Gold

Dinosaurs, Debt and Destruction

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I’ve been thinking about the World Debt problem for some days, and searching for a theme to make it lively. I couldn’t see how the citizens of the world can get out from under this pile of debt we’re leaving our children… (Mine’s 19 by the way and a Bio-Chemistry student at Manchester University and loving it. – Hi Rachel?)

Anyway, we have a US. economy, with a national debt of close to $17 trillion, a European one with €14 trillion, a British one with over £1trillion, and a Japanese debt to economy ratio of 270% of GDP by the end of next year… (And the Chinese?)

When will politicians realise you can’t steal from the future, you can only borrow it. And the day you start to pay it back you shrink the economy.

Every hundred years or so, we need to clear away this debt so that we can get out from under it, and that is usually done by a war…

The Central Bankers have for a hundred years been building this ship, and the ship is now getting so big the ocean won’t be big enough to sail it.

Banks – Too Big to Fail?

So, the “Too Big to Fail” Banks, who get their blood money, from the Fed… They remind me of Tyrannosaurus Rex, Gigantosaurus, and the great plant-eaters the Brontosaurus and Diplodocus… They must have felt quite secure in their bigger than you world, just days before the sky darkened, and flamed, and a meteor hit the boggy marshland that is now beneath the Gulf of Mexico, throwing up mud, plants, rock dust and huge plumes of water and spume. Over the days that followed, the dust encircled the globe, and the planet cooled.

The day that changed the world, and the world view.

The Tidal wave probably spread to the shores of Africa, Europe, and beyond. The entrance to the Mediterranean was opened and washed away sending the wave as far as present day Israel and Egypt, and perhaps even through the straits of the Bosphorus to the Black Sea. and even the Persian Gulf.

In the space of three days or less, the planet probably cooled by 5-10 degrees, and the world had changed irrevocably. Plants died from lack of sun, rain was acidic, and the mammals scurrying beneath their feet, who were warm blooded took their opportunity as ever larger dinosaurs succumbed to the devastation, providing a veritable feast of the carcasses now rotting in the moisture laden atmosphere.

Over the next decades the air cleared, and new plants and animals emerged to take the place of the great lizards.

Sometime in the next 10-30 years we are going to see a similar event, and the TBTF Banks, will be like T-Rex and the Brontosaurs.

Smaller, nimbler, perhaps warmer creatures will grow up and replace the cold-blooded dinosaurs of the Industrial Revolution. The Internet, and the Internet of things will replace them, and a new currency system will have emerged.

Is Bitcoin, Litecoin and the others the financial equivalent of the mammals of 65 million years ago. Will these crypto-currencies, and precious metals replace the Dollar, just as the guinea-pig replaced the Tyrannosaurs. And on that day, the true value of these 5,000 year old monies will be known once again?

What the Fed has done for us?

A hundred years ago, an ounce of Gold bought a Savile Row suit, and today, it still does. A Pound weight of Sterling silver the same. Now that British Pound Sterling, will not buy a loaf of bread, and a carton of milk. THAT’s what the Fed and the politicians have done for us…

But over the next 5-20 years, that pound weight of Sterling Silver will once again buy that suit, and the wardrobe to put a dozen others in. As we speak, the ratio of Silver to Gold coming out of the ground is 9:1… Historically it was 16:1, and yet if we check the current prices… Gold today, is circa $1213.22, and Silver is $19.04 – a 63:1 ratio.

50 years ago, the amount of above ground Silver was 5 times that of Gold, today the reverse is true. In my lifetime, Silver will be gone from metals warehouses, and the only silver will be available from mines and scrap. To encourage more mining, the price will need to go a LOT higher. Those who have even just a little will be the “Nouveau Riche”.

And miners with large reserves and resources will be probably FTSE 100 companies. Companies such as Arian Silver a British AIM registered company, but traded also on the Toronto Stock Exchange has that and will be tens, possibly 20 times their current price…

(Incidentally that is not a recommendation – but an invitation to do your due diligence – Arian Silver)

But with 50 million ounces proven, and another 80+ million probable, and who knows how many ounces still to discover, the prospects are at least positive, given the current price point of silver. No other substance on the planet apart from oil has so many uses- 10,000 and counting. And Silver is irreplaceable in so many of those applications. Silver is my number one long-term investment. Eric Sprott a multi-billionaire is reputedly 70% in on silver and silver miners, and he knows Arian Silver well, which is why he owns 14% of the company.

