May 21, 2018 
 Monday 
 
 

Forum
Topic:
Gold Enters Major Bull Market

       

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 By bluejay

08/22/2008  8:39AM

Last on gold is $823.70

The following is an article written by Mr. Richard Smith a Phoenix gold dealer in addressing the bullion coin shortage and certain remarks made by Mr. Chris Powell, secretay/treasurer Gold Anti-Trust Action Committee(GATA):

A dig at GATA from a U.S. gold coin dealer over assumptions it has made, and publicised, regarding the U.S. Mint’s recent suspension of 1 ounce Gold Eagle sales. All credit to GATA though in that it has linked to this article on its own website too(Mineweb).

Author: Richard Smith*
Posted: Wednesday , 20 Aug 2008

PHOENIX -

Last Thursday, the US Mint notified its bullion distributors that the 1-ounce size gold Eagles were out of stock and temporarily not on offer for a while, with more details to follow early this week. Then the fun began...

From time to time, the bullion division of the US Mint suspends sales of one product or another, usually due to some production glitch or shortage of blanks. This week word came out that one-ounce gold Eagles would temporarily be unavailable. (As gold coin dealers, at this time, we have plenty of Eagles in stock, with more coming to us through distribution channels.)

Somehow, the coin publication "Numismatic News" picked up this story and sent it out to their email subscribers. No US Mint sources were cited for the story, but instead they quoted an ‘explanation' provided by Chris Powell, still holding forth under the banner of the Gold Anti-Trust Action Committee. Remember GATA?

Under the headline, "U.S. Mint suspends gold coin sales: futures price is a fiction," Chris Powell of GATA wrote Friday:

"The U.S. Mint has suspended sales of American eagle gold coins and is refusing orders from dealers, two coin and bullion dealers confirmed Thursday."

Mr. Powell goes on to say that:

"The suspension is overwhelming evidence that the futures contract price of gold on the commodities exchanges is substantially below the physical market price and that, indeed, the commodities exchanges are being used as GATA long has maintained -- as part of a massive scheme of manipulation of the precious metals, currency, and bond markets."

In order to separate fiction from truth, let's start with the fact that the US Mint did not suspend all gold coin sales, or even all bullion gold coin sales, but is only temporarily suspending sales of one size (1-ounce) of one product (the gold Eagle).

Word is that the Mint is temporarily out of planchets (round gold blanks of proper coinage weight and .917 fineness), and that more information will be provided as to when sales of the 1-ounce gold Eagle will re-start.

In the meantime, gold bullion is available in many forms of coins and bars from all over the world, at prices based on, yes, commodities futures trading. Even the US Mint is offering some, including the .9999 pure gold 1-ounce "Buffalo" bullion coin (a product the Mint first launched in 2006), and the .917 fine gold Eagles in half-, quarter-, and tenth-ounce sizes.

So what really happened? How does an institution such as the US Mint run out of the gold raw materials from which it strikes the most popular size of its most successful bullion coin product?

In this instance, the Mint is the victim of its own success. Demand for gold Eagles has skyrocketed lately, and some 287,500 1-ounce gold Eagles have been sold by the US Mint since January. This year the Mint's average monthly sales of 1-ounce gold Eagles is some 36,000, compared with a little over 12,000 coins a month in 2007. When the Mint temporarily suspended sales of gold Eagles on 8/14/08, some 60,000 coins had already been delivered in the first two weeks of August alone.

This latest glitch by the US Mint is hardly evidence that "the commodities exchanges are being used as... part of a massive scheme of manipulation of the precious metals, currency, and bond markets." In fact, the US Mint is turning out Eagles at a pace not seen since 1999. See U.S. Mint Sales

It's no wonder that the Mint would run out at that rate. Gold blank production is outsourced by the Mint, and the Mint orders them ahead of time according to expected demand. But when sales triple in a few weeks time, some delays can be expected.

When the Mint places an order, gold strips are prepared, blanks are punched out, then weighed, finished, packaged, and shipped via secure carrier to the Mint's facility at West Point, New York, where they are struck into gold Eagles, then inspected, tubed, counted, and boxed.

This process can take a few days. It's not like running out of chocolate chip cookies at lunchtime, and going to the store for more chocolate, butter, and flour, so you can have another batch ready in time for dinner.

It cannot be unknown to Chris Powell and GATA that billions of dollars worth of physical gold are bought, sold, and exchanged every week, all over the world, in the form of finished bullion, coins, jewelry, mine bars, and recycled gold scrap, based on the very futures prices which Mr. Powell calls a "fiction."

Not to be too hard on GATA - they stood up for gold in the days when no one cared much about the shiny yellow metal one way or the other. Around the turn of the last century, when gold was $255 per ounce and The Powers That Be were putting on that gold was just an obsolete metal, an anachronism from days gone by, GATA uncovered and published a lot of factual evidence that gold prices were being held down intentionally by the US Treasury and the Fed, in cahoots with central bankers the world over

Back then, no organization was more loved and respected by the then-tiny US gold- bug community than the Gold Anti-Trust Action Committee. The organization's self-aware ‘tilting at windmills' image had a sort of charm to it, and their noble protests of gold price manipulation had a certain resonance and underdog appeal.

Today, Mr. Powell's pique is understandable, coming during one of the worst weeks for precious metals in modern memory. During the week just past, gold lost 8.39%, silver tumbled 22.9%, platinum was down 10.8%, and palladium shed some 16.7%, all in five days time. These sorts of number suggest a washout in the current downdraft in precious metals prices.

