Central Banks Global Insanity Makes Scary Markets

Central bankers in Europe, America and parts of Asia are determined to keep printing, and selling new bonds backed by empty air with no oxygen, and smoke and mirrors. We think it’s deliberate to bust the global credit system and begin anew with erased debt, and a one world currency. In our view, if the system is smashed, what do the smashers have left with which to take control over the smashees-the Sheeple?

“The market place is a crime and punishment world, and this Federal Reserve credit expansion is the greatest monetary crime of all time. Accordingly, the punishment will be far and away the greatest punishment of all time.” -John Exeter, Gold Newsletter June, 1987 and James U. Blanchard III Golden Insights

Individually, much of the crazy stuff we see in our daily travails could be called absurd and not a real threat to world-wide economics. However, when we begin to produce a longer list; a daisy chain of foolishness, it’s not so funny any more. Here is our latest pile of the nasties producing rapt attention, and hair standing on end amid bug-eyed bewilderment.

The underground lending economy in China is charging 10% interest for private loans. Chinese inflation is running 10% annually in some regions and over 35% in others. Crops are burned-up and food imports will be legendary.

There are numerous, very serious problems in China right now and they are doing their best to correct them. However, the sheer magnitude of a huge population and millions of job positions regularly needed for new workers is overwhelming. It has been reported they need 25,000,000 new jobs per year just to stay even. This is impossible.

On the primary river, the Yangtze, water level is down -40%. This hurts hydro production and creates more problems down stream. Food and jobs are the largest issues in China. Suicides are increasing by the month as corporate slave labor is driven to the wall with overwork earning peanuts.

Greece cannot begin to pay its debts and signaled last Friday it might be on a permanent exit path from Euroland and the Euro currency. Rating agencies in the USA have down-graded Greek paper to junk. This problem is coming to a head and must be settled next month or else.

Portugal is slightly less nervous but only because their “Debt Day” is further out on the calendar this year.

Iceland has stiffed the European bankers and told them they will not pay. If they do, it’s a dollar a week and the rest when they catch the debtors; which is never. Greece and Portugal might be next in this action. Meanwhile, “Sell-out” Iceland banksters are kidding the ECB into believing they want to repair the damage and join the EU community of nations. This is false-flag-pacifier feeding pabulum to the European bankers and media.

Ireland has seen a major decline in pub traffic amounting to -7% fewer customers. There is a one way exodus from Ireland to Australia for opportunity and work. The Irish central bank scammers are trying to persuade Europe’s lending markets that billions in debts will be re-structured and they will be paid. Yet, remnants of the old IRA are girding for battle again; this time against the bankers. Remember what we wrote about relating to Adam Fergusson’s book When Money Dies during the years 1918-1922? Then, some politicians and bankers were exterminated. We are strongly against this violence but history repeats.

Legitimate voting, negotiation and conciliation are the right and legal way but when a man’s been robbed blind and those doing the robbing continue to rob, we know where things are headed into the streets.

Our latest trouble spot last week was news from the U.K. Ironically, they will get the worst outcome for trying to do the right thing by moving to a severe austerity program. By installing major cutbacks on free-stuff, the herd is going to retaliate as their suffering increases. This one could very well be the Black Swan me and my colleagues have been worrying about.

Germany is strung-out for nearly $600 Billion to $1 Trillion in credit to the PIIGS and other weak-sister Euro-land members. Some of the nearby non-Euro members from Eastern Europe are looking for ways to duck and run.

We learned on a recent radio interview; from the host, that Switzerland no longer has gold behind its Swiss Franc as of 2006; this after somehow making a deal with the IMF. The Swiss are solid but a fiat currency is a fiat currency. Should conditions go very sour quickly, as they are liable to do in emergency credit situations, the Swiss Franc might get tossed with all the rest.

Canada and Australia are in better condition than most but those USA bad credits would be a millstone on Canada should Bernanke’s Frankenstein credit creations go south. The Aussie’s had $22 Billion in national good credits when the current administration took office. Now they are about that amount in the hole and are having economic meetings on the problem this month.

Weather all over the world is creating major destruction including earthquakes, drought, floods, grain shortages, and massive damage to say nothing of storm deaths in the USA and thousands killed in Japan. The PC crowd says its global warming. We say it’s a normal, one decade long disaster that’s been proven to be cyclically problematic throughout history. These weather cycles are normal and recurring. Global warming is a scam to take money from governments and taxpayers.

American farmers are doing their very best to grow and provide but cold, rain, flooding, storms and later planting are not encouraging to say the least. We think the corn market is the most vulnerable. Prices could set new records and rationing might arrive in the fall.

Those in the PC Green crowd proclaim fraudulent science to make money on green energy and other trashy ideas, designed to steal government subsidies and make money. If you corral all of that nonsense and compare it with crude oil, natural gas and coal, their scam might produce 1-2% of the global energy needs per year if lucky and, at a distinct economic disadvantage… as in loser. Without subsidies this scam is toast.

The USA lacks a longer range coherent energy policy but rather ricochets from one stupid idea to another as politicians change seats on each Election day.

The latest world-class stupid idea is to tax American drivers by the mile. They are already taxed that way by paying fuel taxes at the pump. How about some national budget reductions and savings? Not a chance.

Energy costs will rise on inflation and erratic markets. The USA is at risk in our view since 35-40% of our unleaded gasoline arrives as imported fuel from foreign refineries. What happens if deliveries are interrupted?

The US refinery population is diminishing rapidly mostly because of no energy policy, government rules interference and ridiculous EPA pressures. There can be safe and clean drilling. It has been proven for years, but the more recent response has been not in my backyard, or even in the backyard at the North Pole.

A new refinery costs $6 Billion to build. Kuwait offered to pay for one in the USA and they were EPA turned down. They went to China where they were welcomed with open arms.

“More than 28% of U.S. homeowners owed more than their properties were worth in the first quarter as values fell the most since 2008, Zillow, Inc. said today.” -John Gittlesohn 5-9-11 Bloomberg.net -Editor: Crash and burn trends in housing continue, as we have predicted since June, 2005. This will take a decade to reverse, find new support and regain strength.

Despite the anguish, whining and silliness that precious metals trends are “finished,” we forecast they continue rising much higher for several years. Our shortest forecast is 2017 and our longer one is 2024 for very long and extended rallies as real hard money continues to be recognized, purchased and saved for a rainy day. Hey, its raining already and the storms are increasing with ferocity. This is why precious metals continue to rally.

The Federal Reserve TARP program did nothing but prop-up bankrupt bankers and auto companies with a few others like AIG, which is still a Zombie company praying on the public shares markets’ and taxpayers to cover Goldman Sach’s bad trades. The U.S. Government plans to sell a large amount of AIG shares as soon as possible maybe at the peak before a fall selling event in New York.

The derivative scams continue and this time the breath and extension has been worse than before the Lehman crash. No one will stop these bankers and CEOS as they continue to use taxpayer’s money to pay lobbyists’ to promote their scams.

With American elections many months away next year, the regular, preliminary foolishness is well underway promoting individual agendas while handing out more free stuff for votes using taxpayers money to pay for it.

The president’s election war chest is estimated at $1 Billion dollars. The president will be re-elected and the administrations’ disasters shall continue.

We thought how naïve of us that the GOP’s would get busy and keep their promises to work for a balanced budget. What a joke! In their first tiny budget battle they folded like a cheap suit. The GOP idea of leadership is to “Go Along to Get Along,” or, in common parlance, we get the same old political crap as usual.

The die is cast and the end is very clear. The USA and world economies are doomed and, we as the little Sheeple, just have to recognize it; deal with it and be prepared.

Current inflation will go into hyperinflation. When it does, it will happen swiftly in days or hours terrifying markets and the entire world. This isn’t just a German 1919-1921 repeat. This is the reserve currency for 85% of an entire global monetary system rushing into a major smash. The German event was play school compared to what’s coming.

How can we cope with $6-$10 gasoline, heating oil at double or triple and the airlines trying to operate with Jet-A costing three times as much? One-third of the airlines operational costs are fuel. Recently, those costs were raised from 33% to nearly 40% for the industry. One executive said this fuel increase can ruin the airline industry.

Old folks pensions will be decimated causing choices of eat or, freeze; take your pick on higher utility bills. Food is already up significantly for some items and this is only the beginning.

This summer could be the start of major street riots and violence over food, water, and no paychecks. There are now 44,000,000+ on USA food stamps. It goes to 50,000,000 by the end of this year.

Some have said the Middle Eastern riots, violence and protests could not happen in the U.S. Why are we any different? Another interesting point… why are all of the Middle Eastern nations sinking into trouble at once? Was this a coordinated effort?

Could all this mayhem be prevented? We say easily by walking-away from three stupid wars and bringing home thousands of troops to do other more productive work. There is no need for America to be a policeman to the world.

Why is it necessary to attack half the immediate world in the Middle East to steal their oil? We could probably pay full retail on longer term contracts for a fraction of the money it costs for the wars. This is all about money, power and control.

