Gold & Silver: Explosive 2010 Rally Poised to Repeat

By Dominique de Kevelioc de Bailleul

“The precious metal markets feel just like the summer of 2010,” Goldmoney Chairman James Turk told King World News, Monday. With European woes presently the primary focus among investors, as it was at about the same time in 2010, Turk suggested the monster rally that began in the summer of 2010 is overdue for a major move to well past $2,000 and $50 for gold and silver prices, respectively.

In the summer of 2010, gold and silver prices took 31 months to recover and eventually breakout to new bull market highs following the Lehman collapse.

It’s been 14 months since the brutal correction in PM prices from the April 2011 highs, but Turk believes the corrective phase may have run its course, with “sentiment being at rock bottom” as an historically reliable hint of an imminent market about-face to higher prices.

To illustrate Turk’s point, in order to match today’s abysmally low market sentiment in the precious metals, we have to go back to October 2008, the month of panic from the post-Lehman debacle.

During that month of impending doom, which coincided with the absolute bottom of the silver crash of $8.50, off from the high in March 2008 of $21, Bloomberg wrote, “It looks like we’re on the edge of a bottomless pit in precious metals … Confidence is at rock bottom. No one wants to be long any commodity.”

From Reuters, a month later, in November 2008, “Fears of a global recession will continue to weigh on silver prices. Globally, we’re in a new paradigm. It’s difficult for anyone to know exactly where the bottom is.”

Fast forward to the summer of 2010, Turk famously predicted a seasonally-unusual late-summer rally in the precious metals—a rally which, in retrospect, was the result of market participants front-running an expected announcement of further ‘quantitative easing’ from the Fed.

It turns out, the front-runners were correct. On Nov. 3 2010, the Fed announced QE2, the buying of $600 billion of U.S. Treasury securities. Gold and silver prices soared, with gold jumping from $1,175 to $1,920 and silver soaring from $17.50 to nearly $50 throughout a 13-month rally in the precious metals.

Today, the market is on the cusp of another monster rally, according to Turk, and the “eery” feeling he has of a replay from the Fed, the catalyst for the entire bull market rally in the monetary metals, could be gleaned from post-FOMC comments as well as speeches and writings of Fed ‘officials’ of late. The latest speech comes from San Francisco Fed President and CEO, John Williams, who attempts to condition the markets to incorrectly conclude that the Fed’s QE initiatives don’t correlate to consumer price inflation—a point also, coincidentally, made by the Tokyo Rose of the gold market, Jon Nadler, in an interview with Bloomberg Television on Jun. 22. See BER article, Jon Nadler, Another Fed Whore

In a speech by the Fed’s Williams, Tuesday, titled,Monetary Policy, Money and Inflation, he stated, “In a world where the Fed pays interest on bank reserves, traditional theories that tell of a mechanical link between reserves, money supply, and, ultimately, inflation are no longer valid.

“Over the past four years, the Federal Reserve has more than tripled the monetary base, a key determinant of money supply. Some commentators have sounded an alarm that this massive expansion of the monetary base will inexorably lead to high inflation, à la Friedman. Despite these dire predictions, inflation in the United States has been the dog that didn’t bark.”

Economist, John Williams (the other John Williams) of ShadowStats.com, disagrees. According to the ShadowStats.com website, Williams published (see chart, above) how the Fed attempts to divorce Fed actions from market effects by jury-rigging consumer price data. ShadowStats Williams’ CPI model of 1980 reveals inflation running at nearly 10 percent, not the 2.1 percent published by the Fed.

According to Goldmoney’s Turk, investors of precious metals should buy during these phases of very low market sentiment and lulls in Fed policy, because when the Fed actually makes the announcement for more ‘quantitative easing’, a good amount of the move in the precious metals will happen before the announcement, as was the case in 2010.

The silver price, for example, climbed nearly 50 percent to $25, leading up to the day of the QE2 announcement of Nov. 3, up from its summer 2010 low of $17.33. After the Fed QE2 announcement of further U.S. Treasury buying of $600 billion, silver doubled in price within six months.

Turk expects another big move, like the one that began in the summer of 2010, and he urges investors to accumulate more metals before the formal announcement of QE3, not after.

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

Eric Sprott: Record Silver & Gold Prices this Year

Speaking with GoldSeek Radio, billionaire investor Eric Sprott of Sprott Asset Management argued that gold and silver bullion will reach record highs this year.

“I think that gold was the investment of the last decade, and I suggested that silver will be the investment of this decade,” Sprott told GoldSeek’s host Chris Waltzek.  Sign-up for my 100% FREE Alerts

After bottoming near the $280 level in 2000, gold soared to as high as $1,200 before closing 2010 at approximately $1,100, for a 294 percent gain for the 10-year period.  On the other hand, silver began the year 2000 at $5 and ended 2010 at $16.25, for a 225 percent gain for the same period.

Sprott believes the precious metals will make new highs this year, a prediction not supported by Jim Rogers of Rogers Holdings and Marc Faber of Marc Faber Limited and publisher of the Gloom Boom Doom Report.  Though Rogers and Faber are bullish on gold and silver in the long term, both gentleman have said 2012 will be the year of further consolidation and a possible test of the 40-month moving average near the $1,200 level.