Why? There is fairly universal agreement that the credit crunch that celebrated its first birthday this month is a slow-moving train wreck that will take at least a couple of years to come to its ugly end. This has helped tip the US into a recession, Europe is heading there fast, and oil and most commodities are down sharply over the past few months. All these factors have helped to relieve inflationary pressures on prices. In a nutshell, the prospect of potential deflation is the current ‘story' behind the past few months' swoon in the precious metals.

The loss in value this week of All the Gold in the World (AGIW) came to some US$300 billion. Total losses to AGIW since March 17th's London fix of $1011.25 now exceed US$1.049 trillion dollars ($1,049,000,000,000.00). That's probably nowhere near the aggregate world-wide loss in real estate value over that same time period, but a big chunk of change nonetheless.

This is how free markets work, and no one, including Mr. Powell, is obligated to sell his gold when prices don't suit him. In fact, the beauty part of these ‘manipulative' commodities exchanges is that they make it possible for he, or anyone else in a free country, to buy gold for some 28% less than it would have cost on March 17th. To label that reality a ‘fiction' is either disingenuous nonsense or a sign of deep denial about how the world works.
 By bluejay

08/21/2008  10:37PM

Last on gold is $836.50.

The following was submitted to Agoracom.com by a member.

August 20, 2008 article written by Richard J. Green of Clearwater, Florida

The Truth About the Recent PM SMashdown.

Two paragraphs of excerpts from that article:

It’s no wonder precious metals investors are unloading despite swearing they would not be fooled into panicking when the financial system began to come apart at the seams. Make no mistake; what we are seeing in the gold and silver markets is an all out attack by the financial powers that increased in intensity on July 15th when it became apparent that Fannie Mae and Freddie Mac are, for all intents and purposes, insolvent. Gold investors have been let down in a big way by supposed experts that comment on the gold and silver markets but can not see the most obvious of price suppressions in the history of the financial markets. Just this morning I read another comment on how the creation of the gold and silver ETFs has been a huge boon to gold and silver. While it increased demand due to the ease of acquisition; it has done nothing for the price of gold and silver since supply can now be said to be unlimited by the paper promises as well as centrally located physical stockpiles that can be further leased out. Just try redeeming your promise of silver and gold for actual silver and gold. Not only that, but most commentators completely miss relaying the point to gold and silver investors that at times like now, where systemic risk levels are higher than ever, you want real physical gold and silver in your possession and not the undeliverable promises of a counterparty such as Bear Stearns, for example. Money is now growing on the order of 20% and that is not only in the US but also worldwide. The recent bounce in the dollar has been explained to be a big reason for the decline in gold. You are being sold a story by a dishonest used car salesman. Where the dollar trades versus other paper currencies no longer has any lasting affect whatsoever on any hard assets. They are all declining at an increasing pace toward worthlessness. About the only difference of substance is that they have different colors of ink. Without the option of the ETFs gold would long ago have climbed past $2000 per ounce. I would wager that if only 10% of gold ETF holders sold their position and turned around and bought physical gold that gold would be back over $1000 an ounce in a heartbeat. The spreads that have opened up between the spot and futures market and the physical markets should be setting off alarm bells but you hear very few commentators mentioning it. Two notable exceptions are bullion dealer Franklin Sanders and bullion accumulator and commentator Jason Hommel. Please see Hommel’s silver wisdom.

You do not get a $200 move down in gold and $7 move down in silver in a month’s time, (because they were supposedly in a bubble), and then after everyone and his mother is selling you find it almost impossible to find any actual gold or silver to buy at major dealers across the country. 100 oz. bars on eBay are changing hands at $17 per ounce, over $4 above the spot price. That is a heck of a lot closer to the market price than $12.68 spot which is what the screen says right now but where you can not buy a single ounce of physical silver. After this display anyone that uses the paper markets to invest in gold and silver is just an out and out dummy, plain and simple, and they deserve what they will eventually get… nothing. How speculators can continually line up leveraged positions against bullion banks with unlimited cash backing who in turn repeatedly smack down the markets is a mystery. Unfortunately, the cumulative action of these players is making it tough for the rest of us but at the end of the day it will not matter because we will have our gold and silver or our stocks of the companies that are producing gold and silver and making a lot of money. Even the US mint has suspended production of gold coins. Silver coins are being severely rationed because they can not divert any more silver from the industrial users that must have the physical silver to consume, taking it off the market forever. If you can not see by now, with all this data in hand, that the crash in gold and silver has nothing to do with market-related prices you would have to be a complete imbecile.
 By bluejay

08/20/2008  4:45PM

Last on gold is $812.60

More on bullion coin shortages.

The following exchange was carried on the jsmineset.com website earlier today.

Dear Mr. Sinclair,

Wonder if other CIGA's have encountered delays in delivery of their gold bullion orders? The dealer I use has posted a message on their website and when called, affirmed that various products are unavailable for delivery for an undetermined length of time. They hope to resume deliveries "within a few weeks".

Though I am delighted to hear folks are putting money in hard assets and are taking advantage of the current sale, I am wondering what is going on and whether this is something to worry about.

Puzzled in New Jersey,
CIGA Annette

Dear Annette,

I would have simply shrugged this off based on the fact that most local coin dealers as well as majors are in the business to make money without taking risk. As markets fall they do not buy in any significant way. Therefore as gold settles out they have little or no inventory.

They are merchants only at times when it pleases them, yet so many people all over the world are telling me the same story. The only answer is the reaction we just witnessed in paper, not real gold. That would suggest but not prove the bullion market is tight.

