The Anti-Midas Touch
The primary cause of the world’s economic ills – rocketing us headlong into the MOST DEVASTATING GLOBAL CRISIS SINCE WORLD WAR II – was the abandonment of the gold standard in 1971. Mind you, this event was not solely U.S.-based, as the ENTIRE WORLD stood by idly and allowed it to happen, without so much as a peep. Forty years later, essentially EVERY nation on Earth faces a debt crisis of EPIC proportions, with no feasible solution other than DEFAULT, via either reneging or hyperinflation. These “solutions” WILL occur universally - it’s only a matter of when and how.
Back to the U.S., things have gotten so bad – in our stagflationary nightmare – the government has become the “provider of last resort,” of essentially ALL vital needs.
In financial markets, the PPT supports stocks, the Fed buys bonds, the ESF protects the dollar’s exchange rate, and the Cartel – of course – attacks gold.
Economically, the Fed provides free credit to “TBTF” banks, the Treasury “invests” in zombies like GM, Citigroup, and AIG, Congress authorizes military spending to provide unproductive jobs (to soldiers) and “war profits” to the military-industrial complex, and welfare is provided to the “unwashed masses,” in the form of Food Stamps, “disability,” Medicare, Medicaid, Social Security – now that it operates in deficit – and cheap, but un-dischargeable loans for everything from homes to cars to college tuition. In other words, it sticks its muddy paws into every conceivable “cookie jar,” destroying whatever it touches. Best put, the “ANTI-MIDAS TOUCH.”
The below Zero Hedge article depicts this phenomenon in its full glory, the perfect example of how the government enslaves itself, individual citizens, and the taxpayers at large by “lending” to poor credits for unnecessary reasons. In a nutshell, it dissects recent consumer credit data, noting how revolving debt has plunged to levels last seen in 2005 – as banks are NOT LENDING because they are INSOLVENT – while non-revolving debt has EXPLODED to record highs.
Consumer Credit Soars As US Government Encourages Student, Car Loan Bubbles
Non-revolving debt is “the type used to fund GM car purchases by subprime borrowers and push the student loan bubble well into its $1+ trillion record territory.” In other words, negatively impacting the ENTIRE NATION, other than GM executives and those receiving cars, homes, and education for free. The perfect Ponzi Scheme, except there are NO MORE BUYERS left, other than the “buyer (and lender) of last resort.”
Under a gold standard – such as the one SUCCESSFULLY utilized in the late 1800s – such a Ponzi Scheme could never even start, let alone expand to such epic proportions. But alas, the world collectively opted in 1971 to utilize a system that had FAILED IN ALL INSTANCES throughout history; only this time, on a GLOBAL basis where no true “safe havens” existed. Of course, the SUCCESSFUL gold standard construct remains, and in due time – perhaps A LOT sooner than anyone can imagine -will yet again be embraced.
PROTECT YOURSELF, and do it NOW!
Call Miles Franklin at 800-822-8080, and talk to one of our brokers. Through industry-leading customer service, and competitive pricing, we aim to EARN your business.
This is NOT the time to throw in the towel. It is the time to buy more gold and silver.
The following email, from a long-time fan of Miles Franklin, is typical of the anguish that so many of you are suffering through.
David,
Everyone around me has gotten out of gold…and tells me I should sell my bullion and buy ETF’s
Sinclair’s words are soothing, though my panic days are back big time…..
Since the gold people have all moved their IRA’s etc. out of gold…
not sure where to go from here…
ah.
Jeni
Jeni,
Read the Wednesday and Thursday daily very closely. Take my comments in Wednesday’s daily very seriously. Focus on the James Dale Davidson report and the Weiss Research interview.
You are worried about the wrong thing. The problem is NOT falling gold; it is what is about to follow (the end of the Petrodollar and an inflationary storm that most are simply not prepared to handle). Falling gold is a blessing. It allows us to buy more, cheaply, for the last time.
Do not listen to your friends. They are the herd heading off a cliff. When there is blood in the streets, I buy (Rothschild). In the near future, gold will be your best asset.
