- "The modern banking system manufactures
money out of nothing. The process is perhaps the most astounding piece
of sleight of hand that was every invented. Banking was conceived in inequity
and born in sin . Bankers own the earth. Take it away from them but leave
them the power to create money, and with a flick of a pen, they will create
enough money to buy it back again . Take this great power away from them
and all great fortunes like mine will disappear, for then this would be
a better and happier world to live in . But if you want to continue to
be the slaves of bankers and pay the cost of your own slavery, then let
bankers continue to create money and control credit."
-
- --- Sir Josiah Stamp, president
of the Bank of England and the second richest man in Britain in the 1920's,
speaking at the University of Texas in 1927
-
-
- What's that, Bunky? You say your
arthritis is flaring up again? You can't sleep and your back is killing
you? You say you took out a huge home-equity loan last month and
bought silver bars with it at $14 an ounce and now your wife is throwing
a screaming hissy fit because you just explained how the spot price of
silver dropped below $10 just yesterday? You say your neighbor's
dog peed on your leg while he told you how his kid just came back from
Iraq...in a box...and you're afraid that Ahmed is going to nuke your home
town? Is that what's troubling you, Bunky? You think that you
are doomed? Is that what's got you down? Well, I understand.
I can sympathize.
-
- This is no time for real men to be getting
depressed. Perk up. Hold your head up high! Get up off that
couch. Throw those shoulders back. Stand up straight.
Push out that chest. Lift up that chin. Face adversity with
a smile. Be a man! Never give up! Never say die!
Never give up!
-
- HOORAY FOR THE RED, WHITE AND BLUE.....errr....unnhhh....excuse
me. I got a little carried away there.
-
- We have work to do. There is a
silver lining, but finding it isn't going to be pretty.
-
- If your wife already has thrown you out,
try to get a quick property settlement statement executed, with all that
under-water silver allocated to your side of the ledger. Then, if
you can get the house sold quickly and there is anything left over after
paying off that 2nd or 3rd mortgage, go buy some more silver bars.
-
- Didn't you notice that, just a week ago,
the date was 6/6/6? What did you expect to happen? Fluffy bunnies
and manna from heaven?
-
- Now, have I answered the many emailers
who have been wondering just what I think the current market slide means?
It is not bad news unless you sell out and realize a loss. If you
bought silver or gold, you are in the game. Hang in there.
When the tide turns and the runup occurs, you will see why.
-
- In fact, recent huge price drops say
just one thing to me: Hallelujah! Sell the kids and buy silver
and gold! It is the Perfect Storm of a buying opportunity, folks.
All aboard. Don't worry. Be happy. Back up the truck.
Hell, go rent a second truck and back it up, too. You can buy silver
today at two-thirds the price of just a month ago! (Or gold, but
silver is, I think, a better call.)
-
- Always, I have resisted calling the top
or bottom of anything, but this is about as close as I think we are going
to see in a bottom in today's metals markets. True to my word, I
bought more silver at $12, still more at $11 and yet still more just yesterday,
at $10. Yes, I, too, am under water on all those purchases.
You have company, but I'm not accepting any whiners in our upcoming march
downfield, so cheer up.
-
- When does a metals bull market correction
get redefined as a metals bear market? It doesn't. Not these
days. You are witness to the manic death throes of the dollar.
You want to talk doomed? I'll show you doomed. The dollar is
doomed. Both Alan Greenspan and George W. Bush have seen to that.
Doomed, I tell ya. Doomed!
-
- If you must own fiat currency, make it
Swiss francs. Otherwise, once you have taken care of essentials (physical
safety, location, food, protection, etc.), shift any and all dollar-denominated
assets (stocks, bonds, mutual funds, retirement funds) into precious metals
of one sort or another. You may not have noticed, but the dollar
lost one third of its value under the first five and one-half years of
the current Bush Administration. You won't believe what's going to
happen during the next couple of years!
-
- Today, let me turn to some other well-known
market analysts in an attempt to lift your spirits. You will see:
it's not just me saying the things that I say.
