Friday, February 14, 2014

Gold's Message To The Market

Let’s put this into perspective.  When did anyone in the mainstream media say gold was a great investment?  What you are hearing is a huge bias not borne out by the facts.  - Robert Wiedemer, "100% Fake Recovery"  LINK

Gold has been the best performing asset since the Fed tapering began on December 18th, 2013.  Most analysts were, and many still are, calling for gold to hit $875 this year.  How they arrived at that conclusion is beyond rational comprehension, given that if gold stayed below $1200 for any length of time most gold mines would be shuttered.  Moreover, almost every bearish Wall Street analyst never even considers the enormous amount of gold being accumulated by China.  I don't understand how these people can call themselves professionals when they are ignoring two obviously fundamental variables affecting the price of gold.

As we know, belief without evidence is nothing but faith.  It would seem to me that Wall Street is exercising bad faith in their assessment of the gold market.

At any rate, the fact and evidence stands that gold has been outperforming everything since mid-December.  One reason for this is that the Fed and the bullion banks have been forced by the sheer size of the demand from Asia to "retreat" from the unprecedented manipulation of the price of gold over the last 2 years.  The reason for the "retreat" is to let the price of gold rise in an attempt to slow down the massive demand for physical gold.

But there are several fundamental reasons that investors now perceive gold to be undervalued, especially relative to the U.S. stock market.  First, there's no question now that the U.S. economy is rapidly slowing down.  Auto, retail and home sales are declining and it's becoming clear that the cold weather/dog ate my homework excuse is not cutting it.  Again, when you look at data available that Wall Street and CNBC conveniently overlook, it's pretty obvious that the majority of  Americans are cash strapped, have piled on new debt and are living from hand to mouth.  I doubt 99%'ers are going to be rushing out this year to buy a new Lennar home and a shiny BMW for the driveway.

Because of this, it is probable that Janet Yellen will have to reverse the taper and start printing even more money than the $65 billion/month being printed after the first two tapers.  Let's not forget, taper or not, the Fed is still printing at a rate of $780 billion per year.  In addition, assuming Stanley Fisher is confirmed as Yellen's partner in crime, we can expect to see them implement a negative Fed funds rate policy.  Most people are unaware of this, but Fisher is a huge academic proponent of negative interest rates as a means to try and stimulate economic growth (Israeli-born, he was an economics professor at the University of Chicago and at MIT before going on to try and destroy the world with his ideas).  Furthermore, Janet Yellen launched her bid to replace Bernanke with a speech in early 2012 advocating negative rates to stimulate employment.

For the record, negative interest rates are gold's rocket fuel.

Finally, I find it curious that very little attention has been paid to the fact that the Government is now operating until March 15, 2015 without any debt ceiling limit.  Quite frankly, there should be outrage from both the media and the public.  No one seemed to even notice.  But letting the Government go for a year without ANY spending restraints is the equivalent of letting a multi-convicted pedophile operate a daycare center that has a sleepover option for parents who travel a lot.

In my view, unlike most mainstream investors, the smart money buying gold did happen to take notice of the unlimited credit card that Congress just gave the Obama Government.  It actually became obvious last Friday to those few of us who do follow the news that affects our system that Boehner's House would pass a "clean" debt issuance extension.  Since last Friday gold is up $57, or 4.5%.  The GDXJ junior mining stock index is up 14%.  In comparison, the S&P 500 is up 2.6%.

Things are going to start to really unravel in our economic and political system this year.  As the underlying conditions deteriorate expect the Orwellian "things are getting better" lies to intensify.  Try to enjoy what you can, while you can because life will likely become a lot more difficult for most of us this year.


  1. In order to sustain all the Federal programs and keep some social order the Government has no choice but to print.......MOAR ! The free shit army will get all they want, until they can't.

  2. ZIRP-investments (gold and silver) will be safer at any interest rate...

  3. Forgive me, I am not a trader just a reader.....

    I was under the impression one reason (of a multitude) that gold and silver were kept low was that banks/institutions could purchase gold cheaper to replay the gold that was sold off from Germany's stash. The low prices also allowed Asia to purchase en masse at lower prices, but it was byproduct. If Germany's gold is really gone I can't see them just walking away. Thoughts?

    I also agree that the non-debt limit for the next year could make things really dicey. Is anyone (in power) even thinking about what kind end game this could cause?

    Could you elaborate what negative interest rates would look like for the average joe? I heard if interest rates rise, housing and credit cards (prime rate + %) would be toast and many people would be forced to default. With negative rates, I don't see the banks making loans having lower interest rates. I'm having a hard time getting my head around this concept.