Best wishes,
David
And then there is my friend Marc, who is equating the current drop in gold to a repeat of 2008. He is freaking out! I had to remind him to look what happened after 2008. In round numbers, gold fell 25% in 2008 only to rebound over 150% in the next 36-months. So far, gold has dropped almost 20%. The end of the fall is near. But this time, the rebound in the following 36-months will dwarf what happened in 2008.
I urge all of you to be patient and look forward 12 – 24 months and ask yourself what you think gold (and silver) will be worth when the trillions of new yen, pounds, euro and dollars hit and work their way through the global economy. For most of us, the coming inflationary storm will be unlike anything we have ever seen in our lifetime, and if James Dale Davidson is correct, you will not want to own any fiat currency.
Larry Edelson, who has been bearish on gold and silver, predicts it will only be a short while before we see $5,000 gold and $150 silver – and that assumes NO FURTHER MONEY CREATION. More global QE will push the prices even higher.
So let me get this right – we have a chance to buy an asset for around $1,500 that recently cost around $1900 that is going to at least $5000 and instead of being grateful, most of you are scared out of your wits and ready to sell what metals you already own. That’s why, dear readers, so few people win as investors. Most of you will buy on the way up and sell on the way down. If you do, you’ve got it backwards.
Most of you spend your time checking the prices every day or every hour instead of looking at the fundamentals and the big picture…in spite of my urgings to do just the opposite.
Most of you will be thrilled when the price of gold (and silver) starts to rapidly move back up and sets new highs. I will not! It will be the signal that the crap has finally hit the fan. The canary in the mineshaft will have taken its last breath. What good is money or profit in a world where you will be afraid to venture out and enjoy it. And trust me, everyone’s standard of living is about to take a dive. Yes, your wealth can increase and at the same time your standard of living can fall and that is where we are all headed. The worse case scenario is to lose you money and try and deal with the crushing inflation and social unrest that will accompany it. Money ain’t everything, but you’re gonna need a lot of it to get by.
Yesterday’s piece by Davidson and today’s article by the boyz at Weiss Research should tell you all you need to know about why you need gold (and silver) now, more than ever before. And low and behold, you can buy it at a big discount. But only those of you with the ability to see beyond today’s falling price (which will end shortly) and have the strength of conviction to act will benefit.
AGT
Read the Tuesday Afternoon Wrap-up for 5/15/2012 and the Wednesday Morning Commentary for 5/16/2012
This month marked several notable personal “anniversaries,” including “TEN YEARS IN HEAVEN AND HELL” – i.e. Precious Metals investments – and “FIVE YEARS IN DENVER.” However, it also marks my 20th anniversary listening to Howard Stern, the world’s most famous radio performer.
When I think of Howard Stern, I first and foremost consider how much he has made me laugh. During good times and bad, his crew has entertained me on each day. Twenty years ago, I listened for 15 minutes when I got dressed – preparing to commute to Manhattan – while today, his three-day-per-week shows are rebroadcast continually on Sirius XM radio.
Next, I consider how he is misunderstood, the product of the most targeted – government-led – PROPAGANDA campaign in the entertainment industry. Yes, he has segments featuring scantily clad women, but none have been mistreated, and several have gone on to successful careers thanks to the exposure he provided. In fact, I’d place Howard Stern in the narrow pantheon of performers that have used their “pulpit” to promote young, unknown comedians and actors – such as Jerry Seinfeld before he was SEINFELD – like Johnny Carson, Rodney Dangerfield, and currently, Chelsea Handler.
Thanks to the aforementioned smear campaigns, few realize his show lasts nearly five hours per day, devoted principally to discussing current topics and interviewing celebrities, which for most listeners is the most enjoyable part. As it turns out, he has been one of society’s most upstanding citizens – charitable, kind, and a devoted father and husband, with values far surpassing most of the “role models” we are instructed to admire by our “leaders” and “education system.” In other words, I relate Howard Stern followers to “goldbugs,” otherwise normal people who simply believe a gold standard is more effective than fiat money.
For ten years, I have toiled against – for lack of a better word – evil forces seeking to separate me from my primary means of financial survival, in an environment that has become increasingly malevolent (read: manipulated) each passing day. This month is a primary example, as not only is the sector under yet another Cartel attack, but “they” have trotted out any and all PROPAGANDA TOOLS they can find, including Warren Buffet, Charlie Munger, and Bill Gates.