And if you’d like some Silver… Just in case… Liberty Silver

Until next time…

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Money, Gold and Bitcoin… What’s a Government to do? (Mon, 18th Nov, 2013)

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As the Philippines begins receiving Aid, from around the world, yet another disaster occurs, this time on the other side of the planet, in the U.S., as a Tornado hits Tornado Alley – unusual for mid November (apparently). A number of deaths have been reported. Once again we watch from the sidelines, and furrow our collective brows, seemingly unable to do anything except show our sorrow, and pass on our good wishes to those involved, and our condolences to those who have lost loved ones.

Is it just better communications, and thus we’re hearing about these things more frequently, or are there simply more of these natural disasters? We can only speculate at this time.

The implications for money though should be obvious. Someone has to pay for the reconstruction and the damage.

In the absence of Insurance, those buildings will probably never be replaced, The land holders will maybe invest money, that either had been sitting on the sidelines waiting for investment opportunities, or was already scheduled for investment elsewhere, meaning that either the opportunity doesn’t get the investment dollars, or someone somewhere “prints” the necessary money, increasing the supply of dollars, and probably Philippine Pesos.

Back when I first started commenting about the Precious Metals marketplace, it was a little African Gold miner with a foothold in Zimbabwe and an influx of capital, as 5 Directors put up £100,000 each to re-start operations on a grander scale that first caught my eye.

Anyway, back then (late 2003) I did my analysis, and lept to the conclusion that Gold would ultimately reach circa $8,500/oz, and that after an initial burst to circa $2,000, it would drop back by half (circa $1,000.).
 
WHY? What prescience did I have?

I simply looked at the chart of the 70’s and multiplied by ten.

From the mid 1960’s, it was obvious that Gold was coming under pressure, from Britain, France and Italy who all remonstrated with the Fed (who were funding the Vietnam war effort at the time) for their profligacy and money printing.

The Gold price had gone from $25.00 in 1932, to $35.00/oz after the Federal Reserve got their hands on all the Gold, and there the price stayed until August 15th 1971.

However, maybe Gold was slightly overvalued back during the early 60’s and really the price should have been closer to $25.00…

Anyway, if you recall, the 2001/2 bottom in Gold was $254.00 and that was a near enough ten-fold price improvement on the theoretical 60’s price. Wages had gone up similar levels – I’m old enough to remember wages from that era, as I was already working back then, and remember the slogan £20.00 for all in 1971-72 here in the UK. and circa £30, was a grown working man’s wage.

The Silver price per ounce bought roughly one barrel of oil, and ten years later as it peaked at close to $50, it still did.

Of course since then Central Banks have been divesting themselves of silver – an even more barbarous relic than gold? And If I recall accurately, oil fell to $18/bbl during 2000/1 – I certainly remember paying between 99 cents/gallon and $1.06, in Austin Texas back in late 97 anyway, when I worked at Dell Headquarters in Roundrock, just 8 miles from the  city centre…

So, where does this lead me? To the inevitable…

Gold will certainly rise, but to where? It is unlikely that a steady rise in the price is likely, because that would mean moth-balled mines would begin re-opening, and an increase in supply, which would counteract price rises.

At $2,000 almost all current Gold mines would be profitable, so the price has to (MUST) remain in the doldrums to choke off supply, It is imperative then that those who control the world’s money supply, target the alternative currency – just as we learn again the U.S. legislators are seeking to interfere in the market for Bitcoins, as the price has risen again to a new high as it peaked at just over $600, before dropping back in recent days.

 
Gold MIners therefore have to sit on the sidelines perhaps, or maintain mines either in loss making situations, and depending on cost structures reduce output, or run at marginal profits. Not possible for all except those with huge reserves of cash, and reserves of metals too, with low fixed costs, hoping and waiting for an upturn.

