Warren Buffett’s Phony Noblesse Oblige

By Dominique de Kevelioc de Bailleul

There is something very wrong with America if people embrace Berkshire Hathaway’s Warren Buffett’s sick notion that says more taxes are needed to pay for US budget deficits.

“We’re taking in too little money and spending too much,” Buffett said, in a CNBC interview on the subject of the federal budget deficit and his previous suggestion that billionaires should pay higher taxes.  “Solving the problem of me paying the low tax rate I pay is not going to solve the fiscal problems of the United States, but to ask other people to be making sacrifices during this period—and we’re going to ask them to make sacrifices—we’re going to ask them to make it on the revenue side and the expenditure side, and to leave this group [the 400 highest income earners] alone is a travesty.” Sign-up for my 100% FREE Alerts

Buffett frames the debate on taxes in a classic Morton’s Fork, a term attributed to John Morton (1420-1500), archbishop of Canterbury and tax collector for  England’s King Henry VII, which argues that wealth is available to collect from the rich, who have it—and from the frugal, who have learned to live without it (savings).

As the framers of the US Constitution warned more than 200 years ago, granting power of taxation to government only leads to bankruptcy, and worse yet, taxing labor is immoral and tyrannical—include you.

Buffett never broaches the issue of the 16th Amendment (never ratified); he, instead, seeks the path of least resistance to save his own skin and ‘reputation’ by offering to write a check to close trillion dollar budget deficits as an example of noblesse oblige.

“It’s only when the tide goes out that you learn who’s been swimming naked,” Buffett famously said, a quaint metaphor for describing the result of unhedged risk.  But the quote can also be applied to a flawed and deteriorated political system, which, arguably, has been propped up since 1913 through easy money generated by an unconstitutional banking cartel.  He never discusses the legality of a privately-held Federal Reserve and its role in budget deficits.

Given that the damage has already been done—the US has been technically bankrupt for decades—Buffett recommends giving still more tax dollars to a hopelessly broken Republic, which has suddenly become mired in a fight between the people and a powerful cabal, with political and banking hacks commingling roles between the Federal Reserve and Washington.

“We know where the egregious acts were, so enough with the lambasting of the banking system and all these bankers,” Buffett told Bloomberg.  He raises the stakes in the argument with a risky proposition (bluff?) with tacit support of the banks.

And Buffett doesn’t stop there, though someone should stop him; he raises yet still, with an egregiously gratuitous remark about the housing market in his open letter to investors of Feb. 25.

He wrote, “Large numbers of people who have ‘lost’ their house through foreclosure have actually realized a profit because they carried out refinancings earlier that gave them cash in excess of their cost,” stated Buffett.  “In these cases, the evicted homeowner was the winner, and the victim was the lender.”

Apparently, showing how out of tough he is, a similar Marie Antoinette moment brewed in France in the late 18th century.   Transposing the Fed for the Catholic Church and Washington for French peers and an eerie comparison can be drawn by Buffett’s tack.

Like Paris, Washington cannot help but feel the heat of a collapsing economy as it attempts to pay for its own Empire, while the evidence of Warren Buffett’s mouth covered with cake crumbs can only serve to escalate the rage of bankrupted Americans led to slaughter by a reckless Fed.  Wasn’t it a past financial icon “Sir” Alan Greenspan who encouraged the housing market bubble?

Now Buffett wants the American people to pay again and after his AIG bailout in addition to the Greenspan fiasco.  Is he suggesting that money created out of thin air that bankers profusely lent to buy homes should now be taxed—which is essentially asking the borrower to pay tax on a tax (inflation)?

Ironically, as the American people fight another French Revolution, a former subject of the ‘Red Coats’ and another household name of finance, Jeremy Grantham of GMO LLC, at least partially succeeds where Buffett fails in the diagnosis of the fiscal problems of the US.

“ . . . the current U.S. capitalist system appears to contain some potentially fatal flaws,” Gratham wrote in his letter to GMO investors.  “Therefore, we should ask what it would take for our system to evolve in time to save our bacon. Clearly, a better balance with regulations would be a help. This requires reasonably enlightened regulations, which are unlikely to be produced until big money’s influence in Congress, and particularly in elections, decreases.”

Big money influence on Washington?  Grantham strongly intimates that corporations (presumably led by the most powerful corporations of them all: banks) have influenced politicians, thereby exposing a “fatal flaw” of alleged American capitalism.

That now-exposed fascist oligarchy in America, which loses credibility each day, has desperately enlisted Uncle Warren as a pinch-hitting King Solomon in an effort to quell a groundswell movement of liberty spearheaded by presidential candidate Congressman Ron Paul.

Paul couldn’t disagree with Buffett any more and takes Grantham’s assessment one huge step further in the diagnosis of what ails America, when Paul stated, “Capitalism should not be condemned, since we haven’t had capitalism.”

The idolatry of Buffett’s crony capitalism scheme has been exposed, but he doesn’t see that any more than he saw the credit collapse of 2008.  Or, maybe, a more compelling case could be made that demonstrates Buffett’s role as America’s avuncular uncle and apologist for a fascist, crony capitalistic system is just another clever fraud to go along with Fed lies, Washington lies, and of American freedom.

“When one gets in bed with government, one must expect the diseases it spreads,”  Congressman Ron Paul once said.

Just as Buffett under-priced risk to his Berkshire Hathaway insurance company empire, he has apparently underestimated the American people, too.  Diverting attention away from the root cause of Washington’s budget deficit with a divide-and-conquer ploy of framing a debate which pits the rich against the middle class will, in the end, not work—if he’s paying attention to Paul’s gathering steam in the American Revolution, the sequel.

“There’s a different understanding now. There’s a lot of people talking about free-market economics rather than Keynesian welfarism and interventionism,” Paul announced on ABC’s This Week. “There is an intellectual revolution going on with the young people. There are people who have sat on the sidelines for years.”

