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Secret memos and the plan that could destroy the wealth of millions of Americans
About a year ago, I began a project to research the unprecedented amounts of dollars being created by the Federal Reserve... and how it’s destroying the wealth in America. But during my research, I stumbled onto something else... something bigger and more important than inflation—and much more disturbing. I’m going to air this story, but keep in mind it’s at great personal risk. You see, the last time someone tried to expose the Fed on this level, one U.S. official, operating in Germany, approved an order to burn more than 2.2 million pages of records and research. And before I go any further, I want to make one thing very clear... The following contains only the undisputable facts of this case... because I want you to see the facts for yourself, and then make up your own mind. If what’s contained in this letter turns out to be true, every man, woman, and child in this country will be severely affected in the coming months... and not 1 in 1,000 knows what’s coming. Here are my complete findings.
For the past 50 years, rumors have circulated throughout the U.S. financial markets that the Federal Reserve has been involved in a scheme to illegally suppress the price of gold and silver. On the record, the Federal Reserve System denies these allegations. ―I can say unequivocally The Federal Reserve Bank of New York has not intervened in the gold market in an attempt to manipulate the price of gold on its own behalf or for... anyone else. – Alan Greenspan, Federal Reserve Chairman, 1987 – 2006 ―We have found no evidence of manipulation.‖ –Michael Gorham, Director, Commodities & Futures Trading Commission and former Federal Reserve official ―There is no evidence of coordinated efforts to manipulate price... There is no logical rationale for such a conspiracy.‖ –Jeffery Christian, former World Bank, International Finance Corporation, and International Monetary Fund official But if the Federal Reserve denies involvement in gold price manipulation... Then how do you explain these recently declassified government documents?
A telegram marked “CONFIDENTIAL” is wired from the United States Embassy in Paris to the State Department in Washington, D.C.
The authors are unknown. The document is a detailed plan on what would have to be done to suppress the price of gold. The plan involves: 1) Convincing the public ―that there is no point any more in speculating on an increase in the price of gold,‖ and to ―subdue the speculative demand for gold.‖
2) Recommending the creation of a ―new reserve asset‖ with ―gold–like properties‖ to replace gold and prevent it from increasing in value.
The idea, according to the document, is for central banks ―to remain the masters of gold.‖
A memorandum marked ―SECRET‖ makes its way through high–level officials at the U.S. Central Intelligence Agency.
The authors‘ identities are kept secret. The memo – which describes a rising gold price as a ―basic problem‖ for the U.S. dollar – lays out several strategies for suppressing gold prices, including:
Establishing a ―private gold market‖ where central banks buy and sell gold only to each other, as not to affect the official free market price.
Bringing South Africa [the world‘s largest producer of gold at the time] to flood the market with all of its gold in an effort to keep the price down.
U.S. President Gerald Ford receives a 7–page memorandum from Fed Chairman Arthur Burns, marked ―STRICTLY CONFIDENTIAL.‖
The memo describes secret arrangements – in writing – between the Federal Reserve and other central banks to bypass the open market for gold, as not to affect its price. Specifically these arrangements require foreign central banks – such as Germany‘s Bundesbank – not to buy gold in the open market, or from other governments, at a price above the official U.S. government price of $42.22 per ounce. Keep in mind, the open market price of the time was between $160 and $175 per ounce.
The purpose of these arrangements is to determine the ―shape of the future world monetary system.‖
Cc‘d on the memo are Secretary of the Treasury, William Simon... Secretary of State, Henry Kissinger... Presidential Economic Advisor, Bill Seidman... And Chairman of the Council of Economic Advisors – and future Federal Reserve Chairman – Alan Greenspan.
Behind closed doors...
The Federal Reserve‘s Federal Open Market Committee (FOMC) meets eight times a year to establish interest rates and set our nation‘s financial policy.For the first six decades of the Fed‘s existence (1913–1975), the discussions of these meetings are largely kept secret from the public. But in 1976, legislation called the Sunshine Act requires the Federal Reserve to make word–for–word transcripts and recordings of all FOMC meetings available for public view. According to House Banking Committee investigator, Robert Auerbach, Federal Reserve officials deny the existence of verbatim transcripts or recordings of any FOMC meetings. According to the Fed, they simply don‘t exist. But, according Auerbach, because of questioning by House Banking Committee investigators in 1993, it became clear the Fed had not been telling the truth... and, shortly thereafter, Fed Chairman Alan Greenspan ordered all verbatim tapes and transcripts to be destroyed. But here‘s the thing. Not everything was destroyed...
***FOMC TRANSCRIPT – 3/21/1978***
The price of gold has risen more than 80% over the past year and a half. In the Fed‘s spring Open Market Committee, Fed Chairman William Miller suggests two possible ways to quell the rising gold price. Option # 1 is to sell large amounts of gold into the market – specifically, by getting the U.S. Treasury to sell 300,000 ounces per month.
