Jim Rogers & Marc Faber Agree, Bombs Away

By Dominique de Kevelioc de Bailleul

Investors waiting for an official announcement of another round of Fed balance sheet expansion may be losing ground in the next leg up in precious metals prices—and in oil and other commodities prices.

Don’t wait for the shot to be heard.  Place your favorite dollar-destruction trade now before the mom-and-pop investor as well as the institutional money manager catches on to the next stage of deceptive practices of the Fed.

There’s no alternative to more money ‘printing’, according to Jim Rogers of Rogers Holdings and Marc Faber of Marc Faber Limited.

In the case of Rogers, he says the Fed desperately wants to avoid more “egg on their face” after two QE mistakes, while both men lead the publicly stated  comparison between Bernanke and his lead neo-Keynesian cheerleader Paul Krugman with France’s 18th century John Law.

“I do not know whether they will announce it [QE3] or not. They are a little bit embarrassed because they announced QE1 and QE2, and it did not work. So they may try to discuss it,” Rogers told the Economic Times.

“They may just continue to do it without getting egg on their face again, but they are going to print money, they are all going to print money,” he adds.  “It is the wrong thing to do, but that is all they know to do.”

Once a complimentary Fed policy tool for orchestrating global money flows, the coordinated actions to manipulate interest rates and issue communiques have now become a huge liability for Bernanke.

It’s now become apparent that $2.1 trillion of officially-disclosed money creation since the onset of QE1 in Dec. 2008 has not delivered that reliable Keynesian magic as hoped.  Instead, much of that fiat merely spilled over into the commodities and precious metals markets, in addition to propping up insolvent banks and U.S. stock markets.

As the monetary base expands while real GDP contracts, the Fed must now downplay the evidence of monetization from the layman the best it can.  Otherwise, the Fed becomes completely irrelevant to harnessing the market from the superhighway of hyperinflation.

“If you look at their balance sheets, you will see that something is happening, assets are building on their balance sheets and they are not coming from the tooth fairy,” says Rogers.

Early last week, Rogers told The Daily Telegraph that Bernanke & Company “probably have learned how to do things off balance sheet.  I have nothing to confirm this, but everyone else has learned how, so they probably have, too. This is just a comment on human nature.”

The Swiss money manager Marc Faber agrees with Rogers’ on the outlook for the Fed’s money printing activities in the wake of $1.5 trillion U.S. budget deficits—along with no plan in sight to drastically cut military and ‘entitlement’ programs.

With more wars on the horizon and an American political class comprised of two parties rolled into one oligarchy in bed with bankers, Washington’s will to alter the course of runaway consumer prices through the destruction of the U.S. dollar’s purchasing power is clear—and was made most clear to those paying attention to a failed Ron Paul presidential campaign and a Simpson-Bowles impasse.

“In my opinion, as far as the eye can see, the Federal Reserve will never again implement tight monetary policies,” say Faber to a gathering at the Mises Institute.  They will print and print and print.”

Faber goes on to say that the neo-Keynesians don’t acknowledge that excessive leverage and levels of debt in the financial system are the root cause of the four-year-long global recession, pointing out an eight-page dissertation by economist Paul Krugman published by the NYTimes.

In Krugman’s article, not one mention of the problem of an over-leveraged banking system and excessively indebted economy was made,  lead Faber to believe that the implication is: more of the same monetary drug is recommended.

“They cannot afford to have a debt deflation in a credit addicted economy,” Faber continues.

Thousands of years of monetary history show that the road to hyperinflation is political driven, with no politician or central banker (in the case of today’s monetary system) desiring to be in the driver’s seat when the system crashes from its own weight.  Each elected and appointed policymaker knows that the ramifications of hyperinflation include civil unrest, violence and revolution—either peaceful, or not.  The targets will be on their backs.

“I tell you, sovereign credit in the Western world, they’re all bankrupt,” states Faber.  “But before they officially go bankrupt and can’t pay, they’re going to print money and massively so.  That should be very clear.  That’s the easiest way politically to postpone the hour of truth.”

Americans may fear the truth, but they haven’t experience the pain that goes with that truth—a la Greece, Spain and Italy, to mention a few.  As the market for Spanish and Italian sovereign debt now soars along with precious metals, the markets agree with Rogers and Faber: there’s virtually no turning back for the Fed and its complicit partners in monetary crimes, the ECB, BOJ, BOE and SNB.

