The Dollar is doomed; gold and silver will rise

The US dollar is doomed. There is no doubt. The massive addition to money supply and exploding deficits assure that the fiat dollar will be officially devalued through hyperinflation, replacement with the Amero or a new, "improved" dollar, or some similar device. Devaluation is baked into the economic cake. Massive increases in money supply dilute the value and purchasing power of the currency.

Yet, the price of gold in the futures markets seems to undermine this view. Since cracking $1,000 last March, gold's spot price is close to $750. Moreover, the dollar has bounced off an 8-year low to its highest levels in two years. Isn't the market projecting future values into the most accurate price today? Maybe this isn't a good time to buy?

Because of this anamoly, some people who plan to purchase precious metals to protect the value of their savings have postponed their purchase, hoping to time it with a bottom of the metals and a high in the dollar. Given my plea to purchase gold at what I thought was a low last August, this waiting strategy has paid off -- maybe.

Their strategy has been brilliant if they can just pick up the phone Monday and buy sufficient gold to satisfy their needs with no delay, at near the market price. The problem is that worldwide demand for gold has been huge, and supply is scarce. Yet the spot price of gold is still relatively low. Shouldn't a lower price reflect lower demand? Conversely, shouldn't high demand mean higher prices? And regardless of the price, shouldn't one be able to buy whatever amount of gold they want at or near the market price? In theory, the answer is "yes." But the situation today is that physical gold (as opposed to "paper" gold reflected in spot prices), is difficult to get and has at least a 15% premium over spot.

My best take on the situation is that the dollar boomlet will be very short-lived. It has much to do temporary demand for dollars to unwind derivative contracts, as well as the illusion of safety (the US treasury bond market may be failing). Moreover, the Powerz manipulate the price of gold to conceal inflation and to try to keep the public's faith in fiat currencies. Meanwhile, those in the know, those who understand the fundamentals, are buying in record amounts.

The bottom line: if you're planning on investing some of your savings in gold and silver, then you had better to it this month. The sooner, the better. An attempt to time the market is bound to fail, because no one knows in advance what the low price is. And if you're trading what should be an insurance policy to maximize fiat profits, you're playing with fire.

And while you're establishing insurance positions for the coming economic turmoil, don't forget basics like food storage, non-hybrid seeds, water filters and such. Precious metals will help to preserve the value of your savings. But you'll still need the essentials to stay alive.

Below are links to articles to substantiate what I've said above.

Inflation is baked into the cake:
The Neo-Alchemy of the Federal Reserve - Congressman Ron Paul

Bernanke's Playbook - Dr. Gary North. "We are now reaching the point of the helicopter drop. If the FED does not reverse its policy of buying bad debt with new money – high-powered money, as Friedman called it – we will get mass inflation before the next Presidential election."

The US Monetizing Debt by Printing Money

Bankrupt G7 Print Money to Reflate Economies

41 States are Facing Severe Budget Shortfalls for 2009. As will cities, counties, etc.

Half-million jobs vanishes as economy deterioriates.

Why Credit Cards Matter So Much.

Bank has little option but to ready the printing presses.

"50 Ways to Beat Deflation" -- new lyrics to the Paul Simon hit song.

The Gold Price will soon take off:
Comex Gold Shocks and Awe -- observations on the subtantial deliveries being taken on gold futures contracts at the Comex. Generally options buyers just take paper profits and/or losses. Rarely do options holders take delivery. Jim Sinclair and others have been calling on patriots to take delivery for some time now, putting an end to the scam of using futures contracts to inhibit the price of gold. We've seen the disconnect between the price of "paper" and physical gold for six months. Evidence is mounting of substantial deliveries in December and February, pulling the rug out frm under the theives. For more insights into these phenomena, see "What's Really Going on with Gold and Silver."

For more on this stunning event, you must read Antal Fekete's article on the new "backwardization" of gold pricing in the futures markets. Hal Turner summarizes the most salient points here. "December 2 is a landmark, because before that date the monetary system could have been saved by opening the U.S. Mint to gold. Now, given the fact of gold backwardation, it is too late. The last chance to avoid disaster has been missed. The proverbial last straw has broken the back of the camel. Few people realize that the shutting down of the gold trade, which is what is happening, means the shutting down of world trade. This is a financial earthquake measuring ten on the Greenspan scale, with epicenter at the Comex in New York, where the Twin Towers of the World Trade Center once stood. It is no exaggeration to say that this event will trigger a tsunami wiping out the prosperity of the world." As this realization hits the markets, the price of physical gold should skyrocket. (Check here for more observations on backwardization.)