Option #2 would be to simply suggest that the Treasury was going to unload large quantities of gold into the market. ―You don‘t have to sell gold,‖ Miller says, ―you just have to breathe [that you may] one day.‖
In essence, Miller is telling the FOMC that the gold market can be manipulated by propaganda.
***FOMC TRANSCRIPT – 7/6/1993***
In a Summer FOMC meeting, Fed Governor Wayne Angell expresses concern over a recent 20% increase in the price of gold. He talks about the desire for a low gold price and lays out how it can be achieved. Angell states that the Federal Reserve ―determines the price of gold‖ and that they can ―hold the price very easily‖... ―all they have to do‖ is make interest rates and Treasury Bonds attractive enough to make it ―unprofitable to own gold.‖
The price of gold drops nearly 15% after the meeting:
In fact, during the next Federal Reserve Open Market Committee, which took place a few months later, Governor Angell addresses the recent action in the gold markets:
“I recognize that the price of gold has come down from $400 to $371 and that really is a factor that parallels the move that took place in the bond market; and that has worked very, very well.”
Now do you believe the Fed when they say they have not intervened in the gold markets? The question is... It is obvious that the Fed has manipulated the price of gold, but why? And what, exactly does this have to do with you? You see, most Americans don‘t understand the historic and powerful role gold has played in monetary matters for centuries. Monetary experts at the world‘s biggest banks look to gold as a barometer of the dollar‘s real, intrinsic value. They see gold as the ultimate, final standard of value. The world‘s richest people and the world‘s biggest banks are always looking for the strongest currency... and they frequently measure all currencies against gold. To maintain the appearance of a safe currency, it‘s critical that the Fed make sure the price of gold remains low. Or, at the very least, that it not go up too fast. As you know, gold has risen suddenly and sharply recently. These moves came after a ten–year period of increasing gold prices. These issues should matter to you because, if gold continues to spike higher, there could be terrible consequences for all Americans... If the Fed suddenly loses control of the gold price... the dollar itself could crash, bringing down not only our banks, but our entire consumption–led way of life. I‘m publishing this report and trying to alert my fellow citizens of these risks. Please... look at these facts carefully. At the end of this letter I‘ll discuss several ways to protect yourself. But first... let me show you what I‘ve found about the Fed‘s gold manipulation.
You be the judge.
―The objective of this manipulation is to conceal the mismanagement of the U.S. dollar so that it might retain its function as the world‘s reserve currency.‖ Gold Anti–Trust Action Committee There are essentially 2 specific reasons for the Federal Reserve to hold down the price of gold, as I see it. The first, I‘ve already talked about. And that is to preserve the worldwide power of the Fed‘s intrinsically worthless paper product – the U.S. dollar.
You see, almost all countries in the world today use the dollar as their ―reserve currency.‖ That is, the dollar is the internationally agreed upon form of payment. When one country wants to buy goods from another country – like oil from Saudi Arabia... mangos from Costa Rica... or corn from America – these goods are paid for in dollars. Foreign countries have bought TRILLIONS of dollars and are holding them. But there‘s also one very big catch. If something else becomes more valuable than the dollar – or is seen as more reliable – then the world could switch currencies, and trillions would come flooding back into the United States. Just how bad could it get? Well... just consider this fact. More than $4.3 TRILLION U.S. dollars are actually held outside the United States, in foreign exchange reserves. China, #1 on the list for example, holds more than $891 BILLION. Japan holds $883 BILLION. The UK, $541 BILLION.
My point is, if the world ―dumped‖ the dollar, and all those foreign dollars came rushing back into the U.S., the money supply inside the U.S. would increase on a massive scale. What would that mean for you? Well, the purpose of this letter is not to scare you, but if the dollar lost its status as the world‘s reserve currency, our current standard of living would be in serious jeopardy. Billionaire investor Sam Zell, for example, recently estimated if such an event were to occur, Americans‘ standard of living would decline by as much as 25%. I personally think it would be much higher. A collapse in the dollar would mean that everything – from food to clothes to gasoline – would cost significantly more... and wages and other forms of income (like dividends and Social Security payments) I believe, would not keep pace with prices. Of course, this doesn‘t take into account the massive amounts of inflation undertaken by the Fed in recent years. ―The U.S. government intervenes in the gold market to make the dollar look worthy of being the world‘s reserve currency when of course it is not equal to the demands of that esteemed role. The U.S. government does this by trying to keep the gold price low, but this aim is an impossible task.‖ James Turk, Former Manager of the Commodity Department of the Abu Dhabi Investment Authority ―The rigging of the gold (and silver) price allows the continued existence of a falsely strong U.S. dollar, which the Fed has printed up over $1 TRILLION of this year.‖ Jason Hommel, Precious metals analyst And what about the second reason for the Federal Reserve to manipulate the gold price? You see, not only does suppressing the gold price artificially inflate the value of the dollar... But because of this inflated value, the Fed can effectively create as much ―money‖ as it wants. An artificially strong dollar persuades the public that an intrinsically worthless currency – like the dollar – is healthy and in working order.
