The announcement by the BOE exactly one week ago has brought about great psychological damage to the Gold Market: the worst fears of Gold Bulls have been realized: the message is clear: Sell Gold and invest it in the Almighty Dollar.
We have a War on our hands here. It is a WAR ON GOLD:
WAR ON GOLD
Britain, The USA and The IMF are running scared, trying to keep confidence in the faltering Keynesian economic game. Britain is the latest to announce that they are selling huge stock piles of low yielding gold to purchase higher yielding paper money investments. They have announced the selling off of more than half of their gold reserves, 415 tones of their 715 tones reserve over the next 2 years. This follows the April 28, 1999 announcement by the IMF that it is ready to sell some gold, perhaps one-and-a-half-billion dollars worth. President Clinton proposed last March that the International Monetary Fund should sell a large portion of its gold reserves to finance debt relief for heavily indebted countries.
Why is Britain, The USA and The IMF selling their gold reserves? Because it is bulky and not a profitable investment? Because there is too much of the shiny metal about? Has the world lost interest in gold?
Rather it is fear! Fear that the current fiat money game is about to collapse before their eyes. And out of desperation they have declared war on honest money. And eventually nothing good will be held sacred as "all is fair in love and war".
It was the near collapse of Long-Term Capital Management (LTCM) last September that accelerated this fear. LTCM is a hedge fund specializing in large-scale speculation, and it's near collapse caused light to be shown upon the ugly workings of the money manipulation game and unfunded paper assets. LTCM was heavily exposed to Asian currency devaluations and gold loans. Had LTCM been allowed to collapse it would have sent shock waves throughout the economic house of cards and would have caused full blown panic and economic chaos. Gold would have risen to the top of the economic food chain as the real store of value. Paper currency would have been exposed as the great fraud that it is, and the bubble like economic system that likes to play money games would have been blown apart.
Impending Y2K chaos has also raised the Government's fear level. Gold sales are at record levels and signs of mistrust are showing themselves through out society. Even the Government's own experts are not 100% sure that there will be no fallout from Y2K. People are beginning to hoard valuable supplies instead of hoarding Federal Reserve Notes as feared by Greenspan. Y2K survival items are getting impossible to find with waiting lists growing longer. Survival retreats are skyrocketing in value and anxious folks are being told by the official media not to worry.
But why would they sell gold?
It is like fixing the game. First, by dumping large amounts of gold they mesmerize the herd. Then suddenly uninterested in gold they turn to paper money assets. The herd is unable to do anything but follow, stampeding alongside, trying to be the first one's to get those now precious paper money assets. A classic Wal-Mart style Christmas season run on Furbys.
Secondly, by waging war on gold they hope to bail out the other hedge funds that are at risk. What they are not telling us is the true health of the Keynesian economic game. And of the similar fate awaiting other hedge funds and similar investment schemes, unfunded paper assets, Federal Reserve Notes and the stock market.
The Keynesian economic game has aged and has been on it's death bed for a long time. But it is going to die hard. Rubin, Greenspan, Central Bankers and other economic power houses have a vested interest in keeping the economic body alive. Adrenaline shots are repetitiously administered to the patient in the form of lower interest rates. They are hoping you will shop until you drop to keep the game alive. You would think the economic patient is alive and well but it is more like an electrified Frankenstein Monster that you see dancing about. About the only organ still alive in this animated body is the ferociously cancerous loans that are racing though out the system.
And where is this propelling us? Because of outright denial of the problems associated with the Keynesian game the economic élite are forcing this game into overtime. The patient who once had a good heart and brain is now so weakened beyond saving that most of the organs are now considered to be unfit even for transplant. I am left to wonder, will the decaying, artificially animated mater cause the spread of disease to social bodies (riots) and political bodies (war)?
What this all mean to you?
Because of the war being raged against gold, the dollar will remain strong going into the next depression and world wide deflation. But the menace to the bubble that Rubin and Greenspan are trying to keep inflated is the faith of the American people. And they are gambling that they can keep us out of a deflationary spiral by enticing us to bail out the world through spending. As we go into deflation we will find ourselves way over our heads because of our spending sprees done on remortgaged upon remortgaged loans and unable to service our debts because of the softening of our economy. There will be increased bankruptcies, people will become spooked and will curb their spending habits. Getting into debt will become scary even though Greenspan keeps dropping rates. The economy will stall and the markets will tank. Realize that the only thing floating the economy right now is spending.
Most of the rest of the world has already curbed their spending. Now, it is up the American consumer to do the spending for the whole world. The good faith and credit of the American people will begin to come into question. Strong currencies like the US dollar will begin to be seen for what they have become. Backed by nothing real and unredeemable. Remember the economic collapse of Rome. The people ran to the streets to dump their debased Roman money for anything of value. The faith in the currency was lost, people realized they really couldn't see the value of coins made mostly of tin, with a likeness of an important person stamped on them. Chaos ensued and war reigned happily there after.
For us the worst case scenario will spell the death to paper assets and civil unrest, remember Indonesia? Yes, my prediction for the future is grim, much worse than many of you expect. I sincerely believe this is where we are heading. I have prepared for the worst, have you? I also look forward to the new beginning on the other side of the economic collapse. Do you have the means (Game Money on hand) to survive through the accelerating deflationary period? Do you have the means (Gold and Silver) to preserve your wealth through the following hyper-inflationary period? Do you have what it takes to make a good life for yourself and your friends after the economic reset button has been pushed and everything restarts. I hope you will view my comments as coming from a very prepared optimist. And that you will try to be open to the possibilities and get prepared just in case.
In this war the casualties will be vast. The survivors will be in a whole new world of opportunity.
See you there.
Darren Perkins
May 12,1999
gold-eagle.com
P.S. We Gold-Bugs will have the last laugh! |
