Buy Gold, While It's On Sale

Dollar Commentary:

Smart investing is about taking advantage of situations when they arise, and there are plenty of opportunities right now. On the above chart you can see that the dollar has gained 19% against gold in the last month, after falling horribly for many years. This dollar rally is effectively an invitation to increase your gold holdings, and it is what I have done this week. Gold is quickly becoming my personal currency.


Debts have to be paid, whether in one form or another. Dollar debt can be paid traditionally or by dilution. The US debt is so large that I don’t believe it can be paid traditionally, so the dollar has to be diluted. This dilution will cost all citizens in one form or another, mostly in the form of a lower standard of living.

If a currency is diluted it loses purchasing power, both here and abroad. The buyer gets less and pays more. In the next few months the dollar appears headed down to the $65.00 area on the $USD index. This technical price action represents the fundamental of debt payment by dilution.

While the time of this actual quotation is uncertain, Jim Rogers has commented on the magnitude of the US debt with this statement over the years,“Europe’s got some bad problems but the entity as a whole is not nearly as deep in debt as the U.S. They don't have a huge balance of trade deficit, like we do.”

Our debt could turn into a crisis, and it could be a lot worse than what Europe is experiencing. Will Illinois, California, and New York be viewed by the rest of America like Germany views Greece now? Where does this all end? It feels like there is no end, and much more pain to come for many years.

The dollar rally already now appears to be starting a topping out process. This process that is topping the dollar is also creating substantial bottoming action in gold and commodities. I expect this process to take another two weeks. I want to own more gold while the “sale” is on.

Gold Super Highway Chart

Gold Analysis

Two important items:

You can make the argument that chart damage has been done here. The small symmetrical triangle I highlighted last week failed, but it was a small technical formation; the big technical picture continues to strengthen. Gold has begun the journey to becoming the worldwide asset of choice in this crisis.

Massive Asian physical buying has come to the metals as a result of the three day correction that saw gold prices fall over 10%, and the Indian wedding season preparations are picking up steam.

A report was posted on Bloomberg several days ago stating that gold could go to $10,000 per ounce based upon the amount of money printed on a historical basis. That is prior to any additional QE programs. More printing allows for an even higher gold price. Many believe the US government will default on obligations. There really is no final target price for gold. Over time, governments will just keep printing paper currency to dilute their debts, as they have for thousands of years. It began with diluting gold coins with other metals. The space age has brought the electronic printing press. Gold is volatile, but the largest trend of the gold price over the longest time has always been higher, against government promise-backed currency.

I believe physical gold owners are the smartest of all investors.

To be in a market and to stay in a market, you must believe in what you own and know why you own it. Don’t buy something simply because the chart looks nice. Buy it because of great fundamentals. Use my technical buy signals to increase your core positions.

Read The Rest Here

Dollar is over.

The dollar is over, and since it has no real backing, no gold, no silver, no oil, no military, no industrialised nation producing any real goods, nothing but great bar tending and waitressing jobs riding the wave of housing bubble entrepreneurs paper flow.......well, hate to break it to you, but, we are fucked.
Just look at what Financial Times has to say about the death of the dollar:

The US dollar will lose its status as the global reserve currency over the next 25 years, according to a survey of central bank reserve managers who collectively control more than $8,000Billion.
More than half the managers, who were polled by UBS, predicted that the dollar would be replaced by a portfolio of currencies within the next 25 years.
More
On this story
Euro stabilises in volatile trade
Trading Post Pound’s woes underline fears over UK debt exposure
King at odds with ECB on eurozone crisis
Fed holds rates on inflation concerns
Trading Post Peso vulnerable to US growth concerns
That marks a departure from previous years, when the central bank reserve managers have said the dollar would retain its status as the sole reserve currency.
UBS surveyed more than 80 central bank reserve managers, sovereign wealth funds and multilateral institutions with more than $8,000bn in assets at its annual seminar for sovereign institutions last week. The results were not weighted for assets under management.
The results are the latest sign of dissatisfaction with the dollar as a reserve currency, amid concerns over the US government’s inability to rein in spending and the Federal Reserve’s huge expansion of its balance sheet.
“Right now there is great concern out there around the financial trajectory that the US is on,” said Larry Hatheway, chief economist at UBS.
The US currency has slid 5 per cent so far this year, and is trading close to its lowest ever level against a basket of the world’s major currencies.
Holders of large reserves, most notably China, have been diversifying away from the dollar. In the first four months of this year, three quarters of the $200bn expansion in China’s foreign exchange reserves was invested in non-US dollar assets, Standard Chartered estimates.
The prediction of a multipolar currency world replacing the current dollar dominance chimes with the thinking of some leading policymakers.
Robert Zoellick, president of the World Bank, last year proposed a new monetary system involving a number of major global currencies, including the dollar, euro, yen, pound and renminbi.
The system should also make use of gold, Mr Zoellick added. The results of the UBS poll also point to a growing role for bullion, with 6 per cent of reserve managers surveyed saying the biggest change in their reserves over the next decade would be the addition of more gold. In contrast to previous years, none of the managers surveyed was intending to make significant sales of gold in the next decade.
Central banks have bought about 151 tonnes of gold so far this year, led by Russia and Mexico, according to the World Gold Council, and are on track to make their largest annual purchases of bullion since the collapse in 1971 of the Bretton Woods system, which pegged the value of the dollar to gold.
The reserve managers predicted that gold would be the best performing asset class over the next year, citing sovereign defaults as the chief risk to the global economy.
The yellow metal has risen 19.5 per cent in the past year to trade at about $1,500 a troy ounce on Monday, buoyed by the emergence of sovereign debt concerns in the US as well as eurozone debt woes.
Read More Here: FT's Full Article

Debt Ceiling Reached, Again...

The Treasury Department auctioned $56 billion in new debt Tuesday and Wednesday, enough to take the U.S. over its federal debt ceiling when the three- and 10-year notes settle on Monday.
Treasury officials last month flagged May 16 as the day the government would hit the $14.294 trillion debt limit.
The U.S. is selling $72 billion in new debt over three days this week. The Treasury auctioned $32 billion in three-year notes Tuesday and $24 billion in 10-year notes Wednesday, and will sell $16 billion in 30-year bonds Thursday. All of the auctions will settle Monday.
As of Tuesday, total debt subject to the limit was $14.274 trillion, according to the Treasury Department.
The Obama administration has asked Congress to raise the limit, warning that failure to act could lead the government to default by Aug. 2--and could spook investors even before then.
House Speaker John Boehner (R., Ohio) said Monday that any increase in the government's debt limit should be accompanied by trillions of dollars in spending cuts.
"It's true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt limit without simultaneously taking dramatic steps to reduce spending and to reform the budget process," he said.
The federal budget deficit widened in April, with the government spending $ 40.49 billion more than it collected last month, a Treasury Department report said Wednesday.
The deficit was the 31st monthly shortfall in a row. With seven months of fiscal 2011 elapsed, the government has spent $869.90 billion more than it has collected.
Even the most aggressive plans wouldn't wipe out budget deficits for years, meaning that debt will continue to mount.

Bin Laden had a pocket full of Euros

Aparently, Osama Bin Laden was carrying about €800 in his pocket. Not even terrorists trust the dollar anymore!

Mexico quietly buys 100 tons of gold bullion

Mexico has quietly purchased nearly 100 tons of gold bullion, as central banks embark on their biggest bullion buying spree in 40 years.
The purchase, reported in monthly data published by Mexico’s central bank, is the latest in a series of large gold buys by emerging market economies intent on diversifying reserves away from the faltering US dollar.
China, Russia and India have acquired large amounts of gold
in recent years, while Thailand, Sri Lanka and Bolivia have made smaller purchases.
Central banks became net buyers of gold last year after two decades of heavy selling – a reversal that has helped propel the price of bullion to a series of record highs.
On Wednesday gold was trading at about $1,510 a troy ounce, down 4 percent from a nominal record high of $1,575.79 reached on Monday.
As a result of Mexico’s purchase, central banks, sovereign wealth funds and other so-called “official sector” buyers are on track to record their largest collective purchase of gold since the collapse of the Bretton Woods system, which pegged the value of the dollar to gold, in 1971.
GFMS, a precious metals consultancy, had predicted that the official sector would make net gold purchases of 240 tons this year, compared with a post-Bretton Woods peak of 276 tons in 1981.
Philip Klapwijk, GFMS executive chairman, told the Financial Times that forecast “might turn out to be conservative” in light of Mexico’s surprise move.
The reversal of two decades of gold selling marks the end of an era characterized by widespread faith in paper currencies and sovereign debt.
The dollar
has plunged 10 percent against the world’s major currencies since January and is trading near an all-time low.
Mexico bought 93.3 tons of gold in February and March, according to the central bank, in a haul valued at $4.5 billion at current prices and equivalent to 3.5 percent of annual mined output.
The country’s foreign exchange reserves have ballooned since last summer, buoyed by its interventions in the currency market to prevent the peso from appreciating.
“[The buying] seems to confirm there’s an appetite now among emerging economies with large forex reserves to add to their gold reserves,” said Matthew Turner, precious metals strategist at Mitsubishi, the Japanese trading house.
“Gold is seen as one way in which to diversify away from the dollar or euro-denominated assets.”
Although gold has quintupled in value over the past decade, it has fallen back in recent days led by a 20 percent tumble in the price of silver.
Just as central banks unwittingly marked the bottom of the market a decade ago with large sales of gold from their reserves, some investors fear that the current rush to buy may signal a top.