Regards,
Jim
 By bluejay

08/19/2008  9:26AM

Last on gold is $812.50

Gold continues to rally off a low point from a few days ago in the $775 area where it was learned that the Chinese were big cash buyers.

The following story came out today concerning the vulnerability of the US banking industry:

August 19, 2008
>
>
> Credit crunch may take out large US bank warns former IMF
> chief
>
>
>
> Gary Duncan, Economics Editor and Leo Lewis, Asia Business
> Correspondent
>
>
> The deepening toll from the global financial crisis could
> trigger the
> failure of a large US bank within months, a respected
> former chief
> economist of the International Monetary Fund claimed today,
> fuelling
> another battering for banking shares.
>
> Professor Kenneth Rogoff, a leading academic economist,
> said there was
> yet worse news to come from the worldwide credit crunch and
> financial
> turmoil, particularly in the United States, and that a
> high-profile
> casualty among American banks was highly likely.
>
> "The US is not out of the woods. I think the financial
> crisis is at the
> halfway point, perhaps. I would even go further to say the
> worst is to
> come," Prof Rogoff said at a conference in Singapore.
>
> In an ominous warning, he added: "We're not just
> going to see mid-sized
> banks go under in the next few months, we're going to
> see a whopper,
> we're going to see a big one - one of the big
> investment banks or big
> banks," he said.

I sleep well at night with gold and silver. I wonder sometimes how people can sleep with their money in the banks.
 By Michael Miller

08/18/2008  5:35PM

I saw the same disclaimer this morning when I checked spot. A while ago I related the experience of a shareholder who wanted to take delivery on a 100-ounce commodity contract. He wanted the gold. He never got it and his contract was rolled over or he could take his profit. What is the situation with physical gold? I wish someone would buy a contract (especially now) and take delivery. If anyone out there has done this, please tell us.

I come in contact with gold people over the phone or Internet. After all, the Sixteen to One produced over 1 million ounces of gold. The best part is that knowledgeable geologists are confident at least another million will be accessed with our mine plan. I am actively looking for some working capital and therefore meet people interested in gold. I have heard that physical gold is not easy to come by, which surprises me. Maybe the big mines have liens on their production. I don’t see why there is this difficulty. Again, if someone can shed some light on this specific subject, please do so. Thanks.
 By bluejay

08/18/2008  10:00AM

Gold $797.80 up $11.80
Silver $13.11 up $ 0.41
Gold/XAU Ratio 5.68
Gold/Silver Ratio 60.85

In past submissions to the Forum I have stressed that weakness in gold and silver coming from the New York markets is a paper market. The CFTC says that there are adequate supplies of the metals on deposit in vaults but is that really true?

The following is a advisory posted at kitco.com:

IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products. Please note that you can continue to place orders and prices will be guaranteed; however, cancellation fees will still be applicable regardless of the length of the delay. Consequently once inventory is received there may also be delays in processing and shipping by our vaults.

Where is all the silver?

A report posted to the ECU forum page at Agoracom.com by a member living in Ottawa states that there are no bullion silver coins, silver bars or junk silver available from local coins dealers.

The same member states that coin dealers say that there is an eight week waiting period for these silver products.

It appears that there are two silver markets: a paper commodities market that determines world prices and a physical market where prices are unsure.

While there seems to be great pressure on the price of silver recently at the commodity exchanges with buyers at the retail level finding delivery delays, what is one to think?

One end result here is obvious, the market on physical silver bullion coins will be carrying a far greater premium than what used to be the norm.
 By bluejay

08/15/2008  10:41AM

Gold $786.00 off $19.70
Silver $13.04 off $ 1.10
Gold/XAU Ratio 5.66
Gold/Silver Ratio 60.28

Visions of 1976 come to mind today as gold is trading below the $800 level. In August of 1976 I was hearing nothing but negatives concerning gold as it dropped below the $100 mark and was being verbally whipped by every media outlet in town.

Following the oil crisis and Israeli/Egyptian conflict in late 1973, gold topped out at just over $200 an ounce early the following year.

It was in August of 1976 at near $95 that gold made an important low. Not too far in price from where the US abandoned paying gold out for dollars when President Nixon, basically, closed the gold window and effectively took the country off the gold standard on August 15, 1971.

August is seasonally a quiet month in gold for the commercials and one might wonder, why it wouldn't make sense for the anti-gold miscreants to do their dirty deeds against believers in gold during this time of the year? The element of surprise is an old trick used in making and continuing wars since the beginning of time with degrees of success.

The important point to remember is that the anti-gold legions have successfully won some battles but they continue to lose the major war on gold.

Could it be any coincidence that gold's unexpected sell-off is going full force this August and could it be the month of another major low for gold like it was back in August of 1976?

In 2006 gold made an important intermediate low in September of 2006 at $555 very near in time of the year to the other mentioned intermediate lows. It would appear reasonable to make the assumption that this year's sudden weakness will either end today(low so far is $774.90), or in going forward in just a matter of days.

Way far in the distance hidden by media attacks, Jim Sinclair is calling for gold to surpass $1400 an ounce in February of 2009 or possibly a few months later. His superior batting average is in a stand alone category.

Based on the media's track record they will be wrong again and will have delivered another great dis-service to those who allow their minds to be ravaged with all their continuing arrogant propaganda concerning the doom of gold.
 By bluejay

08/12/2008  8:23PM

Gold $806.90 off $3.90
Silver $14.47 Unch
Gold/XAU Ratio 5.73
Gold/Silver Ratio 55.76

Today, 8-12-08, Lawrence Williams from Mineweb made some preposterously suspect comments to their readership:

On the way up to its(gold's) high point of $1,030.80 an ounce, which now seems almost a distant memory(????), gold was moving up along with the oil price as the dollar sank to unprecedented recent depths. Gold then stuttered as oil continued to rise and the dollar to sink, never regaining its peak, while oil went on to a heady $147 a barrel as the dollar continued its weakness.

