As governments have used their ammunition in fighting to retain power for their Fiat currencies, the price of Gold and the Exchange Traded Product (ETP) or Exchange Traded Fund as it is more commonly called for Gold – the GLD has fallen.
But there comes a time in every charlatan’s performance when those watching no longer believe in the power of the magician pulling the strings behind the scenes.
In this case the arm of power behind the throne – the Central Banks – have sold or leased much of their Gold to Bullion Banks, who have sold this gold on the markets as their futures contracts came to an end, and the buyers took delivery, rather than as might have happened previously – settled in cash – it is increasingly obvious that as the number of contracts increase and more and more gold heads east to China and India, and north to Russia, and to numerous other central banks worried about their gold held in U.S. vaults, and have begun to increase their holdings, and repatriate their gold from overseas vaults, that it couldn’t go on forever.
And then this piece caught my eye…
So what will happen when the gold does really run out?
Initially, I suspect Bankers will settle for cash, but probably have to pay a premium to do so, as those who own the metals contracts extract their pound of flesh. This will probably be under the radar, at first, but it will eventually leak out, and as more and more people have to settle for cash, the premiums will rise. This will feed through into the published prices, as the disconnect between the paper price and the settle price increasingly becomes obvious.
According to figures I’ve seen there are between 100 and 200 contracted ounces, for every real ounce in existence. This is how the Bankers came to dominate the world and its economies. The left hand not letting the right hand know the truth or what it was upto.
Fractional Reserve Lending meant lending out upto 10times the amount held on deposit. Of course this assumes they hold ten per-cent in reserve. BUT in the last ten years, those same bankers have had as little as 3 per-cent and that means they were lending out in excess of 30x their reserves. And that is the reason for the boom, and the bust when we had our Bear Sterns and Lehman moments.
If the Bankers persist in this lending and futures contracts binge, then it will end in disaster for the banks (and us) but at that point, the price of gold – both official and unofficial, will explode to the upside.
Of course in the meantime, as Harry Dent has stated on several occasions, the price may fall in the meantime, as first deflation due to demographics, and his convergence waves take hold, but as has been mooted on Bloomberg today, perhaps QE4 is but a printing press away?
And if it happens, when all that money leaks into the economy?
Can you say Boom?
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An important anniversary slipped quietly by last month without any fanfare, on August 15th, as the anniversary of the day, that President Richard M Nixon, closed the Gold Window, and put the world on the path to financial armageddon.
From that day to this, the U.S. has essentially been able to print up as many dollars as it felt it needed to pay for things it wanted, and forced the rest of the world to accept “funny money” – aka. – Fiat Currency.
The fact that they were able to strengthen the dollar in 1973, temporarily when it convinced Saudi-Arabian leadership to accept an offer it could hardly refuse is still highly relevant…
America would back the House of Saud, with the full military might of its national forces, and the Kingdom of Saudi-Arabia (KSA), would accept only U.S. dollars for its oil, forcing dozens of other countries to trade for dollars, to pay for that oil, and the KSA, would re-invest those surplus dollars in Treasury Bills. Eventually the rest of OPEC would be forced to follow suit or commit commercial suicide.
Over the last 9 months, events in the precious metals markets and geo-political and economic circles, world-wide have been making headlines.
As geo-political tensions rise around the world, I wonder out aloud what is the end game. To learn where we are going, it’s important to know where we’ve been, and we have to look back 40+ years.
If we look at the ageing baby-boomers who are retiring in droves here in the west, (Of which I am one) and as our spending patterns change, we need to understand why this has such a big impact on economies.
In my experience, young people spend their money on a handful of things – Music, Fashion, Booze, travel and generally having fun, primarily in their pursuit of their partner in life – irrespective of their sexual proclivities.
As these people mature, they buy a bike/car, and their first flat or small starter home, and all the essentials of normal urban life – beds, tables, chairs, sofas, kitchen gadgets etc.
Then as they pair and begin to settle down, their partner now safely esconced in their home, perhaps 5 years have passed, and two incomes in one household means for a while they can experience a rise in social status and maybe buy a bigger home or have more expensive holidays. (though things are a little different in recent years as gap year students take the young to the far-flung corners of the globe.)
With women now making up more than half the working population in the west, women are now leaving “bonding” later, and perhaps seeking someone who meets and exceeds their expectations, and thus probably for professional women (i.e. those with degrees and/or professional qualifications) they’re leaving the having of children until they are in their early 30s, or as late as early 40s causing problems for over-stretched maternity departments, and over-stretched National Health Services, as increased age introduces greater risks and higher costs.