Why is there no reasonable longer, term USA energy policy that would include not only the world at large but, a USA domestic policy?

The other huge money-saver could be cancellation of ALL government run and mandated heath care programs. Let private industry do it all as they would be released from layers of useless red tape and rules. The result would offer better care, less paperwork and tremendous savings. Charity would cover those unable to pay and the medical universe along with churches, the Red Cross and others would pitch-in to help the unfortunate.

This cannot happen as lobbyists for Big Health Care, and those for the massive defense industries need the government’s money to keep producing stuff to smash and blow it up for nothing. Big health care companies need your taxpayer dollars to make huge profits.

The better advice we can offer is to expect nothing from these situations and hope for the best. Take care of family and friends, invest in hard assets and daily necessities and soundly cut back your standard of living. We all have things we can do without and would probably be the better for it. Be careful out there. Control risk first but work at enjoying the simpler things in life.

More than ever, it is important to take immediate necessary precautions to protect yourself and your families and friends. Traders and investors should be buying precious metals and select shares right now. In our newsletter we have a great list of trading and investing ideas for you.

Meanwhile, you can never go wrong buying physical precious metals and holding them for security. We’ve had a constant run of nearly eleven years in gold rising +15% per year or more, so this remains a good trade. In the last twelve months, gold rallied over 34% and is going ever faster. As outstanding as those numbers are, silver is doing even better. Inflation adjusted gold should be about $2,350. Charts are telling us the top is no where near for now.

It’s not going to stop any time soon. In fact, we predict those annual percentages will rise even more and this offers a chance, arriving only once in 25 years on the historical commodity cycles.

Roger Wiegand

Federal Reserve Must Implement QE3, Says NIA (FULL TEXT)

The National Inflation Association (NIA) – http://inflation.us – today released the following article to its members:

Gold prices surged today to a new all time high of $1,463.70 per ounce, while silver prices soared to a new 31-year high of $39.785 per ounce. Silver is now up 129% since NIA declared silver the best investment for the next decade on December 11th, 2009, at $17.40 per ounce. The gold/silver ratio is now down to 37, compared to a gold/silver ratio of 66 when NIA declared silver the best investment for the next decade. This means that not only is silver up 129% in terms of dollars since December 11th, 2009, but silver has also increased in purchasing power by 1.78X in terms of gold.

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(Photo: REUTERS / Kevin Lamarque)
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The latest US business and financial news as well as issues and events Sample
Gold is the world’s most stable asset and the best gauge of inflation. This brand new breakout in the price of gold leads us to believe that the Federal Reserve is getting ready to unleash QE3 at the end of June. The Fed will surely not call it QE3, but NIA can pretty much guarantee that the Fed will continue on with their purchases of U.S. treasuries. If the Fed pauses after QE2, it will mean that treasury bond yields will need to surge to a level where they attract enough private sector and foreign central bank buyers in order to not only support the funding of our rapidly rising budget deficits, but to support the redemption of maturing treasury securities.

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In the month of March, the U.S. government spent more than eight times its monthly tax receipts, when you include the money spent for maturing U.S. treasuries. The U.S. treasury netted $128.18 billion in tax receipts during the month of March, but paid out a total of $1.05 trillion, which included $49.8 billion in Social Security benefits, $47.4 billion in Medicare benefits, $22.58 billion in Medicaid benefits, and $37.9 billion in defense spending. However, by far, the U.S. paid out the most for maturing U.S. treasuries, which equaled $705.3 billion.

In order for the U.S. government to stay afloat with only $128.18 billion in tax receipts, it had to spend $72.5 billion from its balance of cash, which ended the month at $118.1 billion, and sell $18 billion worth of TARP assets. But most importantly, the U.S. treasury had to sell $786.5 billion in new treasury bonds.

The U.S. government is the largest ponzi scheme in world history. We can only fund our government expenditures and pay off maturing debt plus interest, by issuing larger amounts of new debt. Americans are lucky that we have been blessed with record low interest rates for an unprecedented amount of time, but NIA believes that as we roll over U.S. treasuries in the future, we will have to refinance them at much higher interest rates. Our national debt is now so large that interest payments on our debt will become the government’s largest monthly expenditure.

If the Federal Reserve doesn’t implement QE3, NIA believes it will just about guarantee a bursting of the U.S. bond bubble in the second half of 2011. If the Fed stops buying U.S. treasuries, there is a chance that we won’t find foreign buyers for our bonds no matter how high interest rates rise. The world is waking up to the fact that the U.S. government is insolvent, and the benefits of propping up the U.S. dollar are no longer worth the expense to our foreign creditors. The U.S. government ponzi scheme will soon be exposed for the world to see.

Japan has been the most consistent buyer of U.S. treasuries. With Japan needing to raise $300 billion to rebuild parts of their country that were destroyed by the earthquake, tsunami, and nuclear disaster, we believe they will be forced to dump their U.S. treasuries, at a time when the U.S. desperately needs Japan to roll over their treasuries into larger amounts of new ones. Not only that, but with Arab revolutions taking place across major Saudi states and the U.S. beginning to occupy Libya for no reason at all, we will likely see Gulf states follow in Japan’s footsteps and stop purchasing/dump U.S. treasuries. Plus, China appears to be becoming more reluctant to continue buying U.S. treasuries, and is positioning the yuan to be the world’s new reserve currency. Without Japan, Saudi states, and China, there will be no buyers left for U.S. government bonds.

The fact is, with no QE3, we could literally see the 10-year bond yield double from 3.52% to north of 7%, overnight. Even then, it is unlikely to attract foreign buyers and we will likely be faced with failing bond auctions, which would cause a massive rush out of the U.S. dollar and trigger the currency crisis NIA has been predicting. NIA sees no other option for the Fed, but for it to continue on with its endless money printing and destructive inflationary policies.

Federal Reserve officials discussed last month in closed-door meetings the possibility that rising commodity prices could cause inflation. The fact is, rising commodity prices don’t cause inflation, they are a symptom of inflation. When the Fed leaves interest rates at 0% for over two years and prints $600 billion as part of QE2, that money printing and easy money is the inflation of our money supply, and rising prices are the result.

The Fed is narrow-minded and continues to focus on the CPI, which only grew last month by 2.11% year-over-year. Fed Chairman Ben Bernanke says he expects rising commodity prices to create a “transitory” boost in U.S. inflation. Meaning, when the CPI rises even higher in the upcoming months, Bernanke will likely place the blame on what he considers to be temporarily high oil and soft commodity prices.

The CEO of Wal-Mart is now saying that U.S. inflation is “going to be very serious” and that Wal-Mart is already seeing “cost increases starting to come through at a pretty rapid rate.” He predicts that because of huge increases in raw material costs, along with soaring labor costs in China, and skyrocketing fuel costs around the world, retail prices will start increasing at Wal-Mart and all of their competitors in June, especially for clothing and food.

When asked about the predictions of Wal-Mart’s CEO, Bernanke said that he expects price pressures to remain largely stable, but then added, “Wal-Mart has more data than the government does.” Bernanke was also quoted as saying, “We have to monitor inflation and inflation expectations extremely closely because if my assumptions prove not to be correct, then we would certainly have to respond to that and ensure that we maintain price stability.”

The European Central Bank (ECB) is expected to raise interest rates tomorrow for the first time since 2008. Many people are now speculating that the Federal Reserve will begin raising the Federal Funds Rate at the end of 2011. NIA is receiving many new ‘NIAnswers’ and email questions on a daily basis, asking us what will happen to gold and silver prices if the Federal Reserve were to raise interest rates.

In our opinion, the Federal Reserve raising the Fed Funds Rate would actually be very bullish for gold and silver prices, because it will serve as an admission that even the Fed believes inflation is becoming a major problem and beginning to spiral out of control. Historically, the best performing time period for precious metals has been when the Fed begins to raise artificially low rates. Remember, when the Fed begins to raise rates, they will probably raise rates only 1/4 or possibly 1/2 of a percentage point at a time. Interest rates of 1% or 2%, although higher than 0%, are still artificially low and will do nothing to curtail inflation. NIA believes the real rate of U.S. price inflation is now 6% and we will need to see the Fed Funds Rate rise to a level that is higher than the real rate of price inflation, if the Fed wants to have any hope of preventing hyperinflation.

Read more: http://www.ibtimes.com/articles/131528/20110407/inflation-us-economy-gold-prices-qe2-qe3-tarp-obama-treasuries-federal-reserve.htm#ixzz1LxGKqYrU

What it Takes to Truly Stop the Gold Bull

Commodities / Gold and Silver 2011

The odds of a long-awaited precious metals correction increased this week.
Gold and silver have been setting new high after new high. Gold is up $100 and silver’s up more than $10 since President Obama ruled out significant spending cuts in his mid-April budget speech and the Fed chairman noted inflation will be “transitory.”