The advice of the American people to Warren Buffett is clear:  Look old man, get on board with the Paul campaign tout de suite, or end up in a shot gun wedding with John Law, Alan Greenspan, on your way to the Mexican boarder.

No more taxes, no more bailouts, no more Fed, and no more crony capitalism. Sign-up for my 100% FREE Alerts

Greece is D-O-N-E, $70 Silver in 90 Days

By Dominique de Kevelioc de Bailleul

Speaking with King World News, Goldmoney’s James Turk reiterated his $70 silver price target—but brazenly violates the rule of ‘responsible crystal balling’ by adding a date along with his price prediction.  Turk expects a double within 90 days.

In essence, Turk expects silver to move up at a compounded annual rate of return of 700 percent by the end of silver’s seasonally bullish months, which end with May.

Now, that is one bold call . . . or is it?

A move that large must mean only one thing: A big event is just over the horizon, and it is about to emerge for everyone to see.

“Events so far this year have been extraordinary,” Turk told KWN.  “The markets are signaling it.  In reality, events are spinning out of control.”

That event, is Greece (and maybe a contrived political diversion) and its $18 billion interest payment due Mar. 20.  With the Greek one-year bill yielding 720 percent, the market has already declared a default of Greek debt.

Back on January 17, Paris-based credit rating agency Fitch had stated that under the conditions set by Germany, the ECB and the IMF (Troika), Greece cannot, or will not, be saved.  Greece must default.

“ . . . it won’t be a surprise when the Greek default actually happens and we expect it one way or the other to be relatively soon,” Fitch Ratings Managing Director Edward Parker told Bloomberg News.

On Feb. 28 (released on Feb. 28), Standard & Poor announced that it had lowered Greece’s credit rating to “SD,” Selective Default.

“Poor’s Ratings Services lowered its ‘CC’ long-term and ‘C’ short-term sovereign credit ratings on the Hellenic Republic (Greece) to ‘SD’ (selective default),” S&P stated in a release.

“If Greece were to withdraw from eurozone membership (which is not our base-case assumption) and introduce a new local currency, we would reevaluate our T&C assessment on Greece to reflect our view of the likelihood of the Greek sovereign and its central bank restricting nonsovereign access to foreign exchange needed for debt service,” the rating agency concluded.

In other words, if Greece takes back the drachma as its currency, the euro becomes a foreign currency and Greece survives.  But what will come of the French and German banks that must then take the loss?  The only logical answer: a monstrous ‘ring fencing’ operation by the world’s central banks to plug the gaping hole, but not a mere $18 billion hole; the hole could reach $2 trillion.

The Wall Street Journal reports on Feb. 28:

World financial leaders from the Group of 20 industrialized and developing economies will include an explicit March timeline for Europe to boost the size of its emergency bailout fund, a senior G-20 official involved in the discussions said Sunday.

The official G-20 communique will link the strengthening of Europe’s bailout fund as “essential input” into its considerations of bulking up the International Monetary Fund’s own lending resources, the person said.

Although the G-20 statement won’t incorporate specific amounts officials are targeting for the European Union firewall and IMF coffers, the finance ministers and central bankers pointed to an IMF study recommending $2 trillion in combined backstop facilities as a reference point.

It’s no surprise that insiders at S&P leaked the downgrade announcement scheduled for Feb. 28, as silver withstood selling pressure above the $35 breakout level with much ease on Monday.

“In this regard, I have mentioned several times my expectation that once resistance at $35 is taken out, silver will climb to $68-$70 in 2 to 3 months,” notes Turk.  “I still expect that outcome, but of course, only time will tell.  I thought it might be tough going for silver in the $35-$36 area, but maybe not based on the strength we are seeing today.”

With the release of the S&P downgrade to the dread “Selective Default” rating on Tuesday, now the global banking system needs to come up with $2 trillion to prevent an imminent Armageddon scenario, according to the IMF.

Translation: central bank balance sheet are poised to explode by some trillions.

Extraordinary events beget extraordinary price moves, according to Turk.

“I have mentioned several times my expectation that once resistance at $35 is taken out, silver will climb to $68-$70 in 2 to 3 months,” noted Turk.  “I still expect that outcome, but of course, only time will tell.  I thought it might be tough going for silver in the $35-$36 area, but maybe not based on the strength we are seeing today.”

Under the bizarre circumstances, Turk’s call for a two-bagger in silver may not actually be that outrageous after all.  Moreover, there’s an outside chance that $70 silver by May is a conservative call given the potential for any number of mishaps or miscalculation by the G-20 following an official Greek default.

Wyoming Prepares for Dollar Collapse, Constitutional Crisis & Revolution

By Dominique de Kevelioc de Bailleul

Wyoming legislatures have followed the lead of 13 other US states on Friday when it passed a bill outlining the state’s response to an economic of political crisis at the federal level of the United States. Sign-up for my 100% FREE Alerts

House Bill 85 passed by a 5-to-2 vote to provide “a task force to study governmental continuity in case of a disruption in federal government operations,” according to the Casper Star Tribune.

A seven-member task force was commissioned by Wyoming politicians to submit an impact study as well as recommendations in the event of the following:

1)   A US dollar collapse and contingency plan for the rapid deployment of a alternative state-issue currency.

2)   Federal government incapacitation, nullification or overthrow

3)   US Constitutional crisis

4)   Need for coordination between Wyoming Governor, National Guard and federal troops

5)   Disruption in food supplies

6)   Disruption in energy supplies

In addition, the task force will submit by Dec. 1, 2012 a feasibility study for assembling its own standing army, including conscription of state residence.