It's now only taken a month for all to change. The dollar is strengthening by the day as the oil bubble has burst(????) and the black gold has lost over 20 percent of its peak value against the dollar - and whether it has dragged gold down with it, or vice versa, gold has also tumbled by over 20%, putting both effectively into defined bear market territory(????).

Most of the above is no more than cheap propaganda.

Mr. Williams makes the case for a poor relative strength performance of gold compared to oil and the dollar but fails to tell the truth why it acted that way: by the help of the cental bankers of the world that are scared to death that a continuing higher gold price will focus suspicion upon their weakening paper currencies.

Mr Williams says that the gold price above $1,000 is a distant memory. The days of gold being fixed at $35 an ounce is a distant memory.

Mr. Williams says that the oil bubble has burst. Please, give your readers some credit for intelligence. The dot.com and housing market were burst bubbles. Oil is in a very strong bull market that just got ahead of itself, nothing more.

The last questioned statement by Mr. Williams has to be the joke of the day: "Putting both(oil and gold) into defined bear market territory." OK Mr. Williams, why don't you define your defined bear market territory phraseology? Gold is in a major bull market and has been in it since it traded above $350 some years back. In my opinion, gold would have to close below $400 to be in bear territory again.

If central bankers hadn't messed with gold's price since 2001 the royal metal would be selling for well in the excess of $2,000 an ounce.

The central bankers have a license to steal from simple folks like the shareholders of the Sixteen to One Mine: they suppress gold's price while making our company carry the burden of increasing prices for labor and materials in THEIR inflation that THEY created with THEIR printing presses.

Gold's last sale is $811.30.
 By bluejay

08/12/2008  12:47PM

Last on Gold is $817.10.

The following was posted to the jsminset.com website earlier today.

Jim Sinclair's Commentary:

Those OTC derivatives continue to humble the once high and mighty. It is far far from over.

UBS swings to loss as customers withdraw cash
Troubled bank plans restructure; new finance chief appointed
By Simon Kennedy, MarketWatch

Last update: 10:13 a.m. EDT Aug. 12, 2008LONDON (MarketWatch) -- Beleaguered Swiss bank UBS on Tuesday reported a second-quarter loss of 358 million francs ($331 million) and said it would restructure by separating its investment banking and wealth management arms after nervous clients withdrew more cash in the quarter.

The bank's fourth consecutive quarterly loss compared to a profit of 5.55 billion francs a year earlier and came after it warned in July that its bottom line would be at or slightly below break-even for the quarter.

The latest loss included around $5.1 billion of further write-downs and provisions of $900 million linked to its recent settlement of a U.S. probe into the sale of auction-rate securities.

The bottom line would also have been far worse if it wasn't for a tax credit of 3.83 billion francs, which was significantly more than the 3 billion franc credit expected.

Shares in the group wavered between gains and losses and were down 0.8% in afternoon trading as investors balanced the weak results against welcome restructuring plans and a further reduction of its remaining exposure to risky debt.

"We would characterize the results themselves as largely disappointing, with weak inflows and underlying investment bank division revenues," said Matthew Clark, an analyst at Keefe, Bruyette & Woods.

"However, risk asset reductions, governance improvements and proposed separation of the units may be better received," he added.

More...
 By bluejay

08/11/2008  10:58PM

Last on Gold is $805.10. The following few sentences are an excerpt taken from a Jim Sinclair commentary on Georgia tonight:

It may well be that the friends of the dollar and enemies of gold are gearing up for the final battle as the dollar bulls fail to see the forces being marshalled against them right outside their windows.
 By bluejay

08/11/2008  6:06PM

Gold $823.00 off $32.50
Silver $14.64 off $0.63
Gold/XAU Ratio 6.02
Gold/Silver Ratio 56.22

Gold took a severe beating today closing off $32.50 at $823.00. This is the start of the fourth straight week of declining prices. The weakness has surprised followers of the metal and has freightened many.

Jim Sinclair of jsmineset.com has repeatedly stated that nothing has changed. So, what's up? He has stated that the OTC derivative problems can't be fixed.

The problem is that the banking system is in BIG trouble and the Fed is beside themselves in the continuing cashing out of maturing CD's looking for safe heaven.

Where is this money to go? One place that the Fed doesn't want it to go is into gold, other precious metals and the producing companies. To their mind, these acts would undermine their power and be counter stabizing to the ailing banking system.

There is nothing more unsettling to the Fed than witnessing long lines of people at banks wanting their money. If you don't think this is a serious problem just ask the people that lost millions in the IndyMac Bank failure in California that was the second largest bank failure in U.S. history.

The Fed is a member of the powerful Plunge Protection Team which also includes the Treasury, SEC and the CFTC. These people rig markets. The days of free markets in this country are over and maybe others, they just don't exist anymore.

The proof of this is, why are hedge funds allowed by the SEC to depress prices of precious metal companies with "out of control" naked short selling. This means for the people that don't understand it that the hedge funds can sell shares that they don't own or are unable to borrow. To me, this is a crime.

During the past 16 days someone or some entity has been forcing gold lower and they are doing almost all of this selling without physical gold.

