James Turk: Silver is Approaching Stage Two of its Bull Market
Back in April 2007, I wrote about the three stages that appear in every bull market, and more to the point, that gold was approaching the end of stage one. Gold back then was still trading around $690, and therefore well below its then record high of $850 reached in January 1980. My view was that “gold looks ready to make a new all-time high. When that happens, stage two begins. There will not yet be widespread excitement about gold in the next stage, because that won't occur until stage three. But when gold makes a new record high, and particularly after it breaks into a 4-digit price, people will begin paying attention.”
I wrote a follow-up article in November 2009 entitled Welcome to Stage Two of Gold's Bull Market, just two months after gold broke above $1,000. Focusing on the change in prevailing sentiment, I noted how differently gold was being treated. "During the first stage of a bull market, the media and most investors alike focus on past issues, rather than future potential. Over the past decade one consequently heard all the reasons not to own the gold…But there is a notable difference in this stage compared to stage one.
Look how many people are writing and talking about gold. Gold has moved from apathy and neglect – stage one characteristics – to growing attention. But importantly, instead of embracing gold and analyzing it to determine relative value, today’s attention is one of widespread disbelief and skepticism that gold can climb higher. These are exactly the responses one should expect to emanate from stage two." I concluded by noting that at some unpredictable point in the future, gold will enter stage three "when gold no longer is relatively good value."
I did not make any mention of silver in the above two articles. It too has three stages, butsilver is still mired in stage one, which began in February 1991 after silver had collapsed to $3.50. It was an astounding 93% decline from its January 1980 peak of $50. But as we can see on the following chart, $3.50 was silver’s low, and its price has been rising ever since.
This chart shows a massive accumulation pattern, marked by the green lines. This pattern is a story of strong hands and weak hands, specifically, of silver moving to the former from the latter.
From its $50 high in January 1980 to its $3.50 low in February 1991, the weak hands were shaken out. At that point, the accumulation by strong hands – who were buying because the recognized that silver was an exceptional bargain – became the dominant force. Their buying power was stronger than the selling pressure of the weak hands, and the price of silver responded by starting to climb. It was classic stage one action, but here’s the important point.
Silver is still in stage one. It won’t advance into stage two until $50 is exceeded, just like gold did not enter stage two until its previous high of $850 was hurdled.
I expect that silver will exceed $50 this year, which is a point of view I first mentioned in my outlook for 2010.
Admittedly, I was a little early with my forecast about when gold would enter stage two. So perhaps I will again be early by forecasting that silver will enter stage two of its bull market this year. Regardless of the accuracy of my timing, one thing is clear. Because it is still in stage one, silver remains good value.
March 5, 2011
Jason Hommel: silver going to US$500/oz
Here's an excerpt from Jason Hommel's newsletter, where he argues on why the metal is eventually going to hit US$500/oz...
"Recently, I've been hammering the point that there are two major reasons why silver is headed to $500/oz.
First, silver hit $50/oz. in 1980, and money creation has increased 10 times since then, so the true inflation adjusted price of silver will be $500.
Second, when 1% of money in US banks buys silver, it will be 1% of about $18 trillion, which is $180 billion. If you divide that by 700 million, you'd get $257/oz., which would leave no silver for industry or the rest of the world, which implies a silver price of at least about $500.
So, here then is the problem.
How will they prevent silver from going to $500/oz.? They can't. They can only slow down the rise, or let it rise fast. (while increasing volatility, and creating temporary price dips) And how will they prevent the implications of such a massive rise to $500?
See, the problem is twofold.
If they let silver run fast to $500, say over 6 months, the dollar will be perceived as collapsing, and could continue to collapse to zero.
But if they let silver continue to go up "slowly" at only 30% per year, for the next ten years to take us to $500, this would create a worse problem. See, after nearly 20 years of precious metals only going up, people will begin to notice -- more than notice. They will begin to say, "precious metals only go up, they never go down". And that's how price bubbles begin to form, making silver go from fair value to over valued.
And if silver were to become over valued, that would drive the price from $500 to $5000, and could continue and ultimately collapse the dollar to zero value.
So that is quite the problem for the people who are trying to prevent the silver price from rising.
The silver storm is coming. Prepare.
People ask some interesting questions when I point out that silver is headed to $500. They ask, "Gee, who will buy it when it's that expensive?" Did they not comprehend the argument? Only 1% of people will be buying silver when silver is $500/oz., (a hundred times more than today, when only 1% of 1% of people are buying silver) but yet, 99% of people won't have bought any silver in the recent year, at $500/oz.
Some analysts today say that silver is going to go down, because "everybody loves silver". Such analysts don't know anything about the fundamentals, which trump any kind of other analysis! Silver might hit the news due to new highs, but the facts are clear. Only about 1% of 1% of money is buying silver each year. That's one dollar out of 10,000!
Silver's not a popular investment. Not yet. But it will be. IT WILL BE! Prepare for it. Get it now. Anywhere below $50 to $100/oz is cheap..."
