No Time Left, Gold & Silver to Go Sky High

By Dominique de Kevelioc de Bailleul

Either something huge is coming to the financial markets, or something huger, or even huger yet lurks.

Consider the following, though not close to being all inclusive of the warning signs riddled throughout the global geopolitical-financial landscape.

  • George Soros dumps stocks and loads the boat with gold
  • John Paulson has nearly half his portfolio invested in gold
  • PIMCO recommends gold
  • Chinese importing record-high shipments of gold
  • U.S. Mint sold 191 times silver ounces to gold ounces for 1st week of Aug.
  • Spanish bonds drop nearly 200 basis points within two weeks
  • Baltic Dry Index makes fresh all-time lows.
  • The German, Dane and Dutch people balk at PIIGS bailout
  • U.S. and China economies are rolling over; Europe in depression
  • Israel’s allegedly insane PM may trigger WWIII with Iran
  • Invasion of Syria likely
  • U.S. government preparing for revolution
  • Lyndon La Rouche says threat of nuclear war the highest since Bay of Pigs
  • Rule of law unofficially suspended in the United States
  • Gun sales and “prepper” industry go vertical

And all of those troubling events, and many more, are unarguably traced to a coming collapse of the U.S. dollar.  The world has been dependent upon the dollar for trade and banking reserves for 68 years, and it’s removal as a working global exchange vehicle cannot lead to anything favorable, financially or politically.  History tells us so.

Adding to the chorus of dollar collapse prognosticators comes the folks at Charles Nenner Research Center, an outfit that’s been on a long winning streak of successfully predicting with astounding accuracy the cycles of the gold market, currencies and equities.

Nenner warned of an intermediate top in gold as it crossed $1,900 and not to expect anything too troubling for the euro during drama surrounding the crisis in Greece.

Though not as well-known as heavyweights John Taylor of FX Concepts or the parade of guests of Eric King’s King World News, Charles Nedder’s work deserves a fair amount of attention.

Though his demeanor on camera appears somewhat awkward and unpolished, the man who frequently wears a yamaka on air has outshone the best analysts of economic and market cycles.  He doesn’t mince too many words and gets to the point rather quickly during his interviews.

Speaking with Financial Survival Network host Kerry Lutz, managing director of Charles Nenner Research Center, David Gurwitz, says Nedder’s research indicates that gold should easily go to, “for sure, $2,100, $2,500” per ounce as the world begins to scramble out of the U.S. dollar—the world’s reserve currency that, he predicts, will collapse within 15 to 18 months.

“Gold is going to $2,100, $2,500 and silver should go back up to $49 . . .” says Gurwitz.

Moreover, Gurwitz says Nenner expects a strong euro against the dollar in the coming year, or so—a prediction that’s also consistent with other extreme dollar bears, such as Europacific Capital’s Peter Schiff and ShadowStats’ John Williams.  Both Schiff and Williams see 2013 as the turning point in the dollar’s relative strength against other major currencies.  And all three forecast a dollar collapse within two years to 30 months.

“Our dollar should fall apart in about 15 to 18 months, which is just going to create a whole mess of things,” says Gurwitz.  “And the euro will be the currency of choice, which it is now, believe it or not.  And he [Charles Nenner] has been saying to people for a while, ‘don’t short it; don’t short it; don’t short it’ and he’s been right.”

In March of 2011, Nenner told Fox’s Bull and Bears the DJIA would drop to 5,000 and that war would break out by the close of 2012.

In May of 2012, Nenner told Bloomberg if the weak nations of the eurozone left the supranational currency, the euro would take over the role as the safe haven currency, which suggests, maybe, that a resolution of the global financial crisis will include some, or all, of the PIIGS leaving the common currency by 2014.

“Market Shock” Coming This Fall: UK Telegraph Sources

By Dominique de Bailleul

“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” an unnamed source at a major European bank told the U.K Telegraph, Friday.

With the fear of, yet, more war—especially with Iran, a likely spark for WWIII —liquidity-trapped central bankers, political squabbling within German and between eurozone members over the fate of the euro, solid evidence of a global economic catastrophe lurking, and a nasty U.S. presidential election between two grotesque candidates nearing, any hopes of consumer spending or capital formation to come to the aid of an insolvent banking system has already been thoroughly discounted in the price of the bank stocks.

And of course, it was the smart money skipping town during the two-year-long phony ‘rebound’, leaving the inevitable ‘act II’ of despair to the retail investor and captured institutionals as the usual bag holders.