In an article in the Wallace Street Journal by David Bond on June 28, 2008 he quoted, in his words, a well placed China guy. The source said:

1- China has a problem. What it would like to do is convert its huge holdings of U.S. dollars and U.S. Treasuries into gold.

In response, Mr. Bond asked the following question:

Then why not start buying gold?

2- We can't. The minute the word gets out that China is unloading all, or any part, of its $1 trillion in U.S. paper to buy gold, the game is up. Two things happen: the price of gold goes to $10,000 and the current value of the U.S. dollar falls to about 10 cents.

I have attempted to offer guidance based upon interpretation of charts and quoting smart people and presenting articles over the years.

I can not control the suspected negative exploits of the anti-gold element that is currently represented by the PPT to cast mud all over the shinny metal in hopes of dissuading bank withdrawals from being directed into it.

The really sad concern is that as Americans we are witnessing an ugly fact: while our government employees are depressing gold and the producing company's shares the Chinese are gladly scooping them up in a slow and methodical manner.

The Chinese will not buy in excess of 4.99% of any listed company which negates their obligation to report their new ownership to the SEC as the process continues to divest themselves slowly of the diseased dollar.

I feel like a parrot saying this but you should be buying more gold on this deepening reaction to protect your wealth factor from inflation and to insure your financial future.

Does anyone know what's really going to happen next to our financial sector as the OTC derivatives continue to meltdown? Will we be told everything in a timely manner? I wouldn't expect it.

Protect youselves and take advantage of gold's current weakness.

Last sale on gold is $813.50.

What we are witnessing is a well planned and executed attack on gold. The Chinese are loving it!
 By Dick Davis

08/08/2008  8:47PM

Forum readers may also be interested in an interpretation of Wizard of Oz.

Google: Wizard of Oz allegory
 By bluejay

08/08/2008  8:38AM

Gold $853.10 off $19.20
Silver $15,43 off $0.75
Gold/XAU Ratio 5.85
Gold/Silver Ratio 55.29

As the paper factory proponents pull out all the stops to discredit our gold insurance policy its seems timely to interject some perspective while the miscreants from the paper factory continue to make the royal metal swoon for the third straight week.


The Four Tires of the Apocalypse

By Darryl Robert Schoon
Aug 5 2008 8:48AM

www.drschoon.com



The engine used to run on premium, e.g. gold and silver; now it’s being run on credit which over time will destroy the engine and everything else.

The euro, the yuan, the yen, and the dollar are The Four Tires Of The Apocalypse, an event that recently appears to have come out of nowhere. It didn’t. Its apparently sudden appearance is new only to those who wished to see otherwise.

The destructive juggernaut now bearing down on the financial house of cards constructed by central bankers contained within it the seeds of its own destruction from its very beginning. Over time, those seeds would turn into Cerberus, the hound of hell, on whose mercy Bernanke et. al. now depends.

Epochs, like movies, need time to reveal protagonists and antagonists, as well as victims, villains and victors. We are now at the end of an epoch and as the final scene opens, the program notes are becoming disturbingly clear.

We find ourselves participants in the last and final act of capitalism and its credit based capital markets—or more correctly, credit and/or debt markets masquerading as free markets.

THE BIRTH OF CERBERUS THE GENESIS OF THE JUGGERNAUT

Capitalism did not appear until the Bank of England began issuing its debt-based paper money in 1694. The issuance of credit as money gave rise to capital markets where debt-based money replaced savings-based money

The Bank of England’s debt-based money drove out gold and silver coinage as Gresham’s Law clearly illustrates—bad money drives out good. No one would willingly pay gold or silver for what paper coupons would just as easily buy.

Capital markets are debt-markets made possible by the fiat issuance of central bank debt-based money. After central bankers’ faux money replaced gold and silver coins, commerce appeared to change forever; but that too is now about to change.

The rise of central banks parallels the substitution of paper debt-based money for gold and silver. When a disease spreads, so, too, do its symptoms. Replacing gold and silver with debt-based money was to eventually cripple commerce itself, albeit after a three hundred year run at the table.

Previous to central banking, commerce was founded on currencies composed of gold and silver. But with the advent of central banks, credit was substituted for gold and silver and after three centuries, credit-based economies are now on the verge of collapse, the juggernaut is in the shop and the long awaited apocalypse has arrived.

SOMEBODY BETTER CHECK THE TIRES

The euro, the yuan, the yen, and the dollar—the four major fiat currencies—are The Four Tires Of The Apocalypse; and although the economy’s engine, the credit markets, have seized up and are receiving most of the attention, somebody should take a look at the tires.

The mechanics, the central bankers, are instead focused only on the engine. Their solution again proves that good mechanics are hard to find. Like hacks at the corner garage, they’re pouring more credit into an already flooded engine, a sure sign they don’t know what they’re doing.

They’re not even looking at the tires. They should because the tires are fiat made of paper. The front tires are the Japanese yen and the Chinese yuan. The rear two are the euro and the US dollar; and it’s the two rear tires that now pose the greatest threat, the driver’s side rear, the US dollar, in particular—and the spare in the trunk, the British pound has a leak.

Of the four, the Chinese yuan is the newest, which in credit-driven economies is a plus, as usage in such economies equals more debt. Nonetheless, the Chinese yuan is not capable of carrying more than its present load although it is presently holding its own.

The other front tire, the Japanese yen, unlike the Chinese yuan, is well-worn and its tread is almost gone. Its debt load is enormous (the highest ratio of debt to GDP of all major economies) while its pressure, sic interest rate, is the lowest of all, incapable of handling more.