-
- Consider the following from Roland Watson,
who writes, in "Staring Into the Abyss":
-
- "The push to trade crude oil in
euros instead of dollars has been gaining momentum in Iran and Venezuela
as well as Russia. This will obviously increase demand for euros and decrease
demand for dollars and send the US Dollar Index down. Moreover, some
of these petroeuros will find their way into the currency reserves of oil
exporting countries. The final question is whether other countries will
follow suit and diversify out of dollars? We know they are already, will
that continue? If Japan is no longer going to keep the Yen down, they won't
be needing all those billions of US dollars they got in exchange for selling
Yen. Moreover, if China is going to decelerate the expansion of the Yuan
money supply (which has been as high as 24% per annum), they will not be
exchanging as many Yuan for US dollars. Assuredly, the central banks of
the world are top heavy in dollars and that amount is certain to decrease
in the years to come."
-
- Did you hear that? Mr. Watson says
all those dollars that overseas countries and banks have been using to
conduct business are going to be coming home. But, you say, the dollar
has strengthened in the midst of all the recent chaos. In fact, the
US dollar may seem to be the only shoal of strength in today's storm-ravaged
world financial system. Well, there is some truth to that, but it
is only temporary and merely illusory.
- List member Tom sends the following,
from Richard Russell's current Dow Theory Letter:
- "Where are the islands of safety?
The initial islands of safety are dollars and T-bills. The ultimate
island of safety is gold. So far, investors are rushing to the dollar
and T-bills (notice, not so much to bonds). The second phase of this
bear market will see a major rush back to gold." As Tom sagely
points out, Richard Russell is the reigning Dean of Wall Street analysts.
When Richard Russell talks, the financial world listens.
-
- Now listen to this extended quote, from
a June 12 unattributed article on Unknown Country's web site entitled "Dollar
on the Edge":
-
- "The Organization for Economic Cooperation
and some elements of the International Monetary Fund are predicting that
the dollar will fall from 35% to 50% to account for the gigantic debt that
the Bush Administration has created by the combination of tax cuts and
spending on the war in Iraq.
-
- "This will result in an increase
in gasoline prices from the region of $3.00 to the region of $6.00, and
will cause all imports to roughly double in price. This will mean that
everything from clothing to cars to many grocery items will shoot up in
price. At this point, the housing market will collapse, and there will
be a wave of bankruptcies...
-
- "A 'run' on the dollar, caused by
panicking foreign holders attempting to sell into non-existent buying,
could cause the dollar to collapse very suddenly, even over a matter of
days. There is evidence that the US is attempting to manage the decline
by purchasing its own debt. As Asian purchasing of US paper declined last
month, the slack was taken up by Caribbean and UK banks that would not
normally have the liquidity to make such purchases. Therefore, they are
acting for a third party, and the only party that would buy dollars when
a loss in value is inevitable is the US Treasury.
-
- "By doing this, the US is hoping
to prevent a sudden collapse of the dollar and the subsequent unwinding
of the US and world economies in a fiscal disaster so profound that it
will eclipse the Great Depression. It can work for a while, but inevitably
if the US becomes the only major customer for its own currency, the dollar
will go into freefall. Where it will stop, and what will happen to the
world economy then, are the looming unknowns that have made world equity
markets so uneasy over the past thirty days, and promise to bring more
trouble in the future."
-
- And just who, do you suppose, the author
means when he says "some elements of the International Monetary Fund"
say that the dollar must go down by 35-50% just to account for Bush's profligate
spending? They are us! Our own officials are warning of an
impending decline in the value of dollars by up to one half. Our
own guys! They should know, for heaven's sake. And, of course,
they do know. Add in the foreign dollars coming home, and that drop
becomes a "freefall."
-
- In other words, boys and girls,
the dollar is doomed, just like I've been telling you! Not only are
all those foreign dollars coming home, but Bush has been shoveling even
more overseas, to add to the upcoming carnage. And, to hide the fact
that foreigners no longer are buying American wooden nickels, America secretly
is buying back its own debt. And what does America use to buy that
debt, you ask? Why, more dollars, of course. After all, it's
only ink on paper to those yahoos in Washington. You don't really
think that they care if every dollar they print dilutes the value of any
dollars you have left, now do you?