“A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way,” according to the Telegraph journalists, Harry Wilson and Philip Aldrick.

Contrary to the paid cheerleaders of U.S. economy, no one is in the mood to commit to anything productive or able to consume the products (if he could) during the most tumultuous times since the Great Depression, leaving the middleman, the banks, with nothing to do.

“The problem is a shortage of liquidity – that is what is causing the problems with the banks.  It feels exactly as it felt in 2008,” a senior London-based banker told the Telegraph.

Whether the problem is a shortage of liquidity or an abundance of banks with an overabundance of bad assets, several very big banks are on the brink of failure—again.  And all the banker insiders know who is who, and who isn’t going to make it unless the money printing and bailouts increase more rapidly—and soon.

This time, the world’s no. 1, 5 and 10 ranked European banks (by assets) are in trouble, with combined assets totaling $7.6 trillion.

“Credit default swaps (CDS’s) on the bonds of Royal Bank of Scotland (no. 10), BNP Paribas (no. 5), Deutsche Bank (no. 1) and Intesa Sanpaolo, among others, flashed warning signals on Wednesday,” stated the Telegraph.

The article goes on to quote that the CDS rates on RBS paper reached record highs, Wednesday, surpassing the spike premium paid during the height of the global financial meltdown of October 2008.

So, ‘act II’ of the global financial crisis is about to begin, just as George Soros had warned.  According to Soros’ SEC 13-F (ending Jun, 30), the billionaire insider reported selling all of his fund’s banking sector shares, and showed his appetite for holding gold increased markedly.

Therefore, the question doesn’t appear to be whether the Fed will be there to save the U.S. banking system (it will), the question is whether the ECB will be allowed to copycat the Fed.  We’ll know on Sept. 12, when the German high court rules on the constitutionality of participating further in eurozone bailouts.

And a further question is: when will the central banks overtly announce more easing?  Will the ECB (assuming Germany somehow gives it the green light) and the Fed wait for something to ‘break’ before acting, or will the central bankers preempt the inevitable collapse?

We’ll find out in September and/or October.  In the meantime, there are always the black and gray swans of war (or something out of the blue) to further complicate any expectation of a direction to these markets.

Source: UK Telegraph

Get Your Money Out of Morgan Stanley—Fast!

By Dominique de Kevelioc de Bailleul

With the stock price of Morgan Stanley (NYSE: MS) inches from its Armageddon lows of Oct. 2008, whispers of the imminent overnight collapse of this U.S. broker-dealer begin to surface.  Client funds, again, are at risk.

“I’m hearing rumors that another major financial house is going to implode,” says TruNews host Rick Wiles.  In fact, the name I’ve been given is Morgan Stanley . . .

“It’s going to be put on the sacrificial alter by the financial elite.”

Beyond the evidence of a teetering stock price—Morgan Stanley’s troubles may never go away—leading to bankruptcy, if traders can glean anything from the financial activities of front-running insider George Soros, the man who warned in Jun. 2010 that the global financial crisis has entered “act II.”

According to Soros’ 13-F filing (ending Jun. 30) with the SEC, the billionaire financier reported that his fund sold nearly all shares of JP Morgan, Goldman Sachs and Citigroup—not paring back his holdings of financials, but completely dumping them.

And, as if to yell that the F.I.R.E economy is, indeed, on fire, the 82-year-old Soros also reports loading up on gold—adding a bit of poetry to Charlie Munger’s bizarre comment (1) in reference to investors who seek out gold in times of trouble.

Well, Soros’ act II has yet to crescendo to its tragic end, but “when a major global player with direct ties to the White House, Wall Street, and the banking system starts off-loading stocks and starts stacking gold, it suggests a very serious market move is set to happen,” says blogger Mac Slavo.

Adding to the speculation of a Morgan Stanley collapse, Bloomberg coincidentally pens an article on Aug. 23—the following day of the TruNews broadcast—in which the author Bradley Keoun recounts the dark days of Morgan Stanley at the height of act I of the financial crisis in 2008.

“At the peak of Morgan Stanley’s Fed borrowings, on Sept. 29, 2008, the firm reported that liquidity was ‘strong,’ without mentioning how dependent its cash stores had become on the government lifeline. . .” states Keoun.

