CHAPMAN: Gold, Silver, Economy & More
By: Bob Chapman, The International Forecaster
Wednesday, 25 April 2007
US MARKETS
It is about to become abundantly clear that free trade and globalization does not work for America and if its pursuit is not quickly brought to an end it will be disastrous for America. What is being done to enrich transnational conglomerates in global trade is disastrously wrong for our country. If free trade is such a win-win proposition, why do we keep on losing?
When we broke away from the yoke of Europe’s black nobility we knew collectively as a new nation that free trade didn’t work and we knew what the outcome of such nonsense would bring. Yet, since the early 1960s elitists in and behind government have pushed such an agenda. As learned men they have to have known and still know such a system doesn’t work. Following such a commercial path can only lead to bankruptcy. History is very specific, free trade does not work – only fair trade works. Not just for us, but all nations.
For many years we have been a lone voice in the wilderness. Few wanted to listen – few had the guts to challenge the system. Fortunately we are starting to see small shafts of light seeping into the argument if for no other reason than we are on the edge of national bankruptcy. The destructive impact of globalization on American prosperity is becoming visible as thinking men and women stop and say how many jobs can we afford to lose? Five million looks to be just the beginning. Elitists according to Professor Blinder see further losses of some 40 million more jobs.
Time is fast running out for America and we are having no success with either political party coming to grips with this overwhelming problem. Republicans are all for it and have laid free trade as a cornerstone of their policies. The Democrats have the Hamilton policy group formed last year by ex-Treasury Secretary Robert Rubin to make sure that what he calls the laizzez-faire trade doctrine known as Rubinomics, which we label Schacht corporatist fascism, continues to dominate the Democratic Party. As you can see corporatist elitists control both sides of the action and discourse. We must transform our policies to our national interests, not the interests of globalists who are trying to implement world government. What we have been facing for years and what is now staring us in the face is frightening. It signals the end of America and our culture. Our people eventually will be scattered across the globe seeking and begging for work at subsistence levels. All we have built since our revolution is about to be lost. The European power centers of the Illuminati have never forgiven us from breaking away from their grasp. They want us back to control us again.
What free trade amounts to is Asian countries and others first manipulate and weaken their currencies, they offer investment funds for expansion, they lower taxes and supply slave labor. The host country gets the production and supplies jobs, the transnational conglomerates get fat profits and high-value-added jobs leave our country forever.
China and India are doing this on a massive scale with help from American and European corporations. We are not taking about shirts and shoes; we are talking about Intel’s new $2.5 billion semiconductor plant in China. These are far reaching problems for the future. This is a process of self-destruction. Multinational firms are no longer American or European, etc., they are international vagabonds. They no longer have a home country. In fact, in time they will all become corporate citizens of offshore tax havens and we will never receive taxes from them again. This is the next step. Our trade partners are no longer partners. We are in conflict. We are in a trade war and elitists in and behind our government have been and will continue to sell us out if we let them. There is no mutual gain on an unleveled playing field. Our forefathers knew that. The same problems existed in 1793 that exist today. Only our leaders are forcing us to succumb to the destruction of our very lives. The desires of the multinational corporations and the needs of Americans are headed in directly opposite directions. The well-heeled corporations have the campaign donations flowing fast and furious, which clouds the thinking of our Congress and conveniently ignores the needs of Americans. They are purchased over and over by elitist free trade interests. We cannot compete with nations where wages are 10% to 25% of what our wages are. What can our politicians be thinking of? What can corporate America be thinking about? At this rate foreigners will have no one to sell to in America. They will be broke and have no purchasing power. Now we are seeing the easy part, loss of $30 per hour jobs for $12.00 per hour jobs. A downward pressure on incomes and living standards. If this is allowed to continue it is obvious even to the dumb that we will end up at the bottom of the heap.
We wrote an article describing exactly what is happening in the American Mercury in 1967 and no one was listening. Few are listening today. This is part of the great leveling of civilization, so that everyone will be happy to accept world government.
This is what this is all about. We are not going to get richer via globalization. We are going to get poorer, and you can already see it. The dogma is there and even real conservatives have been sucked in by the free trade theory, because they believe wrongly that it’s Libertarian. Well it isn’t. It’s a trap you have been ensnared in. Every Americans’ well being is being threatened by a false theory designed to enslave you. The win-win assurances you’ve been given are lies. Free trade is the new elixir. What you haven’t been told is that free trade has been tried for centuries and has always failed. You do not know that because you haven’t studied economic history. All the average American wants is tonight’s TV and a six-pack.
