TBD & Planning

Stuff to do

Prod­ucts & mon­eti­sa­tion
* how to mon­e­tise this? Real­ly help peo­ple and real­ly deliv­er

* Add new Quotes — http://www.barefootsworld.net/banking-fed-quotes.html
* dum­my tasks
* Add Quo­ta­tions PAGE:
** http://www.hashbangcode.com/blog/create-page-posts-wordpress-417.html
** http://wordpress.org/support/topic/display-the-posts-of-one-category-in-a-page-solved

* http://www.youtube.com/watch?v=qeQtpRGSI_8 — James turk — Munich — gold Per­for­mance chart?
* Mon­ey vs Cur­ren­cy
* DUP-Essays
* http://seekingalpha.com/article/694041-john-embry-on-gold-silver-currencies-and-commodities

Tag Line:
Cometh the Gold­en Bull — Are you ready?
Mon­e­tary Sur­vival for you and your Famil­ly
My one-stop water­ing-hole for mon­e­tary sur­vival
Your one-stop water­ing-hole for mon­e­tary sur­vival

* traf­fic
* dri­ve up usage

Ukraine Loses All 33 Tonnes of Its National Gold Early One Morning

33 Tonnes of Ukraine gold gone

unmarked plane spir­it­ed 33 Tonnes of Gold away

It seems that last week 33 Tonnes of Gold left the Ukraine in an unmarked
air­craft and has left the coun­try, pre­sum­ably for safe­keep­ing, but more than
like­ly for­ev­er. I doubt that the Ukrain­ian Peo­ple will ever see that Gold

The sto­ry broke two weeks ago in the Ukrain­ian Russ­ian lan­guage pub­li­ca­tion iskra

Here is what the arti­cle states:

  • event took place at ‘Boryspil Inter­na­tion­al Air­port’
  • event occurred at 2 am
  • over 40 heavy box­es loaded
  • about 15 men in black with body armor — some armed with rifles
  • some oth­er men got onto the plan
  • The plane took-off in a hur­ry (emer­gency take-off) des­ti­na­tion unknown
  • When work­ers report­ed to local air­port author­i­ties they were told to “mind their own busi­ness”
  • The vehi­cles used to load to bring the box­es were unmarked
  • Order was giv­en by act­ing Prime Min­is­ter Arseniy Yas­tenyuk

Here is my take on this sto­ry:

  • The Gold is gone for­ev­er
  • dis­ap­peared into the same black-hole as the Gaddafi Gold dur­ing the NATO raid on Libya
  • Mr Yas­tenyuk is not an elect­ed leader of Ukraine
  • Mr Yas­tenyuk has expe­ri­ence as a Cen­tral Banker — is this real­ly a coin­ci­dence?
  • rumor #1 — that the Gold was flown to the New York Fed­er­al Reserve
  • rumor #2 — flow to Switzer­land to be shared/stored by Yulia Tymoshenko and cronies
  • plane was unwmarked and had no win­dows — hmm­mm — if it was a 737 it is prob­a­bly CIA Oper­a­tions
  • rumor #3 — Black­wa­ter did the dirty work — any filth Wash­ing­ton needs done can be done by these guys — mur­der­ing, rap­ping, loot­ing, sack­ing …
  • GATA — Chris Pow­ell — New York Fed on Ukrain­ian gold reserves: Don’t ask us
  • GATA — Chris Pow­ell — Russ­ian-Ukrain­ian news site describes trans­fer of Ukrain­ian gold to U.S.

Here is a Google Trans­la­tion of the text:

As our site work­ers air­port “Borispol” , this night in 2–00 , with the des­ig­nat­ed air­port run­way start­ed unreg­is­tered trans­port plane …

Accord­ing to the staff “Boryspil” , before it came to the air­port four col­lec­tor car and two car­go minibus Volk­swa­gen, thus, all the arriv­ing truck license plate miss­ing . Car pulled out of about fif­teen peo­ple in black uni­forms , masks and body armor . Some of them were armed with machine guns . These peo­ple have down­loaded the plane more than forty heavy box­es …

After that , some mys­te­ri­ous men arrived too entered the plane . All load­ing was car­ried out in a huge hur­ry . After unload­ing the car with­out license plates imme­di­ate­ly left the run­way , and the plane took off on an emer­gency basis …

All who saw this mys­te­ri­ous “spe­cial oper­a­tion” air­port offi­cials imme­di­ate­ly noti­fied the admin­is­tra­tion of ” Boryspil “, from which received a strong rec­om­men­da­tion ” not to med­dle in oth­er peo­ple’s busi­ness” …

Lat­er, the edi­tors called back one of the senior offi­cials of the for­mer Min­istry of income and fees, which report­ed that , accord­ing to him, tonight, on the orders of one of the ” new lead­ers ” of Ukraine in the Unit­ed States has been tak­en all the gold reserves in Ukraine …

So all very sus­pi­cious. Very, very sup­si­cious.