Silver to Breakout Amid Odd Forecast—Ben Davies

By Dominique de Kevelioc de Bailleul

“We’re trend ready, Eric.  I think it’s a prescient time to come on the show,” Hinde Capital CEO Ben Davies begins his interview with King World News (KWN), referring to a resumption of the upward trend in the gold market.  But, where gold goes, silver follows at a ‘double-time’ pace—at least.

Davies proprietary model for pricing silver suggests to him a move higher of 25 percent, citing reasons of a slight upturn in the U.S. economy, the return of easy-credit European politicians from vacation, and, possibly, truth in the rumor that Spain will ask the ECB for a bailout during the weekend, ending Aug. 19.

On the news of a Spanish capitulation, alone, silver prices could move higher this week, according to Davies.

Though Davies doesn’t expound upon his ‘odd’ thesis of U.S. growth next year, or even suggest where that growth will come from, he does expect, however, more monetary accommodation by central banks to buoy silver prices—an expectation echoed by currency and monetary policy expect Jim Rickards, who, so far, has been on the money with his prediction of ECB easing ahead of the Fed.  Now, it’s the Fed’s turn, according to Rickards.

Incidentally, Rickards anticipates Fed Chairman Ben Bernanke to announce further QE at the annual central bankers meeting at Jackson Hole, Wyoming in early September.  He tweeted, Sunday, that recent weakness in the Chinese renminbi against the dollar weighs more heavily with the Fed than U.S. jobs and GDP, and that downdraft in the Chinese currency, beginning from the first days of May, will push Bernanke to make the long-awaited QE announcement at Jackson Hole.

Moreover, it turns out the rumor that Spain would ask for a bailout, that Davies alludes to, is fact-based, in part.  The Wall Street Journal reports, Sunday, Spain’s Finance Minister Luis de Guindos “would like to see the European Central Bank commit to massive, open-ended sovereign-debt purchases” before Spain asks for a new bailout from the central bank—a request that former Goldman Sachs operative Mario Draghi would only be too happy to accommodate.

However, Spain and the other nations which make up the PIIGS will await Germany’s high-court ruling on whether an exception to Germany’s constitution will be granted on behalf of the ECB and its sovereign debt purchases.  That critical ruling is scheduled for Sept. 12.

Back to Davies.

When asked by KWN host Eric King about the short-term prospects for the silver price, Davies didn’t hang his hat on the central-banker-easing mantra as the primary reason for his anticipation of higher silver prices.  Instead, Davies emphasizes a disconnect between elevated equities prices and depressed silver prices as his reasoning for silver to play catch up.

He also suggests that U.S. economic growth will add to the several known catalysts to a substantial move higher in the silver price, a shocking departure from the 2013 Armageddon scenario advanced by Jim Rogers, Marc Faber, Peter Schiff and a legion of well-informed, talented and ‘unencumbered’ market handicappers, including, too, economist John Williams of ShadowStats, who would take grand exception to Davies’ U.S. economic forecast.

Flying in the face of Davies’ forecast of economic growth comes an American Petroleum Institute (API) article which reports global fuel deliveries for all products dropping through the floor—not a good sign.

From API:

Demand for gasoline, the most widely used petroleum product, dropped 3.8% from a year earlier, to 8.624 million barrels a day, the lowest July level since 1997. Gasoline use in the heart of the peak summer driving season was 2.2% lower than in June. January-July gasoline demand averaged 1.1% below a year earlier, at 8.671 million barrels a day, the API said.

Kerosine-based jet fuel use fell 0.8% in July from a year ago, to 1.455 million barrels a day, while demand for heavy residual fuel, used in power plants and industrial burners, dropped 7.1% year-on-year, to 294,000 barrels a day.

Production of all four major products–gasoline, distillate, jet fuel and residual fuel–was greater than demand for those products. As a result, petroleum imports decreased and exports increased. Total imports of crude and refined products fell by 9.6% to average 10.4 million barrels a day in July. Exports of refined products increased 11.1% to a record high for July of 3.244 million barrels a day, and year-to-date exports were up 14% compared with the same period in 2011.

Refineries operated at 92.7% of capacity in July, the second month in a row above 90%.

Crude oil production rose 13.6% year on year in July to 6.225 million barrels a day, the highest July level since 1998. Year-to-date output averaged near the July level and was up 11.9% from the same period in 2011.

Nonetheless, Davies likes silver, in the short-term.

“Silver is the ugly duckling at the moment.  Isn’t it?  It’s definitely performing very badly, and I think it’s tantamount to the same as gold,” says Davies.  “But I think I would err slightly on the side of more silver bullish.