The strong uptrend, however, showed its first signs of weakness in months this week. Gold has fallen for four straight days and silver is down nearly 20% from its highs.

If the downswing continues, it could be enough to send the hot money crowd running for the exits and set off a long-awaited (and healthy) correction.

It’s time like these, when pundits are itching declare the bubble over and emotions can quickly overcome rational decisions, the best move is to revisit what it’s going to take to pop the emerging gold bubble.

The Dollar’s Widely-Predicted Demise

The current “story” driving gold is a simple and very widely spread one.

Government spending is out of control. The federal deficit is well over $1 trillion and both sides are nowhere close to agreement on how to close it (and won’t be until after the next election or until the next debt crisis suddenly hits). China has stopped by U.S. government bonds. Bill Gross, a.k.a. the Bond King, has sold out of U.S. Treasuries. There’s nowhere to go but down for the dollar over the long run.

And any hopes of a return fiscal sanity have been quickly dashed. The last round of $38 billion in phantom spending cuts have done nothing to reduce the trajectory of federal spending growth.

The chart from Downsizing Government shows the trajectory of federal spending excluding TARP (which created a huge outflow in 2008 and one-time inflows in 2009 and 2010 as it was paid back):

In short, the dollar is doomed.

We, however, see the gold bubble as a much simpler financial phenomenon. As a result, our view on gold is a bit different and we’ll have a good idea of when the still-forming gold bubble is about to burst.

Getting “Real” about Gold

Gold prices have risen due to many factors. One catalyst, however, has outweighed them all.

The chart below from Gresham’s Law shows what happens when real interest rates (interest rates after inflation) are negative.

As you can see, there have been three periods of sustained negative interest rates in the past 80 years.

Each period of negative interest real rates coincided with rising gold prices and/or extremely high inflation.

The first period came at the tail end of the Great Depression and throughout World War II. The price of gold was fixed. After World War II was over, however, a sharp recession followed and inflation increased more than 100% between 1945 and 1946.

The 1970s was the second period of inflation. After the gold standard had been lifted, inflation soared and nominal interest rates didn’t keep up. Real interest rates plunged and high inflation, economic stagnation, and a sharp rise in gold coincided. Gold prices didn’t drop until real rates turned positive in 1980.

The final period of negative real interest rates is the current one. Since the Fed dropped nominal interest rates in 2002 to counteract the tech bubble and spark the housing bubble, real interest rates have meandered in and out of negative territory.

Since the credit crunch, however, interest rates have stayed negative. The entire time, official inflation has been benign, but commodities prices have surged and gold and silver have lead the way.

And this period of negative real rates is not going to end anytime soon.

Bernanke’s Bind

The Fed chairman is in a bind.

He can raise rates, shut off the free money spigot, send stocks and bonds much lower, and let excess debt be cleared away during a deep recession. This would result in positive real interest rates.

Or he can keep the party going, allow the economy to continue to limp along, and let inflation continue to grow. This will keep real interest rates solidly in the negative.

During last week’s first ever Fed press conference, an example of how politicized the Fed has become, Bernanke signaled he’s firmly committed to the latter.

This is the most critical foundation to the coming gold bubble.

There’s no way to value gold. It could be worth $500 and $5,000. Either could be justifiable. The most important factor is real interest rates are negative because gold goes up when rates are negative.

A precious metals correction may be near. It may not be. But at this point, we’ve got at least another year and a half left (probably longer) to go for gold prices as real interest rates are going to be held well below zero.

If history is a reasonable guide, gold prices will continue their uptrend. And for a number of reasons (more near-term catalysts for available here) any correction will be a short-lived buying opportunity.

Good investing,

Reasons to Keep Riding the Silver Bull Market

Peter Krauth writes: After watching silver’s wild and relentless climb since last August, some high-profile investors have started taking profits.

That’s caused silver prices to correct about 20%, down from $48.70 to $39.05 intraday yesterday (Wednesday).

Does that mean the silver bull market has peaked?

In a word: No.

Don’t misunderstand: We could still see additional declines in the price of silver.

After that, however, we can bank on the silver bull resuming for the very simple reason that we can identify the three specific factors that have caused silver prices to fall. And all three of those factors are as rational as they are finite.

Three Reasons the Silver Bull Stumbled
As Money Morning readers are well aware, I’m as much of a silver bull as anyone. But when I look at the 20% decline silver prices have experienced in the past several days, I can attribute the drop to the following three reasons:

•Silver prices rose a long way in a very short time, making them vulnerable to downward pressure from other catalysts.
•The exchange on which silver trades made it tougher for traders by boosting margin requirements several times starting last week.
•And several high-profile investors have reportedly sold silver, exacerbating investor nervousness.
Let’s look at each of the three.

Silver Prices: A Long Run in a Short Time
I’m more aware of this than anyone. I put a “Strong Buy” on silver for Money Morning readers back in late August when the white metal was trading at $19.40 an ounce. It was at $48.70 on Friday, meaning that investors who took this advice pocketed a profit of as much as 150% in just eight months.

Even after the sell-off, those readers are sitting on a double.

In a follow-up article that appeared last week, I warned that a near-term correction was possible, but noted that the long-term outlook for silver was highly bullish.

Whenever a financial asset makes such a stunning advance in such a short time, it is much more vulnerable to a correction or consolidation. So this isn’t a surprise to me, and it isn’t a worry.

Comex Raises Silver Margins – Again
The Comex division of the New York Mercantile Exchange – where silver futures are traded (both of which are part of the CME Group Inc. (Nasdaq: CME)) – on Monday decided to raise the margin requirements on silver by 12% (the increase went into effect the next day). That came on the heels of two previous increases – of 9% and 10%, respectively – that were implemented last week.

Last week’s increases in the margin requirements for silver failed to quell the exuberant trading. But Tuesday’s 12% increase may have done it.

You see, the precious metal gold is purchased and held predominantly by big institutional investors, investment funds and even central banks. But silver is actually dominated by individual investors. And when the exchange increased the requirements for trading silver-futures contracts, a number of those individual investors were forced to liquidate their holdings.

Yet something, perhaps even more significant, also took place recently…

Smart Money Takes Profits, Reinvests
In recent days, a number of high-profile silver investors have sold the metal – further unsettling already worried individual investors holding silver.

The fact that the “well-heeled” were exiting silver “put fears in people’s minds,” Adam Klopfenstein, a senior market strategist with Lind-Waldock in Chicago, told MarketWatch.com.

The Wall Street Journal reported late Tuesday that such well-known investors as George Soros and John Burbank have been selling off their gold and silver holdings recently. Those sales have contributed to the recent price declines for these precious metals, and could threaten the nine-month rally gold and silver have experienced.

And Soros and Burbank weren’t alone in their decision to sell.

Eric Sprott, of Canada’s Sprott Asset Management LP – which has a total of $8.5 billion under management, and which is also one of the biggest silver bulls – cashed in $35 million of his own Sprott Physical Silver Trust ETF (NYSEArca: PSLV).

It’s likely this news hit the silver market, too, exacerbating the sell-off.

Why would Sprott do this? Remember, he’s a seasoned and astute investor.

In an interview with Toronto’s Globe and Mail newspaper, Sprott explained that he’s still very bullish on silver. He told the business daily that “Every dollar of money that was raised by selling shares of [the Trust] … was reinvested in silver or silver equities.”

What’s more, PSLV was trading at a 16% premium to its net asset value (NAV). So right near an interim top, Sprott recognized the relative value (versus his own silver ETF) in both physical silver and silver equities.

The trade by this savvy investor – cashing in the overvalued to reinvest in the undervalued – is a perfect example of how the smart money behaves, and why the contrarian investor often comes out on top.

Sprott also indicated that he’s not ditching his trust, and that he continues to own 25% of PSLV, allocated between his various investment funds and charity. [Editor's Note: If you would like to emulate Sprott, take a look at the trade that article author Peter Krauth has detailed in the "Actions to Take" box that follows this story.]

The Silver Bull Lives
Even though such investors as Soros, Burbank, and Sprott have sold silver and silver-related holdings, a number of other experts continue to favor gold and silver. We mention gold because silver remains the “yellow metal’s” crazy cousin.

Hedge-fund legend John A. Paulson – who solidified his place in investing lore by shorting the subprime mortgage market – continues to believe in gold and silver.

And Paulson is far from being the only one. In a column published just yesterday, for example, Brett Arends, who writes for both MarketWatch and The Journal, made a highly compelling case that gold has yet to top out – and could actually “go vertical” from here. Arends made a compelling case, as did some of the institutional players he spoke to.

If gold were to skyrocket, silver would move as well.

Other investors have made similar prognostications.

So my advice is to watch silver closely for signs of a bottom before taking a position. And then buckle up and enjoy the (wild) ride.

