Gold Is Speaking

In the current global manic rush by central banks to inflate and by governments to spend that paper, there are a few observers who have expressed concern that at some future date this wholesale, last ditch Keynesian and Statist approach just might actually produce "inflation."

Many Wall St. types argue "No, inflation is not the problem and is not likely to be the problem for some time. And besides, gold is quiet, not signaling any concern about inflation." Though they like to espouse free market generalities from time to time, these same Wall St. types actually want the State(s) to intervene to protect this or that asset class – to which they are personally attached and now sinking with. While investors are down in most asset categories by 40% in 2008, the orthodox investor and his portfolio manager can’t weather another 20% drop this year! "Oh sure, Keynes was full of it, but good grief we can’t stop this stimulus because it just might work. It must work!" All intellect out the window, it’s desperation time, wish-fulfillment time on Wall St! And how short their memories – failure to remember the policies of the Fed, from August, 2007 onward when the Fed – armed to the teeth with "surprise" interventions – sought time-after-time to halt the ratcheting decline in equity and real estate prices. Was that a success? Or did those penny-in the-fusebox actions merely delay and therefore intensify the decline to the point where a market correction morphed into a collapse? So, let’s do it some more and find out yet again! We can then worry about an "exit strategy" later, we are told.

So, with that as a backdrop, what has been going on with the various "asset classes" in recent years? And especially, what if anything does gold tell us about the risk of inflation? Is it really the quiet unconcerned metal that these State apologist economists claim? Historically gold is a wise metal that often anticipates inflationary and deflationary trends; defining inflation in the Austrian School manner – as growth in the money supply (s), which we now must think of globally, not merely as a U.S. monetary and fiscal event.

With a few comments, I provide some stunning charts that speak volumes about the actual underlying trends, asset value shifts, safety of capital, etc., all of which are reflective of macro-investment decisions that are being made, net-on-balance, by millions of global investors. And they speak volumes!

I begin with a chart that deals with the question: How have commodities done as an alternative or "balancing" asset class over the past years? In this case I measure the CRB Index’s monthly closes v. the monthly closes of the Dow Jones World Index (data begins for this equity index only in 1994, therefore the comparative chart begins then). Well, the answer is pretty clear.

Depending upon when bought into commodities as an alternative asset class (which might balance your equity holdings), you either won or lost several times over that 15 years. In fact an astute trader did well to time some swings in that relationship. But the long-term answer is that commodities were really no better and no worse than global equities over the past 15 years, and presently commodities are actually sinking at a faster pace than equities. So commodities seem to be unconcerned about "inflation" at least as mainstream economists are prone to define inflation.

The same period of time (1994 to present) gold in relation to global equities. Obviously something happened to gold relative to global stocks, something that changed its trend tone with drama in late 2008. The value (price) of gold in relation to that basket of assets exploded in a quantum manner, unlike the opposite behavior of the commodity asset class. Might I point out that the timing of this massive valuational change in gold relative to stocks was coincident with the panic by governments to reflate the collapsing bubble that a combination of their policies has created a handful of years before.

I have watched gold’s behavior v. other commodities for 35 years, and back in the hyper-inflationary times of the late 1970s’ up to 1980, gold soared, but so did the price of grains, meats, fertilizer, etc. Gold was not singularly special. It was part of a general commodity bubble. This time, beginning sharply in late 2008, Gold has made a massive statement and done it in what most mainstream economists continue to define as a non-inflationary/deflationary market environment. Gold says to those economists – define your concepts more accurately fellows. There is massive inflation (monetary expansion accompanied by State power expansion) and it is underway at full throttle. Beneficiary this time is gold (and silver) – almost exclusively. This explosion in relative valuation of gold is more historic and dramatic than any I have heretofore seen. Would not even surprise to see the net price of gold (v. dollar) engage in something comparable – as investors channel their bets onto the back of the lone horse that is still standing and reliable. Though that net price consequence is actually not a necessary event, because gold already has accomplished its role as a State-proof investment asset.

