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Jeff Nielson is from Canada and is a writer/editor for Bullion Bulls Canada ( He has a personal background in law and economics. Bullion Bulls Canada provides general macro-economic and political commentary, since the precious metals markets are among... More
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  • Rebutting The Recovery

    In the topsy-turvy world of U.S. "newsertainment", it is common knowledge that comedian Jon Stewart of The Daily Show is one of Americans' "most admired journalists". Regrettably, the U.S. mainstream media has chosen to compete with Stewart…by producing comedy.

    Their favorite front-man is famed stand-up comedian, B.S. Bernanke. Bernanke became famous for such immortal one-liners as "the Goldilocks economy", "the soft landing", "the exit strategy", and his most oft-repeated joke: "the U.S. economic recovery."

    As is often the case with popular humor, "the U.S. economic recovery" has been repeated ad nauseum by the mainstream media. Inevitably, the joke quickly became boring, and is now just very, very annoying.

    The U.S. recovery is like one of the Simpsons episodes featuring mythical daredevil "Captain Lance Murdock". After performing one of his heroic stunts, and inevitably ending up with his shattered body in a crumpled heap, he shakily raises one hand to give the "thumbs up" sign, and then we hear in the background the announcer proclaim, "He's all right!"

    Observe the following crashes, and the "recoveries"(?) that followed:

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    However, even clever Simpsons' humor ceases to be funny if one is forced to watch/listen to the same joke, day after day, for nearly three years; and the U.S. mainstream media is not nearly as clever/funny as the Simpsons.

    Case in point, observe Bloomberg's latest version of this tiresome joke:

    Service producers are taking over from manufacturing as the driver of the almost three-year-old U.S. economic expansion.

    The end of the recession in June 2009 triggered the biggest surge in production in a decade, propelled by rising demand from overseas and the need to replenish inventories and upgrade equipment. That is now giving way to increasing sales at places like restaurants, transportation companies and temporary-help agencies, leading to gains in employment that have bolstered the world's largest economy.

    Let's dissect the first part of the joke first: "services" are taking over from "manufacturing" as the supposed drivers of this mythical economic recovery.

    To begin with, its absurd to suggest there has been any growth at all in U.S. manufacturing. Manufacturing is the most energy-intensive part of an economy, but the U.S. economy is using less and less energy, and even less electricity than it used prior to the Crash of '08.

    As recently as April 2007, CNN was reporting that a "refining crunch" (i.e. a lack of refining capacity) was so severe that it had become a primary driver of U.S. gas prices. However, by July 2010 (more than a full year after the start of the supposed recovery) Reuters was reporting that U.S. refineries needed to continue cutting capacity. Yet even with the cuts in output, by the beginning of 2012 the Wall Street Journal proclaimed that the collapse in domestic energy demand was forcing U.S. refineries to export so much of their production that the U.S. had become a "net energy exporter."

    (click to enlarge)

    It is even more absurd to argue that there could be "new manufacturing" activity in the U.S. which doesn't require any electricity. Apologists will argue that the 21st century U.S. economy is now much more "energy efficient", because it's so high-tech. Reality dictates otherwise. The chart below shows the complete absence of any significant new spending in the most significant field of hi-tech: "information technology".

    (click to enlarge)

    Obviously, manufacturing activity in the U.S. can only be shrinking, given the collapse in energy/electricity consumption, despite a steadily growing population. It is equally simple to debunk the only new twist to this joke: that the U.S. service sector has taken over from manufacturing as the driver of the U.S. economy.

    The latest available statistics show that U.S. mall-vacancy rates remain near all-time highs. Sky-high vacancy rates in U.S. malls suggest a service sector in "depression" mode, not recovery mode. However, for any who aren't convinced by all the ghost-malls cropping up all over the U.S., there is a very simple way to resolve any possible doubt.

    The service sector, by definition, is employment-intensive. It takes people to provide services. As part of the "U.S. economic recovery" jokes, we have been tortured by the worst pseudo-comedian in the U.S.: the Bureau of Labor Statistics. As its own schtick, the BLS is not only reporting month after month of "jobs growth", but steadily increasing jobs growth.

    It's not even funny. Below is the U.S. civilian participation rate. It's a very simple statistic. It shows the percentage of the U.S. population who are in the work force. As the chart clearly indicates, the civilian participation rate has been plummeting much more quickly since the mythical recovery began than it did during the "recession".