    Thanks for your time. Always enjoy your posts and insight.

    1. The fed leases gold for a low rate to bullion banks who sell it and invest in securities earning a higher rate, pocketing the difference. Then at the end of the lease period, the bullion banks flood the market with naked paper shorts to drive down the price of gold so they can buy back the gold they leased from the fed and give it back to the fed. Central banks are happy because the supply drives down gold relative to dollars they are debasing. Bullion banks are happy because they pocketed the spread.

      With negative rates, banks charge people and institutions for money they have on deposit rather than the current zero. Since banks make money on the spread, loan rates could also come down some for good credit borrowers.

    2. By using the following example from the pages of Wikipedia : "Precession can be demonstrated by placing a spinning gyroscope with its axis horizontal and supported loosely (frictionless toward precession) at one end. Instead of falling, as might be expected, the gyroscope appears to defy gravity by remaining with its axis horizontal, when the other end of the axis is left unsupported and the free end of the axis slowly describes a circle in a horizontal plane, the resulting precession turning. This effect is explained by the above equations. The torque on the gyroscope is supplied by a couple of forces: gravity acting downward on the device's centre of mass, and an equal force acting upward to support one end of the device. The rotation resulting from this torque is not downward, as might be intuitively expected, causing the device to fall, but perpendicular to both the gravitational torque (horizontal and perpendicular to the axis of rotation) and the axis of rotation (horizontal and outwards from the point of support), i.e., about a vertical axis, causing the device to rotate slowly about the supporting point."

      Envision if you would the uber rich / 1 %'rs / stockholders of the federal reserve , essentially the owners of the U.S. currency and their goals for the future.
      They have carefully planned for the U.S.dollar to go to zero in value as it clearly is demonstrating so. However this grand scheme happens in phases.
      Due to the fact that they have total control of the institutions which set the prices on gold and silver daily , they will continue to harness the phony price structure to that of a gyroscope.
      Basically the held down TRUE rise in prices of physical gold and silver is like the inside spinning part of the gyro - all helping the outside part of the structure ( which stands for their paper currency which you and I have to rely on daily to function.
      As the holders of physical gold and silver watch true wealth opportunities churning in a structured and controlled sphere for the purpose of keeping the 1% in control nothing could be more frustrating !
      In closing I say to hell with the very institution which keeps putting out the phony results that we all have to abide by in referring to anything that has to do with the price of gold and silver ! TO HELL WITH THE COMEX ! dw

  4. You say, "Because of this, it is probable that Janet Yellen will have to reverse the taper and start printing even more money than the $65 billion/month being printed after the first two tapers."

    Well---they may be printing more than we think right now. Yesterday, while in my bank, I withdrew several hundred dollars in cash. Curiously, some $100's were of the old type mixed in with some new. I asked, What's this, I thought the old bills were being recalled and that banks were turning all they had into the fed?

    The teller responded, "we keep getting old ones back on new cash orders from the fed"--She then said, "I don't think they're planning on taking the old currency out of circulation"

    HMMMM---If this is true, the fed effectively just printed billions without lifting a finger!

  5. US allows banks to accept deposits from marijuana sellers

    Under the policies, cannabis sellers in states with medical or legal marijuana will have access to banking services.

    Currently, sellers deal almost entirely in cash, increasing the risk of robbery and the ease of money laundering.

    Colorado and Washington State voted in 2012 to legalise cannabis. Other states are expected soon to follow.

    looks like the banks are getting ready to fail when they do stuff like this.

  6. Great work this week Dave - love the dog-homework and pedophile-daycare bits.

    The hard part for us is not letting everything we know and learn cause lifestyle paralysis - we've prepared in multiple ways, we have cash available, PM exposure, minimal debt, and so far our business has held up well. We want to travel more this year and enjoy the fruits of our sacrifices and work, but it's hard when our minds seem to constantly be in "hunker-down" mode. It seems there's a fine line between preparing and being proactive and diligent, and being so diligent that you stop living life. Do you go through this yourself, wanting to live life, make purchases, travel, but having to overcome a gnawing sense of urgency to save as much as possible and prepare for what's coming?

  7. Our political leaders are classless scoundrels, but they are not stupid. They see the same evidence of collapse we see, and this is their way of preparing. If the wheels do come off the cart, there will be no limits to Fiscal or Monetary stimulus...

  8. Strange.

    Somehow the Left would have us believe the Chinese are the geniuses of the world because of their economy and ability to build mega-arks in climate change blockbuster movies.