U.S. Dollar Weakness Shows Gold and Silver are the only Real Currencies

Currencies / Gold and Silver

Dollar weakness that has continued will continue. That is to make US goods cheaper and more saleable as exports, but the flip side is that imported goods are more expensive and that creates inflation. Such a policy is foolhardy versus foreign nations that have export advantages. Besides the US does not have the predominance of mass to compete on this level. If tariffs on goods and services were implemented that would be another story. That accompanied by a change in tax laws for transnational corporations, that would force them to return the $2 trillion they have offshore and pay normal taxation which would be very beneficial to solve tax, production and employment problems.

Remember, we have lost about 9 million jobs over the past 11 years, as well as 440,000 businesses due to free trade, globalization, offshoring and outsourcing. Tariffs would level the playing field and leave no advantage to cheapening one’s currency, because it would be accounted for in their tariff structure. Having lost our export markets we have a jobless recovery that can never improve, nor can our balance of payments deficit and our increasing debt cause not only falling revenues, but falling job creation. This is just another artifice to try to stave off the inevitable. Lowering the dollar is not the answer. Having a level playing field is the answer.
Price fixing is an exercise in futility and so is a course of mandatory wage increases pursued to play catch up with runaway inflation. Even though higher numbers show sales growth they are misleading and only a reflection of higher pressing inflation. This is not economic growth; it is price inflation. Such an exercise is geared to keep people and business solvent, but in the long term it accelerates inflation and leads to worse problems down the road. The economy is exhibiting deterioration at the edges and that is to be expected for an economy that has been so badly misused. What is left of manufacturing is in decline and until the system is purged such deterioration will continue. It is not only the US, but also the UK and Europe that have followed the Keynesian course and then display suppression when inflationism overrides their systems. These governments are shortsighted and do not posses the strength to cut expenses and raise taxes. They will come slowly when it is to late.
They do not seem to understand balance and sacrifice. Price regulation and wage controls are artificial answers and only expose economic decay and in time fail to work. This value distortion leads eventually to a barter type system, which is inefficient. Then again this would not be necessary if the currency system had not been abused as it had been. This is what happens to nations that wallow in debt in excess of 100% of GDP. The excuses are multifold but the results are always the same, and that is default. Those who created the system in which we are now enmeshed know exactly what they are doing. This game of controls and more money and credit only buys time to pick the right spot to pull the plug and begin another war. We can never understand how bankers can believe the system will collapse, but they remain immune. These same bankers have been in part responsible for current and future inflation and the proliferation of derivatives, which create a faux system within a system. Once these derivatives unravel they will create an explosion at the heart of the banking system. That will take out the top five banks in the US.
There has been no reform and there will not be any. Tariffs will come when it is too late, as will regulatory reform. The proliferation of fiscal debt will continue, as will the exorbitant creation of money and credit. They cannot stop. If they do the system will collapse. That will happen, but only when those driving and controlling the system allow it to do so. We have just witnessed the disinformation calculated to deceive the public into believing that there is a recovery afoot. Nothing could be further from the truth. What little upside that was seen was a lift via price inflation. When figures are released there is never an addendum explaining that if inflation were removed, what the statistics would really be. That is why we have a 5 to 10 year bull market in gold and silver ahead of us, whose presence is so powerful that no governments or central banks can regulate, suppress or overwhelm it.
We have learned from studying the history of currencies for the last 6,000 years, that gold and silver are the only real currencies. Recently we have seen a 40-year hiatus, but, of course, in the history that is the blink of an eye. Being mortal is disturbing because you can see history, but not the future. But we say you can approximate the future by learning about the past. His-story, the history of man. Bankers wed to the fractional banking system really despise gold as a backing for currencies, because it dos not allow them to create infinite amounts of money and credit. This leads in time to monetary debasement and the kind of conditions we are witnessing today. As we said previously, we have seen an almost entirely unnoticed titanic struggle between the US dollar and gold over the past 2-1/2 years, and gold has been the winner hands down. Now we are seeing the inflation factor come into play. The Fed at the same time continues to support the bond market to keep interest rates low, even going to the extent of manipulating the Treasury Inflation Protection Securities to create an illusion that inflation is a minor factor. The manipulation of bond prices in the US Treasury market has all but driven all investors, both foreign and domestic, away from these markets. Finally investors, particularly professionals, see the situation for what it is – plain and simple fraud. In addition, they are tired of observing the scams totally lacking in prosecution to say nothing of the selective corporate welfare, which has been doled out to fellow Illuminists. All they can see is unbridled monetization and inflation and lower dollars as far as the eye can see.
In recent developments the US, England and France have declared a so-called NATO war against Libya. They have frozen $32 billion held in trust by the US in the US. That is the largest amount ever held by the US concerning a foreign country’s asset. The three countries want Libya’s oil, four water aquifers, central banks and their 484.5 tons of gold, plus the Libyan funds held by other countries. These three want to steal it all and leave the country destitute. The EU has in addition frozen $67 billion. It is thought that because the US is desperate for funds that they will now put into the economy those funds to help keep the economy from collapsing.
The US Treasury and the Fed have created a giant bond fraud and the world’s professionals and governments are well aware of it. If they have to take the US dollars in trade they have to take the inflation that comes with them.
They not only have to tend to inflation in their own economies, but fight off dollar inflation as well. That is why nations are dumping US dollar as soon as they receive them by buying raw materials, investing in land, real estate, plant and equipment and gold and silver.
The bankers and the western governments now expect us to believe that Osama bin Laden is dead. He died years ago. This is just more propaganda for a distraction to more important matters, such as the deterioration and collapse of the western financial system. Anything to keep the game going, anything to deceive. We see no comment in any media that the US and European countries had frozen some $32 billion in US banks and $67 billion in European banks of Libyan sovereign wealth funds. As you have seen desperate people do desperate things. These funds do not belong to Mr. Gaddafi, they belong to the Libyan people. It is simple the west is broke and needed the funds. When you see Chatham House all over the European news you know the black nobility executed this.
As such events occur we have Fed Chairman Mr. Bernanke totally lacking integrity telling us there is little inflation and that the Fed just needs more time to complete recovery. What recovery, it must be hiding because we do not see it? What the Fed is doing is no monetary experiment. It has been tried over and over again through the centuries and it is well known among professionals that what Mr. Bernanke is doing does not work. When you hear from Mr. Bernanke that commodity price effects will likely prove transitory, when there has been a bull market in commodities since 1999, and that bull market is getting stronger, you have to question Mr. Bernanke’s integrity. He reminded us of the dollar’s previous comeback proved the safe-haven status of the dollar. How laughable. The rally created by banks was market rigging and we exposed what they were up to early. They are now running the euro up to make even more profits. This week or next the euro should reverse its rally as meetings resume in Greece. To these people currencies, gold and silver, commodities and markets are like footballs to be kicked around. It is not surprising that long-term confidence in the dollar is falling as uncertainty and instability, along with climbing inflation are becoming noticeable. There is no question the Fed has spent many years off course serving its owners and controllers in banking and on Wall Street. This time it is different. This time they are taking the whole system down deliberately to force the peoples of the US, UK and Europe to accept world government. This is not abrogation of responsibility or incompetence; this is willful greed and destruction. In QE1 and QE2, the banks and Wall Street were saved and then the Treasury. Little was done to address what was going on in the real economy. All credit, monetary and fiscal policy, was used to extend the health of the financial community and select transnational conglomerates.
Speculation has been the result of credit expansion almost all of which was pointed at Wall Street, banking and AAA rated transnational conglomerates. We find it interesting that all commentary and reports are based on Fed assumptions. Their policies and end game are rarely questioned, especially when other professionals know what they are up too and they know it does not work. Is it because they are Keynesians? In part yes, but the key is they are afraid to speak out, because if they do they lose their jobs, or in some cases are suicided. These people play hardball and they are unmerciful killers. If you don’t believe that just look at all the wars they have created and financed on both sides. You cannot approach what the money powers are up to with logic and reason. You are dealing with a predatory animal that will out of hand kill its own for power and survival.
How can anyone believe the Fed Chairman when he tells us that there are well-anchored inflation expectations, when real inflation is about 10% and even the uneducated public understands that? This is a monstrous lie, all and sundry know that, yet the media and the powers behind government perpetuate that lie cloaked in propaganda.
As a results of such prevarication gold and silver hit new highs. That has of course brought a barrage of sell recommendations from the regular suspects on CNBC, CNN and Bloomberg, along with the comments of silver mania, bubble, etc. What is worse though are the 96% of newsletter writers who have been consistently wrong for the past five years. It is sell, sell and switch to gold. The coin dealers go right along with the program for profit of course. What a woeful gaggle of dunces and opportunists.
The public doesn’t believe the Fed inflationary lie nor do professionals believe a weak dollar is good for the economy. For Bernanke to even allude to higher official interest rates is laughable. These same “expert”’ observers go right along with the perpetuation of what the Fed has done for a century and that is rob the public blind. Very few want to return monetary policy to the Treasury and perhaps honest transparent policies, that put the American people first, not Fed shareholders.
As we said three years ago, the Fed will expand money and credit until it cannot any more and then they’ll have a new world war to eliminate population and distract the public’s attention away from social, financial and economic chaos.
Right now the big push is to sell silver to buy gold based on the gold-silver ratio. We have been in the markets for 52 years and that ratio has never worked. All the traders who listen to this foolishness will end up last in line. Jackrabbit trading is for losers, we know we were traders for 25 years.
What does not seem to be self-evident among investors and others in that the same group controls Treasury and the Fed. They do what they feel like doing and the media, which they own and control, does exactly as they are told. Writers and commentators say we need more rules to control the Fed. What we need is an end to the Fed, but these weak willed characters refuse to say that because they do not want the wrath of the elitists down on them. What a scurrilous group. There are not going to heavy new rules, because the people who control the Fed have purchased 95% of congress and the judiciary. There has to be violent and radical change and unfortunately there is only one way that can come about.