Our country is being deliberately transformed into a loser. We produce very little, so we have become dependent on multinational conglomerates and third world nations and worse yet, we are going bankrupt doing so.
Does anyone of sound mind really believe that this perverse relationship can continue? Endless offshoring and outsourcing? Now we are not seeing cheap goods as we did before. The prices are rising and that is inflationary. That means our fiat dollar buys even less as time goes on as our debt increases and our dollar depreciates. As testament to this our current account deficit is 7% of GDP every year. It doesn’t get better, it gets worse and it will continue to do so until our recession really takes hold. We consume more than we produce and we spend more than we make governmentally, personally and corporately. Our living standards are falling and will continue too. How long will foreigners who lend to us keep financing our profligate ways? We do not know, but there is a limit to their generosity. Eventually, and soon, consumption will begin to fall and debt will be paid down or borrowers will seek bankruptcy. The longer we wait for this adjustment, the worse it will be.
The policies we see are not those of the people or for the most part policies of politicians. These policies are the brainchild of the Illuminists who sit in power behind the scenes. Every nation is pursuing their own self-interests, as are the transnational elitists. We believe it’s about time we began with our own self-interests, our very survival. We have to focus on bringing our case to Congress because other countries and corporations are pursuing their own self-interests. The situation has simply been allowed to go too far. Multinationals are totally out of control. We have to go for the heart of the problem and that is the multinationals bottom line. We have to institute tariffs both on goods and services and then maybe these transnationals and foreign manipulators will get the message. If this causes a depression so be it. We are going to have a depression anyway, so what’s the difference. We are going down if we don’t act. If we put on tariffs the whole world goes with us. They are playing chicken and we are calling their bluff. We cannot have any compromise because our opponents have no interest in backing down. They really believe they are the masters of the universe. The time for tariffs is now and if we do not get them we shutter to think of what America is in for while foreign nations and transnational elitists laugh all the way to their banks.
That brings us to the matter of purchasing legislation. We are now seeing massive amounts of money from hedge fund operators who happen to be free trade globalists. Here we are looking at depression and the collapse of the financial system, and these funds are destroying our future. You might compare the situation with Congress dealing with an unregulated Mafia. Investment banks created hedge funds and private equity funds to hide the eminent bankruptcy of our financial system and to use the massive liquidity floating around the world to increase control over the necessity of life, as in cartelization, to bridge the transition under their control into One World Fascist Government.
There are more than 9,000 hedge funds. Most headquartered in the Cayman Islands and they are totally unregulated. They control $2.1 trillion and leading the pack, not surprisingly, are Goldman Sachs and JP Morgan Chase. Their private-equity funds have $1.4 trillion in assets. They are led by Carlyle Corp., KKR and Blackstone. As an example, Carlyle has $56 billion under management and owns 185 companies, which employ over 200,000 people. What these private equity funds do is take their funds and short term bank loans to buy a company up via debt, they then load the purchased company up with debt, get all their money out with a giant profit and then sell the company. Everything they buy and strip is eventually resold. The attraction is they slash payrolls and raise prices and wait for suckers to appear. In a way it reminds us of piracy.
Hedge funds in a way operate like banks do. They buy into companies and then demand that they merge.
These funds perpetuate themselves by buying politicians, guaranteeing them longevity, so they can go on looting indefinitely.
Since 1997, gold has increased in value from $300 to $700 for a compound return of 8.7%, which covers inflation. Furthermore TIPS has returned an average annual return of 5.4%. Gold has returned an average annual compounded rate of return of 8.65% since 1971. That is since the gold window was closed on 8/15/71. Gold since that date went from $35.00 to $693.00 an ounce or 18.8 times and has been as high as $850.00 in 1980. If you go back over 20 years of Treasury yields, the average yield has been 6.21% as M3 increased 7.8%, which is very close to the rate of inflation. That is why as a rule of thumb inflation closely tracks the increase in money and credit, M3. That is how we can prove beyond any doubt that the CPI, the consumer price index, is completely bogus. TIPS and US Treasuries are not the real answer if M3 is growing at 8% or 11%. You are better off in Swiss franc government bonds that do not take that annual 10% currency loss and forget the yield, or be in gold and silver related assets, or both dependent on what is suitable for you.
