-- Published: Friday, 4 September 2015 | Print | Disqus
“…Wall Street Shills will be in the news explaining how markets become unreasonably fearful from time to time. They will tell investors that it is time to hunt for bargains.
“In the meantime, watch your rear: There’s a serious counterattack coming.
“It will be an attack on our supply lines. The cronies and the feds will attempt to cut off our finances and our line of retreat, trapping us between the anvil of the market’s deflation and the hammer of the Fed’s inflation. There will be no escape, no way out.
Bill Bonner, Bill Bonner’s Diary, 09/02/2015
Bill Bonner correctly identifies The Threat that is coming from The Mega-Bank Cartel (Note 1) — an “attempt to cut off our finances and line of retreat” — that is, The Cartel’s Attempt to discourage and, in certain circumstances, prevent the use of Cash. Take Note that Mega-Bank Moves in this direction are already occurring.
But The Threat is much Broader than that, and includes dethroning the US$ as the World’s Reserve Currency and replacing it with a New Reserve Currency, IMF SDRs, a “Currency” which could not be owned by Citizens, but would be Controlled by The Mega-Bank Cartel’s IMF.
Worse, this would result in a dramatic drop in the Purchasing Power of Citizens’ (like you and me) Fiat Currencies, in effect, a Confiscation of Citizens’ Wealth.
But before we address that IMF SDR Threat, Consider how the “Cash Abolition Threat” — an “attack” as Bonner correctly puts it — is likely to play out.
“…Wall Street Shills will be in the news explaining how markets become unreasonably fearful from time to time. They will tell investors that it is time to hunt for bargains.
“In the meantime, watch your rear: There’s a serious counterattack coming.
“It will be an attack on our supply lines. The cronies and the feds will attempt to cut off our finances and our line of retreat, trapping us between the anvil of the market’s deflation and the hammer of the Fed’s inflation. There will be no escape, no way out.
“Last week, the influential Financial Times newspaper ran an article calling for the abolition of cash. … And it claimed that cash causes ‘a lot of distortion in the economic system’.
“Can you believe it?...
“It also repeated the familiar claims that cash also is what finances terrorism, tax evasion, and the black market. Making cash illegal, it says, would ‘make life easier for a government set on squeezing the informal economy out of existence.’
“You see where this is going, don’t you, dear reader?
“If the feds are able to ban cash, they will have you completely under their control. You will invest when they want you to invest. You will buy when and what they want you to buy.
“You will be forced to keep your money in a bank — a bank controlled, of course, by the feds.
“You will say that you have ‘cash in the bank,’ but it won’t be true. All you will have is a credit against the bank….
“If this new attack succeeds, by law, it will have no access at all to cash. And neither will you…
“You will be completely surrounded. If the feds want to force you to spend… or invest… your money, they will simply impose a ‘negative interest rate.’…
Ibid.
Unfortunately, there is precedent for these sorts of Actions. Worse, Certain Mega-Banks have already taken steps to discourage the use of Cash.
“In 2001 in Argentina, the closed the banks. …
“In 2013 in Cyprus, they whacked large accounts with a 50% tax…
“And in the U.S., JPMorgan Chase recently sent a letter to its large depositors telling them that, as of May 1, it would start charging what it called a ‘balance sheet utilization fee’ …
“The feds will announce a ‘bank holiday.’ They may ban transfers to gold sellers or foreign currency…
“…It will be almost impossible to protect yourself.”
Ibid.
This accelerating push to discourage/forbid the use of cash is one consequence of The Fed and other Central Banks multi-faceted “Competition” to diminish the Purchasing Power of their Fiat Currencies (i.e., QE, Easy Credit, etc.) and to support their Banks. Medium-term this will cause a dramatic loss of Purchasing Power of the $US, and, long-term, loss of value of U.S. Treasuries.
But it is important to consider how this will likely play out and how to surmount the Negative Effects beginning now.
Short-term, Re. U.S. Treasuries, various increasing risks to the Equities Markets and the Economy have made and will make Investors turn to that ostensible “Safe Haven” of Treasuries with more Equities weakness coming in the weeks ahead.
And, as the Equities Crash is now launching we are seeing a Rush back into the Ostensible Safety of U.S. Treasuries and will likely see the 10Year Yield dropping to or below 2% again for a while, as we forecast.
In sum, short to medium term, we are still Bullish on U.S. Treasuries. Long-term we expect them to crash. The Signal that that Crash is impending will come when their yields start to spike.
We intend then to issue a Buy Recommendation aimed at Profiting .