Gold And Silver Storm The Fed

Commodities / Gold and Silver 2011

All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation. John Adams (1735-1826), American President

America’s founding fathers would not be surprised at the dire state of the nation they created in1776. America was then an experiment. No similar form of government had ever been attempted; and even at its birth the founding fathers had doubts as to whether the American experiment would succeed.

Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. John Adams (1735-1826), American President

The once great nation of America is now a goat rodeo where the electorate is both confused and ignorant yet stubbornly believes itself otherwise. Adroitly ruled by corporate and banking elites whose deadly threat remains unrecognized, America today is bereft of leadership and options, a shadow of the nation intended by its founders.

The warnings of those who created America have long been forgotten. John Adams’ words regarding the dangers of not understanding the nature of coin, credit and circulation was clear warning to those who would later place the nation’s currency in the hands of private bankers.

The central role played by central banking in America’s problems is not understood by most Americans. However, the founding fathers clearly understood the dangers posed by the issuance of debt-based money from central banks. On my program, Dollars and Sense, .I explain the system of central banking adamantly opposed by our nation’s founders, see http://www.youtube.com/…

Of the founding fathers, Thomas Jefferson especially recognized the dangers that central banking posed to the American experiment:

The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin [gold and silver coins]. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.

Yet, on December 23, 1913, private bankers gained their long-awaited advantage over America when business and corporate interests successfully created the Federal Reserve Bank, a central bank which the founding fathers had fought the Revolutionary War to prevent.

After 1913, a consortium of private banks which would henceforth issue America’s currency in the form of debt, i.e. Federal Reserve notes, in opposition to the wishes of those who founded America.

The Fed’ substitution of its paper notes for gold and silver has now caused the nation irreparable harm. Since 1913, the banker’s debt-based currency has resulted in the transfer of most of America’s wealth to the moneyed elites, leaving the rest of America impoverished and in debt. Today, the very top 1 % of America receives 25 % of its income and controls 40 % of its wealth.

The bankers’ parasitic plunder of America is almost complete as America’s politicians have sold-out the country, members of both parties are now indentured to the special interests who openly buy their votes behind closed doors.

..deep down in our hearts, we have been accomplices to doing something terrible and unforgivable to this wonderful country. Deep down in our hearts, we know that we have bankrupted America and that we have given our children a legacy of bankruptcy. … We have defrauded our country to get ourselves elected. Senator John C. Danforth (MO-R), April 22, 1992

The bankers’ triumph, however, is not complete and were it not for their insatiable greed, the bankers would already own America. But in 2008, the banker’s greed, overstepping all bounds, almost destroyed the global economy and significantly damaged the world’s banking system; and while this is bad for the Fed, it’s good for America.

Only the complete collapse of the Federal Reserve System and central banking can now free America from eternal debt enslavement; and while it’s been a long time since 1776, there are more ways than one to overthrow the few who tyrannically rule the many by credit and debt.

CENTRAL BANKING’S CONUNDRUM

The foundation of central banking was the convertibility of its debt-based paper money to gold or silver. This convertibility provided the confidence to exchange valuable goods and services for the bankers’ paper banknotes.

The ability to convert paper banknotes for gold and silver provided the requisite confidence for the bankers system to function. As long as the delicate balance between credit and debt could be maintained, this system, known as capitalism, provided England with an insurmountable advantage over the rest of the world.

England alone was able to send its army and navy to war on credit. Its navy essentially became a fleet of state-sponsored pirates, allowing England to invade other countries with impunity, plunder their wealth and become the largest empire in the world since Rome.

The British empire, however, reached its apogee in the mid-19th century and when its empire began contracting, the bankers needed another country to serve their now insatiable ambitions and need for profits. America was their country of choice.

In 1913, the creation of the Federal Reserve Bank in America afforded international bankers the very same opportunities conditional upon America fulfilling two essential prerequisites: (1) maintain the convertibility of paper money to gold or silver, and (2) maintain the critical balance between credit and debt. America failed to do either.

America maintained the convertibility of paper money until 1971 when the US had overspent its gold reserves after WWII and could no longer convert US dollars to gold; and, as a result, the balance between credit and debt after 1971 also became heavily imbalanced in favor of debt when the US discovered it could easily trade its paper dollars for the world’s wealth without a concomitant transfer of gold.

America took England’s golden goose, spent the gold and now the days of central banking are numbered; and whether you know it or not, this crisis presents America with a priceless opportunity to free itself from the unconstitutional abrogation of the right to live, work and prosper free of the parasitic bankers who profit from the indebting of others.

THE SURGING PRICE OF GOLD AND SILVER AND THE COMING COLLAPSE OF THE FEDERAL RESERVE

When the US could no longer convert its US dollar to gold in 1971 as required under the Bretton-Woods agreement, paper currencies everywhere became only government promises to pay. For the first time in history, all money became fiat.

Central banks rightfully became concerned that the value of their currencies, when no longer convertible to gold or silver, would loose value; and, indeed, that is what began to happen.

Governments everywhere began printing more and more money as gold no longer had to be exchanged for excess currencies held by other countries; and, of all the countries that abused the new found ability to do so, the US was the greatest transgressor.

This is why the US soon had the largest trade imbalance in the world. The US took advantage of the reserve currency status of the US dollar to begin buying more oil from the Middle East and more goods from Asia.

First Taiwan in the 1970s, then Japan in the 1980s, then China in the 1990s and 2000s found themselves with increasingly excessive amounts of US paper money. Lacking the need to exchange gold for its dollars, after 1971 the US went on a worldwide spending spree with its increasingly worthless US dollars; and, today, the rising price of gold and silver reflects the world’s growing unease with still growing US deficits in both its domestic budget and foreign trade.

Of the 21 trading days in April, the price of gold reached record highs on 15 of those days. The ascent of silver was even greater. Today’s acceleration of silver and gold is an indication that Fed’s attempts to continue central banking’s 300 year hegemony are failing.

The below graph compares the price of gold to the NASDAQ and US housing bubbles; and while gold is not a bubble, to the unknowing it can appear to be so. That is because gold is moving inversely to another bubble, the now-deflating bubble of paper money, the largest bubble in history.

In April, hedge funds bet billions that the US dollar would fall and they won the bet. The price of gold is currently tracking both the demise of the US dollar and the collapse of confidence in the Fed’s global ponzi-scheme.

Instead of being afraid of the future, Americans should be rejoicing.

FRAUD AT THE FED
Is the Fed engaged in fraud?
Does a bear sh*t in the woods?
Do hemorrhoids hurt?

Eric deCarbonnel has posted a remarkable video on fraud at the Fed: In FRAUD: Federal Reserve Is Selling Put Options On Treasury Bonds To Drive Down Yields, Mr. de Carbonnel provides a clear-cut narrative as he connects the dots on a Fed scheme to distort interest rates, thereby misleading buyers regarding the risks associated with US Treasuries.

Mr. de Carbonnel’s twelve minute video goes by with remarkable speed, leaving the viewer both enlightened and repulsed, somewhat akin to watching Hannibal Lecture’s handiwork being explained in detail.
Gold And Silver Storm The Fed
Commodities / Gold and Silver 2011
May 05, 2011 – 05:56 AM

By: Darryl_R_Schoon

All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation. John Adams (1735-1826), American President

America’s founding fathers would not be surprised at the dire state of the nation they created in1776. America was then an experiment. No similar form of government had ever been attempted; and even at its birth the founding fathers had doubts as to whether the American experiment would succeed.

Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. John Adams (1735-1826), American President

The once great nation of America is now a goat rodeo where the electorate is both confused and ignorant yet stubbornly believes itself otherwise. Adroitly ruled by corporate and banking elites whose deadly threat remains unrecognized, America today is bereft of leadership and options, a shadow of the nation intended by its founders.

The warnings of those who created America have long been forgotten. John Adams’ words regarding the dangers of not understanding the nature of coin, credit and circulation was clear warning to those who would later place the nation’s currency in the hands of private bankers.

