-- Posted Thursday, 5 June 2008 | Digg This Article | Source: GoldSeek.com

Ever since the Berlin Wall came down back in 1989 we have seen the very things we protested against so vigorously with regards to Russia come to pass in the U.S. without so much as a peep.  If we do not now have a centrally planned economy and stock market then I do not know what else you would call it.  Our Central Bank decides what interest rate level and how much money production is just right for the economy.  We even have a Working Group on Financial Markets to tame any market response that does not reflect the intentions of all of the Central Planning.  Somehow they are allowed to expand these non-market related powers which in turn continue to move the system to one that is more and more centrally planned.  Finally, we have arrived to the point where it apparently is okay for the Fed to print money from thin air, (which only translates a portion of the purchasing power of all of the people’s money into the pocket of JP Morgan), so that JP Morgan can turn around and purchase Bear Stearns and in effect stick us with the tab.  This signal event was the all clear signal for us to back up the truck and buy all the physical gold and silver you possibly can for protection from this type of thievery.  They are flat out telling you that your money is theirs and they will take it and use it whenever and for whatever purpose they choose without your agreement.  On top of that the mainstream commentary drones on how the $130 oil is going to cause inflation while, in reality, it is the inflation from the example above that has caused the $130 oil.  These so called experts are in fact financial illiterates.  Even more pathetic is the fact that Congress is trying to figure out what to do about speculators since they are buying commodities, driving their prices up which they believe is the cause of inflation.  These are not highly trained economists if they believe that knocking the price of commodities down will not result in even higher demand and eventually even higher prices.  It never occurs to them that the centrally planned economy has set interest rates in the neighborhood of 10% below inflation which amounts to paying buyers to spend money on real things which can not be expanded at a mere whim like today’s money from air.  It has gotten so bad that even the clueless reporters on CNBC are making fun of the government’s inflation releases.  The activity in commodities is not speculative; it is totally rational as people exchange increasingly worthless scrip for items which take tremendous work and inputs to produce.

There has been much commentary about the huge short interest in gold and silver markets and how it is not manipulative but as Jason Hommel and Ted Butler intelligently point out there are limits on the buy side yet no limits on concentration and size on the short side.  The latest explanation I have seen ridiculing the manipulation crowd explains away any manipulation by showing us how the short interest is totally rational due to the yen carry trade.  This guy just doesn’t get that the entire yen carry trade is one big manipulation as that financing would never be available in a true free market.  The availability of yen at such low rates is due to, again, a centrally planned and pegged exchange rate system.  This is the very reason that physical gold and silver is the only true defense from this centrally planned rigging.  Gold and silver is outside this system and there are limited quantities available.  Now that the world is slowly but increasingly in large numbers waking up to the fact that money is being diluted in their pockets they will seek out a defense and gold and silver answer that need.  I contend that the Gold and Silver ETFs were created to hasten this process.  In effect, the ETFs are an attempt, (and one that has been more than mildly successful), to “fiat”-ize gold and silver.  I am amazed how readily acceptable that these instruments have become to the gold community which should know better, particularly in light of the firms that are responsible for bringing these options to the public; the banks and money powers that are the biggest enemies of true money which endangers their very existence.  On this point it has gotten so bad that some of the leading advisers in gold and silver feel these are totally fine alternatives.  There is one gold stock adviser and newsletter writer whom I have the highest regards for as far as analysis and stock picking ability that has always had a top ten list of gold stocks through all types of gold markets bull and bear.  Several months ago he dropped his top ten to six and recommended putting the remaining 40% in the Gold ETF.  His reasoning was that he liked it better than cash.  It is only one step away from cash; a promise of gold rather than a promise of nothing.  I am glad to see he has since, and in very short order, brought his top ten back to eight and this week it is going back to a top ten.  Maybe he thought better of the possibility that the ETFs are empty promises.  At any rate, I for one rate the ETFs as far, far more risky than gold or silver stocks and the reason is I believe the ETFs are a total fraud.