Longer term, regarding the future of the U.S. Dollar, Jim Rickards well describes Triffin’s Dilemma, and how it ensures that the $US is doomed as World’s Reserve Currency. (Rickards is author of “Currency Wars” and “The End of Money.”)
But, Rickards claims that IMF SDRs are the “Brilliant” Solution.
But Rickards is wrong in claiming that IMF SDRs are a Solution because he also admits that “The only losers are the citizens of IMF Member Countries — people like you and me — who will suffer local currency inflation” … and further admits “I’m preparing with Gold and Hard Assets.” (That last is excellent advice.)
“If the dollar was the lead reserve currency, then the entire world needed dollars to finance world trade. In order to supply these dollars, the U.S. had to run trade deficits….
“So the U.S. ran trade deficits, the world got dollars and global trade flourished. But if you run deficits long enough, you go broke. That was Triffin’s dilemma. Any system based on dollars would eventually cause the dollar to collapse because there would either be too many dollars or not enough gold at fixed prices to keep the game going. This paradox between dollar deficits and dollar confidence was unsustainable….
“This new Age of King Dollar lasted from 1980–2010.
“Still, it was all based on confidence in the dollar. Triffin’s dilemma never went away; it was just in the background waiting to re-emerge while the world binged on new dollar creation and forgot about gold. The U.S. ran persistent large trade deficits during this entire 30-year period as Triffin predicted. The world gorged on dollar reserves with China leading the way in the 1990s and early 2000s.
“The new game ended in 2010 with the start of a currency war in the aftermath of the Panic of 2008. Trading partners are again jockeying for position as they did in the early 1970s. A new systemic collapse is waiting in the wings….
“The major trading and finance powers are cannibalizing each other with weak currencies….
“Is there an alternative to gold? There is one other way out. That’s our old friend, the SDR. The brilliance of the SDR solution is that it solves Triffin’s dilemma.
“Recall the paradox is that the reserve currency issuer has to run trade deficits, but if you run deficits long enough, you go broke. But SDRs are issued by the IMF. The IMF is not a country and does not have a trade deficit. In theory, the IMF can print SDRs forever and never go broke. The SDRs just go round and round among the IMF members in a closed circuit.
“Individuals won’t have SDRs. Only countries will have them in their reserves. These countries have no desire to break the new SDR system, because they’re all in it together. The U.S. is no longer the boss. Instead, you have the “Five Families” consisting of China, Japan, the U.S., Europe and Russia operating through the IMF.
“The only losers are the citizens of the IMF member countries — people like you and I — who will suffer local currency inflation. I’m preparing with gold and hard assets, but most people will be caught unaware, like the Greeks who lined up at empty ATMs last month….”
“Triffin’s Dilemma and the Future of SDRs,” Strategic Intelligence,
Jim Rickards, 07/09/2015
Yes, Price Hyperinflation is coming, and the way to prepare is yes, with Gold, Silver and selected Hard Assets.
But, acquiring these Hard Assets has to be done with Great Care in Asset-Form-Selection, and with Excellent timing. This is because a Fed-led Mega-Bank Cartel has for years been engaged in Price Suppression of these Precious Metals. (See Gold Anti-Trust Action at gata.org and Note 1 below). But let’s consider a recent example of how this Price Suppression plays out.
The Gold and Silver Launch UP which we earlier forecast has begun. Gold has moved from $1090ish to $1160ish per ounce recently, despite Cartel Price Suppression efforts. But on September 2nd’s Equity Rally, The Cartel has been able to continue to suppress paper/digital prices again (back down to $1120ish as we write), but at a Tremendous Cost — a record High 124 “ounces” of long paper Gold contracts on the Comex were recently reported for every ounce of physical actually in inventory.
“Earlier this week, a Comex gold inventory report showed that availability of the precious metal was down to its lowest levels ever for eligible gold to be used to back futures contracts in the paper metals market. And as every indicator points towards a vast shortage of both physical gold and silver worldwide, on Aug. 5 bullion bank J.P. Morgan attempted to quell the run on metals not by delivering actual gold to the Comex, but by performing an accounting trick and manipulating data to change registered gold into eligible gold on inventory ledgers. …
‘since after the adjustment, Comex registered gold had dropped to a never before seen low of just over 10 tons, resulting in record high gold coverage ratio of 124 ounces in outstanding gold open interest for every ounce of physical. …
‘this was not achieved with an infusion of actual new gold into the Comex, but thanks to JPM reclassifying 276,000 ounces of gold from the Eligible into the Registered category, even as actual eligible gold continues quietly hemorrhaging out of the Comex.’ — ZeroHedge
“In reality, the Comex is no longer used as a true futures market for delivery of physical precious metals as it has not made an actual delivery in over two and a half years. And instead the Comex presides over a paper and derivatives market, …
“For years there has been much speculation on just how much the Comex is used to manipulate the price of gold and silver by allowing the Fed through bullion banks like J.P. Morgan to manipulate prices through the futures market.”
http://www.examiner.com/article/gold-market-so-tight-that-banks-are-manipulating-data-to-show-more-inventory
For The Cartel, Silver also is especially increasingly a “Problem” because of the intensifying Physical supply Shortage, as manifest by the 30%+ premium for recently-minted Bullion Coins.