© Copy­right MMXIII RagingGoldenBull.com

Quote — Einstein on War


Ein­stein on War — He saw what comes next …

I know not with what weapons World War III will be fought, but
World War IV will be fought with sticks and stones.”

  • Albert Ein­stein (said often through­out his life…)

Ein­stein was one smart cook­ie, and after he saw the pow­er of The Bomb, I guess
he saw what comes next. Unfor­tu­nate­ly hope in our inept lead­ers will not be
enough — We need to think for our­selves and work with those around us to
infor­ma and build a bet­ter world to live in. Just sayin’ .…

More Gold­en Mon­ey Quotes

© Copy­right MMXIV RagingGoldenBull.com

One Hundred Years of the Federal Reserve

Just for fun — here is the two hun­dred years BIG pic­ture — so you can get a per­spec­tive on things. An angle on it, if you will:

Federal Reserve Centenary - Cause for Celebrations?

After one hun­dred years, look what they man­aged to do with the USD

The extreme right of the  graph rep­re­sents what is know in the trade as the “final death throes”…before final­ly expir­ing exhaust­ed after a long hard fought strug­gle, alas all in vain.

Well, well. They must be slap­ping each oth­ers on the back right now. Howl­ing
with laugh­ter. Tears of joy run­ning down their faces. — Pic­ture it:

Well done boys! We screwed them all for the last hun­dred years! Here’s to the  next hun­dred years of mon­ey print­ing and theft.


Signing of the Federal Reserve Act - December 23rd 1913

Woodrow Wil­son Sign­ing of the Fed­er­al Reserve Act — Decem­ber 23rd 1913

Make sure that you are stack­ing out­side the bank­ing sys­tem because these guys wont stop till they have the but­tons of your shirt …

So, how do you feel about that?

© Copy­right MMXIII RagingGoldenBull.com

BitCoin Knocking on Golds’ Front Door …

bitcoin parity with gold price

Bit­coin to rival gold?

Well it has come to pass…BitCoin is now knock­ing on Golds’ front door as it has been for some time now…In fact a very long time in Bit­Coin time units (a week or two).

There is only five USD dif­fer­ence between them. Imag­ine!

Will it hap­pen?

How high can this go?

Where will it (and even more impor­tant­ly Gold) go to next?

Well after a long hard strug­gle for the last five years the upstart cryp­to-cur­ren­cy is giv­ing gold a rol­lick­ing and chance to prove itself. What does this mean exact­ly? Has the plan­et gone nuts? Or has anoth­er par­a­digm shift tak­en place?

Be pre­pared for a jour­ney of thrills and adven­ture! Stay tuned folks!

© Copy­right MMXIII RagingGoldenBull.com

The Gold Silver Ratio Explained

what is the Gold Silver Ratio, what does it mean, and why is it useful?

The gold sil­ver ratio explained

Today we are going to return to one of the old chest­nuts of the pre­cious
met­al invest­ing world and explain the rela­tion­ship between the two key
met­als gold and sil­ver. Specif­i­cal­ly we will give the answer to the
ques­tion of what is the Gold Sil­ver Ratio mean­ing?

As well you know, gold and sil­ver have been used for the last five
thou­sand years odd as “real mon­ey” and they have always had a tight
rela­tion­ship. Today in our mod­ern world the cen­tral plan­ers have weaned us
onto a paper worth­less cur­ren­cy (aka fake, or more tech­ni­cal­ly fiat
), while they (I guar­an­tee you) are buy­ing and stor­ing up all the
gold and sil­ver they can find with both arms, and feet.

This rela­tion­ship is based on their scarci­ty and how much of it was com­ing
out of the ground — Obvi­ous­ly if one is much more com­mon (Sil­ver) than
the oth­er (Gold), then it is going to be worth less.

Through­out his­to­ry this rela­tion­ship (ratio) has remained fair­ly con­stant
at some­where between twelve to one, and six­teen to one.

So in oth­er words you would need twelve ounces of sil­ver to buy one ounce
of gold. Or Gold was twelve times more valu­able than sil­ver. Some­times you
would need six­teen ounces of Sil­ver to buy one ounce of Gold.