    (click to enlarge)

    This is one of the few pieces of raw data remaining in the U.S. which has not been (cannot be?) corrupted by the propaganda machine. Less and less people are working in the U.S. - and the job losses have been accelerating during this "recovery". With less and less people working in the U.S., and more and more malls closing; it is utterly ridiculous to claim that the U.S. service sector is growing. Merely selling a few more "Big Macs" to over-fed Americans just won't cut it.

    We are left with the following analysis of Bloomberg's joke. It writes that growth in manufacturing and growth in services has led to growth in employment. Meanwhile, back in the real world we see that U.S. manufacturing activity must be contracting. U.S. service sector activity must be contracting. And the result of this is that less and less people have jobs each month - i.e. there has been no net "jobs growth" of any kind.

    It is the hallmark of good humor that it needs to have injections of originality in order to be funny. It is here we see the complete failure of the mainstream media in the realm of comedy, as epitomized by their favorite icon: B.S. Bernanke.

    Bernanke crowed that the U.S. had a "Goldilocks economy" (i.e. everything was "just right") and it immediately turned lower. Bernanke told us the U.S. economy would have a "soft landing", and the U.S. suffered the worst economic crash since (at least) the Great Depression. At the beginning of 2009, Bernanke promised an "exit strategy", while only a few weeks ago he admitted that there would be no "exit" until at least 2015 (and even that might just be another joke).

    We get it. Whatever Bernanke says, we can be 100% certain to see the exact opposite. And so when Bernanke tells us day after day after day (for three years) that the U.S. economy is "recovering", we know that it is in fact continuing to plummet downward. It is a very old joke, and arguably it was never funny, especially if you're one of the 10's of millions of Americans who have been victims of the U.S. Greater Depression - through losing their homes, losing their jobs, or both.

    Attention to all of the would-be comedians in the U.S. mainstream media: you need some new material!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: U.S. economy
    Apr 19 11:51 AM | Link | 8 Comments
  • Two Scenarios For Next Precious Metals Rally, Part I

    Let me preface this piece by first stating that my reason for writing it was not to induce people to guess which scenario they found more probable, and then to place their bets beforehand. Rather, my purpose was exactly opposite: to prepare people for either scenario so that when they recognized one or the other unfolding they wouldn't do something stupid in a moment of panic (or greed).

    Sadly, in our markets to "do something stupid in a moment of panic" generally means doing precisely the opposite of what one should be doing. This also explains why the bankers like to start panics. First of all, as the cause of these panics the banksters are neither "panicked" nor (obviously) surprised themselves. So they continue to operate calmly (in this feeding-frenzy) while the sheep make themselves especially easy to sheer.

    As a result of this never-ending game being played in our markets by the bankers, there is genuine utility in looking ahead (something the sheep almost never do) so that when events do unfold we will be prepared to act (calmly) - as opposed to reacting in panic (as the bankers desire).

    With that preface out of the way, the next task is to explain/define these two, looming scenarios:

    1) The crash-driven rally

    2) The event-driven rally

    Putting aside the fact that gold and silver are the most undervalued assets on our planet today; despite this ever-present truth the sheep generally need a "reason" to jump on the precious metals bandwagon. The irony here of course is that simply by jumping on the bandwagon the sheep supply the necessary momentum to drive prices higher - meaning that no "reason" is every truly necessary for gold and silver prices to go higher, in accordance with their ultra-bullish long-term fundamentals.

    So the Catch-22 of the precious metals market is that we always need some catalyst to break gold and silver free of the intermittent bankster-created "log-jams" which have occurred in this market over the course of its 10+ year bull run, even though there is never any reason necessary to bid-up these grossly undervalued assets. In the last several years we have seen (arguably) three such catalysts. Two of those catalysts were events and one was a "crash".

    Taking these catalysts in chronological order, the first of the three was the Crash of '08. Critics will argue that a "crash" is precisely an example of an event-driven catalyst. However, as I alluded to previously a market-crash is a particularly unique form of event, due to the extreme and unusual sentiments which accompany that event. The second reason to distinguish this catalyst from an "ordinary" event which serves to drive the market higher is that the circumstances prior to a crash will be markedly different from the circumstances of any other event-driven rally.

    To begin with, one very likely clue that we will be on the precipice of another banker-created crash is that gold and silver (and likely all commodities) will begin to rally strongly without any identifiable cause for their strong surge in prices. To be more precise, the mainstream media (i.e. the propaganda machine) will not supply us with any "reason" for these soaring prices (other than pointing to their favorite scapegoats, the evil "speculators").