“I think that with recent equity and S&P 500 performance, I think that the strong correlation there and optimism for growth, and, actually, our analysis is actually [sic] for a pick-up in U.S. growth in nine months time.  So the overlay there, for us, is that silver could perform well here.”

Davies’ timing for a move high in the silver price pretty much sacks up with Goldmoney’s James Turk and other frequent guests of KWN.  It’s a breakout any day in both gold and silver, they say, with silver expected to catapult quickly and close the 57-to-one ratio of the two metals.

“I think we’re threatening to make a move here and it could come in the next few weeks if not sooner,” proffers Davies.

“Optically [chart], I’m looking for the low-to-mid-30′s, and that is as far as our trend system will take us in the interim—in the short term, I should say.”

His target for gold of $1750 and silver of $33-$35 equates to a gold:silver ratio of between 50 and 53.

UBS: Hyperinflation Nears; Gold, the Canary in the Coalmine

By Dominique de Kevelioc de Bailleul

Swiss-based UBS AG issued a warning to clients Wednesday that the U.S. is on the path of a hyper-inflationary depression.  Forty years of a nation’s currency not redeemable for a physical asset has just about reached its limit of usefulness, according to the world’s 17th largest bank (ranked by assets) and its economist Caesar Lack, Ph.D. economist.

In Lack’s note to investors, titled, Global Risk Watch: Hyperinflation Revisited, he states:

Hyperinflation: Paper money only has a value because of the confidence that the money can be exchanged for a certain quantity of goods or services in the future. If this confidence is eroded, hyperinflation becomes a threat. If holders of cash start to question the future purchasing power of the currency and switch into real assets, asset prices start to rise and the purchasing power of money starts to fall. Other cash holders may realize the falling purchasing power of their money and join the exit from paper into real assets. When this self-reinforcing cycle turns into a panic, we have hyperinflation. The classic examples of hyperinflation are Germany in the 1920s, Hungary after the Second World War, and Zimbabwe, where hyperinflation ended in 2009. Indeed, hyperinflation is not that rare at all. Economist Peter Bernholz has identified no fewer than 28 cases of hyperinflation in the 20th century. [emphasis added]

Lack’s overview of the events which lead up to a currency collapse comes straight from the work of Austrian economist Ludwig von Mises (1881-1973), an economist shunned by the establishment’s money masters for his heretical economic viewpoints, and scoffed by today’s confused legion of ‘expert’ economists, media personalities and political figures such as deficits-don’t-matter Dick Cheney.

Americans will soon find out that deficits, indeed, do matter, says UBS.

Just as a student pilot is told to trust his flight indicators and not the sensations brought about by his inner ear, the readings of hyperinflation stare each investor in the face—if he’s trained to ignore the likes of the establishment’s head cheerleader Paul Krugman, and, instead, interpret what the economic indicators tell him from the standpoint of the obscured von Mises.

As von Mises pointed out, hyperinflation is not a result of a money supply gone wild through the excessive printing of paper notes, per se; it’s the result of a marketplace of participants suddenly rushing out of a monetary system which they perceive no longer works or can be trusted.  MF Global, PFG, LIBORgate and, now, hints of fraudulently managed ‘allocated’ gold accounts surfacing, all contribute to that cumulative, then sudden drop in confidence in the U.S. dollar.

As repeated attempts to audit the Fed regain renewed support in Congress, policymakers are under pressure by a public—a public that now questions the once-sacred, enigmatic and arcane central bank’s role as the steward of the nation’s money.  As congressman Ron Paul stated in an interview with GoldSeek radio during the weekend, another bill to audit the Fed makes its way through committee.  The issue has mushroomed in popularity with constituents, therefore their representatives, and can no longer be ignored, according to Paul.  The issue of the Fed won’t go away.

And the last step toward hyperinflation comes from a public that comes to realize that, in fact, deficits do matter and that four decades of deficit spending has reached its limit in the U.S.  The realization of American exceptionalism, as it relates to matters of fiscal responsibility, was just another propagated myth could come as early as next year, according to many students of the Austrian-school, such as Jim Rogers, Marc Faber, John Williams, Peter Schiff, Max Keiser, James Turk, Eric Sprott, among others.  As the U.S. economy rolls over, federal tax receipts will drop further, gaping an already monstrous $1.5 trillion deficit ($5.3 trillion, including unfunded liabilities) into a Greece-like death spiral.

“Ultimately, hyperinflation is a fiscal phenomenon; that is, hyperinflation results from unsustainable fiscal deficits,” states UBS.  “Peter Bernholz [author of Monetary Regimes and Inflation: History, Economic and Political Relationships]

notes that historically, cases of hyperinflation have been preceded by the central bank monetizing a significant proportion of the government deficit.

