April 18, 2021 

Gold Enters Major Bull Market


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 By bluejay

10/15/2008  10:36AM

Gold $843.00 up $8.40
Silver $10.39 down $0.57

The government continues to be in a franctic effort to save the present failing financial system that they, themselves, permitted to befall upon us.

According to the following article by Darryl Schoon presented on Kitco.com today we have all been used as pawns, suckers, for the sake of private bankers in their quest for more and more until they broke their own rigged game.

Now, to satisfy governement and our elected officials they command us by directives to bail them out at our expense. This scheme of trickery clearly indicates, in one form or another, that the government present and past(Greenspan, Rubin, Paulson, Bernanke etc.) are all on the bankers payroll to financially deceive us.

Losers in the Casino of Paper Money

By Darryl Robert Schoon
Oct 15 2008 10:43AM


When the Dow soared 936 points on October 13th, its 11.1 % rise was its best percentage advance since 1933—an advance which had occurred during the Great Depression.

Five years after its 1933 historic advance, the Dow Industrials were down 90 % from its highs and in 1953, the Dow was still down 75 %. When speculative bubbles collapse, the losses are staggering and prolonged.

The 936 point rally on Monday will not be the only rally in this falling market. There will be more. There will be also more lows. We have not yet seen the bottom. We’re not even close. That’s not the fat lady singing that you hear. It’s the sound of your stock broker throwing up.


I know exactly what investors felt after Monday’s rally. I felt the same false optimism when the Banker’s Bailout Bill was initially rejected. Previously, I had cynically predicted the Bailout Bill would pass and when it was rejected, I was elated.

My elation, however, was premature. In the end, my cynicism proved correct. The $700 billion bank bailout bill was approved and signed within the week as I had predicted. The capitulation of public government to private bankers was now complete.

In 1999, a $300 million lobbying effort by banks and insurance companies had overturned the 1933 Glass-Steagall Act, an act specifically designed to prevent another Great Depression.

Now, because of its repeal, banks and insurance companies were again allowed to bet the savings of Americans in their drive for profit without regard for consequence; and not surprisingly, in less than a decade after its repeal, America is again on the verge of another depression.

By their repeal of the Glass-Steagall Act, the Democrats and Republicans sold out America; and, now in three weeks, on November 4th, Americans will again go to the polls and again vote for the same parties and politicians that sold them out.


In advanced, sic failing, democracies such as America, both political parties are owned by the bankers who control the government and the nation by controlling the flow of credit. Although the will of the American electorate was overwhelming opposed to the bank bailout bill, the President, congressional leaders of both houses and both parties, and the two presidential candidates were united in their support of the bailout bill and were consequently united in their opposition to the will of the people.

Democracy, n. Government of the sheep, by the shepherds, for the wolves.

L.A. Rollins, The Devil's Lexicon.


Our present economy is best understood as a casino. In the casino, house chips in varying denominations, e.g. dollars, euros, pounds, pesetas, pesos, yuan, yen, krona, drachma, won, etc have been substituted for gold and silver.

This is because the casino is run solely for the profit of the bankers; and through control and issuance of their paper chips, the bankers are able to control much of what happens on the casino floor.

The bankers make sure that the governments who issue the paper chips do so at the direction of central banks. Through their influence over the central banks, the bankers control the flow of chips without which the patrons cannot play.

Question: Who are the patrons and what role do they play in the casino?

Answer: The patrons are the producers, savers, and entrepreneurs without whose activities the casino would come to a halt. In the casino, they are known as marks, suckers who provide the on-going profits of the casino.

The casino’s hidden skim: Through the constant issuance of paper chips, governments insure the value of previously issued paper chips will fall thereby forcing patrons to gamble their earnings at the casino tables in order to preserve their paper savings and to perhaps gain by so doing.

The casino’s hidden advantage; While the casino patrons, sic marks, can only bet their earnings and savings on a 1:1 basis, in the private gaming rooms upstairs, the casino owners are able to draw on house credit and leverage their bets by 20, 30, or even 40 times their original sum.

What went wrong: After 1999, the casino owners began betting the savings of the downstairs patrons (bank savings deposits and insurance investments allowed by the repeal of Glass-Steagall) and bet this money on subprime CDOs, credit-default swaps, derivatives, emerging market equities, commodities, etc. and used house credit to leverage their bets far beyond the original amounts.

At first, winnings skyrocketed driven by the vast amounts of leveraged money available from the repeal of Glass-Steagall, providing even more incentive for the casino owners to borrow and wager even more. But, in 2007, the luck of the house changed

Even in rigged games, if the sums bet are large enough, the losses can be staggering and can break the bank, sic the house/casino. With bets leveraged 40:1, a fall of only 2.5 % completely wipes out the bettor. A fall of 100 % takes out not only the bettor but the enormous amount of credit extended to the bettor by the house.

Some of the losses incurred by subprime CDOs are as high as 90 %. The losses on Lehman’s bonds are over 90 %. The reason why financial markets are in such trouble is the trillions of dollars in credit extended by the banks is now gone and, as a consequence, almost all banks are bankrupt.

With the casino now broke, governments have announced that they will guarantee the value of all paper chips issued by the casino. Governments do not want bettors to cash in their paper chips because they know the banks are broke and do not have the cash to cover either their bets and/or the chips they issued.

Now the casino patrons are being forced to subsidize the casino while their governments are frantically issuing more chips hoping that by so doing the now terrified patrons will return to the now empty tables and continue to bet what little they have left.

Good luck.


The failure of our credit based capital markets and our democratic process is symptomatic of the changes taking place on our planet. The bankers’ system of paper money has so undermined all commercial activity along with our political institutions that the flaws of both are now obvious to all.

The bankers’ system of credit and paper money began in England in 1694, was moved to the US in 1913 and from there spread to the rest of the world, much like STDs. Debt and worthless money like sexually transmitted diseases are unintended results of initially pleasurable activity, in this case, economic expansion.

Unfortunately, there is no penicillin that can cure our ailing economy; and the ones responsible, the bankers, are mistakenly hoped by many to have the answers. They don’t. They made the problems and will only make them worse. Wait and see.

At the end of eras, institutions are found incapable of providing the solutions and answers they once did. Capitalism, which drove economic expansion for 250 years, is now stumbling and has fallen on its own sword, debt, which it once used to enslave others; and, democracy, previously the hope of mankind has become a caricature of the hope it once promised.


The end of eras are always succeeded by the beginning of another. Endings, however, are meant to clear away the old in order to make way for the new. We are seeing the collapse of that which is familiar. It has been an extraordinary era and its ending will be no less so.

Buckminster Fuller in his introduction to The Critical Path in 1981 wrote:

Twilight of the
World’s Power

Humanity is moving ever deeper into crisis—a crisis without precedent.

First, it is a crisis brought about by cosmic evolution, irrevocably intent upon completely transforming omnidisintegrated humanity from a complex of around-the-world, remotely deployed-from-one-another, differently colored, differently credoed, differently cultured, differently communicating, and differently competing entities into a complete integrated, comprehensively interconsiderate, harmonious whole.

Second, we are in an unprecedented crisis because cosmic evolution is also irrevocably intent upon making omni-integrated humanity omnisuccessful, able to live sustainingly at an unprecedentedly higher standard of living for all Earthians than has ever been experienced by any;

...that humanity now—for the first time in history—has the realistic opportunity to help evolution do what it is inexorably intent on doing—converting all humanity into one harmonious world family and making that family sustainingly, economically successful.

In 1981, Fuller predicted our present crisis. He also predicted its successful outcome. We are now in the crisis he predicted. You will not survive by hanging onto the old. You will survive by letting go. Buy gold, buy silver, have faith. Better times are coming.

Darryl Robert Schoon
blog www.posdev.net/pdn/index.php?option=com_myblog&blogger=drs&Itemid=81
 By bluejay

10/14/2008  1:34PM

Last on gold is $834.60.

The following is a report from David Icke's newsletter from October 12, 2008.

