The Alchemy of Financial Checkmate

Part - II

December 31, 1997

The Alchemist Theory: Gold is Dead

Are we witnessing the culmination of the alchemist's dream: that a fiat currency, whether made of paper or electrons, has become not only "as good as gold" (A. Greenspan) but has become a perfect substitute?

The second theory is that gold's death is being engineered, at least the perception of death is manufactured, leading to a single global currency without the requirement of any assets backing that currency. Afterall, is it not conceivable in the art of financial alchemy to have a single global unified monetary system using a single currency (paper or electronic) that requires no assets to support it not unlike the current heterogenous set of fiat currencies we have today. If current fiat currency are simply built on confidence and faith and are limited in their liquidity only by a continuation of such faith, why not a one world currency built. That faith would be secured by the fact that there would be no alternative currency which poses a threat to the new world currency, all national currencies would have become worthless, devalued, including the U.S. dollar. From a level playing field a new global system and currency could be established. Such a currency, no matter what its form, would theoretically require to assets to support it and would not be vulnerable to competition which current national fiat currencies are. The world currency is the U.S. dollar not gold....the financial alchemist dream....a substitute for gold made out of not a lesser baser metal but biodegradable woodfibre. Goldbugs seem to cling to some romantic article of faith that gold can and will resurrect its valuable self as the standard for world currency, but I'm not yet convinced of it. While it is true that we currently observe a struggle between gold and the U.S. dollar for global supremacy, I am not yet convinced that gold cannot be effectively nakedized or made useless by the illusions which are manufactured in our western media about this relic of old. If a group of intellectual elites does exist and are quietly engineering or longing for a global union, a global system of trade, currency and governance, then it seems that one of their agenda items would be to ensure there are no threats to their new system.

We shall begin with another John Kutyn quotation:

"To understand the world financial situation is to understand the difference between reality and illusions of reality."

My theory is this: Soros, as advisor to Rothschilds and others, is correct in his understanding of the basic human flaws and the participant's bias which drive the mass psychology of the markets. This psychology infects even central bankers but does not seem to illude the merchant bankers who make up the IMF...that organization with endlessly deep pockets that craftfully steals from the pockets of the indebted third world and bailouts out the indebted first world (S. Korea, the next candidate) while fleecing these nations of their national assets (New Zealand: soverignty, national treasures, resources; Mexico (oil), S. Korea (manufacturing capital). In fact, every bailout requires constitutional amendments which transfers assets into the hands of this fraternal order. Indeed, who is the IMF and where do they get their deep pockets.

The theory is this: one by one, the fiat currencies fall, but their fall is itself orchestrated and perfectly timed as to avoid chaos. Should this orchestration get away (e.g. Japan), there will be chaos and riots...making Albania look like a picnic. They will fall under the cry that their currencies and economies were overbuilt and unstable, unsustainable, inflated...Economist will spend hours and newspaper landscape to analyze the fundamentals, but will be unable to explain reality using their "science" of economic fundamentals. Because, as Soros foreshadows, fundamentals don't live hear any more (as you too admit). The world will cry for a new SYSTEM, as IMF Director Fisher has already foreshadowed, they will cry for a new money god.....That money god will come in the form of a new world currency, backed by gold, but where gold has been cornered into the hands of not the central banks but the merchant banking powers who were the original architects of those so-called "soverign" banks in the first place. DOMINION will have been achieved, overnight.... Your gold coins in your pocket will become the target of persecution and arrests and you will be forced to accept the world's standard currency. There will be no alternative...you will be unable to trade with your gold because they will have long outlawed both gold and old paper currency....that global currency is already being experimented with......electronic transfer systems..... The central bank will be the LBMA, and they will argue that in their vaults resides the gold which gives the new global currency stability....they will argue that this new money god has established resiliency, stability, sustainability, and harmony to an inherently flawed and unstable system of hetergenous currency and trading systems. Meanwhile the same powers have bankrupt not only nations, but the gold producers themselves, we are seeing their demise as we speak as gold persists at or below $300/oz....it is a small sacrifice for the those same powers who own gold mines...to foreclose of mine production fits their grander objective...to corner supply, current and future. How best to achieve this, fix price and rates that cut off the oxygen to mining companies, gold leases too are drawing down the oxygen levels and CBs exhaust their options. EVERYONE is left vulnerable, particularly soverign nations who have now exhausted their holdings of gold having be led by "fundamentals" that suggest gold sales and leases are lurcrative. All the while, those who have manufactured such a sentiment have been purchasing...except for the pesky irritants of the Middle Eastern oil barons and the Chinese. So the mines will shut down, gold lease calls by CB will choke, there will be no more gold supplied, at least according to what the fundamentals would dictate.

CHECKMATE!

When that day comes, and I hope it never does, neither gold bullion, dollars, stock certificates in mining companies, NOTHING will be allowed in the new world system of exchange. You will have no option.