“After investigating 29 hyperinflationary episodes, 28 of which happened in the 20th century, Bernholz writes: ‘We draw the conclusion that the creation of money to finance a public budget deficit has been the reason for hyperinflation.’”

Reruns of Cheney video clips will be used by some as a reminder of how fiscally, politically and morally bankrupt American culture has become.  It will dawn on a larger and more meaningful portion of Americans that the promise of a trip on the train to the American dream was really the boxcar to the slaughterhouse.

That flashpoint worries the Fed and the oligarchy (witness the Warren Buffett, Charlie Munger and Bill Gates interviews with CNBC’s Becky Quick), as confidence in American institutions will be irredeemably lost, leading eventually to that fateful day of hyperinflation.  Just as 28 other currencies before, another currency, the dollar, will end up as the next worthless fiat.

The bizarre series of Executive Orders and other unconstitutional steps taken by all branches of government since 9-11 tip the hand that central planners have  been preparing for that day of awakening.  The anger generated by a public armed to the teeth most likely will trigger panic and another American Revolution.

UBS ends with:

Gold – the canary in the coalmine

Due to its long standing as the foremost, non-inflatable, liquid alternative currency, gold is the first destination for wealth fleeing from paper money into real assets. Gold can be considered a hyperinflation hedge, and its price can be considered an indicator for the probability of hyperinflation. A sudden rise in the price of gold would be a warning sign that the risk of hyperinflation is increasing, in particular if it went along with a worsening of the fiscal situation in the deficit countries and an easing of monetary policy. Not only gold, but also other commodities, as well as the stock market, would profit from investors fleeing from money and from government debt. Thus a strong rise of gold, commodities, and stock markets, accompanied by a fall in the currency and in government bond prices (i.e. a rise in yields) could signal the approach of hyperinflation. We will continue to monitor global inflation developments and change our risk assessment in the global inflation monitor according to current events.

CNBC Interview: Warren Buffett Shows Fear

By Dominique de Kevelioc de Bailleul

In one of the most revealing interviews with the man who has always been optimistic for a continued prosperous America, Berkshire Hathaway Chairman Warren Buffett, for the first time, appears noticeably fearful about the future of the U.S. economy.

Buffett cult members must have noticed his more-than-usual speech stammer as he searched for the right words in response to questions posed by CNBC’s Becky Quick—who, incidentally, is one of CNBC’s softest of softball interviewers.  In contrast, a Buffett interview with Rick Santelli would most likely drop the Dow 1,000 points within the first few minutes of questioning.

There’s little doubt, if you read between the lines of Buffett’s responses to questions from stick-figure journalist Becky Quick, it’s time to head for the hills and buy gold, gun and take up God.  The 81-year-old investor had nothing good to say about the U.S. economy—a first for the Orifice of Omaha.

When Quick asked whether Buffett’s optimistic assessment of the U.S. economy of six weeks ago is still on track, Buffett began with a mea culpa nervous laugh, as if to say, ‘Oops, I misread the tea leaves.  Sorry fans; this thing is going down.’

Stripping out the filler and avuncular chit-chat ‘Uncle Warren’ persona, the cold-hearted Nebraskan is saying that the outlook for the U.S. economy is not good—just as Jim Rogers and Marc Faber have warned investors many months ago.  In fact, if Buffett wasn’t such a cheerleader for the establishment—the establishment that has feathered his nest for so many years—he’d stop treating investors with disdain though his condescending obfuscations to direct questions and hokey homilies of America the Beautiful—and come clean with investors.

Not Warren.  Joining the Washington mafia is for life.  No exceptions.

“Well, I’ve got a little different story this time,” Buffett chuckled, and went on to say that he’s been looking for a turnaround in the economy for more than two years, but nothing stands out as a potential catalyst of future growth.  The GDP stall, back to flat-line, hasn’t been led by any particular sector; “ . . . it’s pretty general,” he said.

Quick asked, “Well with everything else — not a reversal, a slowdown in the growth, what happened? What happened six weeks ago to spook people, to spook businesses?”

Buffett responded, disingenuously, of course,  “I don’t know the answer to exactly why it’s happening. And I don’t know what it will be three months from now or six months from now because three months ago I didn’t know what it would be today.”

The Sergeant Schultz of billionaires doesn’t know what Jim Rogers knows, or Marc Faber knows, or Peter Schiff knows—and Max Keiser, Eric Sprott, John Williams, Ben Davies, James Turk and about a dozen regulars of Eric King’s King World News.  Buffett knows nothing, the Hogan’s Goat of Washington.