For more from Jason Hommel on silver you can visit his web site "Silver Stock report"
resource : copied from Silver-owl's blog
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Stop! What is Money?
The money that the world uses today is created by private banks lending non-existent money called credit. This credit has never, does not, and will never exist, except in theory on computer screens. People starve and die all because they do not have enough digits on a computer screen. All of this credit, created by the private banks, is owed back to those same banks, plus interest. By design, there is never enough credit in circulation to pay back all the principal plus interest on the loans outstanding, which is why the concept of bankruptcy is built into the system.
Using the simple system above, banksters are given the ability to manipulate the world's economies into 'boom and bust' cycles. In essence, the only difference between a boom and a bust is the amount of credit in circulation, or, rather, the net amount of numbers on people's computer screens. Initially, banksters create a boom by increasing the supply of credit in the economy. During this boom period, individuals and businesses are encouraged to take on more debt as they are more confident of increasing their income in the future. All this extra credit in the system leads to moreactivity, which in turn creates more confidence in the system, with many getting into more debt. This boom is akin to a fishing trawler; the bankster throws out a credit line and waits, once the bait has been taken the bankster begins to wind in the credit by taking credit out of circulation, it's gone. The economy then moves into a slump or recession, simply because there are not enough units of credit in circulation. The banksters are then able to trawl from people the wealth that does exist, in exchange for money that never existed in the first place. [1]
The whole economic system is all about the level of confidence that the population has in it . . . and that confidence all starts with the people and banks that run it. What we have seen so far in 2011, particularly in early August, is a string of increasingly negative statements about the worldwide economy, both in the media and from governments. There has been a rapid decline in the confidence levels of individuals and businesses in the system, and it appears that we could be only one or two negative statements away from a breaking point. As a friend of mine observed after the 2008 global financial crisis, "it will be like all the money suddenly went to money heaven."
The following observations of events in August 2011 highlight the 'perfect storm' that is building:
August 2nd: The US Congress signs into law the Budget Control Act of 2011 and in effect raises the Federal debt ceiling by up to $2.4tn. This essentially presents the Federal Reserve with a green light to monetize another round of Federal debt.
August 3rd: An interview with former Fed officials, Donald Kohn, Vincent Reinhart and Brian Madigan, shows growing support for another round of quantitative easing, whereby central banks purchase financial assets from banks and other private sector businesses with newly created money (referred to more recently as "QE3"), if inflation comes down.
August 5th: Credit rating agency, Standard & Poor, downgrades the long-term credit rating of the US government from AAA to AA+ for the first time in its history. This does not immediately halt the US Treasury's ability to borrow, but what it does do is downgrade the entire infrastructure of the fiat monetary system. Therefore, the lesser talked about but far more important consequence of the downgrade comes from the domino effect felt by the rest of the economy. US treasuries may be able to shake off the downgrade (for now), however the rest of the world's economy will not. As PIMCO puts it: "[the] U.S. Downgrade Heralds A New Financial Era".
August 7th: Global money trends: Beijing Downgrades US-Treasury to A+ - Is Anybody Listening?
August 7th: Former Federal Reserve Chairman Alan Greenspan, on NBC television's "Meet the Press", ruled out the chance of a US default following S&P's decision to downgrade America's credit rating:
"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default ... What I think the S&P thing did was to hit a nerve that there's something basically bad going on, and it's hit the self-esteem of the United States, the psyche" said Greenspan
Greenspan then provides the Fed with the perfect alibi for the coming market collapse: It's Europe's fault.
"[A double dip recession] depends on Europe, not the United States. The United States was actually doing relatively well - sluggish, but going forward - until Italy ran into trouble ... When Italy showed signs of significant weakness in selling its bonds ... it created a massive problem within Europe because Italy is a very large country that ... indeed cannot be bailed out... And that's what's causing our problem."
August 8th: Peter Schiff responds to Alan Greenspan's remarks on "The Peter Schiff Show":
"According to the illustrious maestro, there is nothing to worry about, the US Government should still be AAA because they can print money, well so can any country ... All they [rating agencies] should look at is the currency ... If simply having a printing press means that you're AAA, why do we even have rating agencies? ... This whole thing is absurd, when you are rating sovereign debt of course you are rating the dollar ... What is happening to the dollar today as a result of the S&P downgrade? it's rising, the dollar index is up ... it's not surging but the fact that its not collapsing is ridiculous ... now it is collapsing against real money though, look at the price of gold, it's up $40 ... Why is the price of gold up, but why are other currencies down? ... that's because of intervention, central banks in other countries in order to keep the S&P downgrade from killing the dollar and killing the treasury market they are intervening, they are throwing good money after bad, they are buying dollars and they are buying treasuries with money that they print ... but the one thing they cant print is gold."
August 8th: Zerohedge: Here Comes TARP 2: Bank Of America Implodes, At $6.87, BAC CDS Up 20% To 260 bps As Bankruptcy Contemplated ... This has huge potential to be a Financial False Flag attack. Will the morgue make a power play?
