BUY NOW SALE
ENDS SOON
Inverse
Lin-omena, the inverse of the Jeremy Lin phenomena where the unknown and previously
discounted suddenly rise to prominence; here, the powerful and previously
secure suddenly fall.
Today, central bankers, the mandarins of capitalism,
are in disarray. Their attempts to contain capitalism’s current crisis
increasingly resemble the tactics of a defeated army in retreat. Like
Napoleon and Hitler’s respective “Moscow moments”, the 21st
century economic crisis has brought to an end the bankers’ spectacular
300 year run at the table of power and wealth.
The indebting of others as a means of accumulating
wealth ends when the indebted can no longer pay what they owe. The arcane and
esoteric scribblings of second generation
University of Chicago trained economists cannot cover up this basic fact,
i.e. that the indebted are broke; and soon, their creditors will be as well.
The bankers’ franchise of credit and debt
built on a leveraged foundation of paper money fractionally backed by gold
allowed the West to accumulate geopolitical power and wealth on a vast scale.
That era is now over.
It ended when the gold convertibility of the US
dollar was terminated in 1971 when the cost of maintaining a global military
presence outstripped the ability of the US to pay in gold what it owed on
paper.
It was as if someone removed a pin from the axle of international
commerce when the US dollar was no longer convertible to gold. Previously,
the US dollar was linked to gold, and other currencies were linked to the
dollar. Everything was stable. It is no longer so. Once the pin connecting
gold and paper money was removed, everything changed. The axle of
international commerce began to vibrate and lately it’s been getting
much worse. The fear is that the wheels are now about to come off.
Section 1, topic 3, How to Survive the Crisis and Prosper in the Process, Schoon, 2007
Today’s fragile state of the euro, a fiat
currency created in a failed European attempt to compete with and/or replace
an increasingly unstable US dollar, is but another indicator that the wheels are now about to come off.
After the US ended the gold convertibility of the US
dollar in 1971, gold skyrocketed from $35 per ounce to $850 in 9 years,
increasing almost 2,500 % in value, dwarfing the later rise of the Dow (from
777 in 1983 to 11,722 in January 2000) a much smaller rise of 1,400 % over
almost twice the time (17 years instead of 9).
After gold’s spectacular ascent, central
bankers decided the price of gold needed to be ‘managed’, as a
rapidly rising price of gold signaled that something was fundamentally amiss
with the bankers’ fiat paper money, a signal that central bankers did
not want sent, a signal that bankers would work exceedingly hard to disguise
for the next 40 years.
When stocks lose their value
That’s a terrible thing
When homes lose their value
That’s a terrible thing
But when money loses its value
That’s the most terrible thing of all
Introduction, How
to Survive the Crisis and Prosper in the Process, Schoon,
2007
CENTRAL BANKERS MANAGE THE PRICE OF GOLD
In actuality, central bankers did not work
‘exceedingly hard’ to disguise the real market demand and price
for gold. Instead, bankers disguised market demand not by hard work, but by
smoke and mirrors, a contrivance common to confidence men everywhere and,
today, to central bankers in particular.
To suppress the price of gold, central bankers
covertly supplied markets with gold bullion belonging to the nations on whose
behalf they ostensibly toiled, suppressing gold’s real price with
excess supply. This artifice was discovered by Frank AJ Veneroso,
an extraordinary financial analyst and consultant well known only in the
rarefied circles of international finance, see
http://www.venerosoassociates.com/.
According to Veneroso,
since the early 1980s central bank gold sales and loans comprised a
significant portion of all gold sold. In 1990, Veneroso
estimates that 21.5 % of gold sold that year came from central bank vaults;
and by 2000, central bank gold sales had increased to over a 1/3 (34.6 %) of
all gold sold.
Frank Veneroso’s
story of central bank manipulation of gold markets is found here.
With thousands of tons of central bank gold coming
onto the market, it’s clear why the price of gold declined from 1980
until 2001. What is remarkable, however, is that in the face of such
overwhelming supplies, the price of gold began to rise in 2001.
