Crisis of Fiat Currencies: US Dollar Surpluses Converted into Gold By Bob Chapman ,
The International Forecster | November 22, 2010
Something is going on that your government does not want
you to know about. Very few journalists have written about
it and little or nothing has appeared in the mainstream
media. The story could be one of major stories of our time.
Western
powers have tried to destroy gold as a backing for currencies
for many years. Presently the major media won’t touch
the story and that is understandable.
Something we have been writing about for years is the Shanghai
Cooperation Organization known as SCO. Few have been listening
and few have been interested in what their mission is and
what they have been up to.
Some of the members are large oil producers and some, like
China, are large oil users. Some have very large US dollar
surpluses. As well, some are large commodity and gold and
silver buyers. In fact, members are in a great part responsible
for driving these prices higher. It is debatable, but we
believe there is a conscious effort to accumulate gold and
silver, dump dollars and to back their currencies with gold.
China and Russia are both large gold producers and for
a number of years have been buying up domestic gold and
silver production, so that it never reaches the market and
does not affect prices. If anything the absence of sales
tends to push the markets higher. As a matter of fact Russia
and India are visible buyers. Even Iran with its oil surplus
recently announced that they had purchased 340 tons of gold.
Their recent gold purchases are very significant as affiliate
members, which have access to the present and ultimate direction
of the group. You might say buying gold has been a protective
effort to shield members and close observers from the problems
generated by dollar policies. They are accumulating gold,
as many have been worldwide, for the past ten years, but
particularly over the past few years.
This buying, for protection, has served to thwart the efforts
of US policymakers, the Treasury, other central banks in
Europe and the Fed, from being able to continue the blatant
suppression of both gold and silver prices. The malefactors,
except for forays into derivatives and futures, which are
transitory, have lost control and suppression of gold and
silver prices, and it is only a matter of time before all
visages of any control will be visible. Since 1988, in August
when Present Reagan signed the Executive Order creating,
“the President’s Group on Financial Markets”
and the subsidiaries that have grown out of that policy,
that the Treasury won many if not most of the battles. The
SCO in part changed that and now they and the public are
winning the war for a fair and free gold and silver market.
The current class action lawsuits, including RICO, are a
testament to the market manipulation in silver, which is
finally coming to an end. HSBC and JPMorgan Chase, the latter
that is the major owner of the Fed, are going to be finally
prohibited from rigging these markets. Their officers all
belong in jail, but elitists never go to jail; they pay
fines, and keep right on robbing the public.
Other SCO members and observers are accumulating gold as
well, be it in smaller amounts. We might add that other
nations observing Russia and China and their gold purchases
are buying as well. These participants must believe that
there could be a return to sound money; otherwise they wouldn’t
be gold buyers. Buying gold is certainly preferable to holding
US dollars, which have consistently fallen in value versus
other currencies over the past ten years. Then again all
currencies have fallen versus gold over that period, some
19.6% annually. It is nice to see nations are finally waking
up to the reality that fiat currencies will all over time
deteriorate versus gold. The temptation is enormous to deficit
spend.
The most interesting aspect of the SCO is that they do
not strive for political agreement such as the European
Union. They are interested in economic stability and development
and security. There is no overall binding laws. Nations
retain their sovereignty, which is the exact opposite of
what the elitists in the US and Europe desire, and that
is world government. The SCO has provided great flexibility
something that is non-existent in elitist controlled countries.
Another interesting facet is that the SCO probably represents
half of the world’ population, far more than the US
and Europe. As these nations accumulate gold so does some
of their citizens, which puts strong upward pressures on
gold prices on a continuing basis.
In addition some of these nations, such as China, are spending
dollars by buying natural resources and other things in
other nations in an attempt to relieve themselves of excess
dollars earned in trade. Both Russia and China fully realize
that the US dollar is in serious trouble and has been for
a number of years due to fiscal debt and the unbridled creation
of money and credit by the Federal Reserve. They well know
the dollar is in serious trouble and what the outcome will
probably be.
As the economies of the US and Europe become more deeply
mired in problems the economies of SCO nations more and
more resemble the free economies of old that were very successful.
