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Commentary on Precious Metals

"In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die." --Rudyard Kipling

Commentaries:

  • <<End of the Dollar>>.
  • In Gold We Trust. By Koos Jansen. Regularly updates the state of the gold market around the world. An excellent researcher. Mr. Jansen believes (from his research) that China, as of 2014, has accumulated over 14,000 metric tonnes of gold.
  • (YouTube) THRIVE: What On Earth Will It Take? Good information on how the elite control the economy, health care, food, energy, etc. Somewhat utopic (i.e. the "torus" pattern), but informative, otherwise.
  • (YouTube) Robert Kiyosaki ~ Interview By Glenn Beck. Glenn Beck sits down with Robert Kiyosaki, of Rich Dad Poor Dad, and many other mega financial book best sellers. They talk about cash flow, the 5 G's (i.e. Gold, Guns, Grub, Ground, and Gas). They also discussed the future of America, etc.
  • End of the Road: How Money Became Worthless. Good one hour summary of how we got here. Costs $5.00 to rent.
  • (YouTube) Silver is The Achilles' Heel to the Entire Economic System. Posted 3/21/2012. David Morgan commentary. See also: Global Silver Taxes Part of Global Agenda to Dissuade Individuals From Buying Silver which lists the high taxes on gold and silver purchases in Europe. This is in contrast to China, India, and Russia where taxes on gold and silver are minimal to non-existent.
  • GATA: 'Financial repression' is gold price suppression. Posted 12/30/2011. What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities, or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets....as a mere high school graduate remarked a few years ago, "There are no markets anymore, only interventions."
  • Money supply explosion will lead to accelerating inflation. Posted 12/17/2011. Singularity or the point where the gold price goes to theoretical infinity, is in February 2014, only 26 months away. Unless this long-term trend (since the 1900s) is somehow broken, gold is also telling us the dollar is heading for hyperinflation.
  • Kyle Bass on the Fate of the World. Posted 12/16/2011. Must watch video.

Ludwig von Mises Institute

Banking and the State. Posted 2/1/2013. The process of civilization: (1) There must be an inequality of skills and wants among people. This is a necessary condition for people to want to seek cooperation. (2) Man must recognize that higher productivity is possible through a division of labor. The inequality of skills and wants, accompanied with the assumption of a minimum intelligence, leads people to engage in the division of labor and specialization. This, in turn, brings about the need for interpersonal exchange. The primitive form of an exchange economy is barter. Barter has limitations, however. Sooner or later, people will realize that using an indirect means of exchange is economically beneficial. The indirect means of exchange that becomes universally accepted is called "money."

Money Warehousing. Money is an economic good like any other. As such, it will be economized, like any other good. People will demand convenient ways of holding and exchanging their money proper. With people differing in individual time preference, there will be savers (those who hold excess balances of money proper) and investors (those who demand money proper in excess of their actual holdings). It is against this backdrop that two kinds of money businesses would emerge in the free market: deposit banking (or money warehousing) and loan, or credit, banking.

The Incentive for Aggression. There are several ways of acquiring property: homesteading (which actually denotes the “first-user-first-owner principle”), production, and voluntary contracting. There is also theft--the forcible appropriation of the property (or labor) of others. Man's inclination is to aggression. It is the individual’s economic incentive to aggress against other peoples’ property that is at the heart of the emergence of what is typically called "government."

A government can be understood as a territorial monopolist of compulsion: an agency that engages in institutionalized property rights violations and the exploitation – in the form of expropriation, taxation, and regulation – of private property owners. There are various forms of government, but they can be distinguished between private (monarchy/feudalism) and public (democratic-republican) ownership of government. Public ownership of government will lead to an ongoing erosion of the encompassing interest of the majority of the people in the market income of society. (The average voter will support those politicians who are expected (rightly or wrongly) to improve the voter’s economic situation. A voter has every economic incentive to act in this way – irrespective of the fact that the income he may obtain in this way results from expropriating fellow citizens.)

(1) If and when public ownership of government takes hold, commodity money will be replaced by fiat money. (2) Fiat money leads to collective corruption on a grand scale. And (3), once collective corruption has become sufficiently widespread, the fiat money regime will be destroyed by hyperinflation.

It Will End in Hyperinflation. Collective corruption, once it has become sufficiently widespread, will lead to hyperinflation – meaning an accelerating increase in the quantity of money, leading to an erosion, or even a total destruction, of the purchasing power of fiat money.

