Demise of the Dollar

Chinese Torture?

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Anyone over 50 (at least in the UK.) will no doubt have learned of so-called Chinese Water Torture, which was discussed in the playgrounds of schools the length and breadth of the country during the 50s, and 60s – perhaps this misplaced discussion was just childish minds being over imaginative, or the result of the war films that were the standard fare of the era, or perhaps just the result of propaganda by a biased media, or just by ill-educated professionals, who had been mis-informed and we juniors picked up on it – we can but speculate.

According to the stuff of legend, this involves suspending a bucket or other recepticle full of water in which a small hole has been punctured, such that water will drip out at a fairly consistent rate over a fairly lengthy period of time.

The torture victim, is placed under this recepticle, and strapped in a fixed position. The slow but monotonous dripping, at first appears to offer no threat to the intended victim, but over time, first becomes an inconvenience, then a minor irritation, then an annoyance, then a major irritation, then downright torturous.

The slow drip, drip, drip, ratchets up the pressure on the intended victim…

Applying the Torture?



So, this analogy brings me to the reason for this tortuous piece.

As I wrote some weeks ago, China informed the world, back in May, that they had improved their Gold holdings over the previous six years from April 2009 at 1,065 tonnes to 1,658 tonnes (allegedly – since many commentators think this was significantly under-reported)

According to reports, China announced it had purchased an additional 19 tonnes in July, but news released a few days ago, says they have also now added an additional 16 tonnes in August. This now brings their total to 1,693 tonnes, and according to silverdoctors.com, they’ve imported “a whopping 112 tonnes” so far in the first half of this year from the LBMA, up from the 110tonnes in the whole of 2014.

So is this “Drip, Drip” of additional purchases the equivalent of the torture method mentioned earlier for the FEDs?

China sold some $94 Billion in Treasury Bills, which might also be sending a signal to those in the non-BRICS Banking world.

And according to Alisdair Macleod, who referenced a Zero Hedge article, he said that if nothing else, it confirms the gold market is plagued by disinformation, not limited to Comex. Besides the conflict between the bears in the futures market and the physical bulls, on one day we are told of record Indian gold and silver imports at 126 and 1,400 tonnes respectively for the month of August (Koos Jansen), and of Indian gold demand “remaining weak” (HSBC). The former is a hard number, the latter an opinion, but it is opinions that are quoted most in the mainstream market commentaries.

Also in August, Chinese public demand reported on the Shanghai Gold Exchange totalled 265 tonnes, so between India and China identified demand exceeded the world’s monthly mine output by about 56% – Over half. Given anecdotal evidence of increasing physical demand from elsewhere in Asia and also in western markets by the general public, the drainage of physical gold previously available to cover futures and forward contracts, as well as unallocated bullion bank accounts is at very high levels. No wonder there is so little registered gold in the Comex vaults.

Alisdair Macleod September 3rd 2015, interview…

Now we hear via Jim Willie interviews, that the Tianjin explosion, may MAY, have been a Langley (i.e. CIA) inspired or managed incident. Remember, this was in an industrial park, port, and the home of a chinese super-computer, which according to JW, managed not only financial transactions of the emerging Chinese Banking and Financial Services Industries, but Chinese Military, and with a footprint of 1,000 square feet is HUGE. Within days of the explosion, the whole of the North-East of the U.S. Airline databases went down. Was this a revenge attack by Chinese hackers? We shall never really know, but we can speculate.

As things stand, the British, German and American Financiers, who essentially rule western industry and politics, will have control wrested from them, when the Chinese wrest control of the Gold market, and Precious Metals are priced in Yuan/Renminbi (RMB) and Chinese currency will be required in most trade deals, and many east-asian nations may, MAY only accept Renminbi for their products, and that will help seal the fate of the dollar.

As things stand now, 32 nations have currency swap facilities with China in Chinese currency, as I suggested some months ago, when Saudi-Arabia began discussing oil deals with China, as a way of balancing the emergence of the changes in the oil markets which have driven down oil prices largely because of fracking, and deep water production made possible by cheap money loaned out in the form of Corporate Bonds, we may see oil wars, but therein lies the problem.

As oil prices have collapsed from their 2007 high of $147/barrel, those corporate bonds, and finance raised to drill for shale oil, will come due, and many of those companies, are now struggling to make money. According to Jim Willie, the oil bond market collapse could be greater than the sub-prime crisis, that exploded onto our screens in 2008.

And at this particular point in time, the world credit markets stand on $700 TRILLION worth of derivatives. When the derivatives market collapses, perhaps as a result of those oil bonds, we could be seeing the end of the dollar empire, and thus the end of Western hegemony.

But this is of course all speculation…

However, when this collapse happens those who have savings in Banks, Savings in Stocks, Savings in Pension Funds, IRAs, SIPPs and bonds, will all suffer. When all those savings – excess savings as “Conant” once in the late 1890s called them, sought out productive assets overseas, in the round advocating a dollar Empire in the process, rush for the exits, from assets with counter-party risk, to assets with none, then the long awaited price reset in Precious Metals will begin.

And this price reset, will cause a spike in metals prices as many of those manipulators, who are currently shorting the price using leveraged shorts in such products as ETFs, ETPs, Options, Covered Warrants, CFDs, Spread-Betting accounts, and Binary options accounts, will all be rushing for the exits at the same time.

And where will the carnage lead them? To the one asset class with no counter-party risk.

Have you got yours yet? The sand in the hour-glass may be fast running out, as reports emerge of severe shortages in small denomination coins and bars. 100 Kilo bars are still plentiful in Silver, and larger bars. This may be a fabrication issue – i.e. refineries struggling to keep up with coin and small bar demand, or it may be that there is an emerging shortage of silver in the supply chain. If you were a miner, would you sell your ore into a falling market?

