The 80% Solution

http://www.nysun.com/editorials/the-80-solution/88049/

If Mr. Obama comprehends how bad it is for Iran that its currency has shed 80% of its value, why doesn’t he comprehend that about a dollar that has lost 50% of its value under his presidency alone?

Mr. Romney keeps saying that on the first day of his administration he’s going to label the Communist Chinese regime a “currency manipulator.” The Wall Street Journal’s editorial page responds that “biggest ‘currency manipulator’ in the world today is the U.S. Federal Reserve.” The president is boasting that his policies have destroyed the Iranians’ currency even worse than he, the Fed, and the Congress have destroyed our own. The Iranian currency is down 80%, the value of our own is but half of what it was four years ago. American working men and women, and millions who can’t find work, are going to buy gas and groceries and coming home with empty wallets.

Jim Rickards - Who’s the Sucker at the Global Gold Poker Table?

The language in this op-ed from James Rickards may sound familiar to some of you since I correspond with him a bit.  I've often used the poker metaphor.  I just purchased his yet-to-be released book "Currency Wars."  He has a very interesting background, having worked both government and in the private sector capital markets.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/8_Jim_Rickards_-_Whos_the_Sucker_at_the_Global_Gold_Poker_Table.html

More Beijing embassy cables show China sees gold as central in currency war

These cables exposed by wikileaks are incredibly damning on the western world's desire to maintain the global financial status quo--that of the USDollar as a reserve currency.  It is also very revealing that the return to the gold standard is starting to materialize--albeit at much higher gold prices.

http://www.gata.org/node/10387

James Turk's presentation on the gold price and the US dollar

http://youtu.be/qeQtpRGSI_8

Presenting The Fed's Slogan: "Making It Harder To Feed Your Family For 98 Years And Counting"

http://www.zerohedge.com/article/presenting-feds-logo-making-it-harder-feed-your-family-98-years-and-counting

Silver and the USDollar

Confucious 222 quote in the comments section:

The Fed/Crimex/JPMorgue cartel has only one answer for a 60 year old price suppression scheme that has resulted in silver shortages and backwardation: suppress it some more.

The Fed has only one answer for the destruction of currency value resulting from too much currency printed: print some more.

The US Govt. has only one answer to the economic destruction resulting from too much deficit spending: spend some more.

The MSM has only one plan to explain the disconnects from observable fact and the lies: lie some more.

Doug Casey: Precious Metals vs. the USD

http://www.theaureport.com/pub/na/9420

Peter Schiff - Fed’s Actions Cause Massive Gold & Silver Buying

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/27_Peter_Schiff_-_Feds_Actions_Cause_Massive_Gold_%26_Silver_Buying.html

“Ben Bernanke may deny that there is a causal relationship between his monetary policy and rising prices but the market knows differently.  In fact when Ben Bernanke denies the relationship, then the expectation is that he is going to continue on his current monetary policy course which is the green light to buy gold, buy silver, buy oil, buy commodities, sell the dollar and that’s exactly what’s happening.  That’s why the dollar is hitting new lows today.”

You could see the dollar begin to fall as soon as the statement was released, and then the fall intensified when he (Bernanke) began opening up his mouth.  He’s either lying or he’s incompetent or a combination of both, but neither inspires confidence in our country, our currency or our economy.  I mean whenever Ben Bernanke opens his mouth you want to sell anything that is related to the United States.

They said they are going to continue to reinvest their maturing principle back into treasuries, so the Fed said they are basically not going to shrink their balance sheet and that’s inflationary on its own.  Who are they kidding?  The Fed is going to keep buying bonds because if the Fed doesn’t who else is going to do it?  There is nobody who is going to buy them because the rates are too low.  So the Fed is just talking, but anybody who understands reality can see through it.   And obviously with the gold price soaring and the dollar plunging, a lot of people can see through it.”

“I think as early as this fall we could be in a dollar crisis because I expect the dollar to weaken throughout the summer.  And if we don’t get a big bounce during the summer when they end QE2, which I don’t think they are going to end it but they might pretend they are ending it, if the market senses that the Fed is still printing money which they will be doing, the dollar I think could go into free fall.  That is going to force the Fed’s hand and you are going to have really high interest rates and this economy is going to implode...but we have a phony economy that needs to implode.”