The Gold Silver Ratio Calculation Method

The ration between gold and Silver allows us to better understand market sentiment - and where it may be out of line

Gold Sil­ver Ratio Cal­cu­la­tion

So what is the Gold Sil­ver Ratio today? Well for that we sim­ply do the
sim­ple Gold Sil­ver Ratio Cal­cu­la­tion — Divide the cur­rent USD price of
Gold, into the cur­rent USD price for sil­ver. This gives us 1,350 divid­ed
by 22.6 which gives us a ratio of 59.7. So let’s call it 60! This is today
as of this writ­ing — This will change dras­ti­cal­ly in the future and I
invite you to revis­it this page five years from now!

This means that today we would need 60 ounces of Sil­ver to buy one sin­gle
ounce of Gold. That means the ratio is very high, and at some point it
will revert back to the his­tor­i­cal mean (as me men­tioned above, some­where
between twelve and six­teen).

See this ten year Gold Sil­ver ratio his­tor­i­cal chart here:


Start allo­cat­ing some of your invest­ing mon­ey today in some Sil­ver to
com­pli­ment your Gold in your per­son­al Pre­cious Met­als hold­ings — would be a
very smart thing to do. So don’t delay! Start to action that task today!

© Copy­right MMXIII RagingGoldenBull.com

Rethink Your Finances — Gold and Silver Is The Only Real Money

The cur­rent illu­sion of mon­ey and finance are the biggest decep­tion in known his­to­ry.

Our lead­ers (against our bet­ter needs) have tak­en our mon­ey (gold and sil­ver was mon­ey for the last five thou­sand years) and replaced it with a bro­ken, worth­less cur­ren­cy.

You know this to be true and is born out every sin­gle day by the cease­less manip­u­la­tion of banks, stock quotes, ETF’s, gold and sil­ver prices, and indeed the stock of Gold and Sil­ver them­selves sup­pos­ed­ly held by the sov­er­eigns — in our so called Bank­ing & Invest­ment sec­tor.

Let us now join togeth­er and call it by it’s one true name — Theft.

Jim Sinclair Meets The RagingGoldenBull in London

I just got­ta share this with you — Jim Sin­clair and the Rag­ing­Gold­en­Bull him­self. What a great hon­or!

Mr Jim Sinclair (Mr Gold) and Mr Farley Balasuriya (Chief GoldenBull) meeting in London June 2013

Mr Jim Sin­clair (Mr Gold) and Mr Far­ley Bal­a­suriya (Chief Gold­en­Bull) meet­ing in Lon­don June 2013

Was in Lon­don over the week­end and had the oppor­tu­ni­ty to talk to Mr. gold him­self — Mr Jim Sin­clair.

This was part of a closed door Lon­don Q&A Ses­sion on the very sen­si­tive top­ics of mon­ey and gold and where we are all head­ing.

The Two Core Mes­sages which rings through loud and clear are:

  • The End-Game is here now
  • Get out of the Sys­tem NOW!

I hope to elab­o­rate on his mes­sage and the oth­er things that were dis­cussed over the com­ing weeks on this blog, and in my emails (sub make sure your are reg­is­tered to our newslet­ter).


Ques­tion: Have you start­ed and what are you doing to pre­pare for the end-game that is cur­rent­ly upon us?


Check out the orig­i­nal here on Mr Sin­clairs JSMineset.com (about two thirds down page).

© Copy­right MMXIII RagingGoldenBull.com

John Embry on Gold and Silver

Here is a recent inter­view with John Embry for the Hera Research Newlet­ter (HRN):

HRN: Thank you for join­ing us today. Let’s talk about gold stocks.

John Embry: Gold stocks rep­re­sent a tremen­dous val­ue in rela­tion to the price of gold and to the fun­da­men­tals of the sec­tor. There has been tremen­dous short­ing activ­i­ty by hedge funds and, as a result, ded­i­cat­ed gold funds have expe­ri­enced redemp­tions. Retail investors, who are nat­ur­al buy­ers of these stocks, have been anni­hi­lat­ed by the price action. This has cre­at­ed one of the finest oppor­tu­ni­ties, if not the finest oppor­tu­ni­ty, that I have ever seen.

HRN: Do you have a short term price tar­get?

John Embry: I don’t look at short term price charts for gold. In a mar­ket as heav­i­ly inter­fered with as this one, charts can be made to look any way you want in the short run. As I see it, if you don’t like gold at these prices, then you must like cur­ren­cies. My part­ner Eric Sprott often says, the U.S. dol­lar is the best look­ing horse in the glue fac­to­ry. If the U.S. dol­lar is the world’s strongest cur­ren­cy, that’s the best endorse­ment for gold that I can think of.