THE TURNING POINT
The turning point, however, actually occurred in
1999 and is marked by an event relatively unknown and almost tantamount to
financial treason. About that event, I wrote in March 2009:
In 1999, it was
rumored that investment bank Goldman Sachs had a 1,000 ton gold short
position in the markets. Goldman Sachs was betting that the price of gold
would continue to fall and they would be amply rewarded for their apparent
“risk”.
Because of central bank manipulation, the price of gold had moved inversely
to the rise of stocks for almost 20 years and bankers were making easy money
on the bet gold would continue its downward spiral.
However, much to the shock of Goldman Sachs and the central bankers, in 1999
gold stopped falling; and, because Goldman Sachs’ short position was so
large, Goldman possibly could suffer catastrophic losses.
This is when England’s then Chancellor of the Exchequer, Gordon Brown,
on May 8, 1999 announced England would sell over 50 % of its gold reserves,
415 tons of the most precious metal on earth at the very bottom of the
market.
The decision to sell England’s gold thereby saved Goldman Sachs and
insured the political future of Gordon Brown. Goldman Sachs’ is still
in business and Gordon Brown is now [2009] the Prime Minister of
England—proving that good things come to those who do the bidding of
the powerful (whether either outcome was worth 415 tons of England’s
gold is questionable).
Selling a
nation’s gold to save the bankers’ parasitic system is now common
practice as the banker’s system continues to collapse and gold
continues to rise. Since Gordon Brown sold England’s gold, gold has
risen from $275 dollars per ounce to its present price of over $900 despite
the thousands of tons of central bank gold sold to prevent its inexorable
movement higher. On 2/14/12 gold is $1,715]
CENTRAL BANK
SALES AND LEASING OF GOLD HAS MADE GOLD AVAILABLE AT FAR BELOW MARKET RATES
To hide their
burning house of cards, central bankers have sold thousands of tons of gold
from national treasuries, mainly Switzerland, to keep the price of gold below
what it would otherwise be. This is the true upside (for buyers) of the
bankers’ gold suppression scheme.
While citizens
cannot prevent central bankers from selling gold from their national vaults,
today they are afforded the extraordinary opportunity to buy that very same
gold on the open market at prices heavily discounted to their otherwise true
market value.
My current estimate of today’s true market value of
gold—without central bank intervention—is in excess of $10,000
dollars per ounce.
Many central
banks, however, are today switching sides in the war on gold, preferring to
keep their precious metals instead of selling them in an increasingly futile
attempt to prevent the inevitable from happening—the collapse of the
bankers’ now burning house of cards.
Today, the
bankers’ fiat currencies are in a death spiral. It’s only a
matter of time until the US dollar, the Japanese yen, the British pound and
all paper currencies—including the Chinese yuan—come
under the same pressure that now plagues the faltering euro.
Central
bankers, however, will do everything in their considerable power to prevent
their lucrative franchise of credit and debt based on paper money from
collapsing; and, of late, they’ve discovered a new way to suppress gold
and silver—the precious metal inventories of GLD and SLV, the precious
metal ETFs used by investors to participate in the rising price of gold and
silver.
When
Europe’s debt contagion spread in the summer of 2011, the price of gold
began moving rapidly higher which bankers feared could itself turn into
runaway contagion. The below chart shows that GLD and SLV, the ETF funds,
were used by central bankers to cap gold and silver prices in mid-August.
Link
Amid growing
concerns about Europe’s debt crisis as gold rapidly rose, GLD sold 26.12
tonnes of gold and SLV sold 304 tonnes
of silver, driving the price of silver down 8 % although gold rose 4.9 %
despite GLD’s considerable efforts to the contrary.
That GLD and
SLV ostensibly dedicated to profit from the rising price of gold and silver
would sell their inventories in a rapidly rising market runs counter to their
mandate; unless, of course, they did so knowing that central banks would soon
ambush gold and silver with deeply discounted lease rates on precious metals
that would cut short gold’s increasingly spectacular rise.
Jesse’s Café Americain
traces the planned ambush of gold by central banks during their September
take-down, see here.
Gold had risen to a record high, $1900, on September 1st and on
September 2nd, central banks then took
corrective action, dropping their lease rates for gold sharply lower into
negative territory.