By their mid-thirties, people are climbing the corporate ladder, getting increases in pay, generally as their productivity rises in line with their experience.
Output on a national scale rises but this is only temporary unless higher investment in capital goods (new vehicles/machinery etc., that gets goods to market quicker, and/or cheaper) increases productivity further, these gains are not carried through indefinitely though. This is where political mistakes are made, as politicians think that the growth will continue.
As people hit their forties and early fifties, their willingness to learn unless pushed, seems diminished as they become experts in their field, just at the time newer technologies are adopted by the young first.
By the time people hit their mid 50s and early 60s, their abilities are beginning to decline; health issues begin to rise on average and national governments see a fall off in taxes, as some retire early, or die young – though the demands on their national budgets increase as improvements in health-care put additional burdens on national budgets.
Intermittent overseas wars also add to these burdens as those apparently with historical empires adopt the role of world policemen.
This adds further financial burdens on countries, and leads to overspending to maintain prestige, or to appease emotional electorates, or to maintain their leadership role, allowing those with more quiescent military to improve and begin spending in increasing amounts.
This was the nature of things in the west when Britain began losing its pre-eminence, and the U.S. took up the political and economic cudgels.
As a result, we now see the extent to which Britain, and America have over-spent in recent years, as the U.S. deficit grows to 105% of national income, and its budgets become overstretched as its military tentacles have extended now to over 145 countries.
The role of World policeman is an onerous one, and like all great empires this eventually causes a collapse at home, due to excessive spending as tribute (the term used by the Romans to refer to taxes) begins to lessen.
As demographics affects all economies, those with rising populations have greatest demand for housing, food, water and the other essentials of life, and when economics fails to meet those requirements, people look for scapegoats. Those with the most usually get the most scrutiny and criticism.
But to get back to the title of this piece, where will this ultimately lead us?
As Vladimir Putin, and Xi Jinping, grow their economies, and grow increasingly wary of U.S. dollar hegemony their actions have consequences for all of us.
China has in recent years agreed bi-lateral trade deals with a rising number of countries to reduce the dollar from its trading, and China in particular has used its excess dollar reserves to buy increasing amounts of Gold and Silver, and overseas resource assets with precious metals and other precious resources for its industries.
Russia too has sought to lessen its dependence on dollars, and the BRICS Development Bank recently announced, will wean these emerging economies off the dollar as the $100billion in Capital gets used to help out economies in difficulties. Will some of this capital be used to buy Precious Metals? It would appear so, as China now trades more Silver in physical metal form, than the COMEX, the former leader in precious metals derivatives trading.
This will ultimately lead to a dollar collapse, and like a wounded animal, this may lead to the U.S. lashing out to protect its interests, as it has been in the middle-east and in Ukraine, where fights to protect access to middle-eastern oil, paid for with dollars, and for access to Ukrainian agricultural land are being waged by proxy military. But the collapse of the dollar unless mitigated by the increasing energy production, may cause the whole world economic woes, or worse.
This involvement in the middle-east has caused many of the problems as those with a different view of the world seek to eliminate western ideologies from their countries. These skirmishes though, may grow to encompass those other major economies – China and Russia.
James Dines, the economic mind behind the Dines Letter and Dr Paul Craig Roberts former adviser to Ronald Reagan, also thinks that we are on the verge of a major conflagration and James Rickards a CIA adviser on financial matters, in a recent interview claims the U.S. is staring down the barrel of an economic gun.
But also in January 2014, the United States government entered into a deferred prosecution agreement with JPMorgan Chase which is the biggest bank in the United States and one of if not THE biggest banks in the world giving those who have benefitted most from the financial mess the U.S. has gotten itself into essentially a free pass.
The recent prosecutions of Financial Institutions has resulted in fines being paid, and JPM – probably the biggest offender, has paid approximately $29 billion in fines – yet not one senior banker has done any jail time.
When Janet Yellen begins the next round of Quantitative Easing (which might be called something else) all hell will break loose in the precious metals markets.
Buying Silver… Why NOW?
The reasons are not so obvious.
Silver is collectively, a monetary metal, an investment vehicle, and an industrial material.