As the mountain of sovereign, corporate and personal debt chokes the economy—while the Fed won’t allow the markets to clear with its ZIRP policy—while the dollar debases at rates never seen since the Civil War, Buffett knows nothing of why the U.S. economy isn’t miraculously recovering from the post-Minsky Moment.

Lies through omission are still lies, Uncle Warren.

In short, the 81-year-old ‘legend’ has turned into a ‘has-been’ overnight.  Or better yet, Buffett the oligarch is about to tank along with the U.S. economy, American exceptionalism, his Cadillac, his ice cream cones, See’s peanut brittle, and his phony blue-collar flag-waving imitation.

Instead of fighting the good fight throughout his storied career to prevent the U.S. from sinking into a fascist plutocracy, like the humble Texan Ron Paul has for three decades, maybe Buffett would gain some respect from other analysts who’ve been too busy being told they’re doom-and-gloomers, nut cases and extremists by the ‘prestitutes’ of main stream media.  While Ron Paul was telling it straight, refusing Medicare payments from his elderly patients during his time as a practicing physician, Buffett smiled, chuckled and played paddy fingers with Charlie Munger and the boys in Washington who bailed him out with TARP.

Recall Uncle Charlie Munger’s comment about goldbugs.  May 7, he said on CNBC, with who else, but the Tokyo Rose of the oligarchy, Becky Quick, “Gold is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939 but civilized people don’t buy gold – they invest in productive businesses.”

And another oligarch, George Soros, should know exactly what Munger is talking about.  Through his own admission, the teenage Soros turned in Jews to the Gestapo during the reign of the Third Reich in the 1930s.  Soros is civilized, but people escaping the tyranny of Nazi Germany or 21st century America are uncivilized cattle.  But, then again, Soros owns gold, hedging again from tyranny.

What a cast of characters.

Back to Buffett, who said this about JP Morgan gold cartel kingpin Jamie Dimon, “I think Jamie Dimon is one of the best bankers in the world.”

Sure, and Bernie Madoff was one of the best fund managers, too, until it was discovered that Bernie’s phony profits were just that, phony, a smaller Ponzi scheme than the one managed by a man at the helm of America’s largest bank.

“There’s No Way You Can Bet Against America & Win,” Buffett had said in his previous interview with Quick of six weeks ago, which begs the question: What America is he talking about?  Central America?  Those are the strangest words from a disgrace of a man who was ashamedly Made in America.

Source: CNBC

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.

Jim Rogers: America’s Cocktail for Civil War

By Dominique de Kevelioc de Bailleul

TruNews’ 13-year host Rick Wiles and famed investor Jim Rogers of Rogers Holdings discussed many of the same topics Rogers’ is asked to update from time to time, on many programs, including the gold market, Europe’s woes, the U.S. dollar, and the economic outlook of Asia.

But Rogers ended the interview with a bang, taking on the controversial subject weighing on a growing number of Americans: Is the U.S. headed into an extreme social/political catastrophe?  And by implication, should Americans head for the exits?  Wiles, himself, struggles with this question, as he’s intimated to his listeners in the past that he’s seriously considering relocating outside of the United States to avoid “life-threatening” dangers brewing within the republic.

Though Rogers did not go on the record by recommending Americans flee the U.S., the 69-year-old Singapore resident did, however, paint a rather gruesome picture of future difficulties confronting America (not dissimilar to Gerald Celente’s warnings) and the likely unpleasant and shocking reaction by an oligarchical government against its own people.

Wiles, who earlier in the broadcast nearly became speechless in complete disgust after reporting President Obama’s latest and bizarre executive order regarding the president’s sudden ‘state of emergency’ relating to Russian nuclear material
(Jun. 25, 2012), asked Rogers to speculate about what America will look like in 20-30 years.

Rogers said:

Thirty years from now . . . we [America] will certainly have been through a period of default . . . There’s more than one way to default, you can print money, pay people off, pay them off with worthless currency.  You have a default. . . De facto, you’ve defaulted, but . . . you’ve paid off the debts, but the people who receive that worthless money are not very happy.  And that’s going to happen in the U.S..  You’re going to see institutions that we’ve known in the U.S. for decades are going to disappear, or totally turned over.  Lehman Brothers had been around for 150 years.  Bear Stearns had been around 80 odd years, or something.  You’re going to see more of that.  You’re going to see more universities disappearing.  Some of the Ivy League schools are essentially bankrupt, or we’ll find out that they’re bankrupt.  So you’re going to have huge, huge turmoil, many museums, hospitals, art galleries, many things that we’ve known and loved, are going to be in serious trouble, disappear, and in the meantime you’ll have new companies, institutions rise.

