Ron Paul: The Movie

 

An Introduction to Austrian Economics with Israel Kirzner

Israel Kirzner is an Austrian economist and one of the world’s foremost experts on Ludwig von Mises’s methodology and thought.

Here he speaks at a Future of Freedom Foundation event on December 21, 1996 and provides a good general overview of Austrian Economics, touching on the concepts of imperfect knowledge, the origin of entrepreneurial motive, spontaneous order, and the “fatal conceit” of attempting to centrally plan economic orders.

 

Road Map to Sound Money: A Legislative Hearing on H.R. 1098 and Restoring the Dollar

 

Professor Antal Fekete outlines the gold-suppression, bond-support scheme

In a two-part essay posted at 24hGold, the economist Antal Fekete provides a compelling interpretation of the gold price suppression scheme, which is also a scheme for the support of U.S. government bonds.
Fekete writes:

 ”The government has the following desiderata: 
 1) To have a floor below the bond price. 
 2) To have a ceiling above the gold price. 
“Indeed, without such a floor and ceiling, the bluffing epitomized by check-kiting could be called, and the international monetary system would unravel. 
“To promote these desiderata, the bond and the gold markets are manipulated. It is true that the Treasury and the Federal Reserve prefer not to play a direct role in it. Speculators are induced to do it for them through the lure of risk-free profits. 
“Simply put, the role of the derivatives market is to make phantom bonds available to buy, and phantom gold available to sell, for the benefit of speculators. It is no problem to make speculators want to buy phantom bonds. They have the incentives. They know that the Federal Reserve is going to buy, rain or shine. This offers a risk-free opportunity for profits. All the speculators have to do is to pre-empt Federal Reserve purchases — that is, to buy beforehand. So let them. 
“The tricky part is how to make speculators want to sell phantom gold. This problem is solved by setting up a gold mine as a front, beefing it up as the world’s largest gold-mining concern, and letting it introduce a phony hedge plan.“

Fekete adds:
“Clandestine government policy to manipulate the bond and gold markets is revealed by statistics on the number of outstanding contracts in derivatives, showing an inordinate open interest in bonds on the long side and in gold on the short side. Neither has any rhyme or reason to exist, in view of the underlying economic reality. What is more, the long interest in bond and short interest in gold derivatives are increasing exponentially, far outpacing the amount of bonds in existence and the amount of gold available for delivery. 
Moreover, there is an extreme concentration of derivatives in the hands of three or four firms — namely, concentration of long bond and short gold positions.”

Part I is headlined “When Atlas Shrugged: The Lure and Lore of Risk-Free Profits” and it is at 24hGold HERE
 
Part II is headlined “When Atlas Shrugged: Gibson’s Paradox and the Gold Price” and it is at 24hGold HERE

 

King World News Weekly Metals Review

The King World News weekly precious metals review finds Bill Haynes of CMI Gold and Silver reporting a quiet week on the retail front but futures market analyst Dan Norcini shaking his head at brazen intervention in the gold market by central banks. 

You can listen to their commentary at the King World News Internet site HERE

 

Egon von Greyerz talks to James Turk

James Turk interviews Matterhorn Asset Management‘s Egon Von Greyerz (one of the most brilliant minds in precious metals today) on the importance of owning physical gold (and silver of course) OUTSIDE the banking system.

 

Mystery and Intrigue in the Gold Market

Mystery and Intrigue in the Gold Market

 

By Mark Leibovit

Liebovit VR Gold Trader

Monday, August 15, 2011

 

Politicians, governments, media, etc. seem to overlook the true value of precious metals and try to deter individuals from owning them. This has been going on for centuries. Most recently, the United States government prohibited American citizens from owning gold between 1933 and end of 1974.

They continue to mislead people into believing that paper currencies are the real wealth. We hear from the chairman of the Federal Reserve, Ben Bernanke, that gold is not money, just “tradition.” Despite Bernanke’s comments, gold is indeed a currency that competes with government-issued currencies and helps determine not only the value of those currencies but also the level of interest rates and the value of government bonds.

Do they inject this propaganda to take attention away from what the central banks are actually doing with gold and the price of gold? Are they really overlooking or ignoring the true value of gold, or is this smoke and mirrors in front of what they are actually doing?

The gold-exchange standard protected citizens from hyperinflation and other abuses of monetary policy. President Nixon ended the gold-exchange standard on August 15 1971, which meant the end of direct convertibility of the dollar to gold. This removed the restrictions put on governments and central banks as to what they could do with the money supply.