Being a PM believer engenders difficult social consequences – absolute AND relative performance notwithstanding – but I have persevered, and thrived, as a result. Even a few years back, I would NEVER have believed my “conspiracy theories” would be heeded, nor that PM’s merits would ever be appreciated outside my “shadow world.” However, I have been proven wrong, as that world has expanded dramatically, with many new “leaders” – myself included – taking the helm from aging “gold greats” like Richard Russell and Jim Sinclair. While still vilified by most, gold and silver are clearly on the Western world’s radar screen, and not a month goes by where another “MAINSTREAM” investor or institution publicly recommends gold or PM investments. When the END GAME arrives, the ENTIRE WORLD will laud gold – although few will actually own it – but until then, I expect more of the world’s “smart money” to find its way into Precious Metals.
Like gold, Howard Stern has been vilified for decades, but when he left “terrestrial radio” to join Sirius Satellite Radio in 2006, a strange thing happened. His new “private” gig took him out of the tabloid and government spotlight, enabling him to slowly but surely, re-build his reputation as he simultaneously led Sirius out of obscurity. Less and less negative press was published – principally because the FCC could no longer accuse him of “corrupting the public airwaves,” and all of a sudden, people realized that not only is he a decent guy – not to mention hilarious – but possessing a “skill set” ideal for public television.
When American Idol broke up its original judging team three years ago, he was constantly rumored to be courted for Simon Cowell’s spot, so much so that he had to fight off reporters asking the question. As with gold – which I believe ANYONE will warm to once they hold a shiny one ounce coin in their hand – I believe Howard Stern would be the ideal American Idol judge – smart, charismatic, funny, and an expert talent evaluator – but alas, American Idol chose to stay mainstream by hiring first Ellen DeGeneres, and later Jennifer Lopez and Steven Tyler.
But then, an equally fortuitous event occurred. Piers Morgan idiotically left America’s Got Talent - or “AGT” – to create a news program on the dying CNN network (worse off since, thanks to his show). Once again, the Howard Stern rumors surfaced, but I thought nothing of them, especially as he had spent a tortuous decade working for NBC – W….ENNNNNNNNNNNNNNNN….B…C” in the 1980s, ending in a horrible, public business divorce. But lo and behold, today’s NBC executives thought differently, and sure enough he received his first mainstream gig, judging one of America’s top rated shows!
Last night, I watched the season opener, and couldn’t be more proud. Howard Stern was everything I knew he would be, proving that decades of PROPAGANDA were just that. Watch for yourself, and “judge” as you will. But like gold, Howard Stern is “good” for Americans, no matter how much his detractors say otherwise.
James Dale Davidson’s Bold Predictions
In the last 48 hours, two of my close friends and my Miles Franklin Quarterly editor all contacted me and asked if it was time to sell their gold and silver. Even my wife asked me if “we are still o.k.?” Whoever said that markets are moved by emotion knew what they were talking about. Doubt and fear are everywhere. Our fearless leader, Jim Sinclair says it’s once again time to dig a hole in the ground and climb in and cover it over with a rock and don’t come out for a few weeks or even a couple of months. This is a drill that has been commonplace for the entirety of the bull market. Let me make one thing perfectly clear, for the umpteenth time – the bull market IS NOT OVER. Do NOT sell your precious metals. This is the TIME TO BUY, NOT SELL.
In today’s daily, I feature a report by James Dale Davidson and I take his warnings very seriously, and so should you! If his conclusions are valid, then the recent fall in the price of gold and silver are a gift from heaven! You are being given one last chance to buy gold and silver at a deep discount. I don’t know about you, but below $1,550 I am a serious buyer of gold. Below $1,500, should it fall that far, I will throw all caution to the wind and throw whatever dollars I have left into gold and silver. As my friend Trader David R says, “At $1,400, gold is the BUY OF A LIFETIME.” No guaranty we will see $1,400 or even $1,500 but it makes no difference. The lower it goes, the more I buy. When you finish reading Davidson’s report, you will understand why.