Mr. Icke's thoughts might freighten you some but they are well worth consideration.

The David Icke Newsletter, October 12th 2008



Hello all ...

Well, well, well. What a couple of weeks. It is a strange and surreal feeling to watch your books of nearly two decades unfold before you on the TV screen and I can confirm that it gives you no satisfaction at all.

'I told you so' is far less the reaction than 'What are we going to do about it?'

I have been banging out year after the year the two key coordinates that we need to understand to get a fix on what is truly happening in the world. These are (a) where those in control wish to take us and (b) the methods they use to get us there.

Put the two together and a world of apparent confusion, chaos and complexity takes on crystal clarity.

This is the structure of global tyranny that the bloodline families and their masters have been working for thousands of years to install:

There may be a few other elements, like a Middle Eastern Union, but this is basically it. In the end even the nation states would go as units of government to be replaced by smaller regions to disperse any unified response to the edifice of power above.

The main technique that is used to advance this agenda is what I call Problem-Reaction-Solution, which goes like this: Create a problem covertly and blame someone or something else for what you have secretly done; tell the people through an unquestioning and pathetic mainstream media the version of the problem you want the masses to believe; then openly offer, through changes in society, the 'solution' to the problem you have yourself created. This 'solution' is always the installation of more centralised control.

Take these simple coordinates and apply them to the events of the last few days and weeks and everything morphs into focus.

The banking 'crash' has been coldly designed to create the 'problem' that can lead to the 'solution' - a massive centralisation of power in the 'private' and 'government' banking systems, both of which are owned and controlled by the same network of families.

Look at that chart above and you will see 'World Central Bank', the body the Elite want to impose to control the entire global financial system. As a result of the economic turmoil, we are now seeing this being proposed to 'solve the problem' of the banking chaos and to 'make sure it never happens again'.

They have not yet, to my knowledge, used the term 'World Central Bank', but that is precisely what they mean when they talk about a new structure to police the global banking system. This theme was summed up in a headline in the UK Daily Telegraph: Global financial crisis: does the world need a new banking 'policeman'?

How appropriate that Britain's Mr. Sleeze, Peter Mandelson, the man behind Tony Blair, was brought back into government this week by Prime Minister Gordon Brown as 'Secretary of State for Business, Enterprise and Regulatory Reform and President of the Board of Trade'. Note: Secretary of State for 'Regulatory Reform'.

He's been brought back at just the right moment to secure UK support for a global body to control the banking and financial system. He is not an elected Member of Parliament, but that's no problem in a 'democracy' like Britain. Instead he's been made a 'life peer' which secures him a seat in the unelected House of Lords and thus qualifies him to join the government.

Mandelson, the son of the advertising manager at The Jewish Chronicle, came back into government after serving four years as Trade Commissioner (unelected bureaucrat) with the European fascist dictatorship, sorry 'Union'. His two previous roles in government ended with him being forced to resign over allegations of corruption.

This Illuminati gofer was installed just in time to deliver his 'solution' to the banking crisis: a new 'machinery of global economic governance', as he calls it. Gordon Brown himself said that global regulation was 'urgently in need of modernisation and reform' and the head of the International Monetary Fund has also called for a global organisation to police the financial system. We will see this theme constantly promoted.

As the Telegraph article said:

'So, as the world's central bankers gather this week in Washington DC for an IMF-World Bank conference to discuss the crisis, the big question they face is whether it is time to establish a global economic “policeman” to ensure the crash of 2008 can never be repeated.'

Classic Problem-Reaction-Solution.

But the banking crash has many other elements. These people rarely, if ever, do anything for just one reason. This is why connecting the dots across a vast series of subjects and events is so important to exposing the game.

Another coordinate that I have been stressing since around 1997 is China's role in all of this. China is a massive centre for the conspiracy and in so many ways mirrors the global society these sick people seek to impose.

China has been incubating for hundreds of years being prepared for its role as a key player in these times we are now experiencing. I was told by an insider many years ago to watch for the emergence of China as an economic and military power because then the action would really start.

Well, here we are.

China's 'economic miracle', based on slave labour that undercuts production costs across the world, has produced a mountain of money which has been used to buy foreign debt. It holds in excess of one trillion dollars worth of US Treasury bonds (debt) and debt of the US government mortgage lenders, Fannie Mae and Freddie Mac, recently saved from collapse by political intervention.

But even this trillion dollars doesn't nearly tell the full story because it doesn't include Chinese investment in private US corporations and the use by the Chinese government of third parties to hide the extent of its holdings.

Put it all together and China is gaining ever more control of the US economy and it can use this power to destroy what is left of the American financial system. If it sells its massive dollar holdings the value of the 'mighty dollar' will plummet and if its debt is not repaid it can claim American assets, yes government assets, just as a bank forecloses on your house if you don't make the payments.

And the United States is now ten trillion dollars in debt with more being added by the minute. The 'superpower' is essentially bankrupt and at the mercy of its overseas creditors - especially China.

Given that the plan is for a war involving North America, Europe, Russia and China this takes on even greater significance, as does the involvement in the trillion-dollar (open chequebook) 'bail out' of US Treasury Secretary Henry 'Hank' Paulson. Who is picking up that debt?

On April 3rd this year, investigative reporter, Wayne Madsen (waynemadsenreport.com), highlighted a secret document detailing the sequence of events leading to martial law and a possible war. Madsen's report said:

'WMR has learned from knowledgeable sources within the US financial community that an alarming confidential and limited distribution document is circulating among senior members of Congress and their senior staff members that is warning of a bleak future for the United States if it does not quickly get its financial house in order. House Speaker Nancy Pelosi is among those who have reportedly read the document.

The document is being called the "C & R" document because it reportedly states that if the United States defaults on loans and debt underwriting from China, Japan, and Russia, all of which are propping up the United States government financially, and the United States unilaterally cancels the debts, America can expect a war that will have disastrous results for the United States and the world. "Conflict" is the "C word" in the document.

The other scenario is that the federal government will be forced to drastically raise taxes in order to pay off debts to foreign countries to the point that the American people will react with a popular revolution against the government. "Revolution" is the document's "R word”.'

They sure as hell know that a war is coming, as I have highlighted myself so many times. See my newsletter, The Policeman Was Right ... Only 'The War' Is Still To Come in the subscriber newsletter archive.

Paulson: China's man?

Treasury Secretary Henry Paulson has major connections to China and he is also the bankers' representative in government. Until 2006, Henry Paulson was the head of Goldman Sachs, a major influence in the 'sub-prime' mortgage debacle that is the official excuse for the 'Credit Crunch'. Now, as Treasury Secretary, he is handing out trillions to the banking system he represents and no doubt will return to when he leaves office. He has even appointed another former Goldman Sachs executive, Neel Kashkari, to decide on who gets the money. For 'Goldman Sachs', by the way, read 'Rothschild'.

Neel Kashkari, or 'Cash Carry' as he has now become.

Paulson is extremely close to the Chinese elite and, according to the Daily Telegraph, has visited China more than 70 times. All these connected facts are not coincidences. There is a plan unfolding here and it is happening on so many fronts.

This week the Bank of China announced it is buying a stake in the French bank LCF Rothschild and it says the two will develop private banking and asset-management services for China's newly rich. Oh, I think there is just a little more to it than that.

China and other foreign interests increasingly own America and, as I have been saying for ten years or more, the idea has been to use America to destroy America, both militarily and financially.

The United States has long been employed to fire the bullets, financially and literally, but the gun is being loaded elsewhere, mostly in Europe. America has been brought to its knees through war and financial mayhem and that is exactly what was meant to happen.

Why? Look at that global government structure again. A world government, world army and world central bank cannot have total control if there is a 'superpower' with the political, military and economic strength to say 'no' to its decisions. America had to be destroyed and that is what Boy Bush was installed to secure by saying and signing anything he is told to.

Unfortunately, those programmed by the vision of 'John Wayne America', Democrat voters as well as Republicans, have been too blind to see what to some has been so blatant.