“I don’t think there’s anyone in this room today what would come up here and say that this country is in good shape, that the world is stable and in good shape — because that is clearly not the case,” said Wyoming state Rep. Lorraine Quarberg, R-Thermopolis. “To put your head in the sand and think that nothing bad’s going to happen, and that we have no obligation to the citizens of the state of Wyoming to at least have the discussion, is not healthy.”

While the ‘mainstream media’ touts economic recovery, publicity of a growing potential of a dollar collapse from notable private sector experts such as Trends Research Institute Founder Gerald Celente, private economist John Williams, billionaire hedge fund manager Kyle Bass and money manager Marc Faber has steadily gained traction as the public and state legislatures become distrustful of ‘mainstream media’ (MSM) to adequately challenge seemingly incredulous federal government economic statistics.

“I am not interested in the garbage these government officials broadcast either they are lies or they are distrustful,” Marc Faber said in Sept. 2011.  “You can’t trust them anymore because they produce statistics that are completely unrealistic.”
Faber won’t put a date for a dollar collapse, but he has repeatedly warned that ultimately “the dollar is doomed.”

In January 2012, Trends Forecaster Celente told ABC Australia, “I would say, since I’ve been doing this work, over 30 years ago, I’ve never been more concerned [about the US dollar and euro] than I am right now,” adding that the global financial system “could “spiral out of control” some time “by the first quarter of 2012” as the European crisis worsens. “There’s no way to bail out the European nations.”

Kyle Bass, as well as many other private sector money managers, suggests that the European crisis, then, would spread to US banks, given that the global banking system between the Europe in the US is inextricably connected.  If Europe fall, the US falls, too, though the MSM downplays the direness of the rapidly accelerating currency risk to the US dollar that would result of a crisis in the euro (or yen).

In fact, the risks to the dollar are so profound that economist John Williams makes a compelling case for the mathematical impossibility of the US ever recovering from hidden multi-trillion dollar deficits, forecast by him, for the remainder of the decade.  The dollar would need to drop sharply lower from current levels for the US government to have any hope of paying its bills.

Like Faber, Williams has repeatedly stated that US government statistics regarding GDP, inflation, unemployment, total federal obligations and budget deficits are completely “meaningless.”

For example, federal government unfunded liabilities easily top $100 trillion (a staggering amount also estimated by Boston University Professor Laurence Kotlikoff), though only $15 trillion is ‘official’, while the unemployment rate is closer to 22 percent, not the 8.3 percent reported by the BLS, according to Williams.

“Risk remains high, though, of a sharp sell-off in the U.S. dollar and dumping of dollar-denominated paper assets, particularly as the euro area crises come to head and the damages are absorbed, in due course, by the global financial system,” Williams told King World News on Feb. 17.

Williams’ prediction of hyperinflation in the US “remains 2014, but events of the last year have accelerated the movement towards this ultimate dollar catastrophe,” and that the gold price will achieve multiple times its present price as the public panics into the precious metal during the US dollar hyperinflation process.

“The unfolding circumstance will encompass a complete loss in the purchasing power of the U.S. dollar; a collapse in the normal stream of U.S. commercial and economic activity; a collapse in the U.S. financial system, as we know it; and a likely realignment of the U.S. political environment,” he warned.

Wyoming has begun to prepare for the Williams scenario. Sign-up for my 100% FREE Alerts

Gold’s Role in Endgame Comes More Into Focus

By Dominique de Kevelioc de Bailleul

As a post-Lehman solution to the Western world, which suddenly found itself drowning in debt, drags well into year three, speculation of an inevitable endgame to Kondratiev’s Winter of discontent is coming more into focus.

Federal Reserve Governor Thomas Hoenig, World Bank President Robert Zoellick, Grant’s Interest Rate Observer Publisher Jim Grant and Currency Wars author Jim Rickards, among others, have proposed the idea that the only responsible solution to mountains of unserviceable debt requires backing, at some level, the world’s reserve currencies with gold. Sign-up for my 100% FREE Alerts

The outspoken and constant thorn in Fed Chairman Bernanke’s side, Hoenig, shocked the officialdom with a suggestion that if the Fed is serious about achieving ‘price stability’, it would mandate a reintroduction of gold into the global monetary system.

“The gold standard is a very legitimate monetary system…We’re not going to have fewer crises necessarily,” Hoenig said in a Jan. 5, 2011 speech.  “You will have a longer period of price stability or price level stability, but I don’t know that you’ll have lower unemployment, I don’t know that you’ll have fewer bank failures.”

Again, this time, at the global level, in Nov. 2011, Zoellick controversially broke the ice to an open discussion about gold in an article published by the Financial Times of London.  He called for a Bretton Woods II.

Zoellick wrote:  The international monetary system “is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalization and then an open capital account,” adding, “The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

Taking the queue from Hoenig and Zoellick, Jim Grant’s well-known and thoughtful ‘voice of reason’ began echoing both bureaucrats, lending added credence and pressure from the respectable of the private sector to a notion that’s continually berated by the government bullpen of Keynesians at the Woodrow Wilson School.

“Why not issue bonds backed by gold bullion?” Grant suggested in a Bloomberg interview with Tom Keene on Feb. 14.  “Gold is a better money and is grounded in something besides the power of the people that print the dollar bills.”

Jim Rickards, the man who points out that a global financial system which has been using BIS Special Drawing Rights (SDRs) behind the scenes in parallel with the dollar-based system to settle trade for some time now, said he expects monetary authorities will try an SDR scheme in an increasingly larger roll before central banks are forced into a more stable currency regime.

When will central banks be ultimately forced into a corner and succumb to the discipline inherent in some form of a gold-back monetary system?

James Sinclair of JSMineset.com offers a time line for the next ‘event’ and the ‘big reset’.  This week, he drops a bombshell in an article to the gold community.  In it, he said the next shock wave to the global financial system will take place some time, “in all probability,” between March 14th and 20th.