Now, I have a story to tell you. In 1986 I was a speaker at an SMI Financial Seminar in Zurich. At the conference, every one of the speakers was bullish on gold and was concerned about inflation. Everyone except James Dale Davidson. Davidson boldly stated that all of the presenters got it wrong and gold was not the place to be and inflation would not be a problem. For his insight, he received the lowest grade-out of all of the speakers. The only problem was that he was CORRECT and everyone else did get it wrong.
From that day on, I held James Dale Davidson in the highest of esteem. I read his newsletter, Strategic Investments, and his books, (Blood in the Streets, The Great Reckoning and The Sovereign Individual) co-authored with Lord William Rees-Moog (former Editor-in-Chief of The Times, London). His predictions, including the fall of Communism, and the fall of the Berlin Wall, were laughed at by the “experts,” but they came to pass.
Davidson has come out of retirement and I just received another of his bold predictions, one that I take quite seriously, based on his past history of being right in every instance I can remember of a major trend change. Here are some of his thoughts, but you may want to take a stiff drink before you dig in:
On September 21, 2012, America’s Most Popular Investment Will Reach its Use-by Date
It will be a civilization-altering development…
The Coming “Megapolitical Earthquake” that Will Shake Civilization to the Ground
I’m so passionate and assured of my reasoning (and I believe you will be too once I present the evidence) that it has compelled me to come out of retirement to fire the distress flare about the titanic event that could erupt just weeks from now…
So destabilizing is this event that the biggest names in politics and finance have tried everything in their power to prevent it…and for some years they succeeded. But due to America’s weakening economic and military muscle, we are finally coming up against resistance from our neighbors and trading partners…
For generations, it appeared that the Empire’s power and reach knew no bounds. But in the past few years, we have been crushed under the monumental financial stress of policing the globe, launching failed wars, securing oil and other strategic assets and bailing out “buddies” and zombie banks.
And this has all been at a time when our Social Security and Medicare costs are sky-rocketing (Their unfunded liabilities have been growing by $5 trillion annually – at a rate of more than 33% of GDP – while the economy has grown at a rate of less than 1% annually over the past four years). And our tax revenues and T-Bill sales are plummeting…
In Short: We have lost our leverage…
We have reached the physical limit on our exercise of power…and we are no longer having as much success at bullying the world into getting what we want, whether it be oil, gas, credit, trading agreements or any other such strategic assets…
Our Bloated Empire is starting to feel the pains and consequences of Her Crimes of Consumption…
I have tapped into my contacts and my sources from across the global geopolitical plains, and gathered inside intelligence from some of the biggest money-movers-and-shakers in the business, and I have uncovered a pivotal development, which I believe will set off the most violent economic reversal we’ve ever known…
Cradle to Grave
Read the Monday Afternoon Wrap-up for 5/14/2012 and the Tuesday Morning Commentary for 5/15/2012
Following my February 10th RANT, “GENERATION GIMME” – in which I described the scary responses of U.S. college students to questions of their perceived role of government – I want to highlight a four-minute video by one of my new favorite commentators, Charles Biderman of TrimTabs. TrimTabs breaks down FRAUDULENT U.S. economic data in the same manner as ShadowStats, focusing principally on the “BS from the BLS” regarding employment trends. However, Biderman also doubles as one of society’s most astute commentators, per below.
“Europe Has Started The Endgame” And Biderman Says “The US Is Next”
In this “RANT,” he describes the “CRADLE TO GRAVE” mentality of nearly all Americans and Europeans. Western nations have been the world’s economic leaders for centuries – mainly via IMPERIALISM, care of its early mastery of VIOLENT WEAPONS – and consequently, have come to believe they are both superior to Easterners, Africans, and Latin Americans, and entitled to the world’s highest living standards, free of cost. In other words, an adult version of “GENERATION GIMME.”
The END GAME of such hegemony commenced 20 years ago, starting with the loss of Western economic dominance and now, a COLLAPSE of Western political dominance and social stability. The Euro currency is system’s fatal flaw, MAGNIFYING the aforementioned hubris by tying together 23 nations with disparate languages, economies, and – most importantly – cultures. It’s one thing to ease trade restrictions between nations – particularly when bordering – but another to impose uniform financial restrictions on nations whose economies and finances have little, if anything, in common.