The Destruction of Wealth

UT Takes in 1 Billion in Gold to Hedge Against Inflation

Dallas hedge-fund manager J. Kyle Bass helped advise the University of Texas Investment Management Co. on taking delivery of 6,643 gold bars, worth $987 million on April 15, now stored in a bank warehouse in New York. Bass, who made $500 million with 2006 bets on a U.S. subprime-mortgage market collapse, said managers of the endowment, known as UTIMCO, sought board approval to convert its gold investments into bullion this year. A board member, Bass, 41, said he was asked to help with that process. While Bass, a managing partner at Hayman Capital Management LP, said in an April 16 e-mail that “the decision to purchase and take delivery of the physical gold” was made by endowment staff members, “I helped where I could.” Gold futures touched a record $1,489.10 an ounce April 15 in New York before closing at $1,486. The Texas fund’s $19.9 billion in assets ranked it behind only Harvard University’s endowment as of August, according to the National Association of College and University Business Officers. Last year, UTIMCO added about $500 million in gold investments to an existing stake, said Bruce Zimmerman, the endowment’s chief executive officer. The fund’s managers sought to take delivery of bullion to protect against demand for the metal overwhelming supply, according to Bass. Open interest in gold futures and options traded on the Comex typically exceeds supplies held in its warehouses. If the holders of just 5 percent of those contracts opted to take delivery of the metal, there wouldn’t be enough to cover the demand, Bass said. Printing Money “If you own a paper contract where they can only deliver you 10 cents on the dollar or less, you should probably convert it to physical,” said Bass, who isn’t related to Fort Worth’s billionaire Bass family. He said holding cash wasn’t a better choice because the rate of inflation exceeds money-market rates by 2.5 percent to 3 percent, eroding the value of cash. “Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said April 15 in a telephone interview. “I look at gold as just another currency that they can’t print any more of.” Sovereign-debt concerns also boosted demand for the metal on April 15, driving Comex futures to an all-time high. The price has climbed 28 percent in the past year. Gold’s 10-year rally has attracted billionaire investors such as George Soros and John Paulson, who seek a store of value as record-low interest rates erode returns on currencies. Wealthy Buyers Few investors take physical delivery of bullion. As of April 14, 2,860 contracts this month, about 0.5 percent of total open interest, had been converted to metal, exchange data show. Physical deliveries have slowed as gold topped records this year, said Blake Robben, a senior market strategist who handles deliveries of Comex metals for clients at Chicago-based broker Lind-Waldock. “It’s usually wealthy individuals with net worths over $1 million who want to take delivery to diversify away from the dollar,” Robben said. “Generally, it’s a big hassle and not worth it to take delivery.” Investors can own 100 ounces of gold futures with Lind- Waldock by paying a $100 fee and putting up $6,571 in a margin account to purchase one contract. To take delivery of a 100- ounce bar, investors have to pay the full price of the contract. Bass, a Texas Christian University graduate who was named to the endowment’s board in August, is a former salesman with Bear Stearns Cos. and Legg Mason Inc. He said about 5 percent of his hedge fund is invested in gold. The endowment, which oversees funds held by the University of Texas System and Texas A&M University, has 664,300 ounces of bullion in a Comex-registered vault in New York owned by HSBC Holdings Plc, the London-based bank, according to a report distributed at a meeting in Austin. “I simply voted as a board member to approve the storage facility and concurred with their decisions,” Bass said.

Think Precious Metals Prices Are A Bubble? Think Again.