August 8th: Bloomberg: AAA Rated France May Be Vulnerable to Downgrade Following Cut to the U.S.
August 9th: Zerohedge: S&P Cuts AAA Rating On Thousands Of Municipal Bonds.
August 9th: US Federal Reserve chairman, the Bernank states he intends on keeping interest rates at zero for at least 2 years. As Max Keiser broke it down:
"This is a form of financial oppression, and I would go so far as to call it financial apartheid. If you are part of the elite you get to borrow money at -2%, if you are borrowing money on a credit card you are borrowing money at 35% or 40% or higher, guaranteed to impoverish you ... They are creating, through financial apartheid, a financial underclass. Keeping interest rates at 0% is the key. They are getting away with incredible fraud and confiscation of wealth and plunder.
The [way this] negative real interest rate story relates to gold is very interesting, because [people equate] the negative real interest rates with deflation and they equate deflation with an environment that is poor for gold. Historically, however, negative real interest rates or 'deflation' are actually the best time to be buying gold ... So gold is [increasing] in either deflation (which is really another word for hyperinflation), hyperinflation or inflation ... So there is really a no lose situation. There's no top on gold, because there is no amount of destruction that one can imagine won't visit the fiat currencies around the world because the fiat currency grid is going to go the way of the dodo ... There is no top on gold, $10,000/oz for gold, yeh of course, it could go a lot higher because fiat currencies are going to zero ... It has run it's course, it's finished, it's over, the 25 year paper bull market is finished"
The Bernank has also stated that officials have "discussed the range of policy tools" to strengthen growth and are "prepared to employ these tools as appropriate." These statements clearly leave the door open for further asset purchases and investors are now looking towards the Bernank's comments at Jackson Hole on August 26th for the launch of QE3.
August 11th: Azizonomics: Europe Bans Shorts (Backside Now Exposed) - 'Belgium, France, Italy and Spain override European regulation to impose 15-day short selling bans on their markets. While there are huge black holes of debt slowly sucking those nations' good faith and credit into the mists of the universe, regulators seem to have forgotten that imposing short selling bans didn't prevent a crash in September 2008.
August 12th: Zerohedge: Liquidity Options Running Out For European Banks - "Liquidity Crisis Scene Set"
August 12th: Zerohedge: Guest Post: Consumers Are Confident Of Recession
August 14th: Zerohedge: Italy Is The New Greece, As Strikes Shift From Syntagma Square To Rome
This series of somewhat unfortunate events carries a simple message to the banksters of the world: Money is being removed from circulation.
What we are likely to see from banksters in response to all this, is a 'smoke and mirrors' campaign to allow them to hand out more money to their bankster friends. Since European liquidity is clearly the focus of banksters at the moment, the Fed will remain silent as the European Central Bank ("ECB") and the Bank of England ("BOE") expand their balance sheets. As 'sh*t hits the fan (SHTF)' the American banksters will focus everyone's attention firmly on Europe. Once the US markets have deflated enough for the Bernank to declare deflation to be a huge risk, the Fed will be given the go ahead to launch QE3.
The popular belief amongst financial analysts is that the Bernank will announce the Fed's intentions for QE3 at Jackson Hole on August 26, 2011. As central bankers appear to like being very predictable, a JHole announcement of the Bernank's intentions to print is very possible. I would speculate that, in order for the Bernank to gather support for QE3, we would need to see markets deflate a long way from here until the announcement. Unlike the announcement of "QE2" in August of 2010, QE3 will only be instituted amongst a panic to which we haven't seen since the first round of monetary printing in 2008.
Remember, it's just a ride...
What is clear is that the world monetary system is just a game. If you know how the world monetary system works, you know the game that you are playing ... and if you know the game and the rules you're playing by, you can prepare for, and even benefit from, any future moves by banksters.
I would strongly argue that the decade-long bull market we have seen in precious metals is only the first phase of what will be an explosion in the price of these precious metals. Phase 1 of this bull market has seen a huge acceleration in the value of gold and silver as alternative media has awoken to their huge potential and begun spreading that message. We saw the fruition of Phase 1 in November of 2010, when Max Keiser launched his "Crash JP Morgan, Buy Silver" campaign, a direct plan of action to bring down the banking cartel.
Phase 2 will begin when the critical mass of the world's population heads that message and loses faith in fiat currency. When this happens, there will be a rapid push towards decentralizing the monetary system of the world and the bull market in gold and silver will accelerate at an unprecedented level. It is a bull market in dissent, a bull market which stems from societal revolution. This may well happen sooner than you think.
