US MARKETS

            The World Bank and the IMF are subsidiaries of the US government and have been since their inception. The Bush administration choice of Paul Wolfowitz to run the World Bank has to be a reward for ineptitude. Wolfowitz was a strong voice in the WMD episode that brought us to invade Iraq. Of course, we all now know that no such things existed and that Mr. Wolfowitz’s howlings were pure lies. He was deeply involved in the reconstruction of Iraq, which has been a disaster. Wolfowitz could not run anything; he is an ideologue. He along with other elitists thought we would move him to Iraq, take over the oil wells and privatize them. They would be sold to US oil interests for $0.05 on the dollar. That did not work because the Iraqi people, who they had liberated, disagreed and an insurgency began, which has cost American families more than 4,000 dead and 30,000 wounded. Paul Wolfowitz was a chief planner in this fiasco, which was all about stealing the Iraqis oil. Elections, freedom and democracy came later. The oil fields were never privatized and the war continues.

            If Mr. Wolfowitz, as head of the World Bank, presents the same unworkable policies he put into motion in Iraq he will be confronted with great skepticism. What other response could you expect, this is the man who contends there still were WMD’s in Iraq. The appointment of Wolfowitz turns the World Bank into an ugly American bank. The world will see the bank as another extension of failed American policies and the extension financially of Pax Americana.

Wolfowitz’s track record at the Defense Department was a disaster accompanied by an epidemic of waste fraud and corruption. Maybe the neocons just want him out of the way, because he has become too much of a burden. Thus, they have awarded him a patronage plum; a reward to a loyal Sherpa, as these megalomaniacs like to call themselves. Then again, Bush is just dumb enough to make such an appointment. Maybe he is paying back his critics. You know how vindictive he and his crew are. Diseased minds do some very strange things.

            Our President tells us Paul Wolfowitz is a man of compassion who believes deeply in uplifting the world’s poor. Another flagrantly stupid statement. There is absolutely no evidence to support this assertion. Wolfowitz will be a management disaster just as he and his boss Donald Rumsfeld were at the Department of Defense. They do not listen to anyone except themselves. This is a clique of arrogance and ideologues who are totally blind to their own mistakes and under such people our Defense Department is a disaster and we are losing billions of dollars every year. Even in Iraq, the CAP lost $9 billion. It, of course, was stolen. For this feat CFR elitist Paul Bremer was awarded the Medal of Freedom. What a sick joke. He should have been awarded for waste, fraud and corruption something the elitists are masters at.

            There is no question, even omitting his failures; Wolfowitz is eminently unqualified for his job. Foreigners have come to the same conclusion and believe Wolfowitz will turn the World Bank into a direct subsidiary of the US government and no longer make loans, just simply give money away to those who follow the US’s imperial line of empire. The bank under Wolfowitz would visually become another pawn in America’s global dominance.

            The French tempered their opinions by recognizing the appointment as a proposal. Other governments are preparing for talks on the matter thus; the appointment is not open and shut. Government officials were diplomatic in their comments. Outside of government, comments were harsh. In Der Spiegel (Mirror in English) the headline read: “Wolfowitz, Nein Danke (no thanks).” In Europe, Wolfowitz is considered a unilateralist hawk and Europeans are outraged. It is absolutely the wrong decision. The continent is not pleased. Making matters more difficult is that the nomination follows that of John Bolton, an unspoken critic of the UN, an institution Europe would like to see strengthened. Some in Europe even called the nomination of Wolfie truly terrifying.

            Wolfowitz’s appointment is part of spring-cleaning but it is also means the World Bank would be shaped to ensure that the US domestic and business interests will be served as well as that of free trade and globalization. The pursuit of so called free market liberalization and deregulation will be accelerated.

            What we are witnessing is an intercine fight among elitists as to the direction toward world government. Europe’s view is slow and methodical. The US advocates want to speed up the process. We believe underlying all this is a fear and skeptism by Europe’s Black Nobility that the American elitists may go it alone, bypass the world government and impose an American world empire. Make no mistake, this appointment is very important for George and the neocons.