The central role played by central banking in America’s problems is not understood by most Americans. However, the founding fathers clearly understood the dangers posed by the issuance of debt-based money from central banks. On my program, Dollars and Sense, .I explain the system of central banking adamantly opposed by our nation’s founders, see http://www.youtube.com/…

Of the founding fathers, Thomas Jefferson especially recognized the dangers that central banking posed to the American experiment:

The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin [gold and silver coins]. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.

Yet, on December 23, 1913, private bankers gained their long-awaited advantage over America when business and corporate interests successfully created the Federal Reserve Bank, a central bank which the founding fathers had fought the Revolutionary War to prevent.

After 1913, a consortium of private banks which would henceforth issue America’s currency in the form of debt, i.e. Federal Reserve notes, in opposition to the wishes of those who founded America.

The Fed’ substitution of its paper notes for gold and silver has now caused the nation irreparable harm. Since 1913, the banker’s debt-based currency has resulted in the transfer of most of America’s wealth to the moneyed elites, leaving the rest of America impoverished and in debt. Today, the very top 1 % of America receives 25 % of its income and controls 40 % of its wealth.

The bankers’ parasitic plunder of America is almost complete as America’s politicians have sold-out the country, members of both parties are now indentured to the special interests who openly buy their votes behind closed doors.

..deep down in our hearts, we have been accomplices to doing something terrible and unforgivable to this wonderful country. Deep down in our hearts, we know that we have bankrupted America and that we have given our children a legacy of bankruptcy. … We have defrauded our country to get ourselves elected. Senator John C. Danforth (MO-R), April 22, 1992

The bankers’ triumph, however, is not complete and were it not for their insatiable greed, the bankers would already own America. But in 2008, the banker’s greed, overstepping all bounds, almost destroyed the global economy and significantly damaged the world’s banking system; and while this is bad for the Fed, it’s good for America.

Only the complete collapse of the Federal Reserve System and central banking can now free America from eternal debt enslavement; and while it’s been a long time since 1776, there are more ways than one to overthrow the few who tyrannically rule the many by credit and debt.

CENTRAL BANKING’S CONUNDRUM

The foundation of central banking was the convertibility of its debt-based paper money to gold or silver. This convertibility provided the confidence to exchange valuable goods and services for the bankers’ paper banknotes.

The ability to convert paper banknotes for gold and silver provided the requisite confidence for the bankers system to function. As long as the delicate balance between credit and debt could be maintained, this system, known as capitalism, provided England with an insurmountable advantage over the rest of the world.

England alone was able to send its army and navy to war on credit. Its navy essentially became a fleet of state-sponsored pirates, allowing England to invade other countries with impunity, plunder their wealth and become the largest empire in the world since Rome.

The British empire, however, reached its apogee in the mid-19th century and when its empire began contracting, the bankers needed another country to serve their now insatiable ambitions and need for profits. America was their country of choice.

In 1913, the creation of the Federal Reserve Bank in America afforded international bankers the very same opportunities conditional upon America fulfilling two essential prerequisites: (1) maintain the convertibility of paper money to gold or silver, and (2) maintain the critical balance between credit and debt. America failed to do either.

America maintained the convertibility of paper money until 1971 when the US had overspent its gold reserves after WWII and could no longer convert US dollars to gold; and, as a result, the balance between credit and debt after 1971 also became heavily imbalanced in favor of debt when the US discovered it could easily trade its paper dollars for the world’s wealth without a concomitant transfer of gold.

America took England’s golden goose, spent the gold and now the days of central banking are numbered; and whether you know it or not, this crisis presents America with a priceless opportunity to free itself from the unconstitutional abrogation of the right to live, work and prosper free of the parasitic bankers who profit from the indebting of others.

THE SURGING PRICE OF GOLD AND SILVER AND THE COMING COLLAPSE OF THE FEDERAL RESERVE

When the US could no longer convert its US dollar to gold in 1971 as required under the Bretton-Woods agreement, paper currencies everywhere became only government promises to pay. For the first time in history, all money became fiat.

Central banks rightfully became concerned that the value of their currencies, when no longer convertible to gold or silver, would loose value; and, indeed, that is what began to happen.

Governments everywhere began printing more and more money as gold no longer had to be exchanged for excess currencies held by other countries; and, of all the countries that abused the new found ability to do so, the US was the greatest transgressor.

This is why the US soon had the largest trade imbalance in the world. The US took advantage of the reserve currency status of the US dollar to begin buying more oil from the Middle East and more goods from Asia.

First Taiwan in the 1970s, then Japan in the 1980s, then China in the 1990s and 2000s found themselves with increasingly excessive amounts of US paper money. Lacking the need to exchange gold for its dollars, after 1971 the US went on a worldwide spending spree with its increasingly worthless US dollars; and, today, the rising price of gold and silver reflects the world’s growing unease with still growing US deficits in both its domestic budget and foreign trade.

Of the 21 trading days in April, the price of gold reached record highs on 15 of those days. The ascent of silver was even greater. Today’s acceleration of silver and gold is an indication that Fed’s attempts to continue central banking’s 300 year hegemony are failing.

The below graph compares the price of gold to the NASDAQ and US housing bubbles; and while gold is not a bubble, to the unknowing it can appear to be so. That is because gold is moving inversely to another bubble, the now-deflating bubble of paper money, the largest bubble in history.

In April, hedge funds bet billions that the US dollar would fall and they won the bet. The price of gold is currently tracking both the demise of the US dollar and the collapse of confidence in the Fed’s global ponzi-scheme.

Instead of being afraid of the future, Americans should be rejoicing.

FRAUD AT THE FED
Is the Fed engaged in fraud?
Does a bear sh*t in the woods?
Do hemorrhoids hurt?

Eric deCarbonnel has posted a remarkable video on fraud at the Fed: In FRAUD: Federal Reserve Is Selling Put Options On Treasury Bonds To Drive Down Yields, Mr. de Carbonnel provides a clear-cut narrative as he connects the dots on a Fed scheme to distort interest rates, thereby misleading buyers regarding the risks associated with US Treasuries.

Mr. de Carbonnel’s twelve minute video goes by with remarkable speed, leaving the viewer both enlightened and repulsed, somewhat akin to watching Hannibal Lecture’s handiwork being explained in detail.

We are indebted to Mr. de Carbonnel for his revelation of what would be in a just world, the smoking gun. But this is not a just world. This is America where power determines what’s right and wrong, where the scales of justice are weighted in favor of those who rule and where the cries of the less fortunate are dismissed as undeserved.

Nonetheless, Mr. de Carbonnel’s indictment will give the viewer a clearer understanding of the smoke and mirrors deployed by the Federal Reserve. His video can be viewed at http://www.youtube.com/…

That the Fed would engage in fraud to perpetrate the ponzi-scheme of which the Fed is the principal is not to be unexpected. The Fed is engaged in a fight to the finish, although the Fed does not yet know the end is far closer than believed.

What economists perceive as a series of unexpected exogenous shocks are instead the signs of systemic instability caused by the collapse of their debt-based paradigm. Bankers will be surprised when their control over the world’s wealth and resources ends along with the paper money that made it possible.

The bankers’ self-centered concern about the future is justified as the Fed is vulnerable as never before—and while this may be bad for the Fed, it will be good for the rest of us, especially America..

Question: What will bankers do?
Answer: They will have to find gainful employment in a world where parasites no longer rule.

We are indebted to Mr. de Carbonnel for his revelation of what would be in a just world, the smoking gun. But this is not a just world. This is America where power determines what’s right and wrong, where the scales of justice are weighted in favor of those who rule and where the cries of the less fortunate are dismissed as undeserved.

Nonetheless, Mr. de Carbonnel’s indictment will give the viewer a clearer understanding of the smoke and mirrors deployed by the Federal Reserve. His video can be viewed at http://www.youtube.com/…

That the Fed would engage in fraud to perpetrate the ponzi-scheme of which the Fed is the principal is not to be unexpected. The Fed is engaged in a fight to the finish, although the Fed does not yet know the end is far closer than believed.

What economists perceive as a series of unexpected exogenous shocks are instead the signs of systemic instability caused by the collapse of their debt-based paradigm. Bankers will be surprised when their control over the world’s wealth and resources ends along with the paper money that made it possible.

The bankers’ self-centered concern about the future is justified as the Fed is vulnerable as never before—and while this may be bad for the Fed, it will be good for the rest of us, especially America..

Question: What will bankers do?
Answer: They will have to find gainful employment in a world where parasites no longer rule.

Sell Offs In Gold and Silver Are Opportunities To Get On Board The Precious Metals Bull Market

“One must take advantage of sell-offs in gold and silver miners;
they are opportunities to get on board the secular bull market in precious metals.”

The long awaited healthy pullback has come. However, do not forget that Federal Reserve Chairman Ben Bernanke will continue devaluing the dollar (UUP) by keeping interest rates at all-time lows and continue quantitative easing as we have not seen a major improvement in unemployment and housing. We are also entering an election year in which central banks do not want to rile the equity markets. Just because the S&P (SPY) has been soaring does not mean the economy is improving. Easy money policies will continue for an extended period of time to fight against current economic weakness. This is an environment in which gold (UGL) and silver (AGQ) will benefit. We are currently seeing a massive inflationary environment globally that has caused political unrest in North Africa and the Middle East, and rising costs in key emerging economies such as China and South Korea.