Currently at only 0.5 % because of an almost fatal blowout in 1989, the Japanese yen still hasn’t yet recovered—that the tire is still in service after its severe blowout is in itself something of a miracle.

But the two rear tires, the euro and the US dollar, are the source of our future trouble as they are particularly vulnerable to the continuing collapse of credit markets. The euro and dollar, like all fiat currencies, are dependent on the strength of their underlying economies, economies addicted to credit from increasingly insolvent banks, banks which are in far more trouble than presently believed.

Like someone who has HIV and has only confessed to having the clap, the money-center banks in Europe and the US are holding assets both on and off their balance sheets that are virtually worthless, with actual losses totaling $1.6 trillion, four times what the banks have yet admitted; and because the value of fiat currencies are a function of their economies, the collapse of the US dollar and euro may be ahead.

PUBLIC MONEY PRIVATE BANKS

It is now clear that central banks are using national treasuries to indemnify losses incurred by private banks. This should come as no surprise. Once private bankers and public government colluded to debase the currencies of their nations in order to enrich themselves, the joining of the two was inevitable and it is happening as we watch.

The last and final act of capitalism will be characterized by the looting of what little remains in our national treasuries as central bankers bail out the banks that caused our present problems. The only thing new is our surprise that it is happening.

The consequences, however, will not end there. The consequence of the public bailout of private banks will be the collapse of fiat currencies, currencies which have been the very basis of government and bankers’ power—power which will be swept away when fiat currencies collapse.

THE END GAME

Capitalism and credit markets—the bastard offspring of fiat money and central banking—are now in their final stage; and the default of fiat money will herald the end of the reign of central bankers in our affairs. No fiat system has ever survived. The present fiat system will be no exception to that rule

For those worried about private property, have no fear. Capitalism has nothing to do with the private ownership of property as maintained by private bankers and their corporate sponsors. The private ownership of property existed long before capitalism and will exist long after.

Capitalism has everything to do with central bankers’ issuance of debt-based money and the increasing power of government in our lives and the increasing profits of bankers at our expense.

Thomas Jefferson, the author of America’s Declaration of Independence understood well the threat posed by central banks:

The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution…Bankers are more dangerous than standing armies… [and] 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.

With the establishment of the Federal Reserve Bank in 1913, the American people allowed private bankers to destroy the economic freedom the founding fathers had fought to achieve.

That first by inflation and then by deflation, the banks and corporations as Jefferson warned are now in the process of depriving Americans and others of their homes and property by the issuance of credit and by default on those debts

The founding father fought a war in 1776; and 137 years later in 1913, Americans ceded back what they had won when they allowed private bankers to establish the Federal Reserve Bank in the US, a central bank which would do exactly as Jefferson said

Since the establishment of the Federal Reserve System, the US has been a slave to bankers and those in government who do their bidding, Today, Americans are bankrupt and indebted to those they allowed to issue their currency.

Today, America’s once free markets are rigged and government officials lie openly and with impunity whenever it serves their purpose to do so, their words no more trustworthy than the statistics they produce in order to pacify a nation regarding the dangers they have put it in.

Soon, however, that will change. For the collapse of the fiat US dollar will also bring about the collapse of those who benefit from its false issuance—private bankers, corporations and those who govern for their benefit in our name.

Although we do not possess the requisite power to successfully oppose those who oppress us, we can however wait for their inevitable demise, a demise that will unfortunately be as devastating to us as it will be to them.

The collapse of the US dollar will be horrific as will be its aftermath. But the price of liberty is always high. It was high in 1776. It will be high again.

THE UNLEASHING OF CERBERUS

These days at Apocalypse Auto, the lights are on at midnight as the mechanics wonder what to do. This is not the first time the once apparently unstoppable US economic juggernaut has been in the shop.

Just a few years ago, when the dot.com bubble burst, the US economy was obviously badly in need of emergency repair. To Al Greenspan, the head mechanic at Apocalypse Auto, it was a dangerous situation.

In 1989, the Japanese stock market bubble had collapsed sending Japan into a deflationary spiral in which it was still mired and if the US suffered likewise, the US, Japan and world economies would be in deep trouble.

So, Al and the others at Apocalypse Auto did what they did. The story is best told by Professor Antal E. Fekete in The Bubble That Broke The World, June 2003

… Aladdin Greenspan let the genie out of the bottle. The genie is now at large, entirely on its own, roaming around the world, visiting disaster upon the economies wherever it may go: a depression possibly worse than that in the 1930s. Aladdin hasn’t got a clue how to put it back in the bottle because if he tried, the genie would threaten to plunge the world into another bottomless pit, that of hyperinflation.

Greenspan [explained] the strategy the Fed has developed to combat deflation. He would climb the yield curve, that is, go out to buy government bonds of all maturities, if need be up to and including the30-year Treasury bonds, in an effort to push interest rates down thereby enlarging the monetary base that would, according to him, contain the weakness in prices.

It is a long shot from open market purchases of bonds to a buoyant price level. After all, once in circulation, the new money created by the Fed is no longer under its control. It is under the control of the speculators. They will not necessarily deploy it in the commodity or stock markets, as the Fed is hoping. They may see a better opportunity for profitable speculation elsewhere, say, in the real estate or the bond markets [bold, mine].

Just as Professor Fekete predicted, central bank credit, sic “new money”, went out of central bankers’ control and created an even larger bubble, the US real estate bubble whose collapse is now threatening economies everywhere.

Central bankers are again trying to contain the forces they themselves set in motion. But, irreparable harm has already been done because the genie that Greenspan let out of the bottle was no ordinary genie, it was Cerberus, the hound from hell.

