Smack Down Time

SUBHEAD: The weeks ahead could be a bloodbath for the dollar, the yen, the euro, and the pound.

By James Kunstler on 15 April 2013 for -

Image above: Speculation on gold creates a financial bubble. From (

What a humdinger last week was in a money world that is chugging toward maximum velocity and turbulence. Readers know (and may be sick of hearing) that I'm allergic to conspiracy theories, but my allergy is not absolute or total and there are excellent reasons to believe that the smack down of gold and silver was an orchestrated event.

By whom?

So far, in the opaque realm of paper gold sales, we don't know, except that it was a 500-ton dump that set off the larger skid, and it is even quite possible, as one anonymous wag put it on James Sinclair's website, that the buyer and seller were virtually the same entity -- meaning that the probable naked short transaction only amounted to a mere bookkeeping jot when all was said and done.

Anyway, the 500-ton all-at-once dump could only be calculated to drive the price down. Any rational strategic sale of so much gold would be parceled out in smaller amounts over time so as not to drastically impair the sales revenue, as this sale did.

And, by the way, who even has the roughly $25 billion holdings in paper gold besides a major government, a major central bank, or one of the Fed's Too Big To Fail handmaidens (Goldman Sachs, JP Morgan, Morgan Stanley)? Or who could afford to eat the $billion-plus loss on the smacked-down sales value? In other words, the usual suspects.
I hate the term The Powers That Be, with its odors of recycled paranoia and lumpen extremism, but signs of collusion abounded last week. First, on Wednesday, Goldman Sachs issued an advisory to short gold as the price flirted with $1600/oz. Then on Thursday, The New York Times planted a front-page story headlined: "Gold, Long a Secure Investment, Loses Its Luster."

The story featured a quote by supreme market manipulator and world-class schmikler George Soros: "Gold was destroyed as a safe haven, proved to be unsafe," Mr. Soros said in an interview last week with The South China Morning Post of Hong Kong. "Because of the disappointment, most people are reducing their holdings of gold."

Well, there you have it. Soros sez: Gold = shit. If you get some on your shoe, scrape it off. All that set the stage for the Friday smack down. Notice how falling gold and silver prices make the US dollar look good -- it takes fewer dollars to buy more precious metal. The dollar must therefore be sound!

And this is in the interest of whom? Say, perhaps, a Federal Reserve busy systematically melting away the value of dollars through so-called quantitative easing (money "printing" or promiscuous credit creation) plus financial repression (interest rate chicanery), and also a US government so deep underwater on its debt obligations that Treasury Secretary Jack Lew shares office space with the giant squid of the Aleutian Trench.

To complicate matters, the day of the gold smash, rumors flew of a plan by the Cyprus government to sell off its relatively small gold holdings to pay off its EU debt -- didn't happen -- but the rumor had the effect of further queering the gold price some more by implying that the EU would soon come calling on all the PIIGS nations to settle up their vigs with yellow metal.

Thursday, interesting things happened in another ring of the circus.

The novelty investment called Bitcoin, having developed a hockey-stick chart profile, shooting up from about $60 a month ago to $260, got smacked smartly back down to $60. It had been attracting a lot of attention as a shelter from international monetary shenanigans -- and hypothetically as an eventual rival to funny-money central bank currencies.

Bitcoin is a web-based species of virtual "money" invented by a shady character (or cohort of characters) called Satoshi Nakamoto whose true persona remains mysterious.

Bitcoin's supposed virtue is that it can't be confiscated by governments -- though experienced programmers know any website can be hacked -- or otherwise meddled with, making it a more reliable store of value than the traditional "safe harbor" investments such as sovereign bonds and precious metals.

Well, okay, but it raises a couple of questions:
  1. Does the world need an even more abstract form of "money" than fiat currencies, CDOs, Fannie Mae promissory notes, and JC Penny stock? I don't think so. If anything, the world needs more tangible instruments to represent a store of value, a medium of exchange, and an index of price. Bitcoin is little more than a bundle of algorithms. Granted, math helps with the management of money, but is math "money?"

  2. What happens if you can't get online to access your Bitcoin "wallet?" Is Bitcoin, after all, just another example of the techno-narcissism infecting contemporary culture?
That idea is just off the radar screens of Bitcoin pimps such as Jon Matonis of Forbes Magazine who said last week that "civilization won't regress to the state of having no electricity." Really? You think so? Just watch. Electric grids all over the world are aging and decrepit -- the USA's in particular -- and the capital is not there to renovate them.

And perhaps you haven't noticed the gathering scarcity problem with fossil fuels. You bet society could regress to, first, spotty electrical service and then possibly no electricity at all in many places.

