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On Friday, I presented the following chart below (courtesy Zero Hedge):

The Fed Nixon Chart

Zero Hedge, December 12, 2013

I want to expand on this.  The Fed was created in 1913.  In the last 100 years, what cost $1.00 now costs $23.59, according to the BLS.  Truth be told, they UNDERSTATE inflation!  Even by their standard, prices have increased by 2,259% during the Fed’s reign.

Note, in the above graph, the vertical growth in the money supply and loss of purchasing power of the dollar starts when Nixon took us off of the gold standard and cut all links between gold and the dollar.  Coincidence?  Hardly!

Between 1800 and the establishment of the Fed, there were only four years when inflation was greater than 10% in a year.  Since 1913 there have been 10 such occurrences.

In an effort to stabilize the economy, post-2008, the Fed has dramatically increased the money supply and their balance sheet. (see graph, above).  There are consequences to there policies.  Or should I say, there will be consequences.

Currently, the Fed’s balance sheet has ballooned to around $4 trillion.  That’s nearly five times what it was in 2008.

Historical and Projected Fed

At the same time, M2 money supply (paper money in the US economy) is up 27%.  The Fed is continuing to fund QE to the tune of $85 billion/month.  History suggests that this will ultimately destroy the value (buying power) of the US dollar.  To ignore this reality will be the biggest financial blunder you will even make.

Meanwhile, over at the Comex, things remain much the same.  According to Ted Butler:

 JPMorgan increased their net short position by about 3,000 contracts, and now hold a short-side corner in the Comex silver market of approximately 13,000 contracts.  That’s 65 million ounces, which represents a hair under 75% of the entire Commercial net short position in silver.  How’s that for concentration?

JPMorgan’s long-side corner in the Comex futures market in gold has been reduced by 4,000 contracts and is now down to 66,000 contracts, or 6.6 million ounces—and that’s all due to the fact that they took delivery of that many gold contracts during the reporting week.

Butler Research

We say buy gold and silver to cover your bases.  Of course we do. We sell gold and silver – BUT Hoffman, Holter and both Schectmans have a majority of their net worth in these items.  Yes indeed, we do believe what we say.  How could we not when we are the ones writing about the cause and effect, like this little essay, on a daily basis.  I say it is not possible to be rational, open-minded and reasonably intelligent and not come to the same conclusions we do.  The scary thing is that most people do not agree with us , including family and friends.  How can it be so evident to us and not to anyone who is exposed to these facts?  I don’t get it!  But I hope you do.

Finally, here is an outstanding video on the manipulation of gold below – who does it, why they do it and why it will fail.  A must see for all our readers.  Set a few minutes aside and check this out…

GOLD PRICE: Cartel Catch 22

Here is a few enlightening comments on silver by Edge Trader Plus:

There could be one more new low in the near future, but that does not mean the physical will be commensurately lower.  It is a personal choice.  The time to buy is now, in the present.  When silver eventually reaches over $150 the ounce, will it have made any material difference if you paid a dollar or two more or less the ounce?  We live in an increasingly Orwellian world.  Name, address, and SSN may be required, at some point. Anonymity will be lost.

China’s and India’s record buying aren’t even enough to change the trend.  Let that be your message of how strong a hold central bankers can exert in suppressing price.  Why would China or India want to see silver at $25, $30, $50, or over $100 when they can buy at current levels?  Take a page from their book and keep on buying. 

It may be weeks, it may be months, it may even be longer before the manipulators lose control, and they will, as history tells us.  History also tells us it often lasts longer than most people expect.  Buy the physical while you can, even if it takes another year before reality prevails.  Just as one cannot know when a turn will occur, one cannot also know for how long silver will be able to be purchased, in the interim.  Be smart.  Better a year early than a day too late.

Edge Trader Plus, December 14, 2013