Lets take a look back to Max Keiser's article in The Guardian from December 2010 where he introduced many to his Crash JP Morgan Buy Silver campaign: Want JP Morgan to crash? Buy silver
"Over the past 11 years, the Gata (Gold Anti-Trust Action) committee has worked to reveal the silver/gold price suppression scheme; thanks to whistleblower Andrew Maguire in London, an investigation has been opened. As part of the ongoing expose, it has now become clear that JP Morgan is sitting on what is estimated to be 3.3bn ounce "short" position in silver (which they have sold short, meaning they don't own it to begin with) in an attempt to keep the price artificially low in order to keep the relative appeal of the dollar and other fiat currencies high. The potential liability for JP Morgan has been an open secret for a few years.
On my show, Keiser Report, I recently invited Michael Krieger, a regular contributor of Zero Hedge (the WikiLeaks of finance). We posited that if 5% of the world's population each bought a one-ounce coin of silver, JP Morgan would be forced to cover their shorts - an estimated $1.5tn liability - against their market capital of $150bn, and the company would therefore go bankrupt. A few days later, I suggested on the Alex Jones show that he launch a "Google bomb" with the key phrase 'crash jp morgan buy silver'.
Here's how the campaign works: wealth tied to a fiat currency is easily overwhelmed by wealth tied to silver and gold. And the world is waking up to the fact that they have the ability, without government assistance or other interference, to create a new precious metals-based backed currency system by simply converting their fiat paper into real money.
This campaign has 100% chance of working; it falls into the category of a self-fulfilling prophecy. As more individuals buy silver and gold, all attempts to replenish the system with more paper money will only cause the purchasing power of the silver and gold to increase - thus prompting more people to buy more. Any attempts to bail out JP Morgan would have the same effect. If the US Fed was to flood the system with bailout money for JP Morgan to cover their silver short position (as they did after the collapse of Long-Term Capital Management), more inflation will ensue and the price of silver and gold will rise more, triggering more purchases. A virtuous circle is born.
If anyone is interested in helping to crash JP Morgan, buy silver. In the end, it's about transferring wealth back to the people from where it came."
Since Keiser shared this campaign with the world, the "Crash JP Morgan, Buy Silver" campaign has gone viral. Despite several heated attacks on silver in the first half of 2011, which saw the price of Silver drop from near its record high of $50 back to $35 in just a matter of days, it is clear that the banksters can not kill an idea, and purchases of physical silver have increased to never before seen levels. Physical silver is now back in the firm hands of the people, including decentralized groups such as the Silver Liberation Army ("SLA").
Businessweek (22 June 2011): Silver-Coin Sales Booming at Perth Mint on Demand for Haven -'That's 66 percent higher than the previous full fiscal year and about 10-fold more than five years earlier. Sales of 1- ounce gold coins will be close to a record, he said.'
Zerohedge (7 July 2011): UK Royal Mint Silver Production Surges 100% - Sovereign Edward Supply Tight but Bullion Premiums Low - 'The U.K.'s Royal Mint said that first-half silver production in 2011 doubled, while gold production climbed 8.9% over 2010 levels.'
Bix Weir on silver (9 August 2011):
"The main battles for the banksters are in the silver markets and they are doing absolutely everything they can to project to the world that silver is not the place to be, silver is not a monetary metal and silver is not a safe haven.. but we know that is complete bull**** ... banksters are trying their best to protect silver, and not gold ... silver is the metal that can destroy the entire monetary system .. taking out JP Morgan would start a crash in the derivatives market that is unrecoverable ... and that's where all their power is going to protect the silver market so people don't rush in and buy physical silver."
JP Morgue will no doubt continue to manipulate markets and keep the silver price down. This is whyphysical silver holders must knowingly sit tight and play the waiting game. While the manipulation still persists, the silver markets will remain extremely volatile. Take this as your opportunity to "buy the f-ing dip (BTFD)". If you are patient, one day you will be rewarded. The day when JP Morgan completely loses control of its short position in silver and the physical price of silver decouples from the paper price will be one to remember.
For the vigilante investors out there, why not short JP Morgan's stock? The lower JPM's stock price goes, the lower their market cap becomes...the lower their market cap becomes, the larger their liabilities become in relation.
Another exciting possibility for the near future is the play Max Keiser has dubbed 'The Reverse Nixon' and the 'Golden Dream'. Imagine a world in which U.S. President Barack Obama were to pull a reverse Richard Nixon and put the U.S. back onto a gold standard against which it could devalue its debts.
As Max Keiser puts it:
"That's a genius idea ... that's exactly what is going to happen anyway ... Those who criticize this idea say there's not enough gold ... but there's something called the price discovery mechanism.. markets reflect supply and demand.. If you have 600 trillion of worthless derivatives, some of that is going to end up being repurposed as a gold standard at $20-25-30,000 an ounce ... that's just the way markets work - accept market driven capitalism or go home."
The world monetary system is just a game; a game that is about to embark on a giant shift in direction. The events of August, 2011 should be a wake-up call for many. However, like everything in life, don't take my word for it - go out and do your own research and be ready to make your own moves. The monetary revolution will not be televised. The paradigm shift towards decentralized monetary systems is in progress. ¡Viva la Revolución!
