Friday, September 17, 2010

Preventing the US Government From Stealing Your Gold


The following is an excellent article by Jeff Nielson which I often feature on this blog. Whilst Jeff's arguments are very compelling the ultimate way to prevent the US govt. from ever confiscating your gold in the future is not to vault your gold in the USA! At ABC Bullion we can securely and discreetly sell you bullion then offer you free vaulting and insurance options for your bullion (gold, silver, platinum, palladium) in the "Switzerland of the Pacific" - Australia.

Australia is the USA's oldest ally, Australians have died alongside of Americans in every major war since the civil war. Australia is a stable western democracy, with English as the national language and an English style court and legal systems. Australia was the only OECD and G20 member country not to have gone into recession during the GFC - due to having no national govt. debt when the crisis hit. ABC bullion is a private company not affiliated with any govt. agency and as such have no local tax or IRS reporting requirements for our customer's holdings.

Gold, silver and platinum bullion is sales tax, VAT & GST free for all of our customers - so your money goes 100% to purchasing metal, not funding the tax office. Please visit our new website for more information about bullion investing and don't forget to check out our free storage options. ABC Bullion, proudly Australian.


By Jeff Nielson: With the U.S. government having already stolen the gold of its own citizens once, a question which I have often been asked by American readers is, "Do I think the U.S. government will steal [their] gold again?"

My reply has always been that in the absence of a gold standard there is no motive for simply confiscating all gold again. With U.S. debts and liabilities exceeding $100 trillion, while all the gold inside the U.S. is worth considerably less than $100 billion (at current values) even a quadrupling of the gold price from today's price would still make it totally inconsequential in restoring solvency to the U.S. government. If the government were to stoop to directly (and openly) stealing from its citizens, it would be much more likely to pillage their bank deposits, which are more than ten times as large as their gold holdings.

However, there is a further point which I should have made which relates to this issue. Specifically, even without formally "confiscating" our gold, all of our governments have already created a vehicle to steal a portion of our gold: our taxation systems. The pretext our governments use/will use to steal our gold (and silver) via taxation is "capital gains." This is such a perversion of the concept of a "capital gain" that such tax treatment for gold and silver is simply evil......read on

Gold Gains to Record on Wealth Demand; Silver at 30-Month High


By Sungwoo Park: Sept. 17 (Bloomberg) -- Gold surged to a record, extending its rally, as the dollar’s drop spurred demand from investors for wealth protection. Silver advanced to a 30-month peak and platinum to the highest level since May.

Gold for immediate delivery advanced 0.4 percent to an all- time high of $1,280.80 an ounce and traded at $1,280.75 an ounce at 3:01 p.m. in Singapore. Futures for December delivery climbed to a record $1,282.30 an ounce. Cash silver reached a high of $20.9587 an ounce and platinum $1,620.75. Should silver exceed $21.355, it will reach the highest in about 30 years.

“Uncertainties over the global economic recovery as well as the financial market persist,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures co. in Seoul. “Gold is where money should be at this juncture. Now that bullion breached the record again, it will probably continue rising.”

Bullion typically moves inversely to the U.S. currency. The Dollar Index, which measures the greenback’s strength against six major counterparts, lost 2.7 percent this month as the U.S. economic outlook worsened, while gold advanced 2.6 percent.

The metal is set for a 10th annual gain as investors seek protection against the dollar’s decline and the prospect of slowing growth. Gold, traditionally a hedge against rising prices, rallied 17 percent this year amid tame inflation.

The metal has rallied as central banks and governments maintained low borrowing costs and spent trillions of dollars to stimulate economies. President Barack Obama said last week that the U.S. economic recovery has been “painfully slow.” The administration forecasts this year’s deficit will hit a record $1.47 trillion and $1.41 trillion next year.

Gold will average $1,400 in the fourth quarter as “risk aversion and fear take precedence over greed as the outlook for Western economies remains obscured by a myriad of unknowns,” Deutsche Bank AG said in a report on Sept. 10.

Some investors are purchasing gold on expectations that government spending and protracted low interest rates will fan inflation. The Fed’s rate for overnight loans between banks is zero percent to 0.25 percent. The benchmark may not increase until the second quarter, a Bloomberg survey of economists shows.

Silver traded 0.7 percent higher at $20.9425 an ounce and platinum traded up 0.5 percent at $1,620 an ounce. Palladium gained 0.8 percent to $554.25 an ounce.

