Posted on 04/07/2013 6:45:56 AM PDT by Bon mots
For Americans, financial and economic Armageddon might be close at hand. The evidence for this conclusion is the concerted effort by the Federal Reserve and its dependent financial institutions to scare people away from gold and silver by driving down their prices.
When gold prices hit $1,917.50 an ounce on August 23, 2011, a gain of more than $500 an ounce in less than 8 months, capping a rise over a decade from $272 at the end of December 2000, the Federal Reserve panicked. With the US dollar losing value so rapidly compared to the world standard for money, the Federal Reserve’s policy of printing $1 trillion annually in order to support the impaired balance sheets of banks and to finance the federal deficit was placed in danger. Who could believe the dollar’s exchange rate in relation to other currencies when the dollar was collapsing in value in relation to gold and silver.
The Federal Reserve realized that its massive purchase of bonds in order to keep their prices high (and thus interest rates low) was threatened by the dollar’s rapid loss of value in terms of gold and silver. The Federal Reserve was concerned that large holders of US dollars, such as the central banks of China and Japan and the OPEC sovereign investment funds, might join the flight of individual investors away from the US dollar, thus ending in the fall of the dollar’s foreign exchange value and thus decline in US bond and stock prices.
Intelligent people could see that the US government could not afford the long and numerous wars that the neoconservatives were engineering or the loss of tax base and consumer income from offshoring millions of US middle class jobs for the sake of executive bonuses and shareholder capital gains. They could see what was in the cards, and began exiting the dollar for gold and silver.
Central banks are slower to act. Saudi Arabia and the oil emirates are dependent on US protection and do not want to anger their protector. Japan is a puppet state that is careful in its relationship with its master. China wanted to hold on to the American consumer market for as long as that market existed. It was individuals who began the exit from the US dollar.
When gold topped $1,900, Washington put out the story that gold was a bubble. The presstitute media fell in line with Washington’s propaganda. “Gold looking a bit bubbly” declared CNN Money on August 23, 2011.
The Federal Reserve used its dependent “banks too big to fail” to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Federal Reserve was able to drive the price of gold down to $1,750 and keep it more or less capped there until recently, when a concerted effort on April 2-3, 2013, drove gold down to $1,557 and silver, which had approached $50 per ounce in 2011, down to $27.
The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.
For now it seems that the Fed has succeeded in creating wariness among Americans about the virtues of gold and silver, and thus the Federal Reserve has extended the time that it can print money to keep the house of cards standing. This time could be short or it could last a couple of years.
However, for the Russians and Chinese, whose central banks have more dollars than they any longer want, and for the 1.3 billion Indians in India, the low dollar price for gold that the Federal Reserve has engineered is an opportunity. They see the opportunity that the Federal Reserve has given them to purchase gold at $350-$400 an ounce less than two years ago as a gift.
The Federal Reserve’s attack on bullion is an act of desperation that, when widely recognized, will doom its policy.
As I have explained previously, the orchestrated move against gold and silver is to protect the exchange value of the US dollar. If bullion were not a threat, the government would not be attacking it.
The Federal Reserve is creating $1 trillion new dollars per year, but the world is moving away from the use of the dollar for international payments and, thus, as reserve currency. The result is an increase in supply and a decrease in demand. This means a falling exchange value of the dollar, domestic inflation from rising import prices, and a rising interest rate and collapsing bond, stock and real estate markets.
The Federal Reserve’s orchestration against bullion cannot ultimately succeed. It is designed to gain time for the Federal Reserve to be able to continue financing the federal budget deficit by printing money and also to keep interest rates low and debt prices high in order to support the banks’ balance sheets.
When the Federal Reserve can no longer print due to dollar decline which printing would make worse, US bank deposits and pensions could be grabbed in order to finance the federal budget deficit for couple of more years. Anything to stave off the final catastrophe.
The manipulation of the bullion market is illegal, but as government is doing it the law will not be enforced.
By its obvious and concerted attack on gold and silver, the US government could not give any clearer warning that trouble is approaching. The values of the dollar and of financial assets denominated in dollars are in doubt.
Those who believe in government and those who believe in deregulation will be proved equally wrong. The United States of America is past its zenith. As I predicted early in the 21st century, in 20 years the US will be a third world country. We are halfway there.
They should buy gold, with tax dollars, and use the gold to pay off existing debt? Why the extra step? Just use the tax dollars to pay off the debt.