Finally, the chart below shows gold’s behavior v. the broad commodity asset class. For 30 years it moved in a range v. other commodities, no better, no worse. That sedate range of valuation fluctuation is now over, done with. Gold has made a statement – if your eyes are wide open. Gold sees inflation NOW, and has already begun to respond in an historic manner.

September 5, 2009

J. Michael Oliver [send him mail] has provided proprietary technical analysis and consulting for the past 20 years to large asset management institutions. He is also a hedge fund manager.

Copyright © 2009 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

Candidate for New Jersey governor calls for second 9/11 Commission

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The Best Enemies Money can buy

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Appeals court rules against Ashcroft in 9/11 case

A federal appeals court has ruled that former attorney general John Ashcroft may be held liable for people who were wrongfully detained as material witnesses after the September 11 2001 terrorist attacks.

In a harshly worded ruling handed down today, a three-judge panel of the 9th US circuit court of appeals called the US government's use of material witnesses after September 11 "repugnant to the Constitution and a painful reminder of some of the most ignominious chapters of our national history".

The court found that a man who was detained as a witness in a federal terrorism case can sue Ashcroft for allegedly violating his constitutional rights. Abdullah Al-Kidd, a US citizen and former University of Idaho student, filed the lawsuit in 2005, claiming his civil rights were violated when he was detained as a material witness for two weeks after 9/11.

Al-Kidd said the investigation and detention not only caused him to lose a scholarship to study in Saudi Arabia, but cost him employment opportunities.

He argued that his detention exemplified an illegal government policy, created by Ashcroft, to arrest and detain people particularly Muslim men and those of Arab decent as material witnesses if the government suspected them of a crime but had no evidence to charge them.

Al-Kidd's attorney, Lee Gelernt with the ACLU, said the ruling by the three-judge panel had implications reaching far beyond the government's actions in detaining material witnesses post-September 11. The court flatly rejected Ashcroft's claims that has absolute immunity from such lawsuits because of his job, Gelernt noted.

"The use of the material witness statute as a post-9/11 detention tool is one of the least understood parts of the post 9/11 landscape, but it has enormous implications because it was done in secret and the government has never renounced the policy," Gelernt said. "Our hope is that we can now begin the process of uncovering the full contours of this illegal national policy."

The 9th circuit judges said Al-Kidd's claims plausibly suggest that Ashcroft purposely used the material witness statute to detain suspects whom he wished to investigate and detain preventively.

"Sadly, however, even now, more than 217 years after the ratification of the fourth amendment to the constitution, some confidently assert that the government has the power to arrest and detain or restrict American citizens for months on end, in sometimes primitive conditions, not because there is evidence that they have committed a crime, but merely because the government wishes to investigate them for possible wrongdoing, or to prevent them from having contact with others in the outside world," judge Milan D Smith Jr, for the majority. "We find this to be repugnant to the Constitution and a painful reminder of some of the most ignominious chapters of our national history."

Five more banks fail -- 89 so far in 2009

NEW YORK (CNNMoney.com) -- Five small regional banks were closed by regulators on Friday evening, pushing 2009's tally so far to 89 institutions. Of the five failures, two were in Illinois, and there was one each in Arizona, Iowa and Missouri.

Customers of the banks, however, are protected. The Federal Deposit Insurance Company, which has insured bank deposits since the Great Depression, covers each customer account up to $250,000.

In Illinois, Platinum Community Bank, in Rolling Meadows, and InBank, in Oak Forest, were the latest institutions to be cosed by regulators. This makes for a total of 15 failed Illinois banks this year. The last one to go under was Mutual Bank, in Harvey, on July 31, 2009.

The Office of Thrift Supervision was unable to find a buyer to take over the assets of Platinum Community, which were estimated at $345.6 million with deposits of $305 million. As a result, the FDIC will begin mailing customers checks for their insured deposits beginning on Tues., Sept. 8.

