Sunday, November 29, 2009

Gold Is Quality, Stability, and Safety

Bob Chapman
The International Forecaster
November 27, 2009
Investors buy gold when there is inflation and when there is a flight to quality. They buy gold when they no longer trust currencies, due to government or central bank profligacy. Due to those and other reasons gold has broken out to new highs. It could well be that gold may never see $1,000 again. Long ago the world’s central banks set the course for a planned collapse of the world economy to implement world government and there is now no turning back. We have proof stretching back to 1965 that intervention by the Treasury and the Fed was taking place in the gold market. The illegal sale of gold on 10/19/87 was a good example of that. Then came the FOMC memos of the 1980s and 1990s to kill the perception that gold be allowed to reflect a policy of a weak dollar unbacked by gold. It is all there and probably more proof which our government and the Fed hides from us. We have to laugh at the smug who say why would the Treasury bother to rig the gold price? The point is they have and they are still doing it.
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There is no question in our minds that the Fed will monetize and inflate until they cannot anymore.
The perception now is that the massive stimulus put into international markets, especially US markets, will be withdrawn as interest rates are allowed to float upward. This stimulus was responsible for the stock market climbing from Dow 6600 to 10,500, a 60% leap built on monetization. If the punch bowl is removed the market will return to test 6600. In addition, the deflationary undertow kept at bay by the stimulus, will overcome monetary policy and the nation and the world will slip into monetary, deflationary depression.
The Fed is now forced to allow gold to trade higher and the dollar to fall lower. What else would one expect under current monetary circumstances? This policy will allow both gold and the dollar to play out to their full extent. The Fed’s job has been very difficult considering a fiscal budget deficit of $1.5 trillion not counting off budget items that take it over $2 trillion – a condition we are told that will persist for the next ten years. The solution has been the creation of ever more money and credit. There has been no cooperation. Nothing has worked together. All the problems have gone spinning off into a number of directions. There is no control on fiscal or monetary policy. What the players refuse to understand is that until the system is purged the situation is only going to get worse. There is no recovery. It is only an interlude in an ongoing depression.
The result will be gold at $2,500 by the end of 2010, and perhaps much sooner. The buyers know what we know. Real inflation since 1980 dictates $6,700 to $7,200 gold. Even official inflation demands a $2,400 price. In both instances how much inflation will 2010 bring? We are projecting 14% real inflation and government and the Fed keep telling us inflation is 1.2%. Our figures show 6-1/8%. In addition the fundamentals show us that gold production has been in shortfall to usage by 150 or more tons for years and that situation will worsen over the next ten years. Yes, we have hit peak gold. Interest rates rises won’t come for at least a year, if ever, and 5% growth in aggregates is in the realm of wishful thinking. Less gold is currently produced annually than in 1980 and there are trillions more dollars sloshing about the world financial system, a good part of it for speculative purposes. Without changes in monetary and fiscal policies, gold and silver prices will just keep rising. The further our government, via Goldman Sacks, JPMorgan Chase, HSBC and Citigroup, short gold and silver and the shares, the greater price appreciation will be in the future as they ultimately will have to cover their shorts. We are at the confluence of big things happening. The fiscal debt overhand is so onerous that a ¾% rise in interest rates would mean the Fed would have to monetize another $150 billion and a 5% increase in interest rates would increase debt service interest by $600 billion additional dollars. Yes, gold could reach $3,000 in 2010 and 2011 could bring another doubling as a result of the Fed and government just continuing what they are doing. Will inflation reach 25% or 30% in 2011? We don’t know, but as we reflect on what the Fed has been doing we say that possibility certainly exists. Could that mean $11,000 gold? Perhaps it does, we won’t know until we get there.
Even if inflation abated in 2011 or 2012 and a deflationary depression took command, gold would still be the go to investment. That is because for 6,000 years it has been the only currency that has owed no one anything. Would you really be ready to trade it for a fiat currency? We don’t think so. All bond markets as well as stock markets would have collapsed with the exception of gold and silver shares. Just look at the 1930s and see the gains Homestake had, if you don’t think gold stocks can make fortunes during a depression. Gold and silver are the investments for all seasons as long as you have patience. The banking system may collapse. What better to use than gold and silver coins for barter. This past year we have seen lending by banks fall 16.2% y-o-y or by $600 billion. Just double that figure and you are in depression. Can you imagine what it will be like with little or no lending? Unemployment is 22.2%. Under such conditions the unemployed could be 35% or more. What do we do, let the Illuminati create another world war to cover up their machinations? The dollar is already falling and probably will eventually collapse. Could it be 1-1/2 to 2-1/2 years from now that there will be an official 2/3’s devaluation? The exchange of three old dollars for one new dollar and a 2/3’s default on all debt by all nations with one another and the revaluation and devaluation of all currencies followed by a new international trading unit made up of the top G-20 currencies weighted in an index. That is certainly plausible as the dollar ceases to be the international reserve currency.
These events could push residential and commercial values down 75% or more from their highs. All investments except gold and silver could fall 60% to 95% as they did during the 1930s. The Fed won’t be able to cut interest rates, which will already be at zero. Demand for capital will force real rates higher and bonds lower. All issuers of consumer debt will most likely go broke, as 50% of debtors won’t be able to service their debt.
Real nasty times are just around the corner and nothing can be done to prevent them. The system must be purged. More major layoffs are on the way, real wages will fall and taxes will rise. The Dow will settle somewhere between 1,500 and 4,200. We won’t know where until we get a lot closer. Companies have maintained the bottom line by firing people, offshoring and outsourcing and using illegal aliens. That method of cutting costs is approaching a threshold of diminishing returns. The next big wave of layoffs will be municipal in towns, cities, counties and states that no longer have the reserve to pay employees. Some states, such as Florida has no funds to pay for unemployment benefits and were it not for the stimulus plan they would have stopped issuing checks a year ago. At this rate in many states municipalities will cease to function and schools, fire and police will be disbanded. That is where this is all headed. Americans have to be told the truth about what is really going on and who and what caused it and how we can fix it.

