Is President Obama Wearing A Giant Gold Mask?
Jan 14, 2009
- Hands up all those who have heard President Obama utter the word "Gold" repeatedly.
- How about a few times? Hmmm. Still no hands.
- That's because he may only need to mention the word "Gold" one time.
- I submit that the incoming President of the United States may be wearing a mask. A mask he will take off very soon.
- Revealing the real new President of The United States of America: President Gold.
- Some analysts have noted the uncanny similarities between the current financial crisis and the crisis of 1929.
- Some have noted the uncanny similarities between President Roosevelt and President Obama. Infrastructure spending. Tax cuts. A "new deal".
- Here's a quotation from President Obama: "There's a new book out about FDR's first 100 days and what you see in FDR that I hope my team can emulate, is not always getting it right, but projecting a sense of confidence, and a willingness to try things. And experiment in order to get people working again."
- FDR. President Franklin Delano Roosevelt. Inaugurated on March 4, 1933. About 3.5 years after the October stock market crash of 1929. Keep that time period in mind as you read this. There is always a lagtime between the stock market's actions and the economy's actions. And the actions of the President of the United States.
- The highlight of President Roosevelt's first 100 days in office? On April 5, 1933, one month after taking office, he announced his blockbuster:
- Executive Order 6102. Claiming authority from the "War Time Powers Act" of 1917, President Roosevelt put total control of the American gold market into the hands of the US Treasury. American citizens were ordered to sell their gold. All of it.
- The US Treasury bought all that was sold. At aprox $20 per ounce. The central bank and the commercial banks of America began the process of handing all gold to the treasury. The hand-over was completed by Dec 31, 1933. Over a period of about 9 months, American citizens transferred their gold to the US Treasury.
- One month after the handover was completed, what happened? President Roosevelt announced an increase of about 70% in the price of gold. From about $20 an ounce to $35 an ounce.
- What is going through President Obama's mind right now? What are his advisors telling him about gold? Does he understand that only $9 trillion of the $700 trillion OTC derivatives nightmare has been written off? What might tens of trillions of further write-offs do? Of course he does.
- President Obama has spoken of the need for "drastic action". Ben Bernanke, head of the US Central Bank, has spoken of the use of the US dollar as a major tool in the fight against deflation. And Mr. Bernanke has noted the value of the dollar is under the legal jurisdiction of the US Treasury. Not the US Central Bank. Keep that firmly in mind.
- Keep in mind that the stock market peak of 1929 occurred in Oct 1929. President Roosevelt's revaluation of gold by 75% took place in Jan 1934. Over four years after the peak of the stock market in 1929.
- The current crisis saw the stock market peak in Oct 2007. That's not even a year a half of time that has passed. Since the peak of a market that featured a $700 trillion derivatives bubble. $700 trillion is a number completely incomprehensible to most people. Just as the size of the $700 bubble has been incomprehensible, the damage from that bubble will be incomprehensible in proportionate size.
- As the damage grows to incomprehensible size... and here is the kicker: so will the actions taken by the President of The United States of America grow to incomprehensible size.
- The "revaluation" issue of gold has been a hot potato with gold investors. Investors have polarized into two camps. Polarized "I'm 100% right and you're 100% wrong" thinking by investors is generally dangerous and destructive.
- The gold revaluation issue has been twisted, thru lack of understanding, into the "gold confiscation" issue. With one camp of investors and analysts "heading for the hills" and bashing the US govt, the US President, the US Central Bank, and the US Treasury as incompetent idiots or evil monsters. This camp believes there will be a confiscation. Certain scams set up as gold dealers have preyed on some of these investors to convince them to buy and store gold with boiler room type operations outside of the United States. Other investors are in trouble with the tax dept for their actions. There is a near paranoia on the part of these investors that Uncle Sam is on the gold warpath.
- The second camp are a combo of head in the sand investors and analysts and money managers who see confiscation as something that was "ancient history". These are the same people who believed the stock market bull was "here to stay" in the 1990s. They label people who mention the word "confiscation" as Quacks and Weirdos.
- If you read their work carefully, many of the money managers in the second camp made statements like "there won't be anything but a mild recession" in very recent years. And failed to mention the derivatives issue in any serious way. Once the crisis hit fullblast, however, there they were in all their glory. Claiming to have predicted everything. Look closely. They got it all wrong. The facts are all there. And they are getting the revaluation issue all wrong now.
- The gold revaluation issue is a serious issue. Ben Bernanke takes it seriously. So President Obama, by definition, is taking it very seriously. We're only in the very early stages of this economic crisis, regardless of the damage to the stock and commodity markets. I repeat: revaluation is a US Treasury tool. Not a central bank tool. Revaluation is not brought out of the US Treasury toolbox until the Central Bank's tools, rate cutting to zero, asset purchases with printed money, have been used extensively. The rate cut tool has been used fully. There is much more that can, and likely will, be done with the asset purchase tool.
