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Remember this post I made on August 8, 2008? In that post I called for $640 gold, $1100 platinum, $11 silver, $200 palladium, and Canadian dollar at 84 cents. I also predicted that the US would pull out of Iraq, and predicted that oil would slide to $55 a barrel. My prediction was that all of these things would happen before the US elections. Let's look at just how remarkably right my predictions were. When I made that post, prices were as follows: Crude oil: $120/barrel Gold: $870/oz Silver: $16/oz Platinum: $1550/oz Palladium: $350/oz Canadian dollar: 94 cents US Today's lows? Crude oil: $62/barrel (Prediction: $55) Gold: $680/oz (Prediction: $640) Silver: $8.60/oz (Prediction: $11) Platinum: $760/oz (Prediction: $1100) Palladium: $165/oz (Prediction: $200) Canadian dollar: 79 cents US Clearly some of the prices overshot to the downside but that's to be expected in any bear market. So what about my prediction that the US would pull out of Iraq in October? Well, let's see... US to pull out of Iraq within a timeframe of 18 months (Obama) to 48 months (McCain).US forces to withdraw from Iraqi territory no later than Dec. 31, 2011.I strongly encourage you to read both those articles so you can see for yourself that this Iraq timeline is a very important (and recent) development, and it applies to both Obama and McCain. Stay tuned for the bitter-sweet celebration of the fulfillment of my final prediction: McCain becomes President.
It's official: The Council on Foreign Relations now calls the US dollar a "historical anomaly," a "piece of paper of no intrinsic merit." Check it out - straight from the horse's mouth.
What is the Globo? By now, you should have heard about the Euro, as it is Europe's currency. If you look hard enough you can also find something about the Amero - a proposed currency for North America. But the Globo? The globo is the global currency to be imposed by Russia, Saudi Arabia, Brazil, Japan, China, the EU, Canada, Australia, and possibly the UK, in a joint effort to detach themselves from the US dollar. Why do all countries want to detach themselves from the US dollar? Are they even attached to the US dollar to begin with? Unless you've been living under a rock, you should know about the Bretton Woods agreement signed after World War II that gave the then-gold-backed US dollar reserve currency status for the entire world. The dollar then was said to be "as good as gold," and was in fact 100% backed by gold. $35 was an ounce of gold - literally. In 1971, after a decade of deficit spending on the Vietnam War, Apollo, and Great Society programs, the US had to end the Bretton Woods agreement. The US-gold link had come under pressure from France and the UK which were buying up gold like mad and dumping US dollars, knowing that dollars were intrinsically worth less than gold. Thus, Richard Nixon was forced to terminate the Bretton Woods agreement on August 15, 1971. What followed was a decade of inflation known as the "stagflation" era, after the dollar essentially became a worthless piece of paper. However, in the early 1980s, after the middle east was driven into bankruptcy, a new deal was established with the Arab nations (except for Iraq and Iran), whereby those countries would sell their oil in exchange for US dollars, which they would then keep in gigantic savings accounts - called "reserves" - for ever & ever & ever (because if they ever spent those dollars, the US would experience hyperinflation and the US empire would come to an abrupt end). During the Reagan, Bush, and Clinton years, a new kind of American imperialism flourished, where the US struck deals with increasingly more countries for those countries to purchase enormous amounts of US dollars (like the Arabs did) to finance a growing US debt. Japan is now the world's foremost holder of US dollars. China also holds a lot of dollars. Keep in mind that the dollar is nothing but worthless paper. Worse still, all the countries holding US dollars must be forced (coerced) NOT to sell those dollars because if they ever did, the US would suffer a Zimbabwe-like hyperinflation. Today, virtually every country in the world holds large quantities of US dollars in reserve. The US dollar is a price-fixed currency. The US treasury (or more accurately the Federal Reserve) sets the price of the dollar. The dollar has no purchasing power, because it's a worthless piece of paper. However, the Fed gives it the illusion of value by DECREEING what its value is. It does so by simply readjusting the number of dollars in circulation. The dollar is a FIAT currency (FIAT implies "by government decree"). Whenever the value of the dollar is driven upwards (by the Fed selling treasury bonds), all other countries suffer because their own currencies inflate relative to the dollar. Thus, it becomes harder for those countries to purchase things (like oil) on the market, because those things are sold in US dollars. However, if