-
- And where does America get those dollars,
the creation of which the 1913 Federal Reserve Act gives exclusively unto
that private company owned by the foreign elite, disingenuously named the
Federal Reserve Bank? Why, by issuing still more debt, of course.
Lessee now, issue debt in exchange for dollars to use in buying back that
same debt....hmmmm....and the interest paid means that more debt must be
issued with each round...now factor in an ever-increasing rate of interest,
too.
-
- It sounds almost criminal doesn't it?
Well, that's because it is, of course. But, then, when has a little
thing like criminal behavior stopped the current American regime?
-
- Notice who are the only people making
money on this scheme via the interest paid on the debt now owed to those
foreigners who own that private company given a license to steal nearly
one century ago. And how much have those foreign central bankers
stolen in that time? Nearly 99 cents of every dollar. That's
right. Today's dollar will buy only about a penny's worth of 1913
goods. And that's just the theft of the principle! Imagine
how much interest must have been paid to these thieves down through the
years, for the privilege of their robbing us blind. Is it any wonder
that they seem to own almost everything in sight these days? Well,
almost everything is never enough for these guys. Next comes the
real shearing of the American sheep, last done during Depression I.
-
- It's a wonder that the mafia never got
into this racket. Oh, excuse me - that's right. The same people
(not Italians, for the record) who brought organized crime to America are
the very ones who have been running this racket all along. You don't
think so? As Michael Corleone said to his bride-to-be in The Godfather
(I or II, I forget which): "Now who's being naive?"
-
- Hmmmmm....how long before the upward-spiraling
dollar-creation curve goes parabolic? We're there right now, folks.
Right now. This past month's turnabout has been simply a part of
the death throes of what can be seen only as a doomed currency: the
dollar. Doomed.
-
- But wait - there's more. Lots more,
in fact.
-
- What I like about
- Bob Chapman's International Forecaster
is the fact that each and every 30-page weekly edition is a complete rehash
of everything he ever said before, together with the current week's new
stuff. From his second June 2006 edition:
-
- "If the Fed carries through and
raises interest rates 1/4% in June and 1/4% in August, the dollar index
probably at this time won't break down through the long-term support level
of 80. On the other hand, if the Fed pauses, the professionals in
the bond market will sell Treasuries and drive yields up anyway and the
dollar could break 80. This is not an enviable position. The best avenue
for the Fed is to make the two increases. That would put the US ten-year
Treasury note at 6 7/8% to 7 1/8%. That would slow the economy, would slip
into recession. The Fed would continue to increase money and credit trying
its best to hide what it is doing. That means an inflationary recession,
known as stagflation (stagnation and inflation simultaneously.)"
-
- See what I mean? And that's just one
paragraph from one of thirty pages. It's tough to pull pithy quotes
from Chapman's material because every article he writes is a complete economics
course in itself. This week, Chapman picks up on the IMF mantra and
goes on to say:
-
- "This time they have to deal with
a dollar that has to be depressed by 30% to 50% - probably 50%. In addition,
both government and consumer debt, both of which are at record highs, have
to be serviced at an ever more expensive rate. As housing prices flatten
out and then decline, so will consumer spending that makes up 71% of GDP...As
the dollar depreciates goods and services being imported into the US will
be more expensive. That means a reduction in consumer spending and higher
inflation. As house prices slide, equity is reduced. That means fewer equity
loans and cash outs, which have been adding billions in spending by consumers
- sixty percent of which kept consumers from financial difficulty. We have
had wage and salary increases but they have been limited. Income
rises 3% and inflation rises 10%. That means even less purchasing power
or less discretionary money available for spending."
-
- Chapman, too, shows his understanding
of the confluence of ever-increasing national debt and all those foreign
dollars that have started to march home:
-
- "During the 18 Greenspan years overall
indebtedness has virtually quadrupled from $10.569 trillion to $38,889.3
trillion, while savings out of current income plunged into negative territory...Treasury
and Agency debt will be sold, which in turn will cause interest rates to
rise in the US. As this debt falls in value all those holding it will be
sellers as well. Not only will interest rates rise, but also who among
foreigners will supply $3 billion a day so the US doesn't go bankrupt?