Thus, The Cartel has temporarily successfully capped Silver’s rise from the $14s to just over $15 and now back to the low $14s as well as Gold’s rise from $1160ish and now back to the $1120s. But the Cartel is finding it increasingly difficult to do so and will ultimately lose that Battle.
Thus, the Great Precious Metals Launch up has Begun. BUT
(CAVEAT!) The Launch UP will not be smooth as The Cartel will periodically succeed with Takedowns as it did somewhat the last week Of August..
The Cartel’s intensifying problem is that there is an increasing demand for Physical Gold and Silver, led by China, India and Russia. And the 124 to 1 “Coverage Ratio” (paper/digital “Gold” versus Physical Gold actually in Inventory at The Comex) reflects.
For years, we have cited here the overwhelming evidence for ongoing and generally successful Central Bank Cartel Suppression of Gold and Silver Prices. (See gata.org for documentation.)
But that worm is turning. Across the Board, Currency Devaluation by Major Nations plus the impending crashing of Alternative Asset Values (e.g., Equities) plus, above all, the increasing shortage of Physical Gold and Silver, especially Silver, available for Delivery.
And consider that Silver has historically had the nearly Equal Stature as Gold as “Real Money”.
And consider that Silver, unlike Gold, has heavy industrial demand (about 50% of its Actual Production) and that it is essential to Modern life in Computers, Smartphones, Medicine, Dentistry and many other Industrial Applications.
In sum, about half of Silver Production gets used up each year in industrial processes.
So we see that a run up on Gold is also beginning. Of course, The Cartel will do all it can to continue to suppress these Precious Metals prices. But they will likely not succeed much longer.
Indeed, Silver may accelerate up first because of the increasingly critical physical supply shortage. And when Silver launches, so will Gold, since Gold is The Ultimate Safe Haven from ongoing and intensifying Central Bank Competitive Currency Devaluation.
There are a number of Triggers any one of which could cause Gold and Silver to launch. For example
The U.S., Chinese and Eurozone Economic Fundamentals — all lousy (see Shadowstats note) with disinflating or deflating economies, and unpayable Debt in many Major Nations
Technicals — Two Hindenburg Omens on the clock.
Multi-year Jaws of Death Pattern Topping
S&P just within 1 point of all time high a few weeks ago, but 10% of NYSE stocks generated new 52 Week lows, at the same time — very Bearish
Industrials forming a completing “Rounding Top” — Classically Bearish
A break below the Bottom Boundary of a declining bearish Wedge
A Death Cross in the Dow
Chinese Shares keep dropping
Equity Volumes Crash on Up Days — Very Bearish
Walmart’s Negative Guidance reflects the Reality that consumers are hurting
And several More.
Deepcaster has forecast The Year-End 2015-2018 Price Targets for Gold and Silver.
And Deepcaster successfully forecast the 2008 and 2015 Equities Takedowns. Our most recent Forecasts generated 40%, 65% and 110% Profit after just 4, 2 and 3 days, respectively in August alone. (See Note 2)
In sum, More Mega-Moves are coming and soon!!
Best regards,
Deepcaster
September 4, 2015
Note 1: * We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s July, 2014 Letter entitled "Profit, Protection, Despite Cartel Intervention" in the ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation, and manipulation in other Markets. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
Note 2: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in recent months in our Speculative and Fortress Assets Portfolios*
• 110% Profit on Russell 2000 Puts on August 21, 2015 after just 3 days (i.e., about 13500% Annualized)
• 65% Profit on Russell 2000 Puts on August 20, 2015 after just 2 days (i.e., about 12000% Annualized)
• 40% Profit on Retail Sector ETF Puts on August 7, 2015 after just 4 days (i.e., about 3630% Annualized)
• 80% Profit on Retail Sector ETF Puts on July 27, 2015 after just 6 days (i.e., about 4850% Annualized)
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-- Published: Friday, 4 September 2015 | E-Mail | Print | Source: GoldSeek.com