    They will not tell us that those price increases are nothing but playing catch-up for the previous $trillions in money-printing. Understand that what responsible precious metals commentators generally tell their audience is that we accumulate gold and silver merely to preserve our wealth - i.e. we're not doing this (greedily) looking to turn a profit. However, the fundamental truth is that the decades of suppression, and the even more extreme manipulation of recent years mean that gold and silver are more undervalued today than they were at the beginning of this bull market over ten years ago.

    Similarly, with the banksters' paper grossly overvalued, this means that most commodities should be soaring to much higher prices, simply based upon the long-term ramifications of year after year of hyperinflationary money-printing. Here we come to the ultimate fear of the banksters, and the political stooges who serve them: they know that the end of their entire, paper Ponzi-scheme will be imminent when prices for hard assets (i.e. gold, silver, and commodities) begin to soar without any explicit short-term causes.

    Unlike the brainwashed sheep, they know their history. They know that the ultimate cause of all hyperinflation is a general loss of confidence in (worthless) paper - just as the Dutch "lost confidence" in their precious tulips 400 years ago. Thus when prices begin soaring (i.e. the paper begins to crash) "for no reason", the real reason will be that people are losing confidence in the paper and dumping it in favor of hard assets.

    This precisely describes circumstances in the spring and summer of 2008, and explains why the bankers decided that nothing less extreme than a "crash" would suffice to put the breaks on the looming hyperinflation. What this means is that unlike an ordinary event-driven rally for the precious metals sector we will be tipped-off prior to the next crash being manufactured: we will see another instance of spiraling gold, silver, and commodities prices with charts showing a clear exponentially-rising pattern.

    The banksters will not sit back quietly and allow their $100's of trillions in Ponzi-paper to evaporate. Inflicting severe economic hardship on 100's of millions means nothing to them. Indeed, the bankers have an even more extreme "solution" for dealing with a pending hyperinflation scenario: starting a war.

    Hitler started World War II to cope with the aftermath of Germany's hyperinflation from the Weimar Republic. However Hitler wasn't a banker. He had no mountains of worthless paper to protect. His only motives were to create a smoke-screen for the economic ruin from the preceding hyperinflation and to cover-up his own economic mismanagement, which is an inherent aspect of all Fascism.

    With the bankers (and the ultra-wealthy Oligarchs) being firmly in charge of our governments today, war would be a tool that they would use undoubtedly before any hyperinflation reduced their mountains of paper to what it really is: "Monopoly money". Thus should we see another repeat of the explosion in gold, silver, and commodities prices which took place in the spring and summer of 2008, many would suggest that we should hope for a market crash.

    Those with the inclinations to be "traders" (i.e. the greedy) will be sensing opportunity at this point. They will note that we will have a clear warning before the next crash is manufactured. They will note that such a crash will occur when we see a distinctive repeat of what occurred in gold, silver, and commodity markets in the spring/summer of 2008. They will look at the charts for gold and silver for 2008, and they will think to themselves "sell".

    This would be a colossal failure of analysis, and another triumph for naked greed. Simply because identical circumstances cause the bankers to use an identical "tool" (i.e. a market crash) does not mean that the consequences of their reckless intervention in markets will be identical.

    Our economic circumstances in 2012 are enormously different than in 2008. Today our economies are all much weaker. Today our economies are all much less solvent. These two different dynamics both have significant implications in any crash scenario. Create a crash in a (relatively) strong economy and there is resistance; that is, that residual economic strength will push back against the downward economic pressure of a crash - slowing the descent and stretching-out the length of time of that downward slide before "bottom" is hit.

    Conversely, create a crash in a weak economy and all you have is free-fall. We would (will?) see a crash which is much faster, and much more severe. This alternately means that anyone attempting to "time" this event by selling their gold/silver and then (assuming they can) buy it back it cheaper could miss badly in either direction.

    The fact that a 2012 crash would tend to be a much faster event would mean that it could be over before all the would-be traders are expecting. They are sitting-and-waiting (for even cheaper prices) with their pile of depreciating paper, while prices have already began bouncing back. And as with the Crash of '08, the rebound in gold and silver prices will be at least as rapid as their plunge, and likely even more rapid - leaving all those greedy "traders" still waiting at the station.