“Neither Morgan Stanley nor its competitors in prime brokerage – Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Citigroup and Credit Suisse Group AG – disclose the size of their hedge-fund balances, leaving shareholders dependent on regulators who previously failed to rein in the risks. [Emphasis added]

But here’s where strong advice from Trends Research Institute founder Gerald Celente and former commodities broker Ann Barnhardt should be heeded.  Both consumer-friendly analysts implore investors and savers, alike, to withdraw from the financial system, warning that allocated brokerage accounts are not truly allocated. (2)

Bloomberg’s Keoun goes on to quote a former Financial Accounting Standard Board (F.A.S.B) member Adam Hurwich, who states, “It [Morgan Stanley's balance sheet] remains a black box,” referring to Morgan’s disclosure of whether allocated accounts at the firm have been re-hypothicated.

Regulators were asleep at the switch in the cases of MF Global and PFG Best, both filing bankruptcy post 2008, taking customer funds with them to the financial grave.  Why not Morgan Stanley?

“They don’t give you the information to be able to decipher whether they have changed anything,” adds Hurwich.

“Prime brokerage was presumed to be a pretty secure business, where the funding was not actually part of the liquidity of the bank,” Bloomberg quotes Frank Suozzo, president of FXS Capital LLC. “So if clients pulled their money out, the view was that money had not been lent out, so the cash would have been sitting there able to hand over. It turns out that that was not entirely correct.”

As the financial community found out in the case of MF Global, “prime brokers were able to reuse clients’ assets to raise cash for their own activities,” according to the financial crisis commission report, published Jan. 2011.

That’s a big red flag for investors to close their accounts with their brokerage firm—fast, especially accounts held at Morgan Stanley.

Why an establishment cheerleader such as Michael Bloomberg would allow an article which serves to remind investors of Morgan Stanley’s financial problems at this time may lend some credence to Rick Wile’s sources, who hear chatter about the impending doom of Morgan Stanley.

Like financial systems that could not be saved in the past, the banks must be then consolidated—that done, of course, after the bankruptcy, where the small investor gets wiped out and the ‘system’ acquires the remaining performing assets of the carcass.

The timing of the Bloomberg article is no coincidence.  Michael Bloomberg is only doing his part for the global banking cartel by tipping off that Morgan Stanley is ready for the “sacrificial alter.”  Get your money out.

(1) In early May, Munger told CNBC, “I think gold is a great thing to sow in to your garments if you’re a Jewish family in Vienna in 1939, but I think civilized people don’t buy gold.”  George Soros is a Jew, living in Hungary during the rise of the Third Reich.

(2) You can’t trust anybody and the entire system is collapsing.  What’s the takeaway from this?  It’s to make sure you have every penny in your pocket. —Gerald Celente, after losing 20 percent of his allocated brokerage account with MF Global.

“If you don’t understand what ‘get the hell out’ means, there’s not much I can do for you.” —Ann Barnhardt, after reviewing an appeals court ruling in the case of Sentinal Management Group, ruling that clients funds can be used to settle secured loans initiated through the banking industry.

Jim Rogers: Duck and Cover, Your Cash is NOT Safe

By Dominique de Kevelioc de Bailleul

As another sign that American institutions have degenerated toward banana-republic class, what was once considered safe and risk-free, cash balances held at brokerage firms as well as many other institutions, are no longer safe, according to legendary investor Jim Rogers of Rogers Holdings.

With the latest scandal involving $215 million of missing customer funds at Chicago-based privately-held futures trading firm Peregrine Financial Group Inc. (PFGBest) a distinct trend has emerged that will most likely reveal in the months and years to come that the entire financial system is riddled with fraud, the level of which, could be so pervasive and systemic as to provide for the proverbial ‘black swan’ bank run of the collapse of the global financial system—despite central banker efforts to prop asset prices up with sanctioned counterfeit money.

“No such thing as safe when you talk about it,” Rogers told OilPrice.com in response to a question regarding investing during times of crisis.  “Even if you put your money in cash, if you put your money in the wrong cash, you lose a lot of money. As the people in Iceland have found out, as the people in Europe on the Euro have found out.  So, no such thing as safe.”

The 69-year-old Rogers has gone on record on more than a dozen occasions that he sees terrible times for the U.S. economy and markets after the November elections, with the years 2013 and 2014 drastically changing the mood among Americans from one of hope to one of panic and despair.

“The problem is: I expect to see serious economic problems in 2013 and 2014 in the U.S,” Rogers said.  “If and when that happens, we’re going to see a final panic in the markets and the economy and everything will have a crescendo and a selling climax.”

And a continuation of the economic downturn, which began in 2008, is expected to reveal, not only how bad and to what extent the economy and investment marketplace have deteriorated, but how much of the shocking state of decline of enterprise America has been hidden from the public through the complicity of the traditional media outlets.