American financial and military power

Just before I left America this week, I heard how those opposing the trillion dollar (open chequebook) 'bail out' of US banks were threatened with martial law if the bill did not go through. US Representative Brad Sherman of California said:

'... Many of us were told in private conversations that if we voted against this bill on Monday that the sky would fall, the market would drop two or three thousand points the first day and a couple of thousand on the second day, and a few members were even told that there would be martial law in America if we voted no.'

The structure is now in place for the military to police the streets of America when martial law is declared and then a whole list of presidential executive orders are triggered into action that will mean the very fascist dictatorship that some of us have long warned about. The same is planned in Britain and elsewhere when the people take to the streets in protest at what is happening.

Then there is the world army. I said in And The Truth Shall Set You Free, written in 1994, that the world army would be a fusion of the UN 'peacekeeping' forces and NATO. This week the Russian Foreign Minister Sergei Lavrov revealed his 'shock' that the UN and NATO had secretly signed a cooperation agreement without all UN member states reading the draft.

This agreement declared that the two secretariats would work together with the common aim of 'maintaining international security on the basis of the UN Charter and certain international directives'. Now, er, what could that mean?

Under the radar, at least the mainstream radar, so much has been going on while the masses watched the latest game or soap. How frustrating it has been to see the warnings ignored and ridiculed as today became ever closer.

Go to sleeeeep ... stay asleeeeep ...

This comatose public indifference has allowed the structures to be prepared to play out the agenda so fast once the button was pressed and the veil lifted. There was always going to be a time when all that has been hidden had to break the surface as the 'new world' was installed as a tranformation of global society.

It has been like gathering an army under cover of darkness and once dawn breaks the targets are attacked from all directions at the same time. 'Where did all this come from?', the targets cry, but it didn't 'come' out of nowhere in that instant. It was prepared long before the strike came - while the people were sleeping.

The attack, in terms of the one now facing Planet Earth, has been in the making for thousands of years. The people have been unaware of this and, even when the warnings and supporting information came over the last 20 years, most either laughed or looked the other way.

Now the chickens are coming home and they are wearing jackboots.

Are we going to grasp the opportunity to act now that the game is being revealed by daily experience? Or is the human race so detached from consciousness that it will still close it's eyes or freeze with fear?

We'll soon see.

I sit here now utterly exhausted after five weeks of almost non-stop travelling and talking in Europe and then America. It is amazing how hard it hits you once you stop. But come Monday morning, and a couple of nights sleep, off we go again with renewed efforts. This is no time to tire, no time to give up on freedom in the face of the challeges we are now facing by the day.

Quite the opposite.

Yes, this is a time of challenge, but it is also offers a wonderful opportunity - IF enough backsides and sofas are willing to part company.

I'll address just that point next week.


'A society whose citizens refuse to see and investigate the facts, who refuse to believe that their government and their media will routinely lie to them and fabricate a reality contrary to verifiable facts, is a society that chooses and deserves the Police State Dictatorship it's going to get.'
 By bluejay

10/14/2008  12:12PM

The last on gold is $841.60.

A few comments from Jim Sinclair today:

Iceland's collapse is no small event. It is not something meaningless that cannot be applied to a broke giant like the USA whose debt to non US entities are enormous problem from banks to government.

This morning the stock market in Iceland, after a three day stop, opened up down 77%. The Krona is in the tank.

The very few in Iceland that survived their crisis are those that, against all advice from every corner, held gold. They are sound and solvent. When this happens to a country their distribution means melts down. Then it is a rush to buy everything you will need for a minimum of 90 days, maybe much longer.
 By bluejay

10/14/2008  11:46AM

Last on gold is $838.60.
Dow Jones Averages 9,328.11

Sometime in July a comment was made to the effect that if the DOW broke and stayed below 10,700 that we were in a bear market and that if 10,000 gave way, Watch Out!

Two days ago or so the DOW crashed to approximately 7800. Today and yesterday, it has smartly rebounded with an intra high of 9,794.37 hours ago and a last of 9,328.11.

Where do we go from here? Expect the 10,000 level to be formidable with an outside chance of it being temprorily breached.

The DOW will be in an extremely wide trading range from approximately 10,000 down to 8,000 for weeks ahead with the outside chance of 7,800 failing. If 7,800 fails to hold for whatever reason, it will be the end of the great bull market and our lives will probably never be the same again.

On the other side of the coin, if the government continues to flood the market with more dollars the inflation effect will settle into the general averages and it will eventually start rising again. Even home prices will start moving up as hyperinflation asserts its ugly head.

The very IMPORTANT thing you should never forget concerning home prices or the stock market is, the realization of your wealth will always be determined by how many ounces of gold you can exchange these items for, NOT HOW MANY FIAT DOLLARS THEY REPRESENT.

Don't let your wealth be confused with the depreciating purchasing power of our current fiat system.

The best plan for retaining your wealth in the future is by holding gold and to some extent, silver. Giving your money to the bankers even with all the recent governement guarantees is still risky business and does not carry any guarantee to protect you against wealth reduction.

Interest yield and guarantees are no more than a lure to steal your wealth through monetary expansion.

Holding physical gold over the longer term will protect you and your families better than any federal bank guarantee.

The day will come when the federal government will tell you what their guarantee actually represents and people will be shocked.

Don't be a sucker.
 By bluejay

10/13/2008  10:23PM

Lasdt on gold is $844.20

The following article is disgraceful and shocking. These men should all be put into confinement with the rest of the nation's criminals.

Financial Mess Was Silenced by Greenspan, Rubin and Summers

By Katrina vanden Heuvel, TheNation.com. Posted October 11, 2008.

A sad tale emerges of willfully arrogant behavior designed to undermine a wise woman's good judgment.

"Break the Glass" was the code-name high-level Treasury Department figures gave the $700 billion bailout; it was to be used only as a last-resort measure.

Now millions have been sprayed and damaged by broken glass.

But more than a decade ago, a woman you're likely never to have heard of, Brooksley Born, head of the Commodity Futures Trading Commission -- a federal agency that regulates options and futures trading -- was the oracle whose warnings about the dangerous boom in derivatives trading just might have averted the calamitous bust now engulfing the US and global markets. Instead she was met with scorn, condescension and outright anger by former Federal Reserve Chair Alan Greenspan, former Treasury Secretary Robert Rubin and his deputy Lawrence Summers. In fact, Greenspan, the man some affectionately called "The Oracle," spent his political capital cheerleading these disastrous financial instruments.

On Thursday, the New York Times ran a masterful and revealing front page article exposing the culpability of Greenspan, Rubin and Summers for the era of dangerous turbulence we live in.

What these "three marketeers" -- as they were called in a 1999 Time magazine cover story -- were adept at was peddling the timebombs at the heart of this complex crisis: exotic and opaque financial instruments known as derivatives -- contracts intended to hedge against risk and whose values are derived from underlying assets. To cut to the quick, Greenspan, Rubin and Summers opposed regulating them. "Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury," recalls Alan Blinder, a former Federal Reserve board member and economist at Princeton University, in the Times article.

In 1997, Brooksley Born warned in congressional testimony that unregulated trading in derivatives could "threaten our regulated markets or, indeed, our economy without any federal agency knowing about it." Born called for greater transparency -- disclosure of trades and reserves as a buffer against losses.

Instead of heeding this oracle's warnings, Greenspan, Rubin & Summers rushed to silence her. As the Times story reveals, Born's wise warnings "incited fierce opposition" from Greenspan and Rubin who "concluded that merely discussing new rules threatened the derivatives market." Greenspan deployed condescension and told Born she didn't know what she doing and she'd cause a financial crisis. (A senior Commission director who worked with Born suggests that Greenspan and the guys didn't like her independence. " Brooksley was this woman who was not playing tennis with these guys and not having lunch with these guys. There was a little bit of the feeling that this woman was not of Wall Street.")