So the Fed keeps the printing presses on... ―It‘s a Central Bankers dream to be able to print all the paper money they want, without affecting the price of real tangible assets... By suppressing the price of gold, which historically has been the benchmark of value between paper assets and real assets, you can perpetuate a global fiat money scheme where the Central Banks can create as much money as they want without serious repercussions.‖ Craig Harris President, Harris Capital Management, Inc. CTA And if you think this isn‘t happening, just consider these little–known facts: Before the Lehman Brothers crash of September 2008, it took the Federal Reserve 13 years and 8 months to double the currency and reserves in U.S. banks. But then after the Lehman Brothers crash, it took the Fed just 3 months to double the money supply. In other words, the Fed accelerated the pace of inflation by a factor of 45 to 1, in just 3 months‘ time! Do you see just how dangerous this is to not only our economy but our entire way of life? My question is: How could the Fed possibly create so much money, so fast... with so little concern over what would happen to the value of the dollar? The answer, we believe, lies in the gold markets. So, how exactly do they do it? How could they possibly suppress the price of gold and get away with it? I‘ll show you...
The Fed essentially has 2 tools at its disposal.
Secret #1: Shorting Gold
―In 1980 we neglected to control the price of gold. That was a mistake.‖ – Former Fed Chairman, Paul Volcker On April 11, 2010 a former Goldman Sachs trader named Andrew Maguire came forward with a stunning accusation. In an exclusive interview Maguire told the New York Post: ―JP Morgan acts as an agent of the Federal Reserve; they act to halt the rise of gold and silver against the U.S. dollar. JP Morgan is insulated from potential losses [on their short positions] by the Fed and/or the U.S. taxpayer.‖ Selling gold futures – or ―shorting‖ gold – is a bet that the price of gold will go down. The more short positions there are the more downward pressure it creates on price. It‘s just like in the stock market. For example, short positions in Nokia – the popular mobile device company – increased more than 50% in February 2011. Its share price plummeted 26% that month – even after news came that Microsoft would pay Nokia billions of dollars to adopt Windows Phone 7. That‘s the power of short position.
So what did Maguire reveal about the short positions in the gold markets? Well, through a series of emails to regulators at the CFTC (the Commodities Futures Trading Commission), Maguire warned of huge upcoming price movements in the metals markets, which he says were authorized by the Federal Reserve and executed by JP Morgan.
In an email dated February 3rd, 2010 Maguire gives the CFTC a ―heads up for manipulative event signaled for Friday February 5‖ designed to dramatically reduce the price of gold and silver.
Maguire says through an accumulation of ―massive short positions‖ an effort will be made to ―...illegally drive the market down and reap very large profits.‖ Smaller investment bankers, such as Maguire, ―will be ‗invited‘ on board, which will further add downward pressure.‖
What happened next? Well, when you look at the price charts immediately following Maguire‘s February 3rd email, there is clear downward pressure in the price of gold. In fact, there‘s a downright nosedive.
It drops 5.1% over the next 2 days. Just enough to hold the price... but not enough to draw unwanted attention. How could Maguire possibly know about these events beforehand? Bill Murphy, chairman of the Gold Anti–Trust Action Committee says it‘s not by chance: ―It would not be possible to predict such a market move unless the market was manipulated.‖ Still, the CFTC has done very little to investigate Maguire‘s claims. This is especially strange since Maguire is not the only industry insider stepping forward with these types of accusations: ―JP Morgan is a leading member of a cartel holding huge net short positions in gold derivatives and who therefore have a vested interest in holding down the gold price and, in collusion with central banks, who are fighting to defend the fiat money system, dump gold on the market whenever it looks like it will break through a key chart point.‖ Clive Maund, Precious metals analyst
―So how does the U.S. government manage the gold price? They recruit Goldman Sachs, JP Morgan Chase and Deutsche Bank to do it, by executing trades to pursue the U.S. government‘s aims. These banks are the gold cartel... The cartel acts with the implicit backing of the U.S. government to absorb all losses that may be taken by the cartel members as they manage the gold price and further, to provide whatever physical metal is required to execute the cartel‘s trading strategy.‖ James Turk, Former Manager of the Commodity Department of the Abu Dhabi Investment Authority ―The manipulation/capping of the gold price is largely accomplished by appointees of the U.S. Treasury/Federal Reserve selling staggering amounts of gold futures on exchanges...‖ Ron Kirby, Independent Financial Journalist And here‘s something else to consider... According to figures from the Office of the Comptroller of the Currency (OCC) — the body that charters, regulates, and supervises all national banks – JP Morgan had over $163 BILLION of gold derivatives [bets on the future price of gold] as of December 31, 2010. Of course, we don‘t know whether their position is long or short gold. The OCC does not report those numbers. But that‘s not what‘s important here. You see, what I find particularly interesting is that JP Morgan‘s position represents more than 85% of gold derivatives held by all U.S. banks.