HRN: Do you believe that cur­ren­cies are los­ing val­ue?

John Embry: The fact is that economies are slow­ly melt­ing down. The prob­lem is exces­sive debt in almost every cor­ner of the world. The only way to deal with the debt is through aggres­sive growth, but fab­ri­cat­ing growth through more debt won’t work. The idea that you can get the econ­o­my to move for­ward by cre­at­ing even more debt just does­n’t wash. We can’t ser­vice the exist­ing debt, even at arti­fi­cial­ly low inter­est rates. I don’t see any easy way out. We have to get the exces­sive debt out of the finan­cial sys­tem. Either pol­i­cy mak­ers are going to cre­ate mount­ing infla­tion or there will be a defla­tion­ary debt col­lapse.

HRN: Europe seems to be a case in point. Do you think the Euro will break up?

John Embry: The Euro­crats who con­struct­ed the cur­ren­cy aren’t going to give it up eas­i­ly. The key is how much the Ger­mans are going to go along with. They real­ize that there’s a huge loss for them if the Euro falls apart. I would­n’t want to be in Ger­man Chan­cel­lor Angela Merkel’s shoes. Ger­many is trapped in the Euro because it relies on exports and Ger­man banks hold the debt of oth­er Euro­pean coun­tries. Despite the bailouts and the infla­tion­ary poli­cies of the Euro­pean Cen­tral Bank (ECB), Ger­many does­n’t have much choice.

HRN: How can Euro­pean gov­ern­ments solve their debt prob­lems?

John Embry: The prob­lem is that it would take a hor­rif­ic debt col­lapse to set the stage for future expan­sion. There is no politi­cian on earth that wants that to hap­pen on their watch. Con­se­quent­ly, pol­i­cy mak­ers will resist defla­tion and we’re going down the oppo­site road, which means mount­ing infla­tion or pos­si­bly hyper­in­fla­tion. I don’t think politi­cians will change the sys­tem. I think the sys­tem will change the politi­cians.

HRN: Can the econ­o­my recov­er in a high infla­tion sce­nario?

John Embry: Cre­at­ing even more debt is not going to work. To me, high infla­tion is the most cor­ro­sive thing that can hap­pen to an econ­o­my or to a coun­try. I’m real­ly wor­ried that neo­clas­si­cal, Key­ne­sian econ­o­mists like Paul Krug­man, who are pre­scrib­ing even more debt, will bring about a col­lapse.

HRN: Are these prob­lems the result of Key­ne­sian eco­nom­ics?

John Embry: If you real­ly applied Key­ne­sian­ism as Keynes orig­i­nal­ly envi­sioned it, the gov­ern­ment was sup­posed to run sur­plus­es when the econ­o­my was grow­ing to pay for the deficits that would be cre­at­ed dur­ing down­turns. That’s been con­ve­nient­ly for­got­ten. We’ve had an astound­ing build up of debt. I don’t think peo­ple ful­ly real­ize how seri­ous this is. I’m amazed at how com­pla­cent peo­ple are. We’ve nev­er been in a posi­tion like this in the entire his­to­ry of the world.

HRN: Why do you think peo­ple are so com­pla­cent?

John Embry: I think it’s cog­ni­tive dis­so­nance. When con­front­ed with some­thing that’s real­ly unpleas­ant, and to which there’s no easy solu­tion, the aver­age per­son will basi­cal­ly block it out and look for some­body to tell them that every­thing is fine. The main­stream news media and the gov­ern­ment are doing that as we speak. Con­se­quent­ly, the aver­age per­son does­n’t have a chance of under­stand­ing what’s going on. The man in the street does­n’t have a clue what’s com­ing.

HRN: What about invest­ment pro­fes­sion­als?

John Embry: I have a lot of close friends who have been in the invest­ment busi­ness for 40 years and they don’t want to hear it.

HRN: Won’t the Fed­er­al Reserve and oth­er cen­tral banks sim­ply bail out the sys­tem?

John Embry: They think that print­ing mon­ey will buoy the mar­kets and that that’s good, but it won’t solve any of the prob­lems. Although you may get a momen­tary lift in the finan­cial mar­kets, when it plays itself out we’ll be back in the same sit­u­a­tion, but with mon­ey that’s being sys­tem­at­i­cal­ly destroyed.

HRN: Does print­ing mon­ey work in the short term?

John Embry: There are nom­i­nal prices and real prices. Print­ing mon­ey is very decep­tive and peo­ple are con­fused by its effects. I am only inter­est­ed in real returns, not nom­i­nal returns. If you have a nom­i­nal return that’s caused by infla­tion, you’re los­ing mon­ey because gov­ern­ments tax nom­i­nal gains.