In the first part of this article, I explained why I believe the ETF is a fraud and even if it weren’t it could not possibly function as presented.  I believe a third grader could understand the logic yet I received around ten letters explaining to me that the ETF represented 98.5% of the gold that is (supposed to be) there due to the management and handling fees as outlined in the original prospectus.  Well at least it’s good to see that some other people have read the prospectus so they are at least trying to understand what they own.  The major point that I was trying to make and that many did not comprehend is that the Gold and Silver ETFs are many times their original size so they have had to constantly buy more gold and silver to back the shares with actual metal.  There is no economic way for them to do that with the Gold ETF trading at a constant discount to spot gold, gold futures and physical gold.  As an example, right now with spot gold at $885.90, gold futures at $887.90, and physical gold at $917, how do you take shares of GLD at $87.45 which equates to $874.50 and buy physical gold when new shares are issued.  There is not even enough to buy the gold never mind shipping it, storing it, guarding it, or insuring it.  Even if gold is being purchased the shares reflect less and less gold every day and the shares should trade at a bigger and bigger discount which going forward allows buying less and less gold.  In addition, the rules of the ETF make it a possibility that the gold can be swept away by big redeemers.  It is very unlikely that big institutional investors such as Calpers, for example, would sell and take delivery of actual gold or silver since they very likely have nowhere set up to actually store it.  Small investors are priced out of the market for redeeming since you can only actually redeem a minimum of 10,000 ounces which is almost $10 million.  So who does that leave that would take possession?  When the bullion banks and the money powers are no longer successful in capping the gold price through their various means including the GLD and SLV ETFs, they can quite easily purchase huge positions even if it causes the gold price to go up $100’s of dollars in one day.  Since the banks get first dibs on new money which materializes from thin air at the whim of the Fed, it would not matter what price they pay for the shares.  Then they could sell the next day by redeeming and take possession of all the gold they have been herding into the ETFs over the past several years.  The ETFs could see the majority of their physical backing pulled right out from under them without any warning.  This may seem far-fetched to some yet it remains a very big risk to the holders of GLD and SLV now that the physical metal markets are so tight.  In addition, by buying the gold and silver ETFs you are handing the suppressors of gold and silver a pool of metal so they can be used to lease or sell gold during critical periods to delay the metals from reaching true market levels.  I believe that if only 10% of the holders of GLD and SLV sold their shares and put the proceeds into physical metal in their own possession immediately, the price of gold and silver would skyrocket.  There is no better sign that this would happen than the fact that the latest takedown in silver from above $21 an ounce to the $16 range directly after the Working Group on Financial Markets meeting on March 17^th resulted in a massive number of coin and bullion dealers almost completely out of most products as amply documented by Jason Hommel @ silverstockreport.com. 

As I said before people are catching on in increasing numbers.  Some will only catch on when food prices are so high that they are starving.  It is the same as with oil.  Although oil may be higher than it would be due to financial buyers there are other factors which can not be derailed.  Little is spoken of how not only has the US been filling its strategic petroleum reserve, but many, many other nations are taking similar actions.  If this buying were to dry up over night the oil price would surely plummet, however, since the necessary investments have not been made to find huge new pools of oil, it would only be a short-term respite.  We can easily see how this has played out in the gold market with gold production still on the decline for the past six years despite a more than tripling in the price.  Silver has at least had some supply response but this is more than offset by the many new uses and patents on the industrial side for silver, not the least of which is a new discovery of how to replace platinum with silver in catalytic converters, keeping in mind that platinum is over a hundred times the price of silver.  Gold has been termed a bubble by many fools in the media yet demand is soaring and we already know there was no room for any more investment demand in the gold and silver markets as supply and demand has been so tight; thus the creation of the fiat gold and silver markets, the GLD and SLV ETFs.  I have also heard some commentators hammer that if you have some gold or silver being held for you then you are safe if you get the serial numbers of the allocated bars that you hold.  As I recall in the original audit of the ETF some numbers appeared twice and a few were even listed three times.  The point here is that just because someone gives you a number does not necessarily mean you are safe and are absolutely not as safe as if you have the metal in your own possession.  The US government gives out knowingly bad economic numbers as policy regularly so why that would give someone confidence is beyond me.  For example, this week the government released a number showing first quarter inflation was the lowest for the past four years.  Does that make you feel confident in receiving a number or does it terrify you? 

