Gold, Current World Events And How All The Pieces May Tie Together!

August 19, 2015

How is it that the paper price of gold can be on the verge of collapse, while oddly enough the demand for the physical precious metal itself can barely be met by the supply? 

Over time in the real world, there exists a direct relationship where the price of a product is dictated by the supply and demand for that product; unless of course it happens to be the gold and silver market.

Without a doubt collapsing gold and silver prices in the face of exploding demand is a reality that defies all the rules; but the real question is “why?” Somehow everything I learned in Econ 101 mirrors the education I received as a child in the 60’s and 70’s.  Neither have anything in “common” with what is perceived as the real world today.

I believe a very strong possibility exists that the current downward paper manipulation in gold is a part of a desperate ruse designed to distract the investing public’s fickle attentions from the seriousness of the political, economic and financial chaos present in the World’s financial system today.  This in conjunction with an over-abundance of technical market traders making decisions based solely on 20-20 hindsight is a trend which creates ideal corrections in long term Bull Markets!

The First Dominoes Have Fallen!

Economic and financial situations such as Greece are just the tip of the iceberg when it comes to the approaching world-wide debt crisis which awaits any Country that believes debt can continue to grow exponentially without any repercussions.  I find it more than disconcerting that the bankers and politicians responsible for this world-wide economic and financial nightmare have seldom if ever been held accountable for their crimes and the destruction of their Countries!

Why do you think the major Countries of the Western World are now attempting to pass legislation to outlaw cash?  Do you think it just might have something to do with the knowledge that bank depositors in the Western World will soon be running to the banks standing in long lines with “nothing but a prayer” in an attempt to repatriate their hard earned deposits.

Where do you think a large portion of this cash is destined to find a home when depositors realize they have been lending their money to these institutions earning 0% interest assuming 100% of the risk while the bankers collect 100% of the profitable bets? 

Past solutions to these bad debts were funded with a “mulligan” commonly referred to as Government “Bail-Outs.”  We have now approached a point in time where the laws on the books are shifting that liability directly on to the shoulders of the naïve bank depositors where their money is now in the process of being stolen through a refunding, or should I say taxing process called “Bail-Ins?”  All the risk for no returns!

If cash is outlawed individuals would lose total control over their money enabling governments to steal or tax at will directly from their accounts; this will take the injustice of civil asset forfeiture to a whole new level.

I believe it is inevitable that the day will arrive when the world will look up from their cell phones and realize the debt crisis in Greece is nothing when compared to mathematically impossible challenge of the of the US to meet its future debt obligations. 

The “Puppeteers” pulling the strings are fully aware of the risk they face when this day arrives.   They know they must have their “ducks in a row” to combat the manufactured inevitable fallout and the changing of the guard in October when it comes to the “World’s Reserve Currency!”  They know it is just a matter of time before the lines begin to form.

This is just one chapter in their over-all agenda and it can only be accomplished if the world’s attention is diverted with news being spewed from the major media sources that keeps the public focus and emotions building in opposite directions.  This diversion not only gives “The Puppeteers” the time they require to install the final pieces of legislation needed to steal any hard assets they do not currently own, without any interference from the public, but it also gives them the power to imprison the public as emotions boil over into chaos.

What do you think fast-tracking  the TPP bill is all about and why did the Republicans roll over and give a man in the opposite party total control of all decisions being made without even taking the time to read the 28 chapters of the bill.  Only a moron or a puppet bowing to their masters wishes would deny his constituents their rights to read, examine, add input, change or kill a bill which will infringe upon their rights, liberties and freedom’s going forward.  Seems to me their office exists as a checks and balances mechanism to keep this exact same event from happening in the first place.

Anyone who questions the wisdom of our “Founding Fathers” as they drafted the Constitution giving protection to life, liberty and the pursuit of happiness 2.5 centuries later should be on their hands and knees giving thanks to the fact that these individuals had the foresight to understand the risks that this Country faces today particularly when those who stand to benefit the most are too blind to see it! 

When the citizens of this country openly accept the denial of their rights for what they believe is the protection of those rights they in essence get what they deserve.  The “dumbing-down” of Americans has been far more successful than the “Puppeteers” could have possibly imagined!  The only hope of long-term survival lies directly in The Constitution of the United States as that is the foundation which made this Country great in the first place.  Granted, it is not perfect, but it worked very well for over 200 years.

Anytime bills and laws are passed without any public knowledge or input as well as carte blanche immunity being granted to the corporate designers of the new laws a scenario is created where the only outcome means the public will suffer and lose.