If Sinclair is correct, another Lehman calamity should finally put to rest any faint hope still lingering among the markets’ most optimistic of an euro solution.

Irrespective of the actual date of the Lehman 2.0, China may find it is in her best interest to intercede and cut a deal with the EU favorable to its export-based economic model.  Additionally, all recipients of China’s potential trillion dollar largess will most likely need to pledge gold as collateral to any bailout from the PRC.

If a deal can be reached, Europe gets a reprieve for a while and China gets a badly-needed boost to its gold reserves (at default).

Since the latest tranche from the Troika for Greece included a clause requiring the Greeks to pledge its 111 tons of gold reserves, China will want and expect the same deal.  Though not adequately reported, the deal reached this week in Athens hooked the nation’s ultimate reserve.

“Greek gold will be held hostage to their debt,” stated Sinclair.

Knowing that Portugal, Ireland, Spain and Italy (at the very least) will also require bailouts following Greece, their gold will most likely be pledged as collateral as well.  Between these four other nations of the PIIGS, the tonnage available as collateral, are 382, 6, 281, 2,451, respectively, for a total of 3,120 tons.  That 3,120 tons, too, as Sinclair has put it, “will be held hostage.”

Isn’t the installation of technocrats in Greece and Italy for the purpose of securing the gold?  Will Portugal require a technocrat government as well?

But the ‘big reset’ won’t come this year, according to Sinclair, allowing more time for Germany, China and the US to secure the gold before ultimately pulling the plug on the PIIGS.

“I do not agree that we are at the doorstep now of major changes in the international monetary system,” Sinclair speculated.  “That comes in June of 2015.”

Assuming Greece can be used as a model for subsequent sovereign defaults by other eurozone nations in the future, the question, then, is: will the gold price be officially revalued before the official defaults of nations that have pledged gold as collateral—or after?  In other words, is a more diabolical version of 1933 planned for the PIIGS? Sign-up for my 100% FREE Alerts

“The last man standing among asset categories as the new monetary system is introduced sometime post June of 2015 will be gold and gold alone,” said Sinclair.

$6 Gas this Summer—US Economy Falls of Cliff

By Dominique de Kevelioc de Bailleul

Strap on that safety belt for one wild summer of frantic trading in the energy complex, according to economist, prolific author and wealth strategist, Stephen Leeb.  He says gas prices in the US could reach $6 per gallon by the summer driving season.Get my next ALERT 100% FREE

And if there’s any economic event that could surely torpedo an already near-flat-lined US economy into a death spiral, it will come from a massive price hike in that most critical commodity to any economy—oil.  According to the charts, oil has again breached the $105 resistance price level, leaving only $115 as the last point of resistance before traders begin eying $150, $200 or higher for a barrel of West Texas Intermediate Crude.

And at $6 per gallon, US consumers will not only experience a touch of Europe without leaving the comforts of their own homes, the drain on another flat-lined metric—household income—could inject additional life to the anti-Obama tide of disenchantment this election cycle.

“March is now on the way, and we are seeing very high prices for gasoline at the pump,” Leeb told King World News.  “ . . . we are continuing to see higher prices for gasoline and it may even hit record highs.  In fact, I think they will hit record highs and we will see a minimum of $6 per gallon gasoline in the United States this summer.”

As geopolitical tensions between the West and Iran reach fresh highs, some in the business of managing money reckon that soon the oil price could reach fresh highs as well, with the added help of a runaway printing press operator at the helm of the Fed, Ben Bernanke.

One 40-year money manager veteran Robert Fitzwilson, founder of Portola Group, anticipates the possibility of oil trading up from the present $80 to $100 range, to a new range, above the record price of $147 per barrel, set during the summer of 2008.


Along with Leeb, Fitzwilson believes the proverbial ‘perfect storm’ between two reliable catalysts for higher oil prices are about to clash hard this year.  Those catalysts include a Middle East war (this time with Iran) and the Fed’s unofficial policy of encouraging sidelined money to take on risk at near-zero borrowing costs.

“Regardless, the secular forces almost ensure that the price of energy is going higher,” Fitzwilson told Eric King of KWN.  “With this [ultra-loose monetary policy] as a backdrop, we have the Fed mandating that they are going to try to get the stock market higher and improve the economy by printing money. You can’t have that happen without demand for oil increasing.

“So, both from a monetary perspective and a supply/demand perspective, the price of oil has to go higher and has to go higher in a substantial way.  $170 to $250 a barrel oil would not surprise me.”

Under a Leeb scenario, $6 gas at the pump translates to as much as a two percent chop to US GDP, undermining the Fed’s efforts to break from the three-year-long liquidity trap following the collapse of Lehman Brothers in 2008.

Instead, a near-double in gasoline costs surely will push consumer spend off a cliff, destroying any hope of a true economic recovery, reducing $1.5 trillion deficits, raising employment levels, as well as ushering in the potential of record lows in the US dollar against all commodities, not just against oil.

The Fed, as the ‘buyer’ of last resort in the US Treasury market, will most likely step on the money accelerator that much harder to replace lost consumer spending and buyers of US Treasuries.  That’s when inflation really takes off, according to Leeb. Get my next ALERT 100% FREE

“This could turn into really tough times . . .  Because the economy will be struggling in that environment, we could see QE3 in the midst of already record high gasoline prices,” he speculates.  “Now that will be wildly inflationary.”

Jim Rogers: Attack on Iran, Pure “Madness” — Likes Gold & Silver as Hedge

By Dominique de Kevelioc de Bailleul

Jim Rogers fears an attack on Iran will happen, calling a military confrontation with the world’s fifth-largest oil producer, “madness.”  The 69-year-old chairman of Rogers Holdings also favors commodities over paper assets as investment for the remainder of the decade, especially gold during tensions in the Middle East.   Sign-up for my 100% FREE Alerts

“It is pretty clear that many people in Washington DC and in America who want to do something with Iran,” Rogers told India-based Economic Times.  “There seem to be many people in Israel who want to do something with Iran,” adding, “I find it madness if they would even think about something like that because if they do, it is going to cause all sorts of havoc in the world and retaliation, but people do foolish things all the time.”