As mentioned earlier, when even the commentators on financial TV have caught on and make fun of the latest government inflation reports, the public at large will not be far behind in recognizing the farce of most anything the government reports.  The next step is they will seek out a way to protect from further having the value of their money picked from their very pockets through inflation.  The people of other nations are far ahead in this process; they have been taking physical metal off the market and into the safety of their own possession.  It is time Americans wake up, it is not too late to act to avoid becoming a victim but time is growing very short and if you haven’t gotten your financial house in order it will only cost you more to protect yourself from what is coming the longer you wait.  It is time to buy all the physical silver and gold that you can and if you can not do that you are much better off with gold and silver stocks than to shoot yourself in the foot by taking the unnecessary risks mentioned above of the ETFs.  There are many small gold and silver stocks trading at very low earnings and cash flow ratios and growing at very high rates that are being totally ignored due to the fact that they have been made to “look bad” on their price charts.  The junior sector is just overflowing with incredible bargains that are cheap by just about any measure.  Remember, if they are priced in dollars that is what is truly going down as are all paper currencies.  Once you come to grips with that fact you should know what to do.  BUY SILVER AND GOLD AND BEYOND THAT THERE HAS NEVER BEEN A BETTER TIME TO BUY STOCK OF THE JUNIORS.

Richard J. Greene

Clearwater, Florida

-- Posted Thursday, 5 June 2008 | Digg This Article

-- Posted Tuesday, 22 January 2008 | Digg This Article | Source: GoldSeek.com

I have heard from many investors inquiring if they should sell their gold stocks and just buy the gold and silver ETFs. The first thing they should understand is that doing so would prolong the time they must wait for gold and silver to reach their true market levels which are much higher. The gold and silver ETFs were created by such financial giants as JP Morgan and Barclay’s Bank that also serve as custodians and sub-custodians. These are the very firms that have been involved in the process of short selling gold and silver in huge quantities. That they would be involved in creating the ETFs had to be considered as most unlikely unless they had nefarious purposes. What I mean by that is that when the gold and silver ETFs first came out the investment demand for gold and silver was just in the initial phases of taking off. The bullion banks and financial powers that have been involved in suppressing the prices of gold and silver needed an outlet to satisfy this additional demand for gold and silver when there was clearly no actual gold and silver to fulfill this additional demand.

Most do not like to recognize that the business model of the US is fast approaching what could be called Fascism, particularly since that word is immediately associated with World War II Italy and all the ugliness of the Axis powers.  However, when one looks at the definition of what fascism is, it becomes clear that many of our Government’s decisions benefit the large corporations more than the people the government is supposed to be serving. In return, these corporations return all their support in both monetary contributions and affirmations of policy through such means as the media which is largely controlled by the same money powers. Look no further for evidence in some of the examples that have arisen with the outbreak of the unconstitutionally un-declared war on Iraq.  Instead of the military providing services by use of its own personnel for things such as laundry and meals, big corporation’s line up for their part of the money pile. A perfect example is Halliburton which handles laundry for the soldiers at an outrageous fee of $99 per bundle, and this in a country where such a service would be a tiny fraction of such a fee.

Based on the surrounding circumstances you would have to be naïve if you believe that the gold and silver ETFs were created so that investors would have an easy way to get exposure to gold and silver without the burdens of taking delivery and finding a secure and safe location to store it.  The one and only purpose was to fulfill a dire need to satisfy a growing and steady investment demand for gold and silver that has no hope of being fulfilled by the actual production or availability of real gold and silver. That no one can see this charade is truly amazing since it is so easily revealed that a second grader could understand it.  I can give an example that should truly make the buyers of GLD or SLV seriously question their investment choices. There is simply no room for any additional demand for gold and silver, particularly investment demand which is already growing rapidly and exponentially.  So what to do about this dilemma?  If you are one of the big short sellers of gold and silver and see that the jig is up and investment demand has reached a level that will overwhelm your ability to keep it under wraps, how can you find an outlet for this demand?  Why not provide a piece of paper that promises ounces of gold and silver since they know they can’t produce the real thing?  Gold production is in decline.  The world’s biggest producer, South Africa, reported a 12.7% decline year over year in production enabling China to surpass it as the largest producer.

The following example a second grader should be able to follow. Yesterday GLD traded at a price of $87.05 while gold futures were $882.00 and spot gold was at $881.00.  I called my best sources and the best quote I could get for purchasing one ounce of physical gold was $897.00.  So here is the question: If you were buying ownership of gold at an effective price of $870.50 for an ounce of gold by buying the gold ETF at $87.05, how does the gold ETF turn around and purchase real physical gold for you when the spot price is $11.00 higher, the futures price is $12.00 higher and the physical price is $27.00 higher?  That is a neat trick.  I wonder how they do it. YOU SHOULD START WONDERING TOO!  Do you really believe the GLD ETF can survive loosing $27.00 for every ounce of gold that they buy for you?  Now you know why the custodian and sub-custodian’s agreements for these ETFs are so complicated and un-auditable.  It would make sense that the GLD would have to trade at least $4-$5 higher than the price of gold if they were actually buying it, insuring it, guarding it, and delivering it.  They say there is a sucker born every minute.  This should help to prove that point.