Central banks want to continue to expand the money supply but not face the consequences. They seek ways to force down the price of gold because the price of gold is an indicator of central bank monetary policy.

How do the central banks continue to increase money supply while trying to keep the price of gold down?

The most common policy is to lease gold to a specialized group of insiders known as bullion banks. The central banks call this leasing, but it is operationally a form of gold sales.

The central bank leases gold at well under 1 percent per year to bullion banks. Bullion banks then sell the gold into the private market, take the money, and invest it in government bonds or other investments that pay far more than 1 percent per year.

That gold is gone. To get the gold back, the central banks would have to demand payment in gold by the bullion banks. The bullion banks could not repay this gold without going into the gold market and purchasing it. This would drive up the price of gold. It would bankrupt the bullion banks.

So central banks do not require the bullion banks to repay the gold the bullion banks borrowed. The central banks simply roll the loans over, year after year, and the bullion banks invest the money they get from selling the gold. These central bank sales are not recorded as sales by the central banks. The public remains oblivious.

The central banks maintain the fiction that they still own the gold. They report their holdings of gold as not having changed. But from an economic standpoint, the gold is gone and there is no possibility of central banks will ever get it back from the bullion banks.

Another way central banks and governments battle investors in gold is to announce from time to time that they are contemplating the sale of gold. This scares some gold investors, who sell. By threatening to sell gold, central banks are attempting to push down the price of gold.

The latest example of this came at the G20 meeting on April 2. An announcement was made that the International Monetary Fund would make available special drawing rights (SDRs), which serve as money for central banks. To raise some of this money, the IMF was to sell some of its gold. That was the official announcement.

The IMF has been threatening to sell gold for years. To do this takes a majority vote of the member nations of the IMF. It is clear that the member nations are willing to allow the IMF to do this. Previously, this was not clear.

Why would a central bank or the IMF say in advance that it planned to sell a large portion of its gold holdings? When a large holder of commodities is going to sell into the open market, he does not announce this in advance. His goal is to maximize the money he gains by the sale of the asset. If he warns the world how much he plans to sell and over which time period, this will depress the price if the sale constitutes a significant quantity.

It is economically irrational for a seller of commodity to say in advance how much he plans to sell. I say “economically irrational” on the assumption that the goal is to make a profit. But if the goal is not to make a profit but rather to harm people who hold a particular commodity as an investment, the announcement makes good sense.

A rising price of gold warns the public that the government’s tax policies and the central bank’s monetary policies cannot be trusted.

How do we believe our governments when they tell us that precious metals have no real value even as foreign governments and foreign banks continue to buy billions of dollars of the metals and some are even buying mining companies and mines to ensure continued supply?

In April 2009 China announced that its gold reserves had increased by 76 percent, from 600 tonnes to 1,054 tonnes. For the previous six years China had been reporting to the IMF only 600 tonnes. Had China acquired those 454 new tonnes only in the past year? Experts believe that China acquired those 454 new tonnes over at least several years, largely by purchasing the production of China’s own fast-growing gold mining industry.

Global financial institutions continue to create paper contracts not backed by the physical metals. Is this their way to show plenty of supply in order to keep prices down so that they can continue to accumulate the bullion?

In 2000 CPM Group, a commodities market research, consulting, asset management, and investment-banking firm) released a document stating, “With the start of the London Bullion Market Association’s release of monthly trading data, the market has become aware that 100 times more gold and silver trade hands each year, just in the major markets, than is produced or used. Some market participants have wondered aloud how 10 billion ounces of gold could trade via the major markets each year, compared to 120 million ounces of total supply and demand, while roughly 100 billion ounces of silver change hands, compared to around 628 million ounces of new supply.”

Years ago GATA disclosed that the IMF, the leading compiler of official gold reserve data, allowed member nations to count gold they had leased, gold that had left their vaults, as if it was still in their vaults. The effect of this accounting fraud was to deceive the gold market into thinking that central banks had much more gold left with than they really did.

While the major gold and silver exchange-traded funded frequently report their metal holdings, studies by GoldMoney founder James Turk and former GATA board member Catherine Austin Fitts and her lawyer, Carolyn Betts, suggest that this data is unreliable too. For the major ETFs won’t disclose exactly where their metal is, and indeed their prospectuses say it’s OK for the ETFs not even to know where their metal is kept among custodians and sub-custodians.