In the case of an all-out war with Iran, Rogers believes many markets will initially suffer from the geopolitical shock and turmoil in the Middle East, except, maybe, gold.

“If somebody starts bombing Iran, everything in the world is probably going to go down for a while except maybe gold,” he said.

But when asked specifically about the most obvious commodity standing to benefit from a war with Iran, oil, Rogers didn’t explicitly offer a comment on the potential price of crude following an attack on Iran—possibly to play down the possibility of drawing criticism of profiteering from war.

“I am not investing as it was going to happen other than the fact that I do own oil and I own commodities, but I hope it does not happen, but it looks like it will,” stated Rogers.

War or not, Rogers likes commodities no matter where world GDP is headed.  Strong growth brings strong demand for raw materials; weak growth elicits central bank intervention via currency debasement.  It’s a head-you-win-tails-you-win trade, according to him.

“If the world economy gets better, the shortages of nearly all commodities are developing and I am going to make money in the commodities,” Rogers explains. “If the world economy does not get better, they are going to print a lot more money. The place to be is in real assets, including base metals.”

As in previous interviews with various media outlets, Rogers, again, specifically mentions the same three commodities, silver, rice and natural gas as promising vehicles for investment capital, though, through advice from his lawyers, he states that he doesn’t formally “recommend” any one or group of commodities in particular.

Narrowing Rogers’ apparent penchant for silver, in July 2011, Rogers told CNBC (BER article), “Silver is going to go much, much higher—much higher, over the next decade.”

In early November, Economic Times quoted Rogers (BER article), “I would prefer silver because it is still depressed on a historic basis. Silver is 30 percent below its all-time high.”

Two weeks later, Rogers told CNBC (BER article), “Throughout history, when things have gone wrong, they print money…when they print money, you should own silver, you should own rice, you should own real assets.”  Emphasis added.

As far as timing of a meaningful purchase of gold, of recent past, Rogers wasn’t buying gold at the $1,600 and $1,700 level, preferring to wait for the possibility of a further correction before jumping back into the bullion market.

He, like Gloom Boom Doom Report publisher Marc Faber and FX Concepts’ Founder John Taylor, is looking for a intermediate capitulation in the gold market before buying in quantity.  All three men expect new highs in gold in the future.

However, Rogers appears less confident that a further correction in the gold market is in the offing given the escalating geopolitical events of the past few weeks between the US and Iran.  Since the sell-off in September, Rogers indicated that he was not buying, but today, he’s a nibbler.

“I bought some gold on Monday, a little bit,” he said.  “Not very much, but if gold goes down a lot, I would buy. I hope I am smart enough to buy a lot more gold. Gold is going to go much higher over the course of this decade.”

And, in step with both the thinking of Faber and Taylor, Rogers believes the gold market has much more room to run before it’s time to consider selling the precious metal. “Do not sell your gold, not yet.”   Sign-up for my 100% FREE Alerts

 

Here’s How Iran Could Launch Silver to $100

As the latest news from Tehran suggests Iranian oil exports to France and the UK will be cut off in response to EU sanctions on the world’s fifth largest oil producer, the oil price inches to a breakout price above $105 per barrel.  Silver, too, is again prepping in sympathy for the possibility of a major move up to test $37, which, if cleared, could prompt traders to eye the last bastion of resistance at $50! Sign-up for my 100% FREE Alert

In essence, by his latest move, the confident and smiling and Ahmadinejad has told the Obama Administration to ‘bring it on’ and be thrown out of office as the US teeters to a market-driven bankrupt, not unlike Russia 1989 following its war with Afghanistan.

Iran’s oil ministry spokesman Ali Reza Nikzad-Rahbar stated on the ministry’s Web site during the weekend that “crude oil exports to British and French companies have been halted,” adding, “We have our own customers and have no problem to sell and export our crude oil to new customers.”

The threat of $150+ (maybe more likely $200) oil price from an attack on Iran during an election year will most assuredly usher in a Republican, and Obama knows it.  Inflation will kick him out of the presidency as fast as Jimmy Carter tumbled out of the Oval Office in 1980—over the same issue:  Iran.

“Above $115, there really isn’t any technical resistance until the $140 level, near the all-time high,” technician Dan Norcini told King World News.  “If we see two consecutive closes above $115, you dramatically increase the odds that crude oil will be revisiting the all-time highs near $150. . .”

On the other hand, the inflation that’s already primed into the financial system can be masked by a war with Iran, providing perfect cover for the Fed and its drive to lower the value of the U.S. dollar.  Could Obama benefit politically as a war-time president?  History shows Americans rally around their president during war irrespective of his popularity prior to the war.

What this may mean, is silver bugs could soon have their day in the sun despite the blatant dereliction of duty at the CFTC to put an end to JP Morgan’s criminal enterprise.

So, it turns out, instead of the ‘good guys’ ensuring a free market in silver, Iran, backed by the might of Russia and China, could free silver from the financial repression scheme of US policymakers.

The chart, below, shows the relationship between the oil and silver price.  As oil ran away from the silver in 2008, silver caught up with crude during the monster silver rally of July 2010 – April 2011, taking the price of silver from $18 to nearly $50 within eight months.

How high the silver price can achieve during the next rally could pop some eyes for sure.

The silver market is razor thin.   And with reports from both Eric Sprott of Sprott Asset Management, Goldmoney’s James Turk and the U.S. Mint indicating that the number of dollars moving into the silver market has equaled the amount of dollars moving into the gold market for months following the violent 50 percent silver correction last year, it’s difficult to imagine anything but spectacular moves to the upside could result.