“I think both gold and silver will trade before the end of the year at new highs,”  Sprott told SilverSeek.com.

On gold stocks, Sprott said ETFs and trusts, such as the gold and silver trusts he offers, have diverted a lot of money out of the gold and silver mining shares and into the metals.

“I think it’s undoubtedly true that the amount of money going into gold-like products, such as ETF’s and our trust, have definitely taken away from the stocks,” he said, and added that it’s now silver’s turn to shine brighter than gold.

“And the reasons I come that conclusion is by watching what people do with their money,” Sprott continued.  “So for example, when we analyze, for example, the U.S. Mint sales.  They sold as many dollars of silver as they sold dollars of gold last year in terms of gold coins.  That means that essentially, with silver trading at a 50 to one ratio, people bought 50 times the amount of silver as did they gold.”

In addition to demand statistics, Sprott noted the available supply coming to market each year will put a lot more upward pressure on silver when compared with gold.

“The amount of silver that’s available for investment each year is 450 million ounces and the amount of gold that’s available for purchase is about 70 million ounces, which means you have a ratio of about six-and-a-half to one is amount of silver you can buy versus gold,” he explained.

“For the life of me, I can’t see why silver would massively outperform gold over the next few years.”  Sign-up for my 100% FREE Alerts

Utah Goes Rogue to Save Itself, Gold & Silver Now Legal Tender

After months of public outcry over Washington’s out-of-control fiscal and monetary policies, Utah Governor Gary Herbert signed into law Utah House Bill 157 Currency Amendment allowing gold and silver bullion as legal tender within the state to settle retail transactions and debts. Sign-up for my 100% FREE Alerts

Though several other states have proposed similar legislation, Utah becomes the first state of the Union to actually pass a law providing ammunition to fight back the ill effects of the Federal Reserve’s malicious debauching of the U.S. dollar.

The symptoms of rapidly rising costs of life’s necessities can be directly attributed to 10 years of money supply growth, not seen since the disastrous 1970s.   As of April ’02, M1 money supply has skyrocketed 77 percent to $2.22 trillion for April of this year.

And it’s going to get increasingly worse.  After compounding at a 5.9 percent rate throughout that 10-year period, the Fed has forecast another 17.4 percent increase in M1 through April 2013, a near trebling.

The signs of run-of-the-mill inflation metastasizing into hyperinflation now appears, giving rise to the notion that the reason for the politically unsavory executive order of the NDAA signed by Obama on New Years Day—which effectively suspends the U.S. Constitution—is to provide the legal authority to a sitting president to initiate martial law, including a civil uprising in the event of a collapse of the U.S. dollar.

Other states may soon follow Utah’s watershed legislation—and quickly.  In its annual World Economic Outlook publication, the International Monetary Fund (IMF) noted that a Eurozone breakup could rapidly disintegrate into a “full-blown panic in financial markets and depositor flight.”

Why?  The IMF knows that Greece’s economic collapse merely represents the tip of the EU iceberg.  Much larger European states, such as Spain, Italy, France, and even some have speculated, Germany, cannot survive the crushing debt loads coming due this year.  It’s truly the end of the road for a global financial system that tried an experiment of unbacked fiat currencies, globally.

“The potential consequences of a disorderly default and exit by a euro area member are unpredictable…,” according to the IMF report.  “If such an event occurs, it is possible that other euro area economies perceived to have similar risk characteristics would come under severe pressure as well, with full-blown panic in financial markets and depositor flight from several banking systems.

“Under these circumstances, a break-up of the euro area could not be ruled out.

And as Europe collapses, the U.S. will most assuredly go with it.”

Contrary to misinformation propagated by officials at the Fed and Treasury, Europe is the U.S.’s Greece—a warmup, a warning sign of systemic failure, according to many private economists and well-known financiers.

As early as the greater economic collapse of the Great Depression of the 1930s, the mother of all Depressions of the 1870s, severe recessions and depressions, currency crises and bank panics on either side of the Atlantic have rippled globally.  The Bank Panic of 1907, which began with the fall of the Knickerbocker Trust Company in New York, quickly spread to Paris and Rome, collapsing France and Italy, leading to recession in Europe.  This time, with electronic banking and communications as they are, is certainly no different.

Back then, financial ruin was creeping into the U.S. economy as the result of the U.S. Civil War of 1861-65 and the failed Greenback that funded it.  That war’s cost, reminiscent of the money borrowed and spent for post-WWII wars fought overseas, culminated into hard times more severe and lengthy than the better-known Great Depression of the 1930s.

“This could cause major political shocks that could aggravate economic stress to levels well above those after the Lehman collapse,” the report concluded.  And that’s when financial Armageddon begins in earnest, according to many the world’s well-respected economists.

It is now that, even the more disengaged Americans among the population of 310 million can wrap their minds around the bizarre sequence of political events of the past decade, beginning with the Patriot Act, then NDAA, to most recently,  Executive Order—National Defense Resources Preparedness (NDRP)—an order which gives guidance to all U.S. Departments to activate a National Defense Executive Reserve (NDER) in case of national emergency or peacetime (i.e., preparations). (1)

In other words, at the very least a currency collapse is coming.

