Graceland Updates 4am-7am
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
- 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
- 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
- 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
- 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.
Jan 13, 2009
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