Gold – The Next Leg
QUESTION: Been reading your writings for over twenty years, enjoying everything. Quick question, in regards to 2015.75 and the time frame for unrest, economic implosion and capital flow directional changes. Is this the time frame that gold will once again embark on a new up leg which will conclude in the famous and typical blow off phase ?
Also, do you foresee a reset with a new currency basket here in the USA or something else, that will involve gold.
Thank you Martin. have a nice evening
ANSWER: I am preparing a gold report now. Many people keep harping on the QE and how this will be inflationary. This is really rubbish. That amounts to 0.06%. A 2% rise in rates will result in an additional $340 billion increase. If rates went back to where they were in 2007, we will be looking at $1.3 trillion in interest annually. It will be the rise in interest that is inflationary, not the monetization of $85 billion. We are now looking at annual interest expenditures greater than the $1 trillion national debt in 1980. The rates will rise when they cannot sell. We are shifting from PUBLIC to PRIVATE assets. Just look at the Dow.
The new currency comes into play when we are forced by the FREE MARKETSto confront the fact that socialism is collapsing the same as communism did in 1989. This is where gold will rise, not because of hyperinflation nonsense, but because the value of money will become volatile and uncertain. That is what will impact gold. There will be NO hyperinflation for that assumes that government will honor its debts and print. Historically, they always default – i.e. 1931.
The leg up in gold will come with the realization of a crisis hits the majority. That is what we require and that comes after 2015.75.
The Buying in of Long-Term to save banks 2007-2010, Has Now Placed a Time Bomb at the Door
Treasury Secretary Jack Lew made the following statement during remarks today before the Economic Club of Washington D.C.:
“[W]e are relying on investors from all over the world to continue to hold U.S. bonds. Every Thursday, we roll-over approximately $100 billion in U.S. bills. If U.S. bond holders decided that they wanted to be repaid rather than continuing to roll-over their investments, we could unexpectedly dissipate our entire cash balance.”
Wonder why the Fed is Boxed-In?
Fed is Trapped – They Have Injected Tremendous Volatility Into the System
The Fed said that it would continue buying bonds at an $85 billion monthly pace for now, expressing concerns that a sharp rise in borrowing costs in recent months could weigh on the economy. What the Fed is really saying is that behind-the-curtain everyone is screaming that interest rates will rise and that will blow out the deficit. Gold rallied under the nonsense this will be inflationary, when in fact the opposite is necessary to send the deficit soaring out of control. This is why Japan bought government bonds to help keep rates down.
While the decision surprised financial markets, Bernanke refused to commit to a tapering of purchases later this year, as he had previously suggested. We are in a credit ceiling crisis and any rise in rates will blow the deficit out dramatically. I wrote an op-ed for the Wall Street Journal. I pointed that the miracle of the balanced budget under Clinton was shifting the debt more short-term saving on interest expenditure. This is the same policy. The Fed is trapped. It has boxed itself in and there is ABSOLUTELY no escape. It bought back long-term bonds to help mortgages and that reduced the debt to even shorter-term.
The Fed is in such a crisis mode that it cannot escape. Stop the $85 billion per month that is really negligible, and you are off and running as the market will anticipate higher rates. Bernanke tested those waters and hinted at what he would do and rates shot up like a rocket. They have injected tremendous volatility into the economy that will blow the lid off come 2015.75.
Spain Will No Longer Index Pensions to Inflation
Spanish Prime Minister Mariano Rajoy
The collapse of Socialism is unfolding before everyone’s eyes – they just ignore it. In the states they manipulate the CPI to render inflation irrelevant and impossible. In Spain, they now will stop indexing pensions altogether because they cannot create a fake CPI as the US does. There will no longer be any automatic link to inflation from 2014 onwards for Spanish Pensions. Thus, the Spanish government wants to save 33 billion euros in ten years. The retirement age for the time being remains at 65 years for now but there are discussions about raising that to 70 in the EU as a whole behind closed doors in Brussels.
Politicians make promises all the time, then they break them. If a fund manager took your money said they will pay you 25%, then reduce it to 20%, then 15%, then 5%, then say it is theirs, isn’t that FRAUD? Not in politics. That is why Socialism fails.
Merkel handing Banking Supervision to Brussels
German papers are reporting a secret deal of Merkel’s. The Federal Chancellery experts working on the revision of banking supervision have leaked that Angela Merkel will give up her resistance to the takeover of the banking supervision by the EU after the election. The international banks are to be therefore controlled by Brussels. Germany will control only the savings banks and regional banks themselves. This means that Germany loses another piece of sovereignty. (seeDeutsche Wirtschafts Nachrichten)
China Shifting from Public to Private US Investment
China continues to shift from Public to Private debt investment. In July, they were buying mortgage-backed securities while selling US government debt. They are moving away from the Public and into the Private debt markets. China understands cycles – the West does not.
Banks to Link All Data on Everyone Worldwide into One Database
Governments require banks to collect, store and analyze customer data for tax purposes. Now the HSBC want to link the data from all customers worldwide. They claim this allows access to the bank accounts of customers faster and more efficient in case of emergency – as in the case of a banking crash. And the side benefit – no privacy for anyone anywhere. Thank you HSBC.