Remember, no-one will sound the bell identifying that now is the time to act. If you haven’t already begun to prepare, time may be fast running out.

It will be prudent too if Jim Rickards and Bill Bonner are correct, who have been following this inevitable crisis from its inception in the 1970s to its current conclusion, advise us to take currency from our bank account, and keep it outside the banking system, while we still can. About a month’s currency should suffice.

The banking crisis in Cyprus, in 2013, and Greece in 2014/15 were just stepping stones on the way to this one. Legislative changes forcing European Banks to seize their depositors’ currency rather than hit tax-payers for another bailout have been put in place. The digits on the banks ledgers are now theirs, not yours. You have been warned.

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WHY has the Gold price NOT Risen exponentially – YET?

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BoE

Central Bank Manipulations?

The reason Gold has not exploded yet, is because Gold as a physical asset, is undervalued in the West (in general), and highly valued in the East for historical reasons. (Partly as a result of Western Central Banks, having too much power, and thus ensuring regulation gets passed to limit Gold’s usefulness as a store of wealth and partly, because the Chinese had their education in paper currency back in the 11th Century, and others in the Far-East had their education more recently, with the currency crises of the late 1990s.)

As Gold heads east, it is in the interests of those who wish to accumulate it, to play devil’s advocate and allow the manipulations to continue. As I stated in my last post, both Russia and China, are unimpressed that when they sell goods on International Markets, they receive a depreciating currency, that can be conjured up out of thin-air [or to be more accurate – digits on a computer] by its manipulators…

When the Tide goes out (to borrow a phrase used by Warren Buffet) i.e. When Gold becomes part of the process for settling International Trade again, then we will see who is wearing no shorts – (i.e. a fast-reversal back to Bretton-Woods) i.e. which countries, are spending more than they earn – Internationally speaking – and who is managing their economy well, by exchanging physical goods, for physical goods (in the form of physical Gold, or a gold backed currency which can be exchanged for Gold)

China’s approach is therefore like an aeroplane coming into land, and on the approach path to forcing the world’s trading nations to stop using currency inflation to buy up scarce natural resources, and Gold will at that time achieve its real value.

That time will happen when the first country breaks ranks, and demands Gold for its goods, and has enough Gold to withstand a draw of its currency for International Trade, and the only country that comes even close to that is China (and perhaps Russia) and therefore when China finally – officially – releases its Gold holdings – which Pravda in a recent article suggested was 30,000 tonnes, (because they have re-smelted their Gold, and re-cast it into 1Kg bars) then the value of Gold will achieve the exponential rise we have all been expecting.

By end 2015, China, has to float its currency, (WTO regulations) so perhaps is hedging its bets, by holding huge Gold reserves to act as a floor under the value of their currency. Reference – http://english.pravda.ru/news/business/21-05-2015/130683-china-0/

That to me makes perfect sense. It will also mean those countries of Africa, South America and other developing nations, who sell raw materials, will experience rapid rises in living standards, and many will end up paying their political masters huge sums, unless the corruption that has been endemic in some of those countries, suddenly vanishes. (Just as happened during the 1970s which may in itself cause other problems as it did, during the decade and the one following.)

Of course, the poor westerner, will experience rapid price inflation for all their most important needs. And those countries who use the American Dollar as their currency system, would be well advised to consider a replacement.

Food, and raw materials, such as oil, gas, copper, tin, lead, zinc, and precious metals, too will all be more highly valued.

Those with good stores of these commodities, will flourish, those who depend on government largesse for their income, will not fare so well.

And paying for things internationally, will require some form of internationally accepted money – one I have been reading quite a bit about in recent weeks is BitGold.

This manages to marry the best of both crypto-currencies, and precious metals.

To widen your reading and viewing material, you might like to visit these channels on You-tube, and search terms and web-sites.

Recommended YouTube Channels:
SGTReport,
TheDailyCoin,
SilverDoctors,
ChrisMartensondotcom,
USAWatchDog,
X22Report,
AMTV,
TruthNeverTold,
SchiffReport,
BrotherJohnF,
Ron Gibson – WhatReallyHappened 2015 (Mike Rivero),
Gregory Mannarino,
FinanceandLiberty,
HyperReport,
Mike Maloney – GoldSilver.com – WealthCycles,
GoldSeek,
RT BoomBust,
RT KeiserReport,
NextNewsNetwork,
Cambridge House,
TrendsJournal.

YouTube Search Key Words:
Dollar Collapse,
Dr. Paul Craig Roberts,
Alasdair Macleod,
James Turk,
Chris Powell,
Jim Murphy (GATA),
G. Edward Griffin,
Peter Schiff,
Marc Faber,
Jim Grant,
Jim Rogers,
Rob Kirby,
Jim Sinclair,
David Morgan,
John Williams, (or Shadowstats.com)
Catherine Austin Fitts,
Bill Holter,
Ellen Brown,
Nomi Prins,
Andrew Hoffman,
Ron Paul,
Axel Merk,
John Rubino,
Mike Maloney,
Jim Willie,
HiddenSecretsOfMoney.

HIGHLY RECOMMEND:
ZEROHEDGE.COM

W.

A New Russian Winter, or the Calm before the Storm?

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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.

We’re all slaves now…

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Over the previous weekend, I bought a DVD, of a film, I’d been hoping to watch for some time. I would have gone to the cinema, but my wife prefers Rom-Coms, to historical dramas, and my friends all live disparate lives, so I had to watch it home alone.

It featured that giant of the acting world – Daniel Day-Lewis, in a role he was nominated, and won an Oscar for, having been directed by Steven Spielberg – Lincoln.

The film tells the story of Lincoln’s finals months, as he negotiated with the Confederates who were on the point of being beaten in the Civil War, and also with his own Congress to add the 13th amendment to the constitution. Sally Field played his wife, and her part conveyed the pain that she and Lincoln had to endure as their sons enlisted, or were killed, and as his wife blamed him for their loss.