The big subterfuge is the core inflation rate. It is misdirection and distraction. Media releases site full inflation once and then give all the space and debate on the core rate, which means absolutely nothing because it strips out food and energy. The trick by Washington and Wall Street is to obscure inflation in the 7.5% to 11% range. As you know the Fed doesn’t publish M3 anymore, but we are one of only a few that have taken the time to estimate it and it’s been over 10% for a long time. Politicians and Wall Street want to bury the real ok inflation number. They do not want you to know you are being screwed out of 10% of your wealth every year if you stay in Treasuries. Worse yet, you are taxed on losses. It’s the big lie technique pioneered by the corporate fascists in Germany in the 1930s and it still works because people are uneducated or just plain dumb. What they are doing is brazen and nothing is said about it. That is because government, the media, Wall Street and corporate America are all in on it. They have a vested interest in the system. That is why economists and analysts say nothing about the scam, because they will all lose their jobs. This is how it’s perpetuated. It’s a conspiracy of silence. How can our statistics on core be correct at +.01% for the month when the British pound hits a 26-year high against the dollar and as the euro is 100 bps away from its high? That is simply impossible. Our dollar has been in a process of destruction for 36 years and it is getting worse. Why do you think gold is going up? It’s because it is a true barometer of inflation. That is why the US Treasury and the central banks have a gold suppression cartel. They do not want anyone to know their assets are being stolen. Now you can better understand what this game is all about and why you have to have gold and silver related assets to protect yourself.
GOLD, SILVER, PLATINUM, PALADIUM AND DIAMONDS
Monday morning four hours prior to opening, all markets showed little direction. The Dow was +16, S&P -9 and Nasdaq +48 Dow points. The Nikkei was 3, FTSF -7 Dow points, the CAC -20 and DAX -4. The yen was -7, the euro -.0031 and the pound -.0019. Oil was +.19, gas +0.01 and natural gas -10. The 2-year was 4.65% and the 10’s were 4.66%. Gold was -$0.80, silver -$0.07 and copper -$0.03.
JP Morgan Chase has joined the Dubai Gold and Commodities Exchange (DGCX) as a broker-clearing member, so they can manipulate on that exchange as they have on others.
On 4/17, the COT report showed large Comex commercials had a net short position increase of 21,394 contracts or 14% from 153,204 to 174,598 from week to week. That is 45,100 contracts as we mentioned previously. Above $690.00 we expect they will add another 35,000 contracts to some 80,000 additions. At that point, probably in two weeks, gold will either contract $20.00 or breakout to the upside. Do not forget the commercials are sometimes wrong and we could very well have a breakout after they added 80,000 more shorts. Their position would strengthen and compound the move on the upside by forcing short covering, which would add to upside velocity. Any correction will be shallow and quick, followed by another move to the upside. The XAU and HUI are no longer valid indicators because they are so easy to manipulate, just look at GG.
StreetTracks – the ETF-GLD – rose 0.31 tons to 494,87 tons of gold. On 4/17 GLD rose 6.16 tons briefly moving above the 500-ton mark. It then fell back 5.85 tons.
On London LYXOR increased 0.93 to 89.76 tons of gold over the past two weeks. Barclay’s iShares, Comex Gold trust, IAU, remained flat holding 44.71 tons. This continued long-term accumulation of gold remains bullish.
Barclay’s IShares Silver Trust continued under accumulation over the last two weeks, up 92.87 tons to 4,226.31 tons worth $1.88 billion. There has been large selling of silver bags, putting pressure on silver prices and not allowing higher prices equaling the gold move.
The long-term outlook for gold is extraordinarily bullish and we see higher prices through the summer, which is not usual.
India’s appetite for gold is as insatiable as ever. It is the ultimate luxury gift and nowhere more so than in India where brides are draped in gold from dowries laden with jewelry. With tens of millions of brides getting married each year in India, many festooned in gold, it’s no wonder that India is the world’s largest consumer of gold some 20% of annual demand or 800 tons. Jewelry is usually 22 Carat. This is the brides’ financial security.
Indian households have 15,000 tons of gold worth $320 million or 40 times the amount held by the central bank and double the amount the US Treasury is supposed to be holding.
Gold is bought for weddings and Hindu holidays, such as Diwali, the festival of life.
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