Back in April 2007, I wrote about the three stages that appear in every bull market, and more to the point, that gold was approaching the end of stage one. Gold back then was still trading around $690, and therefore well below its then record high of $850 reached in January 1980. My view was that “gold looks ready to make a new all-time high. When that happens, stage two begins. There will not yet be widespread excitement about gold in the next stage, because that won't occur until stage three. But when gold makes a new record high, and particularly after it breaks into a 4-digit price, people will begin paying attention.”
I wrote a follow-up article in November 2009 entitled Welcome to Stage Two of Gold's Bull Market, just two months after gold broke above $1,000. Focusing on the change in prevailing sentiment, I noted how differently gold was being treated. "During the first stage of a bull market, the media and most investors alike focus on past issues, rather than future potential. Over the past decade one consequently heard all the reasons not to own the gold…But there is a notable difference in this stage compared to stage one.
Look how many people are writing and talking about gold. Gold has moved from apathy and neglect – stage one characteristics – to growing attention. But importantly, instead of embracing gold and analyzing it to determine relative value, today’s attention is one of widespread disbelief and skepticism that gold can climb higher. These are exactly the responses one should expect to emanate from stage two." I concluded by noting that at some unpredictable point in the future, gold will enter stage three "when gold no longer is relatively good value."
I did not make any mention of silver in the above two articles. It too has three stages, butsilver is still mired in stage one, which began in February 1991 after silver had collapsed to $3.50. It was an astounding 93% decline from its January 1980 peak of $50. But as we can see on the following chart, $3.50 was silver’s low, and its price has been rising ever since.
This chart shows a massive accumulation pattern, marked by the green lines. This pattern is a story of strong hands and weak hands, specifically, of silver moving to the former from the latter.
From its $50 high in January 1980 to its $3.50 low in February 1991, the weak hands were shaken out. At that point, the accumulation by strong hands – who were buying because the recognized that silver was an exceptional bargain – became the dominant force. Their buying power was stronger than the selling pressure of the weak hands, and the price of silver responded by starting to climb. It was classic stage one action, but here’s the important point.
Silver is still in stage one. It won’t advance into stage two until $50 is exceeded, just like gold did not enter stage two until its previous high of $850 was hurdled.
I expect that silver will exceed $50 this year, which is a point of view I first mentioned in my outlook for 2010.
Admittedly, I was a little early with my forecast about when gold would enter stage two. So perhaps I will again be early by forecasting that silver will enter stage two of its bull market this year. Regardless of the accuracy of my timing, one thing is clear. Because it is still in stage one, silver remains good value.
March 5, 2011
Jason Hommel: silver going to US$500/oz
Here's an excerpt from Jason Hommel's newsletter, where he argues on why the metal is eventually going to hit US$500/oz...
"Recently, I've been hammering the point that there are two major reasons why silver is headed to $500/oz.
First, silver hit $50/oz. in 1980, and money creation has increased 10 times since then, so the true inflation adjusted price of silver will be $500.
Second, when 1% of money in US banks buys silver, it will be 1% of about $18 trillion, which is $180 billion. If you divide that by 700 million, you'd get $257/oz., which would leave no silver for industry or the rest of the world, which implies a silver price of at least about $500.
So, here then is the problem.
How will they prevent silver from going to $500/oz.? They can't. They can only slow down the rise, or let it rise fast. (while increasing volatility, and creating temporary price dips) And how will they prevent the implications of such a massive rise to $500?
See, the problem is twofold.
If they let silver run fast to $500, say over 6 months, the dollar will be perceived as collapsing, and could continue to collapse to zero.
But if they let silver continue to go up "slowly" at only 30% per year, for the next ten years to take us to $500, this would create a worse problem. See, after nearly 20 years of precious metals only going up, people will begin to notice -- more than notice. They will begin to say, "precious metals only go up, they never go down". And that's how price bubbles begin to form, making silver go from fair value to over valued.
And if silver were to become over valued, that would drive the price from $500 to $5000, and could continue and ultimately collapse the dollar to zero value.
So that is quite the problem for the people who are trying to prevent the silver price from rising.
The silver storm is coming. Prepare.
People ask some interesting questions when I point out that silver is headed to $500. They ask, "Gee, who will buy it when it's that expensive?" Did they not comprehend the argument? Only 1% of people will be buying silver when silver is $500/oz., (a hundred times more than today, when only 1% of 1% of people are buying silver) but yet, 99% of people won't have bought any silver in the recent year, at $500/oz.
Some analysts today say that silver is going to go down, because "everybody loves silver". Such analysts don't know anything about the fundamentals, which trump any kind of other analysis! Silver might hit the news due to new highs, but the facts are clear. Only about 1% of 1% of money is buying silver each year. That's one dollar out of 10,000!
Silver's not a popular investment. Not yet. But it will be. IT WILL BE! Prepare for it. Get it now. Anywhere below $50 to $100/oz is cheap..."
