James Turk On Gold And Silver Manipulation And The Dollar

James Turk of GoldMoney.com says, “COMEX is just a side show. It’s just a paper market. The action is taking place over here in London. You are seeing this huge backwardation. If you want to put a big order in, say $50 million for physical metal, you can’t get that metal tomorrow. You are going to have to wait for a while before you can get that metal. That’s sign to me that gold is cheap. The same thing is happening in silver. As a result of that, you are going to see much higher prices as we move to the end of the year.” Turk goes on to add, “We’ve seen the slow burn in the dollar. You have these blips up and down and, right now, we are having this momentary blip of dollar strength, but eventually, it will go over the edge of the cliff. That is, ultimately, what happens when a currency collapses. Eventually, people realize the currency no longer makes sense.”

- Source, USA Watchdog

Max Interviews Alasdair Macleod About Gold, China, QE And The Economy

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss precious metals manipulation in Switzerland and the costs of the never-ending banking fraud - from the ‘suffering and life long risks’ to children in Europe and beyond to the rising cost of food hitting lower income consumers. In the second half Max interviews Alasdair Macleod about gold, China, QE and the economy.

US Dollar Money System Failing In Spades

What does the extreme precious metals demand say about the global financial system? Kirby thinks, “What the western world is trying to hide from the rest of the world is the U.S. dollar centric money system is failing, and it’s failing in spades. The only reason it hasn’t failed yet is extraordinary levels of corruption and fraud have been used and employed to keep kicking the can down the road. They are also trying to keep officiating and hiding from the general public how broken the system really is. That’s been done basically by payoffs, bribes and ownership of the media; payoffs, bribes and ownership of the political apparatus; and payoffs, bribes and ownership of the biggest financial institutions. It gives things the appearance of being under control, but beneath the surface, things really aren’t under control.”

- Source, USA Watchdog

Is Gold About To Turn Around?

Nick Santiago thinks we're about to see a turn around. Based upon this Friday and last, something's about to happen. The miners might be about to make a turn around too. The world is going crazy and the financial system is on the skids, where else can you put your money? Precious metals is going to be the place to be. Be patient.

Central Banks And Financial Repression Authority

Axel discusses Gold, Central Banks, Governments and Markets.

Central Banks Suppressing Gold Price To Rig Currencies

Central Banks around the world are suppressing the gold price in order to defend their currencies, according to Chris Powell, secretary of the Gold Antitrust Action Committee.

Ron Paul Says: Watch the Petrodollar

By Nick Giambruno, Senior Editor, InternationalMan.com

The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. The sooner the better.—Ron Paul

Dr. Paul is referring to the petrodollar system, one of the main pillars that’s been holding up the US dollar’s status as the world’s premier reserve currency since the breakdown of Bretton Woods.

Want to know when the fiat US dollar will collapse? Watch the petrodollar system and the factors affecting it. This is critically important, because once the dollar loses its coveted reserve status, the consequences will be dire for Americans.

At that moment, I believe Washington will become sufficiently desperate to enforce the radical measures that governments throughout world history have always implemented when their currencies were threatened—overt capital controls, wealth confiscation, people controls, price and wage controls, pension nationalizations, etc.

And there’s more. The destruction of the dollar will wipe out most people’s wealth, leading to political and social consequences that will likely be worse than the financial consequences.

From Bretton Woods to the Petrodollar

The dollar’s role as the world’s reserve currency was first established in 1944, with the Bretton Woods international monetary system. The US—victorious in WWII, and possessing the overwhelmingly largest gold reserves in the world (around 717 million ounces)—could reconstruct the global monetary system with the dollar at its center.

The Bretton Woods arrangement linked another country’s currency to the US dollar at a fixed exchange rate, and the US dollar was tied to gold, also at a fixed exchange rate. Countries accumulated dollars in their reserves to engage in international trade or to exchange them with the US government for gold at $35 an ounce.

By the late 1960s, exuberant spending from welfare and warfare—combined with the Federal Reserve monetizing the deficits—drastically increased the number of dollars in circulation in relation to the gold backing it.

This monetary inflation caused nervous countries to accelerate their exchange of dollars for gold at $35. The result was a serious drain on the US gold supply (from 20,000 tonnes to around 290 million ounces by 1971, an amount it supposedly still holds).

With gold reserves shrinking rapidly, President Nixon officially ended convertibility of the dollar to gold, thus ending the Bretton Woods system on August 15, 1971. It was a default, and it took with it the main reason countries primarily held their reserves in dollars. The buck’s preeminent value in international trade was gone. Demand for dollars by foreign nations was sure to fall, along with its purchasing power.

That hurt OPEC, whose members were the world’s leading suppliers of a commodity even more valuable than gold: oil. OPEC countries needed a way to retain the real value of their earnings in the face of a declining currency, without having to jack the price of oil sky high.

If the dollar was to remain strong, it had to reinvent its status as the world’s reserve currency, and that required a new world financial arrangement, one which would give foreign nations an ironclad reason to hold and use dollars. Nixon dispatched his National Security Advisor Henry Kissinger to Saudi Arabia.

The Petrodollar System

Between 1972 and 1974, the US and Saudi governments created the petrodollar system.

Saudi Arabia was chosen because of its vast petroleum reserves, its dominant influence in OPEC, and the (correct) perception that the Saudi royal family was corruptible.

Under the new petrodollar system, the US guaranteed the survival of the House of Saud by providing a total commitment to its political and military security. In return, Saudi Arabia agreed to:

• Use its dominant influence in OPEC to ensure that all global oil transactions would be conducted only in US dollars.

