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Rising prices from
years of inflating the money supply are finally seeping into the highly
doctored core consumer price index. To hear some of the leading economists
debate the inflation issue on TV, with remarks such as asset price inflation
being good inflation versus product inflation being bad inflation, should tip
us off as to just how far from a solution we are. If this is what we have
come to expect from those trained in the field of economics, just imagine how
hopeless it would be to try to explain the dangers inherent in today’s
economic model to your average investor or consumer. We have currencies worldwide
that do not hold value for any length of time in the hands of stewards that
merely wish to project the illusion that they are concerned with maintaining
purchasing power. Meanwhile, they put on a big show of slowly ratcheting up
short-term interest rates to demonstrate monetary credibility while at the
same time flooding a reckless amount of money creation into the system to
offset the higher rates which are still below actual inflation. Surprisingly,
this sleight of hand has well in excess of 95% of the masses so easily
fooled, demonstrating their economic illiteracy.
The financial
leadership of the US is most concerned with keeping up appearances. They
fully believe in their power to manipulate their way out of any reality. Their
moronic attempts to knock down the price of gold and silver, usually in the
middle of the night, are so short-sighted as to be laughable. It amounts to
trying to put out a seven alarm fire by smashing the fire alarm on the side
of the building. By artificially depressing the price of gold and silver they
merely make demand higher than it otherwise would be and supply lower than it
would otherwise be. Now that even the more financially illiterate are seeing
that the heavily manipulated statistics can no longer hide inflation, a slow
motion panic will begin and build. But don’t expect Americans to lead
the charge into gold; the Plunge Protection Team is working hard to sell the
bond market as the place to seek refuge from financial storms. This should be
at least mildly successful for awhile more because the average American has
not yet come to grips with one important fact… the government lies to
us constantly and often. The CEO of Newmont Mining recently projected flat to
declining gold production industry-wide over the next five to ten years. It
follows that supply will be declining for years due to long lead times just
as the mentally crippled begin to understand what has happened and how to
protect themselves. Gold demand will be soaring just as years of neglect
result in anemic production; you can guess the result: spectacularly higher
prices for gold and silver.
The actions that the
Fed takes at this point will not matter except in the short-term since
interest rates are still below real inflation, (rather than the made up inflation
figures that the government manufactures which the masses gladly and
foolishly accept). Recently released GDP figures above 5.0% are a howl, the
real number is very likely negative. The difference is largely the huge
understatement of inflation. While some gold investors fear rising rates with
memories of Volker’s relentless hikes decades ago, the huge debt levels
of today precludes that possibility. Interest rates are going up because
inflation is much higher than most believe not because the economy is too
strong as the Fed would have you believe. They wish! The bull market in gold
began while the Fed was easing rates and flooding the markets with money and
accelerated when the Fed began raising rates and you guessed it, flooding the
markets with money. Since the Fed, a private bank, was unconstitutionally
handed the monetary reins of the United States in 1913 it has instituted a
totally fiat currency in phases that has increasingly served special interest
groups at the expense of the American people and now the people of the entire
planet. With inflation, its main means of theft, increasing greed and
debauchery of the dollar has resulted in capital misallocation and a
hollowing out of the US economy. The condition of Ford and GM are good
examples of this yet the talking heads on financial TV would have you believe
that GM is off to another “fresh start”. You can chalk up
GM’s survival to date to its Fascist-type links to the US Government.
There is still time
to protect yourself financially by protecting your interests by owning gold. It
amazes me that Americans are so comfortable with the current situation that
we must borrow over $2 billion a day from foreigners to maintain our standard
of living. That is not a secure future. Perhaps it is because they
haven’t noticed, just as they haven’t noticed the so called
“Patriot Act” merely takes from citizens their constitutional
rights, or that the “Impunity Act” which exempts special
interests from SEC disclosure which is another giant leap toward Fascism.
The next time an
election is held and your President blurts out ha ha ha ha, I got straight
C’s in school and now I’m your president, make sure you
didn’t vote for him. Hold elected officials to higher standards and
educate yourself on the consequences of the actions of the financial
authorities. Remember the words of Thomas Jefferson, “If a nation
expects to be ignorant and free, it expects what never was and what never
will be.” At this point, to have no exposure to precious metals is
inexcusable. Financial advisors should take note and assess if they could be
held liable or at the very least brain dead. There are well-documented
research papers by Ibbotson and Sinquefield showing how precious metals
exposure increases returns while lowering risk. That should be
especially true under current circumstances.
Richard J. Greene
Managing Partner, Portfolio
Manager
Thunder Capital Management
More articles by the author can be accessed by the
"Research Articles" choice at: www.thundercapital.com
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