, using many of these technologies.
But for TESLA to achieve the price they want, they will have to use every trick in their VERY extensive technological book, to reduce costs – Solar Power for the plant; huge land expanse, Lithium and Graphite close by, rail links, nearby technical staff, and of course all the materials to build the plant, and get materials into and finished cars out of the plant with ease. That means a rail main-line nearby, with an access raillink. It means rolling stock, and the weather needs to be just right – with 300+ days of sunshine per year.
The list of TESLA’s suppliers is not long, but it is long enough. And if their new factory achieves its goals, and TSLA achieves its production and other targets, these suppliers will all make huge sums from their order book.
TESLA Motors’ Known Suppliers:
Hitachi Cable America
Zanini Auto Group
and of course TESLA themselves.
The above companies supply everything from disks and disk brake-pads, springs for suspension, tail-gate lift suspension arms, high-tech radio equipment, mirrors, cables and heat management units for the batteries. And currently these batteries are produced by Panasonic.
BUT there’s something that is not mentioned in this list of all this equipment… WHO Supplies the Lithium Carbonate for the Lithium-Ion batteries?
Or who delivers the batteries, and with freight costs for the Lithium for the batteries a big piece of the overall price, with each battery pack weighing upwards of 1300 lbs, keeping the distance between supply and final end use to a minimum will be a serious cost saving? BUT, what if the company supplying the Lithium has the lowest costs of production, large resources, and has access to large resources of Graphite – and you need 4 times as much Graphite as you do Lithium to make a Li-ion battery?
Graphite is four times more conductive than copper, and the Li-ion batteries rely on a thin graphite polymer film sheet, that can withstand temperatures that reach upto 400 degrees celcius (752° F).
There is one American Tech Company, which is, the same company that produced the Graphene shield (made from graphite) that shielded the Mars Rover that NASA recently landed on the moon that may become one of these suppliers.
This company holds many patents for a huge array of Graphene based technologies, and Graphene is 200x stronger than steel. So strong you could balance an elephant on a pencil on one sheet, and it would hold up. And so light it will revolutionise aircraft design. And that company is? Graftech International (GTI:NYSE).
Of course, the U.S. Geological Survey team already knows about 5.5million tons of Lithium, in the U.S., and just last year, in Wyoming, the University of Wyoming found 18million tons of Lithium, equivalent to about 720 years of current global lithium production.
But also, one North American based Corporation, has a Joint Venture with a British Company, who have recently found a considerable Lithium resource close to where it will be needed and the British Company owns 30% of the resource figures of 119,921,000 tonnes, at a 1.66% Lithium Carbonate Equivalent (LCE) giving 3.28 million tonnes, meaning this small Canadian Corporation owns the other 70%, and this company, as of 4th June, trades for less than one dollar with its price already up 538 per-cent from its year low.
That company is Bacanora Minerals Ltd (“Bacanora” – BCN:TSX).
And with TESLA set to announce the location of its Gigafactory later this year, and to build the infrastructure to build 500,000 electric vehicles per year by 2017, this means, this company’s share price is ready to pop further.
Rare Earth Minerals Plc (LSE AIM: REM) the British company just mentioned, has an option to purchase upto 49% of the project, and recently announced that the Mineral Resource for the Sonora Lithium Project in northern Mexico has increased by 37% to a new total of 3.28 million tonnes of Lithium Carbonate Equivalent (“LCE”) and has been upgraded from the Inferred to Indicated category. A Preliminary Economic Assessment (PEA) will now be carried out, and this will determine if the economics work out, but it will also give plenty of opportunities to buy at low prices, if as I suspect, a major stock-market downturn is not that far away – just about as soon as interest rates start climbing, to rein in inflation over 5% p.a. – though that may be several years away.
This corporation also has another mineral resource with a pilot plant in operation to test the potential of producing Boric Acid, which is used in hundreds of applications, and is likely to generate more income from the resource.
However, there are also lithium reserves at Rockwood Holdings’ (NYSE:ROC) Silver Peak site in Nevada which has an estimated total of 118,000 tons of Lithium in a 20-square mile area; Rockwood is also one of the world’s leading producers of Lithium Hydroxide.
And you better be ready soon, because Jim Rickards is CONVINCED, that as the old saw goes: “The End Is Nigh.” Some extraneous event will trigger the collapse. No-one really knows what that could be, but we can take a few wild guesses – Ukraine spiralling out of control, or a huge new event in middle-eastern politics, or even a military spat between China and Japan, or similar. And China recently sank a Vietnamese fishing vessel fishing in the South-China Sea. Could an event such as this trigger events between East and West? Just such an event instigated by an angry Serb, who shot Archduke Ferdinand, in modern day Bosnia, caused the start of the first world war, due to the number of cross-border alliances.
And if you’re not ready, then there is precious little time left.
As I recently said and as Miles Frankin has echoed – American “exceptionalism,” may be the death of us.
For those keen to learn a little more about crypto-currencies, and hear a debate between those for and those against watch this.
And for those looking to maybe dip a toe in the water and get some crypto-currency – go here —>>> http://qoinpro.com
And we know that Russia is taking its own revenge as they unload U.S. Treasuries. Unknown to the world until recently was what they were doing with their money. Well now we know. According to Billionaire Eric Sprott, here’s what he had to say in a May 28th report…
“Since the economic crisis began, Russia has unloaded an estimated $50 billion in U.S. Treasuries.
Until recently, investors were unsure of what Russia would do with the proceeds of them. Last week, the Central Bank of Russia shed some light on that question when it disclosed that it acquired an additional 900,000 ounces of gold in the month of April.
This brought Russian gold holdings to 34.4 million ounces, making it a major and actively growing player in the world gold market.
Since 2006, Russia has been acquiring the yellow metal at a rapid rate.
On average, they have been adding 0.5 million ounces per month to their reserves, as seen in the chart below.”
|Russian Gold Reserves – Source – Eric Sprott of Sprott Money|
And if you think that the recent price fall of Gold and Silver over the last 2+ years portends what is to come, then perhaps you ought to check out a chart I posted in a previous post, that showed how the Gold price responded in the 1970s. Two major arcs from the late 1960s, to early 1980.
Are we seeing the same processes played out, but over a longer timescale, as the baby-boomer generation retire, and in retiring, their pension companies sell their investment portfolios, to raise the capital to pay the income, or to buy the annuity. That constant drip drip of selling – 10,000 per day in the U.S. alone, and a similar number in Europe, is the driver of the stock markets in the absence of Central Bank Quantitative Easing. As Fed QE is tapered, this trend may re-assert itself.
Once the number of pensioners retiring begins to fall – circa 2018 to 2019, then we should see inflation beginning to rise – possibly precipitously.
Just like in 1978. The time to buy any silver or Gold will be in the next year or so, to sock it away ready for the J-Curve, I mentioned in one of my posts last year.
And if you want some Silver or Gold, then here’s a great way to buy it, as the price reaches its interim lows. Liberty Silver
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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