“I think gold is going to have a big move.  I think gold is underpriced right now.  I don’t think this is going to be the move that wakes them (the public) up out of their coma, I think that move is coming.  It’s going to be a much more spectacular move down the line.”

“When this market senses that this gold rally is real.  The gold bull market is 10 years old, you would think they would figure it out by now but there is more fear than greed in the gold market and you can see that in the mining stocks.  So I think we are still early in the gold bull market.”

USDollar vs. gold

Click on image to enlarge.

http://dollarcollapse.com/inflation/one-chart-two-ways-to-measure-the-dollars-decline/

But the dollar’s path (the green line) requires a little thought. It’s clearly down, but doesn’t seem to be falling as consistently and dramatically as gold is rising. Why is that? Because the dollar in being measured against other currencies — which are also falling in real terms — so the destruction of the euro and yen are masking the dollar’s decline. In other words, all the major currencies are being inflated away, with the dollar just slightly ahead of the ugly pack.

Gold, meanwhile, doesn’t “rise” or “fall”. It holds its value while the currencies in which it is valued fluctuate. So this chart actually depicts two ways of measuring the dollar. The green line is versus other currencies, which is a false measurement because it explains nothing about the real trajectory of the dollar. The gold line is the inverse of the dollar’s true value, as measured against the only remaining real form of money. Seen this way, gold’s rocking bull market is actually the dollar’s epic bear market. Neither is likely to end anytime soon.

Marc Faber: Future Value of US Dollar Will Be Zero

http://www.bullsource.com/marc-faber-future-value-of-us-dollar-will-be-zero/

Faber thinks we’re in a contest for the ugliest currency. He says a huge overhang of US dollars exists globally, and suggests gold and silver as the best currencies. Faber believes the US dollar could rebound in the short term, but maintains his long term prediction that the value of the US dollar will drop to zero.

Seeds of Their Own Destruction

http://dollarcollapse.com/inflation/seeds-of-their-own-destruction/

John Williams - The Great US Collapse Nears

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/3/15_John_Williams_-_The_Great_US_Collapse_Nears.html

Zell: Dollar's Global Fall Will Be 'Disastrous’ for US Living Standard

http://www.moneynews.com/Headline/Sam-Zell-End-Dollar/2011/03/03/id/388209

Central Planning Pavlovian Reaction: Chairsatan Speaks -> Dollar Plunges

Every time Fed Chairman Bernanke testifies before Congress, the USDollar plunges.

When financial distress or geopolitical events erupted in the past, save haven assets included the USDollar, US Treasury bills, and gold.  Guess which one is the go-to asset today?

http://www.zerohedge.com/article/central-planning-pavlovian-reaction-chairsatan-speaks-dollar-plunges

Speaking of the Denver Mint...

I encourage everyone to visit a US Mint.  The San Francisco mint is closed to the public, but the Denver mint offers guided tours to the public.  Reserving a space is recommended to ensure a slot.

As readers of this and other blogs now understand, central bankers, government monetary officials, academia, the financial industry, and the media are notorious anti-gold advocates.  High commodities prices, especially precious metals, thwart the advocacy of the USDollar as the global reserve currency.  Our whole financial system is USDollar-based, and has been since 1945 from Bretton-Woods.

But other sovereign nations are getting increasingly concerned by the profligate printing of the USDollar, so they are diversifying away from USDollar-denominated assets, selling US Treasuries, and buying gold, for instance.  They deservedly are concerned about a bloated, insolvent country issuing more debt.

But the US government and its cohorts must obfuscate these monetary shenanigans, and they also realize that rising prices in the precious metals sector are the canaries in the coal mine of financial distress.  That's why it's in government's best interests to talk gold and silver down, with complicity from economists, pundits and the media.

Which dovetails back to why I recommend readers visit a US Mint if they can.  Upon first entering the welcoming room in the Denver mint to start the tour are two display cases to your left.  The first one chronicles the history of gold.  The next one chronicles silver.

Anybody see the irony in this?  Presidential administrations, central bankers, US Treasury officials, Ivy League economists, Wall Street financial titans, and the financial press have all minimized, dismissed, trivialized, and even mocked precious metals as an investment class, in their vested interest to maintain the status quo of the USDollar as a reserve currency.  They simultaneously proclaim gold is a "barbaric relic."  Gold bugs are lunatics, etc., as the groupthink goes.