    But somehow they are stupid while they hoard the western world's gold?

  9. If negative interest rates come to pass (in order to increase the velocity of money and spur economic activity, one assumes), would it be fair to further assume that the long awaited crack-up boom with its attendant hyperinflation are at hand?

  10. Obama will run his country into similar fashion of Mugabe. The more printing & spending on the poor will impoverish the country even more. Basically, he handicaps his people, he prevents his people from breaking out of poverty. In a direct consequence, central government gains further power because the people are powerless, they need the government to breast feed them.

    For a country going into Zimbabwe style, having gold & silver and leave the country will be the only option.


  11. The Vampire Squid, JP Morgan, Dead Bankers & Criminal Acts

    Eric King: “Bill, you’ve been around this business for decades, and when you look back at what the banking industry was and what it represents today, what are your thoughts on the monster the banking industry has become, where people are killed in order to protect secrets?”

    Kaye: “I don’t recognize the industry. It bears no resemblance to the business that I very proudly entered in the 1970s. When I joined Goldman Sachs it was not only a private partnership, but I think there were a total of only 47 general partners at the time. Now, Goldman Sachs has been famously described as the ‘Vampire Squid,’ with their tentacles virtually everywhere, including governments....
    “They (Goldman Sachs) and their cohorts have essentially hijacked Washington, and to a significant extent the government in London, as well as much of Europe. So the Western world is essentially being held captive by both of these major predatory investment banks, including the major commercial banks such as JP Morgan -- they are working hand-in-hand together in many cases.
    This is a huge threat, not only to the financial system, but what they are doing is a huge threat to people’s individual liberty. I think what these people are doing for their own benefit also has implications that are very negative to the middle classes around the world, which are being slowly wiped out in many countries.

    1. ...and to the point of the vampire squid arrangement present day - it wouldn't be surprising to discover that the NSA is tied into the grand scheme of things with this den of thieves. What better way then to control the people of the world !

    2. Exposing what lies beneath the bodies of dead bankers and what lies ahead for us

      Now consider the plight of a whistleblower who wants to expose criminality within the ranks of a too-big-to-fail. The institution who is engaged in purported criminality based on the findings of the whistleblower can observe the whistleblower’s every move. Where they go, who they meet and what they are carrying to such a meeting. They can be tracked to a residence, a business, or even to their psychiatrist’s office, place of ill repute, or the residence of some significant other outside of their marriage, all of which would be invaluable for blackmail.

      Perhaps the potential whistleblower is clean and free from anything that might dissuade them from revealing what they know, their case could be turned over to the in-house security of former CIA agents for proper disposition. It makes the movie The Firm look like child’s play by comparison.

      This is not some fanciful delusion. There is proof of this that exists. The New York Civil Liberties Union (NYCLU) has documented the increasingly extensive surveillance being conducted in lower Manhattan and throughout the city. They have verified that not only are our constitutional rights being violated every minute of every day, but the fruits of surveillance by police and corporate entities are shared between the police, the intelligence agencies and private financial institutions, without restraint on the distribution on such findings.

      Are you engaged in a protesting against the criminality of the one-percent? Well, they one-percent are watching you, and they are literally seated right next to the police. Are you a journalist following up on possible “bankster” corruption by meeting a potential whistleblower? You better understand that the bankster target of your investigation is watching you, in real-time, with the complete approval and cooperation of the police. As documented by the NYCLU, you are likely now “on file,” and all data compiled is maintained and accessible not just to law enforcement, but to the very target of your investigation—in real time.

      Such surveillance and integration between big banks, law enforcement and spy agencies is not just limited to lower Manhattan or even the United States. It is also most prevalent in London and other cities where international banking is conducted.

      Real-time surveillance and the close working relationship between the “one-percenters,” police and the intelligence agencies gives the targets of criminal probes the ability to be pro-active when necessary. It’s all being done under the pretext of national security when it would appear that the real objective is to insulate the banksters from potential problems that exposure of their criminal actions might cause.

      Oh, and don’t forget that it is us who are paying for this.

    3. What I find amusing is that the Financial Stability Board which is part of the Bank for International Settlements is reviewing the Forex markets.

      The Bank of England seems to have encouraged manipulation of the FX markets so it seems to me that it is the Bank of England that should be investigated. I personally think it is the BIS itself that does the manipulation on behalf of its clients (central banks).
      As you probably know, directors of the BIS have full diplomatic immunity and even though the bank is based in Basel, Switzerland it is basically a sovereign entity.

      How can the manipulators investigate the manipulators?