Wednesday, November 26

ObamaWatch:
Ralph Nader presciently writes about The Third Clinton Administration. "The signs are amassing that Barack Obama put a political con job over on the American people. He is now daily buying into the entrenched military-industrial complex that President Eisenhower warned Americans about in his farewell address. With Robert Rubin on his side during his first photo opportunity after the election, he signaled to Wall Street that his vote for the $750 billion bailout of those speculators and crooks was no fluke (Rubin was Clinton’s financial deregulation architect in 1999 as Secretary of the Treasury before he became one of the hugely paid co-directors tanking Citigroup.)" Is Obama trying to reconstruct the economy on a base of sand?

Robert Scheer agrees that Obama sided with Wall Street instead of Main Street. Previously he had engaged Nader in vigorous debate against this idea. Hopefully reality will awaken more Obama zealots that it did with Bush zealots.

My biggest concern about Obama is not a third incarnation of the Clinton administration (though it will be much worse without any effective Republican opposition). It is the parallels with Germany of the 1930's and where that led. We're in 1932-33 now. Others agree. A big push for so-called "hate crimes" legislation is an ominous sign. Laws against "hate speech" will follow. That's just the beginning of his add-ons to the Bush police state.

Still very, very puzzling that the MainStreamMedia is ignoring the story questioning Obama's actual legal status to be President. (The Christian Science Monitor seems to be an exception.) OK, so it isn't puzzling. Not because the story is not valid, but because the term "MainStreamMedia" says it all. Our "free" media is no more free on the big questions than the obviously state-controlled media in Russia, China and elsewhere. It is the same reason why Ron Paul can't get any traction in the media, and Obama can seemingly come from nowhere to get elected. One lawyer promises to file a lawsuit against all Obama directives until the citizenship issue is resolved.

Justin Raimondo writes about the remarkable connection between "The Bailout, the Media, and the War Party." GE, which owns NBC and MSNBC among others, is now a bailout recipient. GE also produces expensive military weapons systems. Will they bite the hand that feeds them? "With the government in control of the commanding heights of the American economy – the financial sector, which, like GE, has its tentacles wrapped around the communications industry – the difference between private and state-controlled media is near abolition. . . . If the government is now buying "shares" in the corporate owners of the major news outlets, then how close are we to some place like Russia, for instance, where the line between economy and state hardly exists and the major media dutifully spout the Kremlin line?"

The US Government has now pledged at least $7.7 trillion to bail out the economy. They might toss a bone to actual consumers instead of powerful banks and corporations. Obama's financial appointments are full of foxes guarding the hen house. The massive looting of America at the highest levels will continue. Where's that money coming from? Is it any wonder that books on the Weimar Republic are popular right now in Washington? Hyperinflation is cooked into the economy now. Prepare for it.

You might want to see a comparison of the bailout to other famous big budget expenditures in US history. Jim Rogers believes that devaluation of the dollar is policy, that the fear-based dollar rally will end shortly after the new year, and that commodities are the best buys for money.

Speaking of bailouts, why is Ford asking for one when they can produce cars at plants like this one in rural Brazil?

A leading Russian financial analyst sees the decline and financial collapse in the US leading to a breakup of the country into at least six regions. Within a year or two he sees the Amero replacing the dollar. Apparently, the financial system came close to collapsing on November 21, when Citigroup was effectively nationalized. We may well see a bank "holiday" shortly after Obama is inaugurated, if not before. Be sure to keep a month's worth of cash stashed.

With all this increasing socialism abounding, let's not forget that it was socialism and communism among the early Puritans that left them starving. It was the switch to capitalism that saved them. It seems that incentives work better than good intentions.

Last Saturday the first nationwide "End the Fed" rallies were held in 39 different states. Fiat money really is the root of all evil. I was priveleged to speak at the Oklahoma City rally. See here , here, here, and here.

For something interesting and off-beat, check out "Giants of the Old World." And it has long been discussed whether mammograms actually promote breast cancer. Worth thinking about.

Another Day in the Unfolding Crisis

Tuesday, October 7 was designated as a significant day by the forecasters at HalfPastHuman. I've recently become aware of their work through George Ure's UrbanSurvival website, and his subscriber newsletter, Peoplenomics. For over a year they have designated this date as the beginning of a "release" as significant as the events of 9/11, but with about a 6-month duration instead of 10-days. So while I was making coffee I turned on the TV.