Cerberus, Hades’ three-headed hound, is now on the loose. It is a sign of the times that many still hope central bankers can save them from what is about to happen. But hope is as blind as the information upon which it feeds—for although the bankers let Cerberus out, they are powerless to put him back in.

GOLD & SILVER THE BANE OF CENTRAL BANKERS THE FOUNDATION OF OUR PAST AND FUTURE FREEDOMS

Darryl Robert Schoon
 By Hans Kummerow

08/07/2008  12:40PM

Slower growth of M3 still at record heights

The recent slow-down in M3-Growth from 20% p.a. to 16% p.a. is actually telling us that M3-Growth is still sky high.

Accordingly the monetary exchange equation is telling us, that inflation will be the inevitable result of this rapid expansion of the money-supply.

US-$ denominated gold-prices will continue to mirror the real inflation of the US-Dollar paper currency as long as M3-Growth is higher than the actual gowth of all goods and services sold during a given period of time.

This principle has been proven to work against all paper-currencies in the world. It will also work in case of the US-Dollar.

Until M3-Supply is finally reigned in at some time in the future the average price of gold expressed in US-Dollar paper-currency will climb higher and higher.
 By bluejay

08/07/2008  9:27AM

Gold $871.70 off $7.30
Silver $16.23 off $0.31
Gold/Xau Ratio 5.76
Gold/Silver Ratio 53.71

The shakedown in gold continues. Alf Field has revised his Elliott Wave Analysis by stating that a retest of gold's lows at $845 could develop during this current fishing line drop. Alf Field's batting average, calling major moves in gold correctly over past years has been well in excess of .900. So, I think we should listen to him.

The following is how Alf summed up his recent analysis:

The gold market is in the process of completing Large wave II of Major wave THREE. Once Large II is finished, Large III of Major wave THREE will commence. As detailed in Update 20, this should be a strong upward impulsive wave that could reach to above $1,500 before it is completed.

These forecasts are based on the rhythms detected in the gold market during its early stages. The magnitude of the various corrective waves helps to identify the type of wave sequence underway and assists in pinpointing errors when they occur.

Alf Field

Let's see, the expected trading range on gold from a $845 low to the exceess of $1,500 during the upcoming new phase doesn't give a person too much room for being right if they are a fearful seller, does it?

The three P's - Perspective, Perspective and Perspective will always rule.





6 August 2008.
 By bluejay

08/05/2008  11:56AM

Gold $879.40 off $14.40
Silver $16.62 off $0.27
Gold/XAU Ratio 5.92
Gold/Silver Ratio 52.91

Today is it! The beginning of much higher prices in gold and the gold shares.

We are in an price rich environment for some very smart people to buy from the fleeing public.

Just a little perspective shows how awfully wrong the scared and faint hearted public can become when their nerves get frazzled as a result of sinking prices within major bull markets.

For example, the Gold/XAU ratio currently is 5.92. This, alone, exhibits based on historical over bought/over sold levels that shares are on the bargain table. The old rule of thumb is buy above 5.0 and sell below 3.0.

A little more perspective is found on the long term XAU chart(the Philadelphia Gold & Silver Index) with a last price on the Index of 149.18.

Subjectively looking back in years it is quite obvious that prices were held back during the time span of 20 years from 1987 to 2007 at 150 before they broke into new higher territory. This old resistance area is now support and will generally hold prices from going lower and will be used as a blasting off point for some exciting new all-time highs in the months to follow.

Concerning gold, this is what the maestro says:

Dear Friends,

Nothing has changed and nothing will. Gold will reach $1,200 and then $1,650. If I am wrong it is because gold will go even higher - and sooner than expected.

Sincerely,

Jim Sinclair

Don't be a sap by getting suckered into selling your gold and gold shares. This is the time to buy, not sell.

Gold selling lower at $876.

The reason gold is down is that the cartel is playing one of their last few cards in an act of pitiful desperation to keep your mind away from cashing in your maturing CD's for the purchase of gold and silver.

Haven't we been raped enough by these puppeteers?
 By bluejay

07/31/2008  10:07PM

The following is an article that was published in the Financial Times and submitted to jsmineset.com by Monty Guild with a brief comment:

Here is an important article from FT.com that we felt our readers would like.

FANNIE'S AND FREDDIE'S FREE LUNCH
By Joseph Stiglitz
Published: July 24 2008 18:25

Much has been made in recent years of private/public partnerships. The US government is about to embark on another example of such a partnership, in which the private sector takes the profits and the public sector bears the risk. The proposed bail-out of Fannie Mae and Freddie Mac entails the socialisation of risk - with all the long-term adverse implications for moral hazard - from an administration supposedly committed to free-market principles.

Defenders of the bail-out argue that these institutions are too big to be allowed to fail. If that is the case, the government had a responsibility to regulate them so that they would not fail. No insurance company would provide fire insurance without demanding adequate sprinklers; none would leave it to "self-regulation". But that is what we have done with the financial system.

Even if they are too big to fail, they are not too big to be reorganised. In effect, the administration is indeed proposing a form of financial reorganisation, but one that does not meet the basic tenets of what should constitute such a publicly sponsored scheme.

First, it should be fully transparent, with taxpayers knowing the risks they have assumed and how much has been given to the shareholders and bondholders being bailed out.

Second, there should be full accountability. Those who are responsible for the mistakes - management, shareholders and bondholders - should all bear the consequences. Taxpayers should not be asked to pony up a penny while shareholders are being protected.

Finally, taxpayers should be com¬pensated for the risks they face. The greater the risks, the greater the compensation.