Sprott recently told the Silver Doctors:

“ . . . [investors are] buying 50 times more physical volume of silver than they are gold. And when you go to the US Mint site, they sell the same number of dollars of silver as gold. Which means people are buying 50 times the volume of silver than gold.

“But when you look at what’s available to buy- you know we produce 80 million ounces of gold a year, and maybe 70 million of that is available for investment, and we produce 900 million ounces of silver, and theoretically let’s say 200 million ounces are available for investment, well that means you can only buy 3 times more silver than gold for investment purposes.

“But we see so many instances where the ratio is 50 to 1! And GoldMoney’s the same thing. Almost every time I talk to a metals dealer my favorite question- How much silver do you sell vs. gold? And every time, I get the same answer: We sell as many dollars of silver as gold. Well, that’s impossible. It’s just impossible that people can keep buying at that rate, and we not end up with some type of shortage. It’s those data points that make me so optimistic about silver.”

The chart, below, suggests a move in oil to $150 could spark that silver breakout above $50 that silver bugs have anticipated since the beginning of the year.  At $150 oil, silver could clear $50 easily, moving traders to the next target of the round number of $100.

Numerous predictions of big moves in silver for 2012 have streamed in since the start of the new year.  One standout, financial author Stephen Leeb, told King World News on Jan. 31 that he wouldn’t be surprised if silver cracks $100 in 2012.  He believes that, not only is silver an under-priced monetary metal, it’s a critical industrial metal for China’s alternative energy programs.

“I think the outlook for silver, both as an industrial metal and certainly as a monetary metal, is as bright as it can possibly be,” he said.  “I’m sticking with my target of at least $100, but I tell you, Eric [King], it will happen this year.  We are definitely headed for triple digit silver in the not too distant future.”

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Buy Gold & Silver for the Long Haul, says Jim Rogers

As global investors fret about the March 20 deadline for Greece to demonstrate whether it will sink or swim, Jim Rogers of Rogers Holdings advises to hold gold, silver and commodities for the long, rough haul anticipated for the remainder of the decade. Sign-up for my 100% FREE Alert

In other words, currencies are ultimately bound for a trip to the graveyard, according to Rogers.  Greece is only the beginning to the contagion in Europe and the U.S.

“Probably none of us are going to own any paper money at all ultimately, but that’s later in this decade, because paper money is becoming very suspect everywhere in the world,” Rogers, told CNBC from Singapore. “I don’t own any U.S. equities,” adding “I don’t own the pound sterling, although I do love the UK a great deal.”

Rogers, who made his fortune trading commodities during his partnership with George Soros in the 1970s, sees a repeat of central bank monetary profligacy,  which, back then, took gold to $800 per ounce from $35 within nine years—a 42 percent compound return throughout the nine-year bull market run.

“Everybody’s having a wonderful time running the printing presses,” said Rogers.  “The way to protect yourself at a time like that, historically anyway, has been to own real assets. Those are my longs, and currencies.”

While unprecedented imbalances between debtor nations and creditor nations work their way through Europe and, eventually, the U.S., either debtor nations outright default on their debts or they debase their currencies, with the latter the more traditional method of reducing the relative size of debt to revenue.

But the 69-year-old Rogers has hedged for any outcome regarding the two primary reserve currencies, the U.S. dollar and the euro, through the ownership of the monetary metals, gold and silver.

“But I own the euro, I own the U.S. dollar. I own various currencies hoping to get through all this, but someday, none of us are going to own paper money at all,” adding that he’s “not thinking about selling” his precious metals.  In fact, Rogers likes silver over gold at these prices levels.

Gold and silver currently trade at $1,720 and $33.20 per ounce, respectively.

Echoing Rogers sentiments on the yellow metal comes from billionaire hedge fund manager John Paulson of Paulson & Co, who told investors to grab some gold before consumer price inflation takes another jump higher in coming years.

“By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold,” Paulson stated in a letter to investors obtained by Bloomberg on Friday. Sign-up for my 100% FREE Alerts

Greece “Officially Defaults” March 23, Banks Close

Wonder why European leaders appear more like a rotating cast of bumbling 3 Stooges than a team of coordinated fraternal bureaucrats throughout the debt crisis in Greece?  British investigative reporter John Ward of The Slog may have shed some light on to the matter of Greece and the strategically planned hard default of the beleaguered nation’s financial obligations at the close of business March 23. Sign-up for my 100% FREE Alerts

According to Ward, that following Monday, the 25th, Greek banks will close, then presumably usher in the drachma in addition to the shock, confusion and panic expected in markets to the surprise outcome of the two-year long display of alleged unity between France, Germany and other monied parties to solving Greece is revealed to be just a ruse, a delay tactic for a preparation of the event.

“A written document giving firm dates and detailed actions for a planned Greek default has been in the possession of two top Wall Street bank currency trading bosses since the second week in January,” Ward begins his blog post of the morning of Feb. 16.  “The Slog has separate but corroborative sources affirming the existence of the document, and a conviction among senior bank staff that – at least at the time – the plan represented ‘a timetable, not a contingency’. The plan gives a firm date of March 23rd for default to be announced after the close of business.”

Ward makes a compelling case for a backdoor arrangement made between Germany, IMF and the U.S. to take matters into their own hands for saving the global banking system has been the plan all along.

One of Ward’s ‘protected’ sources was quoted as saying, “I have strongly suggested to Greek business friends and clients that they sell up fast, do a sale and leaseback on property, empty bank accounts, and change to a hard currency.”

If Ward’s information is indeed accurate, others closer to the decision makers than Ward surely must have known far earlier.