In other words, JP Morgan is placing more bets on the future price of gold more than any other bank in the U.S... by an incredibly huge margin. In fact, they‘ve held the top position for nearly a decade. My question is, why does one bank – one that has particularly strong historical and financial ties to the Federal Reserve – consistently hold the largest amount of bets on the future price of gold out of all the banks in the United States? Remember... It was the Federal Reserve that gave JP Morgan $30 BILLION in TAXPAYER funds to help it buy out investment giant – and rival – Bear Stearns in 2008 – for just a fraction of its true value.
It was the Federal Reserve that selected JP Morgan to serve as custodian for its program to buy $500 BILLION in mortgage–backed securities... a move that essentially gave JP Morgan the entire U.S. mortgage market! Not only that, but JP Morgan’s CEO is a “Class A” director of the Board of Directors of the New York branch of the Federal Reserve. Do you think it‘s unreasonable to assume that JP Morgan is working as a representative for the Federal Reserve in the gold markets? While you ponder that thought, let me show you the second way the Fed is suspected to intervene in the gold markets...
Secret #2: Gold Lending
―The second way central banks can have an influence on gold is through the lending of some of their gold in the lease market. Central banks have expanded their leasing activities over the recent years, seeking an improvement in the return on their holdings. Actually, central banks are the dominant players in this relatively narrow market. Jean–François Rigaudy Head of Treasury, Bank for International Settlements 2004 Another tool the Fed has at its disposal is something called ―gold lending.‖ Neil Ryan, Director of Economic Research at Blanchard and Company, explains how ―gold lending‖ works:
A central bank loans a bullion bank [like JP Morgan or Goldman Sachs] some amount of gold with a lease rate and length of loan term attached to the contract...
The bullion bank immediately sells the gold into the market and invests the profits of the sales in securities with a higher rate of return, such as government long–term bonds...
Central Bank gold loaned into the market is a major source of supply.
The levels of gold loaned in the market can significantly impact the price...
So how much gold has the Fed lent out? Here‘s the thing. We just don‘t know! You see, most Americans probably don‘t realize that the Federal Reserve is not a government institution. In a rarely–publicized court case, Lewis vs. United States, (1982), the United States Court of Appeals for the 9th circuit ruled that the Federal Reserve banks are ―independent, privately owned and locally controlled corporations.‖
In other words, the Federal Reserve is an independent corporation owned by individuals who profit from ownership of shares... and they are required to make public only a fraction of their financial dealings. The point I‘m trying to make is this: When it comes to leasing gold into the markets, the financial, accounting, and inventory records of the Federal Reserve are none of your business! According to George Milling–Stanley, Manager of Gold Market Analysis for theWorld Gold Council: ―There are no official [gold–reserve] reports... The central banks are under no obligation to report what they lend into the market, what they place on deposit and what they do with their swaps.‖ The late Murray Rothbard, Former Academic Vice President for the Ludwig von Mises Institute and renowned economist, put it this way: ―The Federal Reserve System is accountable to no one; it has no budget; it is subject to no audit; no Congressional committee knows of or can truly supervise its operations.‖ This is why you see so many politicians, like Texas Congressman Ron Paul, calling for a complete audit of the Federal Reserve System. The bill would eliminate restrictions on the audits of the Federal Reserve. Despite the Fed‘s lack of transparency, there is some evidence of what may actually be going on. In the late 1990s, for example, a well–respected financial analyst and economist named Frank Veneroso began noticing strange movements in the gold markets. In short, it was while researching supply and demand data that Veneroso found large quantities of gold were entering the market, but were NOT being accounted for by the major gold reporting agencies. How much unreported gold was entering the market? According to Veneroso, as much as 16,000 tonnes over a 10–year period. Or more than 564 million ounces of gold. The only source capable of adding this much gold into the markets, says Veneroso: The vaults of central banks. The astonishing thing is, practically no one in the U.S. government or financial community is paying attention to Veneroso‘s work... Keep in mind, Veneroso is not some right–wing conspiracy theorist. He is one of the world‘s most trusted, sought after financial analysts. His client list is a who‘s who of global financial institutions including the World Bank, the International Finance Corporation, and The Organization of American States. Not to mention, the Governments of Brazil, Korea, Mexico, Peru, Portugal, Thailand, Venezuela and the United Arab Emirates have all hired Veneroso for his work in finance and economics. In 1998, he authored The Gold Book Annual, probably the most comprehensive analysis of the gold markets ever written. Few people know more about the gold markets than Veneroso. He says: I find it extremely annoying that there is a hell of a lot of obvious evidence out there that something is happening in the gold market––that there are very large supplies coming into the market––larger than the consensus would claim––and no one is willing to discuss it.