Fox News stated on March 19:

The purpose of the order [NDRP], according to its contents, is to make sure the U.S. is prepared to mobilize technological and industrial resources ‘capable of meeting national defense requirements’ and ensure ‘technological superiority of its national defense equipment in peacetime and in times of national emergency.’

Within the context of these rapid-fire Executive Orders, pending legislation to deny or suspend passports for delinquent taxes; record gun sales; the rise of the OWS and ‘Prepper’ movement; and the record flight of Americans leaving the U.S. for good, Utah sees the writing on the wall, as do, apparently, many more Americans.

It’s only a matter of time when many of the other states sign into effect similar laws to the one just passed by Utah. Sign-up for my 100% FREE Alerts

(1) Could this be the reason for record-low gold stock valuations (compared with the price of gold bullion)—the fear of a Venezuela-like confiscation?

Peter Schiff’s Critical Advice to Retirees

Speaking with Yahoo Breakout, Euro Pacific Capital CEO Peter Schiff chastised the Federal Reserve for maintaining ultra-low interest rates at the expense of retirees.  But the outspoken critic of the Fed has a strategy for older Americans to survive the crisis in the U.S. dollar without taking on unnecessary risk.  Sign-up for my 100% FREE Alerts

First, Schiff warns all investors of the trend of the U.S. dollar.  It’s down.  The Fed, in its effort to prevent a sovereign debt and banking collapse, is on course to print the dollar “into oblivion” to replace the financial hole left from bad debt still maintained on the books of the banks and at the Fed, according to him.

“I think what retirees need to understand, is that when the dollar is wiped out, all dollar denominated debt instruments are going to go with it,” Schiff stated.  “So what they have to do is get out of the dollar completely.”

That means, though ‘safe’ assets denominated in U.S. dollars, such as U.S. Treasuries, municipal and corporate bonds will most likely return the face amount of the bond to maturity, the value of those bonds will drop rather rapidly over time, according to Schiff.

A return of two percent on a 10-year U.S. Treasury won’t keep up with food and energy costs, if those commodities appreciate at an average rate of, say, 6 to 8 percent per year.  In other words, Schiff believes the U.S. will continue a repeat of the ‘stagflation’ of the 1970s, but during this decade, the rate of inflation could turn out markedly worse.

Moreover, due to the low rates paid on dollar denominated bonds, Schiff sees a troubling trend by some fund managers who offer retirees ‘higher yielding’ U.S. Treasury funds.  These higher yields can only be achieved by ‘leveraging up’ the fund, a risky proposition to retirees, according to him.

“A lot of them [retirees] are buying longer-term U.S. Treasuries, you know, maybe 30 years to get extra yield.  In so doing, they’re taking enormous risk,” Schiff explained.  “In fact, many of the funds that are out there are actually levering up longer-term debt.  That’s incredible risk.  Other people are buying overpriced stocks.”

Schiff outlines the dilemma presently facing retirees (and other investors), that the financial media refers to as ‘financial repression’, a term used to describe Federal Reserve policy of coaxing investors into assets as a potential means of achieving a meaningful yield by taking on more risk.

Schiff thinks Fed policy is wrong, but he also believes there is a way out for retirees.

“So retirees need to buy gold and silver,” he said, a recommendation also made by famed author Richard Russell of Dow Theory Letters.  “If they want more current income, they need to look toward foreign sources.  I particularly like high-dividend paying foreign stocks.

“But if you can’t take that risk, you can still buy bonds denominated in foreign currencies.  But what you don’t want to do is make the mistake of buying long-term U.S. dollar denominated bonds, because I think the biggest losses in this financial collapse are going to be absorbed by ,felt by, the bondholders.  Even those who own U.S. government bonds or municipal bonds, bonds that are thought to be low risk are still going to be wiped out as the dollar collapses.”

As a summation of the Schiff strategy for retirees, he suggests that the techniques of wealth preservation today differs from a more ‘normal’ investing environment in that assets held should be denominated in foreign currencies, not U.S. dollars.

Allocations between stocks and bonds may not necessarily need to vary from a typical retiree portfolio of investments; it’s the currency in which the assets are denominated that matters in a Schiff strategy.

He likes the currencies Swiss franc, Australian dollar, Norwegian krone, Singapore dollar and Canadian dollar.

Additionally, Schiff suggests that gold and silver should be held as a hedge against all currency risks to a portfolio allocation between foreign stocks and bonds.  Sign-up for my 100% FREE Alerts

Source: Yahoo Breakout

Gold Price: Lord Haw-Haw Dennis Gartman announces “Death of a Bull”

Timing gold purchases is quite often very difficult, even for the so-called pros.  So if you think you don’t have what it takes to trade among the best, don’t feel bad, even the ‘pros’ get it wrong.  Sign-up for my 100% FREE Alerts

Taking Virginia-based economist and publisher of the Gartman Letter, Dennis Gartman, for example.  His track record for forecasting gold prices is so bad that he’s become known as the latest contrary indicator—a ‘professional’ punter, if you will.

Moreover, it’s been suggested that the reason for Gartman’s subscription base is to get fast-track knowledge of Gartman’s trade so that a trader can take the other side.

Just last week, Gartman told Bloomberg News, “we are out of gold” as of Monday (Dec. 12) and “the beginnings of a real bear market, and the death of a bull.”