HRN: Can gov­ern­ments inflate their way out of debt?

John Embry: The U.S. fed­er­al gov­ern­ment, for exam­ple, has reached a stage where forty cents of every dol­lar spent at the fed­er­al lev­el is bor­rowed and a lot of that mon­ey has been print­ed. There has nev­er been a case in his­to­ry where that has­n’t led to finan­cial dis­as­ter. If you study any empir­i­cal evi­dence, they’re in a hope­less posi­tion. They’ve only been able to get away with it so far because the U.S. dol­lar is the world reserve cur­ren­cy. If the Unit­ed States was­n’t able to print mon­ey and was trapped in the Euro­pean Union, it would just be a mas­sive Spain.

HRN: So, gov­ern­ments can’t inflate away their debt?

John Embry: Infla­tion is the eas­i­er, more expe­di­ent route to take, but I would not rule out an acci­dent. For exam­ple, if pol­i­cy mak­ers push aus­ter­i­ty too far they could trig­ger a defla­tion­ary spi­ral that would be impos­si­ble to reverse. I sub­scribe to the Aus­tri­an the­o­ry of eco­nom­ics. In his book Human Action, Lud­wig von Mis­es wrote that there is no way to avoid the col­lapse of a cred­it boom and that more cred­it expan­sion sim­ply destroys the cur­ren­cy.

HRN: Don’t infla­tion­ary poli­cies help banks and sup­port the finan­cial sys­tem?

John Embry: The ECB could do anoth­er Long-Term Refi­nanc­ing Oper­a­tion (LTRO) or the Fed­er­al Reserve could buy more U.S. Trea­suries in the open mar­ket but that’s not real­ly solv­ing the prob­lem. If you actu­al­ly eval­u­at­ed the bank­ing sys­tem and marked all the assets to mar­ket, the sys­tem would be insol­vent.

HRN: And the basic prob­lem is too much debt and lever­age?

John Embry: The over the counter (OTC) deriv­a­tives sit­u­a­tion is so sur­re­al I can’t begin to express it. Cor­rect­ly cal­cu­lat­ed, the notion­al val­ue of all OTC deriv­a­tives is in excess of one quadrillion dol­lars glob­al­ly. The vast major­i­ty are relat­ed to inter­est rates. Cen­tral banks have to keep cre­at­ing liq­uid­i­ty to pre­vent these instru­ments from col­laps­ing.

HRN: What can the Fed­er­al Reserve and oth­er cen­tral banks do?

John Embry: They’re lost either way. They’re run­ning a mas­sive lab exper­i­ment with mon­e­tary pol­i­cy and don’t have a clue what the out­come is going to be.

HRN: Do you think the U.S. econ­o­my can grow its way out of debt?

John Embry: When I was a kid back in the 1950’s, most women did­n’t work. Amer­i­cans main­tained their stan­dard of liv­ing by putting a sec­ond per­son to work. When that was expend­ed they made up the dif­fer­ence by going into debt and, even­tu­al­ly, they used their homes as cash machines. Now stu­dent loans total more than $1 tril­lion. I just don’t see where the con­sumer demand is going to come from going for­ward. You can’t get blood out of a stone.

HRN: What do you think the out­come is going be?

John Embry: I believe that before this is over we’ll have a new cur­ren­cy sys­tem, prob­a­bly backed by gold.

HRN: Do you sup­port the gold stan­dard?

John Embry: One of the great­est peri­ods of wealth cre­ation was when we had a gold stan­dard in the sec­ond half of the 19th cen­tu­ry. It’s hard to believe that it’s going to be 41 years since there has been gold back­ing for any of the major cur­ren­cies in the world. That is what has allowed the mas­sive build up of debt that we have today. If there had been a gold stan­dard, we would­n’t be in the posi­tion we are in. West­ern gov­ern­ments don’t want the gold stan­dard because it restricts their abil­i­ty to dole out favors.

HRN: But the gold stan­dard does­n’t pre­vent finan­cial pan­ics.

John Embry: There are always going to be finan­cial pan­ics, but, under the gold stan­dard they tend to be short term. If we had had a gold stan­dard, there would have been a num­ber of cleans­ing peri­ods where excess debt was elim­i­nat­ed. The Fed­er­al Reserve allowed the build up of debt that led to the stock mar­ket bub­ble and crash of 1929 and to the Great Depres­sion, which was fol­lowed by World War II. It took about a decade to build up the debt and more than a decade to deal with the fall­out. It’s tak­en more than 40 years to build up the debt we have today and I don’t know how long it’s going to take to cor­rect it.

