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Sentiment Changes!
Are Gold and Silver Money?
Former Federal Reserve Chairman Bernanke answers no.
And so do America’s youth. Awhile back I posted videos of a podcaster who would offer Americans a one-ounce gold coin worth approximately $1,800 for one piece of chewing gum, only to be refused. The youth, who pay with credit cards, not with cash, think money is digital. Consequently a bitcoin is worth many times the value of a gold coin despite the fact that a bitcoin’s value is nebulous and can decline thousands of dollars in a day.
And, apparently, gold and silver are not money for people worried about inflation that is allegedly so serious that the Federal Reserve is engineering a recession and pension fund and Big Bank wipeout to stop.
With inflation high and financial investments paying so little, why haven’t people sought to protect their purchasing power by going into gold and silver? Gold and silver prices have fallen while inflation has risen. This is nonsensical.
Part of the answer is that the US dollar is high despite high inflation. This normally nonsensical relationship is because the UK pound, euro, and yen are adversely impacted by economy shutdowns due to Covid lockdowns and energy shortages created by Washington’s Russian sanctions, and these countries are experiencing their own inflations from the sanctions and from the Covid lockdowns that reduced supply and cut them off from global deliveries. Supply reductions can result in higher prices just as effectively as excessive consumer demand.
Another part of the answer is that the supply of gold and silver in the futures market where price is determined can be increased by printing uncovered contracts and, thereby can be increased in supply like fiat paper money. As I explained many times on this website, often in collaboration with Dave Kranzler, the prices of gold and silver are set in futures markets, not in the physical market where gold and silver are purchased. The futures market in gold and silver permits “naked shorts.” This means that unlike the stock market, where the person shorting the market has to have the actual stock to sell, which is usually borrowed, gold and silver can be sold short without the seller owning any gold or silver.
What this means is that gold and silver that trade in future markets can be created by printing contracts that are not covered by gold and silver. In other words, today gold and silver can be increased in supply by printing contracts in the futures market where price is determined just as fiat paper money can be printed.
The printing of contracts and then dumping them into the futures market suddenly increases the supply of paper gold. A sudden increase in shorts in the futures market drives down the gold price.
The Federal Reserve and the Big Banks have used naked shorting to prevent rising gold and silver prices that would show the true depreciation in the dollar’s value.
The futures market clears in cash. The holders of contracts do not demand payment in gold, that is, they do not take delivery. They settle in cash. If those holding delivery contracts actually demanded delivery, it is unlikely the Comex would have the gold to deliver. Comex would simply refuse delivery and settle the contract in cash at a price determined by the manipulation of gold’s and silver’s values by naked shorting.
Gold/Silver investors believe that eventually this way of holding down the price of gold and silver will be overwhelmed by flight from excessively printed paper currencies.
There is reason to believe that they are correct. Unless the Federal Reserve has become involved with the World Economic Forum’s plan to force with crises a worldwide “Great Reset” in which we all become serfs owning nothing, in which case a different agenda is being served, the Federal Reserve’s current policy will cause problems for Big Banks, such as Credit Suisse’s current problems, pension funds, insurers, and for stock and bond prices and the many speculative deals based on former interest rates, and part of the resulting flight from financial assets will find its way into gold and silver.
DYI COMMENT: Completely agree unless forced into the WEF's tyranny the price of gold and silver will eventually rise. As the late Benjamin Graham stated that over time Mr. Market will prevail in the direction of the prevailing economic winds. If inflation remains prices for gold/silver will rise despite their market manipulations' with rising prices for physical delivery has already occurred. Coin dealers are selling silver coins $20 higher than paper [futures market] spot market. Gold coins are marked up as well. As this gap continues to grow more and more investors will move to the physical delivery market thus leaving behind the Fed's and New York centered banks FAKE paper show!
Gold and silver were the original money, because they are rare and can serve as a store of value as well as a means of exchange. A gold and silver money supply can nevertheless be inflated. Gold coins can be shaved–thus the ridges placed on the edges of the coins to reveal the diminution of the gold content. And the coins can be debased by the addition of non-precious metals, as was the silver denarius with which the Roman army was paid. I have a “silver denarius” that is 90% lead.
As economist Milton Friedman demonstrated, even when operating under a gold system, a central bank can essentially cancel it by interventions that offset the currency effects of the import and export of gold to bring the balance of payments into balance.