Sounds dreadful, doesn’t it?  So what should gold holders do?  Well, let’s see how the advice of the gold market’s Lord Haw-Haw panned out for investors during previous corrective phases—which, by the way, are those very times when buying gold makes more sense in a secular bull market.

“I feared the whole financial system was coming to a halt, and you need a little gold in that case,” Gartman told Bloomberg News on Nov. 3, 2008.  “I doubt it will anymore. But it sure felt like it a month ago. There’s no value in gold now.”  (See chart, below.)

Three weeks later, on Nov. 25, Gartman didn’t change his mind; he got more bearish when he should have been a raving bull!

“We are short of gold,” he said in a Bloomberg interview. “We shall always sell rallies such as these that retrace as classically as this market has.”

As the market continued to rally, Gartman became ever more aloof, stating on November 16, 2009 that there was, indeed, “a gold bubble” and anyone thinking otherwise is “naive.”

Apparently, ‘Mr. Gold’ James Sinclair of JSMineset hasn’t been a long-term subscriber to the Gartman Letter.  Eight weeks earlier, Sinclair saw gold for what it is: a hedge against currency devaluations.

“The carry trade has dropped the dollar as a currency of choice,” Sinclair told Bloomberg Radio in a Oct. 7, 2009.  “Gold is competition to currencies,” and added that he expects gold to reach $1,650 per ounce by the first quarter of 2011.  Sinclair was off by five months, as gold soared during the summer of 2011, reaching his $1,650 price target in August.

Back to Gartman:

Somewhere between the dates Nov. 16, 2009 and May 18, 2010, Gartman became to think, maybe, it was he who was naïve about the gold market, jumped back into the “bubble” at some point during the six-month period, then proclaimed to Reuters on May, 18, 2010, “We want out and are heading for the sidelines.”

Now Gartman tells us gold is done.  Finished.  The Fed is done bailing out banks on both sides of the Atlantic and a deflationary collapse is coming.

Apparently, others, too, have noticed Gartman’s poor record of calling bull market tops.  Didn’t Marc Faber make reference to these misguided souls in his interview with Financial Sense Newshour?  See BER article, Marc Faber Fears Gold Confiscation.

From zerohedge.com:

“In August 2011, Gartman said that gold was the biggest bubble of our lifetime. Inconsistently, only last week, Gartman said on CNBC that he is ‘long gold’ and has been for ‘six or seven months’,” zerohedge’s ‘Tyler Durden’ wrote.

“Gartman’s short term calls on gold and silver have been wrong more often than not in recent years. He tends to turn bearish after gold has already experienced a correction and is close to bottoming.

“Those wishing to diversify and add gold to their portfolio will use his call as a contrarian signal that we may be getting close to a low in this most recent sell off. Our advice is to ignore gurus, price predictions and noise – up and down – and focus on the real fundamentals driving the gold market.”

The obvious question, therefore, is: Why subscribe to the Gartman Letter while others steeped in the gold market have gotten it right?  One doesn’t have to pay for some good advice.  Just point your browser to King World News and listen to Eric King’s interviews with the gold market’s real McCoys, or read James Sinclair’s JSMineset.com blog.  Sign-up for my 100% FREE Alerts

Gold Price War: Nouriel Roubini vs Windmills

In a Tweet yesterday, the ingenious gentleman Nouriel Roubini de la Milan taunted the gold bugs, “Where is 2,000?”

Someone should have Tweeted the self-described ‘global nomad’, “Ask Bernanke, my Lord; he’s almost done building that windmill for you to fight.”  Sign-up for my 100% FREE Alerts

But, it appears the errant-knight isn’t ready to go home, quite yet.  And like Don Quixote, whose repeated follies resulted in his uneducated squire paying  Quixote’s damages, the investor who follows Roubini will most likely receive a similar bill at the end of a failed monetary system.

In December 2009, when gold traded at $1,100/oz, Roubini exclaimed, “all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense.”

On the other hand, Marc Faber, the man, who, not only has worked hard protecting the public from American pathocracy, has been right more often about a subject he knows something about: gold—and its critical role as a competing medium to mismanaged state currencies.

But the modern-day high priest charlatan of Milan pretends he’s never heard of Martin Luther or Copernicus.

When Faber was asked in a Dec. 7 FSN interview why gold hasn’t crashed the U.S. dollar yet, Faber blamed the countless deflationists who still follow the likes of Roubini, Prechter, Shilling and David Rosenberg (who appears to have recently defected, from his note to clients, titled, Eight Areas of Behavioral Change to Watch for in 2012, where he sneaks out the back door of deflationists headquarters).

“I don’t hear about gold.  I lived through the last gold bubble between 1978 and January 1980.  The whole world, whether you were in the Middle East or in Asia or Europe or in America was trading London gold, buying and selling every day,” he recalls.  “This has not happened yet, and it hasn’t happened.  Your friends, the deflationists, have been telling people that gold will collapse to $200 an ounce for the last 10 years and that it was in a bubble.

“[They] said it [gold] was in a bubble at $500; they said it at $600, and they’re still maintaining it.  So a lot of people they don’t own it; they bought it and sold it again.  But in the meantime, gold has moved into sold hands.”

See BER article, Marc Faber Fears Gold Confiscation

In the FSN interview, Faber is talking about Roubini, for one.  The graph, below, reveals whether Roubini has been right about gold since his bold statement of Dec. 2009.