HRN: What does this mean for the aver­age per­son?

John Embry: I think liv­ing stan­dards of most peo­ple in the world, par­tic­u­lar­ly in the West are going to decline pre­cip­i­tous­ly. The Fed­er­al Reserve recent­ly report­ed that the net worth of the medi­an Amer­i­can fam­i­ly has fall­en near­ly 40% since 2007 after adjust­ing for infla­tion. Before this all plays out, I think the per­cent­ages are going to be far larg­er.

HRN: Do you fore­see any wider impact on soci­ety?

John Embry: When I was grow­ing up in the Unit­ed States after World War II, I did­n’t real­ize how remark­ably for­tu­nate we were as a soci­ety to have such a strong mid­dle class. Sel­dom in his­to­ry has there been a mid­dle class to equal what tran­spired in the U.S. and Cana­da from the 1950s to the 1980s. We basi­cal­ly took it for grant­ed because that’s all we ever knew. The mid­dle class in the Unit­ed States is dis­ap­pear­ing. What hap­pens is that you have mas­sive pover­ty and a small wealthy class. It’s one of the worst things that can hap­pen to a soci­ety and it can lead to civ­il unrest. If there’s no rea­son to buy into the sys­tem, peo­ple will act up.

HRN: Do you view gold and sil­ver as com­modi­ties?

John Embry: I view gold and sil­ver as mon­e­tary met­als. The main­stream news media con­flates gold and sil­ver with indus­tri­al com­modi­ties, but they’re real­ly a com­peti­tor to the cur­ren­cy sys­tem. Gold is the antithe­sis of paper mon­ey.

HRN: I’ve read that cen­tral banks are buy­ing gold.

John Embry: Con­fi­dence in cur­ren­cies is mis­placed. There is a strong flow of gold from West to East. The Chi­nese, Indi­ans, Rus­sians and Viet­namese know per­fect­ly well what’s going on with the U.S. dol­lar and the Euro. They are buy­ing phys­i­cal gold and the West has been stu­pid enough to sell it to them.

HRN: What’s your view on Chi­na?

John Embry: I’m not opti­mistic on Chi­na in the short run. The Peo­ple’s Bank of Chi­na (PBoC) recent­ly cut bank reserve require­ments by 150 basis points to stim­u­late 1.2 tril­lion yuan ($190 bil­lion) of new lend­ing because they don’t want growth to fall from around 8% to 7%. As I see it, they’ve dined out on West­ern profli­ga­cy for 20 years and have become the most unbal­anced econ­o­my in the world. An inor­di­nate amount of Chi­na’s eco­nom­ic activ­i­ty is gen­er­at­ed by exports and by all man­ner of cap­i­tal spend­ing on man­u­fac­tur­ing, real estate, infra­struc­ture and more. The slow­down in the world econ­o­my has revealed mas­sive over­ca­pac­i­ty in many sec­tors.

HRN: Can Chi­na devel­op a con­sumer-dri­ven econ­o­my?

John Embry: The idea that Chi­na’s econ­o­my can morph into a con­sumer-dri­ven econ­o­my is pre­pos­ter­ous. The very same con­sumers are employed in sec­tors like man­u­fac­tur­ing where there is mas­sive over­ca­pac­i­ty. If the world slides into anoth­er glob­al reces­sion, which is not beyond the realm of pos­si­bil­i­ty, I don’t see how Chi­na stays out of it and if they don’t then there’s no engine of growth left in the world.

HRN: So, even with a ris­ing mid­dle class, Chi­na remains depen­dent on exports?

John Embry: The fact is that Chi­na has become the world’s man­u­fac­tur­er but the abil­i­ty of their two largest cus­tomers, Europe and the Unit­ed States, to con­sume is being con­strained. Chi­na is not going to be able to keep sell­ing more year over year. The HSBC man­u­fac­tur­ing index has fall­en to reces­sion­ary lev­els.

HRN: It has been pre­dict­ed that Chi­na will become the world’s largest econ­o­my. Do you think that’s true?

John Embry: I think Chi­na will prob­a­bly dom­i­nate the 21st cen­tu­ry. The U.S. dom­i­nat­ed the 20th cen­tu­ry but it went through some very tough times in the first half of the cen­tu­ry.

HRN: With a slow­down in Chi­na, what’s your view on com­modi­ties like cop­per or crude oil?

