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International Forecaster September, 2005 (#1) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster

-- Posted Tuesday, 6 September 2005 | Digg This ArticleDigg It!


SEPTEMBER 2005 (#1) Vol. 9 No. 9-1

P. O. Box 510518, Punta Gorda, FL 33951-0518

An international financial, economic, political and social commentary.

Published and Edited by: Bob Chapman

E-mail Addresses (for correspondence) (for information regarding your subscription or renewals)







            Thursday was repo expiration day. The Fed added $22.25 billion in repurchase agreements taking the repo pool to $85.930 billion, up slightly from Thursday. That means the Fed is content to let the Dow stay where it is or to let it slide.


Forty-two percent of all first time homebuyers and 25% of all buyers made no down payment on their home purchase last year. That is what is called being over leveraged. All buyers in 2004 and 2005, who entered their purchase under these terms or used an interest only or adjustable rate loan, could be in serious trouble in the years ahead. Most of these people have no equity in their homes and are doing nothing to pay down their mortgages. They cannot afford the home, but believe rising prices will bail them out. It’s like the Goldilocks stock market of 2000. Least we also not forget that homeowners have removed $559 billion in equity from their homes over the past four years. Sixteen percent of those funds were consumed. Cash-out refinancings have risen to 18.1% of all financings, up from 7.2% in 2003. Home equity has fallen to 56.3% of real estate, down from 75% twenty-five years ago.  Then there are the exotic loans that defy imagination. The Fed says that 47% of all residential mortgages by dollar volume are non-traditional. We can thank Sir Alan Greenspan for lax lending and the lowest interest rates in 50 years. Now that Sir Alan has created this monstrosity he has started targeting asset prices, particularly real estate. Risk premiums may be lower, but investors cannot forget the relative stability and productively growth over the past 15 years has been purchased with an ever-growing expansion of credit and money – a sea of liquidity surrounds us. This has sent asset prices to towering heights. What we have experienced is bogus stability. A stability temporarily created to stave off deflation, which any thinking person knows is the most dangerous of all worlds. The increase in asset values is too often viewed as structural and permanent – they are not. History has taught us that in a painful fashion. Any increase in investor caution means higher interest rates and that brings about lower asset values, which becomes recession. Greenspan has warned you the correction is about to begin. What he called froth he now calls imbalance. Sir Alan believes he is a scientist. That he can correct these imbalances with his magic wand – he’ll adjust the current account deficit and the housing bubble by adjustments in interest rates, prices and the manipulation of markets. Not in his wildest dreams. Alan is a fraud in the tradition of Ponzi. His ridiculously low interest rates are responsible for what is about to happen. We should have taken the hit and the deep recession in 1989, but Greenspan was too dumb to see that, either that or his masters wouldn’t allow him to do so. Now, in order to slowly let the air out of the real estate bubble, which is wishful thinking, interest rates have to climb higher – at least 1/2% and maybe more. Keep in mind the BLS figures he helped to create way understate reality. Inflation is over 10% and unemployment over 13%. He in the process of disarming this real estate bubble has to know 70% of growth and 40% of new jobs, over the past four years, came from the real estate and construction sector and that cash out financing has allowed Americans to live far beyond their means. Higher rates guarantee recession. If Greenspan lets it run its course, he’ll have deflation and depression. If he raises rates and floods the world with liquidity, which he is already in the process of doing, he’ll have hyperinflation, a plunging dollar and sky-high gold prices. Not a very good spot to be, is it? Those $800,000 homes are going to become $400,000 homes and bankruptcies will flourish. There you have it. No easy way out. The minute the public understands what Greenspan is doing the game will be over and that’s not far off.


            There is no political right left. It’s been usurped and destroyed by George and the neocons, which are now to the left of the Democrats. Just look at our liberal controlled media. They report exactly what George and the neocons want, which tells us the media isn’t really liberal, it’s purchased. For those who understand socialism and fascism there are only small differences. Someone gave me a book to read 45 years ago. I didn’t know who wrote it in 1923, but I said to myself, whoever it is they must be a socialist or a Marxist. I then asked the donor of the book who wrote this? He answered Bonito Mussolini, who was a professor at that time. I reread the entire book looking for something different. It wasn’t there. It was later that Mussolini evolved into fascism.