So far, Roubini has cost us 33.8 percent at the supermarket and gas station.  How much has the Larry Summers and Jeffrey Sachs protégé cost us to purchase a lousy 2 percent dividend yield of the DJIA?

Roubini cost us 20.1 percent to receive 2 measly percent, which loses us money after inflation, anyway.

Listen to his economic outlook because he’s good at that, but ignore his advice of where to put your savings.  Stick with Faber, Rogers, Sinclair and others about wealth preserving positions.  And visit the Web sites of James Turk and Eric Sprott for how and where to protect your assets.

Wouldn’t it be nice to see $1,200 gold?

Gold $1,200?  It would be great, sure.  But we’d have to listen to Roubini’s I-told-you-so nonsense.  Preserving wealth not only making the right decisions, it involves resisting the psychological warfare waged by possible plants who will discourage the silver bullet option (gold and silver) away from the Federal Reserve system.  In fact, many have questioned whether Roubini, Dennis Gartman and Jeff Christian are today’s Lord Haw-Haws.

Sounds like another tin-foil-hat conspiracy theory?  Who knows the truth about anything when a bunch of sociopaths have taken over the financial industry, government and media.  Ask yourself how well would you have fared listening to Bernanke, Greenspan, Roubini, Gartman or Christian?  Ask Gerald Celente.

“I think it is absolutely essential in a democracy to have competition in the media, a lot of competition, and we seem to be moving away from that.” —Walter Cronkite

“Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.” —Sen. Barry Goldwater (Rep. AZ)

“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” —Henry Ford

“Government spending is always a ‘tax’ burden on the American people and is never equally or fairly distributed.  The poor and low-middle income workers always suffer the most from the deceitful tax of inflation and borrowing.” —Congressman Ron Paul

“All the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense.” —Nouriel Roubini de la Milan

Marc Faber Fears Gold Confiscation

Aside from the cherished and entertaining Faberisms deployed from time to time in his fight to preserve the truth in front of television audiences controlled by a media-based establishment propaganda machine, Marc Faber also demonstrates why he’s the go-to man for clarity and thoughtful insights in the midst of today’s Orwellian headache.

Speaking with FinancialSense Newshour’s (FSN) James Puplava on Wednesday, Faber, the editor and publisher of the Gloom Boom Doom Report discusses a range of topics, from geopolitics, to freedom and tyranny, to his concerns of people living in an age of central bank monetary cannons gone completely rogue.  He also touched on one of his favorite asset classes, gold, and the third-rail subject of interest to every gold bug: government confiscation.  Sign-up for my 100% FREE Alerts

Note: James Puplava’s FinancialSense.com Web site is loaded with some of the most informative interviews from the brightest minds assembled on the Internet.  See its audio archived interviews.

As far as how high the price of gold can go, it depends upon who has control of the printing presses, according to Faber.  Right now, he said, the power hungry in Washington won’t let gold bugs down, as each sign of a lurking systemic collapse or stock market meltdown has been propped up by the Fed.

“If I could show you a picture of Mr. Ben Bernanke and Mr. Obama, then I would have to say that the upside is unlimited,” said Faber.

And the downside risk to gold rests on the shoulders of central bankers, as well, as the Fed, and now the ECB, will go to any length to feed the global financial system with creative and backdoor credit expansion mechanisms.

“In my view the downside exists if money printing by government is insufficient to revive or maintain credit growth at this level and you have a credit collapse,” he said, and also noted that competing asset classes would most likely fall more, thus retaining gold holders purchasing power during a bona fide deflationary collapse.

But, first, the globe will undergo roaring inflation, according to Faber, then, second, the Robert Prechter, Gary Schilling and David ‘Rosie’ Rosenberg deflationary spiral scenario will play out.

“One day there will be a credit collapse, but I think we aren’t yet there.  Before it happens they’re going to print,” Faber speculates.  “And when printing as it has done in the last 12 years in the U.S. leads to discontent populations, because when you print money then only a few players in the economy that benefit, not the majority of households.”

However, Faber warns that the gold market’s extremely volatile, a normal symptom of a fiat-backed financial system inducing the public into schizophrenia—of clinging to the familiarity of a 67-year-long financial system, moving to periods of fearing total loss at the currency graveyard—will chase investors out.

“A 30 percent correction or 40 percent correction cannot be ruled out, but as I maintain, again and again, I’m not going to go and sell my gold,” Faber said forcefully, as he explained that owning gold is should be viewed as the ultimate insurance policy to cover financial calamity, a viewpoint shared by famed Dow Theory Letters’ Richard Russell—another periodic guest of FSN.

Whether the gold price is in bubble territory, as a few prominent analysts claim, Faber doesn’t see it that way, at all.  In fact, he said, very few people own it or talk about it.  History clearly demonstrates that every bubble will suck in the very last investor before collapsing under its own weight.

Besides, the powerful propaganda machine, which endlessly repeats the party line of a system predicated on a fiat system of dollar hegemony, will not allow cheerleaders of the gold bugs to expend too much airtime away from Wall Street advertisers and obvious shills (to the trained eye) of CNBC, Bloomberg and other ‘mainstream’ media.

So far, the propaganda has only delayed the inevitable rush into gold—the next and longest stage of the bull market.