Ted Butler's Newsletter

Silver Manipulation Explained In A Simple Way By Ted Butler. Posted 11/12/2012. Let me speak in simple terms. JPMorgan is stuck in silver, in my opinion. They bought a pig in a poke when they bought Bear Stearns in 2008 and took over the manipulation of the silver price. Armed with US Government financial assistance that probably included a promise of immunity against being charged with manipulating the price of silver, JPMorgan plunged headlong and willingly into that manipulation. Armed with virtually unlimited capital and regulatory carte blanch from the government, JPMorgan set out to dominate the paper silver market, just as Drexel Burnham, AIG and Bear Stearns did before that. Because the counter party technical funds could be bamboozled into and out of the market by the rigging of prices, JPMorgan came to “own” the silver market. But they became too clever for their own good. JPMorgan became such a dominant force in silver that the tables became reversed and it is unclear if whether silver now owns JPM. That may sound extreme, but let’s look at the facts.

There is an unusual concentration on the short side of COMEX silver. So unusual is this concentration that the CFTC, when faced with hundreds of complaints about the concentration began a formal investigation more than four years ago, unresolved to this day. In response to requests from lawmakers back then, the CFTC (inadvertently) identified JPMorgan as the biggest silver short. Since then, it has been easy for me to calculate JPMorgan’s continuing concentrated position. Even though it is perhaps the most aggressive and litigious of all financial firms, JPM has remained silent to continuous allegations that it is behaving illegally in silver. That silence has only help spread the growing awareness of JPMorgan as being the big silver crook.

No one reading this has ever witnessed a giant financial organization ignoring allegations that they are breaking the law. That includes me and I admit that it seems other worldly to me that I am the one making the allegations, as that was never the plan. But that doesn’t change the fact that whatever JPMorgan does will determine the price of silver. JPMorgan recently added 100 million oz in paper shorts because no other combination of traders was willing to do so. If JPM hadn’t sold short such large quantities of paper contracts, silver prices would have exploded, threatening to expose that silver had been previously manipulated in price. Having added such a manipulative short position, JPMorgan must now somehow rig prices lower to force the technical longs to sell so that JPM can buy back its manipulative shorts. When you get to the extreme position that JPMorgan holds in silver, you are damned if you do and damned if you don’t. I hope this is simple enough.

Ann Barnhardt - The Economy Is Going To Implode

"Communist Manifesto" by Karl Marx

The 10 steps to create an ideal state. See: Jim Marrs - The Trillion Dollar Conspiracy & the NWO (2010).

  1. Abolition of private property.
  2. A progressive or graduated income tax.
  3. Abolition of all inheritance.
  4. Confiscation of property of dissidents and immigrants.
  5. Creation of a monopolistic central bank.
  6. Centralize all communication and transport.
  7. Central control over all factories and farm production.
  8. Central ownership of capital with deployable work force.
  9. Blur the distinction between rural country and cities.
  10. Free public education for all children.

Commentary on Inflation, Deflation, or Hyperinflation

  • Inflation or Hyperinflation?. Posted 5/5/2012. The US Government (USG) is not an economy but the largest consuming enity ever known to man. The USG is net-emitting $3.6B per day, which is being "mopped" up by foreign central bankers. Our fate is now in their hands.
  • Peak Exorbitant Privilege. Posted 4/3/2012.
  • Wherein Gary North Rallies My Deflationist Side. Posted 4/29/2011 by Rick Ackerman. For now, I view myself as perhaps 55% hyperinflationist and 45% deflationist. However, the illuminating discussion of hyperinflation vs. deflation in the Rick’s Picks forum has made it clear to me that neither side holds all the cards. Because of the cosmic sums of debt needing to be liquidated, and the fact that the dollar is the world’s sole reserve currency, it can be said that there is no precedent in history for the disaster that looms – not Weimar, not Argentina, not Zimbabwe. Under the circumstances, the advice of anyone who claims to know for certain how things will play out should be scorned. The safest prediction one could make is that each of us, and everyone, will prove to have been wrong in some significant way.
  • Deflation or Hyperinflation. Posted 4/23/2011.

Your Future: The Ultimate Pyramid Scheme - Good information on this infomercial, but don't buy it

  • Part 1. Introducing the three experts.
  • Part 2 . Oil in the crosshairs.
  • Part 3 . Food is threatened.
  • Part 4 . The myth of American debt.
  • Part 5 . Here's how you can survive.
  • Part 6 . The cost of the pamphlets is $339. No need to buy, since most of this information is already available elsewhere for free.

Events to occur in an Economic Collapse

Debt Crisis

Reggie Middleton

Commentary:

(Paid service) What Radical Measures to Expect in the Post-QE Era. By Gregor Macdonald. Posted 8/1/2012.

Expect the 'benefits' of QE 3 to be short-lived. It will take about 6-9 months for (the coming) QE 3 to fail. Expect more radical solutions to be rolled out by Capitol Hill (not the Federal Reserve) within 90 days after QE 3, including:

  • Infrastructure build-out on a massive scale, such as rail systems and solar power.
  • Military resource redeployment to civilian projects
  • Debt jubilees, such as on student loans.
  • Tax holidays

Also, a weaker dollar policy will be pursued. A weak dollar helps U.S. exports.