Silver’s role in international finance has been prominent over several millennia, as this shiniest of metals was used in Roman currency, and only when Emperors devalued the money by reducing the silver content of coins, did they suffer the wrath of the people. (See: The Coming Battle – 2013)
Industrially, silver is the most widely used commodity on the planet, reputedly used in 10,000 applications and rising. Second only to oil in importance, but its price has been walked lower for decades, as silver was first taken from its pre-eminent role in both American and Chinese money with its removal from the dollar, to junior partner, to minimalist role, and finally in 1964 to negligible role as U.S. currency removed the last remnants of the metal from American currency.
Is it significant, that just 7 years later, on August 15th 1971, the last vestige of precious metals, was removed from the American financial system?
If the death of President Kennedy, and Louise Auchincloss Boyer are anything to go by, I think so.
But silver’s western denouement, means that the East has been able to accumulate this most precious of precious industrial commodities at prices unlikely to be seen again, after this financial collapse begins in earnest.
Silver historically was bought in ratios circa 16:1, compared to gold. We see evidence of this still all around us – 16 ounces to the pound, in the U.S. – 16 fluid ounces to the Pint and this ratio has varied in recent years as silver’s role in monetary matters has been slowly extracted, but its time will come again – it always does…
And with the current Silver/Gold ratio of circa 65:1 when it does go up, because it currently comes from the earth at circa a 9:1 ratio, then its rise will be meteoric.
And if that wasn’t reason enough to be accumulating…
These links should help you make up your mind…
And this page shows you were you can STILL buy silver coins and bars at VAT free prices, and have them discreetly shipped to your door.
And you can get further news on these matters at:
As the war of words continues between the Western and Russian sponsored media channels over what really happened in the Ukraine, it is evident that there is much more to this, than meets the eye.
I am an avid watcher of alternative media, and much of what gets aired through the MSM (That’s MainStream Media) which are dominated by American Corporations – CNN, FOX News, ABC, and in the UK, SKY News, which is part of Rupert Murdoch’s global media group, and of course good old Auntie Beeb – the BBC, seems to be supplied by media flunkies perhaps with an agenda to push – the PR guys.
Of course this is a natural course of events where money is the dominant force driving corporation’s decision making processes, but we would do well to remember that the media, are supposed to serve us, by providing a diversity of views, and by having a diversity of outlets.
Russia, China, and the Middle-East came late to the media party, with RT (Russia Today), CNC (China News Corporation) and Al-Jazeera UK, and US, (funded ostensibly by the Qatari, media group – Al-Jazeera Media Network)
Whilst these media corporations may have existed prior to the European wide Satellite Broadcasting revolution of the 1980s, the people of Europe and America were not granted the opportunity to see these channels, due to limited broadcasting rights, and limited distribution channels, and thus the population’s view of the world is clouded by the political views at the heads of these corporations, and thus any agenda pushed by their paymasters..
That said, we all have to recognise that national corporations will have a bias in favour of their own country, and the culture of the society colours the style of presentation of the news, and the historic value systems of the nation in which these corporations originate.
Wherever though we see media bias, we have to be able to filter out the noise, to get to the truth, that we as voters, need to fulfil our role in society as citizens (Tony Benn, prefers this particular word to the one of “Subjects” with its historical significance).
The citizen’s duty in a democracy, is to watch those who would seek power over us, to hold them to account, and we cannot do that if the media corporations are in the pockets of politicians, or financiers, who set the agenda, and the tone of the news and the politicians imbue us with an acceptance of secrecy.
The old adage of Edmund Burke that: “The only thing needed for evil to triumph is that good men do nothing” is a truism, but for the demos (the public) we rely on media corporations to expose those events of relevance, and to bring to our eyes and ears through print, and multi-media, the bad or evil that some men (and women) do .
American President, John F. Kennedy is widely respected on many things, and widely held up as a beacon of probity in public office (if not for events in the bedroom), and in a televised public address he stated:
” The very word ‘secrecy is repugnant’, in a free and open society, and we are as a people, inherently and historically, opposed to secret societies, to secret oaths, and to secret proceedings.
We decided long ago, that the dangers of excessive and unwarranted concealment of pertinent facts, far outweighs the dangers which are cited to justify them.
Even today, there is little value in opposing the threat of a closed society, by imitating its arbitrary restrictions. Even today, there is little value in ensuring the survival of our nation, if our traditions do not survive with it.
And there is, very grave danger, that an announced need for increased security, will be seized upon, by those anxious to expand its meaning to the very limits of official censorship and concealment,. That I do not intend to permit, to the extent that it’s in my control. And no official of my administration, whether his rank is high or low, civilian or military should interpret my words here tonight, as an excuse to censor the news, to stifle dissent, to cover up our mistakes or to withhold from the press or the public, facts that they deserve to know.”
