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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I’ve been giving some thought to, Monopolies and Oligopolies and Geo-Politics recently.
Many economists will tell you that both Monopolies and Oligopolies are detrimental to the economy. Monopolies generally are not allowed to exist – and where they do exist, they are generally in state control. Mostly in countries with one-party or no-party apparatus, whether that be Fascist, or communist and for many reasons, these two regimes allow or enable them, and share one common thread.
Both state types seek to compel people to do or not do, things that are, or are not in their own best interests – depending on the “thing” we are referring to.
Communists disallow ownership, and vest almost everything in the state, while the Fascist country vests the wealth of the country in the hands of one or a few “wise men” who own the bulk of the productive assets, and tax the rest of the society to pay for things that are generally considered in the nation’s good.
Oligopolies are a slightly different matter.
These have a tendency to become cartels, where these organisations secretly work to protect their own interests, while apparently working for the good of the customer and the nation, it is obviously not competitive, so are not in the consumer’s interest, but governments quite like these because it makes taking policy decisions easier to implement, when they can get the heads of these half-dozen or so corporations in one room – after taking their advice of course.
Here in the UK, we have an oligopoly in the energy market, and for this reason it’s heavily regulated, though if the energy regulator wasn’t trying to get them to improve their customer service, they might be focussed on the thing, that consumers worry about more – prices.
But there’s another oligopolistic industry, and monopolistic practice that is at the root of many other problems in Western Societies.
Banking oligopolies, and Monopolistic Central Banks.
The Central Bank determines the supply of the currency, and the governments allow this, in its own self-interest. The government can pay its bills with money it doesn’t have, which it otherwise would have to tax from its taxpayers, instead it borrows from the bankers, and then has to pay interest, which steals from the citizens, silently through the process of price inflation.
But what it takes with one hand, it gives with the other, in higher stock-market values, and rising asset prices – which benefits those wealthier citizens, who own stocks, properties and other financial assets. This makes those on limited incomes fall further back in the “getting on the ladder” rungs of success.
It happens through the agents of the Central Bank, the major clearing Banks, who form an effective oligopoly linked into this nefarious practice, (also as their owners – as in this case – of the Federal Reserve) while the population are enslaved by debt-slavery, because their taxes are used to pay the interest of the debts to these banks, who buy these Treasuries, using money they don’t really have, but who get it from their paymaster – the Central Bank.
Of course, for all this to work, people have to keep their wealth in cash form, or invested in things that can be manipulated for the ends of the Bankers. – homes, the stock-market, bank deposits etc,
Of course, they would deny this… but as Mrs Margaret Thatcher once opined: “They would say that, wouldn’t they?”
But, once people begin saving their wealth in forms that can’t be taxed, or that the authorities – the government, and the Bankers can’t manipulate, governments and politicians begin to worry.
For example: Crypto-currencies are things that Bankers fear, because they don’t control them, and aren’t taxable – at least not yet. If you have these great. If you haven’t, then perhaps you ought to check them out at Qoinpro. After all, if you can’t beat ’em, then join ’em. And numerous Bank employees and senior executives are now buying into these in increasing amounts – in particular – Bitcoin.
After all, for hundreds of years, the Bankers have controlled the printing presses that gave them immense power over the country and its institutions.
It was President Andrew Jackson of the United States who commented that:
“Banks of issue, are more dangerous than standing armies”
And Thomas Jefferson, who said:
“Paper is poverty. It is not money, it is the ghost of money.”
So what did they mean? As I’ve previously explained, paper currency is a receipt for money, while real money is both Gold and Silver.
So, why do they fear them?
If we look back into history, a Bank Note once said with authority – “I promise to pay the bearer on demand the sum of …”
The missing words originally were the sum involved – ‘in Gold’, or ‘in Silver’ depending on the country of origin, or as the twenty dollar bill from the early 1900s stated: “There has been deposited twenty dollars in gold at the Federal Reserve”
And this prevented the Central Bankers from printing too many of them, unless they had the gold in the vaults to back that up. It meant they could only lend out “savings”.
But what they do now, is lend out debt – because there is no savings, or nowhere near enough at any rate. And when that happens, we are borrowing from our children’s future – Which is fine for investments that add to our stock of goods, but what about those debts used for holidays or other consumption services? And what if they can’t be re-paid?