I have had interviews with the press. After the interviews, it has always turned out that the articles were killed. I have requested debates with [the reporting agencies] and they have refused to show up. I have asked [them] to fund pertinent research studies and they have not responded. I never get a response that counters the evidence that I can bring forward. I simply get extreme silence... Unbelievable, right? And Veneroso‘s research is just the very tip of the iceberg. For example... A Wall Street Journal article from Jan 17, 2005 reveals the government admitting the use of gold sales in the past to support the falling dollar.
And in 1998, Fed Chairman Alan Greenspan is quoted as saying: ―Central banks stand ready to lease gold in increasing quantities, should the price rise.‖ And most people don‘t know that in 2002, Barrick Gold – the largest producer of gold at the time – claimed in a Federal Court in New Orleans that they acted as an agent of the Federal Reserve to lease gold in the open market.
Amazingly, I‘ve never seen this document written about anywhere in the mainstream American press. So, after seeing all of this evidence, do you think the Fed could possibly be trying to exert control over the price of gold?
Well, no matter what you believe about the Federal Reserve‘s role in the gold markets... here‘s the thing I‘d like you to remember: Whether you think the Fed is 100% telling the truth... and you believe they have no interest in suppressing the price of gold... Or even if you think that they‘re involved somehow, on some level... There is one simple fact that NO ONE can deny. It all boils down to one thing. And that is: Is the dollar price of gold depressed right now? And the answer to that is: Yes, undeniably so. How can that be, you are probably wondering? After all, the price of gold is up more than 400% in the past decade. There are two shocking statistics that help prove the point clearly, that gold prices are being artificially depressed. The first is that over the past decade, the gold price has only gone up more than 5% in a single trading day... on only three occasions. In other words, over the past 10 years – out of more than 2,500 trading days – the price of gold has only gone up over 5% just three times. And one of those days was September 11, 2001. Keep in mind: We‘ve been in a gold bull market for the past 10 years. But here‘s the thing. Maybe this is normal behavior for precious metals and commodities, right? After all, this could be ―par for the course.‖ Well, when you look at the same statistics for other valuable commodities over the same period – oil rose more than 5% on 53 occasions... silver 29... copper 22... and nickel 64 – it becomes quite obvious that something has to be holding back the gold price.
Could any rational person look at these numbers and think that gold was NOT being artificially depressed? ―There has to be a force greater than normal market conditions that has repressed the price of gold.‖ Craig R. Smith, Founder, Swiss America Trading Corp. But get this...
There‘s even more compelling evidence of gold price suppression. And that is, the dollar price of gold is nowhere near as high as it should be... Even at $1,500 an ounce... $3,000 an ounce. How can I possibly say that? Here is the answer...
Where the price of gold should REALLY be
You see, one fundamental aspect that most people don‘t realize about gold is that, in a fiat currency society, the gold price has always risen to account for an increase in the fiat currency supply. This simple fact has played itself out over and over again throughout history. Let me explain what I‘m talking about... Ancient Rome: 1st Century A.D. Rome‘s currency – the Denarius – was the strongest, most reliable form of money in Ancient Rome. In the 1st century A.D. the Denarius consists of more than 95% silver. But in less than a hundred years time, to accommodate growing welfare programs, numerous war campaigns, and other government obligations (sound familiar?), Roman emperors begin debasing the Denarius (mixing in copper and bronze) so they can mint more to meet the overwhelming demand. By 284 A.D., the coins are nothing more than tin–plated copper. The government is creating as much as it can. And whenever they run out... they simply make more. Inflation reaches unprecedented levels in the once great society. Only one thing was able to keep up with the skyrocketing currency supply: Gold. A pound of gold is worth 50,000 Denari in 301 AD. Ten years later is rises to 120,000. In 324, it‘s worth 300,000 Denari. By 337, it‘s up to 20 million Denari. And by mid century, to account for the ever–increasing currency supply, the gold price grows to a whopping 2.12 BILLION Denari. That‘s a gain of 42,400% in less than 50 years. Do you see what I mean when I say the price of gold rises to adjust for the increase in currency supply? This is a cycle that has played out over and over again throughout history: 1. A society starts out with currency backed by real assets such as gold or silver 2. The government begins issuing ―symbols‖ of gold and silver, like paper dollars or debased coinage – coinage mixed with copper or other base metals. 3. The government increases this fiat currency supply to pay for war or government debts (inflation) 4. The currency loses purchasing power
5. Prices rise 6. The public senses this loss and rushes back into gold and silver to protect their purchasing power. 7. The price of gold gets bid up to meet the expansion in currency supply. Here‘s another example of what I‘m talking about.