the dollar is driven downwards (if the Fed buys treasury bonds), the US dollar reserves of the other countries now become less valuable. Furthermore, the rapid appreciation in the domestic currencies of the other countries causes problems for exporters. So you can see why the more volatility there is in the dollar, the harder it is for other countries to maintain stable economies. For countries other than the US, the US dollar as a reserve currency is extremely detrimental. The current system of US dollar hegemony (where the dollar is used as the de-facto global currency) is an offshoot of American imperialism and is a way for the US to control world markets. The problem we are faced with today is an impending devaluation of global currencies (other than the dollar). The Canadian dollar has been devalued enormously this week. The Australian dollar has been totally decimated. Every currency other than the US dollar has been falling. The Japanese Yen thankfully was spared, but if the US has its way, all other currencies will be devalued massively. Why? Because the US must inflate away its debt. In order to do that, it has to print more dollars. It can only do that while maintaining stable prices (otherwise inflation will result). The ONLY way to do that is by devaluing the currencies of ALL OTHER COUNTRIES. So China, Japan, Russia, and other economically-strong countries are now deciding (behind closed doors) that in order to maintain some kind of economic stability, they must - ASAP - decouple their currencies from the US dollar. The only way to do that is by making some other currency the global reserve currency, and therefore forcing the US dollar to be valued against that currency. And that currency is the Globo. So as not to repeat the mistakes of the past, the countries proposing the Globo have decided that it will be backed 100% by gold. In other words, the Globo is gold. Therefore, gold will be the new global currency. One ounce of gold will be worth exactly G2461. (G=Globo)
The common wisdom of Warren Buffett, Benjamin Graham, and other great investment mentors has always been that you should pick an asset that you believe is undervalued, and go long (purchase and hold that asset) for many years as its value increases exponentially. However, since the introduction of short selling, this age-old wisdom could not be more wrong.
In today's market, it is far more advantageous to be short for the long term, than to be long. The reason is simple: when you are long, you are paying a price for holding an asset that may or may not appreciate in value. Every day that you hold that asset, you are missing out on the interest that you would otherwise earn if you had not purchased that asset and instead kept your money in a savings account. However, when you are short, you don't have to pay that price. You borrow the asset at a specific lease rate. If the lease rate is less than the interest rate that you would earn in a savings account, then you are actually being paid for being short.
Nowadays, it is very hard to find an asset that grows by more than the interest rate in most savings accounts. It is (and has always been) very risky. However, it is very easy to find a bank that will lend you a particular asset (e.g. gold) at a near-zero lease rate. You then sell that gold immediately, pocket the money, and put it in a savings account where the growth rate is guaranteed. If gold goes down, you cover your short and make extra profits. If gold goes up, you simply double your short position. As long as the rate of return in gold does not exceed the rate of return of the savings account with virtually no volatility, you can always eventually cover your short position for a profit or simply use the interest to gradually cover your short.
Longs are getting killed, especially in the precious metals, precisely because shorts are always fundamentally favored. Lease rates on gold and silver are almost always zero or negative. Negative lease rates mean that you actually get paid for borrowing gold!
In recent news, the SEC banned short sales on all stocks. Too many ordinary people had caught on that short selling big financial firms could be extremely profitable. However, despite the short ban, the Dow plunged 7% today. Yet, the SEC remains silent on the shorting of commodities. If you cannot see the political agenda here, you are blind.
Bottom line - as long as short selling commodities is fundamentally favored by the banks (through low or negative lease rates), it is far more profitable to be short than long. Last month, three banks shorted one tenth of the yearly supply of gold (that's 250 tons), causing a devastating plunge in the gold price - all the way from $990 to $745 with no rebound. The shorts made it out with a 33% profit, even though they never sold any physical gold. The longs got destroyed. This is the sad reality of the "free market" casino. If you want to make money, you better be short, because long just doesn't pay.