This meant that
central bankers would actually pay bullion banks to borrow their gold and
sell it on the open market. The new supplies of gold capped gold’s
increasingly steep seven month rise and, by the end of September, the price
of gold fell back to $1600.
After Sept 2nd,
gold lease rates still remained negative, insuring a continued low price for
gold even as the European debt crisis accelerated and the global economy
slowed. This is exactly what central bankers intended. Gold is a barometer of
systemic distress and central bankers wanted to conceal the flames rising
from their now burning house.
Nonetheless,
even with negative lease rates, gold again began moving higher before central
banks on February 2nd supplied markets with more gold with again
sharply lower lease rates deep in negative territory.
As the bankers’ ponzi-scheme
of credit and debt disassembles, central bankers will find it more difficult
to contain the price of gold; and when gold does break out—as it
will—the price of gold will exceed the $10,000 price it would now
command if it were not for central bank intervention.
At $1700 gold
is cheap; at $3,000 gold is cheap; at $5,000 gold is cheap; at $7,000 gold is
cheap. Wait till the central bank sale ends and you will realize how cheap
gold actually is.
The wheels are now coming off the bankers’
once invincible juggernaut. Whether the out-of-control bankers will crash in
a (1) hyperinflationary blow-off, (2) a brutal never-ending deflationary
collapse-in-demand or (3) in a fatal bursting of capitalism’s bloated
colostomy bag—derivatives—cannot be known
But what is known is that the end of the
bankers’ monetary fraud is near and its demise closer than most want to
believe.
THEY’RE NOT LAUGHING ANYMORE
A remarkable blog, www.dailystaghunt.com,
reviewed recordings of Fed Open Market Committee meetings between 2000 and
2006 and, interestingly, noted the frequency of laughter during meetings,
observing: The number of recorded
laughs actually increased in frequency from 2000 to 2006. In 2001, the FOMC
erupted into laughter 16.5 times per meeting on average. In 2003, it was over
19. In 2005, 27. And then
in 2006, the FOMC burst into laughter nearly 44 times per meeting!
As the 2007/2008 financial crisis grew closer,
central bankers grew increasingly relaxed and confident; believing their extremely
low 1 % interest rates had worked; that they had survived the collapse of the
greatest speculative bubble in the US since the 1920s—the collapse of
the 2000 dot.com bubble—and all was well.
But those in attendance, Greenspan, Bernanke,
Fisher, Mishkin, Krozner
et. al., were wrong. Their fatally flawed solution to the collapse of the
dot.com bubble, low 1 % interest rates, had given birth to an even more
dangerous bubble, the 2002-2006 US real estate bubble, the largest
speculative bubble in the world whose collapse would bring down the world
economy in 2007/2008.
Of course, this wasn’t known in 2006. In 2006,
central bankers were still laughing.
Frequency of
laughter during FOMC meetings
Year Average
laughs per meeting
2000 16.5
2001 15.375
2002 21.625
2003 19.25
2004 23.125
2005 27.25
2006 43.875
Data on the frequency of laughter at FOMC meetings
after 2006 is not yet available. But it can be assumed the frequency subsided
after the massive global credit contraction in August 2007 and after the
collapse of world markets in 2008.
Note: the possibility that FOMC laughter remained
high or actually increased after 2006 is far too macabre to consider. We do,
however, await additional data before passing judgment.
Link
Today, central bankers are no longer laughing. Their
nights are considerably longer as are their weekends; their daily grocery
list might now include quarts of gin and whiskey, prescription
anti-depressants and extra-strength deodorant.
We are collectively in the end game, a period of
great change where the present paradigm is collapsing making way for what is
to come. Keep your thoughts positive and focused on what is coming, not the
troubled passing of the present world. Let central bankers do that.
Note #1: I will be speaking at Professor Antal Fekete’s New School
of Austrian Economics in Munich, Germany, see here.
For details, contact nasoe@kt-solutions.de
Note #2: My latest video, What and Who Do Bankers Do (or what I really think about bankers
and money). Dollars & Sense
show #12, youtube http://youtu.be/hazULFo3oB4
Buy gold, buy silver, have faith.
Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com
Blog www.posdev.net/pdn/index.php?option=com_myblog&blogger=drs&Itemid=81