“I have one concern about gold.  I was recently on Taiwan and South Korea, at two large conferences, nobody owned any gold,” Faber said.  “Gold is owned by a minority, even in the U.S..  Most people in the U.S. have no clue what an ounce of gold is or looks like and so forth.  The same in Europe.”

But as the ‘wealthy’ begin to acquire gold, the chasm between the ‘rich’ and poor will widen substantially, not just between the 1 percent and the rest, but between the upper 10 percent and the growing-poorer middle class.  That’s when the democratic process turns ugly, morphing from a society of rights to a nation ruled by a tyrannical banana republic political dynamic.  See FSN interview, Ann Barnhardt: The Entire Futures/Options Market Has Been Destroyed by the MF Global Collapse.  Or transcript.

Populist political leaders vying for votes from the masses will opt to score easy points with the 90 percent have-nots at the expense of the haves, with draconian taxes on assets such as gold and silver held by the haves, not just through taxes on capital gains, but maybe even through a wealth tax on the holdings.

“This is what the tyranny of the masses can do,” Faber explains.

“You can make it, advertise it to the masses by just taking away from a few people, he added.  “I’m worried most about is the case of gold, not the price; that I’m not worried . . . but I’m worried about the government taking it away.”

The interview moves on to the discussion of the bull rally in gold and silver.  After 11 years of continuous gains in the price of gold, why, then, do so few investors hold the metal?

Faber explains that there remains too many deflationists holding to their thesis of a tumbling gold price, though, as Faber suggests, there has been no factual evidence to support the argument since the pop of the Nasdaq bubble of 1999.

What deflationists point to as proof of their contention, declining housing prices and stock prices, are really manifestations of inflation moving out of those asset classes into others, such as commodities, precious metals and overseas assets, of all kinds.  Inflation, Faber has stated in the past, doesn’t move all asset prices up simultaneously.

“I don’t hear about gold.  I lived through the last gold bubble between 1978 and January 1980.  The whole world, whether you were in the Middle East or in Asia or Europe or in America was trading London gold, buying and selling every day,” he recalls.  “This has not happened yet, and it hasn’t happened.  Your friends, the deflationists, have been telling people that gold will collapse to $200 an ounce for the last 10 years and that’s it was in a bubble.

“[They] said it [gold] was in a bubble at $500; they said it at $600, and they’re still maintaining it.  So a lot of people they don’t own it; they bought it and sold it again.  But in the meantime, gold has moved into sold hands.

“In my case, I’m not going to sell my gold unless I have to.  In other words, everything else is bankrupt, bond market, stock market, cash and real estate.”

Faber also points out, even though the price of gold appears to look like and quack like a bubble duck, with the price of the yellow metal sporting gains of 700 percent since the year 2000, the monetary base and credit creation by the Fed has been so large for so long, the gold price has much more room to move higher to reach ‘fair value’.  See Goldmoney Founder James Turk’s analysis on this very point: BER article, Goldmoney’s James Turk, $11,000 Gold Price.

“I can turnaround and say, look if I consider the price of gold, an average price in mid-1980s, then we take $400 or $450, or whatever it is,” Faber explains, “and we take the monetary base at that time; we take the international reserve; we take into consideration that China hasn’t really begun in earnest to open up; and we haven’t had this wealth expansion in emerging economies, and so forth and so on.  Then, I can maintain, well, actually the gold price is not up; it’s just the price of money, or the value of money, has declined so much against a stable anchor.  So I don’t think that we’re in a bubble stage.”

For the newcomers to the gold market, Faber stresses, “Don’t buy it on leverage.”

Reiterating his previous comments during the interview, Faber leaves the FSN listener with his overriding observations of a U.S. government (other Westerner countries, as well) that shows signs of eventually taking the next steps in its fight to maintain a hopelessly broken political and financial system: confiscation, not necessarily though a highly unlikely and dangerous door-to-door search of proof of non-paid taxes on a citizen’s bullion stash, but through confiscatory levels of taxation and possible criminal penalties to those who daring to escape the Marxist or Fascist regime’s grip on power over its population’s wealth.

“My only concern with the gold insurance is government will take it away,” Faber concluded.  “That is my only concern.  I’m not concerned about the price.

“I also have a concern generally speaking about our capitalistic system.  For sure people with assets, they will be taxed more heavily, that’s for sure.”

Jim Rogers: I’m being forced to buy more real assets

Always looking for bargain prices in commodities markets, famed investor Jim Rogers has been patiently awaiting a significant pullback in precious metals prices before adding to his stockpile.

But that plan may change for Rogers.

The Fed’s statement released on Wednesday, in which it announced a coordinated 50-basis point cut in dollar swap rates with five other central banks, jolted Rogers into rethinking his buying strategy for precious metals and commodities, according to a GoldSeek interview with the 69-year-old commodities trader.  Sign-up for my 100% FREE Alerts

When GoldSeek Radio host Chris Waltzek asked Rogers whether he’s buying commodities right now, the 69-year-old commodities trader said,  “Well, not at the moment, but I’m seriously considering it given what’s happening in the world . . . They [central banks] are going to loosen up even more on money.  That’s not good for the world, not good at all, but that’s all they know how to do.  So, I’m contemplating, being forced to buy more real assets.”