This pressure will also cause the dollar to fall in value. Countries exporting
to the US have been keeping the value of their currencies low by printing
yen or Yuan, buying dollars and then Treasuries. That scenario will end
and the currencies of exporters will rise in value, the dollar will fall,
foreign goods sold in America will cost more and America will have more
unwanted inflation."
-
- And for what does Mr. Chapman see those
repatriated dollars being exchanged? Gold and silver, of course (and
other commodities, too) - America's seed money, built up through the years
by our fathers and their fathers before them, now squandered by the undeserving
rabble that we Americans have become:
-
- "The problem left for foreigners
is what do they do with the physical dollars they are holding? They don't
want to be in US debt or stocks so the only alternative is commodities,
gold and silver. That is because they are a store of value. That is why
they have been buying them and this is why they are rising in value. It's
a flight to quality, a flight to reality. That means the correction you
have just seen in these metals is just another chance to buy, served up
on a platter by elitists who want to destroy our dollar and our economy.
They have been shorting all these metals as they have fallen. They haven't
bought any of their shorts back. This is like a rubber band. Sooner or
later they have to cover."
-
- Finally, Chapman essentially calls this
the bottom in the current correction, then forecasts a huge upswing from
here:
-
- "It is rare that a gold market would
fall 15.3%. The second worst fall was in April 1978, which was 15.3%. After
the fall in April 1978, gold rose 500% in the following 21 months. That
probably will happen again, taking gold to $3,000."
-
- As I have said more than once already
today: the dollar is doomed!
-
- Richard Daughty, known as "The
Mogambo Guru" to legions, is a world-class, Austrian-school economist
who shows profound savvy and analytical skills in his current column by
stating:
-
- "I am 100% sure that we are going
to get price inflation. Lots of it. I am so sure, so very sure, so
very, very sure that price inflation is coming because it has always, always,
always followed monetary inflation."
-
- Now, that may not sound especially enlightened
or profound to many, but ask yourself the last time you heard anything
you actually understood from a government economist or a central banker.
This ain't rocket science, boys and girls. Essentially, all of economics
can be summed up in one phrase: "There's no such thing as a
free lunch." You'll be hearing that a lot as we descend into
Depression II, along with another golden oldie from Depression I:
"Brother, can you spare a dime?" It will have to be restated
in dog dollars, of course, to something like: "Brother, can
you spare a Ten Dollar bill?"
-
- The way-erudite Mogambo goes on to note:
-
- "When you have, like we do right
freaking now, lots and lots and lots of growth in the global monetary base,
especially after whole decades of it, you eventually run out of bubbles
in the stock market, bubbles in the bond market, bubbles in the size, scope
and cost of government, and bubbles in the housing market. That's when
you finally get around to bubbles in commodities. Gold is a commodity,
AND it is a store of wealth....as price inflation heats up and up, as the
value of the dollar goes down and down, gold will go up and up, just like
it has all the other times in history when somebody's stupid government
caused too much money to be created. And especially those times when the
"too much money" created is not just by literally printing up
cash with paper and ink, but creating the money from debt! Hahaha!
But now, this one time in history, you think gold is going to go down as
a result? Hahahaha!"
-
- Do you see a theme developing here?
Paper Bad, Metal Good, perhaps?
-
- Still not convinced? Boy, you are
a tough one, if so. As regular followers of this space know, I am
a self-confessed Silver Loon. I think there is a very real danger
of gold once again being confiscated by our government before it finally
caves in and allows the price of gold to really take off, while it already
has tipped us off that silver will not share gold's fate. Besides,
I believe the fundamentals of silver really call for it to accelerate past
gold, in any event. That brings us to Ted Butler, who believes that
he invented the field of silver analysis and commentary.