- Including the unlimited ability of the US Central Bank to purchase US Treasury Bonds in hyperinflationary amounts. Amounts that could dwarf all the current holdings held by existing bondholders. Amounts that could send the price of the T-Bond to the stratosphere. Last time I checked, a bubble is created by greed. Not fear. Buying of the T-bond to date is not a bubble. Certain technical indicators on the bond indicating a downturn are one thing. Labelling the market a bubble is quite another. What has occurred in T-bonds is a flight of terror. Not greed. While I've laid out tactics to short the bond to limit your risk, should you want to do that, I won't be joining you. If you want to join all the bubble bettors and take part in shorting bonds, keep in mind the other side of the trade is held by Ben Bernanke's printing press. Question: How big is your printing press?
- Once you look at the gold revaluation as a serious tool in the US Govt's toolbox, one promoted by Ben Bernanke, it quickly becomes apparent that some serious study is merited. And to those money managers who speak of "confiscation quacks", here's my message to you: please immediately contact Ben Bernanke and inform him of how much smarter than he is, you are. Somebody is Donald Duck, and it's not Ben Bernanke. It's the money managers and analysts who are laughing at gold revaluation as a serious possibility.
- Gold Revaluation is more than a possibility. It's a freight train. And President Obama is the man who is going to be driving it. With both the US Treasury and the Central Bank on board. And those who have polarized themselves on both sides of the issue instead of looking at the reality are standing on the tracks. It won't go well for them. You want to be on the train, not on the tracks.
- Probably the biggest misconception about the gold revaluation, by both polarized camps, relates to the necessary control of the gold market that must be taken by the US Treasury during a revaluation. My understanding is there was only ONE conviction during the 1930's crisis for a person refusing to hand in their gold. That person had millions of dollars of gold sitting in a major US commercial bank. Their gold was a huge amount in plain view, and the bank was under orders to sell it to the US Treasury.
- The stories you may have heard about govt agent men smashing into homes and safe deposit boxes are nonsense.
- The US Treasury sought to stop hoarding and start spending. That's the purpose of a revaluation. Money spent on gold is not going to power back the economy. The big play was not confiscation. It was control. Control to halt fresh buying of gold.
- You have seen the US Govt, thru the central bank, take rates to zero. You have seen the US Govt engage in unprecedented asset purchases of US stock. And now the purchase of US Govt Bonds.
- The US govt cannot "juice up" the economy without a drastic cut in the value of the US dollar. If the citizens, and perhaps global citizens, respond to that cut by hoarding gold instead of spending cash on company products, there is no restart. There is a wipeout.
- A halt of the new purchase of gold is a prime purpose of a gold revaluation. The purpose is not to send 10 million little govt agent men to your homes and go through your closet looking for the booty. If you think Uncle Sam could care less about your micro gold holdings, you are wrong. On the other hand, if you think a crisis far larger than 1929 is not going to feature a gold revaluation tool being used, you are also likely just as wrong.
- I have mentioned the monster flag pattern on gold bullion. With an aprox $1700 price target. Interestingly, the target represents an aprox 75% rise from the potential "breakout" point on the chart. The same amount of the 1934 gold revaluation.
- The "race to zero" with rates amongst the central banks featured a co-ordinated effort by the major central banks.
- A gold revaluation could feature the same co-ordinated tactics. Most investors are focused on where gold and the US dollar is going, not why it is going there.
- After the Gold Revaluation tool is used by the US Treasury, the gameball is handed back to the US Central Bank. And the nuclear weaponry is brought out of the tool box. The money printing tool.
- The Fed will begin to print money at unprecedented rates. What you have seen to date is child's play. Question: How can the Fed restart the economy if the printed money is taken and stuffed into gold?
- Jim Sinclair, documented as the world's largest gold trader in the last gold bull mkt, has warned those shorting the Dow to play for a "fast cover" at points. Those who stay short could face losses of incomprehensible size if the Dow is hyperinflated. The Fed is perfectly happy to see their printed money stuffed into the Dow, hyperinflating it. They have ZERO interest in seeing their printed money stuffed into gold bullion. And they will take legal action to prevent that. The reality is there is not enough gold around to hand out to all the billions of investors who would storm into it should they just leave it uncontrolled. A mass panic into gold would leave the economy in a vertical nosedive.
- The key to restarting the economy is control of the gold market.
- If you own physical gold, don't panic. If there is a revaluation, there will be controls. But you won't see 1000 G-men outside your door with new gold detecting sniff dogs. On the other hand, if you stand in front of the White House holding a six-shooter and a sign saying " Hey Obama, you'll never take my gold", well, you are very much mistaken. And they may put that on your gravestone. You'll last about 10 seconds with that approach. Conduct yourself with moderation, and you, and your gold, will be fine.
- If you own gold stocks, it should be the party of the century. With no worries of US Treasury controls on your gold stocks. As gold is revalued skywards.
- Sit back and relax. The US Treasury is preparing to do you the world's biggest favour.
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