The 13th amendment effectively brought an end to slavery, and set forth the proposition, that all men were created equal in the eyes of the law, and thus the ownership of another human was contrary to God’s Laws.

The final debates took part in January, and after some political back-slapping and chicanery; The vote, took place, if the film was at all accurate, on 31st January 1865 – almost exactly 150 years ago. The Civil War ended barely three months later and the peace treaty was signed in April of that year.

I mention this, because as a resident and citizen of the U.K, like so many U.S. citizens, the politicians have so indebted us, as to effectively make us all debt slaves to the banksters.

When a Central Bank creates money out of thin-air, to buy up assets, the Bank owners effectively are able to buy assets on the cheap, that they can either sell later at inflated prices, or use to earn income from as a “Rentier”. Bonds being the case in point.

The term “rentier” derived from the French term just prior to the French Revolution, when the various kings, but especially King Louis XVI granted privileges to certain nobility and others who were similarly closely connected to the money power. These privileges granted (for example) the right to collect a toll on a bridge, river crossing or road.

The right to be the monopoly supplier and thus to extract monopoly profits from the citizenry, who became increasingly disenfranchised, dissolute and the poorer while the idle rich were kept in the lifestyles to which they felt obligated.

However, these changes over time, slowly strangled the economy to the point where free trade was stifled. To paraphrase Mrs Thatcher who once intoned something akin to – “They know the price of everything, and the value of nothing.”

These changes ultimately led up to the Revolution, and the former wife of the king – Marie Antoinette issuing her now infamous phrase. When she asked the king why the people were revolting – his reply was “they have no bread” (or words to that affect) to which her reply has become the stuff of legend: “Well let them eat cake.”, though historians suggest this was just “journalistic cliché”

Although these events were important, it wasn’t the real source of the revolution – that was probably because of the financial situation. John Law, a Scot, had introduced in the early 18th century a financial system that inflated land and property prices, disenfranchising those without property, though the economy was also not healthy due to poor harvests, rising food prices, and an inadequate transportation system (due to those privileges mentioned) that made transporting of goods costly and therefore food even more expensive.

The sequence of events leading to the revolution involved the national government’s virtual bankruptcy due to its poor taxation system and the mounting debts caused by numerous large wars between the British and the French.

However, the Americans too once were being bled dry by over taxing authorities in the form of taxes from King George III, and this led ultimately to the Boston Tea Party, where British Cargo Ships were boarded in the dark of the night, and their cargoes of tea bound for England were thrown overboard into Boston Harbour. Thus began the American Revolution.

Which leads me to today.

In the world of offshore asset protection and personal finance, you nearly always come across the claim that there are only two countries that actively tax their residents’ worldwide income: the United States and Eritrea. All other countries only tax income earned at home, though the UK is making steps in that direction.

But, that rule is apparently no longer true.

It turns out that in the early 1990s, Chinese tax officials went on a series of fact-finding missions around the world. One team enjoyed what The New York Times describes as a “long visit” with the IRS, and came away with “a two-volume bound copy of the U.S. tax code and a five-volume copy of I.R.S. regulations.”

After reviewing the materials, the Chinese government decided to write a tax code that would allow them to tax their residents’ worldwide income … the only problem is, they had no idea how to enforce it. And then FATCA came along. Now China knows how to achieve the same.

And given the recent spending on saving American, and other nation’s Banks, the Federal Reserve, have now indebted the people of America and the customers of Europe’s bailed out Banks, to the tune of more than $30 trillion.

With just 325 million Americans, and according to recent evidence, only 63% of the population actively engaged in the workforce, paying that debt has only two possible outcomes – little possibility, and no possibility.

Roughly, 180 million taxpayers, will need to pay almost $95,000.00 each, plus interest (whenever interest rates begin to rise) to pay down this debt, and that’s before any further spending by the successors to Obama’s legacy, or of the unfunded liabilities in medicare, medicaid, pensions or social care.

This indebtedness, is the basis of modern slavery. The UK debt per household is not quite as bad, but is bad enough. the last time I calculated it, it was a mere £76,000 per household of four, but when you break it down to taxpayers, it goes way up.

So you can be forgiven for trying to protect yourself. In the years that follow, I expect governments on both sides of the Atlantic to come after retirees pension pots. We hear so much of how political parties have learned their lessons in regards to spending, but people have short memories, and the parties have too often broken promises, then asked for forgiveness afterwards.

But, one of the ways that you can protect yourself, is with precious metals.

I know, you’ve probably heard this too many times over the last 15 years… You’re probably thinking – “What makes you think precious metals are the answer? “, or “Yeah, right!”.

In the last 15 years, Central Banks have again begun buying Gold, after 30+ years of sales, and falling interest rates, many have asked for their Gold back – Venezuela, Holland, Austria, Germany, or asked to audit their holdings – like Australia.

China has been buying up Gold like there is no tomorrow. India, has historically been the world’s largest buyer, but this has now been overtaken by China’s insatiable lust. And China has been covertly buying from its wholly owned miners, as well as using its huge dollar reserves to buy on the open market, as the Gold price has fallen from its high of 2011.

In fact Jim Rickards has mentioned that he believes that the intention is to protect its huge dollar reserves as the expected dollar collapse occurs, and they’re buying using the dollars they’ve earned selling to the U.S., and loaned the U.S. buying up the Treasury Bonds that have been issued over the last 8+ years but it appears they are now, along with Russia, net sellers of Bonds, and as Jeff Opdyke, Investment Director of Sovereign Society has regularly posted, when China announces its official holdings to the world – all hell will break loose. (though that was done last year in 2015, and to little fanfare)

Because now, they’re increasingly worried about the value of those dollar bonds, and as so many attest, the Chinese are masters of the long game.