• Invest a large amount of its oil revenue in US Treasury securities and use the interest income from those securities to pay US companies to modernize the infrastructure of Saudi Arabia.

• Guarantee the price of oil within limits acceptable to the US and act to prevent another oil embargo by other OPEC members.

No dollars, no access to the world’s most important commodity. It’s a very compelling reason to hold your reserves in dollars.

For example, if Italy wants to buy oil from Kuwait, it has to first purchase US dollars on the foreign exchange market to pay for the oil, thus creating an artificial demand for US dollars that wouldn’t exist if Italy could pay in euros.

The US is just a toll collector in a transaction that has nothing to do with a product or service. But that translates into increased purchasing power and a deeper, more liquid market for the dollar and Treasuries.

Additionally, the US has the unique privilege of using its own currency—which it can print at will—to purchase its imports, including oil.

The benefits of the petrodollar system to the US are impossible to overstate.

What to Watch For

Today, the geopolitical sands of the Middle East are rapidly shifting.

The faltering strategic regional position of Saudi Arabia, the rise of Iran (which is not part of the petrodollar system), failed US interventions, Russia’s increasing power as an energy giant, and the emergence of the BRICS nations (which offer the potential of future alternative economic/security arrangements) all affect the sustainability of the petrodollar system.

My colleague Marin Katusa’s mentioned in his book; The Colder War, you need to be aware of what Vladimir Putin is doing. Putin would like nothing more than to sabotage the petrodollar, and he’s forging alliances across the planet that he hopes will help him achieve his goal.

At the same time, you should watch the relationship between the US and Saudi Arabia, which has been deteriorating.

The Saudis are furious at what they perceive to be the US not holding up its end of the petrodollar deal. They believe that as part of the US commitment to keep the region safe for the monarchy, the US should have attacked its regional rivals Syria and Iran by now. And they may feel they are no longer obliged to uphold their part of the deal, namely selling their oil only in US dollars.

They’re already heavily involved with China and could also tilt toward Russia. Oil traded in rubles or yuan could be the future result—a death knell for the petrodollar.

Conclusion

It was evident long before Nixon closed the gold window and ended the Bretton Woods system in 1971 that a paradigm shift in the global monetary system was inevitable.

Now another shift also seems inevitable. Ron Paul’s words alert us as to when a dollar collapse is imminent.

“We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros.”

Someday, perhaps soon, Americans will wake up to a new reality, like they did on August 15, 1971.

To learn more about the coming death of the petrodollar and how it will directly affect you, I recommend you read Marin’s new book, The Colder War.

Dr. Ron Paul has fully endorsed it and inside, you’ll discover the web alliances and deals Putin has forged to break the monopoly of the dollar in the global energy trade and what a flight from the dollar will look like.

Before Putin makes another move against America, get the full story by clicking here to get your copy of this eye-opening book.

The article Ron Paul Says: Watch the Petrodollar was originally published at caseyresearch.com.

4 Steps for Avoiding a Capital “C” Catastrophe in the Next Downturn

By Dennis Miller

When the tech and real estate bubbles burst, many of my friends lost 40-50% of their retirement portfolios almost overnight. Is a similar downturn looming?

Take a look at the chart below showing the S&P’s performance since 2008.

Caution is in order. We may see a major correction, a huge downturn, or this bubble could continue to grow for quite some time. I’ll leave the timing predictions to others. Still, investor euphoria worries me. Even those playing with retirement money often ignore warning signs, thinking the parabolic rise in stock prices is never going to end. However, this time is NOT different.

Look at the Nasdaq’s performance just before the tech bubble crash:

From March of 1999 to March of 2000, the Nasdaq doubled, and investors were euphoric. Are you feeling that euphoria today?

Don’t Let the Next Downturn Make You Poor

The goal for a retirement portfolio is to create enough of an income stream that you can maintain your current lifestyle over the long haul while the balance grows ahead of inflation. This portfolio should also include enough safety measures to keep you whole regardless of what the market does.

Sounds simple, but it can feel like walking and chewing gum—to the power of 10. Treasuries are supposedly safe… but from what? Sure, you won’t lose your principal, but they won’t protect you from inflation. Certain stocks are solid; after all, many companies survived the Great Depression… but will they keep paying dividends when you need them? Investing in a turbulent market is a gyroscopic balancing act with endless variables.

4 Lifejackets

While outlining the entire Miller’s Money safety system is beyond our scope here, there are four must-do safety measures anyone can easily implement.

#1—Set strict position limits. No single investment should make up more than 5% of your overall portfolio. That means rebalancing at least once a year. I have a friend who brags about how well his portfolio has been doing. Turns out, 80% of his holdings are in Apple. While Apple is a fine company and has done well, he should consider locking up most of his gain and focusing on capital preservation.

#2—Use trailing stop losses. We recommend setting trailing stop losses at 20% or less on all market investments. Stop losses can prevent catastrophic damage to your portfolio. As our portfolio grows, a trailing stop can help lock in a gain. While you may still face setbacks from time to time, a trailing stop limits them. You’ll live to fight another day.

I’ve spoken to some retirement investors who limit each holding to 4% of their portfolio and set 25% trailing stops. Whatever makes sense! Just limit the size of each position—and in doing so the potential for catastrophe.