For more from Jason Hommel on silver you can visit his web site "Silver Stock report"
resource : copied from Silver-owl's blog
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Stop! What is Money?
The money that the world uses today is created by private banks lending non-existent money called credit. This credit has never, does not, and will never exist, except in theory on computer screens. People starve and die all because they do not have enough digits on a computer screen. All of this credit, created by the private banks, is owed back to those same banks, plus interest. By design, there is never enough credit in circulation to pay back all the principal plus interest on the loans outstanding, which is why the concept of bankruptcy is built into the system.
Using the simple system above, banksters are given the ability to manipulate the world's economies into 'boom and bust' cycles. In essence, the only difference between a boom and a bust is the amount of credit in circulation, or, rather, the net amount of numbers on people's computer screens. Initially, banksters create a boom by increasing the supply of credit in the economy. During this boom period, individuals and businesses are encouraged to take on more debt as they are more confident of increasing their income in the future. All this extra credit in the system leads to moreactivity, which in turn creates more confidence in the system, with many getting into more debt. This boom is akin to a fishing trawler; the bankster throws out a credit line and waits, once the bait has been taken the bankster begins to wind in the credit by taking credit out of circulation, it's gone. The economy then moves into a slump or recession, simply because there are not enough units of credit in circulation. The banksters are then able to trawl from people the wealth that does exist, in exchange for money that never existed in the first place. [1]
The whole economic system is all about the level of confidence that the population has in it . . . and that confidence all starts with the people and banks that run it. What we have seen so far in 2011, particularly in early August, is a string of increasingly negative statements about the worldwide economy, both in the media and from governments. There has been a rapid decline in the confidence levels of individuals and businesses in the system, and it appears that we could be only one or two negative statements away from a breaking point. As a friend of mine observed after the 2008 global financial crisis, "it will be like all the money suddenly went to money heaven."
The following observations of events in August 2011 highlight the 'perfect storm' that is building:
August 2nd: The US Congress signs into law the Budget Control Act of 2011 and in effect raises the Federal debt ceiling by up to $2.4tn. This essentially presents the Federal Reserve with a green light to monetize another round of Federal debt.
August 3rd: An interview with former Fed officials, Donald Kohn, Vincent Reinhart and Brian Madigan, shows growing support for another round of quantitative easing, whereby central banks purchase financial assets from banks and other private sector businesses with newly created money (referred to more recently as "QE3"), if inflation comes down.
August 5th: Credit rating agency, Standard & Poor, downgrades the long-term credit rating of the US government from AAA to AA+ for the first time in its history. This does not immediately halt the US Treasury's ability to borrow, but what it does do is downgrade the entire infrastructure of the fiat monetary system. Therefore, the lesser talked about but far more important consequence of the downgrade comes from the domino effect felt by the rest of the economy. US treasuries may be able to shake off the downgrade (for now), however the rest of the world's economy will not. As PIMCO puts it: "[the] U.S. Downgrade Heralds A New Financial Era".
August 7th: Global money trends: Beijing Downgrades US-Treasury to A+ - Is Anybody Listening?
August 7th: Former Federal Reserve Chairman Alan Greenspan, on NBC television's "Meet the Press", ruled out the chance of a US default following S&P's decision to downgrade America's credit rating:
"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default ... What I think the S&P thing did was to hit a nerve that there's something basically bad going on, and it's hit the self-esteem of the United States, the psyche" said Greenspan
Greenspan then provides the Fed with the perfect alibi for the coming market collapse: It's Europe's fault.
"[A double dip recession] depends on Europe, not the United States. The United States was actually doing relatively well - sluggish, but going forward - until Italy ran into trouble ... When Italy showed signs of significant weakness in selling its bonds ... it created a massive problem within Europe because Italy is a very large country that ... indeed cannot be bailed out... And that's what's causing our problem."
August 8th: Peter Schiff responds to Alan Greenspan's remarks on "The Peter Schiff Show":
"According to the illustrious maestro, there is nothing to worry about, the US Government should still be AAA because they can print money, well so can any country ... All they [rating agencies] should look at is the currency ... If simply having a printing press means that you're AAA, why do we even have rating agencies? ... This whole thing is absurd, when you are rating sovereign debt of course you are rating the dollar ... What is happening to the dollar today as a result of the S&P downgrade? it's rising, the dollar index is up ... it's not surging but the fact that its not collapsing is ridiculous ... now it is collapsing against real money though, look at the price of gold, it's up $40 ... Why is the price of gold up, but why are other currencies down? ... that's because of intervention, central banks in other countries in order to keep the S&P downgrade from killing the dollar and killing the treasury market they are intervening, they are throwing good money after bad, they are buying dollars and they are buying treasuries with money that they print ... but the one thing they cant print is gold."
August 8th: Zerohedge: Here Comes TARP 2: Bank Of America Implodes, At $6.87, BAC CDS Up 20% To 260 bps As Bankruptcy Contemplated ... This has huge potential to be a Financial False Flag attack. Will the morgue make a power play?
