Written by Jeff Nielson Friday, 01 June 2012 11:18
At the beginning of this series I acknowledged that there was considerable analytical overlap among the three trends I would discuss and explain. In Part II, readers saw how the imminent Flight out of Paper will be a direct consequence of the excessive money-printing we are seeing today, along with maintaining artificial/fraudulent prices on the bankers’ paper currencies. Creating a massive imbalance today will lead to an exodus of capital tomorrow.
Similarly, in Part III we will see how the long-term destruction of the supply chain for the gold and silver markets is also a consequence of excessive money-printing. However, while the Flight out of Paper will be a direct consequence of excessive money-printing, the destruction of the precious metals supply-chain is an indirect consequence of excessive money-printing – along with price suppression.
The dynamic here is as simple as it is irrefutable: low prices cause high prices. What has caused the 10+ year bull-market for gold and silver, where prices have begun to move toward their fair market value? It was the 20-year bear market, where both the price of gold and the price of silver were driven well below the cost of production for approximately 90% of the world’s gold and silver mines.
Obviously the lower prices went, the fewer miners would/could choose to remain in production. So at precisely the same time that extreme/artificially low prices for gold and silver were stimulating more demand, those low prices were also destroying supply. The inevitable result was the collapse of inventories.
In the typical short-sighted manner in which the banking cabal operates, they had an “answer” for the collapse in mine-supply: dump their bullion onto the market. Thus to temporarily shore-up inventories (i.e. the metal immediately available for sale) the central banks emptied out their stockpiles of bullion, dumping thousands of tons of gold and silver onto the market over those years.
This brings us to the year 2000, and the turning point in the bullion-manipulation game. The supply/demand fundamentals for gold and silver had been warped to such an extreme that the price of gold and silver began rising even while the bankers were continuing to dump 500 tons of gold per year onto the market – the most extreme gold-dumping in all of human history.
Indeed, to illustrate how radical that gold-dumping campaign was we need only look at the media propaganda which accompanied the one-time sale of 400 tons of gold by the IMF in 2009. For a year and a half (as the banksters struggled to have the sale approved) we were subjected to endless media fear-mongering that this one gold-dump of 400 tons would ‘tank’ the whole market.
As informed investors know, the reason why the banking cabal was so desperate to get hold of some of the IMF’s gold is because the gold-dumping by the Western banking cabal screeched to a halt in an incredibly abrupt manner at precisely the same time. One minute these central banks were continuing to dump hundreds of tons per year onto the market, the next minute they were refusing to sell a single ounce.
There are only two possible explanations for this extremely abrupt collapse in the bankers’ gold-dumping. One explanation is that Western central banks have completely exhausted their gold reserves (despite the unaudited reserves these banks claim to hold). Supporting that explanation we have the tireless efforts of GATA in drawing attention to the massive “gold leasing” campaign in which the banksters have simultaneously been engaged.
The central banks love to “lease”gold. Why? Because they can deliver gold into the hands of their minions to be shorted onto the market (and gone forever), while the fraudulent bankers are allowed to pretend they still “own the gold”, even though all they now hold is a (paper) “gold IOU” which could never possibly be redeemed. The central banks are not even required to keep formal records of this leasing activity, so in all the years they were (officially) dumping 500 tons of gold per year onto the market with their sales they could have been dumping even more bullion than that via leasing.
Written by Jeff Nielson Tuesday, 29 May 2012 11:08
In Part I, readers were presented with a list of the three trends which overwhelm all other factors and fundamentals in the gold and silver markets. The first and most dominant trend – the grossly excessive printing of (worthless) paper currencies – was explained to readers in detail.
Through elementary logic, we established that no rational investor would choose to hold these worthless paper currencies, rather than opt for humanity’s 5,000-year old safe havens: gold and silver. Specifically, with all our governments explicitly engaged in the monetary policy known as “competitive devaluation”, only an idiot would hold an asset where the producers of that asset are trying to drive its value to zero as rapidly as possible.
As I discussed in the first installment, the other two dominant trends are directly and/or indirectly derived from the first trend: the gross misallocation of capital, and the long-term destruction of the supply chain. I will focus on the second of these trends in Part II.
Here it is important that readers are aware that we are discussing two separate-and-opposite dimensions to this misallocation of capital. On the one hand, Western investors currently hold only roughly 1/10th the amount of gold and silver that they have normally held on an historical basis. In other words, at the point in time where Western investors should be choosing to hold more gold and silver than at any time in history they are instead holding less gold and silver than at any time in history.
Then there is the second and opposite misallocation. These zombie investors are not only loaded up with $trillions of our (worthless) paper currencies; they are also holding $10’s of trillions in bonds, issued by hopelessly insolvent Western debtors – and denominated in those same, dying fiat currencies. Here clueless paper-holders must step back and take a look at history.
In the 1,000 years since China began humanity’s experiments with these worthless, paper (“fiat”) currencies; the paper has a perfect record: it always goes to zero. Meanwhile, we are equally well-advanced along the road to another regular, economic event in our collective history: what I call a “bond-burning party” – where insolvent debtor governments simply erase all of those bond debts, leaving bond-holders with a big, fat nothing.
These bond-burning parties have more commonly been known throughout history as “debt jubilees”: one or more governments collectively or unilaterally decreeing that their bond debts no longer exist, and thus the “bonds” themselves become nothing but an inferior brand of toilet paper. They are regular events in history, but naturally most Western readers are totally unfamiliar with this common (and inevitable) historical trend.
Our paper-pushing bankers have made sure that their servants in government and the media never let the Sheep know that both the bankers’ paper currencies and the bankers’ paper bonds always end up as worthless paper. In fact, “debt jubilee” is a concept which literally dates back to Biblical times. Back then they didn’t wait for the bankers to officially bankrupt nations before declaring a debt-jubilee. Rather, they were scheduled events – every 25 or 50 years.
So we have our bankers telling us that both their paper bonds and paper currencies are “safe havens”. Meanwhile, 1,000+ years of our own history tells us that both forms of paper are certain to end up totally worthless. Obviously treating $10’s of trillions in worthless (Western) banker-paper as a “safe haven” represents a misallocation of capital on a scale at least an order of magnitude greater than anything else in our history.