John Embry: In the short term, I’m wor­ried about com­modi­ties. In a deep glob­al reces­sion, I expect there will be extreme mon­e­tary debase­ment, which will hold up the nom­i­nal prices of com­modi­ties more than sup­ply and demand fac­tors would sug­gest.

HRN: Do you fore­see a bear mar­ket in com­modi­ties?

John Embry: We are in a short-term bear mar­ket that will be arrest­ed by mon­e­tary debase­ment.

HRN: But there are val­ue buy­ing oppor­tu­ni­ties?

John Embry: Giv­en my views on cur­ren­cies, com­modi­ties that are already depressed could be decent repos­i­to­ries for wealth. I like agri­cul­tur­al prod­ucts. As the glob­al econ­o­my con­tin­ues to devel­op, I think the sup­ply of food is going to be a major issue.

HRN: How can investors pro­tect their assets in a glob­al reces­sion?

John Embry: The only things I’m com­fort­able hold­ing are pre­cious met­als and, because they are so cheap now, pre­cious met­als min­ing shares.

HRN: Where do you think the price of gold will end up?

John Embry: I’m more con­cerned with how many ounces I own than with how many U.S. dol­lars I can get for them at any giv­en point in time. Gold and paper mon­ey are going in oppo­site direc­tions.

HRN: Thank you for your valu­able time.

John Embry: It was my plea­sure.

© Copy­right MMXII RagingGoldenBull.com

15 Fundamental Reasons to Own Gold

Here is one that I have dug up from my archives, just to show how apt, and how long this has been com­ming — the smart investors got on this phase back in 2002 and have been chug­ging ever since. John Embry from Sprott assett man­age­ment gives us 15 fun­dame ntal rea­sons for us to own gold (note that this arti­cle was writ­ten back in Sep­tem­ber 26 2003 — and it is just as informed as it was then):

1.Global Currency Debasement

The US dol­lar is fun­da­men­tal­ly & tech­ni­cal­ly very weak and should fall dra­mat­i­cal­ly. How­ev­er, oth­er coun­tries are very reluc­tant to see their cur­ren­cies appre­ci­ate and are resist­ing the fall of the US dol­lar. Thus, we are in the ear­ly stages of a mas­sive glob­al cur­ren­cy debase­ment which will see tan­gi­bles, and most par­tic­u­lar­ly gold, rise sig­nif­i­cant­ly in price.

2. Investment Demand for Gold is Accelerating

When the crowd rec­og­nizes what is unfold­ing, they will seek an alter­na­tive to paper cur­ren­cies and finan­cial assets and this will cre­ate an enor­mous invest­ment demand for gold. To facil­i­tate this demand, a num­ber of new vehi­cles like Cen­tral Gold Trust and gold Exchange Trad­ed Funds (Elf’s) are being cre­at­ed.

3. Alarming Financial Deterioration in the US

In the space of two years, the fed­er­al gov­ern­ment bud­get sur­plus has been trans­formed into a yawn­ing deficit, which will per­sist as far as the eye can see. At the same time, the cur­rent account deficit has reached lev­els which have por­tend­ed cur­ren­cy col­lapse in vir­tu­al­ly every oth­er instance in his­to­ry.

4. Negative Real Interest Rates in Reserve Currency (US dollar)

To com­bat the dete­ri­o­rat­ing finan­cial con­di­tions in the US, inter­est rates have been dropped to rock bot­tom lev­els, real inter­est rates are now neg­a­tive and, accord­ing to state­ments from the Fed spokes­men, are expect­ed to remain so for some time. There has been a very strong his­tor­i­cal rela­tion­ship between neg­a­tive real inter­est rates and stronger gold prices.

5. Dramatic Increases in Money Supply in the US and Other Nations

US author­i­ties are ter­ri­fied about the prospects for defla­tion giv­en the unprece­dent­ed debt bur­den at all lev­els of soci­ety in the US. Fed Gov­er­nor Ben Bernanke is on record as say­ing the Fed has a print­ing press and will use it to com­bat defla­tion if nec­es­sary. Oth­er nations are fol­low­ing in the US’s foot­steps and glob­al mon­ey sup­ply is accel­er­at­ing. This is very gold friend­ly.

6. Existence of a Huge and Growing Gap between Mine Supply and Traditional Demand

Gold mine sup­ply is rough­ly 2500 tonnes per annum and tra­di­tion­al demand (jew­ellery, indus­tri­al users, etc.) has exceed­ed this by a con­sid­er­able mar­gin for a num­ber of years. Some of this gap has been filled by recy­cled scrap but cen­tral bank gold has been the pri­ma­ry source of above-ground sup­ply.