Each time the two monetary metals reach new highs, calls for the end of the bull market in gold and silver come quickly and frequently. At $500, $850, and ever since gold first cracked $1,000 per Troy ounce in March 2008, the gold price remained the focus of those paid to report a popular view among those firmly entrenched in a fiat paper system that’s rewarded them handsomely for two generations. Those unencumbered by a financial system—a system that pays its employees “more than four times the average salary in the rest of the economy,” economist Paul Krugman wrote in 2008—make a living by developing a reputation for accurately appraising the current state of the vilified gold and silver market. Otherwise, these unleashed analysts and money managers will no longer retain their flocks and fortunes. One such tell-it-like-it-is investment manager is the publisher and editor of the Gloom Boom Doom Report, Marc Faber—who, as a side matter, says that the choice for the name of his report, Gloom Boom Doom, came about from his observations of changing investor sentiment during complete market cycles. So, is it Gloom, Boom or Doom for the precious metals? Faber rejects the notion of a precious metals market soon entering a “Doom” stage. “If it [gold] were a bubble a lot of people would have gold. The whole world would be trading gold 24 hours a day,” he told CNBC’s Joe Kernen. “But I don’t think it’s really a bubble. I think gold is maybe cheaper today than it was in 1999, when it was $252.” The rise in the gold price (but more spectacularly, in the silver price) has been primarily driven by the Fed’s unprecedented easy-money policies, first, following the popping of the NASDAQ bubble in 2000, then again, much higher in price following the collapse of the financial system, starting in March 2008, with the fall of Wall Street broker-deal/investment banking firm Bear Stearns. Not unlike most global pricing, the world’s traditional monetary metals are denominated in U.S. dollars, so a decline in the dollar’s relative value to world supply of precious metals lifts the price of gold and silver in dollar terms. The future of the gold price is bright as long as Fed chairman Ben Bernanke continues a policy of negative real interest rates—when compared, that is, with the rising rate in living costs, Faber has repeatedly stated. Even if the Fed followed last week’s European Central Bank’s (ECB) quarter-point interest rate hike, the competition for dollars between paper assets and tangible assets won’t tip the tide among investors in favor of paper assets, according to Faber. “One day they [the Fed] will increase it [federal funds] by a quarter percent. But what does it mean when commodity prices are going through the roof, energy prices are going up, health care costs are going up, insurance premiums are going up?” he said. Therefore, Faber posits that cash and debt will lose value relative to “commodities, real estate, art, collectibles and so forth, anything that essentially cannot be multiplied at the same rate as paper money, that is subject to the printing presses of Mr. Bernanke.”

The Dollar is Collapsing, just look at commodies!

This was sent to me by an aquaintence that has over 50,000 ounces of silver. He started buying at $12/oz. The market closed at $43.05 yesterday. It's my belief that until Congress can reign in it's deficit spending and pay off our national debt, the Federal Reserve Bank will continue to print money for them to pay their bills with, effectively destroying the dollar. Since the inception of the Federal Reserve Banking system in the USA, the purchasing power of the dollar has declined by 97%. Remember penny candy? It's not gone because it got expensive, it's gone because the Fed has flooded the market place with dollars. This is the true cause of inflation. And in the case of savings, it's theft. If the Fed increases the money supply by 5% and your bank pays 1% on your savings, they have effectively stolen 4% of your purchasing power.

More calls for currency backed by gold and silver.

This from the same state that just found a man guilty of minting the Liberty Dollar.

RALEIGH -- Cautioning that the federal dollars in your wallet could soon be little more than green paper backed by broken promises, state Rep. Glen Bradley wants North Carolina to issue its own legal tender backed by silver and gold.
The Republican from Youngsville has introduced a bill that would establish a legislative commission to study his plan for a state currency. He is also drafting a second bill that would require state government to accept gold and silver coins as payment for taxes and fees.
If the state treasurer starts accepting precious metals as payment, Bradley said that could prod the private sector to follow suit - potentially allowing residents to trade gold for groceries.