  • Have we not entered a reflexive moment where the economic fundamentals of demand and supply have become largely redundant or at least the illusion of such has been cleverly manufactured?
  • If, as Joel Krutzman suggests, we live in a world where "the only distinction between relevant and irrelevant information is whether people pay attention to it" than why should we believe that those who manufacture illusions through the media have not simply used the price of gold to have manufactured a collective feeling of gold being dead?
  • Why is it not possible to believe that gold could effectively play no role whatsoever in a world already accustomed to fiat currencies built purely on faith and the illusions of sustainability which the masses accept both naively and without question. If gold is not needed to support the value of our current fiat currency system, why should it be required to support any other form of currency system, whether it be based on paper, electrons or tulips? Have not the alchemists succeeded in finding the elixir of financial freedom and paradise. If not by have manufactured the illusion that the system can continue to sustain itself without any threat from an outside power or voice that in fact "the emperor has no clothes?" If the alchemists of finance truly do exist...if they do have an agenda for a global currency system, then they presumably won't need gold as its support. Is there any evidence of such? If there is, it is muted and difficult to discern. We have the "news" of the mainstream media (which as Chomsky has noted in "Manufactured Consent" is highly concentrated (Chomsky claims that 50% of the media is controlled by 23 companies)) which has led at least North American, European and Australian investors to believe that gold is dead. Some gold analysts suggest a warm is being waged between the U.S. dollar and gold for final supremacy as the basis for future world currencies. No matter if there is a deliberate attempt by key financial alchemists to keep gold prices depressed, in spite of the "fundamentals" showing record levels of physical , rising values for gold in South East Asian currency markets, and unsustainable debt levels of the major economies, in spite of the fact that only 1/3 of the world's gold is in the hands of central banks, the fact remains that the sentiment towards gold remains depressed. Gold has been nakedized. But why? There are several possible reasons.
  • First, if there is a battle raging between gold and the U.S. dollar for supremacy under conditions of turbulent currency markets, then the U.S. dollar cannot afford to loose, at least in the short term. A flight to gold would mean the end of the U.S. dollar; an end to the U.S. stock market bubble, and an end to the musical debt-chairs game of the G7. In a simple word: chaos. Even the most callous gold bugs who would benefit from such financial Armageddon would not desire such an outcome, even though we could argue that history has taught us that such a lesson, albeit cruel, would bring back reason and prudence to a world drunk on liquidity and teetering on the brink of ruin. Thus the need to maintain the supremacy of the U.S., and thus neutralize the counterforce of gold (which by the way is playing out in S.E. Asian markets with, for example, a 63% rise in the value of gold in S. Korea), could be argued as the only thing to ensure stability in an otherwise unsustainable stock and fiat currency market, burden with unsustainable debt. Ironically, while Soros and other currency traders pass easy judgement on the unsustainable fixed currency systems of S.E. Asia there have been no such judgements passed on other G7 currencies to date. Though the Canadian dollar is now under siege and may in the end follow the same ruinous path of the S. Korean won at the mercy of ruthless currency traders who can cooly argue that the Canadian dollar had it coming. Next stop? Austalia? Europe? Last stop? U.S. dollar.
  • Second, gold has been intentionally neutralized in a "shelling of the beaches" that will see the final demise or cornering of gold, at least so the media will tell us. But why? Why would we need gold to back up a global currency system, whether based on paper or electrons? If fundamentals of physical supply and demand have given way to the fundamental of price and interest rates (Joseph Miller. Monetary Gold Mismanagement) then why do we need gold. Physical realities having become irrelevant, the only thing that matters is our "attention" or our consent to believe any message that is presented. In fact, in our world, has not our attention or time become the most precious commodity? We are drowning in information overload, such that the front headlines is ultimately as far as our reading takes us when we pick up the morning paper or scan the morning website newspage. Why is it so impossible to believe that the reasons to disbelieve in the old fundamentals of gold as the basis of value for currencies has become irrelevant. To what end? Power..control.... Having manufactured our consent that gold is no longer a monetary asset, it is easy to establish a one world currency based purely on faith. Indeed, a world in which the traditional measures of money supply (M1, M2 and M3) have become largely irrelevant, what is to stop those who could successful launch an electronic currency system that is based purely on energy, nothing physical at all. A world in which electrons slosh from one shore to the other, where only interest rates rule the day, where in fact no gold is necessary since there are no hetergenous currencies that pose a threat to the new world currency. As Kutzman so wisely notes we may have already entered a world in 1987 where markets, investment decisions, and the value of currency is no longer determined by fundamentals but by how we feel about them. If all we are left with is feeling, then the key game strategy is the management of our feelings towards something. If price has become the fundamental which controls the "feelings" of the masses towards gold, as we have seen since the southward flight of gold since March, starting with Bre-X, the Australian gold sales, and the Swiss intentions to sell, then indeed Kutzman and Soros may be right. Indeed sorting out what is relevant and irrevelant has become so complicated that it seems logical to use "price" as the sole piece of information upon which to make