Post World War I Germany
In order to pay the massive debts associated with the First World War, Germany takes its currency off the gold standard. Citizens no longer have the right to trade in their currency for gold. Germany begins massive amounts of fiat currency printing to pay off its war debts. According to the New York Times, by the beginning of 1923 the government has 33 printing plants churning out 45 billion marks a day. By November, that number reaches an incredible 500 QUADRILLION marks per day. Between 1919 and 1923 Germany‘s currency supply increases from 29.2 billion marks to 497 QUINTILLION marks (497 quintillion is the number 497 followed by 18 zeros). The currency supply increases 17 BILLION times. But here‘s the thing. Only two assets keep pace with the massive German hyperinflation: Gold and silver. The price of gold corrects itself for the mammoth increase in currency supply, going up from 100 marks an ounce in 1914 to 87 TRILLION marks per ounce in 1923. That‘s an increase of 87 TRILLION percent. Silver follows a similar path.
Those who had their savings in gold and silver preserved their purchasing power. Those who had their savings in Marks, lost everything. Similar situations happened in 10th Century China with an incident they called ―flying money‖... in 18th century France... 1940s Greece... 1920s Austria... 1990s Indonesia...
The list goes on. But the point I‘m trying to make is this: Here in America right now, the price of gold is nowhere near the supply of recently inflated dollars. How do I know? Just look at this. The following graph shows the increase in paper dollars between 1984 and 2010. That is, the cash in circulation plus bank deposits. During this time, the Federal Reserve increased the paper currency supply by more than 10 times. That‘s over a 1,000% increase. This data, by the way, comes from the Federal Reserve‘s own website.
Now take a look at the yellow line. This line represents the value of all the gold held by the Treasury – the number of ounces held times the gold price.
In order for the value of all the U.S. gold to account for all the currency in circulation, these two lines would have to meet.
If that were to happen – like it has in numerous other societies in the past – the gold price would have to increase to – get this – more than $9,200 an ounce.
And if you think the dollar is too strong for any of this to happen... or if you think, ―this type of thing just won‘t happen in America,‖ just consider this fact: It‘s already happened here. Twice. For instance, in 1934 President Franklin Roosevelt debased the dollar and gold was allowed to float on the open market (briefly) until it rose and hit $35 an ounce.
In doing so, gold righted itself to account for every dollar in circulation. Then, in 1971, it happened again. President Nixon took the dollar off the ―gold standard.‖ The price of gold was no longer pegged to the dollar. The dollar is now completely, 100% a fiat currency. Almost immediately, gold rose to account for the increase in paper currency supply.
But I want to point out something interesting that happens here. You see, not only does gold account for all the paper dollars in existence, but when you account for all the newly outstanding revolving credit in the economy – or credit card purchases, represented by the blue line – gold begins accounting for that too!
So, not only does the price of gold go up to account for the physical money supply, it also begins accounting for the supply of credit as well. When all is said and done, the price of gold rises more than 2,300% between 1971 and 1980. But what about the supply of credit in today‘s economy? In other words, how much would the price of gold have to increase to account for that? You see, I already told you that to account for all the base money in circulation today, the price of gold would have to rise to around $9,200 per ounce. But when you add to it all the revolving credit in existence – the price of gold would have to go up way more than that to meet the currency supply.
How much higher? When you add in the supply of credit – just for it to do what it did in 1980 – gold‘s dollar price would have to exceed $12,300 per ounce.
Incredible, right? And that‘s only if NO MORE money is printed. I realize you might think this is completely unreasonable right now. But remember, in the past decade, gold has gone up more than 400%... silver more than 800%. For gold to reach these prices it would mean an additional increase of around 700%. I don‘t think it is unreasonable in the least. Remember, 90% of the population still believes gold is a barbarous relic. These people own stocks, bonds, real estate, and mutual funds.
But what happens when every American wakes up to the fact that gold is the only thing that is going to keep up with inflation? Prices are going to go parabolic. The point of all this, of course, is that today, I believe the Fed is artificially depressing the price of gold. But, in the end, it doesn‘t really matter. Here‘s why... You see, even if the Fed is trying to artificially inflate the dollar‘s value – through the manipulation of gold – they can‘t do it forever. Central Banks can only lease gold into the market for so long. Gold is a finite resource. Sooner or later the vaults will empty out. Not only that, but the alleged short game is coming to an end too. This past fall the CFTC announced an investigation in JP Morgan for silver price manipulation. Furthermore, several metals traders are also suing JP Morgan. They allege that the banking giant engaged in the manipulation of the metals markets by ―amassing enormous short positions.‖ In short, if there is manipulation in the gold markets it will likely be coming to an end very soon. John Embry, Chief Investment Strategist for Sprott Resources who‘s been researching the gold sector for more than 30 years, says: I would suggest that today central banks are discovering to their increasing discomfort what history has always demonstrated – and that is that manipulation of the free–market process ultimately fails. No amount of government interference and price manipulation can change the reality of the free market over the long term. Now, you might be saying to yourself: ―This is great. Gold could go as high as $12,000! So it must be a fantastic investment right now.‖ No, it‘s not. Here‘s the thing that 99% of people don‘t understand about gold. Gold is NOT an investment at all. It is simply a consistent and stable asset that retains its value over long periods of time. But because we calculate the price of gold in terms of a currency (like Roman Denari, German Marks, French Francs, or U.S. dollars) it‘s easy to PERCIEVE the gold price as going up. It isn‘t. All that‘s really happening is the dollar is purchasing less and less... and it‘s reflected in terms of higher gold prices. Don‘t think of it as gold going up...
