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A PREEMPTIVE STRIKE
Frank Smith (aka "Atocha")
My mom, Dr. Mildred Smith, who was 99 years old, died at 2:34am this Saturday, May l8th, 2002. She died on her terms in a preemptive strike on death. According to her living will, and her wishes, extreme life support measures had been removed. She determined the terms of her death, and it made her death less traumatic. Mixing this reality with the actions of the Fed, Wall Street, currency and precious metals markets; resulted in these thoughts and this article. So, this one is for you mom.

AWAITING THE DEATH OF THE CURRENT DOLLAR

The United States fiat dollar, as presently constituted, is terminally ill, and on extreme life support measures in order to delay its inevitable death. Like 1933, the Fed and the United States government officials know that a major financial/dollar crisis is a near future reality. (Gold Confiscation and The Emergency Banking Bill of 1933, by Frank Smith - ( http://www.gold-eagle.com/editorials_02/smithf022502pv.html ) In 1933 the Fed and our government passively waited for Joubert's 'pressure cooker' to explode into overwhelming runs for cash from banks; and, a flight to physical gold. (When Systems Fail by Daan Joubert - ( http://www.gold-eagle.com/gold_digest_00/joubert103000pv.html ) Then in 1933 the establishment reacted in the midst of the circumstances of an emergency and unplanned nationwide bank closing.

I suggest, that various market actions may be telling us that the extreme life support measures in order to delay the inevitable death of the United States fiat dollar, may soon be deliberately withdrawn. The existing extreme life support measures for the dollar, such as the 'gold cap', may be withdrawn abruptly; and, on a week-end. I also suggest that such a preemptive strike on the death of the dollar, as presently constituted, has many advantages. I also suggest that such a preemptive strike on the death of the dollar can alter the lists of winners and losers; resulting from the death of the presently constituted dollar. I also suggest that this altering of the lists of winners and losers can be done in a politically advantageous manner. So, let's examine market actions, possible components of the preemptive strike, and possible fallout in terms of winners and losers.

GOLD BULLION/GOLD STOCKS PRICE DIVERGENCE

Lets look at four diverse gold stocks; but, obviously heavy hedgers have been omitted. For each stock I shall give the settle price for Friday, and the 52-week low.

DROOY4.270.75
GLG8.252.l0
HGMCYl6.244.5l
MDG16.506.54

In my humble opinion, these percentages of price gains are more than 'anticipation' of higher gold bullion dollar values. According to one Internet source, spot gold closed Friday at $310.40. To me, these gold stock prices are clearly a gold bullion/gold stocks, price divergence.

SILVER BULLION/SILVER STOCKS PRICE DIVERGENCE

Lets look at four diverse (pure play) silver stocks. For each stock I shall give the settle price for Friday, and the 52-week low.

BAY.TO4.26C$1.25C$
HL3.100.77
PAAS7.022.87
SSRI3.861.47

In my humble opinion, these percentages of price gains are more than 'anticipation' of higher silver bullion dollar values. According to one internet source, spot silver closed Friday at $4.65. To me, these silver stock prices are clearly a silver bullion/silver stocks price divergence.

THE DOLLAR, THE FED, AND WALL STREET

It seems quite apparent to me that the fiat dollar has topped and is being devalued. In even a controlled step by step devaluation, there is a considerable risk of loss of control because of so many overseas dollars. And, the Fed has made its enigmatic comment about it possibly buying; or, investing in "gold mines". Meanwhile, Wall Street is in shambles due to the public exposure of a steady stream of allegations involving fraudulent/criminal behavior by corporations, accountants, and brokers. The pain and costs of the 'gold cap' appear to be accelerating.

Daan Joubert's 'pressure cooker' for the purchasing power of gold and silver is, in my opinion, ready to explode. And Daan Joubert's 'submarine' for the purchasing power of the dollar is, in my opinion, ready to implode; or, explode. (When Systems Fail, by Daan Joubert - ( http://www.gold-eagle.com/gold_digent_00/joubert103000pv.html ) In my opinion, our fiat dollar fractional reserve banking system is ready to implode. Our fractional reserve gold system is ready to implode. Our fractional reserve silver system is ready to implode. Also, in my opinion, many debt markets were long ago unsustainable, except by 'rolloverism'. Thus the exponential dollar debts from technological debtism are more than ripe for liquidation by implosion.

A controlled and structured death of the fiat dollar, and its debts, would seem to be less traumatic than the chaos of the throes of a natural market forces death for the dollar and its debts. And, last but not least, a preemptive dollar death can change the list of winner's and losers, that result from the death of the presently constituted fiat dollar.