investment decisions in such a casino market. It is ironic that while information has become so vast we are paralized to make a rational decision since we cannot discern what is relevant or irrelevant. In such a word of confusion, we literally beg someone to tell us what the relevant variable is. We are being told today that that variable is "price"... as Soros notes, "price" has become the fundamental which drives decisions and feelings...and no matter how much goldbugs lament about the fundamentals of gold supply and demand and how much we romanticize about the role gold played in the past, the fact remains that gold remains depressed and will remain so so long as it meets the agenda of those who seek the supremacy of the U.S. dollar. It suits these manufacturers of our consent to maintain the illusion of stability and avoid mass hysteria of the masses. I have no doubt that if fiat currency systems do fail, and I believe they will, a soft landing is being orchestrated that will eventually end with the U.S. dollar, the final domino. When that day comes, the alchemists would have achieved their ultimate dream: a one world currency that is based purely on faith and feelings, controlled by a select group of international merchant banking interests (those faceless currency traders who so callously pass judgement on the nations of S.E. Asia and who steal their hard assets while issuing counterfeit fiat currency), and under no threat from ANY competitor, gold or other currencies. When the final domino falls, the system has been completed. Spin and manufactured feelings have replaced fundamentals in a world so wired on information that it can no longer find peace and tranquility amongst the noise and confusion, thus asking for the answer to its troubling questions. It is under these circumstances that those who are participating in creating the noise and confusion, suffering from information overload also benefit by providing "knowledge" those unable or unwilling to think for themselves. Indeed, even basic questions such as "who is buying the gold" that central banks are selling, remain unanswered and unheeded. The inevitability of another unexpected event that causes the big market crisis is not at all clear to me...given, as Soros notes players continually build into their decisions expectations about the future which are in part based on past experiences. Reflexive moments still happen, where normal no longer lives in the market, but knowing when is difficult to determine. While the world appears to be more chaotic and that some argue is becoming less hierarchical I sense another ominious trend; a growing concentration of power, wealth, and control which is kept out of the view of the masses since these same forces control the information flow which we are subject to in the mainstream media.
  • To what end depressed gold prices. To ensure gold can be cornered by those who would launch a new world currency. Indeed, those who seek this final alchemist dream are not detractors of gold. Indeed, the Rothschilds, who are likely partners in this crime, are anything but detractors of gold, they are its principle exchange agent through the LBMA. So why would they want to detract from gold? Several possible reasons. If the feeling towards gold amongst the majority of investors is depressed and if your agenda is the establishment of a single world currency, then you are indifferent to a depressed gold price even if many of your investments (gold mines in S. Africa) are ultimately sufferring. All you care about is to find a means to control increasing volumes of the world's central bank and private investor supply. Having achieved sufficient supplies you are in the best position to establish a new world currency. In fact, gold has been rendered unimportant as money...only jewellery and other industrial uses. Indeed and ironically it is the same dream of Lenin "the most useful purpose of gold was to adorn the wall of restrooms." But communism is dead, or at least we are least the politic of communism is mostly neutralized, but what about the "ideology." Have we forgotten that communism believes in centralized controlled. Then isn't ironic that the world entertains increasing centralized systems of trade (Free Trade Agreements, GATT, WTO), governance (UN), and investment (MAI)? What are we to make of this trend and its apparent contradiction to democratic systems which are based on the freedom and liberty of not only individuals, but systems as well, as well as mediums of exchange? Have we forgotten John Maynard Keynes's who called gold a "barbaric relic." Why should we not believe that Lenin's and Keynes's words have become true...indeed, Soros likens himself to Keynes, a god or a financial alchemist. I find it ironic that many gold analysts let the words of Lenin and Keynes escape so easily from their mouths without considering for a moment whether the ideology of both men has not somehow been achieved! Indeed, what if it has? Do we not then find ourselves backed into a corner...are we not in the uncompromising position of FINANCIAL CHECKMATE? While Greenspan had been a historical defender of the valour of gold as "protector of property rights" back in 1966, is he not either suffering from amnesia or been forced into a financial checkmate himself? Indeed Joseph Miller notes that in these latter days the U.S. finds itself in a welfare state where ironically gold IS a barbaric relic and that it is viewed suitable for guilding the urinals of Washington.
  • I am increasingly inclined to believe that goldbugs cling to a romantic idea that Greenspan will wake up one day and smell the coffee and that gold will rise again as the basis for value. Indeed I ask why should it?
  • While S. Korea is held hostage to the IMF demands, troubling demands are made of these countries. Loans are provided to save their souls of inherently unsustainable currency systems, a decree made from the wise merchant banker inquisition who runs the IMF. Indeed, haven't you ever wondered who runs the IMF? Who are they to play "god" and demand the steep penalty of collateral which includes important hard national assets, such as factories, land and wholesale changes to sovereign systems of their economy and fiscal regimes. The IMF first experiment was New Zealand, then Mexico, now S. Korea is the next experiment.
One cubic foot of gold weighs more than half a ton (1,306 pounds).