The first thing I saw was an excited talking head announcing that for the first time (ever?), the Federal Reserve would start lending money directly to corporations! Wow!! Pretty good start for a day that marks a turning point. The Fed also plans on helping small businesses.

Ure says what we may be seeing is a 6-month "crashcade" financial events that could easily be punctuated by political and military surprises. So let's see what else happened or was noticed today that might be noteworthy.

• The Pope says the world financial system is built on sand. We know what happens to houses sitting on this foundation.


• The Department of Health and Human Services entered into the Federal Register emergency powers to be enacted in an "anthrax emergency." The Secretary says these powers are necessary at this time because he has "determined there is a credible risk that the threat of exposure of B. anthracis and the resulting disease constitutes a public health emergency." Hmm. Thankfully, if you need antibiotics, the US Postal Service will deliver them to your home!


• Mainly of note in Oklahoma, Judge David Russell again supports the Demopublican monopoly by denying injunctive relief from the state's draconian ballot laws to allow Libertarian Bob Barr ballot access. Russell has consistently made decisions in favor of restrictive ballot laws. Why confuse Okie's with bothersome choices?


• The Dow Jones dropped over 5%, making the 29% drop in 2008 the worst plunge in 71 years. This is apparently a trend that can't be stopped by bailouts or other stopgap measures. One Elliot Wave theorist says that investors have reached a "recognition point" of a downtrend that hasn't reached anywhere near its bottom.


• Retirement funds have reportedly lost $2 Trillion in the last 18 months, about 20% of their value. (18 months ago gold was just under $700 an ounce. Did you think it was "too expensive" then?)


• October is the traditional month of financial crashes, and we haven't seen anything approaching panic yet. Hope you're not still holding on. Mad man Jim Cramer publicly advised investors to sell their stocks! Watch out for those MainStreamMedia alarmists.


• AIG executives spent almost $500,000 on a retreat at an exclusive resort a week after their bailout by the taxpayers. I'm sure they needed a rest after all they've suffered.


• Banks are failing/being bailed out all over Europe putting the European Monetary Union in jeopardy. Iceland and Pakistan face bankruptcy.


• The LIBOR spread tells us the worst is yet to come.


• Britain's largest banks will be partly nationalized October 8.


• Britain and many other European countries had their worst stock market drops in history.


• Even Brazil and Russia are getting caught in the tsunami.
• Jim Sinclair continues to urge everyone to protect their investments in metals and commodities by taking physical possession of their stock certificates or putting them into the name of the transmaking sure they're in a real custodial account, and not street name at the brokerage.
• The US Mint has stopped production of some gold American Eagles, while the rest are on strict allocation. There's a "shortage" in gold blanks, you see. You understand, don't you? The price of paper (derivative) "gold" has separated significantly from the price of physical (real) gold. The banksters can, and do, easily manipulate the price of paper "gold." [If you don't have any gold or silver yet, you'd better get some as a longer term store of value, along with several months' supply of cash, food, batteries, prescription drugs, seeds, etc. that you might need in a time of turbulence. There's a good reason Bush has brought an entire brigade back from Iraq for stateside domestic patrols. We might even see the introduction of the Amero and the North American Union as the doomed dollar continues to plummet and lose its reserve status.]

As we get a little more distance on last Friday's bailout vote, more evidence accumulates that not only will it not help, but that it may be the biggest heist ever pulled in broad daylight. Millionaires and billionaires are getting their fortunes saved, while the taxpayers are getting the shaft. Did you realize that the large banks, investment banks and brokerages are huge contributors to McCain and Obama? You can be sure that they have also paid well for their access to the Senators and Congressmen who sold us out last week.

One observer said America is like an elephant that's been shot between the eyes. The hunters have made off with the tusks, and the rest of the jungle is fighting over the remains. A sampling of the analysis: BAILOUT: America's Financial Ruin, All Fall Down, Pigs at the Trough and Republicide. Please vote against ANY Congress Critter or Senator who voted for the bailout in November.

What's ahead? Thursday is "D-Day," as Lehman Brothers Credit Default Swaps are auctioned off. Might be the straw that breaks the camel's back. Then, again, it might not. I keep seeing phrases being used about various aspects of our financial crisis like "looking into the abyss," "approaching the brink," "crash," "collapse," "bank failures," and the like. Using another metaphor, how many bullets can we dodge?