In a major opinion essay by the head of the Economics Department of China Foreign Affairs University, it was argued that China stands to suffer huge losses if it continues to hold most of its foreign exchange reserves in US dollars and he advocated converting those dollars into euros and hard assets, just as we have advocated for five years. China has already averaged 20% losses on its dollar holding and stands to lose at least 30% more. Gold wasn’t mentioned but does not have to be. We know China has been a buyer. Such a move by China toward self-preservation would drive the dollar down and interest rates and gold and silver up. It is now becoming more evident to the dunderheads in the brokerage and investment banking community that the Fed can no longer hold up the market and suppress gold and silver. Next May when the Blanchard lawsuit against Barrick Gold and JP Morgan Chase are adjudicated, the world will be served up one of the biggest financial scandals in history. Under George and the neocons we have seen one of the most disastrous fiscal collapses of any government in history. At the end of 2003 China held $403.3 billion in its foreign reserves and as of this past June it held a staggering $470.6 billion. Of that $480 billion almost $300 billion was in US dollar assets. Another 30% dollar correction would cost China almost $100 billion. We have been citing these possible losses for the past two years. There is absolutely no question China in its own self interest has to soon start selling dollars for other currencies and gold. It is only a matter of when.

            American cannot continue as it has under the elitist yoke of Sir Alan Greenspan great creator of money and credit. We have had the leading economic indicators fall three months in a row; job recovery is virtually non-existent and 70% of GDP growth comes from consumers who are buried in debt. Why would any country in its right mind want to hold fiat dollars? Yet, foreign ownership of our Treasuries has increased 40% in the last few years. Foreign ownership of Agencies and Corporate Bonds has risen 27% and 25% respectively. Foreigners cannot be that stupid – can they? Americans have squandered their savings and are now drawing on the world’s savings to feed their lust for further reckless consumption. China and Japan are our financiers of last resort. In so doing, they have put their countries economies and their survival at great risk. If they continue to buy our debt they will go down with us. We do not believe that China will allow that to happen. Japan, ever since WWII, when the ruling Japanese elite was allowed to keep the billions of dollars in gold, silver, platinum, precious stones and commodities they stole from the victims they murdered from country to country in a deal with the US elitists, have been in the conspiracy’s back pocket. Thus, they will buy US Treasury paper and Agency paper until the bitter end. Then again, Japan has never recovered from the depression they are in and the minute the world economy slows down, which it is currently doing, they will slip back into depression. All serious students of international economics and finance know the game is over and what we are seeing is unsustainable. Unfortunately, most of our citizens and professionals have been taken in by the new paradigmers and liars we call businessmen and politicians. We have a savings rate of 1.9% that just one year ago was 0.4%. Our current account deficit of 5.7% can only lead to hyperinflation and another Weimer scenario. In 1923 Germans got paid twice a day with wheel barrels full of money.  That is what brought Adolph Hitler and the National Socialist Party to Power. How can an economy recover when investment is 60% below levels prevailing in 2000? Meanwhile, federal, state and local governments combined went from a surplus of 2.4% to a deficit of 3.1%. We are sucking up 80% of the world’s savings so we can keep the party going. We have gone from a foreign reserve surplus in 1980 of $36 billion to a deficit of $2.4 trillion in 2003, or 24% of GDP. Unfortunately, it is getting worse daily. In just three more years of this profligacy our indebtedness will be 50% of GDP. Our international indebtedness will be 300% of exports by the end of this year. America has become a banana republic. Foreign individuals, funds, and professionals do not invest here any more, only foreign central banks. Asian central banks hold $2.2 trillion or 80% of the world’s foreign exchange reserves, of which 70% is in US dollars. Japan owns $825 billion and China over $480 billion. A 30% dollar correction will cost these holders collectively over $400 billion. China is the key. They now run the show and they are setting themselves up to knock the US out of first place and fill that position. China has already gone too far and when the plug is pulled they will go down the tubes with everyone else and they have the most to lose. China is in over their heads. They do not have the expertise of the elitists. They are the weak link and they will cut and run. When they do, the world will not know what hit them.