As they say, the “proof is in the pudding,” and since the Euro commenced trading in 1999, NEARLY ALL nations – including Germany – have violated its regulations (scroll down to “Member states by SGP criteria”)…
Stability and Growth Pact – Wikipedia
Moreover, the continent’s weakest nations – both economically and in work ethic – have badly abused the strongest, electing themselves “CRADLE TO GRAVE” benefits without the funding to back them. Actually, the Greece’s and Italy’s of the world did have the funding – via “free capital” from strong nations such as Germany – but that capital is about to disappear. Not only are “Target 2” balances – depicting the flow of such “sunk costs” from Germany to the PIIGS – going parabolic…
…but “THE PEOPLE HAVE SPOKEN!,” with Germans universally rejecting Angela Merkel’s stance of backstopping Europe this weekend.
Merkel’s CDU Trounced In Most Populous State Elections Over Austerity; Pirates Strong
One of the most universal laws of humanity is you can’t get “something for nothing,” a concept depicted in the financial world by the mythical art of “Alchemy,” as depicted in my November 12th RANT, “THE PHILOSOPHER’S STONE.” However, during the past 40 years of PURE FIAT MONEY, several generations have mistakenly believed otherwise. During this period, Western nations levered up their balance sheets, abetted by Eastern nations eager to steal manufacturing market share. However, those days are officially OVER. The West is now fully levered up, the East has already taken its market share, and INFLATION has impinged the GLOBAL economy’s ability to grow.
Therefore, the very process that enabled “CRADLE TO GRAVE” benefits is working in reverse, yielding austerity, liquidation, and social unrest. The Greeks will be the first to learn that without hard, productive work they will starve, followed by the rest of the PIIGS; Europe’s “big Kahunas” – France, Germany, and the UK; and eventually, the biggest Kahuna of all – the United States. Regarding the latter, no nation produces less and receives more – care of its soon-to-be lost “reserve currency” status – and no nation in HISTORY has built as much debt, or – for that matter – universal HATRED.
For those living on the government, be prepared to fend for yourselves. If you don’t believe me, tell me how California – for instance – will cover its $16 billion deficit this year, without DRAMATIC tax increases and/or spending cuts. And if your answer is the Federal government will bail them out, you are inferring they will bail out ALL states and municipalities with PRINTED MONEY, increasing the odds that catastrophic HYPERINFLATION will commence in the very near-term.
California facing higher $16 billion shortfall
As for Europe, you will be the first region to experience catastrophic standard of living declines, yielding EXPLODING social unrest, crime, and political instability, starting with Greece. Once the totem pole of PIIGS is scaled, the “big Kahunas” will be washed over, and eventually the biggest of all – the United States of Welfare. I cannot emphasize such WARNINGS enough, as not only are such occurrences inevitable, but to many, likely fatal.
PROTECT YOURSELF, and do it NOW!
This is Not the Time to Bail. Stick With us Through the Summer.
You are now witnessing the bull doing its best to “throw you off.” This is NOT the time to bail out. I am serious when I tell you, this is the time to add to your positions. Nothing fundamentally has changed! In fact, the fundamentals have never looked better for gold and silver. Stick with us on this. You will not be sorry.
I know that doubt is creeping in with many of you. Even the editor of the hard copy Miles Franklin Quarterly, who has invested in gold and silver for nearly a decade, emailed me and asked if she should sell now. She is retiring this year and is worried.
This is a good time to think like Sherlock Holmes. When you eliminate the impossible, what is left is the truth. What is impossible is for us to grow out of the debt and spending mentality in Washington. QE is a certainty. That said, so is the resumption of the precious metals bull market. It’s merely a question of when and the “when” is not far off.
Here are a few important comments from Jim Sinclair.
Your Greatest Enemy Is Your Emotions
May 14, 2012, at 3:21 pm
by Jim Sinclair
My Dear Extended Family,
Your greatest enemy now is your emotions. In fact it is the only tool that can be used against you.
If you have not taken margin your worst-case scenario is the pain of quoting. I have suggested at various times since $248 gold that you dig a hole, jump in and pull a rock over your head. Each time I did I was derided thoroughly by the shorts. Each time I did the price of gold went significantly higher.
The price of gold is going much higher. The problems that give gold its reason to go higher are growing, not waning.
The entire thesis for gold is illustrated by the three Skiers posted on the weekend.