A POSSIBLE PREEMPTIVE STRIKE

Choosing the death of the dollar, and the liquidation of its debts, on Fed/Wall Street terms could involve actions such as the following:

  1. Either two new currencies (domestic and overseas) could be issued; or, a single new currency could be issued with different rules for domestic/overseas holders.
  2. A repudiation of many overseas existing dollars (drug money dollars, terrorist dollars, and counterfeit dollars, etc.)
  3. A repudiation of many domestic existing dollars (drug money dollars, tax evaded dollars, etc.)
  4. A 'gold standard' currency of some kind. (Value to be determined by the marketplace within a set time.)
  5. All domestic futures markets for precious metals could be closed; and, settled for cash at current dollar prices, in current dollars.
  6. Precious metals futures markets to reopen, with no existing contracts, in new 'gold standard' dollars, when the marketplace has determined a new currency/gold price ratio.
  7. Other paper gold/silver market claims, (except mining stocks), to be closed, settled, and reopened as per the futures markets.
  8. Whatever confiscatory deflation measures are necessary in order to save the domestic banks. (Confiscatory Deflation: The Case of Argentina by Joseph T. Salerno- ../fullstory.asp?/control=890%FS=Confiscatory%2BDeflation%3A%2BThe%2BCase@2Bof@2B)
  9. A major gasoline tax at the pump. (Perhaps a dollar or more per gallon; and, phased in time wise.)
  10. A United States Presidential proposal for major cuts/eliminations in targeted federal programs in order to balance the budget.
  11. Incentives for domestic oil producers.
  12. The opening up of massive federal lands for oil exploration and oil production, with lease income for the federal government.
  13. The start of a phased in shift from income taxes to a federal sales tax.
  14. Do it all so that the Republicans can blame the Democrats; and, the Democrats can blame the Republicans. And, both can blame the consequences on 911 aftermath.
  15. A possible federal 'hoarders' tax' on precious metals sales and/or profits.
  16. Federal lands are put up for sale in order to help balance the budget for a new currency.
  17. Etc. Think about it.

WINNER'S

  1. Those with physical precious metals in their hands.
  2. Those with precious metals stocks already in their accounts.
  3. Precious metals hedgers like ABX.
  4. The precious metals shorts, like JPM, in the futures markets.
  5. The Fed as a pre-existing buyer of gold mines. (No secrecy here, they told you so!)
  6. Banking, Wall Street, and political insiders who have prepositioned their investments for the preemptive strike on the dollar would be personal financial winners; like was reportedly done by United States insiders prior to 911.
  7. Domestic oil companies.
  8. Those who buy federal lands.
  9. Many new federal employees for oil and land revenue programs.
  10. Those who buy from the distressed sales of losers.
  11. The physical gold drain required by the 'gold cap', ends.
  12. Many of the international debts from technological debtism could then be 'handled'.
  13. Those who favor more power for the United States federal government could be big winners. Close the gasoline stations, grocery stores, hamburger stands, and banks, for a week; and, American sheeple would agree to anything.

LOSER'S

  1. Precious metals futures longs. They miss the bull market.
  2. Precious metals options holders. They miss the bull market.
  3. Precious metals stock traders who trade 'in' and 'out'; and, are 'out' during the weekend of dollar death.
  4. Holders of commodity exchange warehouse precious metals that could be settled for cash like the futures contracts.
  5. Americans with overseas dollar accounts, as tax evaders, get punished.
  6. Some foreign dollar holders, as terrorists and drug dealers, get punished.
  7. Some domestic dollar holders, as drug dealers and tax evaders, get punished.
  8. Those who buy gasoline in the United States.
  9. Many government employees who become unemployed.
  10. Those forced into the distressed sales of their homes, cars, etc.
  11. Those in the domestic private sector who will become unemployed as a result of the death of the dollar.
  12. Those domestic entrepreneurships and corporations that will go belly up from the collapse of purchasing power due to the death of the dollar; and, the massive liquidation of dollar debts.
  13. The American sheeple, and many other dollar holders, will experience a severe collective decline in purchasing power due to massive debt liquidations. (Remember, the dollar itself, is debt.) Atocha's Supreme Law of Purchasing Power: "Purchasing Power Gained by Debt Creation is Always Equaled by Purchasing Power Lost by Debt Liquidation.". (Debt: Part One - Purchasing Power, by Frank Smith, http://www.gold-eagle.com/editorials_02/smithf011402.html )

?) A key question will be: "What will happen to dollar bond holders? Winners or losers?
?) Another key question will be: "What will happen to the holders of mortgaged real estate?

The answers to both of these questions would be politically determined by the structure and contents of any preemptive death action to the dollar and dollar debts.

SUMMARY AND DISCLAIMER

I believe that it is likely that with the dollar, and its debts, near death; that the Fed/Treasury will withdraw its extensive life support measures for the dollar. In so doing, they will be able to control and structure the chaos of the death of the dollar within parameters that will be much more favorable for the Fed, Wall Street, and insiders. Thus, a Fed/Treasury preemptive strike that terminates the dollar, as presently constituted, seems to me to be a logical and common sense action.

This is definitely not intended as investment advice. The content of this essay is pure speculation with no insider information. The thoughts of its content were solely the result of my mother choosing to die on her terms, by a withdrawal of extreme life support measures. The contents are provided solely to stimulate your thinking. Any investment decisions that you make are totally your responsibility. I do learn from, appreciate, enjoy, and thank you for your email feedback. I carefully read every email and I randomly respond to some, as time permits. So please, keep the emails, your ideas, and your comments coming. (Debt: Part Four, is almost finished.)


Frank Smith, (aka "Atocha")
Saturday, May l8, 2002
fhsmith@terranova.net
Copyright 2002, Frank Smith

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