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International Forecaster March 2012 (#6) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster

-- Posted Wednesday, 21 March 2012 | | Disqus

The following are some snippets from the most recent issue of the International Forecaster. For the full 30 page issue, please see subscription information below.



We have been in and around the gold markets for 53 years and conditions have certainly changed, driven mainly by market manipulation of all markets as a result of the Executive Order, which created the “President’s Working Group on Financial Markets.” Those who doubt that are either on the government payroll one way or the other, or you are just too dumb to understand what is really going on. In spite of these machinations and ignorant naysayers the bull markets in gold and silver are still alive and well. What you are seeing are paper markets and the use of derivatives to effect short-term pricing, especially when negative events are about to occur. Those events are aided by naked shorting and illegal concentration in both gold and silver and the shares. Mind you, this is being done in a market to control it and in addition government and central banks relish stomping gold and silver into the ground. For years they hid what they were doing. Today their manipulations are in your face. These dramatic forced price falls are fortunately accompanied by heavy buying by China, Russia, India and others. All the elitists are doing is giving long-term investors an opportunity to purchase both metals at prices far below their real value. Official government inflation figures say gold should be selling at about $2,500 an ounce. Real inflation statistics would have gold selling today at almost $9,000. Such deliberate under pricing is accompanied by financial chaos in Europe and England, high oil prices that reflect the possibility of conflict in the Middle East, the results of $1.4 trillion in loans to 800 European banks, England on the edge of bankruptcy and the continual quantitative easing and things such as Operation Twist by the Federal Reserve. The official government line on statistics is all lies. We see one research report after another pandering to these falsities, which is next to worthless. The professionals and investors continue to use these bogus figures and continue to lose money in the process.


There are few sellers in the physical gold and silver markets. The selling takes place in the paper markets. Demand worldwide for these metals as a store of value has never been stronger. Buyers are countries and flight capital from the Middle East and Asia. The traffic is very intriguing. In China the government promotes gold ownership and has thousands of outlets across the country, as does CIBC. They are called gold savings accounts. Just the opposite is true in the US, UK and Europe, where violation of privacy and freezing or confiscation of assets is possible.


Last year demand for gold rose 20% worldwide and it could top $100 billion in 2012. We are seeing major demand as well for Europe as the euro zone deteriorates without a solution in sight.


We have already seen shortages of 1/5 and ¼ ounce coins from time to time as Europeans gobble them up. These developments are reflections of the ongoing financial problems facing the US, UK and England. Those problems are recognized worldwide and thus, we have massive gold off take by many countries. In tandem all countries are running deficits and it is getting worse not better. The attitude is print money like everyone else is and buy gold at cheap prices. There has to be a lesson to be learned when US dealers go to European wholesalers and get little or no new product. At retailers product offerings are even slimmer.


Gold and silver have been in bull markets since June of 2000 and the trend continues, as nations get deeper in a financial hole, which is reflected in their currencies in the form of higher gold and silver prices. Manipulation of paper gold markets cannot continue on forever. One derivative default and the whole edifice could collapse. Manipulation only allows you to buy cheaper, but once the cartel is out of gold and silver underlying their positions, the game will be over.


In our last issue we covered new developments in Holland pertaining to the terrible cost it was foisting on Dutch citizens. A Rotterdam court has overturned Dutch pensions – regulator’s demand that SPVG, pension fund, divest more than ¾’s of its 13% gold allocation. The damages to the fund will be about $13 million, the difference between the current gold price and gold’s price a year ago. The court said the only criteria for purchase was the prudent person rule. The government regulator was wrong, he probably was acting in behalf of central banks. Now that gold has to be bought back.


That takes us back to the monetary aspects of what nations are up too and particularly in the US, UK and Europe. We have had zero interest rates for a long time and we see no end in sight. If rates are raised the financial structure would collapse and everyone in the financial markets is well aware of that. Those sovereign entities and their central banks are trapped with QE and zero rates and there is no way out. You cannot run deficit after deficit and expect gold and silver not to go up as a result of that.