There is no political will for the results of an EU break up. There is no way the Fed is going austere as the austerity is exploding in the face of Europe politically.
There has been no decline in the amount of notional value of OTC derivatives outstanding. If you think Morgan is the only derivative problem out there you are quite wrong.
Stay the course, stop looking every few minutes, and quiet your emotions. Gold will trade at and above $2111 after this reaction is completed.
Respectfully,
Jim
Who Does The U.S. Government Borrow $15.7 Trillion From?
Read the Friday Afternoon Wrap-Up for 5/11/2012 and the Monday Morning Commentary for 5/14/2012
Below is the chart guaranteeing the downfall of the U.S. dollar as “world’s reserve currency,” likely MUCH sooner than most expect. The rate of debt increase has gone exponential, and my contention is it will shortly go parabolic, the result of EXPLODING deficits and – QE notwithstanding – rising interest rates. No currency has EVER survived parabolic debt growth without being MASSIVELY REVALUED or HYPERINFLATED – certainly not the world’s reserve currency – and the dollar will be no exception.
Frankly, the only thing supporting the dollar’s MASSIVELY overvalued status – and thus, above average American living standards – is the inertia of its universal usage, not much different than a bad marriage saddled with kids, a giant mortgage, and lack of professional mobility. Each day, the world’s nations play a dangerous game of musical chairs, not wanting to set off the panic that will ultimately yield a self-defeating currency crisis, but making sure they stay as close as possible to the nearest chair. Nearly ALL nations hold the majority of their reserves in the “world’s reserve currency,” each watching the real-time progression of this chart with a terrified eye…
The point of this RANT is to ask the question some of you know, but most don’t consider – who OWNS the debt?
Traditionally, U.S. Treasuries were held by global retail, institutional, and sovereign entities – roughly half were via public entities, and half private. Treasuries have always been the most liquid fixed income market, until recently considered the ultimate SAFE HAVEN due to implicit backing by the “full faith and credit” of the U.S. government (for whatever that’s worth).
Biggest Holders of US Government Debt
BY FAR, the largest public holders were the Chinese and Japanese governments, but that dynamic is rapidly changing. Many sovereign governments have become net sellers – mostly fearing dollar devaluation – most ominously China. Some – including Russia – appear bent on bringing their net holdings to ZERO, yielding the need for new buyers, which sadly, no longer exist.
China Brings US Treasury Holdings To One Year Low, Russia Cuts Treasury Exposure By 50% In One Year
This is why the Federal Reserve purchased 61% of ALL 2011 TREASURY ISSUANCE, funded solely by PRINTED MONEY. This is the definition of “debt monetization,” or what the Fed euphemistically terms “Quantitative Easing.” In fact, the 61% figure is grossly misleading, as the more important figure is the 90% of issuance purchased on the long-end of the yield curve – i.e., the most speculative type.
According to the Fed’s other obfuscation – “Operation Twist” – it sells short-term Treasuries to buy longer term maturities, yielding the appearance of a cash neutral program. However, the Fed also operates in the short-term Treasury market via its daily “Open Market Operations” – administered by its New York branch – to adjust short-term interest rates. Given the Fed’s current policy target is keeping short-term rates at ZERO until “at least late 2014,” it is obviously monetizing ENORMOUS amounts of short-term bonds as well. Of course, official government statistics don’t refer to such purchases as “QE,” just as it ARBITRARILY refers to Fannie Mae and Freddie Mac’s cumulative $5+ trillion of debt as “off balance sheet.”
In other words, as we speak, the Fed is buying essentially ALL U.S. Treasury issuance with PRINTED MONEY!
WSJ: Fed Buying 61 Percent of US Debt
Which brings me back to the initial chart, depicting a nation on the verge of parabolic – and likely hyperbolic – debt growth, at which point no amount of MONEY PRINTING, MARKET MANIPULATION, and PROPAGANDA can save it from certain FINANCIAL ARMAGEDDON. The $64,000 Question, of course, is when will this point be reached, which I anticipate in the next year. If you recall last summer’s U.S. debt ceiling crisis – yielding S&P’s downgrade of the U.S. credit rating – the debt ceiling was raised by $2.1 trillion, to the $16.4 trillion level we stand at today.