Nevertheless, gold and silver coins that are not debased hold their real value in inflation times, that is they rise in value with inflation while fiat money declines in value unless the central bank suppresses the rise in precious metals prices with naked shorts.
The conclusion is that only gold and silver are real money.
Paper money came in as a stand-in for real money as gold and silver are heavy and their presence in significant amounts is obvious and requires the expense of protection. In previous times, gold and silver were deposited in vaults, and the depositor was provided a receipt, which traded as the first paper money.
In later periods when paper currency, such as Bank of England notes, entered circulation, they were backed by and convertible into gold. The same was true in the US until the Franklin D. Roosevelt era in the 1930s when Roosevelt confiscated gold from Americans and then raised its price.
US Senator Jesse Helms returned to Americans the right to own gold four decades later in the 1970s.
In the 1930s President Roosevelt called in the gold and then raised the official price from $20 an ounce to $35, where it stood until the official price became $42.22. In the 1970s Senator Helms got a law passed permitting Americans to again own gold in the form of coins and bars and not merely jewelry. In the 1980s the price of gold rose to $800 per ounce despite the large rise in the value of the US dollar due to the success of President Reagan’s supply-side economic policy. Wall St had, of course, incorrectly predicted high inflation and dollar collapse from Reagan’s policy, and some investors acted on the basis of this incorrect prediction.
In 2022 the price of gold per ounce peaked at $2,043.30 and currently stands at $1,655. Over my lifetime the price of one ounce of gold at today’s price, has risen by 47 times– from $35 to $1,650.
The question is what has inflation done to the paper dollar? Is the dollar worth 47 times less than in my youth? How much has gold outperformed the paper dollar despite Washington’s methods of suppressing the values of gold and silver?
I haven’t enough confidence in the inflation data to compute this, but would be pleased to publish anyone’s computation that is adequately explained.
What Americans born and raised after my generation do not understand is that at World War II’s close, the United States stood at the top of the world. America emerged as the only industrial economy intact and expanded in productive power after the disastrous war. All other industrial economies were in ruins, and the plans were to convert Germany to a permanent non-industrial agricultural economy. This plan was abandoned only because of the rise of the “Soviet threat.”
As MIT Professor Paul Samuelson, the doyen of American economics in the second half of the 20th century, emphasized, the United States was a self-sufficient economy. Its work force was employed producing products for domestic use and therefore Americans produced the goods and services that they consumed. This meant strong tax bases for numerous cities and states that were later ruined by the offshoring of American manufacturing forced by Wall Street in pursuit of lower labor costs and higher profits, a pursuit that cost America her ladders for upper mobility into the middle class and much of the middle class itself. Foreign trade or “Globalism” was an insignificant and unneeded component of American GDP. US debt, despite the accumulated war debt, was insignificant and of no consequent to the US economy as we owed it all to ourselves.
America’s prosperity was destroyed by the Soviet Collapse in 1991. The reason is that the Soviet Collapse convinced China and India, with their massive underemployed work forces, that capitalism, not socialism, was the future, and they opened their economies to foreign capital.
DYI COMMENT: America's prosperity was diminished by the collapse of communism it was destroyed by our deliberate outsourcing of manufacturing AND then replaced with speculative driven players in our finance, insurance, and real estate sector. So much so they are now the new aristocracy governing the U.S.
Wall St forced American corporations under threat of takeovers to move their manufacturing abroad. This occurred and collapsed the growth of US consumer income and the tax bases of former manufacturing cities and states, many of which, like Detroit, became highly publicized ruins (see, for example, Paul Craig Roberts, The Failure of Laissez Faire Capitalism).
It was not competition from abroad, from China, India, Russia, that stopped the growth of American real incomes. It was the short-sighted, self-serving policies imposed by narrow economic interests, such as Wall St, that knocked America off its perch.
Today the American economy is a marketer of goods made by American firms abroad with foreign labor. Americans do not receive the income from the manufacture of the goods that they consume. Billionaires, such as Sir James Goldsmith and Roger Milliken, and a few economists, such as myself, made this completely clear for years to no effect. In America Greed, not facts, rules.
Greed prevailed over the public interest and what was good for America.
Now we have a country that cannot even produce its latest jet fighters without Chinese parts and whose consumer goods have Chinese labor costs and not American.
A country that has destroyed itself in this way is so poorly led that a revolution is long overdue.