So, is Edward Snowden a traitor, as he is painted by certain sections of the political class and media, or the saviour of the American ideal as espoused so eloquently by President Kennedy?
More recently Ron Paul, that Libertarian, who rather belatedly joined the republican ticket in America, because his views were shut out by the media channels, focussed as they are on the duopolistic activities that shape American politics, and the view that politics should be viewed through the left-right paradigm.
As the Estonian Prime MInister was recorded stating that the group known as the “Maidan” were indiscriminately shooting both sides of the Ukrainian divide we have to ask “WHY?” and also the seemingly oft quoted latin phrase “Qui Bono? – Who benefits?”.
Whenever economies suffer downturns, there are those who offer one or other solution to the perceived problems, and those who would be on the losing side undoubtedly wish to hang on to the money they have made which others take offence to, or wish to use in government taxation.
Just as the last time that the west was mired in economic pain – the 1970’s and early 80’s, we saw unrest in the middle-east in places like Libya in 1969 as Muammar Gaddafi seized power, 1973, when Saddam Hussein seized power in Iraq, and as Khomeini re returned to Iran from Paris, France to begin the Iranian Revolution, when the Shah, who had been appointed or at least supported by American Oil Barons, was forced to flee.
These revolutions occurred precisely for the same reasons we see unrest in the middle-east and Ukraine today – MONEY – or rather “Sound Money”.
When one country can just print up its own currency to buy things that other nations have to provide through blood, sweat, intellect, and capital (savings) to produce, then that country has an unfair advantage, And sound money is the antidote to many of today’s problems, which is why former presidential nominee, and Republican – Senator Ron Paul, has on numerous occasions called for limited government, a smaller military, and a return to the policies of the early republic, when the constitution required the new republic to maintain good relations with all countries, and to not favour any of them.
And to defend itself from tyrannical rulers, the new constitution required the population to have a well armed civilian population, who could be relied upon to rise against tyrants and those who would seek to use the population for their own selfish political ends.
This is the main reason why those in power at the head of the U.S., are keen to influence the Constitution’s 2nd amendment, because without those guns in the hands of the good people (In the main) of America, they can’t impose many of the rules and regulations that they feel they need to keep order, and it is precisely why the use of drones is such a cause of controversy.
There are some who feel that the 9/11 disaster was a secret plot that was allowed by some Neo-Cons (New Conservatives) who want to return the country to a pre-republic era when the Aristocracy controlled everything, and the people were mere serfs – like cows, to be milked daily, and that the events in the Ukraine is an extension of that thinking, as European politicians controlled by the aristocratic bankers of yesteryear, want to extend their control over the fields of the Ukraine, for the food needs of the European population, and for its military significance, with its Port in the Crimea, which President Putin, needs to allow his Naval vessels to access the Black Sea, and through the Bosphorus, to the Mediterranean and beyond..
In fact the phrase a “New World Order” has been used by many politicians keen to have a one-world government, ruled by the few who will no doubt appoint those who already wield significant power by mere dint of wealth – the Plutocrats.
Those groups in the dark recesses of Ukrainian politics, with fascist tendencies it is alleged, have been financially supported in an effort to overturn the backward looking Yanukovych government which sought financial help from its former Soviet pay-masters, and there were many who in the west of the country wished to look towards the European Union for help and progress. Perhaps the choice was a lesser of two evils?
Perhaps the REAL reason that the west has been so vociferous against its former Soviet opposition, is because the West needs pro-western middle-eastern oil, (and oil from the “Stans”) and Syria’s Basher Al-Assad, has already agreed a pipeline from Iranian gas and oil-fields, to the Mediterranean coast, from Iran (a Chinese and Russian ally), through Southern Shia controlled Iraq, Syria and Lebanon (a Syrian ally) to allow Iranian oil and gas to western and European markets, by-passing the pro-Western. Arab nations of Saudi-Arabia and Jordan, and Russia’s Naval Fleet stationed as it is in the Black Sea stands as a bulwark against their political machinations?
Any attempt by the west to use force in the region could be blocked by the Russian Black Sea Navy, which in 2011, added to the number of ships stationed in the Eastern Mediterranean Sea, and which use the Syrian Port of Tartus, which has been in operation since Soviet days.
The events in the bread-basket of the former Soviet Union, may well lead to major political upheaval, and the secession of the Crimea, which given recent unrest, is looking increasingly likely, despite Ukrainian protests that their referendum is un-constitutional.
Watch this Space.