I don’t know enough about the miners to know which of the dozens fall into that category, but Turquoise HIll (TRQ:TVX) is perhaps one, unless the Mongolian Government gets greedy again. (They used to be known as Ivanhoe Mines Ltd – until Rio-Tinto (RIO:L) increased its shareholding to 51% and re-named the Company)

BUT if my tenfold theory holds, then $8,500 would seem a likely zenith, as a move into five figure territory would be too horrific to contemplate for the Banksters, who would defend it to the last and throw everything they had at the price. One only has to look at the 3-Day Kitco Gold and Silver Price charts (http://www.kitco.com/images/live/gold.gif)(http://www.kitco.com/images/live/silver.gif), to see that outside the New York time period, the price oscillates as a result of High Frequency Trading to maintain price stability. We can only speculate as to WHY?

BUT a rise to the suggested figure is likely, and above is not outside the bounds of possibility given the reckless money printing in the last 5 years….

Incidentally, Peter Schiff, who is a major commentator on Gold, and the Fed’s mess, as he might call it, was on the Max Keiser show on RT late last week, and very interesting he was too. Though TBH, I think his timing is out by a couple of years, as the economy stutters along for a little while with QE-infinity still in evidence.

He feels that they won’t taper next year, because as soon as they announce they might, the markets will tumble, and bond prices will fall, raising yields (and thus interest rates) choking off any hint of growth, which is very likely.

 
But, if my timescale holds, then circa 2018 – 2019 is when Gold and Silver prices will rocket. Why?
 
Demographics. The Baby-Boomers were born over a 15 year period from 1947, to 1962. and peaked circa 1957/58, ten years after the soldiers and sailors got back from their war postings overseas.  All that pent up sexual energy went into making babies, and the first of those early retiring babies began leaving the workforce in circa 2005. The first 65 year old baby-boomers reached retirement age in April 2012, so the money supply growth should be trying to counteract this major force of economics until 2022, but of course, those with savings will be worried about inflation, and whenever that begins to take off – Gold and Silver miners will receive a large chunk of it.  
 
If the money supply doesn’t shrink sometime soon, then it will have to grow to match prices or risk deflating the already shrinking economy, further hurting growth, which means even more dollars chasing precious metals, artwork, diamonds, and all other kinds of physical resources to preserve wealth. 
 
The next ten years will I suspect be pretty much a re-run of the same era a century ago. The first world war began as a Serb assassinated the Austrian Archduke and his wife, who at the time controlled parts of what is now Serbia.  
 
Will this era signal the end of the American Empire? And the emergence of a new one – further east?
 
We shall see…

Death and Democracy

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I was watching the Max Keiser Report on RT this morning, and he referred to a couple of International Statutes that have either been enacted, or are under negotiation. These pieces of legislation are International Treaties, and the first appears to be already on the statute book – TPP – the Trans-Pacific Partnership between the U.S. and 11 other Pacific Rim countries.

The other – TAFT – Trans-Atlantic Free-trade treaty, appears to be being secretly negotiated behind bureaucratic closed doors, which seeks to elevate the Corporate Organisation to the level of the State.

“How so?”, I hear you ask… The agreement seeks to give the International Giant Corporations of the U.S., the right to take Governments to the courts for… Get this… Any act which impinges on potential future profits, meaning they can be brought before these courts.  I have no details on where, when, or who will sit on the judging panels, but you can bet they’ll be stuffed with like-minded stooges. A similar panel set up to regulate the Banks in the U.S. has lost only 1 of almost 100 cases, and the person who agreed to the win got fired as a result.

Max Keiser gave the example of a certain “Oil Corporation” in a South/Central American state causing an ecological disaster, and having the right to sue the government (who get their money from tax-payers – let’s not forget) if they impose environmental charges on the ecological damage they commit.

And who elects the officials of these huge Corporations? Yep, that’s right, the same folks who own the shares, of these huge corporations, and who also control the money supply – the old money families who set up the Federal Reserve… I should perhaps also remind readers, that the old dear – “The Fed” is about to reach a milestone that many will not be aware of, and maybe it’s time a new institution replaced these old fiat-money bankers? But I’ll get to that in a future post.

The milestone? Oh yes… The Fed reaches her 100th Birthday in just 6 weeks – on December 23rd 2013.

I believe after 100 years, the old dear ought to be put out to grass, and retired gracefully, because her printing presses, have funded the Second World War, countless clandestine operations by the CIA, the Vietnam war, Taliban (Mujahadeen?) and anti-soviet Chechen rebels, and in recent years enabled the U.S. to embark on its War on Terror which has given the U.S. military the funds to encircle the globe with its tentacles, breathing ‘fire and brimstone’, toppling the Governments of several countries, and killing citizens of countries, without having to stand up in court and argue its case for a death sentence by its use of drones.