    On the other hand, with a crash in 2012 undoubtedly a much more severe economic event, would-be traders could easily jump back into the market too soon - and do their buying with prices about to plunge much lower. We can assess those relative probabilities by looking at our other different dynamic for 2012: much less solvent governments.

    The Crash of '08 sparked the Money-Printing of '09, which in turn has directly led to the Debt Crisis of 2010-to-present. The "64-trillion-dollar question" today is this: if a crash in 2008 caused a debt-crisis (when our economies were relatively strong), what would a crash do in 2012 - with our economies all weak, and all of Europe already in a debt-crisis. The answer to that question is really simple. Everybody is Greece.

    The combination of an even worse crash, with much weaker economies, already in the midst of a debt-crisis means that either the money-printing would have to be much, much more extreme (i.e. guaranteed hyperinflation) or it would fail to halt our economic crash despite the extreme money-printing.

    Understand that every new "dollar" of paper created is created with more debt. Understand that our interest rates are already as low as they can go, and still we see the debt-dominoes going bankrupt one-by-one. So doing much more money-printing means piling on exponentially more debt onto already insolvent economies…while revenues are simultaneously plummeting lower. This precisely describes what just took place in Greece.

    So when "everybody is Greece" (including the world's worst debt-sinner, the United States) what are the holders of $10's of trillions in Western bonds going to do? Will they stoically and nobly "go down with the ship" like the Captains of Finance that they are? Or will they all scramble for the nearest "lifeboat" like proverbial rats deserting that sinking ship? I'll let readers answer that one for themselves.

    In the Crash of '08, it was only the gold-bugs (and silver bulls) who were thinking to themselves "paper is going to zero". The sheep were still all running towards that worthless paper. In any crash in 2012 (or 2013) it will be obvious to everyone that "everybody is Greece", and all that paper is going to zero.

    What this means is that in any future crash event, any sell-off in gold and silver will end very quickly and very abruptly, when all of the "rats" from the bond-market (belatedly) try to swap (worthless) paper for (valuable) metal. Naturally, all of the extreme money-printing taking place means that the underlying paper currencies are just as worthless as the bonds.

    This should mean that all the sheep would be dumping their paper currencies for gold and silver too. However, that would imply rational thinking. Since the panic of any crash event means the opposite of rational thinking, the holders of our paper currencies will undoubtedly do even worse than the bond-holders.

    As I continue to point out to readers, it would take much less than 10% of these paper-holders turning toward the 5,000 security of gold and silver to cause precious metals prices to soar to many multiples of present prices (especially in the tiny silver market). This comes at a time when people are only holding about 1/10th as much precious metals in their portfolio as is the historic norm.

    The question for the precious metals bears and skeptics is this: if gold and silver prices can go on a 10+ year bull-run while ignorant Western investors have under-owned this asset class to the greatest degree in history, what happens when all of the "stupid money" of the West belatedly rebalances their holdings?

    As an aside, this raises a secondary question: how can the drones in the mainstream media continue to talk about "bubbles" in gold and silver while these assets have never been so under-owned by Western investors?

    When thinking investors begin to ask (and answer) these questions for themselves, their strategy for any crash scenario should be clear: don't idiotically sell the gold and silver they are already holding, greedily hoping they can cash-in on some "obvious" short-term trade. Rather they should be buying more gold and silver in any crash, even in the face of rapidly falling prices. They would know that any plunge would be very short in duration, and will reverse higher very, very strongly, when all of the paper-holders finally begin to "see the light".

    Naturally, the hope of myself and all other gold and silver bulls is that we can see gold and silver begin their next, inevitable rally from some event which inspires much less fear and economic carnage than an economic crash. In Part II, I will flash-back to two such events, and note both their significant similarities and significant differences.

    [Disclosure: long "physical" gold and silver, and the gold and silver miners]

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Apr 16 2:37 PM | Link | Comment!
  • The Return to Good Money

    Once again I’m indebted to a reader for passing along a superlative concept and essay on a practical means of returning to “good money” (i.e. some sort of precious metals-based currency). While most precious metals commentators (including myself) strongly advocate the return to some sort of “gold standard”, devising a plausible process for moving away from the worthless paper we carry in our wallets today has proven problematic.

    If we follow the path of “converting” fiat paper-currencies back to precious metals-backed money, we immediately see only two options. Either we get all of the world’s major currencies to simultaneously convert their paper-currencies (an extremely unlikely event), or we must do this in some step-by-step process – which must begin with the world’s “reserve currency” (currently the U.S. dollar).