#3—Diversification is the name of the game. This means internationalizing, too. Holding 5-6 mutual funds all in the United States or in US dollars just won’t cut it. You must diversify into non-correlated assets all over the world; so, should one segment or market tank, it won’t bring down a major portion of your portfolio.

You should also review the correlation of the asset you’re considering. What events in the market will cause the price to rise and fall? And pay particular attention to the near term. For example, until recently, utility stocks were considered the gold standard for retirees. Now there is so much capital in this sector, the stocks are correlating much closer to changes in interest rates.

Look for assets that are either uncorrelated to the market or those which may move in the opposite direction (the market goes down, this goes up, and vice versa).

Again, the game is: hold on to as much capital as possible and live to fight another day.

#4—Look for low duration on income investments. Bond sellers tout the safety of US government and investment-grade bonds. They are correct as far as default is concerned; however, a sudden rise in interest rates would mean a large loss for an investor holding these bonds who resells them in the aftermarket.

Retirement investors normally hold bonds for interest income, and they hold them until maturity. While some say bonds are still a good investment, most of these folks are traders. They buy high duration bonds (their market price moves significantly with changes in interest rates), betting on interest rates continuing to decline, and plan to sell for a profit down the road. We are not traders or market timers. Unless you are comfortable holding a bond until maturity, stay away from it.

When you invest money earmarked for retirement, using models that were in vogue as recently as 10 years ago will leave you vulnerable. Whether you’re considering bonds, utilities or any other investment vehicle, having the most up-to-date information is imperative. You can learn more about where bonds fit—or don’t fit—in your retirement plan by downloading our timely and free special report, Bond Basics, today. Access your complimentary copy here.

The article 4 Steps for Avoiding a Capital “C” Catastrophe in the Next Downturn was originally published at millersmoney.com.

Why Janet Yellen Needs Her Own Magic Show

By Dennis Miller

What do Siegfried and Roy have in common with Federal Reserve Chairman Janet Yellen?
Shortly after the Bureau of Labor Statistics released unemployment data last month showing that joblessness had dropped below 6% for the first time since the 2008 crash, the Federal Reserve announced it would stop government bond purchases; Quantitative Easing is history.

The Federal Open Market Committee’s (FOMC) October 29 announcement states:

Information received since the Federal Open Market Committee met in September suggests that economic activity is expanding at a moderate pace. Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing. ...

The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. ... Accordingly, the Committee decided to conclude its asset purchase program this month.

To better understand what all that means in English, we need to back up a bit.

In 2012, Principal Global Investors Economist Robin Anderson noted of Yellen:

Janet Yellen … is the latest in a string of Fed bigwigs to get behind an idea of using explicit inflation and unemployment targets to inform the market about the Fed’s future plans—forward guidance, in Fed-speak. ...

Essentially, the idea is to set up explicit thresholds for inflation and unemployment measures (the two mandates for the Fed) to help set expectations about the future of monetary policy if there should be a disconnect between the two.

In other words, the Fed leans on concrete inflation and unemployment data to form policy. That sounds intelligent, straightforward, and simple; however, it’s the kind textbook talk we should expect from someone living in a world of theory. Most of the time, the person making these statements has never been responsible for or had her job performance measured by a sales budget, expense budget, or achieving profit goals.

As I’ve mentioned before, in the words of Yogi Berra, “In theory there is no difference between theory and practice. In practice there is.”

Ms. Yellen quickly discovered that Yogi was right. In May 2014, during testimony before a joint congressional committee, she said the 6.5% unemployment goal was being taken off the table, and she refused to give Congress any goals or timelines. She simply repeated that rates would remain near zero for a considerable time and would rise only when stronger economic conditions allowed.

Can you imagine the president of any major corporation standing up at a stockholder meeting and refusing to answer shareholders’ questions? “I’m not sure how much we will sell next year, nor do I know how much money we will earn. But when we get there I will tell you. You can trust me.”

Well, the day arrived, and Ms. Yellen says it’s time for bond buying to stop. And a few months down the road, the Federal Reserve is likely to begin slowly raising interest rates, even though she said she plans to keep interest rates low for a considerable period of time. Why? The unemployment rate, as reported by the BLS and shown in the graph below, is now below 6%.

Ms. Yellen has jumped and is now saying “that was our secret target.” This is her justification for stopping bond purchases. Hmm… sure looks like the Fed knows what it’s doing. Surely announcing that happy days are here again just before the midterm elections was a mere coincidence.

Take a look at the chart below showing the Labor Force Participation Rate as reported by the BLS on November 1.

I might be a 74-year-old with aging eyes, but even I can see that the line is going down. If true unemployment were going down, wouldn’t labor force participation be going up?

When it comes to raising interest rates Ms. Yellen has a big problem. Greenspan let that cat out of the bag at a recent New Orleans investment conference attended by members of the Casey Research team, noting that it was naïve to believe the Federal Reserve is independent of the government.

To justify the Fed’s easy-money policies, he said the government’s insatiable need for capital would have “crowded out” the rest of the economy. In straight talk that means if he hadn’t juiced the system with easy money, interest rates would have risen so high that capital would have been too expensive for the private sector. There is a universal truth: government-spending obligations preempt the need for sound money policies every time.

Ms. Yellen can trumpet all she wants about the Fed promoting employment and keeping inflation under control. Mr. Greenspan has made it clear that the real mission of the Fed is that of dealer to government spendaholics.

Over time, addicts want more frequent injections and bigger doses, and Ms. Yellen has inherited an addict in advanced stages. To solve the real problem (the addiction) requires an effective intervention (hopefully before it’s too late) and real behavioral change or the addict dies an ugly death.