-
- I have had my differences with Ted Butler,
"independent" house analyst for Investment Rarities, and consider
him generally to be a self-absorbed buffoon of the first order. You
see, when I first released "Peak Silver," Butler got its republication
by at least one major financial web site blocked by falsely claiming I
had plagiarized the concept of above-ground silver being scarcer than gold
from him. (That's why it is called a precious metal, of course, and
why its price has been accelerating faster than that of gold, characteristics
that have escaped the attention of very few analysts.) I could
have sued him for that.
-
- However, when Butler knuckles down and
gets over himself, he can be quite compelling, even untouchable.
This is one of those times. On June 12, in an essay entitled "Silver
Default Looming?," Butler clearly puts the lie to the recent silver
price plunge by calling "the current situation in silver...a crime
in progress." Butler has done a first-rate job in deducing that,
perhaps, a single rogue trader "is forcing the market sharply and
intentionally lower by building on an already heavily concentrated short
position as is clearly evident from the CFTC's own published data."
-
- Here is an extended excerpt from Butler's
report, the length of which is necessary to develop the real flavor of
his assertion:
-
- "While the dealer community, as
a whole, aggressively bought back and covered short positions on the price
decline in silver (as expected), the very largest trader(s) actually increased
short positions on the decline. This is unprecedented...The largest
trader(s) have been selling whenever the market is most illiquid (on the
electronic Access market on off-hours and regular session openings and
closings) to cause the biggest price declines. It is predatory pricing
at its most extreme, designed to cause liquidation from leveraged long
position holders. Unfortunately, it has had the intended effect, as leveraged
longs have been flushed from the market. Needless to say, this violates
commodity law...
-
-
- "4 or less largest traders have
more than doubled their concentrated short position relative to the next
4 largest traders during this time period. (Special thanks to Carl Loeb
for the graphics...)
-
- "The 4 or less largest traders are
now net short the equivalent of 187,625,000 ounces, or 37,525 futures contracts,
an incredible 86% of the total net commercial short position. This is the
highest percentage in history...
-
- "I am now convinced, from studying
the data, that anywhere from 100 to 125 million is held by just one trader.
It is looking more likely that this could be a rogue trader, selling more
in order to buy time, although he's probably already in too deep...(R)ogue
traders from the Peoples Republic of China have emerged in both oil and
copper in the past couple of years. Why not silver?...
-
- "Given the current concentration
of a short position well in excess of all COMEX inventories (certainly
not all of which is available for delivery), the risk of a default in COMEX
silver by the largest and most concentrated trader looms large. (T)his
default potential is the most bullish development possible for the price
of silver and those holding real silver positions."
-
-
- Pretty strong stuff - and more than just
a little warranted by the facts, as well. Let's take a look at Mr.
Loeb's chart of silver short concentrations again, only this time alongside
a chart of the price of silver during the past two months. What is
interesting about these two charts is that their graphed inflection points
occur in tandem:
-
-
-
-
-
- In mid April, and not for the first
time during the current silver bull market, Butler's mysterious "rogue
trader" embarks upon a truly serious selling campaign. Within
a week, silver's spot price starts moving lower, stopping at $12, but recovering
fully after another week. Again, in early May, the "rogue trader"
sets a record for being short. Within a week, the price of silver
is falling again, this time slipping under $13. Finally, around the
first of June, our rogue trader really pulls out all the stops, accumulating
an all-time record short position, and silver drops a week later, once
again, this time bottoming out beneath $10 after another week. Coincidence?
Do you believe in coincidence?
-
- Butler is absolutely correct. Just
a single unidentified trader or two is/are moving the entire market lower
by accumulating record short positions which he/it can never fill; enough
to overwhelm the buying by all the other major traders. The recent
decline in the price of silver (and other commodities) is an orchestrated
(and grossly illegal) show not even remotely related to real market pressures.
-
- Butler claims to have written the CFTC
(Commodity Futures Trading Commission), demanding that it require this
trader to prove it possesses the silver to fill the short orders it has
written when they expire (impossible, as it is a total much larger than
all the silver available for such delivery) or, in the alternative, to
post a bond equal to the total market value of the shorts now possessed
(equally unlikely). The government won't do this, of course, though
it moved against, and bankrupted, the Hunt Brothers a quarter century ago
when they tried to corner the silver market, via the simple expedient of
increasing the reserve requirement for leveraged positions.