Think of it as dollars going down...
And THIS is a very bad thing. Gold is simply doing what it is supposed to do as real money. It maintains and preserves your purchasing power against worthless fiat currencies.
Here’s another way to think about it...
Let‘s say you decided to save $2,000 at the beginning of each year for the past 5 years. So, on January 1st 2007 – all the way until January 1st 2011 – you set aside $2,000. At the end of 5 years, you‘d have $10,000 in cash. But here‘s the thing. Over the past 5 years the government has spent TRILLIONS of dollars on bank bailouts... the war on terror... the war in Iraq... and, not to mention, huge ―quantitative easing‖ money injections into the economy. As a result, the government has spent more money over the past 5 years than it has ever spent before. And this has dramatically decreased the value of your $10,000 in savings.
By how much? Well, since gold is widely considered a barometer for the value of the dollar, let‘s compare what would have happened had you put the same amount of money into gold each year. The price of gold in January 2007 was $637. This would have enabled you to buy 3.14 ounces of gold. The price of gold in January 2008 was $836, enabling you to buy 2.39 ounces. The price of gold in January 2009 was $875, enabling you to buy 2.29 ounces. The price of gold in January 2010 was $1,097, enabling you to buy 1.82 ounces. The price of gold in January 2011 was $1,416, enabling you to buy 1.41 ounces. So, at the end of 5 years, you‘d have a total of 11.05 ounces of gold. Those 11.05 ounces would now be worth $16,524.17 at today‘s spot price of $1,495.40 an ounce – or $6,524.17 more than had you saved your money as cash. That means the inflation over the last 5 years (calculating it via the gold price) has been a total of $6,524.17. In other words, just by letting your money sit as dollars, you would have lost nearly 39.5% of your purchasing power. So the purchasing power of the $10,000 you originally saved would have been reduced to roughly $6,050. Shocking, right? But get this... If gold went to $12,300 an ounce today – where some believe it‘s supposed to be – that‘d mean the purchasing power of your original $10,000 would have been reduced to just $740. That means you would have lost roughly 93% of your purchasing power. The point I‘m trying to make is this:
Gold is great at preserving your savings... but it is not an investment you should use to INCREASE your savings.
Yes, you need to own gold and silver bullion... lots of it, if you want to protect your savings, and keep up with what I see as the inevitable inflation that is going to destroy most Americans. Let me show you what I recommend...
Gold is money
My name, by the way, is Porter Stansberry. I run an independent financial research firm called Stansberry & Associates Investment Research. We work out of a restored 18th–century railroad baron‘s mansion in the historic Mt. Vernon district of Baltimore, Maryland. Today, we provide independent financial research to institutional and private investors in 130
countries around the world. You may know of our firm because of the work we did over the last several years – helping investors avoid the big disasters associated with Wall Street‘s collapse. We warned investors to avoid Fannie and Freddie, Bear Stearns, Lehman Brothers and General Motors and dozens of other companies that have since collapsed. We even helped our subscribers find opportunities to profit from these moves by shorting stocks and buying put options. To my knowledge, no other research firm in the world can match our record of correctly predicting the catastrophe that occurred in 2008. But I‘ve put together this briefing for a very different reason. You see, I believe we‘re in the midst of a major dollar crisis... one that will radically change the way you spend and save money. And I‘m telling everyone who will listen, how to protect themselves – and even prosper – from this crisis. The first step you should take to protect yourself is to convert substantial portion of your savings into gold and silver. Gold and silver have served as ―real money‖ for thousands of years. Gold, for instance, has retained its purchasing power for all recorded human history. It‘s a universally recognized and timeless store of value. Its natural properties have imbued the element with traits that humans find intrinsically valuable and well suited to use as money: It‘s portable, divisible, and doesn‘t corrode. If I were to hide 10 gold coins today and leave them for my grandchildren, I have no doubt that in 40–50 years, my grandkids would still be able to use them to purchase something around $14,000 in value. Most importantly, gold cannot be printed out of thin air. Even the U.S. military has packed its emergency survival kits with real gold coins. Why not Dollars, Euros, Yuan or any other paper currency? Because at all times... under all circumstances... gold remains money. Owning gold is simply the best way to protect yourself from extreme government currency creation (inflation)... and the falling dollar. The bottom line is this: I know a lot of people have not yet purchased any gold at all... or have not yet put enough of their savings into precious metals. That‘s why my group recently put together a special Research Report that will show you everything you need to know to successfully buy, sell, and own gold. It‘s called The Gold–Savers Manual: How to Protect and Store Your Wealth with Gold. In short, this report will show you: How much of your savings should be converted into gold... Which gold and silver bullion coins are right for you... Why some gold coins are better than others... The best ways to buy, sell, and store your gold... How to buy gold with ZERO dealer markup...