One premier currency heavyweight, John Taylor of FX Concepts, smelled blood (or had knowledge) back in July of last year of the eventual amputation of Greece from the euro.  His seemingly radical call for gold to reach $1,900 during that unusual summer rally of 2011 in the precious metals, coupled with his brazen prediction of gold $1,000 in April-May of 2012 as well as the euro trading below parity against the dollar, turned many heads.

“I would be surprised to see the euro hold above $1 through this crisis,” Taylor reiterated his summer call to Bloomberg Television’s Michael McKee on Oct. 11  “It’s not over. The banks are going to be in trouble when Europe goes into a recession next year.”

Moreover, Taylor has once again reminded investors of his sentiments regarding the Eurozone and the implications of an imminent Lehman 2.0—but this time, a Lehman-like meltdown of industrial strength.

Thursday, zerohedge.com posted Taylor’s latest missive, which reads, in part:

The market has not opened its eyes to the impact this Greek unraveling will have. The Eurozone will be mortally wounded and the world will suffer a significant recession – maybe as deep as 2008. European banks will lose much of their capital base and many should be bankrupt, but just as in the Lehman aftermath, the governments will try to save the banks and the banks’ bondholders, solvent or not. As the bank appetite for Eurozone sovereign paper will be decimated, austerity will probably follow shortly, followed by deflation and uncontrollable money creation. The European recession should be one for the record books.

Supposedly, evidences by market action to every news flash of a Greek ‘deal’ has calmed markets, putting the risk-on trade into full swing.  But, according to Taylor—who makes no mention of the specifics to the politics—a disaster is in the offing, not a smooth juiced up trade in equities, bond spreads and gold as a result of a job-well-done in ameliorating bank stresses.

In the meantime, evidence of ever-increasing violence in Greece has been the response.  The latest clash with police got noticeably worse this week.

“Before the vote took place there were 80,000 people on the streets, outside the Greek Parliament, basically attempting to storm the Parliament,” UK Independence Party Leader Nigel Farage told King World News.  “There were 5,000 Greek police there using tear gas and there were 10 major buildings that were set on fire.  It really was a very dramatic scene that took place in Athens on Sunday.

Further insistence by Brussels and Germany to subjugate Greeks appears more likely to threaten the lives of those hired to represent the nation of 11.5 million Greeks.  Letting the country exit the euro appears to be the most rational political move before a full-blown Arab Spring sparks in Europe.  Therefore, dropping Greece and ‘ring fencing’ European and American banks could be the most logical solution to Greece—but the plan for a trap must be sprung into action overnight to prevent a run on the banks of a more unpredictable nature.

Capital controls are easy to institute, but where to get the cash?

That solution can only come from the only central bank that can and has been largely getting away with money printing (also, for the most part, legally unencumbered) without much tears for more than 40 years—the Fed.

In late November, the Fed announced a rate deduction of 50 basis points to its currency swap lines with the BOJ, BOE, ECB, SNB and BOC, in a coordinated effort to grease the global banking system (or preparation for the big day on March 23).  The operation is headed by the NY Fed and its mostly unmentionable Exchange Stabilization Fund (ESF).

When asked in December by a House Oversight and Government Reform Subcommittee about the Fed’s move to open the money spigots to five of the world’s most influential central banks, NY Fed president William Dudley said, he “can’t imagine” the Fed ever undertaking unprecedented and politically charged action such as bailing out the Western world triggered by a European meltdown.

“The bar to doing that would be extraordinarily high,” Dudley, the successor to Timothy Geithner.  “We have never gone out and bought large portions of sovereign debt in the history of the Fed that I’m aware of.”

“This is about ensuring the flow of credit to U.S. households and businesses,” Dudley added. “It is in the U.S. national interest to make sure that non-U.S. banks that are judged to be sound by their central bank are able to access the U.S. dollar funding they need in order to be able to continue to finance their U.S. dollar assets.”

Of course, bailing out, or more euphemistically speaking—ring fencing, Europe is in the national interest of the U.S. because, if Europe melts down the U.S. melts down, and it truly will be financial Armageddon.  And that scenario will not be left in the hands of a bunch of bumbling European bureaucrats, who have for a millennium never gotten along when push comes to shove, and most likely never will.

Wasn’t it Gerald Celente of Trends Research Institute who predicted a financial meltdown and bank holidays by the end of the first quarter?  The world will soon find out. Sign-up for my 100% FREE Alerts

Warren Buffett’s Latest Insurance Con

In an article authored by famed investor Warren Buffett, titled, Warren Buffett: Why stocks beat gold and bonds, he attempts to dissuade investors from accumulating gold (again) as insurance during the ongoing financial crisis.

Cleverly riddled throughout his ‘sales pitch’ for keeping with paper assets at this time, essentially, Buffett deploys the old “Feel, Felt, Found” technique of persuasion on his readers, in the hopes of instilling confidence through his past performance, aided by his Lt. Columbo-like charm and icon status.  Sign-up for my 100% FREE Alerts

Here’s how it works:

Buffett begins his pitch against the yellow metal with, “ . . .  gold . . . currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful).”

You see, Buffett wants you to know that he knows how you feel.  He validates your fear.  But . . . now for the ‘but’.

“True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production,” he continued.  “Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.” Emphasis added.

He continued his article by guiding the reader to his understanding that others felt the same way about gold, but after they found that the Berkshire method of investing outperformed very well throughout 46 years, they turned to him, Warren Buffett, the prudential ‘oracle’, the ‘you’re in good hands’ master of money.

In the above quote, Buffett demonstrates that he doesn’t really know how investors feel about the U.S. government and Fed, or he dismisses the fear altogether, as it is the threat to his dollar-based empire.  Does he want to end the Fed and stop the madness, which is the very root of investor fear?

Polls show that the American people don’t trust the Fed, or the U.S. government.  So, Buffett asks you to trust him.