    In my own attempt to reconcile this enormous logistical issue, I previously proposed a two-stage process: first switching from the U.S. dollar to China’s renminbi as the new reserve-currency, and then backing the renminbi with gold. My reasoning was that if the two changes were instituted (more or less) simultaneously that there would be an horrific plunge in the U.S. dollar – as a world full of U.S. dollar-holders all sought to rid themselves of their inferior paper in favor of gold-backed renminbi at the same time.

    The only alternative to that approach for converting fiat-paper to gold- or silver-backed money would be to attempt to ‘re-back’ the U.S. dollar with gold. There are even worse problems confronting this idea. To begin with, most people now believe that the U.S. only has a tiny fraction of the gold reserves it pretends to have. This is the only rational conclusion with respect to any person/entity who claims to hold much more of something than anyone else in the world – but refuses to ever let anyone see it!

    With no official audit of the U.S. “gold reserves” having been conducted for more than fifty years (despite the relentless efforts of groups like GATA, and the indefatigable Ron Paul), the question has now become not “does the U.S. have as much gold as it claims?” but rather “does the U.S. own any gold, at all?” Compound that problem with the near-infinite trillions of dollars of debts and liabilities amassed by the U.S. government, and it is obvious that the only possible way that the U.S. paper-dollar could ever be converted back to good money would be after the inevitable national default of the U.S. government.

    With no especially attractive ideas before us, this is what got me so excited when I read the thoughtful proposal of Hugo Salinas Price, the President of the Mexican Civic Association Pro Silver.  Readers may recall that Price spearheaded a drive within Mexico to return their own currency to a silver standard.

    That movement eventually fizzled-out – undoubtedly in part due to the enormous pressure which the U.S. government would have applied to prevent this change. With the U.S.’s large population of Mexican migrants, there would immediately have been a massive influx of that silver money into the U.S.

    This would be followed by first the U.S.’s Latino population, and soon most Americans ditching their U.S. dollars in favor of Mexican silver-pesos. Not only would such a development be incredibly embarrassing to the U.S. government, but it would have accelerated the paper dollar’s devolution toward zero – through being rejected by the U.S.’s own, domestic population.

    Price solves this problem with the innovative concept of having parallel currencies. To be fair, we can’t give Price all of the credit for this idea – since a similar concept has already been implemented in Indonesia. While the official paper-currency remains the “rupiah”, along-side the paper, government-minted gold “dinar” and silver “dirham” now also circulate in that economy.

    A clip reporting on this development provided an anecdote from a middle-class Indonesian man, who opened his first bank-account in 2000, got himself a credit card and debit card – and then noticed how as soon as he allowed his wealth to be held by bankers that the purchasing-power of his paper-currency began rapidly declining.

    In 2004, the man closed his bank account, and converted all his paper currency to gold and silver money. He reported that Indonesia’s inflation-rate soared to 20% shortly thereafter – and not only did his gold and silver money not lose any of its wealth (i.e. purchasing-power), but he earned a gain on his money (net of inflation) versus the value of the official paper.

    It is in looking at how this Indonesian man (and his fellow-citizens) were completely shielded from the ravages of banker-produced inflation that we see the key to Price’s proposal. In order for gold and silver to function as parallel currencies, they must not be assigned some (arbitrary) “legal tender” denomination, but rather must be valued strictly according to the weight of the metal.

    In theory, Canada and the U.S. also have “parallel currency systems”: both countries mint their own gold and silver coins. However, the arbitrary denominations of the coins are ridiculously (and deliberately) detached from the real world – with silver coins denominated at about 20% of the current value of the metal, while gold coins are denominated at less than 5% of their actual value. Obviously, the intention here is to greatly punish any Canadians or Americans seeking to emulate the economic liberty which exists in Indonesia.

    Should we try to substitute gold and silver for the bankers’ worthless paper, not only are we instantly robbed of 80% (or more) of our wealth if we try to spend it as money, but our governments have instituted absurd and hypocritical “capital gains” tax rules. Our governments pretend that simply by choosing to preserve our wealth (in gold and silver) rather than to allow the bankers to steal roughly 10% of our wealth per year through their currency-dilution (i.e. inflation) that we have made a “capital gain” – simply from not losing any of our wealth.