And the custodians for the major gold and silver ETFs are, perhaps not so coincidentally, also the two major international banks that report having the biggest short positions in gold and silver, short positions that give these banks and metal custodians a powerful interest in suppressing the price of the assets they supposedly are holding for investors who want those assets to rise in value.

The biggest so-called “physical” gold market in the world is the one run by the London Bullion Market Association. The LBMA publishes statistics on how much gold and silver is traded by its members. But these statistics show spectacular volumes, more metal than could possibly exist. Of course much of this metal could be sold and resold back and forth many times every day. But an expert in that market, Jeffrey Christian of the CPM Group, acknowledged at the March 25 hearing of the U.S. Commodity Futures Trading Commission, as he had acknowledged in that explanatory report published in 2000, that the London bullion market is actually a fractional-reserve gold banking system built on the presumption that most gold buyers will never take delivery of their metal but rather leave it on deposit with the LBMA members from whom they bought it.

“Why is gold such a mystery? Why is it, along with silver, kept such a mystery? It’s because the two precious metals are not only money but, from the point of view of free individuals, the best sort of money, less susceptible to what governments see as the most desirable quality of money — the susceptibility to control by government and particularly its susceptibility to devaluation. You can print or otherwise issue gold and silver derivatives to infinity, but not the metals themselves.”

What will this do to the price of gold and silver when the holders of these paper-backed securities realize that the actual supply does not meet the demand, that they will not be able to receive the bullion they paid for? We are already seeing the results of the increased demand as the price of gold continues to move higher.

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Ron Paul’s Urgent Warning!

 

The Gold Standard Institute journal

The July edition of the journal of the Gold Standard Institute leads off with an essay by financial writer Louis Boulanger, who argues that while people may ignore reality, they do so at great peril, as there is no guarantee that reality will ignore them. 

Boulanger concludes that the Internet revolution is moving sovereignty away from the state and back toward individuals — which is, of course, the moral claim for ensuring that the precious metals trade freely as independent currencies. May it come to pass in our time. 

You can find the July edition at the Gold Standard Institute’s Internet site HERE

 

Gold: the secret weapon in the worldwide financial war

A “full-scale financial war” is raging around the world and gold is the secret weapon, geopolitical analyst James G. Rickards tells King World News today.

Rickards says China’s new gold exchange is retaliation for the refusal of the United States to restrain paper currency and help control inflation. He agrees that the exchange has the potential to explode demand for gold.

As for the proposal for Switzerland to create a “parallel” gold-backed franc, Rickards says it would create a massive case of Gresham’s Law, where everyone would dump the unbacked franc for the gold-backed franc. Indeed, Rickards says, the first country that goes to a gold-backed currency will have the only currency anyone wants, the strongest currency in the world. Swiss legislators, he adds, can’t possibly understand the global implications of the proposal.

Holes in the fiat currency dike are popping out all over the place, Rickards says, and in the face of the collapse of their paper currencies, governments will either have to convert their currencies to gold or resort to unprecedented coercion, outlawing gold or punitively taxing it and imposing capital controls.

As usual Rickards has thought things through far more extensively than most analysts. You can listen to his interview at the King World News Internet site HERE

 

Gold standard back?

 

Richard Russell: the only true standard of value

The Only True Standard of Value

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from  Richard Russell’s Dow Theory Letters

April 20, 2011 — The dollar is doing just what the Fed wants it to do — it’s sinking, sinking and sinking more. Sadly, the great American public doesn’t understand what’s happening, and if they were told they couldn’t care less. Of course, what the public does notice is the painful result of the dollar’s bear market. The result is seen every time Joe six-pack and his wife hit the neighborhood super-market. The rising prices are a shocker.

And if the price of your favorite cold cereal has not been raised, there is less of the cereal in the box. Then when Joe has to fill up the buggy to get home, he groans as he sees the gasoline tab. “Sixty bucks to fill up this lemon. I’m going to get a motorized bike,” growls Joey. “This country is going to hell in a hand-basket.”

The US has been getting away with spending more than it takes in, ever since World War II. It’s a process that isn’t sustainable, and if a process is unsustainable it will end. The US’s habit of spending more than it’s paying for has finally hit a brick wall. The wall is the demise of the famous “Yankee dollar.” In order for the US to live over its head, it must borrow.