Trump tried to show us what was happening to us, but so far Americans have proven too stupid to save themselves.
The incompetence of America is perhaps the reason Putin does not concern himself with the American interference in his Ukrainian operation.
As Putin faces a totally incompetent West, Putin, despite his own shortcomings, will prevail. And so will China.
Paul Craig Roberts
Bear
Market
Continues!
Greg Hunter’s
USAWatchdog.com (Saturday Night Post)
Catherine Austin Fitts (CAF), Publisher of The Solari Report and former Assistant Secretary of Housing (Bush 41 Admin.), says what is coming for the economy is pain–and lots of it. CAF explains, “We are either in a major correction or we are going to go into a bear (market), and a lot of it depends on many different politics. If you look at the money being pumped out . . . on climate change, on green energy, environment and all these different new sort of scams, it depends on how they inject money. It’s either a major correction or it could turn into a bear (market). There is no way to tell because it is purely political.”
Various Fed presidents are repeatedly saying the central bank is going to continue raising interest rates. Why? CAF says, “I think they are going to keep raising interest rates. If you are Federal Reserve, you are playing a global game, and what you have to do is protect the reserve currency status. It looks like to me they have decided that all the BIS (Bank of International Settlements) members need to be in the dollar channel.
They [Federal Reserve] are doing everything they can to collapse the market share of the euro and then move that into the dollar syndicate.
I think they have to keep driving the dollar up. The U.S dollar index is up to 113, and at one point, it was at 114. One analyst said it was going to 120. They have the entire frontier market and the emerging markets in a bear trap, and that is very significant power. If you are going to go into the woods and shoot the bear, you can’t wound the bear, you have to kill the bear. So, I think the Fed is going to keep doing this for some time now.
They don’t mind, as you learned from the pandemic, collapsing the small business side of the economy or collapsing the middle-class. . . .
They are implementing the ‘Going Direct Reset.’ They are doing a currency reset. What you are looking at is a fundamental reengineering of the governance system on planet Earth.
Most of the benefits in the dollar system come from the benefits of having the reserve currency and being able to swap money you print out of thin air for real labor and real commodities worldwide.
That’s an enormous benefit, and they are going to protect that benefit. If they don’t protect that benefit, they run the risk of everybody moving out of the channel. This is what the Chinese and Russians are trying to do. They are trying to move out of the dollar channel and trying to create economic resiliency and trade outside the channel. What the Fed is trying to do and the dollar syndicate is trying to do is protect that channel. . . . It’s global government reengineering. It’s 100% power politics, and it’s war.”
In short, the Fed will defend the dollar and the world reserve currency status no matter how hard the stock market crashes,
no matter how much the economy crashes,
no matter how much the bond market crashes and no matter how much the housing market crashes.
In closing, CAF says, “Stop helping them. . . . Don’t bank at the big banks. . . use cash whenever you can, and pray. . . . This is first and foremost a spiritual war, and prayer is the best navigation tool possible. With this level of uncertainty and change, there is no way there is enough experts to help you and enough time to listen to them all. You have to focus on what is important. You have to decide, are you here to be free or are you here to be a slave? There is no more middle of the road. There are two sides, one leads to freedom and one leads to slavery. You have to choose.”
There is much more in the 58-minute interview.
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with the Publisher of The Solari Report, Catherine Austin Fitts. (10.15.22)
Click HERE to go directly to the video interview with Greg Hunter and Catherine Austin Fitts.
DYI: The long awaited bear market is now among us! My model portfolio is well positioned to take advantage when bargains in either or both stock and bond markets. At the end of the month I will update the portfolio!
So hold onto your cash and gold things are now becoming interesting as value improve!
DYI
"Once central banks impose digital money on their insouciant populations, people can be robbed at will by every approved party for every imaginable offense."
The Rule of Power
Last week PayPal, an online service for making and receiving payments, announced that at PayPal’s “sole discretion” $2,500 would be seized from accounts of those PayPal decided were guilty of spreading misinformation. “Misinformation” is whatever some speech control office at PayPal doesn’t like or dissent from official narratives. In other words, PayPal announced a policy of thought control as described in George Orwell’s 1984.
https://www.rt.com/news/564310-paypal-threatens-deplatform-misinformation-policy/ and
Moreover, $2,500 would be seized for each bit of misinformation, apparently even for errors resulting from being misinformed or from misunderstanding. If an account holder spreads misinformation twice, $5,000 is seized; ten bits of misinformation costs the account holder $25,000. Since the definition of misinformation is at PayPal’s sole discretion, it wouldn’t be long before PayPal, faced with missing its quarterly expected profits, would jack up its earnings by seizing people’s accounts.