That means customers are out of luck over the weekend and cannot access any of their Platinum Community accounts. "The bank is gone. It no longer exists," said David Barr, spokesman for the FDIC. "We couldn't find an appropriate buyer. We don't do that very often."

For those Platinum Community customers expecting direct deposits from the federal government -- such as Social Security and Veterans' payments -- MB Financial Bank will handle the transactions. But customers must use the MB Financial branch at 2251 Plum Grove in Palatine, Ill., to access those funds.

Unlike Platinum Community, MB Financial agreed to purchase the assets and deposits of Illinois' other failed bank, InBank. MB Financial receives InBank's $212 million in assets and $199 million in deposits, and customers' funds are automatically rolled over to the new institution.

The three branches of InBank will open as normal on Sat., Sept. 5, as new MB Financial outlets. Customers can continue using their debit cards and writing checks as normal.

In the West, the assets and deposits of First State Bank of Flagstaff, Ariz., were sold off to Sunwest Bank, based in Tustin, Calif. All First State customers -- totaling $95 million in deposits -- automatically become new Sunwest clients.

This is the third bank failure in Arizona this year. The last institution to go under was Union Bank in Gilbert, on Aug. 14, 2009.

Check writing privileges and debit card transactions will continue as normal through the weekend. On Tuesday, all six branches of First State will reopen as outposts of Sunwest Bank.

In the Midwest, Vantus Bank, in Sioux City, became Iowa's first bank to fail in 2009. It had been nearly a decade since the state faced a bank closure.

Great Southern Bank of Springfield, Mo., is assuming Vantus' $368 million in deposits. It will take a fwe weeks for Great Southern to finalize the transaction, but until then customers can continue using the existing branches of Vantus as well as write checks and use their debit cards. Great Southern is also managing Vantus' $458 million in assets until it can sell them off later.

Customers of First Bank of Kansas City, in Kansas City., Mo., can now call Great American Bank of De Soto, Kan., their financial home. When the bank was closed on Friday, it became Missouri's second failure of 2009. When the sole branch of First Bank reopens on Saturday, it will be an outpost of Great American Bank. Customers can continue writing checks and using their debit cards as normal.

Great American Bank bought the banks' $16 million in assets and approximately $15 million in deposits.

The FDIC estimates that these five bank failures will cost the Deposit Insurance Fund a total of $401.3 million.

Anyone who needs further information about what deposits or insured or needs additional details on their bank's failure can visit www.fdic.gov or call 1-800-537-4048.

China agrees to buy 50-billion-dollar IMF bonds

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The International Monetary Fund(IMF) said on Wednesday that China has agreed to buy the first bonds issued by the agency for about 50 billion dollars.

IMF Managing Director Dominique Strauss-Kahn and Yi Gang, deputy governor of the People's Bank of China, have signed the agreement, the IMF said.

According to the agreement, China would purchase up to 32 billion (around 50 billion dollars) SDR, or Special Drawing Rights, in IMF notes.

"The note purchase agreement is the first in the history of the fund, and follows the endorsement by the Executive Board on July 1,2009 of the framework for issuing notes to the official sector," said the 186-nation institution.

The IMF said that "the agreement offers China a safe investment instrument. It will also boost the fund's capacity to help its membership -- particularly the developing and emerging market countries -- weather the global financial crisis, and facilitate an early recovery of the global economy."

The global economy is beginning to pull out of the worst recession since World War II, according to the institution, but recovery is expected to be sluggish and financial systems remain fragile.

As part of its efforts to boost the world economy ,the IMF completed allocation equivalent to 250 billion U.S. dollars of SDRs last Friday. That will be followed by an additional allocation of 33 billion dollars on Sept. 9.

With the two allocations totaling roughly 283 billion dollars, the outstanding stock of SDRs would increase nearly ten-fold to about 316 billion dollars.

Brazil, Russia and India -- the three other countries besides China that make up what is known collectively as the BRIC countries -- are seen as potential buyers of the IMF bonds and are also in the vanguard of developing countries' drive for greater representation in the international financial bodies.