It is even possible that China, through the BRICS Development Bank, which Britain recently joined, is seeking to back its currency (at least partially) with Gold, giving it the status that the U.S. has hitherto had.

As inflation begins to pick up in the years ahead, the urge to buy gold, to protect large dollar holdings, will gain traction, and all assets that rise in value with inflation will be chosen as the protection of last resort. But any asset that is the liability of someone else, that may fall to zero, will be sold. And what happens to any asset when everyone wants to sell at the same time?

As interest rates rise, loans will get more expensive, Bond values will fall, and loans will get called in.

Asset values, secured against loans, such as mortgages on property, will fall in value, just as they did in 2008, and that will mean we are back where we were in the “Lehman moment”. Except now, the debt load worldwide, has risen to such a size, that there is no-one big enough to bail out the Central Banks of the world.

Then governments will do what they have always done – seize their citizen’s wealth. (Chancellor Denis Healey famously remarked, he would ” Tax the Rich, until the pips squeaked.” in 1974)

Banks that fail, will seize their depositors money – Cyprus times ten – and Deposit Insurance will not be enough to save the Bank or its Depositors – too Big to fail.

Only precious metals held in the hands, or in secure vaults as custodian assets in safe political environments, with a history of ensuring the sanctity of custody and ownership – not deposit boxes, which governments have now legislated are Bank’s assets, will be safe.

Overseas held precious metals miners too, will mean an opportunity to increase your wealth as the coming collapse unfolds.

One junior miner with assets in at least four countries in Africa, with 18% of a Diamond mine in South-Africa, a 75% ownership of a Nickel mine and smelter in Zimbabwe, a similar ownership of a Gold mine and refinery in the same country, Diamond assets in Angola, and a growing asset base in Democratic Republic of Congo, with a huge gold-copper find there.

To-date, this 9 kilometre rift has only had 3 kilometres explored, and already 2.9 million ounces have been defined as a resource. This miner has a P/E of just 4 (meaning the company earned a quarter of its share value in one year)

Anyone, who has studied markets for any length of time, knows that on average a healthy PE ratio of about 15 is considered normal. Values in excess of 20 are considered expensive, and values below 10, are considered cheap. So a value of 4, means that if the value of the company increases 3 fold, it would still be cheap. I’ll leave you to draw your own conclusions…

And this mysterious company is? ASA Resources on two exchanges – London (AIM: ASA.L) and was  targetted for a hostile takeover, when its board were removed, and its name changed from Mwana Africa (MWA.L).

Of course, this is not a recommendation to purchase, but perhaps an instigation to do your own research…

And if silver is more your thing… One company I have followed for several years which to be honest has only just managed to survive the onslaught of the falling silver prices from the highs of 2011 down to the current silver price of around $16 might be worth your investment research. For many silver miners, the current silver price is below operating costs, but this miner, which was a producer for several years using a toll-mill agreement (i.e. Leasing someone else’s mill and smelter) has managed to survive after divesting itself of some assets, after a failed financing agreement had to be called in and payments went unmade.

There are many, who feel that the silver price, that has fallen so low, will equal the price of gold, as Silver’s industrial uses rise, silver has a wide range of applications. It is found in jewelry, electronics, batteries, mirrors, solar energy, and water purification, just to name a few (10,000 and rising) and the amount of available silver falls. Seventy five years ago, as U.S. president FDR, confiscated that nation’s silver (and Gold), the above ground stocks of precious metals had a 5:1 ratio in favour of silver. In 2013, that ratio had totally reversed, and there was now a 5:1 ratio in favour of gold. Furthermore, there are those who think we may run out of available mine-able silver – TOTALLY – by the mid 2020’s.

Silver is used in small amounts, so small, that recycling would be so costly as to make it almost impossible to achieve economically. And we currently use circa 680 million ounces each year. Though demand in recent years has risen so far, and so fast, with U.S. Silver Dollar Eagle sales rising to previously unheard of levels, that the current price of silver, which is widely believed to be manipulated to protect the dollar hegemony is likely to rise spectacularly, when the price can no longer be held down.

There are a number of reasons why silver may begin its meteoric rise this year. It has already risen from the low $14.00 range to $17, and most of that came in short bursts in February, and April.

India is the single largest consumer of bullion in the world. As the silver price went down globally, consumption went through the roof in India. India’s first quarter 2013 silver demand was up to $1.78 billion — a 311% increase from the previous year. In the first eight months of 2013, silver imports in India reached 4,000 tons, more than doubling imports during the entirety of 2012.

There were two driving forces behind this trend. First, India placed extremely tight restrictions on gold imports. As a result, sentiment in precious metals shifted towards silver. The second factor here is inflation. With the Indian Rupee inflating a staggering 9.3%, it’s no wonder the nation was buying as much silver as they can get their hands on. The peak silver import hit 5,819 tons in 2013, which was the all-time highest it had ever been.

Industrial applications for silver make up nearly half of global silver consumption, and a rebound in global manufacturing is going to drive up demand. The JP Morgan Global Manufacturing PMI has indicated growth for 19 months straight, while factories in the U.S., UK, and Asia reported increases in activity.

In 2013, there were two devastating landslides at Rio Tinto’s (NYSE: RIO) Bingham Canyon mine in Utah, one right after the other. Over 165 million tons of rock went down to the mine floor, suspending production indefinitely.

This event was, without exaggeration, a catastrophe. It was called the biggest non-volcanic landslide in the history of the United States, and is considered the first landslide to have triggered earthquakes (instead of the other way around, which is common). Fortunately, no one was injured by the slide.