Though Rogers wears a reputation as a mild-mannered straight-talking billionaire, appealing to a more-general audience of investors, another Jim, investment newsletter writer Jim Willie, in contrast, ‘gives it’ to his readers hard, fast and dirty.

“The entire financial system of the Western world is imploding,” Willie, the publisher of the famed Hat Trick Letter, said in an interview with Bull Market Think, Dec. 5, 2011.  “There is exponentially rising risks for individuals and their money…the risk right now–is people losing their entire life savings. I cannot seem to get people to understand this.”

Willie, who, before the crash of 2008, was referred to as “Crazy Jim” by his peers for his seemingly outrageous market and social-political predictions, warned investors in December 2011, a month following the MF Global fraud, “Several million private accounts may vanish–Brokerage accounts, Pension funds, Mutual funds; they’re all at risk.  We are getting into the middle stages of implosion, where I believe the public will not wake up until at least one million private accounts are stolen, and completely vanish.”

It now appears that another Jim Willie “crazy” prediction has splashed cold water of truth on the faces of his critics, with the straight-laced Rogers now backing him up.

Irrespective of style and tone, both the pre-baby boomer Jim Rogers and baby boomer Jim Willie have communicated their analysis of today’s America and financial system to a broad audience desperately seeking wisdom and advice during these most extraordinary times.  And, again, for the record, both men advocate holding gold during the bizarre financial, political and geopolitical upheaval we witness on a daily basis, because, as former partner of Jim Rogers at the famed Quantum Fund, George Soros, has said, “Act II” of the global financial crisis is yet to come.

Nothing but gold (silver, too) in your hands comes with a counter party or access to tax from a criminal government desperate enough to confiscate your wealth to keep their power.

Billionaire George Soros Spikes Gold Position; Yahoo Says Gold in Bear Market

On the day GoldCore reports George Soros’ nearly quadrupled his holdings of the SPDR Gold Trust GLD in his latest SEC filing, Yahoo posts a front page article titled, Gold Tumbles Into Bear Market on Concern Greece May Leave Euro.

As the latest example of media working with Washington to bamboozle the public, the reader of the Yahoo piece won’t find an amplification of its salacious headline.  On the other hand, gold specialist firm GoldCore reports on the same day that global insider George Soros told the SEC he raised his stake in GLD, dramatically.

“Billionaire investor George Soros significantly increased his shares in the SPDR Gold Trust in the first quarter. Soros Fund Management nearly quadrupled its investment in the largest exchange-traded gold fund (GLD) to 319,550 shares – compared with 85,450 shares at the end of the fourth quarter,” stated gold market consulting firm GoldCore in an open letter to the public.

In addition to its hit-and-run article title, Yahoo slyly touches on a significant talking point of the Fed’s tactic of conditioning the uninformed investor into eschewing the only lifeboat available to most middle class investors during the global financial crisis—gold—by seducing the reader into believing that the U.S. dollar is a safe haven and that gold is merely another commodity vulnerable to terrible economic prospects.

Yahoo quotes a Fed primary dealer UBS in an interview with a primary outlet for Fed propaganda—Bloomberg Television:

“It’s a risk-off environment,” Peter Hickson, head of commodities research at UBS AG, said in a Bloomberg Television interview. “People are concerned about liquidity and they’re going to take security in the U.S. dollar.”

Former George Soros partner of the famed Quantum Fund, Jim Rogers, has repeated stated that the knee-jerk reaction by institutions and amateur investors to run to the dollar during this particular and protracted crisis is “the wrong thing to do”, as running away from the euro into another “flawed currency”, the dollar, will turn out to be financial suicide when the trade is over.  Rogers is staunch gold bull.

But speculators will take the trade for a short-term profit, according to Rogers, while long-term investors should view the quirk of madness in the gold market as an opportunity to buy gold at lower prices.  The Chinese and other Asian investors certainly have been, scaling into gold all the way down during the correction in the yellow metal.

“Right now, the gold market is in the middle of a battle between the paper traders and the holders of physical metal,” Goldmoney’s James Turk told King World News (KWN), Tuesday.  “We are seeing huge Chinese import stats for physical gold and robust demand elsewhere for physical metal.”

But Yahoo won’t lead with a headline about massive Chinese buying of gold or that gold futures (and silver futures) have slipped once again into backwardation, a market condition which implies heavy physical buying of the metal as the virtual paper market sells off.