We must be prepared for these current short-term corrections in precious metals because it will provide additional buying opportunities in gold (GLD), silver (SLV) bullion and mining stocks (GDX). The market will try to make you be complacent when you should be fearful, and make you scared when you should be enthusiastic.

I have mentioned that silver was 70% above the 200-day moving average, surpassing overhead resistance, reaching record levels on the oscillators and surpassing my late January technical targets. Silver has moved much faster and higher than I originally projected. I initially thought the move would last through May, but the speculative buying and short covering has caused silver to reach my target a few weeks ahead of schedule. Whenever these conditions occur, caution is merited as the odds of a shakeout have significantly increased. A healthy correction is necessary to maintain the long-term steady uptrend and provide secondary buypoints.

Major institutions raises cash and began selling into a rising market as the speculative fever reached a climax the last two weeks of April. When the consensus gets greedy, I get fearful. Since late January when my indicators turned bullish on precious metals and mining stocks, we have seen record investment demand in silver and gold bullion combined with short covering. Tremendous record volume in the silver market indicated a short-term buying hysteria. These frenzies in the precious metals markets are often followed by quick and violent corrections which we are currently witnessing to shakeout the Johnny Come Lately traders who get overaggressive in these rising markets. Investors were building up very aggressive and speculative positions. The conditions in silver have been setting up for a painful pullback.

A healthy correction is currently necessary to sustain the long-term steady uptrend in hard assets. Most investors do not realize that precious metals are in a long-term secular uptrend but there will be volatility with ebbs and flows. Silver is an extremely turbulent market which exceeds technical targets and momentum oscillators regularly. Silver blows very hot and very cold exceeding to the upside and the downside.

I needed to be careful about this move in silver in late April surpassing my late January target of $40 and the US dollar bearish sentiment which was reaching an extreme in late April. Silver exceeded upper trend channels and saw record volume, showing signs of a shakeout. I was very concerned that silver was overheating as the herd tried to force its way into this trade.

Whenever I have seen these parabolic moves, they have not ended well as the profit-taking begins and the investors who have overleveraged themselves get margin calls. I am not surprised at all about this painful shakeout.

Precious metals investors may be repositioning from bullion into mining stocks. This consolidation may be the catalyst to help the miners catch up with the performance of gold and silver bullion. Mining stocks have not yet seen the speculative levels that bullion has seen. The general public is now realizing that inflation and precious metal prices will be high for some time to come as Bernanke has no plans of exiting, but are reluctant to enter bullion at these pricey levels. Miners, especially junior explorers (GDXJ) are providing a discount to bullion. Inflation will continue for years to come yet this correction in the junior miners (GDXJ) indicates the public is still unaware of the basic fundamental and growth potential of this sector over then next decade especially when gold and silver find support.

This has been no surprise to my readers. I have said that there is no exit plan from the Fed. There is a concerted effort to devalue the US currency to pay back soaring debts. The US is broke and it can’t afford raising interest rates. Savers are getting swindled by leaders in Washington, which has used public taxpayer money to bail out corporations and banks. Americans are getting squeezed by soaring prices of basic goods, while their hard-earned savings are depreciating.

I have urged caution around initiating positions in gold or silver bullion as the trade was very crowded and at the end stages of its short-term move from late January through May. Remember, gold has a historic cycle to provide a sale every six months.

As gold and silver sell off, don’t forget the long-term uptrend will stay intact. Will you be ready for the next turning point in precious metals as the herd sells out during the panic?

I believe junior mining stocks (GDXJ) will catch up. Some people are concerned that some of the mining stocks that haven’t moved yet should be sold while they’re reaching long-term support and basing. I don’t believe so as they all provide leverage to falling currencies and rising demand from emerging economies. As these mining stocks sell off, I begin to look at the long-term fundamentals which have not changed. Perceptions from the herd change but the fundamentals in gold miners (GDX) do not. One must take advantage of sell-offs in gold and silver miners; they are opportunities to get on board the secular bull market in precious metals. I believe it is the best way to protect one’s assets during these times of growing record deficits and currency devaluations.

Where is the Global Economy Headed? The Worst Is Yet to Come

Economics / Global Economy

To be forewarned is to be forearmed.

Roy Furr: I’m writing today after spending the last three days in Boca Raton, Florida, attending The Next Few Years: A Casey Research Summit. If you’re not already familiar, the purpose of this summit was to bring together many of the world’s top economic and investing minds to share with us where they believe we’re headed in the months and years ahead.

The cast of speakers was impressive, to say the least. They brought a variety of view points, an almost overwhelming amount of data and analysis, and a perspective on what the current world means for investors that would be hard to build on. Yet, with all this variety of thought and perspective, one central theme seemed to emerge.

If you’re able to see the annihilation of your currency coming down the pike, and you take the right steps to protect your wealth, you can come out on the other side largely unscathed. Given the right investment strategy, you may even be able to grow your wealth significantly during this time.

While I knew this on some level coming into this event – I’ve been reading Casey Research’s work for just a few months now, and this was the first of their events I’ve attended – I was given pause by Casey CEO Olivier Garret’s welcoming remarks.

“While no one can predict the future with complete certainty,” he said, “it should give you comfort to know that the faculty for this summit have in common that they correctly anticipated the trends now dominating the global landscape.”

When you bring together 35 experts who each correctly predicted what’s happened in recent years – while the mainstream media and those who followed it were thrust clueless into “the worst economic crisis since the Great Depression” – you have to think that if these 35 experts are in agreement about what lies ahead… it’s worth listening. Even if what they’re saying has painful implications.

So what’s the consensus? What will The Next Few Years bring? Well, hold on to your hat.

The Worst Is Yet to Come
I’d like to share an important point Casey Research’s Chief Economist Bud Conrad made to me as the summit was wrapping up.

After all, the Casey Research team is known for predicting well in advance the liquidity crisis that would play out in 2007 through 2009 and the continuing economic troubles that have resulted. They’d laid out the path of the previous crisis far prior to most folks ever hearing the word “subprime.” They’ve long been talking about the decline of the dollar and even “the Greater Depression.”

Yet Bud said this conference was perhaps the first he’s aware of in which the guest experts were more pessimistic about our situation than Casey’s resident experts.

I’ll explain…

As the summit was wrapping up, a number of panelists were brought on stage to answer attendees’ questions. One question in particular was, “On a scale of 1 to 10 – with 1 being, it all gets better from here, and 10 being the unthinkable – how bad do you think it can get?”

A number of attendees gave their votes and thoughts. And it was clear – the consensus was that our current situation of enormous sovereign debt and the associated race to debase the globe’s currencies would get worse. Not to mention civil unrest in the Middle East and North Africa, and even Wisconsin. Or the fact that oil production seems to have peaked and is declining, even before production being taken offline due to the current conflicts.

The most optimistic of the experts on stage suggested we’d experience about a 5 – not too good, but also not too bad.

But what took attendees aback was when folks like professional economist, truth-digger and founder of Shadow Government Statistics John Williams predicted that we were approaching the top of the scale rapidly, and that the lid was about ready to blow on a pressure cooker of economic manipulation and deteriorating fundamentals.

The outlook was similarly negative from James G. Rickards, direct participant in many of the most significant financial events of the past 30 years, as well as the current senior managing director for market intelligence at Omnis.

And perhaps the most frightening picture was painted by John Robb, expert on guerilla warfare tactics and the new “open source” warfare – who not only concurred with the dire outlook but who also was quick to explain that should worse come to worst, we could actually see severe degradation of civilization as we know it.

And this was just what came after nearly three days of hard data, detailed explanation and vigorous debate revealed these scenarios as reasonable assessments of the situation.

The Fall of Fiat?
So what is it that’s pushing us to the edge of disaster? To echo the sentiment with which Bud Conrad started his presentation Saturday morning, I wish I had a better story for you today.

For one, we’re well on our way to a sovereign debt crisis. From the summit’s first presenter to the last, there was nearly complete agreement that our current debt and deficit spending situation is flat-out unsustainable. And while some speakers believe hard-line austerity may be a way out of this without default or massive inflation, this is not a solution that will get any politician reelected, and thus it simply will not happen.

So deficits will continue and debts will grow. But as was suggested by Johns Hopkins University Professor of Applied Economic Steve H. Hanke, among others, our low interest rates cannot continue forever. And as our current, historically low interest rates move to a more normal level, our debt load becomes crippling.

So the Fed must remain in the market as the buyer of last resort on Treasuries, to ensure that even if they’re not the actual buyer, their bid keeps bond yields within what they see as an acceptable range. And because this means more QE under one name or another – through the rollover of the existing balance sheet of the Fed, or political pressure applied to banks and friendly nations – the effect is eventual rampant inflation (in other words, continued and even accelerated destruction of the purchasing power of the fiat dollar, and the takedown of dollar-based savings with it).