In early 1998, according to the Times story, one of the guys, Larry Summers, called Born to "chastise her for taking steps he said would lead to a financial crisis. But Born kept at it, unwilling to let arrogant men undermine her good judgment. But it got tougher out there. In June 1998, Greenspan, Rubin and the then head of the SEC, Arthur Levitt, Jr., called on Congress "to prevent Ms. Born from acting until more senior regulators developed their own recommendations." (Levitt now says he regrets that decision.) Months later, the huge hedge fund Long Term Capital Management nearly collapsed -- confirming some of Born's warnings. (Bets on derivatives were a key reason.)

"Despite that event," the Times reports, " Congress (apparently as a result of Greenspan & Summer's urging, influence-peddling and pressure) "froze" Born's Commissions' regulatory authority. The next year, Born left as head of the Commission. Born did not talk to the Times for their article.

What emerges is a story of reckless, willful and arrogant action and behavior designed to undermine a wise woman's good judgment. The three marketeers' disdain for modest regulation of new and risky financial instruments reveals a faith-based fundamentalist approach to the management of markets and risk. If there is any accountability left in our system, Greenspan, Rubin and Summers should not be telling anyone how to run anything. Instead, Barack Obama might do well to bring back Brooksley Born and promote to his team economists who haven't contributed to the ugly mess we're in.
 By bluejay

10/13/2008  4:34PM

Last on gold is $834.30.

The following link is to a recent video interview of Mr. Jim Rogers. It is quite apparent that the interviewers are quite student-like with Jim being the professor.


Keep reading the truth from Mr. Jim Sinclair at http://www.jsmineset.com while continuing to educate yourself.
 By bluejay

10/11/2008  1:35PM

Last on gold is $849.90

The following is an excerpt from Casey Research in Canada this morning:

Wrote Marketwatch.com: “Finance ministers and central bankers from the Group of Seven nations meeting Friday in Washington are expected to begin hammering out a round of coordinated, uniform measures designed to salvage the financial sector and encourage banks to resume providing loans to each other.”

Concurrently, Bloomberg reported that "Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they 'rewrite the rules of international finance.'

"Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are 'talking about a new Bretton Woods'."

We are speechless.
 By bluejay

10/10/2008  7:14PM

Gold $849.90 off $62.50
Silver $10.17 off $ 1.90
Gold/XAU Ratio 8.45
Gold/Silver Ratio 83.57

The gold cartel showed no mercy today in their unrelenting attack of gold on the COMEX paper Exchange in NY. At one point, the metal was in the general vicinity of the $825 area before it pushed higher to close at $849.90, off $62.50. Silver was no better, closing down $1.90 at $10.17.

The central bank and the Treasury's interference with what used to be free markets and against the people's will to hedge themselves for the coming hyperinflation in this country is no less than crude gestopo tactics with absolutely no oversight by the Congress or the Senate. One reason for the 16-1 being in its current tenuous financial shape is that these same people along with their predecessors have been suppressing gold's price for over 100 years because of its threat to their imperfect fiat currency system. Gold would be selling near $2500 today if they all had stayed at home and played with their gardens.

All this bashing by the powers to be was a planned set-up event, which they shared ahead of time with their bullion bankers as well as some commerical bankers(inside information), for announcements this weekend from the "Big Seven." Expect more COMEX paper pressure in the first part of next week as the western central bankers will glee from their "nothing" summit accomplishments along with a manufactured lower price in paper gold just to make them look good and of course, very smart. What a joke!

The following is an outstanding post from Jim Sinclair tonight:

Posted On: Friday, October 10, 2008, 7:06:00 PM EST

The Frying Pan or the Fire?

Author: Jim Sinclair

Dear Friends,

Stay the course or jump directly into the fire! That's the soundest advice I can give you in this highly volatile market period. I told you that you would see volatility in gold beyond your wildest imagination. That statement usually went along with my warning that by margining anything gold you were putting yourself in great financial risk.

Today has to seal the veracity of that advice. Now get a hold of yourself. There is absolutely no way governments can make a problem of this size go away over a weekend. Those that question me on this issue are the same ones that laughed in 2000 when I said the growth of OTC derivatives was going to break the world. I told the lead director of Bear Stearns at the time that OTC derivatives were going to break his firm but the profits from them was simply too intoxicating for anyone to listen. Now I am asking you to listen.

Whatever is done to resolve this global financial crisis is going to inject incomprehensible amounts of new money into the global financial system.

Academics see the world as a 'Picture In Time." That means they are static thinkers who can't perceive motion. Visionaries like Harry, Monty, Trader Dan & Tony are "Dynamic Thinkers." At present, some academics are promoting the dumbest line I have ever heard. They say that all this new money going into the system is not monetary inflation because it is simply replacing all the money lost and therefore is a wash. That is part of the thinking pattern I am talking about and it's dead wrong.

Dynamic thinkers know that the outflow of these losses has existed from the time of transaction and therefore prior to truer valuation as mandated by Financial Accounting Standards Board (FASB).

The day the FASB mandated truer value had existed for years but was not recognized as such because it was generally accounted for off balance sheet. Just because financial institutions tried to hide their losses, those capital depletions were already a growing cancer inside their organizations.

You can be certain that a repetition of Germany's Weimar crisis is coming soon. There is nothing that can be done to make matters better - even if done by governments unilaterally in a unified action. In fact, such action will only serve to make matters worse.

The larger the financial action, the deeper the financial fall. The G7 still thinks they run the world. That should tell you something about the degree of what they can do.

Gold is honest money that will push all crappy paper out of its way. Why do you think so much intervention took place in gold in US market hours today?

All I can tell you is to stay the course or jump directly into the fire! If the heat in the kitchen is too hot for you, there is nothing I can do for you.

Jim Sinclair
 By bluejay

10/10/2008  10:30AM

Gold $867.80 off $44.60
Silver $10.70 off $ 1.37
Gold/XAU Ratio 8.52
Gold/Silver Ratio 81.10
(Silver has gone comepletely out of whack with gold. The historic ratio is 15 ounces of silver for each ounce of gold. Who is calling silver an industrial metal when it is obviously the current choice as a monetary metal by the scared public?? Unbelievable, the amount of criminal behavior in the NY silver market)

What A Rollie Coaster Ride!

In overnight Asian gold trading the metal surpassed $930 only to be beaten back when the London market opened and followed by more tactical selling when CRIMEX opened in NY. This is an old story, following strength in Asia attack gold prior to the NY opening and continue to pound it lower after CRIMEX(COMEX) opens for business.

Considering London is a cash market one has to wonder, has Gordon Brown relieved the English people of the last of their gold? Have Paulson and Brown been working together again to accommodate each others needs at the expense of the people?

A really scary thought is that when it comes time for rebuilding the financial system, assuming both of these gentlemen have already cashed out their country's gold, where does the new gold come from? Will there be a repeat of what happened in 1931 when Americans were ordered to sell their gold bullion to the Treasury for below realistic value?

The bottom line is that in the not too distant future the powers to be will basically confiscate our wealth, via inflation and possibly gold and the bullion producing companies, in their quest to remain in the throne of power.

Their attack continues in the precious metal shares with their onerous naked short selling scheme as investors are jolted again with massive illegal liquidation of non-existant gold and silver shares. Where is the SEC???? The idiot Cox has cost Americans with these phantom sales untold amounts of their hard earned money. Oh yeah, they are cohorts in the plan, as being a member of the Plunge Protection Team, to defend a fiat system that is destined to fail as all fiat currencies have since the beginning of time. It is overwhelming apparent they will drag us all down with them in what will be a colossal show of unbridled arrogance of historical proportions.

Where does this all leave us? As shareholders, we own the largest gold specimen resource in the world. Any gold product sold for over two times its price under the Patriot Act is not considered gold bullion and maybe out of the reach of their sticky greedy little fingers when the new system arrives to pull us all out of the abyss that we are all being sucked into at warp speed.

Protect yourself the best way you can and good luck.

Don't panic, Long and strong!