You might say they have found their way back to basics and
sound money. As the dollar comes under further downward
pressure more nations will probably join the SCO to escape
the clutches of European and American imperialism and bureaucracy,
which for some years has been onerous and unsuccessful.
What we see is a natural path by nations to extricate themselves
from the control of Wall Street and the City of London,
which have dominated the world for so long. All these facts
considered we believe gold will find its way substantially
higher with the participation of these nations, a factor
the West never figured on. These ten nations are sucking
excess gold out of the market every day and that will continue
indefinitely.
These SCO nations are well aware that the surge of hot
dollars created by the Fed out of thin air are headed their
way and with them inflation. Brazil was the first nation
to attempt to stop this onslaught by imposing a 6% tariff
on interest and dividend paying Brazilian securities, purchased
with US dollars. Over the last two years between stimulus
and the Fed $2.5 trillion has been injected into the US
and world financial system. As a result commodity and gold
and silver prices have exploded. This has caused the dollar
to fall in value versus other currencies and gold. There
is no question more and higher inflation is on the way,
as the Fed gets into QE 2. You can also bet that QE2 will
not be $600 billion, but more than $2 trillion. Inflation
is already showing up in food, petroleum products, airline
fares and in many other items that we use every day. As
usual the government says there is little or no inflation.
Even competent economists still use government’s bogus
figures. What can they be thinking of? They know what is
going on as well as we do. That means we are embarking on
the highest inflation rates in US history. Thus far the
undertow of deflation has been superseded by government
banking and Fed aggregate creation. The Fed, in order to
subdue deflation and such spending has to always overshoot
the inflation they create, so that they can be sure that
deflation cannot take hold. This money and credit is in
the process of working its way through the economy, spreading
inflation as it winds its way through.
The only investors who are being afforded protection are
those who have invested in gold and silver and commodities.
That is less than 2% of the American population. We predicted
in mid-May that QE2 and QE3 would take place for a combined
$5 trillion over the next two fiscal years. In fact, the
Fed was late in starting in June and as a result 4th quarter
GDP growth will probably be 1% and the 1st quarter of 2011
will probably be in the minus column, as unemployment heads
to 25% and extended benefits run out. We are not seeing
growth; we are seeing forced feeding.
The Fed’s promises are not worth the paper they are
written on. Ben Bernanke will print money until he cannot
anymore and we have hyperinflation. That is because he has
no other choice. He has no way out and he knows it won’t
work. Tragically, this is where we are headed and there
is no way to stop what the elitists have put deliberately
in motion.
As long as quantitative easing is official Fed and Wall
Street policy, gold is going to continue to rise with silver,
and the stronger the case is that gold is the real world
reserve currency. That means all currencies will eventually
have to be backed by gold. We believe that elitists have
accepted this fact and that was borne out recently by World
Bank President, CFR, Trilateralist and Bilderberger Robert
Zoellick. We can assure you that was no slip of the tongue.
That was a cleverly planted trial balloon to get public
reaction.
We do not see QE2 and QE3 as incompetence or bungling.
It happens to be the only option available to the powers
behind government. The same errors committed during the
Great Depression of the 1930s are being repeated and economists,
including Mr. Bernanake know they do not work. Yes, the
Fed contracted money supply and when they let it loose again,
it was too late for it to be in anyway effective. Next comes
tariffs as an outgrowth of: currency wars; interest and
dividend penalties on the inflow of hot, inflationary dollars
and retaliatory tariffs as a result of losing 8.5 million
jobs and 432,000 businesses over ten years to free trade,
globalization, offshoring and outsourcing. Smoot-Hawley
tariffs and even dumb Fed moves were bad enough, but Hoover’s
raising of taxes by 150% was a monumental piece of stupidity.
At the root of all this is that the Fed is supposed to
be saving the US economic and financial structure. They
are not doing that, they are saving the banking system and
Wall Street instead and these are the miscreants that caused
the problem in the first place. The result of this policy
of zero interest rates and easy money is that few are saving.
There you have it, planned destruction. Is it any wonder
the SCO members and observers are buying gold on every dip
and will not stop doing so until they run out of dollars.
Our only question is; what took them so long and why are
they not buying more faster?