House Passes $2.1 Trillion U.S. Debt-Limit Increase; Senate to Vote Aug. 2
At the time, a “super committee” of 12 Congressman and Senators was formed to identify spending cuts (and/or tax increases) to offset the $2.1 trillion increase, which ultimately FAILED. IN fact, not only did it FAIL to agree on $2.1 trillion of spending cuts, it agreed on ZERO!
What’s next after ‘super committee’ failure?
Thanks to the most coordinated strategy of MONEY PRINTING, MARKET MANIPULATION, and PROPAGANDA in global history – not to mention strong-arming ratings agencies like S&P…
S&P president to resign after downgrading the US
…and Egan-Jones…
SEC Emerges From Carbonite Deep Freeze, Sues Egan-Jones
…the U.S. government has managed to push this issue – and numerous others – to the back burner. In the meantime, national debt has surged from $14.2 trillion last summer to $15.7 trillion today, currently on track to breach the $16.4 trillion limit before the elections. You can bet “Tiny Tim” Geithner will pull a few accounting tricks – like “temporarily” commandeering pension funds – to push this date past the elections, but nevertheless, it will be a MAJOR campaign issue. And given that absolute debt levels are FAR HIGHER now, with the economy FAR WEAKER – essentially guaranteed to weaken further – it is difficult to believe a second, more lethal debt debacle will not ensue.
US Debt Ceiling D-Day: September 14, 2012
A year ago – before the Cartel VICIOUSLY attacked PMs hours after the Labor Day weekend – gold rose to an ALL-TIME HIGH of $1,920/oz, with silver near its own multi-decade high at $45/ounce. No matter how much MONEY PRINTING and MARKET MANIPULATION TPTB attempt demand for PHYSICAL gold and silver will continue to surge – particularly at today’s ridiculously suppressed levels – and ultimately, PMs will re-assert their traditional relationship to potentially hyperbolic debt ceiling growth.
Gold vs. Debt Ceiling: What is the Correlation?
Time is running out, so PROTECT YOURSELF, and do it NOW!
Keep Your Eye on the Market
I want to assure all of our readers that I have my eye on the markets every day!
Supply Shortages Looming
Read the Thursday Afternoon Wrap-up for 5/10/2012 and the Friday Morning Commentary for 5/11/2012
This is a topic I have written of ad nauseum, as has Miles Franklin’s President – Andy Schectman – who opens his presentations with the following slide:
However, I thought I’d rehash it given the recent Cartel ATTACKS, which have pushed PAPER gold and silver prices to the bases of their respective eight month “reverse head and shoulder patterns.”
While Economics 101 teaches us to “buy low” and “sell high,” the majority of investors lose money in financial markets, slaves to emotion in lieu of logic. I am no different, but ONLY invest in sectors where I have 100% conviction – which is why I have been “all in” Precious Metals for the past “TEN YEARS OF HEAVEN AND HELL.” When investing in PHYSICAL gold and silver, this mantra is easy to adhere to, as no matter how far down PAPER prices are pushed, your metals remain safe and sound. This is why Miles Franklin receives essentially ZERO customer buybacks, even during MAJOR attacks such as what we’ve experienced this month.
To the contrary, “PAPER PM Investments” cause vanishing brokerage accounts, and are thus preyed on by Cartel naked shorting, seeking to DESTROY careless, un-informed, and/or greedy “goldbugs.” You see, “Secret #1” to PM investing is realizing you are not “investing” in securities, but “protecting” your net worth with REAL ASSETS that cannot be destroyed or stolen my manipulative – or normal – market forces.
That said, it matters not what your portfolio allocation looks like, so long as you understand “corrections” within an ongoing, generational bull market should be viewed as gifts, the unforeseen ramifications of TPTB’s efforts to prevent “Gold Fever” from commencing, a fear-based phenomenon where the MASSES desperately attempt to divest dying scrip in lieu of REAL MONEY. Therein lies “Secret #2,” gold and silver are MONEY, while dollar, pounds, and Euros are just FIAT CURRENCIES, backed by ZERO intrinsic value.