This is the second writing that before closing I have to go back and change all the prices because of the volatility that's being forced fed into the markets by the powers to be to scare everyone crazy who believes in gold.
 By bluejay

10/10/2008  12:57AM

Last on gold is $926.30

Stocks: Nikkei Dives 9.62% To 5-Year, 5-Month Low On Panic Selling

TOKYO (Kyodo)--Tokyo stocks took another dive Friday, sending the Nikkei average down more than 9% from Thursday to its lowest level in about five years and five months.
World wealth continues to be destroyed at an unprecedented rate as Americans sleep tonight.

If the DOW continues to meltdown on Friday we may be getting close to stock exchange and bank holidays just to take some intermissions during this shocking financial disaster.
 By bluejay

10/09/2008  9:39PM

Last on gold is $915.80.

The following short missive by Mr. James Sinclair states that most international mints as "shutting down" gold coin production to the public. Give us all a break, the mints are being ordered to cut off further gold coin distribution by the powers to be as the coins are competing for the acceptance of their funny-money and the funds going into their purchase are being withdrawn from the banking institutions of their buddies thus putting more pressure on them.
"Today's gold news is the shutting down of gold coin production by most International mints. They quote this as a reaction to the extreme demand for gold coins. They also stated that by not issuing gold coins it will bring the price of gold down. That is ridiculous reasoning as small gold demand will simply shift to other forms of gold such as 1 kilo bars with known refiner stamps and serial numbers. Who knows, maybe they will even make Dinar coins."

I wonder what the western bankers will do concerning gold if the Russians elect to back the Ruble with the precious metal? If anyone has missed it, the Russians are increasing their influence around the globe. They have recently loaned a billion to Venezuela and about 5 billion to Iceland.
 By bluejay

10/09/2008  6:31PM

Last on gold is $916.70.

This mess is heating up worldwide.

Bill Murphy posting a bunch of reports over on GATA that are downright scary 'cause no one knows where all this is going to lead. This is one bad scene. A few snippets from tonight's Midas:


This input is very disturbing…

Dear Mr. Murphy!
As operator of the gold website www.hartgeld.com today I received several messages that the European Union now wants to go after gold. They fear that a massive run into gold cannot be controlled in any other way.

There are several rumors in banker circles:

Rumor 1 (from a high-ranking banker in Germany)

If the current last ditch system rescue fails and there is a massive stock market crash happens tomorrow Friday, severe limitations will be implemented EU-wide over the weekend:

the sale and ownership of gold will be prohibited
withdrawals from accounts will be limited, companies will need to prove the purpose of transfers
even if this doesn't happen now, planning is underway

Rumor 2 (a former banker with excellent contacts:
http://www.mmnews.de/index.php/20081... )

- There is a directive to banks to not any longer sell gold to the public
- Also there are efforts to reduce the amount of gold and silver which goes into the retail market to lessen the strain on the 400oz bullion bar market in London - this one determines the price. In this way they decouple demand from the price finding mechanism.

The system is now on its last legs on both sides of the Atlantic. More desperate measures are on the way as it looks. But according to Richard Russell: inflate or die. If rumor 1 becomes reality next week, it will be definitely "die" for the elites, because there will be a general uprising.

There is almost no gold available here in Europe. In Germany now banks decline sales (because they have no supply or because of this directive, I don't know). But here in Austria, gold is still available from some banks, although the quantities are limited. There is also a massive run on banks for cash everywhere, even central bankers admit it.

Probably this is of interest to your readers of Midas.

Best Regards from Vienna, Austria
Walter K. Eichelburg

!!!!! This addendum in late this afternoon:

Dear Mr. Murphy!
I've just learned that most German banks no longer sell gold - the sales ban is now active. Prospective customers hear: we do not sell gold any longer, etc. But not: we cannot procure it. Because this new regulation is of course secret, not all banks know about or comply.
There are some signs that Swiss banks join in, or they are no longer able to procure any metal. Best Regards, Walter K. Eichelburg Vienna, Austria

One more…

Bill: One more bit of information: After Iceland, now Hungary goes into sovereign default. They cannot sell their government bonds any longer - failed auction. ´Now everybody wants to get rid of them. Now a chain reaction of sovereign defaults is upon us. Gov. bonds are now "infected" too. Best regards, Walter K. Eichelburg
 By bluejay

10/09/2008  1:31PM


Gold has just made an impressive turnaround. Last sale is $913.40. It looks like the Paulson crew has failed with their manipulative efforts for the day. Are the criminals losing control?? Hopefully, they are.

Gold $885.90 off $20.60
Silver $11.82 up $ 0.05
Gold/XAU Ratio 7.61
Gold/Silver Ratio 74.95

Today's gold manipulation, following the Paulson statements yesterday, only has the metal down slightly in percentage terms. It appears the Plunge Protection crew may be growing anemic in their abilities to control prices. We will just have to wait with our usual patience wondering if and when market forces in the paper market can get the upper hand on the PPT boys.

There is so much blantant manipulation in our financial markets are we ever to know the true value of anything? The banking system is one area that should bother all of us. As Jim Sinclair said the other night, "the local banks are in the web of the Money Center Banks and are therefore in trouble they do not even know about yet." Paulson is now advocating that the government take part ownership of some of them. He is attempting to manipulate our thinking, indirectly, that all will be fine because Uncle Sam knows how to do things. This is a far cry from the truth as they never thought it once necessary to regulate the out of control bankers concerning their lending practices.

Shareholders should be relieved that the Company's shares weren't listed on a major exchange that would have possibly attracted illegal short sellers. Once the illegal shorts get hold of a stock's future the shareholders always ended up paying in wealth reduction.

A patriot for protecting the rights of shareholders against these criminals of manipulation is Mr. Patrick Byrne of Overstock.Com. Since 2005 his company have been hot on the trail of many suspected criminals through the court system here in San francisco.

Good luck to Patrick Byrne!
 By bluejay

10/08/2008  2:58PM

Last on gold is $906.50.

The following comments were taken from the ECU forum page of agoracom.com in Canada from a brilliant observer of the governements tactics to suppress precious metal prices.

Hanky Panky Test at 3:00 pm
Posted by: vhf on October 08, 2008 12:00PM

Hank Paulson is supposed to hold a press conference this afternoon at 3:00 pm. In the past, his "presence" caused PM's to get shelled without remorse. However, the fact that the markets are still crashing despite Hank's series of extreme efforts might indicate his power in waning.

Therefore, we will see how gold and silver perform before, during, and after Hank's little speech today. It could well be a reasonable indicator of gold cartel strength or lack of it.

Regards - VHF
 By bluejay

10/08/2008  8:58AM

Last on gold is $912.50.

We are in historical times with significant events increasingly becoming more frequent.

Chris Powell (usagold.com 07October2008; 18:03)
Central banks all but stop lending gold

By Javier Blas
Financial Times, London
Tuesday, October 7, 2008

Central banks have all but stopped lending gold to commercial and investment banks and other participants in the precious metals market, in a move that on Tuesday sent the cost of borrowing bullion for one-month to more than twenty times its usual level.

The one-month gold lease rate rocketed to 2.649 per cent, its highest level since May 2001 and significantly above its five-year average of 0.12 per cent, according to data from the London Bullion Market Association.

Gold lease rates for two, three, and six months and for a year also jumped to levels not seen in the last seven years.

Traders said the jump reflects the fact that central banks — mostly European — have almost completely stopped lending gold in the last few days and are not rolling forward old leases after maturity. This is because of fears that some borrowers might not repay their bullion loans if they are engulfed by the financial crisis. …
 By bluejay

10/08/2008  7:53AM

Last on gold is $910.

Central Bankers Cut Interest Rates - Push Panic Button

Comex Gold Sharply Higher After Coordinated Rate Cuts


New York gold futures traded sharply higher early Thursday following a coordinated rate cut by the Federal Reserve, European Central Bank and other major banks.

This has triggered safe-haven buying on ongoing worries about the world financial system, as well as buying as a hedge against potential inflation down the road as a result of easier monetary policy, traders and analysts said.