It also means the taxpayers of the future – our children, and their children, will have to pay off these debts through higher taxation, or face a lower standard of living through reduced government services, and experience greater control of their lives by a centralising government.
All industries tend to grow towards having a few large entrants, before newer entrants change things and shake up the industry just as Tesla has shaken up the motor industry in the U.S..
As a further example: TESCO, the UK’s largest of the big 4 grocery retailers, has suffered recently in this fall-out, suffering a 50% share-price decline, as new entrant Aldi has grown its profits by 65%.
And to get to the geo-political issues, as ISIS rears its head in the middle-east, and Ukraine hots up, and once more unrest in Libya is raising its ugly head again, and now I hear two nuclear nations are on the brink of a conflagration, as Islam butts up against alternative lifestyles and religions. Many of these wars could embroil the west, and that will mean the amount of money the west needs to spend to fund its military activities, could be the straw that breaks the camel’s back. As stock markets have reeled in recent days, perhaps the market collapse that many predicted is already upon us.
And apparently the Indian and Pakistani peoples are on the verge of yet another major war between these two nuclear powers. And this is over a resource that neither can afford to lose – water.
Of course with both governments in dispute over the region of Kashmir, in the mountains of the north, the two governments came to an agreement over the Indus river many years ago, which allowed for both nations to tap into this resource which flows through the region, and they have already fought four wars over the territory.
But, since the agreement, both nation’s populations have risen exponentially. India now has a population of 1.2BILLION, while Pakistan has 178million. With senior figures in Pakistan now talking of Jihad, as India extracts more water, this is raising tensions, as Pakistan has only 30 days supply for the whole country.
The Indus river travels the whole length of Pakistan, from its source in Kashmir, to emerge near the Capital Karachi, on the west of the Indian subcontinent, and is responsible for 90% of Pakistan’s water needs. The river holds such a powerful drag on the nation’s minds, because it is used to generate electricity, and is responsible for 50% of Pakistan’s employment.
It could be used to trigger Pakistan’s “first use” policy, starting a nuclear war, given that many Pakistanis are affiliated to one of eight different radical Islamic organisations, who recently formed a joint committee of Jihad. Kashmir could well be that straw that breaks the world’s financial back, causing relations between allies to worsen, triggering a new world war.
Rising tensions and a nuclear war would be hugely detrimental to world economy and financial markets, as Pakistan and India fight over this precious liquid.
Prices of stock-markets would go into free-fall, as much as 40% almost overnight, and trigger losses on derivatives, which as some highly influential, and well-informed people now believe, is as much as 10 times the notional value of the world’s economy – or some 700 TRILLION American dollars.
If that happens, then the flight to safe haven assets will be huge, and if you don’t physically, own either Gold or Silver, your wealth could be totally eliminated. The world’s economy could be so badly damaged, that for a time supply chains break down, and Banking organisations suffer, like Bear Stearns and Lehman Brothers in 2008, reducing many corporations to pennies on the dollar as their chickens come homes to roost.
As a result, Indian Gold price premiums were as high as $50+ in 2012, despite government attempts to stem Gold imports, as the population eschewed rupees for Gold and Silver. Silver, now at prices not seen since 2009/10, could rise over its previous peak of circa $50, and take out a new all-time high.
As Warren Buffet, who has run Berkshire Hathaway since its inception, and where one share currently costs over $200,000, has been repeatedly quoted as saying in relation to markets: “Be fearful when others are greedy, and greedy when others are fearful.”
Now is the time to be greedy where silver is concerned as the world uses approximately 200 million ounces more than it produces. Sometime soon, those who cannot run their businesses without silver, will find they will have to cease operations because there isn’t any available, and the price will have to rise, to enable supply to increase.
And in 2013, not only have the Chinese and Russian Central Banks been buying Gold – But RUSSIAN Banks too bought 181.4 Tons of Gold in 2013. It was more than double that of Russia’s Central Bank additions in 2013.
The biggest buyers according to the Russian Finance Ministry include:
– Sberbank (48.5 tons),
– VTB (38.9 tons),
– Gazprombank (29.1 tons),
– Nomos Bank (19.6 tons),
– Lanta Bank (8.6 tons).
And if this has intrigued you, as to WHY? You can learn how these bankers over 2 centuries worked towards enslaving the people of Europe, Britain and America, in my book: “The Coming Battle – 2013” and you can learn how YOU can claim back your liberty.
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