Over the past ten years of PM ownership, my motto – regarding Cartel suppression – has been “each day worse than the last,” presciently coined circa 2005. However, I never dreamed they could hold “the system” together this long – as bloated, bleeding, and cancerous as it is – and thus, that what I viewed as egregious in 2005 – or 2007 or 2009, for that matter – would pale in comparison to what we see today.
Following gold’s run to an ALL-TIME HIGH of $1,920/oz – and silver to $45/oz – during last summer’s Global Meltdown II, Cartel efforts to push PMs down have been UNPRECEDENTED, consequently pushing prices as far below their “fair market values” as at any time during the 12-year bull market, and perhaps – EVER. I continue to calculate gold’s fair value in TODAY’S DOLLARS – based solely on overt MONEY PRINTING over the past four decades – as $15,000-$20,000/oz, and for silver – based on a return to the historical gold/silver ratio of 15:1 – at least $1,000/oz, again, in TODAY’S DOLLARS.
Given PMs rising “fair market value” – as “TODAY’S DOLLARS” increase each minute – and the most draconian Cartel suppression EVER, one should be wary of the potential SUPPLY SHORTAGES that have plagued the industry each time the Cartel pushes the price too low – or allows it to rise “too high” – over the past five years. We first saw it in late 2008, when the Cartel attacked PMs during the initial stage of Global Meltdown I to prevent them from being viewed as safe havens. At that time – for instance – PAPER silver fell below $9/oz, but PHYSICAL silver never fell below $16/oz, with EVERY GLOBAL MINT SOLD OUT, yielding nearly 100% premiums (to PAPER prices) and 6-10 week delivery times.
It next occurred a year ago, when “ADMIRAL SPROTT” floated his PSLV bullion trust, catalyzing PAPER silver’s run to $50/oz, despite the Cartel’s best efforts post “D-DAY” – November 9, 2010, the first time silver approached $30/oz. In late April 2011 – with PAPER silver trading in the high $40s – the bullion industry again SOLD OUT, with premiums and delivery waits EXPLODING, prompting the Cartel to counterattack with its most “sophisticated” attack to date, the infamous “SUNDAY NIGHT PAPER SILVER MASSACRE,” when it was forced to play its long-held “bin Laden card” to provide cover for one of the most egregious market manipulations EVER.
Then in September 2011 – following the aforementioned PM surges to $1,920/oz and $45/oz, respectively – amidst Global Meltdown II – the Cartel again committed a violent, blatant PAPER PM suppression, commencing with “OPERATION PM ANNIHILATION I” just hours after Labor Day, and minutes before the Swiss National Bank devalued the Franc by 9%. The real world result of this attack – as well as the follow-up “OPERATION PM ANNIHILATION II” in December – were additional PHYISCAL DEMAND EXPLOSIONS, sucking up valuable metal at fire-sale prices. Just two months later – on the eve of the “LEAP DAY VIOLATION,” gold had risen from the high $1,500’s (where we are today) to the high $1,700s, and silver from the $29s (again, where we are today) to $37.50.
Here we are in May 2011 – just two months after the “LEAP DAY VIOLATION” – and gold and silver have been knocked back to those same levels, while the FUNDAMENTALS for why we own PMs exponentially stronger. Greece has partially DEFAULTED and is on the verge of RENEGING on ALL its debt – with Spain, Portugal, and Italy close behind – while France has elected a near-COMMUNIST that threatens to undo the thin fibers of support holding the Euro currency together. WORLDWIDE, economies are IMPLODING and money printing EXPLODING, while the U.S. threatens the world’s third largest oil exporter with annihilation.
Thus, the conditions for a PHYSICAL PM DEMAND EXPLOSION are ripe, and just one day into the sub-$1,600/gold, sub-$30/oz silver environment, Miles Franklin has already seen surging demand. The Cartel’s mantra has been to make you believe a) PMs are NOT a safe haven, b) PAPER PMs are just as good as PHYSICAL, and c) supply will ALWAYS be available if you need it. They are wrong on all counts – as HISTORY proves – and will be wrong again, in spectacular form.
These are the times to think long and hard of what the world may look like in the coming months and years, and how you can best PROTECT your assets from the dangerous times ahead. Per the image above, PM SUPPLY SHORTAGES are real, and at some point will be acute, and finally, permanent.
PROTECT YOURSELF, and do it NOW!
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