“Do not listen to the propaganda and the mainstream media, and do not be spooked by market action because the manipulative activity in the markets right now is so extreme that the market prices are telling nothing about reality,” Sprott Asset Management’s Chief Investment Strategist John Embry told KWN on the same day as the Turk interview.

“I think it’s important at this time that people who’ve been around a long time and have a pretty good grasp of what’s unfolding should express their views to the public, just to counteract the propaganda that they’re receiving from mainstream media.  It’s tough enough without being lied to all the time,” he added.

With more than four decades of working the markets under his belt, Embry closes the KWN interview by advising nervous gold investors to “stick with your positions and you’ll be fine” in the end.  Stop reading comments by media and financial institution surrogates of the Fed, and stay the course.

What’s Really Behind Utah’s Mock Earthquake Drill

Hot on the heals of House Bill 157, which legalizes the use of silver and gold bullion as currency, the state of Utah recently completed a joint mock emergency exercise between the state’s 400 national guard personnel and 48 guardsmen from the neighboring state of Wyoming.

The mock drill is a first of its kind since Utah Governor Gary Herbert declared the first week of April as ‘Earthquake Awareness Week’ for the state’s 2.8 million residents in 2010. Sign-up for my 100% FREE Alerts

“Earthquake expert, Bob Kerry, says Utah has a one-in-four chance for a 7.0 quake in the next 50 years,” Utah’s ABC4 News stated as the lead into the reporting of Utah’s first mock emergency drill.

However, an earthquake of that magnitude hasn’t hit Utah since the 17th century, according to state records.  In fact, since 1811, the only earthquakes registered in the U.S. greater than Richter Scale 7.0 occurred multiple times in Alaska, California, and a couple of times in Missouri.  The conclusion: earthquakes in Utah, of any significance, are very rare.

In addition, the auspicious timing of Governor Herbert’s ‘Earthquake Awareness Week’ annual events raises an additional red flag that points to well-intentioned deception.  Following the fall of Lehman Brother and plunge in global stock markets, discussions of imminent financial Armageddon became widespread in the media and public discourse, not just talk among a fringe few.  Well-known financial experts suggested the risk of a U.S. dollar collapse had increased markedly, including the implications of civil unrest, possibly leading to civil war.

In an Oct. 13, 2010, post on zerohedge.com, the site’s administrator Tyler Durden (Internet name) paraphrased Gluskin Sheff’s economist David Rosenberg’s comments regarding the Fed’s ZIRP policy, stating that the Fed’s plan is very  dangerous and “positions U.S. society one step closer to civil war if not worse.”

Nearly a week later, Time magazine on Oct. 19, 2010, titled, Will the Federal Reserve Cause a Civil War?

Jan. 23, 2011, Newsweek interviewed billionaire currency speculator George Soros about the global financial crisis.  He, too, fears a revolutionary outcome to a failed U.S. dollar—an outcome that historically could lead to far worse violence, loss of life and destruction of property compared with the aftermath of a natural disaster.

An excerpt from the Newsweek article about George Soros assessment of the financial crisis:

“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”

With financial collapse comes looting, violence and the potential for an overthrow of the government.

Interestingly, Utah, a state known for its disproportionate number of religious followers of the Church of the Latter Day Saints (LDS), or Mormons, has a history of promoting self-sufficiency and preparedness as well as fostering traditional fiduciary values.

In the face of a growing concern for a precipitous fall of the U.S. dollar’s value, the state’s LDS could be behind the drive for state-sanctioned preparedness to deal with a sudden spike in crime and the resulting chaos that will most likely ensure from a lack of law enforcement personnel to deal with a currency collapse.

In 1836, Joseph Smith, founder of the LDS movement, formed the Kirtland Safety Society (KSS), a quasi-bank to service the financial needs of the Mormon community in Kirtland, Ohio.  However, after being in operation for less than two years, the bank failed as part of the Panic of 1937 and alleged mishandling of bank funds by Smith.

Though the KSS ‘bank’ failed, the Mormon tradition of individual responsibility, self-reliance and distrust of public institutions remains strong today and may account for Utah’s leadership towards the reclamation of states rights under the 10th Amendment to the U.S. Constitution, as well as the Constitutionally inspired reintroduction of gold and silver as a means of protecting from the collapse of yet another fiat currency.  And the ‘Earthquake Awareness Week’ annual drills instituted by the Governor Herbert may merely serve as a euphemistically phrased reminder of an event approaching much worse than one of Mother Nature’s periodic unpleasant catastrophes. 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

Silver traders: Stop Cryin’ and Start Buyin’!