The right and the left are docile. One-world illuminist elitists are very dangerous. People still do not get it after all these years of exposure. There are not two parties, only one, and the illuminists control everything. Of course, they control the media as well. Without the media they couldn’t do as they please. As we predicted in 2000, at the top of the market, we would have wars to cover up financial failure and at the same time to bring about the New World Order. The insiders need war to accomplish their mission. Their problem is that, it as well opens a window of opportunity for us to retaliate, and they are well aware of that. That is why we have a bogus war on terrorism and the Patriot Acts. Next will be a third world war and Martial Law in America, if these people can pull it off without the American people realizing what is being done to them. That is how they intend to control us.


            A recent poll shows 90% of those polled said it is ok for war opponents to publicly share their concerns about the conflict. Fifty percent believe Bush has increased the threat of terrorism. This AP-IPSOS Poll found only 37% approve of the way the Bush administration is conducting the war. Seventy-five percent of Republicans approved, as did only 15% of Democrats, 53% said the US made a mistake in going to war in Iraq.


            Army recruiters have been ordered to approach 10th, eleventh and twelfth graders – repeatedly. They are told to offer their services as coaches and assistants and to offer to chaperon or escort for homecoming activities and coronations. Just get involved at the high schools. They are told to cultivate centers of influence. “Encourage college-capable individuals to defer their college until they have served in the Army.” That puts the students at a terrible disadvantage. I know I did that. When you get back you are too mature for the college crowd and it’s boring. Most students who wait or split their college up never finish. You at best spend 3 to 5 years catching up. These recruiters even zero in on freshmen and sophomores at college. They hone in on the college freshman class because half will drop out.


Due to the massive liquidity, the average yield on one-year bank certificates has risen to 3.68% from 2.25% y-o-y. It has also been accelerated by the Fed raising short-term rates. Each week we draw closer to yield inversion. We believe it will happen before the end of the year because the Fed is moving short-term rates higher and liquidity is capping the 10-year yield. That yield will not fall unless money and credit contracts or the dollar falls substantially in value.


            Positive real economic growth has been impossible for five years. All the Fed has done is keep the economy from collapsing with low-interest rates and mountains of money and credit. The moment of truth is at hand after 18 years of further abuse. Sir Alan Greenspan is trying to hold off the inevitable until he bows out in January of 2006. If long-term rates stay in inversion it could prolong the downside in the economy but eventually it will head down. The longer it takes for the correction, the worse it will be.


            The key is keep the dollar up, long-term rates up and inflation down. Even if they lie via their statistics, the truth will find its way to the diligent. The journey is impossible, the end inevitable. The Fed has lost control; they just do not want to admit it.



Pat Robertson should read the US Code. If you threaten or intimidate foreign officials you shall be fined under title 18, section 112(b) or imprisoned not more than six months or both. There is absolutely no doubt that Robertson attempted to threaten President Chavez. Robertson’s comments did not contain a threat to kidnap or injure Chavez. He wanted to assassinate Chavez. His threat to take him out, especially when combined with the explanation that this would be cheaper then war, was clearly a threat to kill. With Robertson’s following of Christian soldiers, who knows what one of them might do? It is no wonder President Chavez has put a temporary hold on missionaries.


            On March 16, 2006, that is just six months away, the Iranian Oil Bourse is slated to open. That could be a lucrative market because the world buys $5.5 billion worth of crude a day. That is quite a bill so buyers would like to cut costs. Non-US-dollar holders pay extra cash to buy oil because they have to convert local currencies into US dollars to buy oil. This is a hidden tax and the receipts go to the international bankers.  This will not happen if contracts are allowed to be denominated in euros or other currencies such as gold.


            Presently one-third of oil revenues end up in the hands of OPEC members. Interestingly OPEC members only hold $120 billion in direct dollar holdings, equally split between equities and debt. That means reserves are being invested elsewhere, probably in euro assets.


            Why would Iran accept dollars when the US is threatening to turn their country into a nuclear waste dump? Unless Iran is attacked, that oil exchange is going to open and trade. It has already been approved by the International Petroleum Exchange in London and the New York Mercantile Exchange (NYMEX.) Europeans will still deal with Iran because trades will be in euros and those countries sell lots of goods to Iran and the Middle Eastern countries and Europeans buy almost 40% of Middle Eastern Oil. There is no question in our minds that if that oil exchange opens the days of the dollar being the world’s reserve currency is over. Their 57-year monopoly will be history. The Feds’ own statistics prove the dollar has been subject to diversification over the last several months. Dollar reserves have dropped from about 70% to 62% in foreign countries. China has told us they are diversifying by going to a basket of currencies to base the value of their yuan.