7. Mine Supply is Anticipated to Decline in the next Three to Four Years

Even if tra­di­tion­al demand con­tin­ues to erode due to ongo­ing world­wide eco­nom­ic weak­ness, the sup­ply-demand imbal­ance is expect­ed to per­sist due to a decline in mine sup­ply. Mine sup­ply will con­tract in the next sev­er­al years, irre­spec­tive of gold prices, due to a dearth of explo­ration in the post Bre‑X era, a shift away from high grad­ing which was nec­es­sary for sur­vival in the sub-eco­nom­ic gold price envi­ron­ment of the past five years and the nat­ur­al exhaus­tion of exist­ing mines.

8. Large Short Positions

To fill the gap between mine sup­ply and demand, cen­tral bank gold has been mobi­lized pri­mar­i­ly through the leas­ing mech­a­nism, which facil­i­tat­ed pro­duc­er hedg­ing and finan­cial spec­u­la­tion. Strong evi­dence sug­gests that between 10,000 and 16,000 tonnes (30- 50% of all cen­tral bank gold) is cur­rent­ly in the mar­ket. This is owed to the cen­tral banks by the bul­lion banks, which are the counter par­ty in the trans­ac­tions.

9. Low Interest Rates Discourage Hedging

Rates are low and falling. With low rates, there isn’t suf­fi­cient con­tan­go to cre­ate high­er prices in the out years. Thus there is lit­tle incen­tive to hedge, and gold pro­duc­ers are not only not hedg­ing, they are reduc­ing their exist­ing hedge posi­tions, thus remov­ing gold from the mar­ket.

10. Rising Gold Prices and Low Interest Rates Discourage Financial Speculation on the Short Side

When gold prices were con­tin­u­ous­ly falling and finan­cial spec­u­la­tors could access cen­tral bank gold at a min­i­mal leas­ing rate (0.5 — 1% per annum), sell it and rein­vest the pro­ceeds in a high yield­ing bond or Trea­sury bill, the trade was viewed as a lay up. Every­one did it and now there are numer­ous stale short posi­tions. How­ev­er, these trades now make no sense with a ris­ing gold price and declin­ing inter­est rates.

11. The Central Banks are Nearing an Inflection Point when they will be Reluctant to Provide more Gold to the Market

The cen­tral banks have sup­plied too much already via the leas­ing mech­a­nism. In addi­tion, Far East­ern cen­tral banks who are accu­mu­lat­ing enor­mous quan­ti­ties of US dol­lars are rumored to be buy­ers of gold to diver­si­fy away from the US dol­lar.

12. Gold is Increasing in Popularity

Gold is seen in a much more pos­i­tive light in coun­tries begin­ning to come to the fore­front on the world scene. Promi­nent devel­op­ing coun­tries such as Chi­na, India and Rus­sia have been accu­mu­lat­ing gold. In fact, Chi­na with its 1.3 bil­lion peo­ple recent­ly estab­lished a Nation­al Gold Exchange and relaxed con­trol over the asset. Demand in Chi­na is expect­ed to rise sharply and could reach 500 tonnes in the next few years.

13. Gold as Money is Gaining Credence

Islam­ic nations are inves­ti­gat­ing a cur­ren­cy backed by gold (the Gold Dinar), the new Pres­i­dent of Argenti­na pro­posed, dur­ing his cam­paign, a gold backed peso as an anti­dote for the finan­cial cat­a­stro­phe which his coun­try has expe­ri­enced and Rus­sia is talk­ing about a ful­ly con­vert­ible cur­ren­cy with gold back­ing.

14. Rising Geopolitical Tensions

The dete­ri­o­rat­ing con­di­tions in the Mid­dle East, the US occu­pa­tion of Iraq, the nuclear ambi­tions of North Korea and the grow­ing con­flict between the US and Chi­na due to Chi­na’s refusal to allow its cur­ren­cy to appre­ci­ate against the US dol­lar head­line the geopo­lit­i­cal issues, which could explode at any­time. A fear­ful pub­lic has a ten­den­cy to grav­i­tate towards gold.

15. Limited Size of the Total Gold Market Provides Tremendous Leverage

All the phys­i­cal gold in exis­tence is worth some­what more than $1 tril­lion US dol­lars while the val­ue of all the pub­licly trad­ed gold com­pa­nies in the world is less than $100 bil­lion US dol­lars. When the fun­da­men­tals ulti­mate­ly encour­age a strong flow of cap­i­tal towards gold and gold equi­ties, the tril­lions upon tril­lions worth of paper mon­ey could pro­pel both to unfath­omably high lev­els.

© Copy­right MMXII RagingGoldenBull.com