If you can understand that the current economic and financial environment screams for protection through ownership of gold and silver, please stop shooting yourself in the foot by thinking that the ETFs will do anything but delay and muffle the rise of gold and silver and leave the ultimate holders with nothing but worthless paper at exactly the moment you will need gold and silver for your financial survival.  Nothing compares with having the gold and silver in your own possession and the gold and silver ETFs are way down the list as far as safety goes, and far below even gold and silver stocks.

Richard J. Greene                                                  January 21, 2008

Clearwater, Florida

-- Posted Tuesday, 22 January 2008 | Digg This Article

-- Posted Thursday, 3 January 2008 | Digg This Article | Source: GoldSeek.com

Why do we end with a question mark?  This has been the lament of Treasury Secretary Hank Paulsen at the slightest hint that the US is purposely allowing the dollar to fall against other currencies which would not be well received by other countries investing in our Government bonds.  The question mark is there because we are questioning if this is true then haven’t the policies of the US over the past several years been an unmitigated disaster for our future?  If a strong dollar is in our best interests then it must follow that we are really screwed.  It is getting to be more and more visible to more and more people that that is exactly the case.  All of the ridiculous under-reporting of inflation, the fabricated strong economic reports, all the plays on words to avoid stating the reality of the situation are coming home to roost.  Foreigners are increasingly not accepting dollars; even some of the oil producing countries are turning their heads away from the dollar.  The ridiculously incompetent plan Paulsen spoke up for to bail out subprime borrowers which was really about bailing out the banks which were “still dancing” as Chuck Prince said did insure one thing; that instead of very, very few buyers of subprime debt there would be no future buyers of subprime debt.  Why would anyone be stupid enough to buy something that could have the payment stream adjusted to their detriment while it was already risky enough on its own merits?  We are truly seeing the Keystone Cops in action.  One of the latest schemes to keep the feel good society in tact involves doing repos as long as 43 days of total garbage paper to get it off the books of the banks for the year end dog and pony show.

The producer price index recently hit a 34 year high, the CRB index hit an all time high, M3 money supply in the US is now up to +15.3%, yet most investors are only mildly worried about inflation or not at all.  Central banks have injected over a $1 trillion since August 9^th.  If you do any shopping in the supermarket or pay any bills at all you will know that inflation is already far out of control even if you are economically illiterate.  Yet people still believe the Government’s version of inflation.  My water bill is what my electric bill was a few years ago and my electric bill is what my rent used to be.  I don’t think the average American will grasp the severity of the situation until they are literally starving and because of all the statistical deception and misplaced trust our people will be the last to move to protect themselves – a true tragedy.  Foreigners already shun the US dollar and are trading them in for real money – gold, especially in China. India, Russia, and the Middle East.  Eight of the ten richest men in Russia are heavy accumulators of gold.  Meanwhile, South Africa and Australia are still reporting declining gold production.  How have we managed to fill the gap when production is dropping yet demand has been soaring?  Perhaps some of the less sharp buyers are accepting promises of gold in the future rather than gold.   They will end up with broken promises while the buyers of gold in their possession will reap the rewards of the price that will soar higher than thought possible when it is discovered that the promised gold will not be fulfilled.  Even gold suppressor extraordinaire, Barrick Gold has stated that mine supply is going to fall much faster than is believed.

It is ever more impressive that gold is in the $800’s even with all the high level efforts to undercut its price to keep it from reaching free market levels that would sound the alarms that the financial system is completely unsound.  Commercial shorting on the Comex has been unrelenting and unprecedented and it seems the commercials are on the verge of getting run over.  The Bank for International Settlements reported total gold derivatives are now over $1 trillion which is equivalent to a third of all the gold ever mined.  One piece of advice – know your counter party! 