It is unclear how a person spreads “misinformation” on a payments mechanism. Does it mean that “spreading misinformation” means donating to an organization that challenges official narratives? Does it mean that PayPal would have an army of employees watching social media comments of account holders and reading their emails?
The first seizure was in England where the robbed account was that of the Free Speech Union. It caused an uproar and protests from Members of Parliament and PayPal’s former president, and a couple of days later PayPal said that PayPal’s announcement that it was going to seize money from customers’ accounts for spreading misinformation was itself misinformation. https://sputniknews.com/20221010/paypal-says-it-never-intended-to-fine-customers-2500-for-misinformation-1101700510.html
Think about this for a moment.
If PayPal can seize $2,500 from your account because some woke freak in PayPal’s Thought Control Police Force finds your opinion “offensive,” so can your bank, your 401k, your IRA, your investment account.
Your credit card company can bill you $2,500 for each disapproved statement and turn your account over to bill collectors when you don’t pay. Maybe your car and house will be seized.
Once central banks impose digital money on their insouciant populations, people can be robbed at will by every approved party for every imaginable offense.
A Fish Rots From the Head
Where did PayPal get the idea that it can seize the money of people whose statements it disapproves? Obviously, they got it from the US government. The US government has seized people’s property because the property “facilitated a crime,” which means that a crime took place on the property by someone, not necessarily the owner (The Tyranny of Good Intentions by Paul Craig Roberts).
The US government seized Venezuela’s gold because it disapproved of Venezuela’s politics. The US government seized Russia’s central bank reserves when Russia intervened in Ukraine to protect the Russian population of former Russian territory. US lawmakers want to punish Saudi Arabia for tending to its own interest instead of Washington’s https://www.rt.com/news/564437-us-lawmakers-punish-saudi-arabia/.
The California government wants to steal the medical licenses of doctors who ignored medical protocols designed to serve Big Pharma’s profits and instead saved their patients’ lives
It should be obvious that Western Civilization no longer exists. A civilization is defined by its values, such as free speech, and when those values are no longer honored, the civilization no longer exists.
Think about what the US government has done to Julian Assange. His decade long incarceration in the absence of charges, trial, and conviction violates all legal principles that comprise our constitutional protections from arbitrary and unjust treatment by government. It shows how far gone we are that Assange’s illegal and unconstitutional treatment continues year after year and produces no outrage from Congress, media, law schools, bar organizations, courts, or the American population. The official narrative is that he is a Russian spy and we have to get him at all cost, including the establishment of precedents that destroy our security from arbitrary and ruthless oppression. The assertion that Assange is a Russian spy is an intentional lie, and for the sake of supporting a lie we are depriving ourselves of our constitutional protections.
The US government’s policy of seizing whoever’s property it wants to seize is spreading worldwide. If the home of democracy and the rule of law can arbitrarily do as it likes, so can the South African government which says it is considering seizing the farms of white people without compensation https://www.theepochtimes.com/south-africa-may-soon-take-land-without-compensation_4783318.html?utm_source=News&src_src=News&utm_campaign=breaking-2022-10-10-2&src_cmp=breaking-2022-10-10-2&utm_medium=email&est=e8Ef6F%2BGegg%2Bjv7r0fGz8vzogZKJS61mt%2FC79%2Bvb55H3iniZtm2oqg%3D%3D. In other words, there is no longer a rule of law. There is a rule of power.
The rule of power is what Putin, Xi, Maduro, and the American and European peoples are up against, and they seem very slow to realize it.
Thank You Paul!
DYI
Currently the best bargain remains with precious metals preferably silver or the mining companies. Bonds, now that yields have improved the compounding effect over the long term will outperform stocks as they remain at nose bleed valuations.
--As the stock market becomes more expensive, a conservative investor's stock allocation should go down. The rationale recognizes the reduced expected future returns for stocks, and the increasing risk.
--The formula acknowledges the increased likelihood of the market falling from current levels based on historical valuation levels and regression to the mean, rather than from volatility. Many agree this is the key to value investing.