"By this time next year, central banks will be out of bullets. And a hyperfocus on jobs will usher in a very different political climate, one that pays much less attention to banks and much more attention to labor."

Bank runs. Posted 12/28/2011.

Most think the final resolution of Fiat and ZIRP is through expansion of the MB (Monetary Base) or a governments inability to sell bonds. I don't believe this is the case. We are at a point where the CB (Central Bank) and governments are "all-in" to protect the status quo. The ruling class can effectively increase MB to infinity and they can become the only buyer of debt. Rates can be zero and those not at the table (individuals) no longer matter. The end-point comes from a different mechanism. It comes when flight of demand deposits ruin the reserve banking system.

MB and CBs balance sheets can expand to infinity - it doesn't matter! What matters - IMHO - is deposits. While these are a tiny fraction of the numbers involved in global debt they support the reserve banking system which supports a countries currency. Focusing on monetary base and central banks expansion of balance sheets is barking up the wrong tree. Now that individuals are close to being out as buyers in the debt market, increases in MB does not effect their purchasing power of deposit or currency. "Money" is already now effectively valueless other than as a medium of exchange.

I have been tracking what I think is the key - the ratio of currency per capita to non-institutional deposits per capita. When this grows it is the signal that belief in money as a medium of exchage is eroding. This is what sets off hyper-inflation. When countries finances are widely disparate such as Argentina in the 90s or Germany in the 20s it comes when currency flees one country to another and like a fever breaking the currency is destroyed.

Also read: Europe Bank Run Underway, Why You Should be Worried

Why is the price of gold and silver declining? Posted 12/28/2011.

It's a reflection of the flight from the Euro to the Dollar, the selling of assets to raise fiat, and the threat of deflation. Gold is going down in dollar terms but rising in terms of Euro. But rest assured. The more purchasing power the Dollar has the more expensive it makes our goods to the rest of the world to purchase. Thus slowing down our GDP growth which is already nearly flat. The Fed. will be forced to print even more. Although maybe not announced as QE but printing none-the-less. Trying to time the bottom is impossible. Just pick an entry point you can live with and keep enough cash on hand to make sure you don't have to panic sell to raise cash. Also,

  1. You can't get physical metal off Comex. It's a paper casino where the rules change as the house decides.
  2. Stolen money if you used MF Global as a clearing house.

People fleeing Comex because it's a rigged market...open interest is down 9% since the MF Global failure. Ann Barnhardt and Jim Willie recently had some great insight on that. See here. Bottom Line: Expect the phoney paper prices to keep declining, but the real physical price in the market will stay steady and then rise.

Gold price set for hyperbolic increase. There are five apocalyptic engines pushing the growth in US money supply: they are the government’s budget deficit, its debt trap, the financial condition of the banks, the delusion of Keynesian solutions, and lastly simple compounding arithmetic.

    1. The US government collects only 55c in taxes for every dollar spent. It is relying on economic recovery to reduce welfare payments and increase tax revenue to close the gap. This prospect is receding and establishment economists advise against cutting government spending.
    2. The US government’s debt trap is concealed by the exceptionally low interest cost of funding. The only reason this cost is not higher is the Fed maintains a zero interest rate policy. However, as surely as night follows day, price inflation will start rising as monetary inflation feeds through, forcing the Fed to allow interest rates to rise long before any economic recovery occurs. The rise in interest costs will escalate the budget deficit, which will be financed, directly or indirectly by further monetary expansion.
    3. The banks’ balance sheets are considerably weaker than stated, because of unrealised losses on assets, loan collateral and write-downs on their own debt. Real estate collateral write-downs alone probably exceed bank equity of $1,400bn. On an honest analysis the US commercial banks are collectively bankrupt. To simply survive the banks have no alternative other than to reduce loan exposure while requiring continuing monetary support from the Fed.
    4. Keynesian economists, aware of the banks’ difficulties are terrified of bank credit contraction. For this reason, the macroeconomic establishment strongly promotes the expansion of narrow money to buy off a deflationary depression.
    5. As the purchasing power of the dollar falls, the result of past monetary expansion, yet more dollars have to be issued to cover increased government costs. Past inflation becomes a compounding factor behind price rises.