            America is fast becoming a nation that does not manufacture. If you do not manufacture how can we maintain a technological lead? It is obvious we cannot. We are also outsourcing technology jobs. There has been a loss of 221,000 jobs in six major engineering job classifications. When you do not manufacture, you do not need engineers. What you need you outsource or bring in cut-rate H-1B&L-1 workers. Original proprietary design and core intellectual property are being done in Asia. Due to this outsourcing, R&D budgets are being scaled back. The outcome is a brand name with a sales force selling foreign designed, engineered and manufactured goods, which ultimately Americans will not be able to afford, because most will be without jobs. The jobs will have been sent to another country.

We reflect on President Bush and Condoleezza Rice and their recent trips to Europe. The overall take of the European media was that both were there to promote the EU’s new constitution. The intended effect obviously did not work, as over 50% of French voters say they did not want the new constitution. Our President said, “We want the EU to be successful. The EU is a significant partner in many things, particularly trade.” He was fascinated to see how the cultures and the sovereignty of nations can be integrated into the larger whole in the modern era. In the western hemisphere the nations under his administration wants to create the FTAA, which is modeled after the EU.

            Due to the sinking reputation of the UN, a support group has been formed in Congress. Leading the pack is Rep. Frank Wolf (R-VA). He is being assisted by the US Institute of Peace leaders, J. Robinson West, Richard H. Solomon, Kay King, former Speaker of the House Newt Gingrich and Senate Majority Leader George Mitchell, all members of the Council on Foreign Relations. Participating is the American Enterprise Institute, the Brookings Institute, the Center for Strategic and International Studies, the CFR, the Heritage Foundation and the Hoover Institution. The UN’s recent scandals were in Darfur, the billions stolen in the Iraq oil-for-food program, sexual atrocities committed by UN troops in Congo, and the membership on the UN’s Human Rights Commission of Sudan, where human rights do not exist. Gingrich, Mitchell and Wolf hope to have their report ready for Congress by the 60^th Anniversary of the signing of the UN Charter in San Francisco on June 26.

GE Capital has pulled GM’s $2 billion credit facility following the warning from credit agencies that GM’s paper is junk. That was the first announcement. The second announcement said GE was still providing credit. Evidently GE got a call from the Treasury Department, which probably said, you have to continue credit. If you do not GM stock will collapse and perhaps the whole market. Our guess is the US Treasury is guaranteeing the credit line.

            The annual cost of insuring $10 million of the debt of GM’s financial unit for five years via credit-default swaps rose to around $500,000 on Thursday from $430,000 yesterday, according to Deutsche Bank AG prices.

            We are looking for 6-3/4% to 7%, 30-year fixed mortgage rates by year end. At 7% a $250,000 mortgage payment would rise $164.00 a month on a 30-year fixed mortgage; we see a 5-10% correction in house prices. In areas that have not run up too much, they should stay flat.

            On Thursday Merrill Lynch acted to protect its directors against bankruptcy. Now ask yourself why a corporation would take such an action? We believe because the directors demanded it. This invites the possibility that the directors fear such a calamity.

            The SEC has warned former Pentagon advisor Richard Perle, previously known during the Reagan administration as the “Prince of Darkness,” that it may sue him for his role in the looting of Hollinger International.

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GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS

            Gold is a store of value and the only real currency in the world and it will always be that way. It is not just another commodity. It is much more than that. It is an island of stability and safety in periods of financial crisis like we have today. Gold and silver to a lesser degree are ideal insurance against the ravages of fiat money.

            Everyone on this planet will soon need gold as we face slowing economic growth; rising interest rates; falling stock, bond and real estate prices; rising oil and gas prices; ongoing war in Iraq and Afghanistan; the possible invasion of Iran, Syria and Venezuela; a move by China against Taiwan; the possibility of nuclear war and terrorism; a political crisis; a collapse of the dollar or the imposition of Martial law in the US.

            You buy and hold gold and silver related investments and put them away for the duration of what will be the biggest precious metal bull market in history. The only time you should trade is when you absolutely have to. You have to have conviction and you cannot be shaken out of your position by false profits. Higher gold and silver prices are here to stay. They are a dominant trend. Remember, the trend is your friend.