In so doing, they have over-reached themselves, and driven world-wide sentiment against them.

The Fed may not have set out with evil intent, but the inevitable consequences of having no restrictions placed on their reach, as the old saw goes is: “Power corrupts, and absolute power, corrupts absolutely” Because no other country has access to these printing presses, they have a unique position, which they are widely regarded to have abused.

As my post mentioned yesterday, the antidote to this is Gold and Silver. When the Chinese have over 10,000 tonnes of Gold, which I firmly believe they will have by the end of 2014, or 2015 at the latest, then the U.S. dollar will cease to be used as the world’s reserve currency, and the U.S.’s military strength will lessen, weakening its grip on the world.

And that might just be the start of a meaningful move away from the corporate feudalism, that has emerged in recent decades.

It might also mean that Gold and Silver achieve their true value. So without wishing to give investment advice, perhaps a small purchase in these money metals might prove prudent for the decade to come.

Until next time…

W.

A Fed Apology (Wed 13th Nov 2013)

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The aftermath from the Typhoon Haiyan disaster in the Philippines is now being more widely reported, and the scale of the disaster is now being revealed. Scenes of sheer devastation greet the eye. Our sympathies extend to those poor benighted people..

That out of the way, we turn to money matters once more and while dipping into Bloomberg earlier today, I heard something, I never thought I’d hear – An apology… Not from  our own financial or political masters, but from a former Fed Official

Andrew Huszar, a Federal Reserve Official for nine years, wrote an Op-Ed piece in the Wall Street Journal this morning and in it wrote:

“I’m sorry America… As a former Federal Reserve Official, I was responsible for executing the centre-piece program of the Fed’s first plunge into the bond-buying experiment, known as Quantitative Easing.”

An apology? What for?  His interviewer Erik Schatzker asked him the same question,  His answer, surprisingly, didn’t surprise. He said: “We knew after QE1, that it wasn’t working.” He went on to add that they knew that their efforts really just bailed out the Banks, but his final admission is what shocked me, when he said that the economy was in a similar if not worse state than it was in 2007.

Erik’s co-presenter – Stephanie Ruhle jumped on that suggesting that the growth was better, etc etc, and he acknowleged it was, but that suggests all is not well…

Well there’s a surprise… Peter Schiff, who runs The Schiff Report, also thinks the Fed’s actions were bizarre, and that the damage will come back to bite us all in the derriere.

Of course the Chinese are using some of the Fed’s largesse to buy up as much gold and silver as they can. According to several reports, their imports through Hong Kong have steadily risen from about 36 metric tonnes in 2001, to 86 tonnes in 2008, 114 tonnes in 2010, 375 tonnes in 2011, 625 tonnes, in 2012, and to-date in 2013, over 1,000 tonnes.

Along side this, their output from their own mines has steadily grown whereby they are now the biggest Gold producer in the world with over 300 million ounces mined in the last year for which results are known. But also reports have come through that they’ve been scouring Africa and buying up output from artisanal miners at the spot price, and at the rate of circa 40 tonnes per month.

If this is true, then they are already the second largest holders of Gold in the world after the U.S’s 8,700 tonnes – If they still have it?

Reports surfaced in 1974, that the Gold in the Federal Reserve vaults had gone…

The magazine article in the “The National Tattler Magazine”,  of the U.S., claimed – “All the Gold in Fort Knox is gone”

This hit the news stands on June 30, 1974. On July 3, Louise Auchincloss Boyer, who was attributed as the source of the story, and who was an executive secretary to Senator Nelson Aldrich Rockefeller, had fallen from her tenth storey apartment window at 530, East 86th Street in New York.

What perhaps adds to the mystery behind this story is that her death was reported as – “Probable Suicide” and reported in the New York Times the following day.

Recent reports, that Germany wants its gold back and has been told it will take up to 6 or 7 years further adds to this mystery.

I wonder if we will ever get to the truth, or an apology for that little mystery?

Until next time…

 

W.

Kicking the Can – Again (Thurs 31 Oct, 2013)

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So, as the Hurricane passed over the UK, on Sunday, and into Monday, we counted the cost.  It took a day or so for the damage control systems to take account of the damage, and we learned there had been further major traumas to several people, and even the death of one woman.