U.S. Adopts Tougher Stance on China


By SEWELL CHAN: WASHINGTON — The Obama administration is moving to take a harder stance on the Chinese government’s trade and currency policies, with anger toward China rising in both political parties ahead of midterm elections.

Treasury Secretary Timothy F. Geithner, in separate hearings before House and Senate panels, plans to acknowledge on Thursday that China has kept the value of its currency, the renminbi, artificially low to help its exports and has largely failed to improve the situation as it promised to do in June.

“We are concerned, as are many of China’s trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited,” Mr. Geithner plans to say, according to excerpts of his statement released on Wednesday night by the Treasury Department.

The United States brought two cases to the World Trade Organization on Wednesday, accusing China of improperly blocking imports of a specialty steel product and denying credit card companies access to its markets. The move came just hours before House lawmakers demanded action on the currency issue.

The renminbi has risen about 1 percent against the dollar since Beijing promised new exchange rate flexibility in June.

In his testimony, Mr. Geithner is not expected to rule out declaring China a currency manipulator, a finding that could lead to retaliatory trade measures. The administration has so far refused to take such a step, relying instead on persuasion, though with little success.....read on

Too Big To Fail Global Banks Will Collapse Between Now and First Quarter 2011?


By Matthias Chang
Wednesday, 01 September 2010 01:25

Readers of my articles will recall that I have warned as far back as December 2006, that the global banks will collapse when the Financial Tsunami hits the global economy in 2007. And as they say, the rest is history.

Quantitative Easing (QE I) spearheaded by the Chairman of Federal Reserve, Ben Bernanke delayed the inevitable demise of the fiat shadow money banking system slightly over 18 months.

That is why in November of 2009, I was so confident to warn my readers that by the end of the first quarter of 2010 at the earliest or by the second quarter of 2010 at the latest, the global economy will go into a tailspin. The recent alarm that the US economy has slowed down and in the words of Bernanke “the recent pace of growth is less vigorous than we expected” has all but vindicated my analysis. He warned that the outlook is uncertain and the economy “remains vulnerable to unexpected developments”.

Obviously, Bernanke’s words do not reveal the full extent of the fear that has gripped central bankers and the financial elites that assembled at the annual gathering at Jackson Hole, Wyoming. But, you can take it from me that they are very afraid.

Why?

Let me be plain and blunt. The “unexpected developments” Bernanke referred to is the collapse of the global banks. This is FED speak and to those in the loop, this is the dire warning.


So many renowned economists have misdiagnosed the objective and consequences of quantitative easing. Central bankers’ scribes and the global mass media hoodwinked the people by saying that QE will enable the banks to lend monies to cash-starved companies and jump start the economy. The low interest rate regime would encourage all and sundry to borrow, consume and invest.

This was the fairy tale.

Then, there were some economists who were worried that as a result of the FED’s printing press (electronic or otherwise) working overtime, hyper-inflation would set in soon after.

But nothing happened. The multiplier effect of fractional reserve banking did not take off. Bank lending in fact stalled.

Why?

What happened?

Let me explain in simple terms step by step.

1) All the global banks were up to their eye-balls in toxic assets. All the AAA mortgage-backed securities etc. were in fact JUNK. But in the balance sheets of the banks and their special purpose vehicles (SPVs), they were stated to be worth US$ TRILLIONS.

2) The collapse of Lehman Bros and AIG exposed this ugly truth. All the global banks had liabilities in the US$ Trillions. They were all INSOLVENT. The central banks the world over conspired and agreed not to reveal the total liabilities of the global banks as that would cause a run on these banks, as happened in the case of Northern Rock in the U.K.

3) A devious scheme was devised by the FED, led by Bernanke to assist the global banks to unload systematically and in tranches the toxic assets so as to allow the banks to comply with RESERVE REQUIREMENTS under the fractional reserve banking system, and to continue their banking business. This is the essence of the bailout of the global banks by central bankers.

4) This devious scheme was effected by the FED’s quantitative easing (QE) – the purchase of toxic assets from the banks. The FED created “money out of thin air” and used that “money” to buy the toxic assets at face or book value from the banks, notwithstanding they were all junks and at the most, worth maybe ten cents to the dollar. Now, the FED is “loaded” with toxic assets once owned by the global banks. But these banks cannot declare and or admit to this state of affairs. Hence, this financial charade.