Fast-tracking the TPP is an act that makes the Republican non-stop “showboating” stance on Obamacare a moot point.  Hypocrisy at its worst from all sides!  I guess the door does swing both ways when the best welfare of the people comes into question!   After all, who is more important, the constituents or their corporate campaign sponsors?

Nothing Like A Couple Of Good Examples!

This might also be a good time to speculate about the timing of a couple of additional events which quite possibly serve a far greater purpose beyond bringing justice to a creep and the down-sizing of a top media personality.

What could one possibly do to influence a Congressman or Senator, who is undecided on a particular issue, to swing his or her support their way?  What could one do to create a bias in the press which favors the wants and desires of a particular agenda?

You could always pay a personal visit pleading your case to those whose support you seek; although it never hurts one’s cause to do this at the exact same time when a former Speaker of The House and second in line to the Presidency is publicly exposed and destroyed for the creep he has been known to be for years.

It also seems to be pretty good timing when the “Big Dog” on The Evening News is exposed for fabricating and exaggerating just a little bit too much on a few of the news stories he reported on years ago.  I am sure his exploits have absolutely nothing in common with any other media personalities and reporters as they climbed the same ladder to further their own “blue screen” careers!

I am sure that none of these events have anything in common with each other but I just can’t seem to wonder why our elected officials have a habit of changing their minds so quickly while the press seems to ignore or be totally unaware of some of the events going on in the world today. 

It might also be a pretty good time to for the public to begin questioning why it is that when laws are being broken and a whistleblower steps up to expose these crimes that the whistleblower is the one to go to prison rather than the criminals committing the crimes?

Now if one really wants to take this scenario to the next level, although there is no chance at all any of these events are linked together, then one has to begin to think about why time and time again individuals who have placed their lives, careers and the well-being of their families in jeopardy, to expose criminal issues, are labeled as “crazies” and “fanatics” by those who may have committed the crimes.   These heroes have sacrificed everything in their lives with any meaning, including their lives, for the sake of helping mankind while those who stand to benefit the most never take a moment to ask themselves the simple question “what if they’re right?”

The knowledge that “all is not as we have been led to believe” is a major factor creating many sleepless nights for those who know their assets and wealth are at a risk never before experienced by this generation.

Those who now understand the simple truths written above have been liquidating the traditional investment portfolios seeking a safe haven and control of their wealth to avoid the pitfalls of Cyprus and now Greece.   It is inevitable that many more will follow as they realize the risk is simply not worth the reward.  The initial dominos have fallen putting into motion an event which will rival the depression of the 30’s; the only remaining question is “not if but when!” 

Gold's Funding!

Whether you believe as I do is irrelevant as the events of Cyprus, Greece and now Puerto Rico are facts which can only be classified as the weakest links.  Bank depositors and bond owners who overstayed their welcome in those countries are now paying a price I’m sure they felt wouldn’t or should I say “CAN’T HAPPEN HERE!”

Light bulbs are beginning to come on revealing that the traditional investments of CD’s, Treasury Bonds and a stock market supported by “The Plunge Protection Team” are risks that simply cannot be justified under these conditions at these levels.  This logic is compounded by the fact that CD’s and Bonds pay virtually no interest at a time rising interest rates threaten to decimate their principal. 

Do you think that the real solutions to the issues in Greece, as well as anywhere else, can be solved by taking a massive debt pyramid and building it higher without addressing any of the issues which long ago delivered them beyond the point of no return?  The truth about a debt pyramid lies in its construction as the pyramid is built upside down on a foundation which does not exist.  It is only a matter of time before the layers of debt compounding exponentially on top of each other reach a weight which simply cannot be supported as the pyramid inevitably implodes into itself. 

Why would anyone want to loan their wealth, for virtually no return, to institutions and governments whose only hope of ever being able to return hard earned capital lies in the greatest Ponzi scheme of all time?  Only blind faith supports a system which is destined to spin out of control and crash.  Never before has the term “Full Faith and Credit” meant what it means today!  I think a “pet rock” would be a much more favorable alternative to paper created out of thin air, especially when it appears that October will initiate a new member to “The World’s Reserve Currency Cartel” where that paper will then represent a much smaller “piece of the coveted pie.” 

A Possible Trigger!

Rising interest rates is a “Pandora’s Box” that is about to be opened.  The whole world is captivated by the supposed “choice” to raise interest rates now when the reality of future rate increases will be events completely out of the control of The Fed as their very existence will be challenged by their decisions of the past.