The Bingham County mine is the second largest silver mine in the U.S. and accounts for a staggering 16% of national silver production. So we’re talking about four million ounces of silver per year that have essentially vanished — a strong catalyst for a rise in prices

Silver hit its peak value in 2010, going from $16.94 per ounce all the way up to $49. Since then, the price has come down, but demand hasn’t – it has only grown.

In the first quarter of 2013, silver ETFs purchased 20 million ounces of silver.  And in June of 2013, the world’s largest silver fund added a record of 572 tons to its inventory — more than all of its 2012 purchases combined.

This is incredibly important, because it shows us where smart money is going in the market.

And the company I was telling you about has a property in Zacatecas in Northern Mexico, a historical silver mining district. Four rounds of drilling have identified 50 million ounces in the proven category, and 80 million ounces in the probable category, The company is Arian Silver (AIM: AGQ.L)  with  113.69 million shares in issue, at 1.25 pence, when the silver price rises to $100.00+ I have been expecting, this company will rise with it.

 

However, I have also learned of another Copper, Gold and Silver miner, with huge reserves, and the cash to develop it, though some political interference from the government has squashed some of the enthusiasm, and taken some of the shine off it in Mongolia, which does not have a history of stable political institutions and a threat to improve the 30% government holding by an incoming President, brought the share price down thundering from its highs of $27, to its currentlevel. Turquoise Hill Resources though (TRQ.TSX) has huge resources, and is off the radar for many investors at the moment. A fresh rise in metals prices will bring this miner back into focus, and with such huge reserves, and a major corporation in Rio-Tinto, and with the share price at £1.91(C$3.52) as at 26/4/16 these are set to rise

TRQ - Moonshot in the making?
Production figures show rising production at a time of rising prices…

Inevitably we can not know when the Gold and Silver prices will rise to that extent, but it is my sincere view, that we are about 3-5 years away from the steepest rises, but that we may see smaller rises over the period between now and then.

You pays your money, and takes your choice.

Revenge on the Bankers (Part II)

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My day began on Friday with news that England & Scotland had renewed their Marriage vows, though not before David Cameron had blubbered like an errant husband, saying – “LOOK! I can change”, just so we wouldn’t have to have this discussion again, anytime soon.

And then later the post came, and the Book, safely packaged arriving in a bubble-wrap envelope. Great, I had been beginning to worry that it hadn’t been sent, or that somehow the post office had lost my address. But I needn’t have been concerned.

It’s the new Bill Bonner book “Hormegeddon”, and I hastily tore open the package, read the accompanying letter, and then settled down with a quickly made cuppa to digest Bill Bonner’s wit, erudition, and learning from over 40years as a trained economist. The pearls of wisdom if you like.

A synopsis of the opening chapter is not about to follow, but the basis of the book is that a little of something can be beneficial, but when you get a whole lot of it, it eventually ends badly. Like receiving a glass of water, or a whole ocean full… And Bill has applied this insight to social systems, politicians, and economics in his own inimitable style.

Some time ago now, I wrote about taking revenge on the Banksters, who having used fractional reserve banking, have increased their control of the economy, and the productive assets of a nation, by allowing them to create currency out of thin air, to give to those on the inside, which allows the Central Bankers and the owners of those printing presses, to buy assets at knock-down prices, in an economic bust, which they themselves have engineered.

By not having currency tied to any particular asset class, making the currency of every major economy, purely paper based and thus essentially valueless, they have got to the point where one suspects, the analogy in Hormegeddon is about to befall us.

If the value of money was tied to any commodity, and that commodity went up in price, the population as a whole would know instantly, that price inflation was taking place.

Of course, when you have a tie to any commodity it has to be agreed which commodity.

At various times throughout history, different commodities have been used.

In early history, people stored whatever they had an excess of. The arable farmer stored grain, that was in excess of his needs, and he traded some with the farmer who had Dairy cows, and other livestock.

The hunter stored furs, and traded some for grain when he found a farmer with excess grain.

Of course the problem for many of these commodities was that they were perishable, and so deteriorated in damp or poor conditions.

People realised that a more permanent medium was needed, so that excesses built up in the good years could be traded for things in the lean years.

This was the start of money. Money is really just savings converted into a form that is more useful.

No savings? No money. No problem.

Of course when some people learned about metals, and began making tools like swords, tips for arrows, belt buckles, stirrups for the better control of horses, and adornments. People began to realise the value of these metals as a store of wealth. And the most precious of those metals were silver and Gold.

These two metals were found in many places in tiny amounts, but also didn’t deteriorate. Gold mined in the 5th Century BC, will still resemble Gold mined last year. And Silver whilst it may have lost some of its shine, will still weigh almost exactly what it did a hundred, or thousand years ago.

Gold, of course, retains its lustre long after it is mined and refined, and even mixed with silver, copper and other metals still retains its size shape, weight and colour. This together with its shine, made it desirable, and thus when in the 6th Century BC, as populations were growing in what is now modern day Turkey, people used this strange metal – called “Electrum” – a mixture of these, in the earliest coins.

By the early middle ages, merchants who travelled in their business were prone to being accosted and their money robbed, which made the carrying of these precious metals dangerous. The Goldsmith realised that if he stored the merchant’s gold and gave the merchant a gold receipt, the merchant could transfer that gold to another by merely signing over some of that wealth, and thus the check was born, and the Gold receipt could be used to pay for things. Thus the Bank note was born.

Later the Goldsmiths began lending money and charging interest, and thus Banks were born. As the economy grew, so did the power of the Goldsmiths, now called Bankers, and as more and more people kept their wealth in the vaults of the Bank, the Bankers realised they could lend out more than they had in storage, and thus fractional reserve banking was born.

As the economy boomed during the 16th to 20th centuries as first the Spanish, the Portuguese, then later the Dutch, French and British began their pursuit of global empires, Banks provided capital for these explorers, and got their pound of flesh, whether the trip was a success or not, though the borrower frequently had to pledge their home, or other chattels.