Not sure what you mean by "back state debts".
Say the state needs to borrow $10b dollars. If they can back that debt with gold or silver, instead of an interest rate of $1b, it might be just $50m. A much smaller bite on their taxpayers.
If they have $10b in gold, their interest rate drops from 10% to 0.5%?
California, with no gold or silver, has to pay junk bond yields, if there is still anyone foolish enough to loan them money.
True. How does borrowing more to buy gold make their lenders feel better?
This idea really comes into its own if the federals decide to seize private gold again, offering to involuntarily “purchase” it at a ridiculously low price, as they did before.
They seized it last time, because it backed the currency. Seizing it now is pointless. They might as well seize something easier to find, like bank accounts and retirement accounts. They aren't going to break down your door to seize the gold American Eagle you bought.
This makes sense when there is deflation based in a shortage of dollars, which happened at the start of the Great Depression. The saying was “You could buy a pound of hamburger for a nickel, but nobody had any nickels.”
Likewise, it makes sense when there is strong inflation or even hyperinflation of dollars. This is because the state is on something of a “fixed income”, getting the bulk of its tax revenues only once a year.
Gold, on the other hand, is not tied to a volatile dollar, and has its own value independent of federal dollar manipulation, and states, unlike people, are immune to federal confiscation of gold.
As far as slashing interest rates, the gold acts as an extremely fungible collateral, likely approaching or even exceeding 100% of debt. It goes back to the old idea that “The only people who can get credit are those that don’t need it.” If a loan is just a convenience to you, and one backed by 100% collateral, banks are more than happy to give you a loan, because their risk is tiny. Likewise, your interest rate is likely much lower.
Once again, by selecting an ill-managed state with awful credit, California this time, instead of Illinois, when I have already specified a well-managed red state, and one hopefully with a budget surplus to buy the gold, you present a red herring.
California nor Illinois could not possibly make a functional state repository for gold, because they have no gold and no one will sell them any except for cash on the barrel head, which they do not have. Thus they are not an issue.
Texas, right now, on the other hand, has an $8.8 billion budget surplus. And not only that, but they have recalled *their* state gold, which is kept in bank vaults in New York. And something that should concern us all, New York has suddenly become hesitant about returning this gold, which is not just being demanded by Texas, but also by Germany, and possibly other states and nations.
Those foolish New Yorkers might have sold gold that wasn’t their to sell. If that is indeed the case, the SCOTUS may order them to pay up by any means, even selling off state property.
There has been concern about gold for some years now, ever since the Forex gold market did something unexpected: instead of redeeming the same gold that depositors had left with it, when they demanded their gold back, they got a “Duke’s mixture” of generic gold. This sent up red flags all over the place.
In any event, a state repository would be the best thing that could happen to those that own gold, because it would not only help insure that gold is a fungible commodity in that state, but would provide them tangible insurance against federal bad behavior.
Yes, borrowing when you don't need to gives you a lower interest rate. Not as low as not borrowing at all, so I'm still not seeing the benefit.
I have already specified a well-managed red state, and one hopefully with a budget surplus to buy the gold,
Again, not seeing the benefit to buying the gold as opposed to cutting taxes or paying down debt.
Texas, right now, on the other hand, has an $8.8 billion budget surplus. And not only that, but they have recalled *their* state gold, which is kept in bank vaults in New York. And something that should concern us all, New York has suddenly become hesitant about returning this gold
New York, the state, is holding their gold? Are you sure?
ever since the Forex gold market did something unexpected:
There is no "Forex gold market". Forex is used when talking about foreign exchange, trading foreign currencies. You must mean something else.
In any event, a state repository would be the best thing that could happen to those that own gold, because it would not only help insure that gold is a fungible commodity in that state, but would provide them tangible insurance against federal bad behavior.
Gold isn't "fungible" now in Texas?
Are they really worried that Federal Agents are going to take their gold? Really?
If you’re truly this confused about so many things, and really need answers, there is this marvelous thing called the Internet. Specifically Google.com. If you use it, you might actually find the answers to all your questions, and dispel many mistaken beliefs and opinions.
Good luck with that.
Specifically Google.com. If you use it, you might actually find the answers to all your questions, and dispel many mistaken beliefs and opinions.
I don't need Google to dispel many mistaken beliefs and opinions of goldbugs, but thanks for the tip.
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