Around 8:40 a.m. EDT (1240 GMT), December gold was up $32.80 to $914.80 an ounce on the Comex division of the New York Mercantile Exchange. December silver was 54.5 cents higher at $11.925.

Gold was higher in overnight screen trading and remains firmer after initial volatility when the news broke that the Fed cut its federal-funds rate by 50 basis points to 1.5%. Others cutting rates included the Bank of Canada, Bank of England, European Central Bank, Sweden's Riksbank and the Swiss National Bank.

"With the concentrated effort around the world, it shows fear," said Charles Nedoss, senior account manager and metals analyst with Peak Trading Group. " People are worried that No. 1, it is inflationary. And No. 2, where do you go from here if this doesn't work."

Continue to read Mr. Jim Sinclair at http://www.jsmineset.com for the TRUTH and instructions on how to protect yourself.
 By bluejay

10/07/2008  2:09PM

Last on Gold is $885.90.

If you believe the following press release from the US Mint then, I guess, we are to remain gullible.

The Mint's main complaint is there is a shortage of blanks. If there is then increase the manufacturing capabilities, just like they did with beannie babies. Concerning their ability to press coins, increase the production by buying new presses. I am sure the Fed has ordered new currency presses as the money supply continues to explode(5% of the supply is in currency and coins with the remainder in electronic entries between financial institutions.

Concerning the volatility of gold, maybe the mint should consult Paulson because the Treasury is part of the problem. The Royal Canadian Mint currently doesn't have a shortage because they control all facets of production from purchasing the bullion to retail outlets and to the public. The Royal Canadian Mint produces their own blanks.

The sad fact is that the US Mint was probably ordered to cut back their precious metal orders because it doesn't make sense for them to increase their bullion orders based on unprecedented public demand when Paulson and the Plunge Protection Team are selling gold out the back door and not coming clean to the public about it. Since Paulson and company have employed all types of schemes to suppress gold's price, how can anyone really believe that our 8500 tons of gold that the Treasury states is in good custody is really there?

All the Treasury would have had to do was to move our gold around in the basement of the New York Federal Reserve(NYFR) from our cage to another cage. The NYFR stores gold holdings of many other central banks in New York City.

Is it possible that the Treasury ordered the Mint to cut back on production because the Treasury's supplies of the country's gold are near exhaustion??? If our 8500 tons of gold are still intact, then why aren't the American people presented with a certified report by an auditor to that effect???

Paulson is quite experienced in depressing gold. Goldman Sachs(one of the Treasury's pet brokers) with Paulson at the helm made a fortune selling gold short during the 1990's. When it came time to cover at $300 and below there was a shortage available. It has been speculated that Paulson gave our old friend Gordon Brown of England a call and begged him for some gold to cover Goldman's short. Soon after, Brown ordered the majority of the remaining gold still held by England sold to the market. I guess we know who the buyer was if the story is true.

Gordon said that investing in three other currencies, one of which was the US dollar, was better than holding an asset that had been weak. What a jerk! Gold has always been the cornerstone of a healthy central bank.

During the silver shortage in the early sixties the Mint borrowed the press from the Carson City Mint to increase silver coin production. The upgraded press is currently housed in working condition in a museum in Carson City. Why not borrow this press??

It would appear that the Mint has been ordered to slowly withdraw from providing gold and silver bullion coins to the public. This must be another directive from their banking buddies. Remember, it was these same guys that heavily shorted both gold and silver in July on the CRIMEX Exchange(also know as COMEX)prior to the severe sell-off in August.

According to Jim Sinclair, gold is headed to $1,650 for starters.

background, gold price) By Frank Tang NEW YORK, Oct 7 (Reuters) -

Unprecedented demand for
precious metals and volatile markets forced the U.S. Mint to
cease production for the half-ounce and quarter-ounce popular
American Eagle gold coins for the rest of this year and to
supply other bullion coins on an allocation basis. "Due to the extreme fluctuating market conditions for 2008,
as well as current market conditions, gold and silver demand is unprecedented and the demand for platinum is unusually high," the U.S. Mint said Monday in a memorandum to its authorized coin dealers. "The U.S. Mint has worked diligently to attempt to meet demand, however, blank supplies are very limited and it is necessary for the U.S. Mint to focus remaining bullion
production primarily on American Eagle Gold one-ounce and Silver one-ounce coins," the Mint said. The Mint said it would continue to supply one-ounce American Eagle gold coins and one-ounce American Eagle silver coins on an allocation basis to coin dealers. For half-ounce and quarter-ounce American Eagles, the Mint said that inventory was depleted last week and no more coins would be produced for the rest of 2008. In addition, the Mint said it would produce 1-10th ounce
Eagles based on current coin blank supplies, but would cease
production for the rest of this year once the remaining
inventory was depleted. Produced from gold mined in the United States, the 22-karat
American Eagles have been novel items among collectors and investors since their introduction in 1986. Each coin has a face value of $50 but it is sold by authorized dealers at a premium to the price of gold.


The Mint said it would continue to supply 24-karat American Buffalo one-ounce gold coins based on current blank supplies, but would halt production once the remaining inventory was out. The Mint had suspended sales of the Buffalos in late September due to strong demand and inventory depletion. Similarly, the Mint said that all denominations for
American Eagle platinum bullion coins were depleted last week, and it would halt production for the rest of the year once the remaining inventory was depleted. Coin dealers from the United States to Canada have recently
reported a surge in buying of bullion coins. Gold has soared as much as $200 in the last 30 days as panic investors flocked to gold as a worsening global financial crisis prompted people to seek a safe haven. Spot gold <XAU=> traded at about $884 an ounce on Tuesday, while the gold contract for December delivery GCZ8 on the COMEX division of the New York Stock Exchange was at $886 an ounce.
(Reporting by Frank Tang; editing by Jim Marshall
 By bluejay

10/06/2008  7:01PM

Last on gold is $863.40.

We are apt to shut our eyes against a painful truth... For my part, I am willing to know the whole truth; to know the worst; and to provide for it. --Patrick Henry

Posted On: Monday, October 06, 2008, 5:37:00 PM EST

The World Of Gold

Author: Jim Sinclair

Dear CIGAs,

Gold is the ultimate currency when others fail as a store house of values.
Gold has no liability attached to it.
Gold is universally fungible.
Gold is an appreciating asset on the balance sheets of central banks..
Gold will trade at $1200 and $1650.
Of course gold bottomed on its first break from $1033, but I only say such things once.
The third try for above $1000 is being set up now.
Have you protected yourself?

Your friend,
 By bluejay

10/06/2008  2:51PM

Gold $855.20
Silver $10.94
Gold/XAU Ratio 8.12
Gold/Silver Ratio 78.77

The Plunge Protection Team(PPT), the Treasury's market manipulative arm was feverishly working today to contain mounting losses from the skidding values of the Dow Jones Averages. The DOW closed off on the day 369.88 points. During the session the averages were approaching being off 800 points. The PPT couldn't buy enough of the Index futures while supply was heavy.

In the meantime gold was pushing higher, eventually hitting near $876 with a last of $861.50, up from the previous close of $834.80. After the NYSE close gold slipped back to 655 but is currently trading higher.

The most remarkable event over the past week is the total disconnect between the gold stocks and the price of the metal. At one point today, the Gold/XAU ratio was at 8.38. The time tested axiom was to buy the gold stocks when they hit 6 on the Index and sell them when it hit 3. Times, they are a changing.

In order to understand this great hostorical discrepancy one has to consider how desperate the "powers to be" are at saving the system. Why did gold and silver tank in early August ahead of all the bad news? The main reason was a plan to contain gold under $1000 when it was to be later revealed by the Fed and Treasury that our financial system was coming apart at the seams and needed a quick bailout. It appears their plan, so far, has worked.

The reason the gold stocks came under such severe selling pressure was to confirm in the market place that gold was not a good alternative form of investment as a safe haven. This was easy to accomplish by the Treasury and their cohorts. They just entered sell orders through their two pet brokerage firms, or investment companies, to overwhelm buyers with a barage of unlimited sell orders. All this was accomplished through the illegal trading vehicle known as naked short selling, no certificate required for shorting.