Our sympathies extend to their friends and families.

No doubt the Insurance companies  providing insurance to these property owners will be looking for ways to shave off a few thousand pounds of disbursements as the claims start coming in with immediate effect.  And those whose properties have been damaged will be spending their disbursements having their properties refurbished to get their businesses back up to productive use, adding to GDP, and if that involves materials imported from overseas, and value added here in the UK, then also GNP – but we won’t be any better off.

On the other side of the Atlantic today, we learn that the Fed (Federal Open Market Committee) met to discuss the U.S. economy, and decided to take no action, leaving in place another further dilution of the nation’s wealth by a further $85 BILLION – $1,940,639.25 per minute, raising the Fed’s balance sheet to almost $4 TRILLION. ($4,000,000,000,000).

I find it peculiarly confusing, that the Central Bankers can print out another $85,000,000,000 and no-one bats an eyelid, but we learn that in the U.K., a man who had decided to make his own U.K. British Pound coins (allegedly upto £1.5 milion including blanks) and that man got 8 years in prison (currently up for appeal)

So rich bankers can do it, and give themselves large bonuses for doing so, but poor folks can’t… Doesn’t sound fair to me?

Which is why originally, money was just gold and silver… (and Copper of course for pennies)

In other words the only people who used to make money – legally – were the miners, who sold it to the lawful mint, to be coined into legal tender.

Ah!  Yes, but there’s the rub, the Banks don’t get their cut when that happens.

And that’s why the price of Gold and Silver is manipulated using paper derivatives. If the sheeple* were allowed to see the REAL value of Gold and Silver, more and more would likely begin to buy it, and that means currency, that the Fed would like to have put into risk assets, such as property and stocks and shares (and to a lesser extent T-Bills) rather than a lump of metal, that gains in value but doesn’t employ people, would leave the economy.  (and prop up miners in foreign climes)

Makes you wonder why foreign governments and miners aren’t kicking up a fuss about it?

W.

* The word ‘Sheeple’ is a derogatory term used to define the great uneducated and uninformed masses, who follow the rest of the herd, rather than get educated and think for themselves.

Monday 28th October 2013

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As Southern England recovers from the overnight ‘breeze’ – OK, wind speeds DID reach almost 100MPH, but as reports come in, apart from the 14year old boy who was dragged from a harbour wall by a passing wave yesterday – Sincerest condolences to his family btw, – no-one else has been reported as killed or injured, though trees were blown over, and there appears to be little long-term effect.

I was working in Southern England the last time that a Hurricane (that wasn’t – at least according to Michael Fish) passed by.

As the aftermath unfolded back then, and Britain counted the costs of fallen trees and debris strewn streets – Sevenoaks in Kent, lost six of the seven oaks of their namesake,  the stock market, which had also been at record highs back then began to fall just two days later… (If you’re a Technical Analyst – check out the weekly RSI figures, as this suggests that the market is “toppy”)

Look out below. 

And as the spat between Germany’s Angela Merkel, and the US’s, NSA, continues, the spy saga takes another turn. In a recently read column, in which the writer discussed things technological with LINUX originator – Linus Torvalds, he as good as confirmed that the NSA had asked him to insert a “back-door” into the kernel of the operating system – LINUX.

This begs the question whether Microsoft, Apple, Google, Oracle, and other Tech giants have had similar requests, and whether these software giants complied with them… 

Maybe those outside of the U.S. might be reconsidering their technological options.

IBM, once known for its computer hardware and now principally its software and services has already reported a 40% decline in its Chinese business, down from last year’s highs.  Perhaps Edward Snowden’s  releases will have the biggest effect on America’s global dominance, as people outside America eschew American technology for security reasons.

There seems to be a growing distrust of all things American, and this can not do the US dollar any good in the longer term. As China recently suggested we need to see a “de-Americanised” world, perhaps this might be the straw that broke the Camel’s back as the saying goes.

The USD/EUR rate currently stands at 1:1.3810, and the GBP/USD is 1:1.6196 (as at 09:25).

We shall see where these trend to in the medium term. And if the dollar does decline, this can only strengthen those other alternatives to currency – REAL MONEY – Gold and Silver.

Gold currently stands at $1350.34, and Silver at $22.58 both down slightly on the day, but up from recent days.

Until next time.

W.

PM Forum

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