    This would be identical to going to all of our churches and charities and telling them that while they are exempt from “income taxation”, that because their wealth wasn’t reduced by 20% per year (through taxation) like everyone else that this “windfall” represents a “capital gain” on all donations they receive. Obviously, the mere fact that we prevent ourselves from being robbed (by bankers) cannot constitute a “capital gain” in any fair and rational taxation system. For those interested in these taxation issues, I go into them in much greater detail in a previous commentary.

    By valuing the gold/silver coins strictly by their weight, this allows gold and silver to exert their inherent characteristic as perfect vessels for preserving wealth. Here Price acknowledges the primary practical difficulty: with banker-inflation spiraling out of control, how do we maintain a fair-yet-flexible mechanism for exchanging and valuing gold and silver money?

    When we previously had small-denomination coins made (partially) of silver, as soon as the value of the silver exceeded the “official” value of the coin as money, there was not only a problem with coins being melted-down for profit, but with our governments absorbing large losses from minting these coins.

    Price’s solution to this problem is to have the value of these coins (i.e. their “price” in paper) be slightly higher than the current “spot” prices for the metals. Simultaneously, this eliminates the problem of coins disappearing from the system from being melted-down and allows the government to net a modest profit (or “seigniorage”).

    Obviously this official price would have to be “pegged” at least on a monthly basis (and more often if/when the bankers’ currency-debasing accelerates even further). Price acknowledges that this leaves one, remaining, unresolved issue: how do we handle the inevitable downward “hiccups” in price for gold and/or silver?

    He is unequivocal: the “official” value of gold and/or silver money must never be reduced. Price observes that when a short-term decline in the price of gold creates a gap between the official price of bullion-money and the spot-price of the metals, themselves, all this means is a temporary increase in profits (for cash-strapped Western governments) and it means the people’s money actually becomes better than bullion itself.

    Obviously, many readers not familiar with precious metals (and the monetary depravity of bankers) will be asking themselves “what happens if there is a large, permanent decline in the price of gold and/or silver?”

    These readers must understand the fundamental equation here. When the price of gold and silver rises, the vast majority of that increase is not an absolute increase in value, but only a relative increase in price – versus the paper currencies which are being so rapidly diluted. Indeed, “inflation” is nothing more than the speed with which the bankers are diluting their paper currencies.

    Thus, asking what would happen if there was a large/permanent decrease in the price of gold or silver is an identical question to asking what would happen if there was a large/permanent decrease in banker money-printing? In other words, this is akin to asking “what if the Sun doesn’t rise tomorrow?” I’ll give regular readers a moment to recover from their laughter.

    To illustrate my point, Federal Reserve Chairman Ben Bernanke is about to announce another $1 trillion (or so) in new money-printing for the sole purpose of creating inflation. Creating inflation through excessive money-printing is the primary means by which bankers have been stealing from the general population for centuries. They take full-value dollars from us (as “deposits”) and always give us back dollars which are worth much less (even including the pitiful “interest” they pay us) – because every time we give the banks a dollar, they are allowed to print ten new “dollars”, lend that money to us, and charge us interest on it.

    This also deals with the last possible objection to such a concept: what if governments deliberately set the official price of gold/silver money much too high – so that they could reap excessive profits?

    Understand that artificially pegging the price of gold/silver too high equates to artificially creating deflation in our economies. Given that all of the bankers, and all of our governments who serve the bankers have already demonstrated that they are absolutely phobic toward deflation, this possibility also ranks right up there with “what if the Sun doesn’t rise tomorrow?”

    Price stipulates that because of the relatively moderate price of silver, that it must be the first form of good money re-introduced into our monetary systems – as it is economically accessible to all of the people. This further reduces the possibility of our money “losing its value”, since everyone familiar with the silver sector is already aware that global inventories of silver have been nearly totally depleted – due to roughly fifty years of price-suppression. There is less refined silver in the world today (relative to the amount of gold) than at any other time in the nearly 5,000 years in which we have used these metals as money.

    I can’t end this piece without taking a moment to note the “intimate relationship” between bankers and precious metals. One might even call it a “love/hate relationship”: they “love” to hold gold and silver themselves – but “hate” to see anyone other than bankers possess any of it.

    Astute readers will have already deduced that even a parallel precious-metals monetary system would affect our beloved bankers adversely. Price has some thoughts on this, including one wickedly devious suggestion, and I have a “few” thoughts of my own on that subject. I’ll deal with those topics in a sequel: “Good Money and the Fall of Bankers”.

    Disclosure: none
    Tags: GOLD
    Oct 26 3:02 PM | Link | Comment!
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    May 5, 2009
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