Now, does that lead to war?  It always has.  America has been warlike as you know for the past many decades, several decades anyway.  No doubt we’ll get into more wars and it’s not going to be fun.

Wiles asked Rogers about the obvious trend in America towards preparations of a police state, and will this trend accelerate in the future as the U.S. standard of living declines?

Rogers said:

Well, it always has throughout history and in any country in the world that this sort of thing takes place.  Governments are going to want more and more power, they blame the problems on financial types, they blame the problems on foreigners and they always close off more, putting more controls, eventually also blame it on journalists, because they’ll say, ‘if journalist didn’t write about these problems, we wouldn’t have these problems.’  It always happens that way.  As I say, America has been already been fairly warlike in the past several decades, but it will get more so.  Right now, as you know, the government, drifting for the last decade or two, are now going into our garages, our bank accounts, our bedrooms.  They can do anything they want.  Not only that, America can execute you, they murder you if they want to.  The president has a secret committee, sit down and say, ‘we don’t like Sally Jones.  We think she’s doing things wrong.’  They can execute you—murder you.  And they don’t even have to go to a judge.  They just do it.  This is the law <chuckle>.  It’s mind-boggling to those of us who grew up in the United States . . . This has all happened in the past decade, or so.  It’s not what it used to be.  It’s bordering on the war between the states.  Lincoln abrogated right of Habeas Corpus, even threw <inaudible> into jail who didn’t agree with the war.  This is much worse than that, potentially.

The two men ended the interview with Rogers pointing out one of the observations of the ancient Greek philosopher Plato (424/423 BC – 348/347) regarding social/political trends—a warning of the likely outcome of a morally, economically and spiritually collapsed America—an America in complete chaos.

“Plato, when he wrote The Republic said, the way societies evolve, they go from dictatorship, to oligarchy, to democracy, to chaos, and then back to dictatorship, and it starts over again,” Rogers ended the interview.  “Unfortunately, Plato has been right more than he’s been wrong about that.”

Source: TruNews (Jun. 28, 2012)

Peter Schiff’s Latest Advice to Investors

Dominique de Kevelioc de Bailleul

Gold and silver investors watching metals prices move back down near to the Dec. 29 lows of $1,523.90 and $26.15, respectively, should seriously consider accumulating the metals now.   The ‘Big Reset’ of the global financial, slated for no later than 2014, will reward precious metals holders as the big winners among investors, according to Peter Schiff.

Speaking with Cambridge House International, the CEO of Euro Pacific Capital said, “The United States is in a lot of trouble.”   After the Fed presumably embarks on QE3, and that stimulus wears off, “I think we’re going to have a crisis.  I don’t think we’re going to have time for QE4 or QE5.  I mean, ultimately, that’s where we’re headed, because that’s all QE does.  Each QE sows the seeds of the next QE.”

And global money looking for a safe haven won’t stand for another repeated currency debasements through debt monetization by the U.S. central bank.  Because Europe’s woes have forced politicians to make tough choices there, the spotlight has been taken off, temporarily, the even-more dire circumstances of debt loads and deficits of the U.S., according to Schiff.

Schiff’s time line for the Armageddon scenario of a U.S. dollar crisis matches predictions made by commodities legend Jim Rogers and ShadowStat’s economist John Williams, with each man projecting 2014 as the year the U.S. dollar no longer maintains its former role as the world’s premiere reserve currency—implying a severe decline of its global purchasing power and much higher metals prices.

In 2014, that’s the year the U.S. economy is expected to reach fresh new lows and the year politicians will finally be forced to face the tough choices regarding proposed cuts to federal, state and local government budgets, according to the three men.  It will also be the year that ushers in severe social unrest, similar to what is happening in Greece, in the case of Jim Rogers’ prediction for 2014.

Ironically, Schiff believes that if the U.S. economy miraculously digs its way into real economic growth, the bond market will sell off due to concerns of inflation from two massive QE programs from the Fed, driving interest rates much higher, along with U.S. borrowing costs—costs that will explode the federal budget deficit beyond the already red-line levels of 10-plus percent of GDP.  The dollar cannot survive under that scenario, according to Schiff.