2007 has been a disappointing year in regards to the leverage that gold stocks have provided relative to the gold price, in fact it has been negative.  2008 will go down as the year when that leverage returns in a big way. 2008 will be the year it is discovered why mining costs were going up faster than the gold price; why gold went down when super bullish news or events should cause it to go up; that reason being it was artificially suppressed. 

I think what I regard as the quote of the year as far as gold goes explains it best.   Rob Kirby stated, “Isn’t it amazing how we can have a four billion negative miss on the Trade report, import prices higher than expected (inflationary), zero reaction in the bond market, gold getting pummeled and the US dollar going higher?  I better not drop my coffee cup in amazement – it might fall up!”

Buy gold, silver, and the related stocks and buy them now!

-- Posted Thursday, 3 January 2008 | Digg This Article

-- Posted Wednesday, 10 October 2007 | Digg This Article | Source: GoldSeek.com

Both gold and silver have had attractive and improving supply and demand fundamentals for many years running.  Demand for gold jewelry has exceeded mine supply with Central Bankers making up the shortfall with what is by far their most precious reserve asset.  The stated reason was to achieve higher income while the real reason was to suppress the price.  If you believe their stated reason then you also probably believe that the reason the Fed stopped reporting the M3 money supply numbers in 2006 was to save money as they explained.  Silver, likewise, has lopsided supply and demand with the shortfall on the supply side.  The total depletion of a 60 year US stockpile is bringing the situation to a head.  These favorable supply demand statistics alone have been enough to ignite a precious metal bull market which is now in its seventh year. 

The bull market has had little room for investment demand but that dilemma has been solved in several ways.  We believe that most of these solutions involve substituting paper promises of gold and silver in the future rather than supplying the physical gold and silver right now.  There is a running debate as to how these holders of paper silver and gold promises will fare.  We believe the vast majority of the holders of paper promises will fare quite poorly.  Futures players can be paid off in times of stress in paper dollars.  What if they are paid during a time when the paper currency is losing a big chunk of its value in a single day?  This has happened in countries like Brazil and Argentina yet few see the risk.  Other paper promise holders could get nothing due to the default of their counter party.  We have little doubt that there is not even close to the amount of physical gold and silver that is promised by the paper gold and silver crowd.  We are especially suspect of the gold and silver ETFs due to their custodial and sub-custodial arrangements, and particularly due to their sponsorship by underwriters that are among the biggest short sellers and enemies of a free market in gold and silver.  The day draws nearer when the paper holders of gold and silver awaken to a nasty surprise.

We believe that time is right upon us now and it is creating a new fundamental demand for gold and silver that can be differentiated from investment demand.  We call that demand, demand for real money as opposed to investment demand.  Investment demand buyers of gold and silver may be willing to buy gold and silver futures and ETFs and other forms of paper but real money demand buyers of gold and silver would not even consider it.  That is because once real money demand really takes off there is no way to gauge how far it can go and what kind of panic may exist to get out of all paper.  We clearly see that day on the horizon.  Most people are totally oblivious to these possibilities and have no understanding why these gold and silver alternatives are just that – alternatives.

There are several important events over the past few years that have radically changed the landscape and the fundamentals of gold and silver.  While the percentage of the population that has any understanding of gold and silver is miniscule, we believe the percentage of those that understand the importance of gold and silver and also the change in the landscape may be a similar percentage.  We can point to four events in the last year and a half that can demonstrate this new acceleration in real money demand for gold and silver.  The first one we would point out is the Federal Reserve announcing it would no longer release M3 money growth.  While many immediately saw this as a sign that the Fed would be recklessly creating money at rates approaching hyperinflation, most accepted the lame explanation that it was being stopped to save money and ignored other implications.  The second indication was when hyperinflationary annual rates of money growth worldwide were reported.  Some of the more egregious examples are: Russia 51%, India 23%, China 20%, the UK 14%, the Euro zone 13%, and the US 14%.  This helped delay the break of the dollar below very long term support of the 80 level until just recently.  The third event was the incredible level of unlimited money injections in August several times to stabilize asset prices.  The final indicator was Bernanke’s willingness to cut rates by 50 basis points after a long record of moving in small increments.  These events each contributed to increasing levels of real money demand for gold and silver that is different from investment demand.  It can best be explained that investment demand is recognition of favorable fundamentals and purchasing gold and silver or the alternatives to capture the rising prices that will accrue from the purchase.  Real money demand is more from viewing the insanity of the above mentioned events and fearing a cascading contagion of losses in value of paper due to its rapid and unlimited expansion.  In this scenario you don’t accept futures, you don’t accept ETFs, you don’t accept any paper promises; you only accept the real physical gold and silver in your possession.  It may take more time for this to occur in the US, but overseas this IS occurring right now, particularly in the Far East and the Middle East.  This is exactly what has been necessary to break the fraud and suppression of the gold and silver price that has kept them from reaching a fair free market value. It is happening as we speak.