As another financial crisis comes to a head, another silver crash ensues.  Oh, the tears of sorrow!

Background:

Though there still exists economists, portfolio strategists and corporate CEOs who still don’t see or admit to seeing a double-dip coming to America [did you watch CNBC yesterday?], everyone’s favorite sleaze, George Soros, on September 21, told—that very same 24-hour propaganda doubly-sleaze outfit—CNBC, that the U.S. is in “a double dip already.”

Sometimes, Soros, too, tells the truth, as long as it aligns well with his fascist global-community agenda.

But if you’ve been listening to John Williams of shadowstats.com, you’d already know the fake recovery was just that, fake, and that the worse days for the U.S. are yet to come.

“As activity begins to turn down again, you are going to see things get even worse, and the continued economic trouble is going to be very long and very deep,” Williams told KWN on July 11.  “That puts the Fed in a circumstance where you virtually are assured of a quantitative easing three. That in turn will weaken the U.S. dollar further.”

But as we all know, Bernanke, instead of giving the market what it perceived it needed on Wednesday, crushed the dollar slide, instead.  No QE3!  Not today, anyway.  But Williams will most assuredly be proved correct after the fight from Republicans on Capitol Hill turns Captain Queeg ‘yellow stain’ as it did during Speaker Newt Gingrich’s 1995 noble fight to turn the money spigots off by shutting down the Treasury-Fed cabal.

At some point, the mob will beg for QE3!  Ask Gingrich, who went from Time’s Man of the Year to the bum who authored the ‘Contract ON America” —which leads us to today’s Fed puzzle.

“The markets apparently were hoping for a large, magic pill for an anemic economy that feels like it’s catching the flu,” Barton Biggs told Bloomberg News.  He’s now been quoted by the Washington Post as saying we may be “on the eve” of a financial crisis.

And Dr. Feelgood at the Fed can’t wait for his patient to beg for that shot, thereby garnering support in Washington and within his own ranks to play catch up in the race to minimize the impact of a crushing debt load plaguing the U.S. economy.

John Williams (as well as BU’s Laurence Kotlikoff) has worked the numbers and concludes that the federal budget is “beyond containment.”  The U.S., too, is standing inline for a Greek moment—a Minsky Moment—but that moment is temporarily frozen in time.

What Bernanke showed us Wednesday is that he is indeed very concerned about commodities prices forking the wrong way during that critical phase of a debt-based monetary system gone hopelessly broken, a phase that von Mises referred to as the ‘Crack-up Boom.’

Bernanke doesn’t want hyperinflation; he’s not stupid.  But he does want some inflation in the money supply (however it’s defined)!  “The Bernanke” just doesn’t want his helicopter money printing of U.S. dollars to become expected by market participants.  Admittedly, in hindsight, he had no choice but to punish the markets for even suggesting, at this time, for that whopper monetary shot.  Bernanke wants everyone on the same page begging for QE3.

The Bernank refers to inflation expectation incessantly in his testimonies, speeches and writings.  Believe it or not, The Bernank (and Greenspan, and every Fed chairman since Marriner Eccles (from whom we get the name of the politburo headquarters in Washington) has heard of von Mises and has read his brilliant works.

Austrian economics professor Ludwig von Mises (September 29, 1881 – October 10, 1973) stated that the Crack-up Boom we’re immersed in today can lead to two outcomes: deflation or hyperinflation.  Von Mises wrote:

“If once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power. The advantages of holding cash must be paid for by sacrifices which are deemed unreasonably burdensome. This phenomenon was, in the great European inflations of the twenties, called flight into real goods (Flucht in die Sachwerte) or crack-up boom (Katastrophenhausse).”

Money supply dropped post 1929 crash, and the student of the Great Depression vowed to Milton Friedman that it won’t happen again.  Take Bernanke at his word.  That’s why he was chosen to head the Fed.

But there’s a catch to the money pumping, many, in fact, but most notably the expectations for the direction of consumer prices.  Are inflation expectations “firmly anchored”? as Bernanke likes to state.

And the best way to crush exceptions is to coordinate an attack, initially, on the Swiss franc and commodities complex, then the precious metals, then, everything connected to the inflation trade.  Bravo.  Well done.