Over the 250 years since Nathan Mayer Rothschild, sent his five sons to London, Paris, Frankfurt, Naples and Vienna to found the Rothschild empire, things have only gotten bigger.

These sons founded a Rothschild Bank in each of these cities, a truly international Banking system, that allowed the Rothschilds to benefit from local contacts, and to play each country off against the others, when they came to blows, as they had a tendency to do in old Europe.

President Lincoln, was a man who refused to do business with these Rothschilds, who demanded large interest rates to fund the civil war, and for his sins was shot when he began printing the nation’s currency.

Slowly over several generations, these Banker’s wealth and power over the economy grew, especially when they got together and formed Central Banks and colluded with other Central Banks – the largest of these – the ECB, PBoC, BoJ, Fed, and the Central Bank of Central Banks – the BIS (Bank of International Settlements) based as it is in Basel, Switzerland, home of the notoriously secretive Banking fraternity.

Since 1913, the Fed in particular, has exerted greater control over the world, as the printing presses of the United States were used to fund wars, and the military industrial complex. And the savings of the Chinese, Russians, Indians, Brazilians and other developing nations were used to prop up the dollar further extending this power.

Is this all coming to an End?

A slow start to controlling these Bankers in America was taken a few days ago, on 17th September, as a Bill was passed in the U.S. House of Representatives.

Congressman Paul Broun – U.S. Republican, promoted the Bill H.R. 24, the Federal Reserve Transparency Act (Audit the Fed), which passed in the U.S. House of Representatives with strong bipartisan support. H.R. 24 has over 220 co-sponsors and passed overwhelmingly by a 333-92 margin. Broun, released the following statement after the Bill passed…

“Today’s passage of the Audit the Fed bill brings us one step closer towards bringing much-needed transparency to our nation’s monetary policy. For the past 100 years, the Federal Reserve, a quasi-government agency, has acted under a veil of secrecy – controlling our monetary policy and thus, our economy…

While in recent years, the Fed has been granted a greater role in overseeing the regulation of our financial system, current law specifically prohibits audits of the Federal Reserve’s deliberations, decisions, or actions on monetary policy. This lack of accountability and transparency has led to grievous consequences – and it must end.”

In reality, the Fed is a private organisation with its only shareholders, the 6 or so Banking Families who sneaked out of New York in November 1910 to an (at the time) unknown location to create the organisation, that would strangle the U.S. economy several times over the next 100+ years.

Along the way, the Fed has relieved lots of people of their gold, and is alleged to be responsible for the deaths of various Presidents, and others who threatened their little racket.

We have all heard of the depression that occurred commencing in 1929. In order for the U.S. President to commit to the works that would help get the economy working again, he had to spend money he didn’t have, and the only people who could print or produce the money in America at the time was the FED.

However, the credit of the U.S. was not quite as good as it has been over the last 40+ years, and so the Fed forced the President to confiscate the gold and silver of the nation at a fixed price ($25.00/troy oz) and then re-value it when they had almost 7,000 tons to $35.00 an ounce, which with the other 13,000 tons of Gold they took from overrun Europeans, stood the test of time, until 1971, when Nixon ended the Bretton Woods agreement unilaterally.

So, to get to the meat of this piece, one day soon, this power of the Bankers will come to an end – probably VERY badly.

WHY? How? The Internet!

The Internet has changed dozens of industries in the 40years since DARPA (Defence Advanced Research Projects Agency) funded the first basic research into computer communications.

Amazon, Google, Apple, Microsoft, HP, Dell, E-bay, Netflix, MySpace, Facebook, Alibaba et-al. The Internet and these Tech giants have revolutionised whole industries, and the business models that worked before the Internet, have had to be revised, now that potential customers, can meet with potential suppliers electronically. This process is given the grand title of “disintermediation” and it is worrying the Bankers.

Crowd-funding is replacing the traditional role of Banks providing start-up capital; Electronic Stock-brokers are allowing people to trade the markets from home, or wherever their smart-phone happens to be; Digital Money and electronic payments systems initially made Bankers’ life simple, they didn’t even need the printing presses so much, but now with Crypto-currencies, people can trade value without even using their banks – all through the power of the Internet.

The most widely known of these new fangled currencies is Bitcoin, but there are around 80 of these currencies, and their value and power are growing with every passing day. And you can receive FREE Crypto-currencies daily, including Bitcoin from Qoinpro.

Bitcoin is currently valued at over $400, and its two smaller siblings – Litecoin and Feathercoin (which you also receive from Qoinpro) are like Silver and Copper to Bitcoin’s Gold or Britain’s Pounds, shillings and Pence.

Gold and Silver too are not being forgotten in this new world, as organisations are now trading Bitcoins for Silver and Gold making the banking industry all but superfluous in its historical sense. Only the Bullion Vault holders, are doing well, and who are increasingly based in the Far-East as several new vaults have opened there, and just 18months after their opening, they’re almost full to capacity.

As both of these precious metals fall to interim lows, those on the inside of the precious metals markets, are saying that now, as the economy is supposedly on the mend, is exactly the right time to be accumulating.

Many miners too are haemorrhaging as the metal price falls due to paper derivatives being used to manipulate the metal price, but many can’t continue to operate at these levels.

Only the industrial metals miners are keeping supplies coming. Because their precious metals are a by-product of their operation, the price is almost irrelevant to them, as whatever they get is in addition to their industrial mineral operations, but most of the majors who produce the bulk of the metals will either have to cease trading, or close down operations or both.

This is ultimately leading to a supply crunch – particularly in silver.

Silver is both a precious metal and an industrial metal, and demand is soaring.