Yet, as clear as day, the first thing that grabs you when you start the tour at the Denver mint, are the display cases on the history of gold and silver.  "Do as I do, not as I say..."

The  Establishment's mandate is protect the veneer of the USDollar as a credible medium of exchange and store of value.  While it is true that USDollars are a medium of exchange, since the US Federal Reserve Bank was created in 1913, the USDollar has been a terrible store of value.  It has lost 90 - 99% of its purchasing power since then, depending on which inflation calculations one uses (the official government CPI statistics are notoriously understated).  And that dollar debasing accelerated after 1971 when President Nixon took us off the gold standard, opening the door for central bankers worldwide to recklessly print currency.  Thanks to the ravages of inflation, does anybody still think the cost of healthcare and college tuition has declined over the years?

Former Fed Chairman Greenspan took us to unprecedented heights in debt, and current Fed Chairman Bernanke has subsequently expanded our nation's balance sheet exponentially.  They are trying to solve a huge debt problem by issuing astronomically more debt.  It's insane.  Former US Treasury Secretary Robert Rubin under President Clinton declared the US would pursue a strong dollar policy.  Please...

That's why the financial industry is expert at creating and hoarding Federal Reserve Notes (e.g. USDollars), and why CPA's are expert at keeping as much of them as they can.  But Federal Reserve Notes are just that:  notes, which is essentially debt.  After all, "this note is legal tender for all debts, public and private" and backed only by the "full faith and credit of the U.S. government"—the government's ability to levy taxes to pay its debts.

It has no intrinsic value, and is only worth as much as the confidence in the solvency of the issuing sovereign nation.  Due to America's overconsumption and the overexpansion of our debt levels, the world is losing confidence in the USDollar.

Yet, the government doesn't want too many Americans to own gold or silver.  Why?  Because that means you are outside the all-encompassing financial system.  You are no longer depending on them financially--no longer a counterparty.

I will leave the reader to connect the dots.  If this sounds esoteric, and in case I'm being too vague, I will provide one quote:

"Gold is money and nothing else." - JPMorgan, 1912

Note the name--and the date.  Neither are coincidental.

Strong stocks or debilitated dollar?

Click on chart to enlarge.

http://online.barrons.com/article/SB50001424052970204485204575522280439957038.html?mod=BOL_hpp_dc

Stocks are up only in terms of a declining dollar. In real terms, relative to gold, stocks have gone nowhere.

Technically, equities indeed are resilient and seemingly every other day shake off morning weakness to rebound by the close. Stocks reaching new 52-week highs are plentiful while stocks at the other end are scarce.

So what's the problem? Basically, negative factors don't matter until they do. Only retrospectively do their importance reveal themselves.

The bond market continues to voice its displeasure with the economy.

The U.S. dollar also expressed its concern. One week ago, the U.S. Dollar Index (DXY), a measure of the dollar against a trade-weighted basket of other currencies, broke down below a very important support level at 80 (see Chart 1). In fact, the dollar has been in a declining trend since June.

Granted, a weak dollar helps U.S.-based exporting companies, and indeed big, multinational stocks on the U.S. exchanges are beating smaller, domestically oriented stocks. But a falling currency only helps until it hurts.

So is the weak dollar, and not a positive outlook for the economy, boosting stock prices? Chris Carolan, proprietor of the Carolan.org analysis firm thinks so. He points out that the stock market priced in gold has barely lifted off its March 2009 lows.

By changing the pricing mechanism of the stock market from nominal dollars to the purchasing power of gold, we can see an undeniable multiyear bear market still in force.

To be sure, a falling dollar does boost the price of gold as well since it is priced in dollars. But gold has rallied for nearly a decade as the dollar gyrated wildly. Indeed, gold has made highs in terms of all major paper currencies. Gold is in a bull market no matter how we look at it.

For the near-term, stocks continue to show strength — but only in terms of depreciating dollars. In real terms of a golden constant, the stock market has barely maintained its value.

Jim Rickards on the golden bullet

http://www.zerohedge.com/article/jim-rickards-tells-his-clients-get-out-stocks-and-discusses-feds-final-golden-bullet

What's happened is that all the markets have become so badly distorted that their price discovery function and therefore the information content around it no longer has any value." The primary culprit in this distortion is, of course, the Fed which is now and has been for over a year, openly (and not so openly when it comes to stocks) manipulating the broader market: "I always like to say if a private sector person does it, it's manipulation, but if the government does it it's policy. So they call it policy and they would say they had reasons for it, but in fact it was massively distorting."