Dr. Lacy Hunt estimates that every 1% increase in the interest rate would add $130 billion annually to the budget deficit. Projected deficit increases will run his estimate to $260 billion. Currently, if interest rates increased 4% it would add $520 billion to the deficit, accelerating the need for even more juice.

The government has reported that the annual deficit is going down. The Fed is keeping a lid on interest rates. When government debts are sold in a free market, though, interest rates will rise. Yellen knows this and she is doing everything she can to hide it. Ask her to set a target? Forget about it!

So, what do Siegfried and Roy have in common with Yellen? Both lean heavily on smoke and mirrors. Maybe it’s time for her to take their place in Las Vegas. For updates on her show times—along with timely investment news and economic analysis—sign up for our free weekly missive, Miller’s Money Weekly here.

The article Why Janet Yellen Needs Her Own Magic Show was originally published at millersmoney.com.

Inside The Shanghai Gold Exchange Vaults

Demise of the Petrodollar and the End of American Power

The End of the US Dollar Imperium

Jeff Deist and Patrick Barron continue their discussion on monetary imperialism. They delve deeper into US dollar supremacy, and how it might end with a whimper instead of a bang; how the Bundesbank is a potential savior for the world monetary order, while the IMF is a paper tiger; how elites will have an increasingly hard time denying gold a role in the global monetary system, and how America’s fiat dollar corrupts cultures as well as economies.

- Source Mises Institute

Why Gold Is Coming Back To Life

Edmund Moy, Chief Strategist at Fortress Gold, says factors like renewed demand for physical gold and supply constraints will drive prices higher soon.

Ted Butler - The Silver Nightmare Will Be Over Soon

Halloween couldn't have been more terrifying for silver investors. The gray metal cracked under $16/oz on Friday, a price not seen for nearly half a decade.

For years now, it's seemed like silver was beaten up so badly its price couldn't go lower. But then it would.

Why has silver been beaten down so badly? (now down 2/3 compared to it's high in late 2011). And will it ever see brighter days again?

This weekend, Chris has a long discussion with silver expert Ted Butler on the real culprit behind the wild price slams that have plagued silver: unfairly concentrated positions within the derivatives market.

- Source, Peak Prosperity

Jim Grant - The Outcome Of Hyperinflation Brought About By Massive Helicopter Money

How to think about central bank policy and the economic impact, with Jim Grant, founder and editor of Grant's Interest Rate Observer.

Charles Nenner - Were Out Of The Stock Market And Moving Cash To Gold

Swiss Demand Global Gold Recall Despite Central Bankers

In a word association game, If I said Switzerland, you might say cheese or chocolate or maybe the alps. But another common item everyone associates with the Swiss is their money. Their banks. Their currency.

Soon, that currency could change in a big way. This November, a Swiss Gold Referendum is going to a vote, and the repercussions, one way or the other, could cast a shadow of uncertainty on the US dollar. Nearly one-third of the Swiss Franc used to be guaranteed by gold reserves, not it’s less than 8 percent. If THIS VOTE goes through, the Swiss will be forced to raise the gold reserve back up to 20 percent.

Joining us today is radio host Charles Goyette. He and Congressman Ron Paul have talked about central banks at great length on his radio show. Today, we’d like to get HIS input on the Swiss Gold Referendum.

Jim Rickards: Obama Ending Alliance with Saudi Arabia and Killing the Petrodollar

At the San Antonio Casey Research Summit, Jim Rickards sat down with Alex Daley to talk about the pain ahead for the US Dollar, why we'll soon see SDRs, and other harbingers of the Death of Money.

The Single Most Important Lesson from the Casey Summit

By Louis James, Chief Metals & Mining Investment Strategist

At our San Antonio summit, Rick Rule gave a talk that, as always, was well reasoned, packed with facts, and powerfully cogent. His message was simply that bear markets are for buying and bull markets are for selling—and in the future, resource investors with staying power would look back on the current market as “the good old days” when they were able to buy great stocks cheap.

It was a great talk that no one I spoke to had any objection to nor argument against. What I did hear from some people, however, were comments along the lines of: “Yes, but he’s been saying that for years.”

Given the level of understanding of and sophistication regarding natural resource investing among Casey Summit attendees, this downbeat expression might be a sign of a bottom.

Fair enough, though I have to say that while I did get some questions about talking tax losses or reducing exposure to metals and mining stocks until the tide turns, what most people wanted to know was what the best bargains on sale now are. My answers are covered in our metals newsletters and updated in between issues.

Back to Rick’s talk. When I heard the pushback about Rick having said the same thing for years, my first thought was that he hasn’t; during the first two years of the slump that began in 2011, Rick was saying the market could go lower. He did recommend selected investments earlier, but it wasn’t until the beginning of this year that Rick and the others we featured in our Downturn Millionaires and Upturn Millionaires videos really started saying that this is the year to go long—way long.

Others have been more assertive about buying on the way down, myself included, which I have admitted in print before.

But here’s the thing: Rick and Doug and others—myself again included—have indeed made money buying when the market melts down and despair is in the air, as it is at present. That is an undisputed fact.

This got me to wondering why anyone would dismiss Rick’s remarks. I very much doubt that anyone there thought Rick was making things up, lacking in perception, faulty in his logic. Nor is it plausible that he could have been trying to trick anyone—to what end? Sure, brokers make money on all trades, winners and losers, but brokers who lose their clients’ money lose their clients. It simply makes no sense to deliberately mislead investors about the market or give bad advice on purpose. That’s a recipe for going out of business, and Rick has been in the business for decades, making a lot of money for a lot of people along the way.