It isn't odd that the SEC restricted "all forms" of short selling in the falling financial stocks as the bankers control the system. Why wasn't naked short selling prohibited in the gold shares? The bankers hate gold because when we were on a gold standard their lending practices were held in check.
Under that system, if the bankers wanted to grant more loans then they had to add gold to their reserves.

Your good old corner bankers have ruined the banking system and it is now based on lies and fraudulent accounting standards. Is there any wonder that manipulative steps of the PPT now have to be instituted in order to make bank depositors think twice about cashing out?

It appears that there is one thing the PPT can't control(are they plugging up supply channels someway?) and that is the public quest for the physical metals of gold and silver in bullion form. Coin stores are basically sold out of the product. The following is the latest rundown from golddealer.com concerning their bullion products:

Gem Uncirculated-$2000 Order Free Shipping
Our Buy Price
Our Sell Price

Eagle US Gold Bullion (1 Oz)

Buffalo US Gold Bullion (1 Oz)
Out of Stock

US Gold Bullion Eagle (1/2 Oz)

US Gold Bullion Eagle (1/4 Oz)

US Gold Bullion Eagle (1/10 Oz)
Out of Stock

US Buffalo Proof 1 Oz Gold-Box & Certificate

US Eagle Proof 1 Oz Gold-Box & Certificate
Out of Stock

Austrian Philharmonic Gold Bullion (1 Oz)
Out of Stock

Australian Kangaroo Gold Bullion (1 Oz)
Out Of Stock

South African Gold Bullion Krugerrand (1 Oz)
Out Of Stock

1 Oz Gold Bullion Bar - Pamp Suisse With Cert
Out of Stock

100 Gram Gold Bar-Pamp Suisse (3.21 Ozs)

10 Oz Gold Bar - Pamp Suisse With Cert
Out Of Stock

Kilo Gold Bullion Bar-Pamp Suisse/Cert (32.15 Oz)
Out Of Stock

Austrian/Hungarian 100 Corona (0.98 Gold Oz)
Out of Stock

Chinese Panda (1 Gold Oz)
Out of Stock

Special Australian Lunar Dragon

Australian Lunar Gold Set 1996-2007 Complete 12 coins
Out Of Stock

Mexican Gold 50 Peso (1.2 Gold Oz)
Out Of Stock

US $20 Liberty Gold - XF to AU - Dealer's Choice
Out Of Stock

British Sovereign Circulated (.235 Gold Oz)
Out Of Stock

Swiss 20 Franc Brilliant Unc. (Pre-1933 .186 Oz)
Out Of Stock

French 20 Franc Brilliant Unc. (Pre-1933 .186 Oz)
Out Of Stock

Please note these prices subject to after market changes because of market volatility.

Premium Quality-$2000 Order Free Shipping
Our Buy Price
Our Sell Price

$1000 Face 90% Ave Circ Silver Coin Pre-65 (715 Oz)
Out Of Stock

$1000 Face 40% Ave Circ Silver Halves (295 Oz)

Comex Bars 1000oz .999 fine
At Spot

100 Oz Johnson Matthey/Engelhard Bars (.999 Fine)
Out Of Stock

1 Oz Generic Silver Rounds (.999 Fine)
Out Of Stock

10 Oz Generic Silver Bars (.999 Fine)
Out Of Stock

US Silver Eagles 1 Oz 2008 Box of 500

Canadian Silver Maple Leaf 1 Oz 2008 Box (500)
Out Of Stock

Backdate US Silver Eagles Lots of 100
+ $3.00
Out Of Stock

2008 Austrian Philharmonic Silver 2008 Box (500)
Out Of Stock

PCGS MS65 Peace Dollars – Box of 20
 By bluejay

10/03/2008  4:14PM

The article is out of sequence and belongs below the opening statments of the entry below.

The Gold Standard Strikes Back...

By Antal Fekete
Oct 2 2008 4:40PM



(Part 2 of 2)

The way to resolve the credit crisis: Recapitalize the banks with gold

Privatizing profits, socializing losses

The 0.7 trillion dollar bailout plan of Treasury Secretary Paulson must be seen for what it is: a scheme to privatize profits while socializing losses. The scare tactics with which he was trying to railroad it through Congress has failed and the world is better for it. The malady has to be diagnosed properly. I summarize the popular diagnosis in five points.

The bursting of the housing bubble has led to a surge of defaults and foreclosures which has, in turn, led to a plunge in the value of mortgage-backed securities ? assets which are in effect capitalized mortgage payments.

These losses have left many banks short on capital account. Their problems were compounded by the fact that as their capital ratios were shrinking, rather than reducing their debt exposure they aggressively increased it.

“Leveraging” is the word to describe the deliberate shrinking of capital ratios, i.e., making smaller capital support a larger amount of risks. Aggressive leveraging was characteristic of the pre-crisis boom.

When they recovered after the dizzying ride, banks needed a microscope to read their capital ratios and they reacted in a predictable way. They were unwilling (unable?) to fulfill their mission to provide the credit that the national economy needs for its day-to-day operation.

As a defensive measure financial institutions have been belatedly trying to pay down their debt by selling assets, including mortgage-backed securities, but as they were doing it simultaneously, they drove down asset prices. This has damaged their balance sheets even more. A vicious circle is engaged that some call the “paradox of de-leveraging.”
Capital destruction

I should hasten to say that I disagree with this popular diagnosis which puts the cart before the horse. My diagnosis, described in the first part of this article, identifies the destruction of capital as the cause, and the credit crisis as the effect.

The problem goes back to the U.S. government foolish decision to destabilize the interest-rate structure (and, hence, bond prices) in 1971. As a consequence, long-term interest rates shot up to 16 percent per annum by the early 1980’s, from where they started their long descent that still continues.

Falling interest rates destroy capital as they raise the liquidation-value of debt contracted earlier at higher rates. By ‘liquidation value’ is meant the sum that will liquidate the debt, should it be necessary to pay it off before maturity. In a falling interest-rate environment it will take a larger sum to retire the same debt. Why? Because the scheduled stream of interest payments is now capitalized at a lower rate of interest and, therefore, it falls short in liquidating the debt.

This means that, paradoxically, falling interest rates do not alleviate but aggravate the burden of debt. All observers miss this point as they blithely assume that debt is automatically refinanced at the lower rate. It is not. Falling interest rates create a deficiency on capital account since it takes a bigger bite to service existing debt than originally provided for, and the deficit is made up at the expense of capital. Over-leveraging is not the cause; it is the effect. What it shows is that the banks do not pay heed; they persist in error. They simply ignore shrinking capital ratios. This ultimately causes wholesale bankruptcies, leading to the vicious downwards spiral.

The banks should have made provision to compensate for eroding capital as interest rates were falling. None of them did. None of them understood the insidious process of capital erosion in the wake of declining interest rates. They reported losses as profits. Then they were hit by the negative feedback: capital eroded further. When the truth dawned upon them, it was already too late.

Interest rates have been falling for the past 28 years. The liquidation value of outstanding debt has been increasing by leaps and bounds. It reached the tipping point in February, 2007 as indicated by the unprecedented jump in the price of credit-default swaps. It revealed that any further decline in the rate of interest would plunge bank capital into negative territory. At this point capital dissipation stops: there is nothing more left to dissipate. For the banks, this is sudden death.

No commentator could explain why banks have all run out of capital at the same time, while making obscene profits. My explanation is simple. There have been no profits, obscene or otherwise. The banks were paying out phantom profits in the belief that their capital accounts were in good shape. They weren’t. The banks were unaware that the falling interest rate structure has been making inroads on their capital. Since all banks have been working with microscopic capital ratios as a result of 28 years of capital erosion, the failure of one single bank would trigger the ‘domino-effect’ on the rest.

Why gold?