August 8th: Bloomberg: AAA Rated France May Be Vulnerable to Downgrade Following Cut to the U.S.
August 9th: Zerohedge: S&P Cuts AAA Rating On Thousands Of Municipal Bonds.
August 9th: US Federal Reserve chairman, the Bernank states he intends on keeping interest rates at zero for at least 2 years. As Max Keiser broke it down:
"This is a form of financial oppression, and I would go so far as to call it financial apartheid. If you are part of the elite you get to borrow money at -2%, if you are borrowing money on a credit card you are borrowing money at 35% or 40% or higher, guaranteed to impoverish you ... They are creating, through financial apartheid, a financial underclass. Keeping interest rates at 0% is the key. They are getting away with incredible fraud and confiscation of wealth and plunder.
The [way this] negative real interest rate story relates to gold is very interesting, because [people equate] the negative real interest rates with deflation and they equate deflation with an environment that is poor for gold. Historically, however, negative real interest rates or 'deflation' are actually the best time to be buying gold ... So gold is [increasing] in either deflation (which is really another word for hyperinflation), hyperinflation or inflation ... So there is really a no lose situation. There's no top on gold, because there is no amount of destruction that one can imagine won't visit the fiat currencies around the world because the fiat currency grid is going to go the way of the dodo ... There is no top on gold, $10,000/oz for gold, yeh of course, it could go a lot higher because fiat currencies are going to zero ... It has run it's course, it's finished, it's over, the 25 year paper bull market is finished"
The Bernank has also stated that officials have "discussed the range of policy tools" to strengthen growth and are "prepared to employ these tools as appropriate." These statements clearly leave the door open for further asset purchases and investors are now looking towards the Bernank's comments at Jackson Hole on August 26th for the launch of QE3.
August 11th: Azizonomics: Europe Bans Shorts (Backside Now Exposed) - 'Belgium, France, Italy and Spain override European regulation to impose 15-day short selling bans on their markets. While there are huge black holes of debt slowly sucking those nations' good faith and credit into the mists of the universe, regulators seem to have forgotten that imposing short selling bans didn't prevent a crash in September 2008.
August 12th: Zerohedge: Liquidity Options Running Out For European Banks - "Liquidity Crisis Scene Set"
August 12th: Zerohedge: Guest Post: Consumers Are Confident Of Recession
August 14th: Zerohedge: Italy Is The New Greece, As Strikes Shift From Syntagma Square To Rome
This series of somewhat unfortunate events carries a simple message to the banksters of the world: Money is being removed from circulation.
What we are likely to see from banksters in response to all this, is a 'smoke and mirrors' campaign to allow them to hand out more money to their bankster friends. Since European liquidity is clearly the focus of banksters at the moment, the Fed will remain silent as the European Central Bank ("ECB") and the Bank of England ("BOE") expand their balance sheets. As 'sh*t hits the fan (SHTF)' the American banksters will focus everyone's attention firmly on Europe. Once the US markets have deflated enough for the Bernank to declare deflation to be a huge risk, the Fed will be given the go ahead to launch QE3.
The popular belief amongst financial analysts is that the Bernank will announce the Fed's intentions for QE3 at Jackson Hole on August 26, 2011. As central bankers appear to like being very predictable, a JHole announcement of the Bernank's intentions to print is very possible. I would speculate that, in order for the Bernank to gather support for QE3, we would need to see markets deflate a long way from here until the announcement. Unlike the announcement of "QE2" in August of 2010, QE3 will only be instituted amongst a panic to which we haven't seen since the first round of monetary printing in 2008.
Remember, it's just a ride...
What is clear is that the world monetary system is just a game. If you know how the world monetary system works, you know the game that you are playing ... and if you know the game and the rules you're playing by, you can prepare for, and even benefit from, any future moves by banksters.
I would strongly argue that the decade-long bull market we have seen in precious metals is only the first phase of what will be an explosion in the price of these precious metals. Phase 1 of this bull market has seen a huge acceleration in the value of gold and silver as alternative media has awoken to their huge potential and begun spreading that message. We saw the fruition of Phase 1 in November of 2010, when Max Keiser launched his "Crash JP Morgan, Buy Silver" campaign, a direct plan of action to bring down the banking cartel.
Phase 2 will begin when the critical mass of the world's population heads that message and loses faith in fiat currency. When this happens, there will be a rapid push towards decentralizing the monetary system of the world and the bull market in gold and silver will accelerate at an unprecedented level. It is a bull market in dissent, a bull market which stems from societal revolution. This may well happen sooner than you think.