            The use of cheap nuclear energy is a natural for Iran. Once that is in place they can export more oil, become more prosperous and be more helpful to world oil consumers. Nuclear power in Iran would make OPEC the oil cartel even stronger. The actions by Iran in and of themselves would tend to strengthen the euro as well and give it more status.


            If this exchange goes forward successfully there then could be a move to trade other commodities in other currencies not just dollars. Remember the whole world gains if commodities are traded in currencies of several nations. It will mean the end of America’s monopoly.


            As we have mentioned before, when President’s Bush and Fox and Martin had their secret meeting in Crawford, TX in March 2005 in secret, they laid out the amalgamation of Canada, US and Mexico that will be followed by the absorption of the CAFTA countries forming a single state of North America. The agreement was signed without the consent of the government and the peoples of these three countries. In fact, 99% of them do not know such a secret agreement exists. Among elitists these regulations, not exposed to Congress or the people, are called a tri-national merger or NAFTA Plus or the Security and Prosperity Partnership of North America. Your national media did not tell you about this did they? Congresses are not rubber stamping global, expansionist goals so the illuminists are using regulations and executive decrees and orders to circumvent elected representatives and the people. The legwork is being done by NGOs (non-Governmental Organizations) via funding from foundations and think tanks controlled and used as conduits for elitists goals.


            In the process the US will be the big winner with cheap labor, control of commodities and monopolies. We can promise you the expansion of globalization has nothing to do with security. The US is not only after Canada’s oil, gas and minerals, but also its water. The transnational corporations existing in Canada and Mexico would have unrestricted access to the US market. The big winners are international conglomerates and a government bent on destroying our sovereignty and safety. In the final analysis the joining will not be equal.


            Needless to say our media tells us nothing negative about NAFTA. We only hear the positive propaganda. The US was inundated by illegal aliens and our balance of trade deficit with Mexico and Canada has skyrocketed. The biggest losers are the Mexicans, particularly the poor, uneducated and farmers. They face greater unemployment and poverty and inequality. The rich in Mexico got richer. Few jobs in 11 years have been created in Mexico. You either become an illegal alien, join the black economy or become a criminal. It is amazing how little crime there is in Mexico considering the circumstances. In four years Vincente Fox has not created one new job. He has been a spectacular loser for the people and that is why socialist Mr. Lopez Obrador, former Mayor of Mexico City, will be the next president. That is if US elitists do not assassinate him like they did Donaldo.


            The biggest goal of NAFTA Plus is not only regional government and eventually world government, but also to take America down to the level of a second world nation. Through amalgamation and a standard of living 50% or more less, Americans will accept anything.


            9/11 and the security measures put in place, which included trade, took on crisis proportions especially with Canada and that is when one of the neocon think tanks came up with the idea of taking steps to erase the border by harmonizing its policies, laws, norms, etc. and most important intelligence and security measures to American standards. Canada had to show it was secure to eliminate the border. The deal was that with open borders the US would have unrestricted access to Canada’s natural resources. This plan is now well advanced. Underway already are harmonization of military and homeland security and global security. Effectively that makes Canada’s enforcement subservient to US elitist interests.


            In the case of Mexico, Fox proposed letting as many Mexicans as possible into the US so they can stay there and work and sent $16.8 billion annually home to Mexico. Part of the deal was for Mexico to militarize its southern border to keep out illegal aliens, most of who were on their way to the US. We are told part of the deal was to privatize Pemex, the country’s nationalized oil company and the CFE, the Federal Electricity Commission.


            Canada for years has allowed the US immigration to operate directly on its territory to check passengers headed into the US. Now agents will gain jurisdiction and authority to operate within Mexico. Such a program has begun from Cancun and Mexico City to the US. If an undesirable is spotted they are not allowed to enter the US. Mexican lawyers call this a legal non-competence of US agents that violates Mexican jurisdiction and sovereignty. It constitutes a crime subject to penal action under Mexican law. Obviously that does not bother Mr. Fox and PAN.


            US elitists have every intention of sucking Mexico’s oil reserves dry in 12 years. They want to access the abundant natural gas and silver and also a vast fresh water reserve in the State of Chiapas.