Moreover, he neglects to point out that other billionaires, central banks and ‘smart’ money don’t hold gold for its industrial and decorative utility; they feel that they should own gold because it can be used as money, whose demand for it, while currencies are actively debased, doesn’t have a limit, just as there is no limit to governments debasing currencies.  Why, then, does the Fed store 8,150 tons of gold for the U.S. Treasury?  Why did the EU ask Germany to back the EFSF with German gold? Aren’t they listening to Warren Buffett?

Though Buffett states earlier in his article, “the dollar has fallen a staggering 86% in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 did at that time,” he fails to alert the reader to the connection between the gold price and the dollar’s drop in value during the last 46 years.

Sure, the correlation is no where near a lock-step rise in the gold price as the dollar dropped in value, but gold investors understand the myriad of reasons for that—which includes central bank collusion to ‘manage’ its rise, as former Fed Chairman Paul Volker (1979-1987) laments his remissness during the dollar crisis of the 1970s.

Regarding the dollar’s 86 percent decline in value since 1965, hasn’t Buffett seen massive balance sheet expansions of the Fed, BOE, BOJ, ECB, PRC’s central bank and the SNB since the beginning of the financial crisis?  Hasn’t the Fed indicated that ZIRP could be extended into the year 2014?  What will be the extent of the latest dollar devaluation during this decade against the value of the dollar of 1965?

In essence, Buffett provides the reader with the bum’s rush into having you believe that he knows how you feel, when, in fact, he doesn’t know—or doesn’t want to address the more salient point for owning gold.  Maybe, along with the Fed, he too, is in fear of opening a can of worms to his own argument against holding the yellow metal.

His fortunes are tied to the Fed’s continuation of the dollar-debasement scheme, an old scheme from which he has profited smartly, along with the money center banks—at the public’s expense, not at his expense.

And speaking of eternity (in reference to the above Buffett quote), no one has suggested that gold accumulators hold the precious metal longer than they deem necessary, so why the talk of the long run?  Some investors will hold some gold for eternity (and should), but the point of long-term investing is a specious one for many old hands and newcomers alike to the gold market.

Moreover, gold’s track record of preserving wealth is a bit longer than Buffett’s 46 years of performance, by approximately 3,000 years.

Isn’t gold really an insurance against Buffett’s paper insurance empire, which, by the way, had to be bailed out by the taxpayer?  Gold investors didn’t need a bailout; they’re not connected to Washington.  That’s why they hold gold.

Shouldn’t Buffett know his audience (customer), an audience of many politically and financially repressed retirees who don’t have time for the long run?

Investors have been, as Jim Rogers has recently said, “forced to own real assets” while the Fed deprives retirees, especially, of a market-clearing interest rate for their savings.  Can Buffett still imagine what it must be like to live like Jim Rogers, telling it like it is, instead of pitching nonsense for his own self-centered survival and legacy?  His entire identity was saved by taxpayers, and he’s still talking the same game.

Buffett may have forgotten that it was the taxpayer who took on the roll of AIG’s reinsurance policy, not the other way around, giving true meaning to The Black Swan author Nassim Taleb’s statement, “We’re all blind to rare events and routinely fool ourselves into believing we can predict risks and rewards.”  Touché.  Buffett grossly under-priced risk, and that’s his job.

“I don’t want to spend too much time on Buffett. George Soros has 2 million times more statistical evidence that his results are not chance than Buffett does. Soros is vastly more robust,” said Taleb, in response to a question regarding Buffett’s investing performance.  “I am not saying Buffett doesn’t have skill—I’m just saying we don’t have enough evidence to say Buffett isn’t doing it by chance.”

A snapshot of financial history, between 1946 and 2008, or 62 years, could easily suggest to a statistician that Fed money creation during that period, as well as the demographic trends associated with baby boomers living out their lives staring in 1946 (through 1960), may have more to do with Buffett’s savant-ish buy-smart-and-hold investment strategy than his brilliance for assessing and quantifying ALL risk throughout his various long-term holding periods, as Taleb implies.

In his book, The Black Swan, Taleb reminds readers of the story of Long Term Capital Management (LTCM) and its demise due to the unforeseen event of a crisis in the Thai baht in 1997.  The collapse of LTCM prompted the Fed to quickly bailout the financial system before a Lehman-like event occurred.

At the helm of LTCM were two Nobel Prize laureates who are quite familiar with the Black Swan.  In contrast, Buffett, not only ignores gold’s vital role within the financial system, he ignores his own shortcomings.  Pure hubris.

In a somewhat similar manner, Buffett’s empire was saved by TARP, and now he has the nerve to advise investors to roll the dice again on his paper promises—and just in time, too, for the European crisis to spread to the U.S. in the not-so-distant future.  Holders of gold are betting Buffett will need another bailout, but he doesn’t see that, just as he didn’t see the crisis that necessitated the first one.

“The inability to predict outliers implies the inability to predict the course of history,” Taleb wrote.  At 81-years, Buffett may not be around to pay off on his bets.  It’s been quipped, “The goal in life is to pass on while the last check you write bounces.”  Is that the Buffett personal endgame to the endgame.

“Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See’s peanut brittle,” concluded Buffett.   “In the future the U.S. population will move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.”  Emphasis added.

Correct, Mr. Oracle.  It’s that little bit about “exchange” that has people worried. With what?  Your Berkshire shares denominated in dollars, or See’s peanut brittle?  Please don’t pass off the obvious as some kind of profound wisdom.  Isn’t Buffett making the case for gold with his cute ‘See’s peanut brittle’ remark?

But the one-trick buy-and-hold aged pony doesn’t see that either, or has Buffett made his latest installment to the cabal with his latest ‘advice’ in return for a tip about the kibosh of the Keystone Pipeline?  His railroad looks like a mighty fine investment right now.

Maybe Taleb is right.  Buffett sure is one lucky guy.  Sign-up for my 100% FREE Alerts