Every Chinese, Korean and Japanese made i-Phone, Samsung Galaxy, Notepad, Tablet, PC, Nokia, LG, Sony, Toshiba, Canon camera, Nikon, Lumix, Panasonic, MAZDA, Toyota, or British made Ford, Jaguar, Land Rover, or German made BMW, Mini, Mercedes, Audi, or VW… In fact almost every vehicle in the world which is increasingly carrying increasing amounts of electrical and electronic equipment uses silver.

Imagine – China produces 9 million vehicles per year, Britain at its peak produces almost 2million vehicles, and then there’s America, Brazil, France, Italy, Australia, and India as well as all the other smaller nations who build vehicles including Russia and the former Soviet States.

Silver is used in them all. And with digital payments using crypto, how long can the Banks hold out before the system implodes again?

One way to get these Crypto currencies is Qoinpro, who are giving them away free, and will become a coin exchange in the fullness of time charging a small transaction fee as people use their crypto-currencies.

And as for precious metals. China holds just 1% of its $4trillion worth of reserves in Gold. Many believe they will need to have upto 40% of their reserves in Gold. At just 10% that equals $400,000,000,000 worth of Gold at current prices ($1250.00/oz) which would be the equivalent of 320 million troy ounces, or 9,953.11 metric tonnes.

As a result, I believe China will not stop buying Gold until it has around 10,000 metric tonnes.

In 2009, when they last announced their Gold holdings in April, they had just over 1,000 metric tonnes.

Given that they have been buying in increasing amounts and in 2013, that was circa 2,000 metric tonnes, the price longer term is likely to go a lot higher, once their ambitions become more widely known.

And silver which historically has been 1/16th the price of Gold, will likely return to its historical norm.

But perhaps even more, as silver comes out of the ground at just 9:1 it is not outside the bounds of possibility that silver will reach this dizzy height.

World War 3.0? The End?

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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.

(See: KingworldNews.com)

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…

http://blog.milesfranklin.com/dont-be-surprised-if-silver-is-the-target

http://www.caseyresearch.com/articles/top-7-reasons-im-buying-silver-now-1

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.

www.libertysilver.eu

And you can get further news on these matters at:

http://kingworldnews.com/

 

W.

1, 2, 3, . . . 100 – Coming, ready or NOT!

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I am reminded of the above childhood refrain from days spent playing “Hide and Seek”, with regard to the economic malaise that I and many others foresee coming to a country near you in the not too distant future – whether YOU are ready or not.

Harry Dent, of Dent research, thinks we are in for a period of deflation, and even prophesizes that the markets and Gold price will tank with Gold possibly heading down to $750.00/oz, with a major stock-market correction in 2014.  And Goldman-Sachs has re-iterated its forecast that Gold will drop to $1050.

Seven years ago, Mike Maloney of GoldSilver.com, had a more nuanced grasp on monetary matters, even if Harry Dent perhaps understands economics and Demographics better. Mike Maloney suggested we would have minor inflation first, followed by a period of deflation, which will initiate a Central Bank helicopter drop of currency, and THAT would bring about the final epic period of inflation which will bring about the new financial order and even perhaps the New World Order, that so many seem to have been prophesizing.

Former Fed Governor, Ben Bernanke was famously called Helicopter Ben, for suggesting that in extremis, a committed government or Central Bank could create inflation by dropping currency from a helicopter. It is a tag he has never quite lost. And Janet Yellin seems to be Bernanke’s biggest protégé.

For me, I choose to follow my instincts and try to wind my way through the differences of opinion. I am also a great believer in history repeating itself. Especially when the same or similar circumstances prevail.

Demographics drives personal spending patterns, as Dent has proved,  but Central Banks and Governments have a habit of reacting to those events. Some, like the Americans and Europeans, lend that newly minted Central Bank money to the Senior Banking sector, in the vain hope that the banks will lend that money into the economy. (Or merely to prop up those banks?)

Governments spend money on infrastructure projects, which they are pretty certain will boost the economy. Witness the Tory Government of Margaret Thatcher giving the go ahead on the Channel Tunnel project during the 1980’s, and Britain’s New Labour Government giving the go ahead to the group that built the “Millennium Dome” (now the O2 Arena). And the current coalition’s attempts to make big infrastructure gestures with the HS2 – High Speed rail Link from London to the North West, and a new Airport for London, or an extra runway at London’s Heathrow are also in the mix.

But of course we know that when politician’s spend with one-hand, they take in taxes with the other. And that usually means you and me get to spend less on things we consider important to us.

Of course there can be an antidote to all this, and that is to improve one’s lot by saving and good investing, particularly in tax efficient investments.

The last time we had a similar set of circumstances was in 1975/76, as the inflation rate that had risen to almost 27% the previous year, fell to 8-9%, considered acceptable by many at the time.

Of course back then, this inflation prompted Tesco, to ditch the Green Shield Stamps of yesteryear, and to plan a new strategy with deep discounting, which was planned for 6th July 1977 in “Operation Checkout”.

Over the Week-end of the 4th and 5th all their stores were re-priced, and the stores became like a light to moths and other night-time flying insects. Turnover all but doubled in many stores. But of course it was the demographics that was driving the economy.

Given TESCO’s recent results, will they repeat this exercise to compete with the new kids on the block – Lidl, and ALDI?

During the late sixties, western countries had large numbers of retirees, born at the turn of the century in the late Victorian and early Edwardian eras, who fought in the 1914-18 war, and again in 39-45.  These 60+ year olds were now retired and retiring in droves, spending their retirement proceeds,  as they sold their pension accounts to buy bonds, driving down interest rates and stock prices with equal aplomb. These retirees who had fought – some in TWO World Wars, felt they deserved the relaxed retirement that they were promised. The world fit for heroes.