Source:Xinhua

Swine Flu: Biggest Scam of 2009 Begins, Millions Prepare to “Protect Their Health”

The plague of modern society is preparing for the event that will quite possibly be the most dangerous thing to happen to humanity since the last great outbreak: the release of the Swine Flu vaccination. That’s right, not the flu, the “prevention.”

A “top news story” featured on AOL this morning with the brazen title “2,000 Students at Washington State University Have Swine Flu.”

The article says that “More than 2,000 students at Washington State University have come down with swine flu symptoms in just the first week of classes, school officials said Friday” (Emphasis mine).

Swine flu symptoms. What does that even mean? A runny nose? No doubt this information is based on self-reporting (like much of the “information” we have on the Swine Flu), which means that most of the students were probably hung over from the ‘first week of classes’ and reported these symptoms as potentially being the Swine Flu – because that’s what everyone is telling them it probably is.

No other information is provided in this fear-mongering article which serves no purpose other than to spread media hype in an attempt to grease the American population for the arrival of the soon-to-be-released Swine Flu vaccinations, coming soon to a doctor near you.

The article goes on to say that “A presidential panel estimates that upward of half of the U.S. population could come down with the H1N1 this year.” Oh my God, really?

Read what the Federal Health Minister of Australia has to say about the Swine Flu:

“In Australia, where the winter season has begun, Federal Health Minister Nicola Roxon is reassuring parents the swine flu is no more dangerous than regular seasonal flu. “Most people, including children, will experience very mild symptoms and recover without any medical intervention,” she said.”

The article goes on to discuss that the Swine Flu is no more dangerous than any other seasonal flu, and will likely be responsible for possibly 100 death in the United States. Meanwhile, we will be mass-injecting over 75 million people with a vaccine that has been proven to be dangerous to our nervous systems.

This article discusses Squalene, an ingredient in the Swine Flu that has been linked to very adverse symptoms which are probably worse than the Swine Flu.

As someone who works in marketing, I know a “pre-sell” when I see one. Pre-selling is an extremely powerful sales tactic in which a source that seems reputable (ie. the target audience is likely to trust the source) begins to subtly convince the intended victim, er, customer, that an upcoming product or service is worthwhile in order to increase the likelihood of selling the product once it arrives.

Dictionary.com says pre-selling is:
2) To promote (a product not yet on the market) by means of advertising.
3) To condition (a potential customer) in advance for later purchase of a product.

“But the Swine Flu vaccine is not a product ,” you say, “it’s intended to save the lives of millions of Americans!”

First of all, countless health officials and medical professionals do not agree – and I’ll bet most are afraid to speak up. Secondly, the vaccine absolutely is a product, and the drug companies are bracing themselves for the billions of dollars they are about to receive from the sale of Swine Flu vaccines.

The “pandemic” is nothing but a combination of very good marketing on the part of Drug companies, and the fear-mongering of a bunch of lemmings, the media, who maintain their station in our society by spreading fear, misinformation and half-truths.

Most people in the mainstream media are most likely just stupid, or irresponsible at worst. On the other hand, the drug companies are downright profit-hungry murderers, a plague on their fellow human beings (if they can be called humans at all).

They use us as guinea pigs for profit.

It’s difficult to blame this one on the stupidity of the America public because this is one of the most well-planned and well-executed marketing ploys in history, and one that plays on the natural human fear to protect one’s health.

How many parents will unknowingly damage their child’s future health, in an ironic attempt to protect their health, in the coming year? How will we damage future generations of humanity with our drug experimentation?

I have no doubt that future generations will look back on these last few decades as an atrocity in the annals of human history, much like we now think about shock treatment and lobotomies to cure “mental illnesses” that were largely imagined.

As has been said before, “want to become a millionaire? Invent a disease and market the cure.”

Indeed.

Legal Disclaimer for the sake of our litigious society and drug companies which have far more money than I do: I am not a doctor and all of this is my opinion. You would be advised not to listen to anything I have written here and discuss your health with a doctor before making any decisions about the Swine Flu vaccination.