Saturday, August 8, 2009

Thar's Gold in Them Thar Banksta's Pockets

OK, another linkfest. To the European Central Bank. There are some powerful and respected names in that organization. There are so many countries involved it makes it hard to think that there is concerted corruption involved in the decisions.

They have decided on a systematic sell-off of Gold, over a 5 year period. On the face of it, this seems absurd. Every country is going to be printing money, so real money (Gold), should in theory get more valuable.

The alternative view, and the EWI view, is that Gold and every asset class, is going to take a dirt nap as credit is tightened. But bear in mind, as a long term paying subscriber to EWI, I have seen them be wrong...way wrong, many times. The up side...they have original thinking and original data as I strive for. The downside...they hardly ever admit a mistake or post-analyse why a viewpoint went wrong. This makes me think they are more interested in selling subscriptions than in education and success of it's members.

When everyone gets disgusted with paper money, aka fiat money, or as I like to oversimplify "fake money", with Gold being the only real money, that will create demand for the REAL MONEY.

Now here's one for you all. Since we have all these depression analogies going on. The United States made Gold illegal. In 1933, in order to stabilize the monetary system, President Franklin D. Roosevelt, under Executive Order No. 6102, confiscated all privately owned gold in the United States. In order to go into your safe deposit box after that Order was issued, an armed enforcement official would accompany you, and if you had gold in there, you would be in some deep Kimchee.

OK so you have read the above. Here is the deception part.

The ECB "selloff" is actually a reduction in gold being sold. They used to allow 500 tons per year to be sold off, out of 10,000 total tons of gold that they own. But Germany, after their past hyperinflation, owns 40% of that gold and they firmly state they will never sell any of it. So really there is only 4,000 tons "on the market", now they are reducing the amount to be sold to be 400 tons per year. That's 11.6M ounces, or roughly $10B per year at $900 per ounce

So a little more math to bring things into perspective...they are holding about $250B in gold assets. But the worldwide "notional" value of various financial derivatives is maybe $60T or maybe $200T. Who knows? This stuff is pretty murky. But the point is, regardless of what that number really is...isn't the relative percentage to "real money" just absurd. The entire world is being gambled, and you knows what happens in gambling, the "house" wins.

The real news on Friday, was that the Bank of England decided to increase printing money, giving money to banks, and keeping interest rates really low 0.5%. The real news was not the Jobs Report, which is BS anyway and getting worse.

The only "down sector" for Friday was the Gold miner index. There are alot of poorly informed speculators who exactly misinterpretated the ECB Gold selling news.

Junior Miners took an incredible pounding in the last few years. Many will never develop their lands into real gold producing mines. Many junior miners are simply and fully scammers, the stories are interesting.

The guys below are developing a mine in Panama. Supposedly they started actually producing gold, and then were shut down by "environmentalists". It's an amazing world we live in.

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