However, just as recently, in April 2012, the number of retirees in the U.S. reached 10,000 per day as those born in the aftermath of the second world war – the baby-boomers, began retiring in huge numbers, but the early retirers had already been selling their stock portfolios (or their pension companies were) as early as 2003, as the oldest ones retired at 55 or just after.

Those with a fixed lump sum to spend, put deposits down on the already rising property market, and helped in the “buy-to-let” boom of that period, and just as the profits made by the NASDAQ investors in the late 90s, also put their winnings into property, Banks were lending outrageous multiples to people in low income areas.

The Fed and government’s actions have been an attempt to mitigate these affects on the economy since. And foreign wars in foreign lands (as long as not too many of “OUR” boys get killed), is one way of keeping the economy ticking along. Economists call this the “guns and butter economy”, as an economy cannot direct resources to both with equal measure.

Anyway, as I was reading another blog, that talked about investments and the US Bond Markets, it mentioned the Fed’s requests to other nations – Belgium – to be precise – who apparently have been pressed into supporting the dollar by buying T-Bills, in the absence of the Fed, to keep interest rates from spiking, which would cause another recession, but as I read this, something crossed my mind.

What if Russia and China now decide to abandon the dollar for commodities sales to non-western aligned countries – say with Vietnam? Iran? Or how about Brazil? India? And what if others followed suit causing a run on the dollar?

This could cause an all out dollar crisis, necessitating a hike in interest rates, that would be painful to watch. But it might also stress the system and induce the hyperinflation that many fear – myself included.

Of course, if you read the book “The Coming Battle” you will know that the Fed made surreptitious loans to 20 major Banking groups in Europe of $15 TRILLION, in total – interest FREE, during the heat of the last financial crisis, and they may be now calling in that favour – requesting that these Banks buy Fed debt, to support the dollar, keeping the Gold price in check.

See:(King World News)

But, if Russia decides to avoid the dollar, then all bets are off

In my last post, I mentioned that Gazprom, would under different circumstances be possibly a good investment opportunity, and then I remembered the sage advice of Baron Rothschild in his oft quoted phrase:  “Achetez aux canons, vendez aux clairons”.

For those who don’t speak french, it means figuratively – Buy on the sounds of the cannons, sell on the sounds of triumphalism (or trumpets). Put more simply, “Buy when the war starts, sell when it ends.”

Now I’m not suggesting you put 100% of your portfolio into Gazprom. But if you do your due diligence, and research the MICEX,(Moscow International Commodities Exchange) there will be opportunities, and/or some of the other Russian behemoths, that might benefit from “the return to the mean”, and there could be money to be made.

Anyone who has been investing for any length of time, knows, or will have heard, that on the average, stock prices rise in line with growth in the economy. When they temporarily exceed this price, they fall, and where they are below the average they will at some point return to the average (the mean).

Of course as many of my recent posts will no doubt have showed, the amount of currency being injected into the economy at any particular point in time, can affect certain asset prices. Of course when cash is tight (as in a recession) bank lending goes down, and thus asset prices reflect that lowering of available capital. And when banks have money to burn (so to speak) then lending goes up, and so do asset prices – particularly stocks and property.

Of course the banks take advantage of this, by lending when asset prices are cheap, and forcing foreclosure (where they have to) when interest rates become high. (which of course, they control)

Warren Buffet also known as “The Sage of Omaha” advises to buy when an asset is cheap, and to sell when the asset is dear, and has said – “Be greedy when others are fearful, and fearful when others are greedy”.

Of course the good sage also buys businesses that will never be sold, but ensures good management manage the business and give a good return on his investment. His last maor purchase that I am aware of was H. J. Heinz, of 57 varieties fame.

He also made major purchases in American Rail infrastructure, in light of the production of tar-sands, and shale oil and gas from the Bakken oil fields in Montana, and Wyoming, and north of the border in Canada which will have to be moved to refineries in the south.  And given the size of the finds, this will guarantee regular shipments for years to come.

Another of Russia’s behemoths, and one slightly less well known than its bigger brother but also worth a look is Rosneft.

However, a precipitous fall in the dollar will force many stocks into freefall on international valuations, and force those who hold dollars to flee the dollar also, but into what? Probably GOLD and SILVER.

Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also spoke about exactly what will cause this historic rise in the gold price, as well as what it will mean for the global financial system.

There are reports out this week that the BRIC nations are going to set up a version of the IMF and a BRICs Development Bank, which could trigger the collapse. The amount of trade now being done in Yuan directly between the Chinese and their trading partners, is all a move away from the dollar, which will over time weaken the dollar’s rule as world reserve currency, and with it the U.S. Empire.

Williams also thinks the Russians want to swap oil for gold because they want to bring back gold as a monetary asset. They just want gold, and rather than swap their oil for dollars or roubles, they would rather have gold for it, and they are absolutely right to do that.

From the view, from 30,000 feet as a Central Bank, they can make those decisions. And Williams guarantees the Russian central bankers, who are in charge of their gold policy, are not worrying about whether the price of gold is $1,300, $1,200, or $1,500. They don’t care about that. They just want to own the gold. And so they are going to keep doing these deals that enable them to acquire more physical metal.

At some point, when all the smoke is cleared in the paper markets, like it did during the London Gold Pool in the late 1960s, once that gets righted, then we will know what the right price is for gold.”

We know the London Gold Pool ended finally when France and then Britain asked for $3billion dollars worth of Gold in place of the depreciating dollars, just 4 days before Nixon closed the Gold window for good (even though, he said it was temporary).

Will that happen this time? I doubt it, the U.S. and European Banks are too intertwined.

But Russia’s and China’s Banks?

Now they could do some serious damage.

But an even bigger threat comes courtesy of a number of major actors in the formation of the internet – though they didn’t know it at the time…

For the Bankers – the Four Horsemen of the Apocalypse are – Gold, Silver, the Internet and Bitcoin

 

W.