“We don’t want to allow a real recovery, because that means real bitter-tasting medicine needs to be swallowed,” he said.  And added, no later than the year 2014, we’ll see “higher interest rates.  There’s going to be lower real estate prices, stock prices, some banks are going to fail, and the government is going to have to seriously cut spending dramatically to everybody.”

Under a Schiff scenario of deeper economic recession/depression, dramatic cuts to all levels of U.S. government spending will create a similar and immediate economic and financial death spiral, now faced by Greece, with reduced GDP coming from total U.S. government spending—presently 40.3 percent of GDP—further limiting the U.S. economy to pay on its local, state and federal debt, thereby initiating a feedback loop of further cuts and GDP declines, and so on—an unraveling of the Ponzi-like scheme warned of by Russian economist Nikolai Kondratiev in 1925, and later, by Austrian economist Ludwig von Mises, among others.

By the year 2014, like Jim Rogers’ longstanding ‘heads-you-win-tails-you-win’ investment theme as a result of continued stimulus (currency debasements) to fight the Kondratiev Winter (depression) or the immediate inflation unleashed from years of Fed balance sheet expansion, Schiff recommends holding real money—gold (and silver)—the only money that will survive the loss of confidence in all fiat currencies and the ability of the U.S. to make good on debt obligations.

“There is no short-term fix anymore, because we’ve been doing these short-term fixes for a along time,” Schiff concluded.  “We got a little extra rope from this European crisis . . . Something is going to happen in Europe, because this cannot go on indefinitely.  And the numbers are just so big for the U.S.  Interest rates have got to rise, or the Fed is going to have to print so much money to keep them from rising that inflation is going to flare up in a way that government numbers can’t hide it anymore.”

Therefore, Schiff’s advice: Avoid dollars and euros.  Buy gold, real “money”.

Jim Rogers: I’m telling you, the economy is going to be bad next year

By Dominique de Kevelioc de Bailleul

Commodities investor extraordinaire Jim Rogers of Rogers Holdings strongly suggests battening down the hatches, because the global economy is headed for the rocks, taking stocks with it.  To protect wealth from a deepening of the mostly Western side of the global depression, the 69-year-old Rogers is long oil, gold and other tangibles to front-run the predictable response by central banks of further money printing.  He is short equities.

“If stocks collapsed around the world I would have to buy a lot more stocks,” he told CNBC, Wednesday.  “I would buy stocks again, but I don’t see that happening. I’m telling you, the economy is going to be bad next year. Why buy stocks in the face of something like that?”

Rogers’ gloomy assessment of the future reconciles with the data out of Europe, the U.S. and China—which, taken together, these economies represent approximately 60 percent of global GDP.

In Europe, the sovereign debt crisis accelerates, from relatively paltry numbers needed for a Greece bailout, to gargantuan bailout packages recently proposed for Spain—amounts so large that the ECB emergency bailout fund will be wiped out completely in a matter of weeks.  Then again, there is Greece; it teeters on leaving the eurozone all together, according to EU member of parliament Nigel Farage.

“There’s an impending looming disaster . . . . 100 billion (euro) is put up for the Spanish banking system, and twenty percent of that money has to come from Italy,” said Farage on the floor of EU parliament this week.  “Under the deal, the Italians have to lend to the Spanish banks at three percent.  But to get that money, they have to borrow on the market at seven percent.  It’s genius, isn’t it?

“Any banking analyst will tell you that 100 billion (euro”) doesn’t solve the problem,” Farage added.  “It would be more like 400 billion (euro).  The real elephant in the room is, once Greece leaves, the ECB, the European Central Bank, is bust. . . It has 444 billion euros worth of exposure to the bailed out countries.”  The Euro Titanic has now hit the iceberg, and sadly there simply is not enough lifeboats.”

Jim Rogers agrees.

“What they’re [European Parliament] doing is they’re making this situation worse,” he said in Wednesday’s CNBC interview.  “What I see happening is more and more bailouts . . . the debt is up to the ceiling. The recession is going to be worse. This is not going to be fun.”

Rogers has said in an earlier interview with NewsMax that he knows the economic statistics coming out of Washington are jury-rigged in an effort to bolster the dollar in the wake of the euro woes, and also suggested that after the U.S. elections in November, the EU sovereign debt collapse will move to the U.S.—and that’s the time when the global panic may begin in earnest.

“ . . . this year is going to look good and feel good, because Mr. Obama is going to give out a lot of good information,” Rogers said in a NewsMax interview of nearly two weeks ago (BE article).  “It may be manipulated information, but he’s going to put out a lot of good information.  He’s going to spend a lot of money; he’s going to print a lot of money to get us through the election . . . So if you are not worried about 2013, please — get worried.”