  12. Crack me up boom is proceeding apace.
    it looks linear here, not even parabolic yet, since the chart is in linear mode.

    how long can the swiss keep yodeling past the graveyard, arrogantly pretending to peg their fiat franc to the Euro?
    that's quite the sorcery trick, even by bankster scam standards.

  13. For the first time in 30 years, I saw a big white sign attached to the outside of a rogers jewelry store that was facing traffic on a main street and it said in bold, red letters: "We Buy Gold".

    Could it be that jewelry stores will also find it hard to get Gold?

    1. It is a great way for Rogers to get cheep gold to melt down and either make into jewelry or hold until gold rises again. There is nothing better then fleecing the sheeple and Rogers wants in on the action.

  14. As the U.S. economic and financial system continue down the road of self-destruction, there is an increasing amount of evidence that suggests the day of reckoning is fast approaching.

    One such indicator is the amount of U.S. gold export scrap. At one point in time, the United States was exporting a great deal of gold scrap and waste, however it looks like its citizens are now…. tapped out.

    In a previous article, “U.S. Total Gold Exports Up 31% in Oct 2013″, I discussed the record amount of gold bullion being exported from the United States. The table below shows just how much gold is leaving the country:

  15. How many out there realy know true sacrifice?Answer not many at all!Mainly its the old timers that know and can remember the depression time's. Its been a good run,but an unsubstainable one.I'm Cananadian and suspect my US nieghbours are lying through there as#es,to keep the drive alive.My goverment is hooked to them at the hip,so when there house of cards comes tumbling down,a world of hurt is coming my way as well.It's great you mention the suspension of the US Debt limit,generic media will not touch that unbelievable fairy tale.The people live in full denile,pretending there in first place,when really they are being kicked to the curb.The ban$ters,Wall$treet,and the Military Industrial Complex have taken this great nation to the cleaners.I since some pretty ugly things coming out in 2014 as the jig is up on so many fronts.Move away from the cement cities,Get closer to family,Grow a garden,reduce debt to 0,buy gold&Silver,stock up on some grub,and try to wether the coming storms is all one can do.Seeing it coming and doing nothing,is the BIGGEST mistake of all.Am I freaked,you betcha!

    1. Great insight. I feel like I'm more prepared then most and continue to be freaked out daily.
      No matter how much I prepare I know that there is so much more to do. Good luck up in Canada and God's speed.

  16. Customers have to show ID, can no longer deposit cash into another person’s account

    According to Meghan, when she asked a Chase bank teller why cash deposits couldn’t be made into another person’s account, she was told that the new regulation was imposed by government request

    According to Fox Business, Chase is “the first big bank to enact such a change.” Customers are already being asked for ID as of February 1, while cash deposits into accounts bearing someone else’s name will be banned from March 3 onwards.

    Chase claims it is imposing the changes to prevent money laundering, although the policy is likely to cause massive inconvenience for families, such as parents who wish to deposit cash in accounts belonging to children who are away at college.

    Representatives from Bank of America, Citigroup and Wells Fargo did not respond to questions on whether they would also be looking to impose the same rules.

  17. One-Percent Jokes and Plutocrats in Drag: What I Saw When I Crashed a Wall Street Secret Society

    Recently, our nation’s financial chieftains have been feeling a little unloved. Venture capitalists are comparing the persecution of the rich to the plight of Jews at Kristallnacht, Wall Street titans are saying that they’re sick of being beaten up, and this week, a billionaire investor, Wilbur Ross, proclaimed that “the 1 percent is being picked on for political reasons.”

    Ross's statement seemed particularly odd, because two years ago, I met Ross at an event that might single-handedly explain why the rest of the country still hates financial tycoons – the annual black-tie induction ceremony of a secret Wall Street fraternity called Kappa Beta Phi.

    “Good evening, Exalted High Council, former Grand Swipes, Grand Swipes-in-waiting, fellow Wall Street Kappas, Kappas from the Spring Street and Montgomery Street chapters, and worthless neophytes!”

    It was January 2012, and Ross, wearing a tuxedo and purple velvet moccasins embroidered with the fraternity’s Greek letters, was standing at the dais of the St. Regis Hotel ballroom, welcoming a crowd of two hundred wealthy and famous Wall Street figures to the Kappa Beta Phi dinner. Ross, the leader (or “Grand Swipe”) of the fraternity, was preparing to invite 21 new members — “neophytes,” as the group called them — to join its exclusive ranks.

  18. any chance we have a deal with China to manipulate the gold price lower so they can accumulate exchange for forgiveness of our debt?