We usually deal with these issues in our gold section, but because they are so important and pressing at this time we bring them to the forefront.There is no question in our minds that the Fed will monetize and inflate until they cannot anymore. We see no end to increasing deficit spending. That first will perhaps bring about an Argentinean economy and if we do not come to terms with reality than it is Weimarization or Zimbabweization. When this happens everything will be out of control. Who knows where gold and silver will go, but everyone will want them. You had best make preparations now or you will be very sorry you didn’t. Remember, he who holds the gold makes the rules.
Financial fraud is nothing new. Silver coins were clipped long before Julius Caesar’s Roman legions invaded Gaul in 110 BC.
This enabled Caesar to pay his troops as others had done before him. The fraud allowed him to cross the Rubicon and become dictator of Rome, albeit for a short time.
As we look back some years from now when most of us will be in the Elysian Fields, history will comment on America a nation run by common criminals. Many of you know who they are, and those who do not are about to find out. Richard Nixon rolled for the Illuminati on 8/15/71 by taking us off the gold standard. In the year 1987 we were beset upon by the master criminal Alan Greenspan. He was later joined by other Illuminists, including Robert Rubin and Ben Bernanke and many others too numerous to mention. All of these immoral, diabolical people have destroyed our financial system and they did it deliberately to enrich themselves and to bring about world government. Others throughout the world have seen this period of looting since WWII and want to bring an end to it, but heretofore have been threatened with extinction if they disagreed with these illuminated masters of the universe. That time for the end to begin is fast approaching and the elitists are well aware of that, thus, the final push for one-world government. The process of dumping dollar denominated assets has been moving forward for the past few years. They are being exchanged for many things, but gold is the most important. Foreigners are tired of receiving constantly depreciating dollars for their goods and services. They also do not want US bonds and mortgage paper. Incidentally, the current high absorption of US government debt by foreign central banks is by a handful of banks that are being fed money and credit by our Federal Reserve. The funds to buy this paper are being supplied by our privately owned Federal Reserve. The eventual redemption will be met by further depreciated dollars until such time as there is official devaluation. That is why china, Russia, Brazil, Iran, India and others are dumping dollars. The only time they hold or buy is when they need to devalue their own currencies. A good example is the Chinese Yuan, which is unchanged for the past year as the dollar dropped from 89.5 to 75.50 just since early May.
Next comes the scandals. In the forefront are the tungsten bars coated with gold discovered by the Chinese several weeks ago, which has been blacked out in the elitist owned media. The bars were held and delivered from London and believed to be from the ETF-GLD, which received them from the US government. Our question is how much gold held by the US government is a fraud? Is GLD a fraud? Is SLV a fraud? Why can’t London OTC gold dealers deliver gold and have to borrow it from the Bank of England? Why does Comex not have gold to deliver and has to borrow it from Canada and the ECB? When is the CFTC going to stop the short side concentration in gold and silver? When is the SEC going to stop black box front-running and naked shorting? Once these factors assert themselves will the system break down and finally will some of these crooks go to jail? Wall Street, banking and our government continue to steal from the American people with the assistance of the Federal Reserve. Is it no wonder that 75% to 80% of Americans want the Fed audited? We must also keep in mind that the public still only knows a fraction of what has been done to them. They know little about front running, naked shorting or bogus gold bars, thanks to our media. Criminals are doing 20 to 30 years for much less than what these crooks have done and the core, the heart of the mechanism, springs from the Federal Reserve. The Fed is the center from which the fraud emanates.
When we write and present articles such as this they often appear in other media, but are quickly deleted after a day or two. It will be interesting to see if this article appears at all. We have been told by some sites that government has brought to bear pressure to stop the reprinting of material of a select few writers.
Further to the latest scandals regarding gold and silver: December is usually the largest delivery month of the year and we expect delivery problems again on both gold and silver contracts. The first line of defense by the exchanges will be intimidation and then offers of dollar premiums for not taking delivery as has been recently done in London. Over the next week and into December the drama will again be played out. The question again arises can London and Comex make delivery?
Another factor not yet considered is when will those who were involved in the tungsten gold bar caper be exposed? Who created the bars and then sold them? It is a scandal that is really an afterthought to the massive physical buying in the marketplace, particularly by the Chinese and Indians. As we announced long ago the dollar has decoupled from gold. They are both on their own, although we must concede that a weaker dollar has to help gold prices. Gold still is making gains against all currencies. We have a number of European nations who are upset about the falling dollar and rising euro, etc., especially the Germans. They want business as usual. Evidentially no one has told them the world is in a depression. Western banks are bankrupt and the Chinese and others realize that, so they will not stop buying gold. There is a put behind the price and every time gold softens the Chinese come to the rescue along with others. Goldman and Morgan’s shorts are going to get buried this time.

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