No, I don’t think anyone was really doubting Rick’s sincerity or his conclusions. The hesitant ones were just so beaten up by the markets they were afraid.

This brings us back to an observation I’ve made many times myself and tried my best to stress to investors before they become resource speculators: you have to be a contrarian in our sector, buying low and selling high, and that takes a lot of courage based on solid convictions.

I suspect that some people may sabotage themselves on both scores when the market is down, not wanting to seem like zealots, blind to negative results. The thought makes me uncomfortable myself.

And yet, it’s true that resource investors must be contrarians, or they will get wiped out, and it’s absolutely true that successful contrarianism requires a very great deal of courage.

That’s when it hit me: it’s no accident that Doug and Rick make millions while others make peanuts. Anyone of reasonable intelligence could do what Rick and Doug do, but they don’t choose to. Fear can be fought, conviction can be nurtured, contrarianism can be cultivated. The ingredients and recipe for success are right in our hands… but so few people grasp them!

Extraordinary success can’t be easy, or it would cease to be extraordinary. Obvious. Almost tautological. But still important; it means that while few people do make the necessary choices, almost anyone can make them.

That includes you, my dear reader—if you have the conviction.

So… What’s the difference between a fanatic and a visionary?

Honest answer: Nothing.

A visionary is a fanatic who happens to be right.

I’m convinced Rick is right, of course, agreeing as he does with the Casey consensus on our market sector. I’ve been putting my money where my mouth (or keyboard, as the case may be) is.

Only time will tell if we are right—but if you wait until it’s obvious that we’re right, you’ll miss the opportunity for maximum profit.

Tough call.

But the choice is yours, and only you can make it.

And now you have the opportunity to be seated front and center to hear Rick’s entire talk, along with over 30 other world renowned experts, in our Casey Research 2014 Summit Audio Collection.

With your Casey Research 2014 Summit Audio Collection, you'll hear three days of in-depth presentations covering the most important issues facing our economy today and learn how to survive and prosper over the coming year.

You’ll hear from world-renowned experts in economics, geopolitics, investments, real estate, investigative journalism and international law about the current political environment, the latest developments on the economy, what's going on in the investment markets, what are the most promising investment ideas, and much more..

Altogether, you’ll get over 26 hours-plus of lessons from the world’s greatest investors, delivered to your door as a CD set or straight to your computer in MP3 format.  And if you order today, you’ll get $100 off the Summit collection price.

Click here for more details.

The article The Single Most Important Lesson from the Casey Summit was originally published at caseyresearch.com.

How is Doug Casey Preparing for a Crisis Worse than 2008?

By The Gold Report

He and His Fellow Millionaires Are Getting Back to Basics

Trillions of dollars of debt, a bond bubble on the verge of bursting and economic distortions that make it difficult for investors to know what is going on behind the curtain have created what author Doug Casey calls a crisis economy. But he is not one to be beaten down. He is planning to make the most of this coming financial disaster by buying equities with real value—silver, gold, uranium, even coal. And, in this interview with The Mining Report, he shares his formula for determining which of the 1,500 "so-called mining stocks" on the TSX actually have value.

The Mining Report: This year's Casey Research Summit is titled "Thriving in a Crisis Economy." What is the most pressing crisis for investors today?

Doug Casey: We are exiting the eye of the giant financial hurricane that we entered in 2007, and we're going into its trailing edge. It's going to be much more severe, different and longer lasting than what we saw in 2008 and 2009. Investors should be preparing for some really stormy weather by the end of this year, certainly in 2015.

TMR: The 2008 stock market embodied a great deal of volatility. Now, the indexes seem to be rising steadily. Why do you think we are headed for something worse again?

DC: The U.S. created trillions of dollars to fight the financial crisis of 2008 and 2009. Most of those dollars are still sitting in the banking system and aren't in the economy. Some have found their way into the stock markets and the bond markets, creating a stock bubble and a bond superbubble. The higher stocks and bonds go, the harder they're going to fall.

TMR: When Streetwise President Karen Roche interviewed you last year, you predicted a devastating crash. Are we getting closer to that crash? What are the signs that a bond bubble is about to burst?

Warning Missing the 2014 Casey Research Summit (Thriving in a Crisis Economy) could be hazardous to your portfolio. Sept. 19-21 in San Antonio, Texas. REGISTER NOW

DC: One indicator is that so-called junk bonds are yielding on average less than 5% today. That's a big difference from the bottom of the bond market in the early 1980s, when even government paper was yielding 15%.

TMR: Isn't that a function of low interest rates?

DC: Yes, it is. Central banks all around the world have attempted to revive their economies by lowering interest rates to all-time lows. It's discouraging people from saving and encouraging people to borrow and consume more. The distortions that is causing in the economy are huge, and they're all going to have to be liquidated at some point, probably in the next six months to a year. The timing of these things is really quite impossible to predict. But it feels like 2007 except much worse, and it's likely to be inflationary in nature this time. The certainty is financial chaos, but the exact character of the chaos is, by its very nature, unpredictable.

TMR: Casey Research precious metals expert Jeff Clark recently wrote in Metals and Mining that he's investing in silver to protect himself from an advance of what he calls "government financial heroin addicts having to go cold turkey and shifting to precious metals." Do you agree or are you more of a buy-gold-for-financial-protection kind of guy?