Do you think that the 15% yields on the 30 year US Treasury Bond in the early 80’s, when the US had less than $1.5 trillion in debt, is an event that cannot re-occur as US debt has exploded beyond $18 trillion?  Ironic how, for the past several months, nobody seems to even be counting and worse yet, nobody cares!  The only way you can take a 3% yield at par and transform it into a 15% yield is to devalue the asset to a price of 20% of par or $.20 on the original $1.00.

One must also understand in the 80’s gold retreated into a 20 year bear market as interest rates began their descent from all-time record highs where lower rates stimulated an explosion in pent-up consumer demand which fueled decades of positive growth.  The exact opposite is true today where for 7 years interest rates have hovered at all-time lows creating no growth at all.  Does anyone really believe that rising interest rates will be a positive for a financial system which is teetering on the edge of spinning completely out-of-control?  What direction were interest rates moving as gold rose through the 70’s?  What did the corrections look like?

The Game Too Shall End!

The game will continue as long as The Fed and Central Bankers have the ability to print or buy paper in an account with a zero balance.  As the countries of the world find themselves begging for additional debt to build the pyramid to exponentially higher levels, they and the rest of the world will begin to ask themselves a very interesting question while their Country’s most precious and valuable assets are being stolen.

The question; what gives The Fed and Central Bankers the right to create debt while enslaving countries when they in essence have no skin in the game to begin with?  Have you ever heard of The Fed showing concern over any losses in their portfolio of bailouts?  Funny how the only concerns fall on the “ability to pay” of the borrowing entities as austerity demands and taxes are forced upon the public.  At least the Mafia suffers an actual monetary loss when their loans fail.

All one has to do to recognize the possibility that the US may be in the exact same boat as Greece is to ponder for a few minutes about the fact that The Fed now owns in excess of $4 Trillion and counting, of the $18+ Trillion in US Treasury Bonds, bought in an account with no money, owned privately by the world’s wealthiest Puppeteers!  But then again, “That Can’t Happen Here!”  For those not counting; $4 Trillion in debt divided by 320 million US citizens is $12,500/person in debt currently owned by The Fed; not a bad portfolio for an account with no money or risk!

Now To The Point!

In my opinion, ownership of physical precious metals is a given and should be a component on every individuals buy list.  On a worst case basis the price of gold and silver will rise and fall but these two commodities will never be worthless and can never be created out of thin air!

Those who believe that the day may come where access to purchase additional above ground physical gold and silver may be restricted, for whatever reason, will then find that precious metal equities may be one of the only options available to satisfy the desire to increase precious metals exposure.  I also believe that the demand for physical precious metals, from individuals dumping their bonds and cd’s, will eventually create major physical supply disruptions which could serve as a “trigger” bringing about an end to the scenarios written above.

The last several years have been as tough on mining investors as any time in history.  Mining equity prices are trading at all-time lows with the paper price of gold and silver as manipulated as “the puppets on a string.”  Oddly enough, all this is occurring at a time when the fundamentals for owning gold and silver have never been better while the demand for “true legal tender” in the physical market explodes as the paper price of gold retreats.

The bearishness in the gold market is as ridiculous as the bullishness in the stock market.  One is trading near all-time highs supported only by “The Plunge Protection Team” while the other is trading at multi-year lows where demand increases as the paper price falls.  When the stock market begins to encounter serious issues, do you think the demand to own stocks will increase as the market falls?

If ever there was a time to buy low when “the blood is running in the streets” now seems to be a pretty good time when it comes to precious metal stocks!

Investors like me believe these circumstances have created a terrific opportunity, assuming the traditional markets survive the storm which is on the horizon I believe junior mining companies which are in a position to begin taking gold out of the ground over the next couple of years is a specific sector of focus as their “first pour” could coincide with the next leg of gold’s bull market run.  This next leg in gold will be very profitable for those entering production while those in production today deplete valuable resources hoping the cash flow will keep their mines afloat as the paper price of gold seeks its bottom.

As always folks, these are my own opinions and it is up to each of you to do your own homework as your opinion may differ from mine.

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mhoy@neb.rr.com

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Mike Hoy is a graduate of the University of Nebraska with a business degree and a minor in economics.  Upon graduation in 1978 he was employed as a broker with a series 7 brokerage license.  Today, Mike is an investor who occasionally writes an e-mail update where he shares his favorite stocks and his opinions.  Occasionally Mike will take on companies as a public relations consultant.  

A gold nugget can be worth three to four times the value of the gold it contains because they are so rare.