For weeks, Rogers has been peppered with the same question regarding his plans to buy more gold, and, by proxy, more silver.   He’s repeatedly said that he’s been waiting for an additional pullback in the precious metals before adding to his positions and that he remains a staunch long-term bull in gold, silver and commodities for, what he expects, the remainder of the decade—at least.

In a CNBC interview, two weeks ago, Rogers said, “I’m long commodities and currencies, because if the world gets better, the shortages in commodities will make sure I make money.  If the world economy doesn’t get better, I’d rather own commodities because they’re [central banks] going to print money,” adding that he’d become excited if gold reached the $1,200 level.  See BER article.

However, Wednesday’s rate cut within the dollar swaps market showed that the Fed is committed to temporarily backstop Europe’s liquidity freeze in the Eurozone while a more permanent solution to the liquidity (solvency?) crisis there is drafted by the leaders of the EC on Dec. 9.  It appears that the Fed and ECB are poised to print more money.

In addition to Wednesday’s pre-market shocker by the Fed, a more recent overture from Chicago Fed governor Charles Evans, who said on Dec. 5, “further monetary stimulus is needed” to steer clear of another U.S. debt trap, has upped the rhetoric for more money printing by the Fed, possibly slated for the Jan. 23-24 FOMC meeting.

In the meantime, the ECB decides whether to lower rates on Thursday, Dec. 8.  Another rate cut in addition to ECB’s new chief Mario Draghi may send precious metals soaring once again.

All of these events trouble Rogers, who sounded disappointed that he may not get his wish for lower gold and silver prices.  It appears that recent events may have altered his expectations.

So, is Rogers buying gold now?

“I would have said ‘no’ before yesterday; now, as I say, I’m reconsidering,” he stated.  “I was hoping we’d have a large correction, a continuing correction.  It [gold] has been correcting for three months now, but that’s not much in the context of the 11 years [bull market], so I’m trying to figure out what to do.  I might buy more, given what happened yesterday.  I’m trying to figure out exactly how extensive this is going to be.”

And for Rogers’ take on the silver price, he repeated his preference for buying silver because of the large discounted price to its all-time high and inflation-adjusted high of approximately $150 per ounce.

“Certainly silver could go to three digits if you adjust it for inflation, you get to U.S. dollars, a $100 per ounce some time during the course of the bull market,” Rogers said of the bull market potential for the price of silver.  “Yes, I’m sure that will happen.”

Given a choice between buying only one of the two monetary metals, gold and silver, Rogers said, “If I buy either today, I’d probably buy silver, just because it’s cheaper on an historic basis.  They more or less move together, certainly not always.  I would probably buy silver, if I decide to buy precious metals.”

Then, the conversation turned to the U.S. economy.

Rogers expects utter calamity during the next economic downturn in America, suggesting that each downturn in the U.S. economy creates an increasingly more difficult job for the Fed to raise growth again due to the swelling drag of accumulated debt created by the central bank in the series of ‘prime the pump’ responses to all previous downturns.  See Kondratiev-wave cycles.

“At some time by the end of 2011, 2012 or 2013, we’re overdue for another economic slowdown and that it will be worse than last time because there has been so much staggering amounts of debt created,” Rogers explained.

“You know we had a slowdown in 2002; it was bad; 2008 was worse because the debt was so much higher.  You know 2012, 2013, whenever it comes it’s going to be worse still because the debt now is up so much,” he added.  “The U.S., when taking into account all the off-balance sheet guarantees such as Fannie Mae’s derivatives positions the debt has more than quadrupled from last time.   They cannot do that again.  The market’s not going to let them print staggering amounts of money anymore.

“My only point [was] the next time around, when it comes, and it is going to come, anybody that tells you that it’s not going to come, you should not bother with them, but when it comes the next one’s going to be worse than the last one.”

Peter Schiff’s Urgent Update to Gold & Silver Investors

Following the surprise move by the Fed and five other central banks to lower the interest rate of dollar swaps by 50 basis points, through Feb. 1, 2013, Euro Pacific Capital CEO Peter Schiff issued a special and urgent update to investors.

“There’s an old expression that nobody rings a bell when it’s time to buy or sell,” Schiff began his video message of Wednesday.  “ . . . Well, I think the world’s central banks rung a pretty loud bell today to buy precious metals.”

As the Dow opened on Wednesday, soaring more than 400 points, gold vaulting more than $30 per ounce and silver adding more than a buck following the Fed announcement that the world will soon be flooded with more dollars due to the coordinated cut in the swaps rate, the US currency dropped sharply against its peers which comprise the UDX. Sign-up for my 100% FREE Alerts!

“I believe that it [the dollar] is going to lose a lot more value, not just against other fiat currencies, but against real money, gold and silver,” Schiff continued.  “I think investors should be buying.  Those of you who’ve been on the sidelines waiting for an opportunity to buy, I would not wait much longer; I would just buy.”

Wednesday’s ringing endorsement by central banks to sell dollars and buy precious metals—so far—has fit well into the call Schiff made in October for a lower dollar by year end—a bold call, indeed, in that, it flies in the face of famed FX Concept Founder John Taylor’s prediction for a euro collapse.  Not many traders want to take the other side of a Taylor trade.

