by Jim Willie, Silver Phoenix:
The arguments in favor of silver as an investment asset are growing rapidly. In the opinion of the Jackass website, silver is the most under-valued hard asset in existence, with the highest potential for price appreciation on the globe. To begin with, central banks own no silver, but do own huge tracts of gold. Industry has huge demand for silver, but a trifling amount for gold demand. The investment demand is another key factor in favor of silver, but also for gold. Ever since the tech telecom bust in 2000, the precious metals growth curve has been evident. Ever since the subprime bond disaster in 2007, followed by the Lehman strangulation in 2008, the precious metals growth curve has continued. It is suppressed like holding back a team of six stagecoach Clydesdale horses by simple leather straps held by mere men with computers on their backs. Ever since the QE inflation policy of monetizing the USGovt debt, the monetary role of Gold & Silver has never been more acute in modern history. But silver offers much more.
Since 2012 with the African style monetary policy, also shared at times by South American nations, the US Federal Reserve has been forced to succumb to hyper monetary inflation of the unsterilized variety. It is the most dangerous form of monetary policy to adopt, a sign of utter desperation. With the desperation has come astonishing price capping of the precious metals market, while at the same time reliance upon isolated wars to steal central bank gold at vaults of defenseless nations. The effect upon economies, hardly ever spoken of by the devoted lapdog financial press, replete with their drone message of a fake sluggish recovery, is for profound capital destruction after seven full years of liquidity spew. The economic stimulus will find even more monetary abuse from greater deficit spending, thus more motive to own precious metals. To be sure, the QE bond purchase initiative is kept within the financial sector for service to the banker masters who have captured the USGovt. This is self-dealing on its face. However, hyper monetary inflation always causes capital ruin in an assured sequence, which cannot be averted, even by Fascist Business Model dictums and propaganda.
The response to monetary abuse has always been a return to honest money and viable sound monetary systems. This time will be no different, in its return to Gold & Silver as foundation, except that the movement will come from the East, led by a global insurrection. The West can join the strong sturdy secure movement, or be left behind. Even England recognizes the shift in global winds, eager to build the RMB Trading Hub in London. The Chinese are leading the global reform movement, and are likely to encourage the growth of the German RMB Hub in Frankfurt. The Germans have significantly more trade with Russia & China than the fascist core in London Centre, offering excellent leading edge product lines and world class engineering which the British cannot ever match.
If QE were indeed stimulus, then the USEconomy would have responded after a couple years of the wretched cursed policy at work. It serves Wall Street and the banking sector, and nothing else. The capital ruin and damage are evident in the constant negative GDP (with proper inflation adjustment), the high jobless rate, and the hopelessly rigged financial markets. The USFed has no business propping up the stock market or the corporate bond market, nor the crude oil market. But they have seen fit to consider stocks and crude oil as critical assets, and thus in need of support (to be read as price rigs). The effect of seven years of QE has been a bloated balance sheet at the USFed with $4.5 trillion in toxic assets. The leading toxic asset is the pristine AAA subprime USTreasury Bond. In the last week, China has just downgraded the USGovt debt to a B type grade, which means non-investment grade. In order to keep it all in check, all under control, the USFed must resort to coordinated efforts. They use QE to purchase bonds that are being dumped for foreign creditors. They also use Interest Rate Swap contracts to fabricate fake bond demand, with the levers held at the Exchange Stabilization Fund operated by the dutiful corrupted USDept Treasury. The ESFund is multi-$trillion machinery.
If the entire QE process were stimulus, then the resulting Money Velocity would not be in such dire condition. It was in decline until the Lehman subprime events in 2008, and it continues in decline since QE was put into force in 2012. Perhaps it creates stimulus to the bond market, but nothing but a gigantic wet blanket on Main Street and the tangible USEconomy.
No single graph demonstrates the failure of monetary policy more than this Money Velocity horrendous decline. That is why it never appears in the Wall Street Journal or New York Times, but the Golden Jackass site shows it periodically as a measure of failure. When the toxic vat of the USFed balance sheet reverses, along with those of other central banks, the flow will be from sovereign bonds (like the USTBond) into gold bullion. The trend will be to replace the global banking reserves with hard assets like gold bullion. Both Gold & Silver will become monetary metals. However, a whiff of something very new and refreshing is in the wind. Silver might instead become a core strategic asset for the energy sector, thus binding with the monetary role of Gold. The Paradigm Shift is to have an energy angle, and silver is at its core. Note the parallel from the Petro-Dollar, where the USDollar was intricately linked to the energy sector.
Fractures And Rebellion
Ten years of tremendous monetary expansion should have been accompanied by ten years of gold price appreciation to keep pace. Instead profound price suppression has been enforced. It is breaking down with the bust of the Petro-Dollar, and the dismantled derivative structures that have held the USDollar, the USTBond, and crude oil together. Both Japan and China have halted USTBond purchases. Now Germany is shedding USTBonds in favor of RMB-based sovereign bonds. They talk little of adding gold bullion, since such news cannot be cited in the Western press by fascist fiat rules. Such might be deemed financial terrorism by the Washington fascists. The straw dog argument should always be noted, then dismissed as absurd. Critics claim that there is inadequate Gold & Silver supply to match the rising money supply, the monetary aggregate. They claim the money growth was necessary and urgent in order to manage the global financial crisis that they created in 2007 and 2008. Hokum! There is plenty of Gold & Silver to cover the huge amount of money growth in the last several years, provided the precious metals prices are multiples higher. It is coming like day follows night, as the banker cabal cannot hold back the coiled spring.