Essentially, money will be printed at an accelerating rate to buy time rather than face the three realities of government default, an over-indebted private sector, and a bankrupt banking system. The Keynesians are belatedly aware of the dangers and see no alternative to printing as much money as is required to defer these problems. The monetarists in the central banks are hesitant, torn between Keynesian fears of outright deflation and worries about the rate of monetary expansion so far. However, the history of monetary inflation confirms that once it enters a hyperbolic phase, it is almost impossible to stop. Armchair critics have derided the stupidity of central banks and economists in past hyperinflations, such as in Weimar Germany, Argentina and Zimbabwe. The truth is that when hyperinflation has become visible at the price level, it has already gone past the point of no return at the monetary level.

Financial Panic Sweeps Europe As The Head Of The IMF Warns Of A “1930s Depression” (Posted 12/17/2011).

Right now, financial panic is sweeping across Europe, but most Americans are not too concerned about it because they simply don't understand how important the EU is. The truth is that the EU has a much larger population than the United States does. The EU has an economy that is nearly as large as the economies of the United States and China combined. The EU has More Fortune 500 Companies that the United States does, and the banking system of Europe is substantially larger than the banking system of the United States. Anyone out there that believes that a massive financial collapse in Europe would not dramatically affect the rest of the globe is being delusional. The European debt crisis is one of the biggest stories that we have seen in a long, long time and the coming financial meltdown is going to permanently change the global economy.

Italy Is Finished: "Mathematically Beyond Point Of No Return": (Posted November 9, 2011):

    1. At this point, it seems Italy is now mathematically beyond point of no return
    2. While reforms are necessary, in and of itself not be enough to prevent crisis
    3. Reason? Simple math--growth and austerity not enough to offset cost of debt
    4. On our ests, yields above 5.5% is inflection point where game is over. See Italian 10-year Govt Bond Yield here
    5. The danger:high rates reinforce stability concerns, leading to higher rates
    6. and deeper conviction of a self sustaining credit event and eventual default
    7. We think decisions at eurozone summit is step forward but EFSF not adequate
    8. Time has run out--policy reforms not sufficient to break neg mkt dynamics
    9. Investors do not have the patience to wait for austerity, growth to work
    10. And rate of change in negatives not enuff to offset slow drip of positives
    11. Conclusion: We think ECB needs to step up to the plate, print and buy bonds
    12. At the moment ECB remains unwilling to be lender last resort on scale needed
    13. But frankly will have hand forced by market given massive systemic risk

State of the U.S. economy:

  • Unemployment rate is 9%. That's the "official" (U-3) rate. Everyone knows that the rate is much higher (see Alternate Unemployment Charts).
  • Real wages are falling
  • Income advances go to the wealthy
  • Middle class is shrinking
  • Jobs hard to find. Minimal job creation and historically low investment. Also, globalization is precluding the hiring of domestic labor due to cheaper alternatives in developing countries.
  • Approval ratings of Congress and Obama at record lows
  • Consumers have high debt ratios
  • Home prices are still falling
  • Homeowners are trapped in their homes, unable to refinance
  • Boomers need to save for retirement. Consumption is now turning into savings.

Selected from: Norcini - Central Banks Collapsing the Financial System.

Right now the trading markets have become electronic battlefields. Much of this volatility is being created by a lack of stability in the Western hemisphere. If the current monetary system were a train, the engineer’s in the front would be the heads of the various central banks and they are certainly leading us to destruction....This tremendous volatility and lack of stability is being fueled by the reckless behavior of central banks....The volatility and the instability of the markets is a mirror image of the current monetary system. At some point the sheer volume of debt will carry us to a day of reckoning which is going to bring the system to its knees.

Selected from: Bizarre Love Triangle by Jim Rickards.

The world is now in a beggar-thy-neighbor phase, last seen in the 1970’s and before that the 1930’s, where countries steal economic growth from neighbors by currency depreciation to cheapen exports. The main event is the three-ring circus of the U.S., Europe and China and their respective currencies, the dollar, euro and the yuan. The dynamic is straightforward – all three would like a cheaper currency, relative to the others, to help exports. The U.S. devalues against yuan and the euro – it gets all of what it wants. China revalues upward against the dollar, but keeps a peg to the euro – it gets half of what it wants. And the euro remains strong against the dollar and pegged against yuan – so it gets none of what it wants. This has been the prevailing paradigm since June when the Chinese finally let the yuan appreciate against the dollar in a serious way.

There’s only one problem with this neat solution to the currency wars. Germany may be able to survive with a strong currency but the rest of Europe cannot and parts of Europe, especially Greece, are facing insolvency. Up to a point, the Greeks have to accept the fiscal austerity forced on them by the Germans. But beyond a certain point, either the Greeks or the Germans balk, and the crisis goes critical and threatens the stability of the global financial system.

If the euro weakens and China re-pegs to the dollar as a result, that is the signal for more QE. It’s hard to know how this will play out, but at least we know what to look for. If you want to see QE3 ahead of the market, watch the euro.