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GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS

            As a result of the position that Russia has been forced into in Chechnya and the new rules Mr. Putin wants the Kremlin to pass, which they will, Russia is moving toward a more centralized government. Some call it a path to dictatorship. Western business interests are furious because they are all going to be shut out of Russia’s mineral resources. The rich and middle class in Russia realize what is transpiring and are going to move a good part of their assets into gold, much of which are in US dollars presently. These past three weeks have been the trigger and now the rush into gold will begin. The hemorrhage of dollars could break the dollar and the US economy and send gold upward. Mr. Putin would be very happy to sell those dollars traded for gold, a real asset. It makes Russia stronger. It just so happens, China is pushing in the same direction at the same time.

            If Barrick Gold and JP Morgan Chase lose their lawsuit versus Blanchard and Company anyone who lost money trading gold since 1998 could recover monetary damages. The class-action lawsuit initiated last week is being brought by Blanchard and Company as it builds on their own anti-trust suit against the crooks who are acting for the US government. There is no question now that the policies put in place by President Reagan and continued by his White House successors will be exposed for what they are, criminal acts. The original case is expected to go to trial in April 2005, only six months away. The lawsuit brought in conjunction with two other investors, will attempt to quantify the harm done by Barrick and Morgan and devise a remedy for their restitution. It is expected that a favorable opinion in the new suit will obtain compensation for all gold owners, not only for their losses in their gold investments but also for profits they should have realized.  Blanchard estimates that members of the class, during the period at issue, owned about 96.5 million ounces of gold having a market value of $38.58 billion at $400 an ounce. Once a judgment is obtained and the amount of damages suffered by the class members is determined, those damages will automatically be tripled under the mandatory provisions of the federal anti-trust law. We would then expect Barrick and Morgan to go bankrupt or call upon the US government to cover their losses, because they were acting at the behest of the government. Due to the manipulation Barrick Gold, run by arch-crook Peter Monk, who we have written about for 15 years, made $2.3 billion on short sales in gold and made a profit on those sales for 62 consecutive quarters. This is due to deliberate market manipulation by both parties and the US government. We ask again, where is the SEC, the NASD and the NYSE? Sleeping, of course, in their quest of selective prosecution. They are part of the problem. They are not set up to protect you nor will they protect you. Barrick has admitted plaintiff’s promises and has said the company was acting as the agent of central banks and carrying out their policies in the gold market and thus should share immunity from lawsuits. The federal judge rejected that defense and sent the cases for discovery and trial. During that period as gold fell 25%, Barrick increased profits 400%. It also became the dominant gold mining company in the world through acquisitions made from criminal short sales, instigated by central banks acting in concert in the conspiracy. Assets were purchased at fire-sale prices due to the market manipulation, which the SEC, NYSE, and NASD were well aware of. Incidentally, the operation began in 1987-88 first illegally and then by executive order by President Reagan. He, Clinton, Bush and Bush are all culpable in the ongoing conspiracy.

            Barrick was being fed borrowed gold from central banks on such favorable terms that Barrick was able to overwhelm the market and move prices up or down at will and not have to repay the borrowed gold for years, if at all. Barrick was able to supply more gold than was supplied by all the bullion banks combined. Barrick’s defense will be that they were carrying out orders and acting as agents of central banks and carrying out their policies in the gold market and thus should share immunity from lawsuits. We believe both class-action suits will be successful. They should be followed by criminal RICO lawsuits, so that the thousands of crooks involved can go to jail. As you can see, your government is your enemy.

The Fed and other central banks have to be really upset. Argentina’s central bank bought more gold in July and August taking its gold reserves up to 1.77 million ounces by the end of August, or 55.1 tons up from 42.6 tons at the end of June.