In effect the US and policy intervention from homebuyer tax credit, cash for clunkers, quantitative easing, mortgage purchases have in effect destroyed our markets, they no longer give us valuable information." Obviously, today's most recent battery of micro fiscal stimuli announced by the administration will merely make the market even more irrelevant as a price discovery and a capital allocation deterministic mechanism: and the more administrative meddling, the more money will sit on the sidelines, and the more retail investors will withdraw capital from risky assets. If you no longer invest in stocks, you are not alone: "I don't even take the stock market seriously" says Rickards, "and I mean that in all seriousness. Who's in the stock market right? You have indexers and robots. Is anybody else trading the stock market?"

If you have an avalanche who cares what snow flake started it, what you care about is the instability of the mountainside. The Flash Crash was the warning, I don't think the warning has not been taking very seriously. The markets are not reflecting fundamentals, because there are no more fundamental traders. It is an accident waiting to happen. I recommend to clients that they not be in stocks anymore.

I don't think quantitative easing is a bullet that's going to work. I think that chamber is empty. But the Fed does have a bullet that they may not even realize which I call 'The Golden Bullet.' Which would be basically conducting open market operations in gold in such a way as to devalue the dollar.

If you're worried about deflation and you want to cause inflation and you're printing money as fast as you can and the inflation is not happening, at some point you have to stop and ask yourself well what else can I do? Well the answer is that you can severely devalue the dollar against gold...So the Fed wakes up one day and as fiscal agent for the Treasury, we're a buyer at $1,495 and we are a seller at $1,505, and that represents a 20% depreciation in the value of the dollar.

You have to scare the American people into spending money. Right now the American people are more afraid of not having money, they are not afraid of inflation, but if you make them afraid, they will go out and start spending. So what better way than to devalue the dollar 20% against gold, and the way to do that is through open market operations...Well if that happens to be $2,000 an ounce what have you done? You've depreciated the dollar by not quite 50%. Well that's pretty powerful stuff if you are trying to get people to spend money and dump dollars. So they are not out of bullets, they have what I call the golden bullet...They have that kind of ace in the hole if they really want to trash the dollar.

China favors Euro over USDollar

Be careful who you accuse of currency manipulation. They may stop buying your bonds.

http://www.emirates247.com/markets/gold/tons-of-gold-imports-turn-to-dust-on-arrival-2010-08-15-1.279082

China, whose $2.45 trillion in foreign-exchange reserves are the world’s largest, is turning bullish on Europe and Japan at the expense of the U.S.

Congress, Geithner, Bernanke and Obama have been incessantly accusing the Chinese of manipulating their own currency lower in order to maintain a competitive advantage in exports. What our government officials don't understand is that the Chinese are merely pegging the yuan to the dollar, so any manipulation the Chinese is doing is a direct result of the US Treasury and Fed manipulating the dollar.

Also, our leaders should be mindful that you shouldn't rattle the cage of your biggest creditor. As threatened, the Chinese are net sellers of US Treasury bonds, as they seek diversification away from the USDollar and dollar-denominated assets. They are buying gold and other foreign currencies to reduce their exposure to a debased reserve currency, the USDollar.

Threats of retaliation by raising tariffs in a trade war is exactly the wrong recipe for stimulating the economy. Perhaps our government economists should study the Great Depression to see how well nationalistic trade wars worked out.

Beware the dragon's gold teeth

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=109182&sn=Detail&pid=92730

An 1801 - present USDollar chart

A declining USDollar = diminishing purchasing power = price inflation. This chart tells enough.

Now we look at Siegel's calculation of the dollar's purchasing power from 1801 to 2008. It's a measure of inflation over more than 200 years.

In periods of inflation, which reduce the value of a dollar bill, the line falls. In periods of deflation, which increase the value of a dollar bill, the line rises.

This chart's message: In the 19th century, inflation and deflation alternated wildly, but the dollar remained roughly in the same range.

In the 20th century, inflation won out decisively -- except for the relatively short interlude of the Great Depression.

Because of this 20th-century experience, the value of the dollar has fallen precipitously, to a recent 6 cents. By an astonishing coincidence, the decisive move began about the same time as the Federal Reserve did.