The rise of the non-USD platforms is very powerful and gaining enormous momentum. While the United States is busy igniting wars like in Ukraine, Syria, Djibouti, Yemen, with furtive efforts to engage armed conflict in more nations like Iran, North Korea, and the South China Sea, the Eastern Hemisphere has gone on strike with respect to the King Dollar Court and its not so hidden war of terror in the currency defense. The lost global currency reserve is near, the movement having gained momentum in the last two years. It seems the eastern response to the Ukraine War plus the Iran squabbles, has been to build non-USD platforms and to construct workarounds for the feeble sanctions. See the Jackass article from December on the topic, entitled “The Integrated Non-Dollar Platforms” (HERE). Clearly the United States is using war to defend the USDollar, a development which will not stand and cannot continue. When the Jackass made the war defense forecast back in 2005, it was considered foolish and silly. Not anymore! The rebellion from the East will be coordinated, broadbased, and severe in its effect. The paper mache armor constructed by the fascist tagteam of the USFed and USDept Treasury cannot stop a bullet, cannot avoid fire, and cannot serve in the financial war. The rise of non-USD platforms is the battle cry waged against the King Dollar, whose financial war takes place in the global seas of false liquidity poured out by the banker cabal and subservient central bank franchise system.
With a weak economy, gaping $trillion deficits, rigged financial markets, permitted sovereign bond fraud, dependence upon QE inflation, rejected global trade unions, the Eastern resistance is clear. Furthermore, the Belt & Road Initiative, combined with numerous non-USD platforms, signals the united rebellion. The global system will endure fractures with the broader trade payments done outside the USDollar, the rise of the RMB-Oil-Gold contracts in Shanghai, and the upcoming China-Saudi oil purchases in RMB terms. Next on tap is the introduction of the Gold Trade Note, expected to be built atop the Shanghai integrated contracts. The RMB Trading Hubs will also feature Panda Bonds, where foreign entities like the Italian Govt can issue bonds to finance deficits in RMB terms, thus attracting Chinese investment with no currency risk.
Two extremely important developments have captured global attention in the last couple weeks. US allies are buying crude oil in Euro terms, which should enrage Washington. The effect is to bring about a USD index decline and rise of the Euro. It is almost comical, since the European Economy generally is not chugging along with any gusto whatsoever, outside the German border. But the effect is on financial markets, not the economy. The EU will suffer on its export trade, just like in 2009 before the Euro Central Bank caved in to reduce interest rates (a correct Jackass forecast). The second important development is more psychological in its financial warfare. The exposure of gold vaults by Russia and China serves as a challenge to the Untied Socialist States to match the challenge. The USGovt gold reserves are vacant, as Fort Knox serves as a nerve gas warehouse with a couple barrels of old gold coins in the dusty corner. To be sure, the Gold Standard is coming from the Eastern corridor. The Global Paradigm Shift is well along in the great transition. The Gold Trade Note will supplant the USTreasury Bill in trade payment. The CIPS bank transaction system will work around the abused SWIFT system. The vast multi-$trillion cornucopia of Eastern infra-structure projects linked to the Belt & Road Initiative will continue unabated, uninterrupted, and unrivaled in human history.
The global rebellion will take place in the form of trade payment done outside the USDollar, and sharp reductions in USTreasury Bonds held in banking systems. When the USDollar loses the bulk of its global currency reserve status, its privileges and deep advantages will fall away. The people will not recognize the lost reserve factor, but they will surely notice the powerful profound pervasive effects. They will come in the form of price inflation entering the room from the imported channels. They will come in the form of supply shortage from rejection of USTBills in trade payment at port facilities. They will come in the form of social disorder as a result of inflation and shortage. The public response will be a vast torrent to purchase silver in protection, which could become a matter of survival. The more wealthy will prefer to protect their fortunes with gold. In times of great crisis, expect silver to be used to purchase the standard items like food, fuel, and rent. Expect gold to be used to purchase cars, homes, and businesses. The coming crisis from the lost USDollar reserve status is inevitable. It demands preparation. It will mark an important turning point in US history.
Pep Talk On Precious Metals
For those losing faith from multiple years of suppressed Gold & Silver prices, take heart. The Voice responded to a sequence of probing Jackass questions with a firm statement founded in hope, confidence, pointing to a new dawn in financial structures. It is next to impossible to explain to people how things are going to unfold if they do not understand the concept of mal-investment and the difference between currency and money. The ZIRP exhibits the distortions in faulty investments from zero percent money, while QE exhibits the distortions in pure bold rabid inflation. Precious metals are unique, serving as the only true store of value, standard of value and measure of value, besides being a medium of exchange. If one has physical metal stored and understands the inherent control with its direct access at any given moment, it has been and remains the safest way to protect wealth from the current powerful debasement. While people rush into crypto-currencies, they need to realize that crypto-currencies are not crypto-money yet. Once hard asset backed crypto-money is issued, it will be backed by primarily precious metals, structured on the blockchain technology. Crypto-money will wipe the floor with crypto-currencies and $billions will be lost in the process.
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