I am so sick and tired of reading that gold is up or down because the Risk On or Risk Off trade implemented by the funds. Kitco headline: “Comex Gold Sharply Lower amid Risk Aversion in MarketPlace.” Can’t the media find anything more original to explain the gold “manipulation?” Do we really live in a world that is controlled by hedge funds swinging large sums of money into and out of individual stocks, commodities and sectors with nothing but the shortest of short-term expectations? Yes, that is exactly the case. None of these toxic entities give a damn about the big picture, the primary trends or anything but a quick buck on a highly-leveraged trade. They have turned the stock market into a giant gambling casino and they are the house.
All this nonsense about The Fiscal Cliff. We are borrowing over $7 trillion a year, (not the $1.3 trillion that the government is trying to deal with) and even with increased taxes and spending cuts, nothing will change. We are moving full-speed over the edge of a Financial Cliff that will usher in hyperinflation.
Yesterday, I called your attention to John Williams’ statement that with 90% certainty, we will experience hyperinflation by the end of 2014. In today’s newsletter, I quote our old friend (he used to recommend us in the 90s when we were involved with Swiss annuities) Richard Maybury of the Early Warning Report who says, “It’s a near 100% probability that before the Fed’s monetary insanity ends, we will see gold at $10,000, silver at $100, platinum at $10,000 and oil at $300.” I think he’s wrong. With gold at $10,000, silver will sell for at least $200 – $300 an ounce!
As far as avoiding the Fiscal Cliff, researchers at the International Monetary Fund estimate that in order to stop the fiscal madness, the government will have to CUT ALL transfer payments by 35% and raise ALL taxes by 35%, but obviously that’s not going to happen. Our future is already cast in stone and this Risk On or Risk Off bull crap would be laughable if it weren’t so tragic.
…sometime in this decade the Federal Government will join the long list of other governments in history that have gone out of business. As in the Soviet Union, most state and local regimes will likely survive, but Uncle Sam will be Uncle Kaput. The country and the government are not the same thing. Countries endure, but governments commit financial suicide regularly. It’s not a big deal if you are prepared. It can even be an opportunity to earn fabulous wealth. Many have. Expect the rioting of 2011 to be greatly expanded, possibly to the scale of military battles, as in the Los Angeles (Watts) riots of 1965.
Jim Willie of the Hat Trick Letter wrote:
Dead ahead, the US Government will crash after falling off the fiscal cliff. The cliff is not being approached, rather the nation went over the cliff economically and financially from 2008 – 2011, when the fiscal deficits rose above $1.3 trillion each year and remained above the lofty level. No attempt is being made to avoid the fiscal disaster, marked by five straight years of 13-digit deficits (over $1 trillion). The US Government Debt Limit is the next critical battle, not the budget, which will see haggling and little progress.
Regarding inflation, Willie wrote:
The arrival of price inflation within the United States is next, of the painful variety. The US Dollar problems will cause price inflation, rather than price inflation rendering harm to the US Dollar exchange rates. A crucial distinction. (This is what Jim Sinclair calls currency-induced price push inflation, not demand-induced inflation.) The US Fed bond purchases and US Government dependence have undermined the global prestige behind the US Dollar. However, the global rejection of the US Dollar is far more. A factor for the arrival of price inflation within the US economy. It comes next.
How serious will the inflation be? Willie says:
According to his very credible London source, “a major crunch will occur sooner rather than later, with a domestic US Dollar devaluation of over 50%. He expects the integrity of foreign held US dollar based accounts to be preserved.
Jim Sinclair’s timetable is 2015-2016 for the inevitable dollar devaluation, like the one mentioned by Willie’s London source. At minimum, according to Sinclair, gold will sell for $3,500 US Dollars and it is possible the number could rise to $10,000. That is what a dollar devaluation is all about. When the dollar losses half its value, gold will rise inversely, to $3,500 so there is agreement here. Maybury’s $10,000 number is the same as Sinclair’s worst-case prediction.
So, after gold got clobbered, down at one point to $1,704.80, it turned up later in the afternoon at last glance was at $1,717.60. The stock market and the dollar were relatively flat, so once again, this was nothing more than a Cartel-led gold raid for short-term profit. Do not let this stuff get under your skin. Today would have been a good day to BUY physicals.