John Williams’ estimate has recently evolved from years to a matter of months before this inflation will accelerate dramatically.

But it won’t be a straight line from here, many speakers believed.

In the near term, there’s largely an agreement on increased volatility. For example, Greg Weldon, Editor of Metal Monitor, suggests we may see bond yields fall and the dollar rise short-term as the Fed brings QE2 to its expected conclusion, as it has announced. This, he suggested, could be seen by many as a vote of confidence from the Fed regarding the economy.

The only problem is, just about the only thing that appears to provide support to the stock market right now is QE, and so if equities begin to fall in the absence of QE, consumer confidence drops off. And that, in turn, leads to lower earnings and GDP. Which the Fed can’t have, and so the printing presses start again.

The result: continued monetary inflation, followed by price inflation.

David Galland repeated his well-received assertion that the Fed, in the absence of severe spending cuts from Washington, is finding itself wedged firmly between a rock and a hard place. Even if in the near term the dollar shows some strength, a reentry into the markets by the Fed is likely to push the dollar to new lows… And at that point, the waterfall decline of the dollar as prudent investors seek tangible value will not only be imminent, but will be happening around us.

Doug Casey, in his usual tell-it-like-he-sees-it style, called the destruction of the dollar what it is – corruption – and suggested that this corruption is not confined to the U.S. In fact, we could be facing a world-changing shift that occurs in line with the destruction of multiple dominant fiat currencies… And while the end result may be a dramatic improvement, what happens between here and there could be very painful.

Just as an example, Porter Stansberry and Chris Whalen both called for a shakeout in the banking sector – so needless to say, if you’re looking at record earnings and considering buying bank stocks, you may want to hold off.

The Good News
I apologize for sounding so dire. Truly, I do. But the experts who are certainly more qualified than I to make these bold assertions – and who have a track record to back up this qualification – are in complete agreement that things are going to get worse before they get better.

But is the news all bad?

Not at all. In fact, for those prepared, the crisis that continues to unfold, largely unnoticed by the mainstream media once again, harbors tremendous opportunity. As everything I’ve laid out above occurs, the massive wealth transfer to those who hold tangible assets will continue. This has been largely behind the rise in precious metals and commodities in recent months and years, including gold’s 10-year winning streak.

And this transfer is likely to accelerate, by most estimates. The possible prices for gold and silver bandied about are frankly too high to be believable coming from me. But as a currency depreciates, of course, the numbers become worthless. Gold maintains its purchasing power – it is the dollar whose value changes, downward, and rapidly when the world wakes up to its continued and accelerated weakness.

Michael Maloney, author of the “Rich Dad” Guide to Investing in Gold and Silver, suggested to attendees (presenting swaths of data to back his claim up) that silver will do even better than gold relative to the dollar, even after its recent historic run-up.

Further, legendary speculator Rick Rule, along with Casey Chief Energy Investment Strategist Marin Katusa and Chief Metals Investment Strategist Louis James, presented some of their current favorite picks in the junior resource sector – a sector where the best few companies are set to outperform significantly on the rise of commodity prices and strong demand.

Also, Casey Research invited representatives of some of their top company picks from this sector to present their latest projects and news. There are opportunities in gold, silver, oil, gas, geothermal, and even today’s “black sheep” uranium that may present enormous profit opportunities over the next few years.

Plus Alex Daley, senior technology editor, presented his favorite investable tech trends… Doug Casey, among others, expressed the opinion that if anything ensures we get to the end of the coming crisis and create a better life for ourselves on the other side, it will be tech. And the technologies Alex shared are just the types of investments that should continue to grow in value both independent of and alongside inflation, and that are likely to be in demand even in the severest of scenarios.

And of course, you don’t learn how to avoid serious inflation – or the overreaching arm of a desperate and broke government – without learning how to take your assets offshore. Olivier Garret, Terry Coxon and Jeff Schneider shared the best legal ways – including alternative IRA trustee models and offshore trusts – for ensuring your wealth will be protected through whatever storm may come our way.

There was far more information presented at the summit than I could possibly cover in one short article – from how we got here, to where we actually are now and where we may be going, all the way through to the specific investment implications. But the takeaway was clear and precise.

The global economy is still suffering from the massive accumulation of debt that has been building for the past few decades – the same debt responsible for the 2008 crash, which has yet to be addressed in any meaningful way.

Despite the dire predictions of the faculty, I left the summit hopeful. There are simple and effective ways to protect myself from what’s to come. And, despite turbulent markets ahead, there are plenty of opportunities for profit as well – great companies in well-positioned sectors that will benefit investors like me in spite of the potential crisis looming. And, most importantly, if we find ourselves in the much agreed-upon looming next leg down anytime soon, I’ll be prepared to act and turn that crisis into an opportunity.

Commodities Bull Market and the Cheapest Money in History

So the cheapest money in history played no role in killing the century-long downtrend in commodity prices…?

A LITTLE over three years ago, we published this chart here at BullionVault – now updated so you can see just how much mischief cheap money is causing…

The second-half of the 20th century saw the cost of raw materials fall by almost 75% in real terms. (It’s shown on our chart by the 19 most-heavily traded commodities, courtesy of the Reuters/CRB Continuous Index, adjusted by the US consumer-price index.)

This gift to savers and consumers was itself an extension of a trend beginning almost 100 years earlier for Americans (the end of the US Civil War), and some 150 years earlier in Europe (the end of Napoleon). Yes, there’d been a little “blut und eisen” in the meantime. But just as the oil shocks of the 1970s failed to break the long-term, secular trend – despite doubling real prices inside 3 years – so too failed the far bloodier shocks of World Wars I and II…

See those question marks at the all-time low? We’ll get back to what event they might represent in a second. Because right now, “Mrs. Market is…sending us the Mother of all price signals,” says the GMO asset managers’ Jeremy Grantham, spotting the same break in trend we noted in Feb. 2008.

Grantham’s been watching this signal for longer still, but now puts it very succinctly:

“The prices of all important commodities except oil declined for 100 years until 2002, by an average of 70%. From 2002 until now, this entire decline was erased by a bigger price surge than occurred during World War II.”

What to do? As a money-manager, Grantham says he’s got short-term trades and investments to recommend, of course. But he also plays politician, urging the United States “and every other country [to get] a longer-term resource plan.” Being neither money managers nor politicos here at BullionVault, we’re spared both of those urges. Which leaves only the urge to figure out why real commodity prices now stand back at their early 1980s’ level. Which means trying to figure out what changed in 2002.

“The Monetary Maniacs may ascribe the entire move to low interest rates,” says Grantham. “But commodities are made and bought by serious professionals for whom today’s price is life and death. Realistic supply and demand really is the main infl uence.”

You’ll find this same school of “Money? Schmoney!” analysis flexing its intellect in plenty of other arguments right now, too. Rather than ultra-low interest rates knocking the Dollar lower since – hey! – 2002, “There is a global Dollar overhang that is being unwound” by central-bank reserve managers, reckons Pharo Management portfolio manager Mark Dow, writing for Reuters. “The key drivers of inflation [are] oil and commodity prices, factors beyond the Bank of England’s control,” says UK economist Roger Bootle of Capital Economics and Deloitte. “Questions remain about the capacity of the ECB to find a local solution to a largely global problem,” agrees KBC Bank in Brussels. Indeed, and quite apart from “expansionary monetary policy…other factors, such as growth in emerging market economies, are more likely to be the main drivers,” according to research by the Federal Reserve Bank of San Francisco.

Besides, “Sharp increases and decreases in commodity prices have had little, if any, impact on core inflation,” as the Chicago Fed declared in its own research last month. Which means that “upward pressure on inflation [is only] transitory,” as the Fed’s rate-setting committee has decided time and again this spring.

So there you have it. All these very bright people agree that the “monetary maniacs” are wrong. The record-low global interest rates of 2002 did not spark the swing higher in real commodity prices. The even recorder-low global interest rates of 2009 did not revive the commodity market’s uptrend after the subprime diversion and banking crisis.

No, “The primary cause of this change is…the accelerated size and growth of China,” says Jeremy Grantham – concuring with the San Fran Fed – “[plus] its astonishingly high percentage of capital spending, which is over 50% of GDP, a level never before reached by any economy in history, and by a wide margin.”

Quite where China got the money from, however, no one says.

Three trillion dollars is a lot of cash to hoard up in barely 10 years. It’s a lot of cash to unleash on the world’s commodity markets, too. And “peak oil” or not, us monetary maniacs might just have a point. Real returns to cash do matter.

Doubtless the world really is hitting its straps in terms of natural resources, as GMO’s Jeremy Grantham warns. But bringing the scramble forwards by handing out ever-more claims upon those scarce resources – and at the lowest nominal interest rates in history – can hardly be blameless.