And the signs of a U.S. economic collapse to pair up with Europe’s breakup riddle throughout the monthly data, according to Charles Biderman, CEO of TrimTabs.  Biderman reported as early as March that he saw massive discrepancies in the job data released by the U.S. Department of Labor for the months of January and February, alone.  As the Labor Department reported approximately 350,000 jobs added, Biderman calculated approximately 3 million loss for the two combined months.

Biderman, too, believes the day of reckoning is coming for stocks.

“How can stock markets be this high if the real economy is barely growing?” Biderman stated in his latest video, posted on zerohedge.com.

After the election, the truth cannot be withheld from the casual observers of the markets regarding the phantom statistics not jibing with reality.  It’s then, Rogers believes, the global sell off in stocks will catch up with investors who are long the U.S. recovery story.  In fact, Rogers is so convinced of the bubble in stocks popping in the coming months that he’s short equities.

“I’m not advocating because I’m short, but I’m short because I think there are going to be more problems in the world economy in the next year or two,” he said on Wednesday.  “That’s how you protect yourself in times like this.”

Jim Rogers’ Most Dire Warning, “Please Get Worried”

In his most serious demeanor of recent memory, Jim Rogers of Roger Holdings said the U.S. economy is in for a very rough sledding akin to other major crises since the beginning of the republic.  In fact, the 69-year-old veteran of the commodities markets said even he is “worried.”

When asked by Newsmax’s Kathleen Walter about the state of the U.S. economy, Rogers said he’s not particularly concerned about 2012; it’s an election year, after all.  But after the election, in 2013 and 2014, “it’s coming again” —that slowdown expected by many analysts to lead to a sovereign debt crisis in the U.S., much like what has afflicted Greece.

“. . . this year is going to look good and feel good, because Mr. Obama is going to give out a lot of good information,” Rogers said.  “It may be manipulated information, but he’s going to put out a lot of good information.  He’s going to spend a lot of money; he’s going to print a lot of money to get us through the election.”

But post-election, conditions will change, the data will change, and the financial turmoil that the markets have already enduring will accelerate appreciably, according to Rogers.

“Be very worried about 2013 and be very worried about 2014, because that’s when the next slowdown comes,” Rogers stated.  “In 2002 we had a recession and in 2008, it was worse because the debt was so much higher.”

He added, “The next time is going to be even worse because the debt is so staggeringly high now. So if you are not worried about 2013, please — get worried.”

“Staggeringly high” U.S. sovereign debt, to which Rogers alluded, is projected by most economists to top $16 trillion for fiscal 2012, and the rate of deterioration has soared dramatically since the global financial crisis began in 2008.  The U.S. budget deficit for fiscal 2012 is expected to reach $1.6 trillion, or more, up drastically from $438 billion at the end of fiscal year 2008, and up 10-fold, or $162 billion, from 2007.

Rogers’ dire warning comes off the heals of Marc Faber’s May 25th comments, of which, he said the probability of a U.S. downturn next year is “100 percent.”

Because both men have earned reputations for candid and measured language regarding forecasts, investors have weighted their assessments of the future for the economy and investments quite heavily.

During the U.S. collapse, stocks will drop and currency markets will be in turmoil, according to Rogers. However, like a tsunami, the tide back into the U.S. dollar could be strong during the worst of the collapse, as it had been during the kickoff to the crisis with the fall of Lehman Brothers (from USDX 72 to 88), but the epicenter of a global currency crisis will come back to the shores of the U.S.

That’s the time when interest rates on U.S. sovereign debt could skyrocket, leading to a flight of the U.S. dollar and financial Armageddon predicted by some notable and respected analysts and economists.

Taking into account that 61 percent of global central bank reserves are held in U.S. dollars (28 percent held in euros), the extent of the damage to living standards in the U.S. and across the globe could be dramatic and sudden, according to Euro Pacific Capital CEO Peter Schiff and ShadowStats economist John Williams.

Greece’s less-than-two-percent weighting of the eurozone is equivalent to the weighting of the impact of America’s state of Maryland upon the U.S. dollar, so the fallout of a Greenback in free-fall, globally, has no precedent, no yardstick and no shape, giving rise to the notion that the purpose of FEMA facilities built throughout the U.S. during the past decade has been the result of preparations for a Greek-like moment of global financial history, with riotous crowds and mayhem on American soil 100 times more problematic than that of Greece’s.

“It’s just going to be turmoil. Everybody’s going to be worried, including me,” Rogers said.

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.