DC: I certainly agree with him. Gold and silver are two totally different elements. Silver has more industrial uses. It is also quite cheap in real terms; the problem is storing a considerable quantity—the stuff is bulky. It's a poor man's gold. We mine about 800 million ounces (800 Moz)/year of silver as opposed to about 80 Moz/year of gold. Unlike gold, most of silver is consumed rather than stored. That is positive.

On the other hand, the fact that silver is mainly an industrial metal, rather than a monetary metal, is a big negative in this environment. Still, as a speculation, silver has more upside just because it's a much smaller market. If a billion dollars panics into silver and a billion dollars panics into gold, silver is going to move much more rapidly and much higher.

TMR: Are you are saying that because silver is more volatile generally, that is good news when the trend is to the upside?

DC: That's exactly correct. All the volatility from this point is going to be on the upside. It's not the giveaway it was back in 2001. In real terms, silver is trading at about the same levels that it was in the mid-1960s. So it's an excellent value again.

TMR: In another recent interview, you called shorting Japanese bonds a sure thing for speculators and said most of the mining companies on the Toronto Stock Exchange (TSX) weren't worth the paper their stocks were written on, but that some have been priced so low, they could increase 100 times. What are some examples of some sure things in the mining sector?

DC: Of the roughly 1,500 so-called mining stocks traded in Vancouver, most of them don't have any economic mineral deposits. Many that do don't have any money in the bank with which to extract them. The companies that I think are worth buying now are well-funded, underpriced—some selling for just the cash they have in the bank—and sitting on economic deposits with proven management teams. There aren't many of them; I would guess perhaps 50 worth buying. In the next year, many of them are likely to move radically.

TMR: Are there some specific geographic areas that you like to focus on?

DC: The problem is that the whole world has become harder to do business in. Governments around the world are bankrupt so they are looking for a bigger carried interest, bigger royalties and more taxes. At the same time, they have more regulations and more requirements. So the costs of mining have risen hugely. Political risks have risen hugely. There really is no ideal location to mine in the world today. It's not like 100 years ago when almost every place was quick, easy and profitable. Now, every project is a decade-long maneuver. Mining has never been an easy business, but now it's a horrible business, worse than it's ever been. It's all a question of risk/reward and what you pay for the stocks. That said, right now, they're very cheap.

TMR: Let's talk about the U.S. Are we in better or worse shape as a country politically and economically than we were last year? At the Casey Research Summit last year, I interviewed you the morning after former Congressman Ron Paul's keynote, and you said that you hoped that the IRS would be shut down instead of the national parks. There's no such shutdown going on today, so does that mean the country is more functional than it was a year ago?

DC: It's in worse shape now. The direction the country is going in is more decisively negative. Perhaps what's happening in Ferguson, Missouri, with the militarized police is a shade of things to come. So, no, things are not better. They've actually deteriorated. We're that much closer to a really millennial crisis.

TMR: Your conferences are always thought provoking. I always enjoy meeting the other attendees—it's always great to talk to people from all over the world who are interested in these topics. But you also bring in interesting speakers. In addition to your Casey Research team, the speakers at the conference this year include radio personality Alex Jones and author and self-described conservative paleo-libertarian Justin Raimondo. What do you hope attendees will take away from the conference?

DC: This is a chance for me and the attendees to sit down and have a drink with people like Justin Raimondo and author Paul Rosenberg. I'm looking forward to it because it is always an education.

Another highlight is that instead of staging hundreds of booths of desperate companies that ought to be put out of their misery, we limit the presenting mining companies in the map room to the best in the business with the most upside potential. That makes this a rare opportunity to talk to these selected companies about their projects.

TMR: We recently interviewed Marin Katusa, who was also excited about the companies that are going to be at the conference. He was bullish on European oil and gas and U.S. uranium. What's your favorite way to play energy right now?

DC: Uranium is about as cheap now in real terms as it was back in 2000, when a huge boom started in uranium and billions of speculative dollars were made. So, once again, cyclically, the clock on the wall says buy uranium with both hands. I think you can make the same argument for coal at this point.

TMR: You recently released a series of videos called the "Upturn Millionaires." It featured you, Rick Rule, Frank Giustra and others talking about how you're playing the turning tides of a precious metals market. What are some common moves you are all making right now?

DC: All of us are moving into precious metals stocks and precious metals themselves because in the years to come, gold and silver are money in its most basic form and the only financial assets that aren't simultaneously somebody else's liability.

TMR: Thanks for your time and insights.

You can see Doug LIVE September 19-21 in San Antonio, TX during the Casey Research Summit, Thriving in a Crisis Economy. He'll be joined on stage by Jim Rickards, Grant Williams, Charles Biderman, Stephen Moore, Mark Yusko, Justin Raimondo, and many, many more of the world's brightest minds and smartest investors. To RSVP and get all the details, click here.

The article How is Doug Casey Preparing for a Crisis Worse than 2008? was originally published at caseyresearch.com.

War, Peace, and Financial Fireworks

By Casey Research

Politics has long been a driver of international markets and fickle financial systems alike. Everything is connected. Here are some voices from the just-concluded Casey Research Fall Summit talking about cause, effect, and war.

James Rickards, senior managing director with Tangent Capital Partners and an audience favorite at investment conferences, says the Middle East, Russia, and China are all working against the US dollar and for gold.

America’s recently improved relationship with Iran is actually bad for the petrodollar, he claims, because the Saudis and the Iranians are bitter enemies. The Russians, for their part, aren’t sitting idly by while the US imposes sanctions on them—aside from Putin being able to freeze US assets in Russia, Rickards believes that Russian hackers may already have the ability to shut down the New York Stock Exchange.