Bless CNBC’s Bob Pisani, too, for his repetitive comments regarding traders “gaming the Fed” the week prior to the FOMC meeting.  He was right!  And Bernanke certainly was on board with that observation along with every hedge fund manager from Tokyo to Greenwich, Connecticut.  Even Greenwich’s has-been Barton Biggs ended up looking like a chump for making a call for a market bottom in August.

Well, it’s Revenge of the Nerds.  Isn’t it?  Cool hedge fund managers getting clocked by a bearded policy wonk.

So what is a fiat-money slave to do?: 

Well, has anything materially changed in the outlook for currencies debasement in the coming zillion years?  Read a little from BU’s Laurence Kotlikoff or subscribe to John Williams Shadowstats.com for an instant primer on the disaster that has been covered up by everyone who’s been benefiting from the cover up.

So, stop cryin’ and start loading up the basket of silver goodies left behind by those unfortunate, scared, stupid, impetuous, lazy, distracted or drugged out to know the tsunami will eventually move from the entire world back to U.S. shores.

And, by the way, if you happen to live in Brazil and were clever enough to hold gold (silver prices will be a commin’, too), gold hit a record high in Reals yesterday.  What?  No coverage on CNBC?  So, the inflation generated by, and led by, the gang of four at the Fed, ECB, BOE and BOJ has reached the ‘invincible’ Brazil.  A crushing 22% collapse in the Real since July 26 spells potential civil unrest from those lagging behind its approximate $10,000 PPP national average.

Watch for a potential Brazilian Real-like crash in the Malaysian Ringgit, Thai Baht, Philippines Peso, Indonesian Rupiah and other currency escape routes out of the U.S. Dollar.  The tide has gone out fully now, and the Bernanke knows it will eventually come back to the shores of the U.S.

MP Nigel Farage said it well; he told King World New’s Eric King, yesterday, “Yeah, we’ve had a setback, a little bit of a settling of the gold price after what was a meteoric rise.  I think the worst in the financial system is yet to come, a possible cataclysm and if that happens the gold price could go (higher) to a number that we simply cannot, at this moment, even imagine.  Gold is in an uptrend and professional traders should be buying the dips.”

Naturally, it’s dittos for buying silver.

Jim Rogers’ Top Two Commodities

In an after-the-bell interview with CNBC’s Maria Bartiromo, Wednesday, commodities king Jim Rogers said he’s a bull on all commodities now, but especially likes silver and rice.

The 68-year-old Rogers, known for his partnership with George Soros at Quantum Fund, spelled out what he expects of Ben Bernanke and other central bankers as the financial crisis plays out—that is: print money.

Strong demand from Asia’s growing middle class from a pool of a 3-billion-plus population as well as an anticipated continuation of loose monetary policies by central banks worldwide will lift commodities prices, he said.

“It [print money] is all they know to do in Washington, Tokyo and a few places,” said Rogers.  “They’ll print more money.  And if they print money, you should own silver and rice and real assets.”

If the world economy grows, Rogers likes commodities.  If the world economy goes back into recession, Rogers likes commodities.  It’s a heads you win, tails you win play, he explained.

What happens after QE2 expires at the end of June?  Rogers didn’t venture a guess on the effects on the equities markets as the end of June approaches, but he expects more money printing from the Fed, especially in front of an election year.

“QE2 definitely will go away.  Now it may come back with a different name,” he speculated.  “They may call it cupcakes.  Who knows what they’ll call it, if it comes back.  But they’re going to bring it back, because he’ll be terrified and Washington will be terrified.  There’s an election coming up in 2012.  Washington’s going to print more money.”

On the subject of the debt ceiling impasse in Washington, Rogers doesn’t expect a U.S. government shutdown.  But if the U.S. government didn’t raise the debt ceiling, he surmises that “the dollar would go up,” he quipped.

But a shutdown of the U.S. government won’t happen, he said.  Governments throughout history have all opted to try to inflate out of burdensome debt levels, and this time the response by today’s governments won’t play out any differently, Rogers has repeated stated in the past.

But at some point, the currency crisis comes, and we may be coming close to that tipping point.  “The markets won’t put up with this much longer,” said Rogers.

The billionaire investor’s portfolio is long some currencies (likes the Chinese renminbi) and commodities.  He has no long positions in the U.S., and is short emerging markets and U.S. technology stocks—with the latter, he believes, are in the midst of a bubble, mentioning Facebook (presumably referring to valuation estimates of the social network leader) in particular.

Rogers is also short a U.S. bank stock, but refused to state the name of the bank on two separate occasions during the Bartiromo interview.  Since Rogers initially mentioned more than a month ago that he’s short a U.S. bank, rumors have spread throughout the Web that the bank in question is Bank America (NYSE: BAC).