            Those 20,000 workers in South African gold mines that are going to be laid off because of suppression of the gold price by the elitists, support 12 others each. That means 240,000 people are not going to eat.

            Word out of India is that no one is going to fall for the new Indian gold ETA. Our sources say get real.

This has got to make you puke. The World Gold Council has appointed Pierre Lassonde, President of Newmont Mining, as its new chairman. Now you can understand why Lassonde never would give any credence to the fact that the gold market was manipulated. Antics like this are a reminder as to why gold has a harder time going higher. We get very little support from the mining industry that knows darn right well that the market is being manipulated.          

 

DRDGold will close Blyvoors & Harties shafts. Incidentally, both of us have been down both those shafts, although that was 30 years ago. That cedes a third of their 15 million in gold reserves and that means 5,600 workers lose their jobs and that takes food out of the mouths of 67,200 people. We hope the elitists are proud of themselves for starving these people by rigging the gold price.

 

            Needless to say, the unions are outraged. They can blame their Marxist government for not only destroying their country, but also the mining business. Finance Minister, Trevor Manuel, thinks it is just fine for the IMF to sell gold to suppress the price. The Marxist morons at the National Union of Mineworkers want the government to have DRD Gold’s mining license revoked. Stay out of South African investments, they’ll have nothing but trouble.

 

            A couple of weeks ago in an address to CSFB’s Asian Investment Conference, Nobel Economist, Joe Stiglitz, predicted the demise of the dollar as the world’s reserve currency. He said reserve currencies must serve the role of being a good store of value. The dollar is no longer serving that function and there are alternatives. The dollar’s exchange rate instability is, therefore, as destructive to a currency’s reserve status as inflation is. The alternatives are the euro and the yuan.

 

            These facts revealed by a foremost world economic expert led to his questioning of the US economy as well, “We are looking at larger and larger fiscal deficits. The hope that they will be cut in half in the next five years is just not borne out by the details. It will be very difficult to make the magnitude of cuts necessary to make that happen.” He said America’s war on terrorism would end its prominence in science and that lead would be lost to China and India.  He cited the very low savings rate and how serious the consequences for America were if this continued. What he didn’t say is these problems have to lead to higher gold and silver prices.

 

            We ran into two subscribers this week that told us that their brokers said not to buy gold and silver coins and shares, but to buy the gold ETF, Exchange Traded Fund, listed as GLD on the NYSE. This vehicle is not an alterative to owning physical bullion, coins or shares. Rather, it is just another paper alternative promising to deliver gold – but from where? It will be interesting to see how this bait and switch operation prepares its financial statements, given that the prospectus discloses that gold stored in its subcustodians, and sub-custodians (which could be all of GLD’s gold) are not audited, or even inspected. It says in their 10Q “investment in gold”, which can mean any form of gold for audit purposes. It can be nearly anything gold related, such as gold certificates or other promises to pay in gold. If they declared their assets to be gold they would have to substantiate to their auditors that the gold really exists, which GLD cannot do because of the inability to audit or even inspect gold stored in subcustodians and sub-custodians.

 

            GLD is just another paper scheme; it should not be considered as an alternative to physical ownership or shares. GLD is just another form of derivative. This scam, sanctioned by the crooks at the NYSE an SEC, has drawn in $2 billion. Its sponsors, the World Gold Fantasy Council, whose new CEO is Pierre Lassonde, would have us believe that $2 billion in real gold was purchased, when in all probability, none was purchased. This is just another elitist scam because gold is down $40 since the $2 billion was put in the fund. That is impossible. It should have risen $40. You don’t buy GLD; you buy bullion, coins and shares. You also tell your brokers, who are deceiving you, that they and their managements are liars.

 

            The ECB’s subordinate Central Banks sold 94 million euros of gold last week or about 8.9 tons, up from 8.4 tons the previous week.

 

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-- Posted Friday, 1 April 2005 | Digg This Article

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