China does want a strong dollar because it still holds over $1 trillion in dollar-denominated assets. But Beijing is aware that eventually the dollar will depreciate, so it’s buying gold to hedge against a decline in the value of the US currency. Current gold reserves are estimated to be between 3,000 and 4,000 tonnes of gold; the ultimate target may be 8,000 tonnes.

Rickards thinks that we are approaching a period of extreme volatility in the US markets and recommends allocating 10% of one’s portfolio to physical gold.

Bud Conrad, chief economist at Casey Research, also is a petrodollar bear. For the past 40 years, he says, the petrodollar has bestowed extraordinary privileges on Americans, but that era is now coming to an end.

Dozens of countries have already set up bilateral trade agreements that circumvent the US dollar. Dollars as a percentage of foreign reserves have declined from 55% in 1999 to 32% today—and could reach 18% by 2019, says Conrad. Ultimately, the petrodollar will fail, which will lead to a rise in sought-after commodities, especially gold.

Conrad thinks the greatest danger we face may be a combined financial and political collapse. Current geopolitical problems are even worse than economic problems, he says, and the trend is toward more, not less, war. Wars, on the other hand, often precipitate financial collapse.

Grant Williams, portfolio and strategy advisor for Vulpes Investment Management in Singapore and editor of the hugely popular newsletter Things That Make You Go Hmmm…, wholeheartedly agrees.

War and financial turmoil have always been inextricably linked, says Williams. Both occur in natural cycles, and one often causes the other. He believes that we’re in an extended period of economic peace because the Federal Reserve has used monetary policy “to abolish the bottom half of the business cycle.”

Although that may sound like a good thing, it is not. The business cycle, argues Williams, is inevitable and natural; we need it to cleanse the economy. But the Fed has leveraged to such unsustainable levels to “keep the peace” that the inevitable fallout will be that much worse.

He foresees serious wars to accompany the coming financial turmoil. Today’s geopolitical setup, he says, is similar to 1914’s. In 1914, France was a fading former giant (that’s Japan today); Britain was a waning superpower, no longer able to guarantee global security (that’s the US now); and Germany was an emerging industrial power huffing and puffing and making territorial claims (today, that’s China).

Rather than all-out war, Marin Katusa, Casey’s chief energy investment strategist, believes the new “Colder War” will be fought by economic means, specifically through domination of the energy markets.

While Europe is using less oil than it did over a decade ago, says Katusa, it’s depending more on Russia for its energy. North Sea oil and gas production is in decline, and Norway’s production has reached a plateau and is dropping. Russia, on the other hand, owns 40% of the world’s conventional oil and gas reserves.

The solution, Katusa says, is the “European Energy Renaissance.” As Putin tightens the thumbscrews on his energy trading partners, more and more EU countries are waking up to the fact that they will have to produce their own energy to gain independence from Russia. As the best ways to play this new paradigm, Katusa recommends three undervalued North American companies that are in the thick of the action.

To get Marin Katusa’s timely stock picks (and those of the other speakers), as well as every single presentation of the Summit and all bonus files the speakers used, order your 26+-hour Summit Audio Collection now. They’re available in CD and/or MP3 format. Learn more here.

The article War, Peace, and Financial Fireworks was originally published at caseyresearch.com.

By Grant Williams

 This week’s TTMYGH is going to be a little different.

After several weeks on the road and staring down a couple more, I am going to make an attempt to turn the presentation I have been delivering into written form, after many requests for a version that people can look at in the comfort of their own homes (and, presumably, without my annoying voice clouding the issue).

I’m hoping I can turn a very visual and fluid presentation into a more static one; but I’m sure that if I fail miserably, you’ll let me know.

This will make for a chart-heavy and consequently much longer piece than usual (though lighter on additional articles in the interest of saving your time and space this week), but let’s see if we can’t make this work.

The presentation, entitled “The Consequences of the Economic Peace,” is a look at the ramifications of several decades of easy credit and an attempt to draw parallels with a time in history when the world looked remarkably similar to how it does now.

That last time didn’t end so well, I’m afraid.

So... without further ado, here we go.

The Consequences of the Economic Peace

                                                       

The 19th century was a time of upheaval right across the world.

There were no fewer than 321 major conflicts in a century which encompassed, among others, the Napoleonic Wars, the Crimean War, the US Civil War, the Boxer Rebellion, the Opium Wars, and the Boer War.

That single century saw no fewer than 52 major conflicts in Europe alone.

Britain, as the world’s preeminent superpower, was involved in an astounding 73 conflicts in that single 100-year span. In addition, France fought 50 wars and Spain fought in 44.

How crazy was Europe in the 19th century?

Well, Britain and France fought on the same side in six major conflicts; the Spanish and the French sided together on nine occasions; and Britain and Spain found themselves in alliance in seven different wars.

HOWEVER…

Britain and France fought each other in no less than eight separate wars between 1803 and 1900; and in 1815 alone Spain and France fought each other on four occasions, while the British and Spaniards were on opposing sides six times during the century.

And people wonder why the EU is such a tricky proposition…

The serious point to be made, though, is that once it comes to war, former alliances count for nothing.

Anyway, as the 19th century made way for the 20th, Jan Bloch, a Polish banker, wrote a book entitled Is War Now Impossible?, in which he predicted that the lightning wars of the past — where cavalry ranks and infantrymen faced each other in hand-to-hand combat, deciding victory and defeat in short, brutal fashion — were to be replaced by drawn-out, grinding trench warfare.