-
- I believe that the same people running
the government, you see, likely are the ones writing the shorts, though
Butler speculates that it could be the Chinese at work. If it were
just silver being manipulated, I might see it being China, but the same
thing is happening across a broad swath of commodities, all while the regular
stock market's Plunge Protection Team has been especially active in averting
the same disaster befalling the rest of the world's stock exchanges (they
don't have plunge protection teams, you see, to protect their moneyed interests
at the expense of mere mortals like you and I).
-
- Here's the best part: unless you
are a market maker (broker, commodity house or the like), you are exposed
to no danger. Should a default occur, they will take it in the shorts
(pun intended), not you. You will be sitting there, admiring your
shiny little stash of silver (or gold or whatever). If the market
makers are the culprits, themselves, as unidentified straw men for government,
ours or another, then they will cover at some point. Again, you will
be sitting there, admiring your shiny little stash of silver. In
either eventuality, where does the price of silver go? All together
now: To the Moon, Alice...to the Moon!
-
- Meanwhile, what happens to the dollar?
What is the past tense of doomed?
-
-
- As always, Jim Sinclair's MineSet web
site this week carries several interesting charts, among them the three
reproduced below.
-
-
-
-
- The first shows the path of the dollar
during the past four months. Note that the dollar began its swan
dive in earnest at about the beginning of April. When did it abruptly
turn around? Why, when it got rescued by all the nefarious elements
mentioned above, in mid May. In fact, since early June the dollar
has been on a literal tear, though its fundamentals, as recounted above,
get weaker every day. And how did the dollar get rescued? Why,
by what has become the new old-fashioned way, of course: governmental
rigging. Buying stock futures long and selling commodity futures
short. Your tax dollars at work.
-
-
-
-
-
- Meanwhile, look at the progress of silver's
price during the same period of time. Silver's rise became parabolic
in mid April, just as the market rigging began in real earnest, then got
stopped dead in its tracks. Finally, it fell out of bed two weeks
ago, just as Mr. Butler's "rogue trader" began to set new world
records for market rigging. Notice that the slope of the fitted downward
curve for silver matches almost exactly the upward ascent of the dollar,
which previously looked like a duplicate of silver's current path.
How much longer can this go on? Despite the old wag about how the
market can stay irrational longer than you can stay liquid, not long, rest
assured.
-
-
-
-
- Now let's look at gold's chart, which
is a more faithful mirror image of the dollar's movement, though for the
same reasons as silver.
-
- How much longer? Not much.
Before much longer, there literally will not be enough dollars in the world
to throw into the breach that is being widened by our own government.
Illegally, too, I might add. Let me say it one last time: The
dollar is doomed! If you still aren't convinced, then you simply
aren't paying attention.
-
- Mr. Sinclair also includes the following
reassuring wisdom on his site this week:
-
- The direction of the price of gold is
all in the US dollar.
- The magnitude of that direction is in
the hands of mad men and women with black boxes and $7 trillion in trading
capital.
- These people are the original "Bulls
in a China Shop" that break everything coming in and break everything
again when leaving.
- What we look for is higher lows and
higher highs as the market lunatics enter and exit.
- All technical damage requires technical
repair.
- Technical repair will occur.
- Dig your hole.
- Drag your rock over the top.
- Peek out once a week.
- Soon you will be happy.
-
- No, it isn't exactly poetry, but it should
be music to your ears.
-
- Once again, I do these financial pieces
for two reasons: First, it is critical that those in the "Patriot
Movement" do everything they can to protect their families during
the upcoming unpleasantness, even if it means our buying and putting away
only a silver dollar or two each and every payday. Second, I hope
to entice the unsuspecting back to my lair (www.ConspiracyPenPal.com),
where I then can have my way with their politically-correct belief systems.
Do your part to help make it a better world: send the unsuspecting
a copy of this newsletter today.
-
- New America. An idea whose time
has come.
-
-
- My name is Edgar J. Steele. Thanks
for listening. Please visit my web site, www.ConspiracyPenPal.com,
for other messages just like this one.
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