5) If we are to follow simple logic, the exercise would result in the global banks flushed with cash to enable them to lend to desperate consumers and cash-starved businesses. But the money did not go out as loans. Where did the money go?

6) It went back to the FED as reserves, and since the FED bought US$ trillions worth of toxic wastes, the “money” (it was merely book entries in the Fed’s books) that these global banks had were treated as “Excess Reserves”. This is a misnomer because it gave the ILLUSION that the banks are cash-rich and under the fractional reserve system would be able to lend out trillions worth of loans. But they did not. Why?

7) Because the global banks still have US$ trillions worth of toxic wastes in their balance sheets. They are still insolvent under the fractional reserve banking laws. The public must not be told of this as otherwise, it would trigger a massive run on all the global banks!

8) Bernanke, the US Treasury and the global central bankers were all praying and hoping that given time (their estimation was 12 to 18 months) the housing market would recover and asset prices would resume to the levels before the crisis. .

Let me explain: A House was sold for say US$500,000. Borrower has a mortgage of US$450,000 or more. The house is now worth US$200,000 or less. Multiply this by the millions of houses sold between 2000 and 2008 and you will appreciate the extent of the financial black-hole. There is no way that any of the global banks can get out of this gigantic mess. And there is also no way that the FED and the global central bankers through QE can continue to buy such toxic wastes without showing their hands and exposing the lie that these banks are solvent.

It is my estimation that they have to QE up to US$20 trillion at the minimum. The FED and no central banker would dare “create such an amount of money out of thin air” without arousing the suspicions and or panic of sovereign creditors, investors and depositors. It is as good as declaring officially that all the banks are BANKRUPT.

9) But there is no other solution in the short and middle term except another bout of quantitative easing, QE II. Given the above caveat, QE II cannot exceed the amount of the previous QE without opening the proverbial Pandora Box.

10) But it is also a given that the FED will embark on QE II, as under the fractional reserve banking system, if the FED does not purchase additional toxic wastes, the global banks (faced with mounting foreclosures, etc.) will fall short of their reserve requirements.

11) You will also recall that the FED at the height of the crisis announced that interest will be paid on the so-called “excess reserves” of the global banks, thus enabling these banks to “earn” interest. So what we have is a merry-go-round of monies moving from the right pocket to the left pocket at the click of the computer mouse. The FED creates money, uses it to buy toxic assets, and the same money is then returned to the FED by the global banks to earn interest. By this fiction of QE, banks are flushed with cash which enable them to earn interest. Is it any wonder that these banks have declared record profits?

12) The global banks get rid of some of their toxic wastes at full value and at no costs, and get paid for unloading the toxic wastes via interest payments. Additionally, some of the “monies” are used by these banks to purchase US Treasuries (which also pay interests) which in turn allows the US Treasury to continue its deficit spending. THIS IS THE BAILOUT RIP OFF of the century.


Now that you fully understand this SCAM, it is left to be seen how the FED will get away with the next round of quantitative easing – QE II.

Obviously, the FED and the other central banks are hoping that in time, asset prices will recover and resume their previous values before the crisis. This is a fantasy. QE II will fail just as QE I failed to save the banks.

The patient is in intensive care and is for all intent and purposes brain dead, although the heart is still pumping albeit faintly. The Too Big To Fail Banks cannot be rescued and must be allowed to be liquidated. It will be painful, but it is necessary before there is recovery. This is a given.

Warning:

When the shit hits the ceiling fan, sometime early 2011 at the earliest, there will be massive bank runs.

I expect that the FED and other central banks will pre-empt such a run and will do the following:

1) Disallow cash withdrawals from banks beyond a certain amount, say US$1,000 per day;
2) Disallow cash transactions up to a certain amount, say US$10,000 for certain transactions;
3) Transactions (investments) for metals (gold and silver) will be restricted;
4) Worst-case scenario – the confiscation of gold AS HAPPENED IN WORLD WAR II.
5) Imposition of capital controls etc.;
6) Legislations that will compel most daily commercial transactions to be conducted through Debit and or Credit Cards;
7) Legislations to make it a criminal offence for any contraventions of the above.

Solution:

Maintain a bank balance sufficient to enable you to comply with the above potential impositions.

Start diversifying your assets away from dollar assets. Have foreign currencies in sufficient quantities in those jurisdictions where the above anticipated impositions are least likely to be implemented.