“Everybody will be entrenched in the next war. It will be a great war of entrenchments. The spade will be as indispensable to a soldier as his rifle.”

— Jan Bloch, Is War Now Impossible?

Cheerful soul, was old Jan.

But, despite Bloch’s dire predictions, the first decade of the 20th century was blissfully peaceful, with no conflicts between European powers anywhere on the continent.

By the time 1910 rolled around, however, political tensions were rising across Europe.

The Franco-Prussian war that had so inspired Bloch had led to the creation of a German Empire and the ascension of Wilhelm II to the German throne in place of arch diplomat Otto von Bismarck. It had also made the country more bellicose.

Russia, meanwhile, had lost most of its Baltic and Pacific fleets in the Russo-Japanese War of 1905, and that defeat had led to revolution. Defeat in the Far East forced the country to turn its attentions westward towards the Balkans — a region it eyed lasciviously — as did its old rival Austria-Hungary.

Meanwhile, in 1907, Britain and France had signed the Entente Cordiale, which finally put to bed a thousand years of almost continual conflict between the two countries (or at the very least reduced the “warfare” between the two to bouts of French impoliteness countered by silent indignance with some heavy tutting on the part of the British).

In 1908, Austria-Hungary had annexed Bosnia & Herzegovina; and in 1912 Serbia, Greece, Montenegro, and Bulgaria formed the Balkan League to challenge the Ottoman Empire.

After some classic in-fighting when Bulgaria turned on its allies (only to be defeated inside a month), the Balkan League emerged victorious — a victory that disturbed Austria-Hungary, who feared nothing more than a strong Serbia on her southern border.

So here’s where Europe stood in 1914:

Great Britain, her power receding, was struggling to play the role of the world’s policeman; Germany, newly industrialised and ruled by a nationalistic leader, was puffing her chest out to the rest of the continent; and good old France was in steady decline and (no doubt painfully) reliant upon her old foe Britain for support.

And yet, despite such geopolitical turmoil everywhere, the man in the street was remarkably sanguine about the state of the world:

The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper.

— John Maynard Keynes, The Economic Consequences of the Peace

Those words were written by none other than everybody’s favourite economist, John Maynard Keynes, in his book The Economic Consequences of the Peace, a publication which made him a household name all around the world.

It’s a sad indictment of today’s society that the only way for a modern-day economist to achieve Keynes’ level of fame would be to become a serial killer or marry a Kardashian.

But I digress... let’s get back to Europe in 1914. Despite the numerous mounting problems, as Keynes had pointed out, everyday life went on as usual — and the men and women of Europe in general and the UK in particular assumed that nothing untoward would happen.

Europe’s leaders would make sure everything got sorted out.

Sound familiar?

Then, on the 28th of June, 1914, amidst all the known knowns, a young man called Gavrilo Princip stepped up to a passing car in Sarajevo and with a single shot became a Black Swan that changed the course of history when he assassinated Archduke Franz Ferdinand of Austria.

I won’t go into the details of WWI at this stage; but in case you don’t know about it, I’m told there have been several books written on the subject (Barbara Tuchman’s The Guns of Augustbeing my own personal favourite). Anyway, after four years of warfare that tore the world apart like never before, a peace was finally reached.

But it was a peace which one man in particular vociferously condemned — and that man was John Maynard Keynes.

Keynes had left Cambridge University to work at the Treasury in 1915, and he had been hand-picked to attend the Versailles Conference as an advisor to the British Government. He was staunchly against reparations of any kind and advocated the forgiveness of war debts (yeah, I know… go figure); but as it turned out, his advice to focus on economic recovery was disregarded; and Keynes resigned his position, returned to Cambridge, and set about scribbling furiously in his notebooks.

In just two months, Keynes wrote the book that would make him a household name around the world — The Economic Consequences of the Peace.

In the book, Keynes was highly critical of the deal struck at Versailles, which he felt sure would lead to further conflict in Europe — describing the agreement as a “Carthaginian peace” — and with the passing of a surprisingly short period of time, he would be proven correct.

Click here to continue reading this article from Things That Make You Go Hmmm… – a free newsletter by Grant Williams, a highly respected financial expert and current portfolio and strategy advisor at Vulpes Investment Management in Singapore.

Two Estimations Of Chinese Gold Demand

jessescrossroadscafe.blogspot.com

I found it interesting that these two estimations of Chinese gold demand arrive at similar answers from two different methods and assuming two different start dates.

Before anyone asks, Koos Jansen has addressed the notion of 'round trips' of gold on the Shanghai Exchange in some detail.   It is not the same sort of bullion game that is the hall mark of the Comex.

The first chart is from the data wrangler Nick Laird at Sharelynx.

The second chart is from GoldSilver.com.

I don't think anyone knows the exact amount of physical gold that China and the BRICS are absorbing.   And how much unencumbered gold remains in many of the Western vaults either.

One has to chuckle at 'analysts' who just ignore what of the more significant trend changes in the international money markets.   The BRICS are buying tonnes of gold and adding them to their reserves?  Nothing to see here.  Just the usual hijinks of the uninformed and unsophisticated.

But no matter how one looks at it, there was a profound change in the metals markets around 2006, and that it is somehow involved with what has been called a 'currency war.'  As it has done in the past, the nature of the global reserve currency system is changing.

Gold is flowing from West to East.