But that is an extreme case because in the meantime all it would take is a "denial of service" incident to render Bitcoin useless -- and the mysterious Mr or Ms Nakamoto him/her/itself induced a half-day time-out in Bitcoin last week, taking its Mt.Gox trading platform off-line.

The week ahead in world money matters looks bloody and gruesome. Japan is committing financial hara-kiri by central bank desperation.

In artificially suppressing the gold price, the American Powers That Be (yccchhh....) give China, Russia and other rivals the opportunity to buy gold cheaply, and to do so by dumping some of their US Treasury holdings, weakening the dollar's international exchange value -- which the gold smack down was supposed to enhance!

China and Russia have both been steadily accumulating their gold holdings in plain sight, with the possible motive of backing currencies with more appeal in international trade settlements than the dodgy US dollar.

The weeks ahead could be a bloodbath for the four horsemen of monetary apocalypse: the dollar, the Japanese yen, the Euro, and Great Britain's pound -- that is, the core of the so-called advanced economies of the world. What a prankster history is!

Flashback Warning

SUBHEAD: “Watch The Metals, When They Dip. It Will Be A Good Indication That Things Are About To Happen.”

Mac Slavo on 15 April 2013 for SHTF Plan -

As of this print the price of gold is reaching fresh two year lows, down nearly 25% from its all time high just six months ago. Though uninformed onlookers and financial pundits may see this as the popping of the proverbial gold bubble, the velocity and scale of the take-down in precious metals suggests that there is a massive assault in the works. According to former Assistant Treasury Secretary Paul Craig Roberts, last Friday’s price drop was the result of some 500 tons of gold being dumped onto paper markets, an amount equal to about $25 Billion dollars worth of the metal. Likewise, silver saw a similar dump and price drop. Moreover, the very same thing is taking place this morning, suggesting that some very large and influential market makers are involved.

Who has that kind of money and can afford to lose it in naked short positions? According to Paul Craig Roberts, “only a central bank that can print it.”

Thus, one must assume that this is not a natural effect of the free market, but rather, a coordinated attack on the global precious metals exchange orchestrated by our very own Federal Reserve, an organization run by a board of directors that includes representatives from some of the world’s largest banking institutions.

What’s most alarming about the collapse of gold and silver is that it was predicted in December of 2012 by a Department of Homeland Security Insider. In an interview with Doug Hagmann at the Northeast Intelligence Network, the insider warned that life for the average America would change drastically, and soon, and that this change would be preceded by various events, one of which is a major dip in precious metals:
They already are in motion. If you’re looking for a date I can’t tell you. Remember, the objectives are the same, but plans, well, they adapt. They exploit. Watch how this fiscal cliff thing plays out. This is the run-up to the next beg economic event.
I can’t give you a date. I can tell you to watch things this spring. Start with the inauguration and go from there. Watch the metals, when they dip. It will be a good indication that things are about to happen. I got that little tidbit from my friend at [REDACTED]
(full interview)
If we were to assume that this 25% dip amounting to some $50 billion just over the last two days could be the the precious metals “dip” referred to by the DHS Insider, then we must likewise assume that some very serious events are on the horizon.

To what end?

That remains to be seen, but if the US government’s war-gaming of economic collapse and civil unrest is any guide, we may be looking at the worst case scenario many have feared – an engineered collapse of our financial and economic systems leading to the centralization of control through implementation of martial law across America.

Sound far-fetched?

Perhaps. Unless of course you’re part of the Congressional membership that was explicitly warned of this very possibility at the height of the 2008 crisis:
Many of us were told in private conversations that if we voted against this bill on Monday, that the sky would fall, the market would drop two or three thousands points the first day, another couple thousand the second day, and a few members were even told that there would be martial law in America if we voted no.
House Representative Brad Sherman (D-California)
Debate on the House Floor, October 2, 2008

[video source]
Do you really think they saved the system back in 2008?

According to SGT Report, those involved in the take-down of gold and silver may not been done yet, as the unrelenting push against precious metals proves once again that the arrogance of criminal cartels behind global financial market manipulation continues.

We once opined that you should expect exactly such an event - a mega drop in precious metals – to take place and that you’ll hate your gold so much you’ll want to spit on it.

But consider that in the 1970′s, as gold assailed to its eventual all-time highs, it was halved in price at least once over the ten year period that it rose from double digits to over $800 per ounce.

During times of uncertainty, irrational events will occur. This is inevitable.

Don’t let the hype and manipulation change your long-term preparedness plans.

Consider what is money when the system as we know it collapses, and continue to acquire those hard assets that will retain value and barterability.
The worst is yet to come.

1 comment :

Dharma Sanctuary said...

Kuntsler is finally waking up to the evidence for so called 'conspiracies'. About time he helps open his readers eyes...

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