People forget this is free money for the banking system, but the public gets little benefit. The same thing is in process in Europe. Not zero rates but close to it. The IMF and the ECB, the European Central Bank, may not have had to take write downs of Greek debt, like private bondholders did, but sooner or later taxpayers will have too, that is about $300 billion in losses. The problem goes far beyond Greek bonds; it includes all kinds of bonds, because governments and commercial enterprises work so closely together. That means to a great extent there is no validity to government debt.


It will be soon apparent, as we pointed out in the last issue that the solvent countries cannot afford to carry the system any longer. That means the euro zone system cannot prevail over time and that there will be flight capital to other currencies, gold and silver. We could see the entire euro zone system going under and that could quickly envelope the UK and US as well. The mishandling of the European debt crisis and Greece has only made things worse, and the process of saving the system is futile.


We hear lots of comments on recovery and rising employment. We see very little recovery and few changes in employment, but that is the way of government, lies and more lies. How can any sane person contemplate a recovery with stagnant employment? America no longer has industry or jobs - they shipped them to the rest of the world. As a result America is doomed. The greatest profits and fortunes have been made in manufacturing not in banking and Wall Street.


We need not tell you of the housing industry. It is still headed lower probably until the end of 2014. There will probably be 10 million foreclosed homes to be sold. Even if they are packaged in $1 billion lots it will take years to move them back into the market. Do you remember we told people to sell starting in June 2005, as the market hit its high? It will be a year’s long process in solving the housing crisis, which is as well a banking crisis.


We see more and more commentary regarding market manipulation by the US government. They are questing how the stock and bond markets can stay at high levels in the middle of a serious recession. They are well aware of QE’s and Operation Twist, plus all the money that has been stuffed in banks by the Fed. Conveniently the SEC does almost nothing regarding front-running and naked shorting. The CFTC is arguably the worst regulator of all-time. Not to be excluded the Fed annually buys about 80% of all treasurys. What a shocking state of affairs.


A subject little discussed is the US dollar, also known as the petrol-dollar. Iran and the BRIC nations are about to take the dollar apart. If allowed to continue other Middle East producers will follow the trend. That could eventually destroy the dollar. The Anglo-American establishment has made a terrible mistake limiting Iran’s sales of oil and the use of international funds clearing operation. The allies of Iran were happy to help them end-run the US and UK acts of war.


Although nations still hold about 60% of their foreign exchange reserves in US dollars, that figure is getting widdled down each day. That is especially true in 3rd world nations. These moves are bullish for gold and silver in the long run as many nations are buying gold and silver in place of US dollars. In addition, we are also seeing more bartering, such as the Iran-India oil deal. There will be lots more of it in the future in efforts to avoid using the US dollar.


As we view England they told us two weeks ago that the country was broke and who are we to disagree. As a normal extension of that condition we hear they are preparing the introduction of 100-year sovereign debt for only the third time since 1694, when the Bank of England was established.


Most countries have some sort of a welfare state and unfortunately they are all bad, because money is borrowed in the present to be paid back in the future to afford such benefits. In the case of the US and many other countries the money paid in has been misappropriated or stolen. American social Security and Medicare are examples. As it turns out contributions are simply another undisclosed tax. The next natural step by government is to cut those benefits until there are none and then the citizen is dependent totally on the government for survival and easily accepts one-world government and is ready for indoctrination. During this process central banks are destroying the value of the currency and in that process the value of savings with things such as zero interest rates. Less than 2% of Americans realize this and attempt to protect themselves by purchasing gold and silver shares, coins and bullion.


US, UK and European foreign policy by embargo of oil and cash flow are about as dumb as it gets. These sanctions will be easily overcome. We see them as a prelude to new negotiations designed to put Iran in a subservient position, particularly in the sale of oil in dollars. We do not believe the tactic will work and will end up as a minor factor in future negotiations.


President Obama is starting to run for re-election. He tells us recovery is accelerating and that America is coming back. Even the stock market has breached 13,000 on the Dow. He tells Americans he has gotten us out of the mess it was in. He fails to mention government debt has risen from $10.6 trillion to $16.5 trillion in the three short years he has been in office. What will probably get Mr. Obama reelected are his welfare programs. Too many people now rely on government for survival. Before we know it the Fed will be telling us that they have reached the apex of balance.




03/21/12 (6) IF


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