One other thought to pass along to take this one step further.  At this point everyone should be out of debt and have at least some gold and silver.  There is an old fashioned bank run occurring in the UK on that nation’s fifth largest mortgage lender.  People are lined up around the block waiting to get their money out.  In the US so much money has been created that the total volume of money dwarfs the amount of money in physical form, (green Federal Reserve notes); if there were bank runs, on average less than 5% of depositors would get their money before the green cash ran out.  The FDIC insurance of banks is certainly not designed to cover deposits if anywhere near 10% of banks went bankrupt and even if you were lucky enough to be among the early claimants you may not get your money for two years at which time that amount could have already been inflated away to worthlessness.  The ceasing up of the sub prime mortgage market should be warning enough that if defaults and bankruptcies became prevalent the banks could easily cancel your credit cards, not have any of your cash on hand, and deny you access to your own assets.  We don’t expect this worst case scenario to play out soon but then again we find it incredible how few are prepared; and it is a substantial risk.  So again to play it safe: have some of that green funny money on hand, definitely have some gold and silver, and have a nice stockpile of canned foods on hand to deal with unexpected emergencies.  Do it now!  If these things come to pass don’t be surprised to see gold moving up hundreds of dollars per day.

Richard J. Greene                                                     September 26, 2007

Clearwater, Florida

-- Posted Wednesday, 10 October 2007 | Digg This Article

-- Posted Thursday, 28 June 2007 | Digg This Article | Source: GoldSeek.com

There are just an overwhelming amount of bullish factors for gold and silver that are still cleverly being camouflaged so that the fewest possible can see them.  From this point forward; remember the words of former Fed Chairman Paul Volker from the 1970’s, “the one mistake that I made was in not capping the gold price.”  Do not forget that statement because they did not forget this time and that has created the most incredible investment opportunity for those that see through it that has ever existed.  Control and manipulation in precious metals markets has reached a new level of transparency this year in an effort to discourage interest in the precious metals for their traditional investment merits.

A key event awakening the world to the continuing decline to worthlessness of fiat currencies led by the dollar; was when China was disallowed from spending some of its stockpile of reserves to purchase Unocal.  China has amassed close to $1 trillion in reserves and has been instrumental in prolonging the viability of the U.S. dollar by recycling trade surpluses into U.S. bonds despite massive trade and budget deficits that can be traced to Americans consuming far in excess of what they are producing.  The most basic of economic principles has been totally lost on the American public.  Due to being led by feeble economic minds such as Ben Bernanke and Alan Greenspan, the American public has to be among the most economically illiterate empires in history.  We have been on the verge of bankruptcy for so long that most don’t even have slightest hint that we would have crashed long ago if not for the arm twisting of other Central Banks by the U.S. to run similarly irresponsible monetary policies worldwide.  The problem is right here in the United States and it starts with a lack of savings.  (By the way, define saving as: that left over from the rewards of production that has not been totally consumed rather than the more commonly accepted; borrow money or extract equity to flip into the nearest asset bubble.)  Yet our fearless financial leaders, (clowns), Helicopter Ben or Mr. Magoo would have you believe we Americans are bravely shouldering the world’s burden because we are more willing to consume with money we are borrowing from our trade partners and buying things we have not yet earned and taking rewards that others have earned and that we will be unable to repay.  This is another form of the Adolph Hitler style of truth: say it often enough and they will believe it.