All of these principles were violated in the Bear Stearns bail-out. Shareholders walked away with more than $1bn (€635m, £500m), while taxpayers still do not know the size of the risks they bear. From what can be seen, taxpayers are not receiving a cent for all this risk-bearing. Hidden in the Federal Reserve-collateralised loans to ¬JPMorgan that enabled it to take over Bear Stearns were almost surely interest rate and credit options worth billions of dollars. It would have been easy to design a restructuring that was more transparent and protected taxpayers' interests better, giving some compensation for their risk-bearing.

But the proposed bail-out of Fannie Mae and Freddie Mac makes that of Bear Stearns look like a model of good governance. It sets an example for other countries of what not to do. The same administration that failed to regulate, then seemed enthusiastic about the Bear Stearns bail-out, is now asking the American people to write a blank cheque. They say: "Trust us." Yes, we can trust the administration - to give the taxpayers another raw deal.

Something has to be done; on that everyone is agreed. We should begin with the core of the problem, the fact that millions of Americans were made loans beyond their ability to pay. We need to help them stay in their homes, including by converting the home mortgage deduction into a cashable tax credit and creating a homeowners' Chapter 11, an expedited way to restructure their liabilities. This will bring clarity to the capital markets - reducing uncertainty about the size of the hole in Fannie Mae's and Freddie Mac's balance sheets.

The government should set a limit to the size of the bail-out, at the same time making it clear that, while it will not allow Fannie Mae and Freddie Mac to fail, neither will it be extending a blank cheque. There may need to be a drastic reorganisation. There should be a charge for the "credit line" (any private firm would do as much) and, given the risk, it should be at a higher than normal rate.

The private sector knows how to protect its interests; the government should do no less. As long as the credit line is extended, no dividends should be paid. To ensure that the government is not simply bailing out creditors who failed in due diligence, at least, say, 25 per cent of any notes, loans or bonds coming due that are not lent again should be set aside in an escrow account, to be paid only after it is established that taxpayers are not at risk. Any government loans should be cumulative preferred debt: the taxpayers get paid before any other creditors receive a dime. To discourage moral hazard the interest rate should be at a penalty rate and, reflecting the rising risk, increase with the amount borrowed. Finally, the government should participate in the upside potential as well as the downside risk: for instance, by taking shares (which it might later sell) or, as it did in the Chrysler bail-out, warrants.

We should not be worried about shareholders losing their investments. In earlier years, they were amply rewarded. The management remuneration packages that they approved were designed to encourage excessive risk-taking. They got what they asked for. Nor should we be worried about creditors losing their money. Their lack of supervision fuelled the housing bubble and we are now all paying the price. We should worry about whether there is a supply of liquidity to the housing market, so that those who wish to buy a home can get a loan. This proposal provides the necessary liquidity.

A basic law of economics holds that there is no such thing as a free lunch. Those in the financial market have had a sumptuous feast and the administration is now asking the taxpayer to pick up a part of the tab. We should simply say No.

The writer, 2001 recipient of the Nobel Prize for economics, is university professor at Columbia University. He is co-author with Linda Bilmes of The Three Trillion ¬Dollar War: the True Cost of the Iraq Conflict

Copyright

The article says it all.
bluejay
 By Hans Kummerow

07/30/2008  4:42PM

Money Supply M3 declining in US$ and Euro-Areas

After the M3-Reports for the US$-Area were discontinued in 2006 by the Bush-Administration other "Watchdogs" have stepped in to monitor M3-growth. For details go to http://www.shadowstats.com/alternate_data

M3-Money supply has decreased sharply in the US$-Area in 2008 due to more restrictive lending practises by the banking sector. It is now growing annually at about 16% per year.

M3-Money supply has decreased slightly in the Euro-Area as well. Figures are published monthly by the European Bank Statistics Department. Euro money supply is growing annually at a rate of about 10%.

The declining M3-Supply should result in lower prices for many goods, just like lower prices for real estate.

The fundamental problem, eroding public trust in the value of the US$ is the excessive growth of public debt and/or public guarantees. 30 billion US$ for the rescue of Bear Stearns, 3000 billion for the factual garantee of all obligations of Fannie Mae and Freddie Mac with more aggressive lending by both comanies on the horizon.

This sort of garanteeing for everybody and every amount is raising eye-brows around the globe.

Therefore, gold will probably fetch high US-Dollar prices for a relativly long period of time. From a Euro- or Yen-Point of view the price-increase in gold looks quite moderate due to the sharp decline in the foreign value of the US-Dollar.
 By bluejay

07/30/2008  9:05AM

" A Tale Of Two Cities"

The anti-gold miscreants are jumping up and down with gold's eighth day of weakness, currenting selling at $899.50 and the Chinese are jumping up and down with a higher dollar and a lower gold prices as they sell and buy in vast quantities.

If history is any guide, the fools selling gold are the ones that will be sorry.

Concerning gold and silver stocks, the Gold XAU Ratio is currently at 5.47 which over the past four years has been about the best time to buy these stocks. This has been an excellent baromemeter of timing for buying and selling over the years.

The general rule is: buy the stocks when the ratio is in excess of the 5.0 level and for intermediate trading sell the stocks when the Index is under 3.0.

Gold is in a generational bull market and until it changes, all sizable declines should be bought.

If you don't have your gold yet, this could be your day.

"Time and tide waits for no man."
 By bluejay

07/29/2008  2:36PM

Check out this article in relationship to the banking industry. Who's hiding what?

http://www.reuters.com/article/marketsNews/idINN2849132320080728?rpc=44

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