This puts the role of gold into high relief. Had gold been retained as a component of bank capital, credit-default swaps would have never been invented. Gold is unique among financial assets in that it has no corresponding liability in the balance sheet of others. Gold is the only financial asset that will survive any consolidation of bank balance sheets,in contrast with paper assets that are subject to annihilation (e.g., when the bank is consolidated with its counterparty holding the liability side of that asset). Suppose we consolidate the balance sheets of the global banking system. Then all assets will be wiped out with the sole exception of gold. But since the global banking system as it is presently constituted has no gold assets, under any consolidation the banks will be denuded of assets while note and deposit liabilities to the public remain. This is why the regime of irredeemable currency is susceptible to collapse that could be violent, taking place with lightening speed. It can also be seen that trying to save banks from collapsing through consolidation, mergers, takeovers, and shotgun marriages is pouring oil on the fire: it accelerates the meltdown of bank capital, rather than retarding it.

Implosion of the derivatives monster

My thesis also explains the explosive growth of the derivatives markets. First round insurance against decline in the value of bonds in the banks’ portfolio can be had by selling bond futures. Those writing first-round insurance need to cover their assumed risk in the form of second-round insurance, they do so by selling call or buying put options on bond futures. But those writing second-round insurance also need to cover their risk: they do it in the derivatives market by purchasing credit-default swaps. The point is that an infinite chain of credit-default swaps is being built on every bond in the banks’ portfolio, as shown by the derivatives monster’s more than doubling in size every other year, already having reached the size of one half quadrillion dollars and still counting.

Why is the derivative monster so dangerous? Because it is subject to implosion that could destroy an inordinate amount of bank assets. If the derivatives tower is consolidated, then its value collapses to zero as claims are wiped out by counter-claims. It is possible that this implosion has already started, but the banks (and their supervisory agencies) keep the lid on this information to avoid a world-wide panic. The earth quakes badly under the foundations of the Derivatives Tower of Babel. Its toppling may be imminent. If gold had been retained as a component of the bank capital structure, then there would have been no derivatives monster to fret about.

Those who explain the proliferation of derivatives by the popularity of “dry swaps”, that is to say, swaps created for the sole purpose of speculative profits they promise in view of their ultra-low price-to-reward ratio, are wrong. All those credit-default swaps were purchased by actual insurers insuring actual risks going with bond ownership, in trying to hedge their own risks.

Recapitalizing banks with gold

The credit crisis could be solved through the recapitalization of banks with gold. The Treasury should pledge to match subscriptions of new private capital, in gold, at the ratio of two to one. This means that two gold shares of capital stock subscribed by the private sector (individuals, firms, and institutions) shall invite one share of capital stock subscribed by the Treasury. Gold subscribed by the private sector should be constitutionally guaranteed against capital levy and confiscation.

There is no better use to which Treasury gold can be put which has been foolishly idled for the past 36 years. What is needed is the mobilization of gold hoarded by the Treasury, as well as of gold hoarded by the private sector. The trouble is that much of the privately owned gold is in hiding and won’t surface for reasons of lack of confidence in the monetary system. But as soon as there is a market for the shares of the recapitalized banks, private gold can be coaxed out of hiding and made to participate actively in the great task of rebuilding world credit.

Capital stock of the recapitalized banks would pay dividend, in gold, at the rate of one tenth of one percent per annum to stockholders, exempt of all taxes. This would make it possible, even for people of modest means, to acquire gold earning a safe return in gold. The maliciously false propaganda of the past decades that gold is a sterile asset in that it earns no interest is easy to refute. Gold has been lent and borrowed at interest (facetiously called the ‘lease rate’) without interruption, in spite of its so-called ‘demonetization’ by the government. In fact, the gold rate of interest is the benchmark on which all other interest rates are still based, after adding a risk-premium reflecting the risk that the monetary unit may lose its gold exchange value.

The tax-exempt feature of dividends has great merits to recommend it, especially if no other exemptions across the economic landscape are granted. You could look at it as society’s protection of widows and orphans, and other members of society who are unable to fend for themselves in a competitive environment, to live in dignity away from the hurly-burly of the investment world.

What is the use of recapitalizing banks with irredeemable promises to pay? It has been tried for the past 36 years; it doesn’t work.

No chain is stronger than its weakest link

The newly recapitalized banks must offer their old assets for sale to the public, in exchange for the gold shares of capital stock, through competitive auctions. In this way the true value of the old paper assets can be determined, and whatever can be salvaged will be salvaged. The market for bank assets, presently frozen, would be made liquid once more. If a bank wants to retain a part of its old assets in the balance sheet, it must bid for it in the same way as if it were buying from another bank through competitive auction. If an asset cannot be disposed of in this way, then it must be written off. Any delay in validating bank assets through the sieve of competitive auction will only prolong and deepen the crisis.

The ‘securitization’ of bank assets was an idiotic strategy motivated by the fraudulent idea that in lumping sub-prime assets together with valid assets would somehow impart value to the former, and the marketability of the product would be enhanced. This, of course, is just a ploy to cheat the buyer. It is like trying to make a chain containing a weak link stronger by adding any number of strong links. The weak link must be replaced with a strong one. No chain can be stronger than its weakest link.

The re-liquefying of bank assets is a first order of business in the present runaway global credit crisis. We are past the point that the wild-fire can be localized. Mobilization of gold is the only way.

Save the pension funds!

This crisis is a warning, possibly the last one, that the recapitalization of banks with gold cannot be further postponed without risking the total collapse of the financial system. If there was some hope that the Treasury might have a contingency plan to mobilize gold in case of a crisis such as this, the Paulson bailout plan has dispelled it. When the moment for the ‘break-the-glass’ rescue plan has arrived, what did we find behind the broken glass? More irredeemable promises to pay, to augment bank capital. All chaff, no grain.

Global credit collapse would bring enormous hardship in its train for ordinary people who have worked hard and saved hard through a lifetime only to see the fruits of their efforts going up in smoke. The result could be total social chaos and lawlessness. At risk are all the insurance companies, pension funds, money market funds. Also at risk is the taxing power of the government, as a prostrate economy won’t be able to bear the tax burden, but will spawn a grey economy that finds ways to evade taxes. The rejection by the U.S. House of Representatives of Paulson’s bailout plan can be viewed as a taxpayer revolt. Is it the first, with more to come?

Close of Keynes’ and Friedman’s system

Understandably, it will be hard for policy-makers, academia and media, and the accountants’ profession to admit that they have been wrong all along about gold and its essential role in the economic bloodstream and in accounting. They have fallen victim to the charm of John Maynard Keynes, the prankster who invented the idea that gold was a barbarous relic, and the gold standard was a ‘contractionist fetter’ upon the world economy. Now we have proof that the blame for the contraction should be assigned, not to the use but to the misuse of gold. The debt collapse is the burial ground for Keynesianism.

After Keynes was gone, policy-makers, academia and media, and the accountants’ profession fell under the spell of another visionary and adventurer talking with a forked tongue, Milton Friedman. He was fond of posing as a free-market man, but in promoting irredeemable currency he did more than anybody, save Keynes, to destroy the free market. Friedman promoted the spurious idea that gold is superfluous in the international monetary system as floating foreign exchanges rates can mimic the operation of the gold standard and will balance the trade accounts. But as the record shows, Friedmanite nostrums have ruined the dollar, as well as the once flourishing and peerless American productive apparatus.

Politicians, academia and media, and the accountants’ profession must swallow their pride and get the confession off their chests that their prognostication, policies, and advice about gold have been in error. If they fail to do this, and continue to block the way of gold to make a return to the economic bloodstream, then their responsibility for the suffering caused by the credit collapse in this country and in the world will be total. They will be shown as doctrinaire wreckers of human cooperation under the system of division of labor, who muzzled their critics and usurped unlimited power, while paving the way to a world disaster akin to that of the Bolshevik revolution.

After the close of Marx’ system, the close of Keynes’ and Friedman’s system is inevitable. But the wounds they have caused would take a long, long time to heal.

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