A debt-based fiat currency system that has now fully expanded worldwide has only one way to go and that is toward final collapse.  Now that the U.S. has bought some time by convincing other countries to increase their money growth rates even higher than the U.S., we are at such high rates of growth worldwide, (on the order of 15%) that we are literally hurtling toward either hyperinflation or economic devastation.  The U.S. is in a box and seriously at the mercy of other countries’ decisions because inflation is rising and we can not raise rates due to the leverage, particularly in housing, and we can not lower rates for fear the dollar will rapidly implode.  Thus with money compounding worldwide at a 15%+ clip annually led by Russia at a 57% annual rate, inflation will be too obvious to even the biggest economic dullards.  Even by holding rates constant the Fed would, in effect be easing aggressively as real rates would become even more negative than they already are.  If you can not feel the walls closing in then you haven’t noticed the many countries that have spoken of diversifying their foreign exchange reserves or increasing their commitment to gold.  Syria and Kuwait are the latest examples of countries that have had enough of the excessive money creation in the U.S. and have moved to de-link their currencies from the dollar.  Our foreign policies have been heavy handed economically, militarily and financially.  We are failing on all fronts and stand ready to slap China in the face with trade sanctions even while they have been most instrumental in keeping our currency from plummeting.  We should fear the risk of a military aggression on our part is a bigger and bigger risk as our other two methods of control are weakening considerably.  This would be an even bigger mistake.  The U.S. dollar is on the way out and just because officials have convinced other countries to wreck their currencies at a faster rate does little to salvage anything except perhaps a little more time. 

The U.S. continues to bleed enormous trade and budget deficits, has lost its industrial base, finds fewer takers of its oversupplied currency, and can’t even manufacture borderline positive economic statistics despite massive fraudulent manipulation. The World Gold Council earlier this month said world gold demand is running 31% above a year ago while supply continues to decline.  The world’s largest producer, South Africa, saw gold production fall 7.5% last year to an 84 year low and continued declining in this year’s first quarter at an even greater rate despite an almost tripling of the gold price in the last five years.  Gold production peaked in 2001 at 2645 tonnes and fell to 2470 tonnes by last year.  Five of the top producers: South Africa, Canada, Australia, Peru, and the U.S. produced more than half that total in 2001 with 1330 tonnes and saw that drop off to only 1095 tonnes in 2006.  These stats make a pretty compelling bullish case yet gold is trashed in the press, the TV, financial advisors, and especially the bullion banks and the gold cartel.  They have resorted to an especially incredible tactic of late; instead of smashing down gold when negative news for gold is released, they especially whack it when gold positive news is released.  Despite these attempts gold has held up even with heavy Central Bank sales, heavy shorting in the futures markets, double leasing of the same gold, and attacks on the gold ETF which has been driven down with dollars being thrown at these paper markets.  Meanwhile, jewelry sales are up 17% and physical demand was high on any sell-offs.

The tide is turning as gold as a percentage of global currency is now down to 10% from a high of 84% back in 1950; so the Central Banks are running out of ammo to cap the gold price.  Of course, those investors that continue to make their gold investments in the paper markets of the futures markets and the gold and silver ETF’s are helping to cap the price because the gold cartel will someday run out of gold but they will never run out of paper.  These instruments are what help them to crush the charts of the stocks and the metals causing chartists and technical players to pile on downswings.  There is more technical analysis on the major gold websites than ever…forget them, they do not matter.  First of all 99% of them are trying to chart gold and the stocks in dollars and that is a totally frivolous effort.  The dollar is a measure of nothing with unlimited supply at any point in time.  Technical analysis is another tool being used to cap gold and gold stocks, nothing more at this point.  Don’t listen to technical analysis and don’t listen short term price explanations of the days action.  If you do, you will notice: higher interest rates are bad for gold; lower interest rates are bad for gold; high oil prices are bad for gold; lower oil prices are bad for gold; get it?...EVERYTHING IS BAD FOR GOLD!  That’s what they have to get you to believe for the currency system of the world to make it through one more day.  When that one more day doesn’t come if you listen to these people you will be left far behind and in an incredibly short timeframe.

Since 1970 the money supply of the world has increased more than 20 times the industrial production of the same period.  This IS inflation.  There is now more paper money added to the existing pile of money in the world EACH YEAR, close to $4 trillion, than the value of all the gold mined in human history and the pace is accelerating to the point that the paper money is beginning to be selectively rejected.  Do you not believe that holding gold and silver will not go up more in value than paper nothing?  This is all you ever have to know about gold and silver. PERIOD!

There is a favorite saying that I like very much attributed to Sidney Greenberg: “A successful man is one who can lay a firm foundation with the bricks that others throw at him.”   

They are throwing bricks at you right now and they are made of gold and silver.  GRAB THEM!

Richard J. Greene                                                              June 28, 2007

Clearwater, Florida

-- Posted Thursday, 28 June 2007 | Digg This Article