“What’s really frustrating is that we’re supposed to do well in a lousy world market,” Taylor told Bloomberg in an Oct. 12 interview. “We’re doing very badly.”

Nearly two weeks later, on Oct. 25, Schiff defiantly told KWN, “Our short-term target for the euro, maybe by year end, will be up near 1.48,” adding, “I think that’s going to catch a lot of people off guard who were writing the obituaries for the euro, to see the euro approaching the 1.50 level. The dollar index should be headed back down to the 72 level.”

Schiff recommend to KWN listeners to buy gold and silver as the hedge against the coming drop.  So far, Schiff is holding up quite well to senior Taylor.

“I think we will come pretty close to hitting $2,000 on gold this year,” Schiff predicted. “It would be hard for gold not to be above $2,000 in 2012.  I really think it would be unlikely that we wouldn’t see prices north of $2,000 next year.”  See BER article, Peter Schiff’s Boldest Call Ever.

Fast forward to today, Schiff recommended to his video audience that new positions should be taken in gold and silver, with first-time buyers who’ve been waiting for a pullback to jump aboard.

“You have gold at around $1,700, silver around $32,” Schiff said, Wednesday.  “I think these are good positions to buy gold for the first time, if you still haven’t bought, or add to your positions if you already own.”

In addition to his recommendation to buy precious metals, Schiff reminded investors of the ongoing disinformation campaign waged against investors by central bankers and the media all through this crisis.  Schiff has continually stated, as far back as the early 2000s, that central bankers and ‘respected’ media outlets, to put it bluntly, “lie” to investors about the intentions of the Fed; it’s all part of, what famed trends forecaster Gerald Celente has said is, a CON-fidence game the Fed plays with the markets.

“Here’s the deal, Eric, they are suckering in the people to keep playing the market. This solved nothing,” Celente told KWN, Thursday.  “So when I see this, this is just a con game.  And anybody that sees the game, all they have to do is follow the money.  Where is the money going?  Look at what gold did, zoom it shot up!  Look what silver did, bam!  Everybody knows what’s going on, they are devaluing our currency.”

Schiff provided more detail than Celente about the latest Fed rouse, citing the curious timing of the Bernanke announcement of the day following the Standard & Poor’s large list of bank downgrades, underscoring what both gentlemen have been warning investors for a long time—and that is, that the game is “rigged” against investors of dollar-denominated paper assets and to buy gold.

“A lot of people think that what is going on is a bailout for the eurozone.  It’s not; it’s a bailout for the banks on both sides of the Atlantic,” Schiff explained.  “It’s not a coincidence . . . last night Standard & Poor’s downgraded credit ratings for about 20 major banks, including banks like Bank of America [and] Morgan Stanley.”

Moreover, Schiff noted a similar observation to zerohedge.com‘s post regarding Warren Buffet’s Bank of America’s share price, which, as of Tuesday, traded briefly and dangerously below the $5 mark—a mark at which pension funds and other large institutions must sell the stock, which would no doubt cause another Citigroup-like meltdown in shares of BAC.

“Before the bell [Wednesday], Bank of America shares were under five bucks, a new 52-week low, and this announcement came and the banks rallied,” Schiff said.  “I think this is a bank bailout, a la QE2.  This is not about economic growth; it’s about propping up insolvent financial institutions by creating inflation.”

More evidence of Schiff’s contention came from U.S.-based Forbes Magazine on Wednesday morning.  Forbes stated that it had observed central banks taking unusual steps to liquefy an unknown (undisclosed?) European bank in ways reminiscent of the 2008 financial system meltdown.

“It appears that a big European bank got close to failure last night,” stated Forbes.  “European banks, especially French banks, rely heavily on funding in the wholesale money markets.  It appears that a major bank was having difficulty funding its immediate liquidity needs. The cavalry was called in and has come to the successful rescue.”

Experienced Wall Street observers, such as Schiff, the staff of zerohedge.com and the journalists of Forbes understand the motives and obfuscations disseminated through communiques of central banks all too well.  And those “who do understand this dynamic will buy gold,” said Schiff.

And how high could the price of gold go?

Ironically, France-based Societe Generale issued a note to clients on Monday, a couple of days too soon from the Wednesday’s Fed’s bombshell announcement, in which, it stated, “A major liquidity crisis should not occur this time, as we think we are on the eve of major QE in the UK, U.S. and (a bit) later on in the EZ.”

If the analysts at SocGen had read zerohedge.com’s Friday post regarding a curious and massive blip on the Fed’s “Non-Reserve Balances” statement of an additional $88 billion to its “other” category, they may have wondered if another bank was about to blow up in the system and most likely would have suspended their analysis for a little while longer.

In any event, SocGen also stated it expects the price of gold to soar to nose-bleed heights in the wake of more central bank quantitative easing, as they need to catch up to the unprecedented rate and amount of debt destruction on both sides of the Atlantic.

“Buy gold ahead of QE3 as money creation has a strong impact on prices,” according to the SocGen release.  “Gold is highly sensitive to U.S. QE, as every dollar of QE goes into M0, triggering the debasement of the USD.  Gold = $8,500/Oz: to catch up with the increase in the monetary base since 1920 (as it did in the early 80s).  Gold = $1900/Oz: to close the gap with the monetary base increase since July 2007(QE1+QE2).”