"I think we're in the process of inflating a dollar bubble that could be very devastating," said Bradley, a freshman legislator elected in November's GOP tide. "The idea is once the study commission finishes its work, then we could build on top of the hard-money currency with an actual State Tender Act that will basically [issue currency] in correspondence to precious metals stored in the state treasury."
Bradley's bill has yet to attract any co-sponsors among his fellow Republicans.
Mike Walden, an economics professor at N.C. State University, said the notion of North Carolina reverting to having its own currency is outlandish.
"We dealt with this issue about 100 years ago when the Federal Reserve was established," Walden said. "If North Carolina were to have its own currency, that would put us at an extreme competitive disadvantage vis-a-vis other parts of the country and other parts of the world."
State Treasurer Janet Cowell joked that Bradley's precious metals proposal could increase efficiency in state government by providing a good use for her department's old basement vault, which is currently used for storage.
"I look forward to engaging in an important public policy debate about whose face should be on the gold coin," quipped Cowell, a Democrat.
But Bradley predicts that world events could soon prove him prescient.
"I don't necessarily believe [the Federal Reserve] is about to collapse right now," said Bradley, 37. "There are still a few things they can do with qualitative easing to sort of extend their survival. It's just a question of how long. Right know we have a lot of sovereign debt going to China and Japan. When that debt stops being purchased by foreign countries, that currency is going to flood back onto American shores, potentially creating hyperinflation and bursting the currency bubble we have coming in Federal Reserve notes today."
The Austrian School
Bradley, a self-employed computer technician and former Marine, attended Southeastern Baptist Theological Seminary in Wake Forest until he could no longer afford tuition, he said. While he has not taken any in-depth classes in economics, Bradley described himself as a devotee of the Austrian School, a branch of economic thought that originated in Vienna and was influential before World War I.
Back then the value of most of the world's currencies were tied to the amount of the gold amassed in their national treasuries. The United States abandoned the gold standard in 1933, after it was blamed for worsening the Great Depression.
Though the ideas of the Austrian School have been rejected by mainstream economists for much of the last century, they are in vogue with Libertarians and some supporters of the tea party movement.
The language of Bradley's House Bill 301 predicts a dire future for the U.S. economy.
"Many widely recognized experts predict the inevitable destruction of the Federal Reserve System's currency through hyperinflation in the foreseeable future," the bill declares. "In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System, for which the State is not prepared, the State's governmental finances and private economy will be thrown into chaos. ..."
Asked who are the "widely recognized experts" to which his bill refers, Bradley cited U.S. Rep. Ron Paul of Texas and Peter Schiff, a precious-metals dealer and investor who regularly appears as a commentator on Fox News.
Walden, the economics professor, said the views espoused by adherents of the Austrian School are well outside the mainstream of modern economic thought.
Bradley's ideas for taking the state back to the Gilded Age don't end at economics.
About Commerce Clause
A strict Constitutionalist, he has also introduced bills to exempt North Carolina agricultural products and firearms manufactured in the state from federal regulation as long as they are not sold or exported across state lines, measures that fly in the face of more than a century of U.S. Supreme Court rulings interpreting the Commerce Clause of the U.S. Constitution.
"They're wrong," Bradley said confidently of generations of justices. "The 10th Amendment is quite clear that those powers not reserved in the Constitution for the federal government are reserved to the states. It's doesn't take a high-priced lawyer to interpret the Constitution."
Rep. Becky Carney, a Charlotte Democrat, said she found Bradley's currency bill "perplexing."
"There has absolutely been no indication of the collapse of the Federal Reserve system," said Carney, who serves on the House banking committee. "It sounds like the Chicken Little story about 'the sky is falling.'"
The office of House Speaker Thom Tillis declined to say whether the GOP leadership supports Bradley's proposal to create a state currency. His bill has been referred to the House rules committee, where legislation is sometimes sent to die.
"There are a lot of diverse opinions and diverse views in our caucus," said Jordan Shaw, Tillis' spokesman. "I don't think we're going to forecast what will happen." Read more: http://www.newsobserver.com/2011/03/17/1059132/legislator-says-the-state-needs.html#ixzz1H5iDxEYY

Hamilton, Central Banks And The Death Of The Dollar

"'As on the one hand, the necessity for borrowing in particular emergencies cannot be doubted, so on the other, it is equally evident that to be able to borrow upon good terms, it is essential that the credit of a nation should be well established.' --Alexander Hamilton, Report on Public Credit, 1790"

Hamilton was the father of central banking in these USA. He and Jefferson had very bitter debates on the subject. While borrowing in particular emergencies cannot be doubted, it was never intended as a means to operate the government on a daily basis.