Half of the US’s borrowing comes from foreign sources. And that’s a problem. The fiat US dollar has no fixed value. It’s worth must be measured against other currencies. “The dollar is worth so much in relation to the Brit pound — or the dollar is worth so much in terms of the euro.” Our foreign creditors, many of whom are loaded with dollars, keep a sharp eye on the comparative value of the dollar, and they’re now frightened and mulling over the credit-worthiness of the US. The recent warning from the S&P rating agency heightened our creditors worries about both the US and the dollar.

The disgraceful battle between Obama and the Democrats vs. Paul Ryan and the Republicans is further raising the fears of our creditors. With commodity inflation now out in the open, Fed head Bernanke has a problem. His absurd defense is to refer to “core inflation” (without the cost of food and energy). Bernanke announces to the world that there’s “no inflation,” and besides if there is inflation the Fed can end it any time they want.

What Bernanke and the Fed can not control is the tell-tale price of gold.

As I write the battle is on to keep June gold from closing above 1500. Yesterday June gold hit an intra-day high of 1500, but can it close there? “Ah,” Bernanke must be thinking, “If I could only control the price of that damn gold.”

Yesterday, as I looked at my computer, and I could see the fierce struggle that was going on as gold whipped up six dollars, then five minutes later it is up a dollar-fifty. There must be a powerful contingent (perhaps backed by the Fed) that is desperate to keep the price of gold DOWN and below 1500. But alas for the Fed, gold is traded internationally across the face of the

planet and 24 hours a day. Gold is out of the hands of the Fed and Goldman Sachs, and it trades everywhere and where it wants.

This year I’ve been telling my subscribers to think in terms of two concepts:

(1) Think in terms of avoiding losses (rather than thinking in terms of building fat profits).

(2) Think in terms of PURCHASING POWER. Are you gaining or losing purchasing power?

For ten years I’ve advised my subscribers to climb aboard the great bull market in gold. Early subscribers who have followed my advice now have huge paper profits, many have become millionaires, others have been able to retire on their gold positions. Even new-comers have benefited from their belated investments in gold.

Over the last 12 months, the dollar price of gold is up 31.32 percent. Gold is the only true standard of value. The value of everything else must be measured in terms of gold. “How many ounces of gold does it take today to buy a new Ford?” “How many ounces of gold did it require to buy a new ford in 1932?” It costs a lot more (in dollars) to buy a new Ford today. But how many ounces of gold does it cost to buy a new Ford today compared with the ounces required in 1932 to buy a new Ford? What has changed, gold or the dollar? Gold hasn’t changed, what has changed is the dollar, which has lost purchasing power.

The US public is rapidly being educated about money and gold. Ads are appearing almost daily in the newspapers, telling readers how and why to buy gold. The ads are being confirmed by the rising price of gold. The public is finally “getting it”. I’ve been in this business since 1958, and I’ve seen a lot of advisory services come and go — a lot! What I notice is that there are a number of fairly new advisories that are climbing (entering) on the back of the gold bull market. These advisories are sending out mass mailings to the public — educating them on the fact of the dying dollar and the Fed’s plan to solve the debt problem by diminishing the purchasing power of the dollar. As Lincoln put it, “You can’t fool all of the people all of the time.” Clueless as the American populace is, they are finally learning about gold, something that their great grandparents took for granted.

In terms of gold: Assessing real estate values in terms of gold. At its peak, the housing market in March 2007, the median US home price was $262,600, which was equivalent to 340.6 ounces of gold. Today’s median income price is $186,100 or 109.2 ounces of gold. So in terms of real money, gold, the US median home price has lost 47% since 2007.

Applying the same measurements to the Dow, from the end of 2001 to the end of 2008 an investment in the Dow would have lost 81% of its purchasing power in terms of gold (statistic courtesy Larry Edelson of the outstanding “Uncommon Wisdom” advisory).

The great and harsh lesson of history now stares Americans in the face — no fiat currency in history has ever survived. This fact underscores the growing panic to get out of dollars and out of all fiat currencies.

This emphasizes the irony of those who are rushing into dollars or dollar denominated bonds and blue-chip stocks on the thesis that these are “safe havens.” It’s a rush out of dollars to get into other forms of dollars. What’s happening now is on a greater scale than has ever occurred before in the history of mankind. It’s going to hit the current generation of Americans like a whirlwind. It will be historic in its intensity and destructiveness.

The great gold rush of 1849 opened up the American West. This gold rush of the early 2000′s will open up the eyes of Americans to the danger of the Federal Reserve and fiat money.

Below in log scale — one of the greatest and most significant bull markets in US history.

Below, the Dow over the exact same period.

Richard Russell