CONCLUSION

There will be a financial tsunami (round two) the likes of which the world has never seen.

Global banks will collapse!

Be ready.

The US Government Matches Every Dollar In Tax Revenue With A Dollar In New Debt

From ZeroHedge.com: In our attempts to simplify the comprehension of the ongoing serfdomization of the US population, we would like to present one of the more persuasive charts which the administration would likely be loath to demonstrate. Having collated monthly data from the FMS' Daily Treasury Statement on incremental tax revenues (individual, gross), and new debt issuance, we observe the following rather surprising pattern: since September 2008, or the month when capitalism collapsed, and the Fed, and ever other global Central Bank had to step in as a backstop of last recourse to the western way of life, the US government has undertaken the most peculiar matching program: simply said, for every dollar of individual tax revenue, the government has issued just over one dollar of incremental debt. In other words, in the past two years, tax revenues alone would have proven insufficient by over half to fill the budget gap. In yet other words, the US Treasury is now the functional equivalent of the entire US population and then some, when it comes to keeping the US economy afloat. From another perspective, with an average take down of roughly 50% of each recent auction by Indirect bidders, nearly a quarter (half of half) of US budget deficit needs is funded directly by foreigners. Should (in)formal trade wars escalate, and should the US see an embargo of foreign debt participation, then overnight a quarter of US spending will be unfundable: this includes such critical key expenditures as defense and social security spending. Also, it is important to recall, that of the $3.35 trillion in debt issued over the prior two year period, the Fed has directly (via UST purchases) and indirectly (via MBS purchases, and thus the forced rotation of MBS securities into UST securities for agency holders such as PIMCO) purchased the other half. Thus between foreigners, and the Fed, the US consumer's traditional contribution to funding the US economy has been diluted by half. And unfortunately, as the chart below shows, absent some dramatic deux ex machina, there is no chance this trend in which US debt issuance is the functional equivalent of taxpayer contributions, will ever end........read on

The Gold Bulls Are Vindicated

By The Mad Hedge Fund Trader: For the faithful who have crossed the desert and suffered the slings and arrows of critics and the ridicule of non believers, gold's move to an all time high of $1,276 delivers the greatest of all vindications. All it took was some comments by Ben Bernanke about quantitative easing triggering dollar weakness, and it was off to the races. It didn't hurt that the Indian wedding season, the largest annual purchaser of gold, is just beginning. Actually, it wasn't much of a desert, maybe more of a Zen rock garden, as the barbarous relic, (yes, Alison, it's barbarous, not barbaric) sold off for only six weeks, down to $1,155, before it resumed its recent ascent. The Chinese buying I predicted put a floor under the price much higher than traders anticipated, frustrating hoards of buyers lower down.....read on

Gladiator Culture Keeps Our Eyes Away From the Truth

A Gentle upward slope - No Bubble Spike here


With gold hitting all time highs in nominal US$ there is again ill-informed commentary about a bubble forming in gold. As can be seen in the 10 year US$ gold chart above the gentle 45% degree slope is as expected in a cyclical bull market, with no signs of a bubble spike in prices and resultant blowoff. As in all bull markets 90% of the price rises are made in the last 10% of the bull run and we are no where near that phase in this market.

Central Banking's "Grotesque" War On Your Money

By Adrian Ash: DURING the Second World War, Nazi Germany hatched a plot to flood Britain with fake bank notes.

Working first at the Sachsenhausen concentration camp just north of Berlin, some 140 Jewish printers and forgers made perhaps £132 million in high-quality fakes (some US$650m at the wartime exchange rate, but nearer $6bn today), equal to around 15% of Great Britain's then paper-money supply.

Named after the SS engineer who ran the operation, Operation Bernhard only saw a handful of its counterfeit fivers and tenners reach England. (The Bank of England apparently burnt what it found, along with its records.) Because, "by 1943, the Luftwaffe was almost kaput," writes historian Lawrence Malkin, and so "instead of pursuing their original goal of dropping the counterfeits on England to cast suspicion on real Pound notes, the SS used the fakes to finance its own espionage service."

The Nazis' slave-fake money thus flooded the black markets of Central Europe and North Africa, driving down the street value of Sterling (and spooking the hell out of the Bank of England, which couldn't detect those forgeries which found their way to London). Eventually, through a bizarre twist of fate (and the canny money-launderers of the Jewish underground), it helped fund the post-war flight to Palestine of Holocaust survivors.....read on