Thomas Jefferson wrote:

"The [privately-owned] Central Bank is an institution of the most deadly hostility existing against the principles and form of our Constitution...if the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

Even Abraham Lincoln shared Jefferson's view of the private bankers.In order to finance the Civil War, he approached the NewYork bankers to see about getting a loan for the North. The interest rates they proposed were in the order of 30%. Lincoln's response was akin to; "stuff it."He then had Congress live up to its Constitutional responsibility for issuing and valuing currency and issued his famous greenbacks.

Incredibly, like so many of us, even to the heights of power, Lincoln didn't know at first that he had the OPTION, let alone the probably-intended OBLIGATION to create money for the nation. With the civil war ending, he had come to the conclusion that his government issued currency should become the basis of there-United States monetary system. Within a matter of weeks he was shot in the Ford theatre with his monetary system dying with him.
In 1832, President Jackson vetoed the move to renew the charter of the 'Bank of theUnited States' (a central bank controlled by the international bankers). In 1836 thebank went out of business.

The Bank of the United States (1816-36), an early attempt at an American central bank,was abolished by President Andrew Jackson, who believed that it threatened the nation.

He wrote:

"The bold effort the present bank had made to control the government, the distress it had want only produced...are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."
Andrew Jackson had at least two attempts made on his life. So proud and intent on warning the future generations was he that his tombstone is inscribed with the phrase"I killed the bank!"

It came back.

The Federal Reserve Act was passed in December 1913; ostensibly to stabilize the economy and prevent further panics, but as Congressman Charles Lindberg Sr. warned Congress:

"This act establishes the most gigantic trust on earth...the invisible government by the money power, proven to exist by the Money Trust investigation, will be legalized."

Even as early as 1916 President Woodrow Wilson was saying:

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world--no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small amount of dominant men."

No more stinging condemnation of a concept can be given than by the man who, convinced it was for the good, championed it in the first place!

"We have met the enemy, and he is us."

The lovely Miss Puddy accompanied me to the movies a few weeks ago for a viewing of “Unstoppable” with Denzel Washington. In the movie Washington, a 30-year veteran locomotive engineer saves the day by not listening to the bureaucracy and trusting his instinct honed by years on the job. It is the story of a simple journeyman veteran who knows his trade well from 30 years on the job who saves the day. Washington represents the typical workingman who is fast disappearing in this country.

He plays a blue-collar professional who has dedicated his entire working life to his career. I read the other day that the average young person entering the workforce today will have three different careers throughout his working life – not 3 different jobs but 3 different vocations. How can anyone obtain proficiency in 3 different careers in one lifetime? I feel that if this country’s manufacturing/mining/farming economy is to be saved it will be by people like Washington’s character. Even the ordinary newspaper delivery guy can take pride in his job.
G o o g l e David Bond’s short article, “The Dog Biscuit Miracle” and see how any job can be done with dignity and pride.

Unfortunately everyone seems to be looking for Uncle Sam to be the hero and to rush in and save the day. Our old uncle is in poor shape and is hardly able to help anyone these days.

“The nation is badly insolvent and lacks legitimate income sources, something economists fail to grasp.” Jim Willie

“The US has lost 42,400 factories since 2001. The US has lost 32% of its manufacturing jobs since 2000.” Peter Grandich

We have allowed multi-national corporations to move our factories offshore and left our markets wide open. We were sold the idea that “we” could “think” and “they” could “work”. The idea that factories and mines were dirty and should be moved offshore while we could operate clean financial services, distribution and other service industry jobs was sold to us. We were taught that our economy was based on consumption. The federal reserve drove down interest rates and encouraged everyone to mine the equity out of their homes and to spend our accumulated wealth on new cars, vacations and other mindless consumer goods.

And don’t just blame the democrats.

Phil Gramm’s wife worked hard to repeal the Glass-Steagall act that allowed banks to operate in other financial markets. You would have thought we learned something from the 1930’s. All through the last 30 years our local banks have been gutted and monster national and international banks have taken over the local bank branch in your neighborhood. There was a reason that the very special business of banking with all its special privileges was only allowed to operate locally on a county basis just a few decades ago. A banker from 1980 looking at today’s mess would be astounded at what has happened. The gradual changes in banking over the past decades have been a travesty.

The Federal Reserve is now printing money with QE I (just creating money out of thin air; counterfeiting), QE II and QE to infinity.

There will be no end to monetizing the debt.

Stock outflows by investors have been high over the past year. Now bond outflows are alarming. The fed is quickly becoming the buyer of last resort for US bonds.