George Soros dumps his Gold— was it too early?

Soros has sold his gold.

Anytime a famous billionaire investor makes a significant position move in his clients’ portfolio the tag-along investors sifting through SEC form 13-Fs for clues to the thinking of the rock stars of finance will know about it—though with a time lag, as the required filings are submitted quarterly.

The latest musings among financial writers and investors have focused on the disagreement between Soros and another bigger rock star, John Paulson, regarding the outlook for the monetary metal—gold.  Soros is out, and Paulson is apparently holding for the big move.

So who’s right?

Arguments for the end of the decade-long gold rally generally fall into four theses, a combination of the four, or all of them.

1) The Fed is done with so-called “quantitative easing.”

So Bernanke implies—for now.

Unless Fed chairman Bernanke can find a buyer of a trillion dollars of U.S. Treasuries each year, or is willing to face derailing a U.S. economy on the brink of another full blown Depression brought on by more than $2 trillion deficits, which will then include soaring interest payments of more than $100 billion for each 1% rise in rates—then Bernanke is bluffing, again!

Bond king, Bill Gross, asked the question of many investors in his PIMCO March Outlook letter:

“Who will buy Treasuries when the Fed doesn’t?” Gross asked rhetorically.  If the Fed has been buying up to 70% of new issuance by Treasury, who will takeover the massive buying?

So the Morton’s Fork Bernanke faces is to either continue debasing the dollar to “grow” into the unserviceable U.S. debt levels, or face a collapse of the U.S. Treasury market as higher yields blow out an already blown out federal budget deficit, creating a negative feedback loop.

That Morton’s Fork favors gold.  Gold is primarily an alternative to the debasement of fiat paper money AND a place to park capital during times of uncertainty or a deflationary collapse.

2) Inflation is low and will remain low

Does anyone but the Fed chairman and his groupies believe inflation has been low?  That’s one of the big lies from the Fed.  (See Shadowstats.com)

“To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then when it becomes necessary again, to draw it back from oblivion for just so long as it is needed. …”

George Orwell, 1984

3) In the end, the U.S. dollar will eventually become stronger than the euro

That may be true.  But does it matter if the euro falls faster than the U.S. dollar on its way to the “currency graveyard” as James Turk of Goldmoney has said?  Both central banks are debasing their respective currencies.  In fact, the world’s top two currencies have been devaluing against all widely-traded commodities, (except natural gas) what appears to be, in a coordinated manner.

And Bernanke’s suggestion, which he made in his speech in Atlanta yesterday, that soaring commodities prices have little to do with Fed policy of a dollar devaluation rings, at best, conveniently incomplete and hollow, and at worst, another lie—through omission by the Fed chairman of widely-know correlations documented between a currency’s purchasing power against a basket of commodities over time.

4) Everyone’s in gold.  It’s a bubble.

That’s probably the weakest argument of all.

Marc Faber, editor and publisher of the Gloom Boom Doom Report, was asked by CNBC’s Joe Kernen in April if he thought there was any truth to the gold bubble thesis.

“If it [gold] were a bubble, a lot of people would have gold.  The whole world would be trading gold 24 hours a day,” said Faber. “But I don’t think it’s really a bubble. I think gold is maybe cheaper today than it was in 1999, when it was $252.”

Faber also said he routinely assesses sentiment among investors regarding gold at his speaking engagements.  Usually, he counts less than five percent of the audience who raise their hands in favor of gold as an investment. Sometimes he sees no hands raised, he said.

“And my daughter, she lives in Germany. She walks by a shop when she goes home from work. She said people are lining up to sell gold—the jewelry. So, I don’t think that it’s a gold bubble,” Faber added.

Following Soros’ investment themes may be better than most fund managers of his size.  But investors should remember that another investor legend, who may be more well-know—and liked, Warren Buffett, sold his monstrous stake in silver at approximately $8 per ounce.

Unless Soros is waiting for a big drop in the price of gold (or is pondering buying physical metal, instead), he’s most likely far too early in calling for a long-term top in the gold price.

Wasn’t he who said in June 2010, “We’ve have entered act II” of the crisis, referring to Greece’s sovereign debt problems and the potential flight out of the euro experiment.  When did that crisis get resolved?  And how does the U.S. (indeed, the world) come out smelling like a rose if the euro collapses while U.S. and untold other foreign banks, who are joined at the hip with European sovereigns and banks, become insolvent?