            CAFTA and NAFTA Plus are additional ways of moving toward FTAA - Free Trade Area of the Americas. Looting of Canada and Mexico is very important to US elitists; because they say otherwise the US cannot survive. This will be accomplished with massive cash payoffs to Mexico and Canada, which the Fed will print up on demand. Previously, enormous amounts of cash were sent to Ireland, Portugal, Spain and Greece, when they joined the EU. The same will happen in Mexico.


            FTAA and the creation of one region in the Americas is being ramroded by the Canadian Council of Chief Executives, the Mexican Council of International Affairs and the Council on Foreign Relations in the US. Their plan is to immediately create a unified North American Border Action Plan. Create institutions necessary to sustain a North American Community. Adopt a “Common” external tariff. Stimulate growth in Mexico. Develop a North American energy and natural resource security strategy and finally deepen educational ties.


            This past June the three nationals signed 300 regulations that contain the standardization of policies for monitoring travelers and goods moving from third countries, including systems for visa clearance, categorization of high-risk travelers and trustworthy travelers, and the future implementation of a smart card for those wanting to transit swiftly through common borders of the region.


            The citizens of all three countries are being sold down the river. The US and Mexico already have been injured so that elitist interest could get ever richer. Listen to this. Only 10% of the Mexican populace has benefited from NAFTA. The 10% makes over $1,000 a month. That indicates the real winners are from within the top 2% of the population. That is two million people out of 102 million were able to profit, is a big way from NAFTA.


            Citizens of all three countries are being deceived. What is next is a customs union and labor that can travel from one country to another. Next is the new single currency for the Americas, the “AMERO.” This will destroy the sovereignty of all three countries. It effectively will give the elitist bankers at the Federal Reserve control over all the wealth of the Americas.


            TriGránit Development Corporation in Hungary, which is owned by AIG’s New Europe Fund and the European Bank for Reconstruction and Development, has some new buyers. They are Nathaniel Rothschild (co-chairman of Atticus Capital, the New York-based alternative investment firm, son of Lord Jacob Rothschild, and senior member of the English Rothschild family), Sándor Csányi, CEO of OTP bank, a major bank in the region and none other than Peter Munk, Chairman of Barrick Gold, one of the long-time manipulators of the prices of gold and silver. He and Barrick have been the subject of a lawsuit by Blanchard & Co., which is close to closure. Mr. Munk originally came from Hungary. TriGránit Development is a real estate company and investor, the largest in Central Europe. Their assets are $700 million.


More for subscribers....  




            The World Gold Fantasy Council can find more ways to waste gold producers’ money then any group we have ever seen. We wonder what part of the $60 million went toward discovering Abby Z and her spring collection entitled “Its Good to be Me with Fine Jewelry.”  You don’t need fine jewelry, you need lots of jewelry. This is a sick joke. How do shareholders of these donating producing gold companies put up with this thievery crap? This has nothing to do with the reality of the gold market.


            Gold still remains strong in other currencies. The euro in gold terms finished last week at 355.86 down from 359.09 on the week, still above its breakout at 350.


            Gold production has been declining in Australia for the past few years, dropping 15% over the past 10 years to 265 tons last year. That is eight tons less than 2003/2004 year.


            China will surpass India in a few years as the world’s largest gold consumer. Jewelry and gold sales are up 13.9%. Average incomes are up 9.5% in urban areas. Retail gold sales were up 11% to 224 tons in 2004. The prediction is 600 tons off-take within five years. Small investors are welcomed via passbook accounts. Import duties on gold fell to 20% in 2005 from 23.5%. The fall in the value of the dollar has also been a factor as has been a falling stock market.


            India’s purchases of gold are truly breathtaking. In 2004, demand grew 17.6% to 643 tons versus 547 tons in 2003, and then in the first quarter it rose 72% to 243 tons. The second half of the year with the festivals is usually the strongest buying period. The opinion is that money is moving from a booming stock market into gold.


            The gold suppression cartel is in real trouble. They could be close to being out of gold. We are over $440 an ounce and there is still room for $150,000 new longs. The gold/oil ratio is close to 6.4 to 1. The norm historically is 15. Once reversion takes place gold will rise well over $850 an ounce.


            The shortfall of gold production to usage is 1,500 tons a year and the suppression cartel has less than 5,000 tons left. Mine supplies are falling. The game will soon be over.


            Katrina was the kind of event we’ve been looking for to send the economy down and gold and silver up.


            A Liechtenstein gold mutual fund says they see $600 gold soon.


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-- Posted Tuesday, 6 September 2005 | Digg This Article

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