David Stockman says that our $800 billion defense and homeland security establishment will be forced to de-mobilize by the world bond market.

Bond vigilantes will force the US to finally balance their budget. The US cannot afford higher interest rates. The only other option is default. The fed cannot monetize the debt forever without the dollar falling apart (a default on the dollar itself).

“Any bartender could explain the situation. Bernanke is watering down the whiskey.” Bill Bonner

We are now facing a deadline with the debt ceiling. Tim Geithner says if the debt ceiling is not raised soon the US will begin to default on its obligations. Of course they have to raise the debt ceiling. Otherwise they have to cut spending by 1/3rd and balance the budget immediately. Congress doesn’t have the will to cut that deeply – YET. I predict there will be much posturing and many fine speeches but in the end they will raise the debt ceiling.

Many government agencies (BLS in particular) claim that the economy is recovering and things will be better soon. I am afraid they are deluded (probably just lying but I will give them the benefit of the doubt and politely say they are crazy). Inflation is coming in things we must import, which is a long list these days. We used to feed the world and now we must import some of our own food. Inflation in food, energy and commodities are here now and will get worse. The BLS (bureau of labor statistics, Dept of Labor) claims inflation is in the low single digits but ask anyone who is writing checks to support a family.

They will tell you their cost of living is up over 10% a year. Retail sales appear to be better but a deeper look at the market numbers show high end goods purchased by the rich are doing well while Wal-Mart sales languish.

The middle class is getting squeezed.

Howard Davidowitz says there is 21 SF of retail space for every man, woman and child in the US. This is twice the usual amount.

Internet sales will make the usual amount too high.

Those retail malls that are marginal now will not make it far into the future. Avoid REITs (real estate investment trusts) for retail commercial real estate.

This is not just a depression like the 1930’s it is a debt collapse AND a currency collapse (our currency is now a monetized debt unit). Think more 1781 and 1865 when the continental dollar collapsed in the 13 colonies and when the CSA notes collapsed in the South at the end of the War Between the States. Until the debt is washed out, written down or forgiven the economy will remain anemic and will not recover.

Transferring the debt from the banks to the government will not fix the problem. The debt is still too great. We must either cast off the debt or be slaves to it for the next several generations.

So what should the average citizen of these great United States do at this point?

Avoid municipal bonds like the plague. They will default first. Avoid long term US bonds as well. Short term US notes (6 months or less) are probably OK for now but keep your finger on the sell trigger. Cut back on all expenses and raise cash.
Live BELOW your means. Save cash and hedge that cash with precious metals. Keep your cash in local credit unions or locally owned banks.
Check their ratings and make sure you are saving in the safest institutions in your area. Cut up those credit cards and quit using them. Pay cash for your purchases. Keep 2 months of cash on hand in an emergency fund. Invest your precious metals 50% in gold and 50% in silver. Invest in physical precious metals when possible. For small investors a good investment is to simply purchase 6 months of non-perishable supplies that they normally use every day. They will probably cost 5 to 10% more in 6 months (not a bad return). Plant a garden or support a local farmer (or both).

“We live in an awkward time, too late to change course but too early to line up and shoot those responsible.” Doug Casey

I will close with another movie. “The Voyage of the Dawn Treader” by C.S. Lewis is billed as a children’s story but it is much more than that. In the movie the magician tells the characters, “You’re going to be tempted, and you’ve got to defeat the darkness within before you are able to defeat the darkness without.” Bob Beltz of Walden Media says, “Lewis tells us in his story that God exists and evil exists and there’s great conflict between the forces of good and evil, and ultimately God wins.”

Greed has caused most of our financial problems we now face. We must overcome our own internal demons first. We must prepare for a great conflict. Like C.S. Lewis, I have no doubt of the eventual outcome.


“We have met the enemy and he is us.” Walt Kelly

Larry LaBorde

Silver Trading Company

Dollar Collapse Is Coming, and Soon

I have written and reported on the coming collapse of the dollar for quite some time, but here is a one hour video that puts everything I have reported into one comprehensive, clear, concise statement about what's coming. Spend an hour, pay attention and learn a little something about what's coming. The information during them first hour is pretty much spot on, when the sales pitch starts for "The Stock Market Quitter's Secret" starts, I cannot attest to it's validity, and frankly would go ahead and disconnect. Semper Peratus.