Lets take a look back to Max Keiser's article in The Guardian from December 2010 where he introduced many to his Crash JP Morgan Buy Silver campaign: Want JP Morgan to crash? Buy silver
"Over the past 11 years, the Gata (Gold Anti-Trust Action) committee has worked to reveal the silver/gold price suppression scheme; thanks to whistleblower Andrew Maguire in London, an investigation has been opened. As part of the ongoing expose, it has now become clear that JP Morgan is sitting on what is estimated to be 3.3bn ounce "short" position in silver (which they have sold short, meaning they don't own it to begin with) in an attempt to keep the price artificially low in order to keep the relative appeal of the dollar and other fiat currencies high. The potential liability for JP Morgan has been an open secret for a few years.
On my show, Keiser Report, I recently invited Michael Krieger, a regular contributor of Zero Hedge (the WikiLeaks of finance). We posited that if 5% of the world's population each bought a one-ounce coin of silver, JP Morgan would be forced to cover their shorts - an estimated $1.5tn liability - against their market capital of $150bn, and the company would therefore go bankrupt. A few days later, I suggested on the Alex Jones show that he launch a "Google bomb" with the key phrase 'crash jp morgan buy silver'.
Here's how the campaign works: wealth tied to a fiat currency is easily overwhelmed by wealth tied to silver and gold. And the world is waking up to the fact that they have the ability, without government assistance or other interference, to create a new precious metals-based backed currency system by simply converting their fiat paper into real money.
This campaign has 100% chance of working; it falls into the category of a self-fulfilling prophecy. As more individuals buy silver and gold, all attempts to replenish the system with more paper money will only cause the purchasing power of the silver and gold to increase - thus prompting more people to buy more. Any attempts to bail out JP Morgan would have the same effect. If the US Fed was to flood the system with bailout money for JP Morgan to cover their silver short position (as they did after the collapse of Long-Term Capital Management), more inflation will ensue and the price of silver and gold will rise more, triggering more purchases. A virtuous circle is born.
If anyone is interested in helping to crash JP Morgan, buy silver. In the end, it's about transferring wealth back to the people from where it came."
Since Keiser shared this campaign with the world, the "Crash JP Morgan, Buy Silver" campaign has gone viral. Despite several heated attacks on silver in the first half of 2011, which saw the price of Silver drop from near its record high of $50 back to $35 in just a matter of days, it is clear that the banksters can not kill an idea, and purchases of physical silver have increased to never before seen levels. Physical silver is now back in the firm hands of the people, including decentralized groups such as the Silver Liberation Army ("SLA").
Businessweek (22 June 2011): Silver-Coin Sales Booming at Perth Mint on Demand for Haven -'That's 66 percent higher than the previous full fiscal year and about 10-fold more than five years earlier. Sales of 1- ounce gold coins will be close to a record, he said.'
Zerohedge (7 July 2011): UK Royal Mint Silver Production Surges 100% - Sovereign Edward Supply Tight but Bullion Premiums Low - 'The U.K.'s Royal Mint said that first-half silver production in 2011 doubled, while gold production climbed 8.9% over 2010 levels.'
Bix Weir on silver (9 August 2011):
"The main battles for the banksters are in the silver markets and they are doing absolutely everything they can to project to the world that silver is not the place to be, silver is not a monetary metal and silver is not a safe haven.. but we know that is complete bull**** ... banksters are trying their best to protect silver, and not gold ... silver is the metal that can destroy the entire monetary system .. taking out JP Morgan would start a crash in the derivatives market that is unrecoverable ... and that's where all their power is going to protect the silver market so people don't rush in and buy physical silver."
JP Morgue will no doubt continue to manipulate markets and keep the silver price down. This is whyphysical silver holders must knowingly sit tight and play the waiting game. While the manipulation still persists, the silver markets will remain extremely volatile. Take this as your opportunity to "buy the f-ing dip (BTFD)". If you are patient, one day you will be rewarded. The day when JP Morgan completely loses control of its short position in silver and the physical price of silver decouples from the paper price will be one to remember.
For the vigilante investors out there, why not short JP Morgan's stock? The lower JPM's stock price goes, the lower their market cap becomes...the lower their market cap becomes, the larger their liabilities become in relation.
Another exciting possibility for the near future is the play Max Keiser has dubbed 'The Reverse Nixon' and the 'Golden Dream'. Imagine a world in which U.S. President Barack Obama were to pull a reverse Richard Nixon and put the U.S. back onto a gold standard against which it could devalue its debts.
As Max Keiser puts it:
"That's a genius idea ... that's exactly what is going to happen anyway ... Those who criticize this idea say there's not enough gold ... but there's something called the price discovery mechanism.. markets reflect supply and demand.. If you have 600 trillion of worthless derivatives, some of that is going to end up being repurposed as a gold standard at $20-25-30,000 an ounce ... that's just the way markets work - accept market driven capitalism or go home."
The world monetary system is just a game; a game that is about to embark on a giant shift in direction. The events of August, 2011 should be a wake-up call for many. However, like everything in life, don't take my word for it - go out and do your own research and be ready to make your own moves. The monetary revolution will not be televised. The paradigm shift towards decentralized monetary systems is in progress. ¡Viva la Revolución!
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