We are mere days away from some VERY big news.
There is a greater chance than ever that the world will be VERY different by October 1.
Yom Kippur is approaching, and the Russians have expressed great fear of a second Yom Kippur War, between Israel and Iran. They are intent on "preventing" it, by launching an earlier strike in Iran - September 28th.
Israel has been positioning itself in Georgia, in order to invade Iran. NATO bases have been built in Georgia. Georgia represents the perfect strategic location (other than Iraq) for attacking Iran. Iran is now surrounded by enemies: Iraq, Georgia, and Afghanistan - all are now occupied either by the US (NATO) or Russia.
Russia has positioned itself in Georgia and Syria. Take a look at what countries border Georgia and Syria. The US is in Iraq, ready to help Israel with its Yom Kippur Iran invasion. Russia will attack Iraq from Syria and Iran from Georgia, and the US will not know what hit it.
Prophet Alois Irlmaier sees "two eights and a nine" for the start date of World War III. 9/28/2008.
Congress is going on vacation at the end of this week. McCain has decided not to show up for the debate in Mississippi. Americans will be totally taken by surprise by the events that are about to unfold.
Guess what, American taxpayers just got SCREWED OVER by their OWN government! The government just used their OWN money to erase the debts of PRIVATE COMPANIES. If you're an American, now would be a good time to yell, "I'm as MAD as HELL, and I'm not going to take it anymore!" Here's a video from Don Harrold that should get you fired up: This is the greatest example of government tyranny since the days of Nazi Germany. Everyone should be up in arms. But the ignorant debt-slave sheeple are just happy that they still have their low-paying jobs at Walmart or McDonald's and their infinite lines of credit, while owning NOTHING. Way to go America, land of the FREE, home of the BRAVE.
What is "indeflation"?
It's inflation and deflation, at the same time. And it's what's happening right now in the financial markets.
Let me explain to you how it works. As you may already know, inflation
is a loss of purchasing power. Deflation is the opposite of that. So
how can both be happening at the same time? Isn't that a paradox?
Right now, vast amounts of money are being wiped out as the Greenspan
derivatives bubble finally implodes. There is no doubt that money is
disappearing from the system at an alarming rate. As a result, prices
are collapsing in just about every asset class, including commodities,
and the dollar index has rallied from 70 to 80 in just a few weeks.
Yet, there is inflation going on as we speak. The dollar is losing its
purchasing power. Just look at gasoline prices at the pump. Even though gasoline futures are now under $2.50/gallon (!), gas prices at the pump are unchanged! Check out the price of bullion on eBay. Just try to
obtain any gold or silver at current spot prices. You will be faced
with severe shortages. Bullion dealers are even offering to buy back
bullion at a premium to the spot price!
Even though most asset prices are about the same as (or lower than)
what they were in 2007, and even though the money supply has not grown
at all, the dollar has lost purchasing power because you cannot obtain
the same quantities of REAL STUFF that you once were able to obtain.
The limitation is imposed by supply shortages, rather than price. The
US dollar fantasy has finally slammed against the hard concrete wall of
reality.
The cold reality is that the liquidity of the dollar has evaporated.
The dollar is no longer liquid. Nobody wants dollars, even though the
supply of dollars is dwindling. Basically, demand for dollars has dried
up faster than supply. Demand for REAL things, on the other hand, is
stronger than ever.
Remember how everyone was saying in 2007 that the global financial
system was suffering a liquidity crisis? Well, now the US dollar is
suffering a liquidity crisis. Soon, every currency in the world (since
they are all backed by the dollar) will also become illiquid.
Check out the LIBOR rates this week. They were as high as 6%. The
money markets are coming apart at the seams. All of this is indicative
of a liquidity crisis in fiat currencies themselves. All signs are
pointing toward indeflation. The REAL purchasing power of the
dollar (and other fiat currencies) is going down at the same time as prices are falling and the US
dollar index is rising.
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