And so much more... You‘ll also hear from a variety of experts I‘ve interviewed over the years and what they recommend you do – many of whom you‘ll likely recognize by name. One is one of America‘s top gold bullion dealers. He‘s also one of the founders of the largest coin grading service in the world. Another is a person whom I believe is the single greatest gold investor on the planet. He helped write the Minority Report for the U.S. Gold Commission with former presidential candidate Ron Paul – the book that explains the relationship between gold and the U.S. dollar and gives ideas for reintroducing the gold standard. In short, in each of these interviews and stories, you‘ll hear about some of the moves you can make right now to protect yourself from the extreme government inflation that is happening in this country. In short, I believe this is the most comprehensive guide to buying gold you can get. We‘d like you to have it, free of charge. Keep in mind this report is not for sale at any bookstore or website. And that brings me to the second thing I believe you should do with your money now and over the next few years. Remember, as I said earlier: Buying gold will not make you rich. Gold is simply a way to maintain and preserve your purchasing power against the falling dollar. If you want to protect your savings from inflation The Gold–Savers Manual will show you how. But what should you do with the rest of your money if you want to do ―better‖ than preserving your savings... if you actually want to make a lot of money over the next few years? That‘s what I‘d like to show you next...
Better than gold
If you want to prosper during the dollar crisis... I mean really have the opportunity to make a lot of money, you need to buy equity shares, held in your name, of the half–dozen companies that will see their value skyrocket the most, as gold prices inevitably move higher. But which gold stocks do you buy? After all, there are more than 1,000 gold companies listed in North America alone. Well, for starters, the best gold investments aren‘t gold explorers. Sure, some of them get lucky. They stumble upon world–class gold deposits... Pump out millions of ounces of gold from the ground... And make shareholders rich in the process. But typically, this is not what happens. Fact is, most gold discoveries simply don‘t pan out. Either there isn‘t enough gold in the ground... Or the company isn‘t able to attract any financing. More often than not, shareholders end up losing money. I believe the best gold stocks to own during a gold bull market are the ones that actually mine and
produce gold – these companies are known as the ―producers.‖ But not just any gold producer will do. You see, only the companies with the most gold in the ground – verified by an independent, certified mining auditor – who produce gold at the cheapest possible price, are the absolute best stocks to own. This is where a lot of investors go wrong. For example, they don‘t know the difference between ―proven‖ and ―probable‖ reserves... or never take into account how much it actually COSTS to get the gold out of the ground. As a result, they take on much more risk than necessary, and often lose a lot of money. But after working in this business for more than 15 years, I can tell you with 100% certainty that to successfully pick the right gold stocks you must have PROOF that the company has lots of gold in the ground, vetted by an independent 3rd party... can produce it cheaply... and sell it for a profit. Eldorado Gold is the perfect example of a producer you want to own right now. Eldorado owns more than 5 world–class gold mines, containing more than 7.3 million ounces of PROVEN reserves. Last year, Eldorado got gold out of the ground at a cost of just $382 per ounce (the industry average is around $572 right now). In other words, with gold prices above $1,450 right now, the firm makes more than $1,060 for every ounce it mines. But that‘s not all. Not only did Eldorado produce 632,000 ounces of gold in 2010, more than DOUBLING its net income over the previous year... But in 2011, the company plans to increase production to more than 715,000 ounces. By 2015, the company plans to produce more than 1.5 million ounces per year. More than double its current rate. Because of this, the stock has absolutely crushed the gold price over the past 2 years...
It‘s gone up roughly 25% over the price of gold... And more than 80% overall. We‘ve been telling people to buy Eldorado since 2009. Now, there‘s no question, Eldorado Gold is definitely one of the gold producers you want to own right now.
But here‘s the thing. It‘s not the best one. You see, we know of several more companies that are just as good as Eldorado Gold in terms of proven reserves, efficiency, and price. These companies should skyrocket in the coming months and years, as the gold price goes inevitably higher. We‘ve put everything you need to know in a special report called The Only Gold Stocks You Need to BUY Right Now. This report, like The Gold–Savers Manual: How to Protect and Store Your Wealth with Gold, is also free of charge. Let me show you how to claim your copies.
Where should we send your free reports?
The guy who put all this research together is a geologist I hired 6 years ago. His name is Matt Badiali. Matt‘s been a geologist for his entire career. And he‘s been studying the precious metals and energy industry for the past 15 years – working on drill rigs... exploring mines... you name it. >His research has been published in several scientific journals. He’s taught at three prestigious universities. And he’s presented his research at numerous industry conferences, including for companies like Anadarko and Exxon. What it all boils down to is a lifetime of seeing how this industry works, from every angle. That‘s why a few years ago, I asked Matt to start putting his expertise to work in the world of finance. Why? Because I realized that someone with his level of expertise could make a killing in the markets – especially now. So he now spends every day analyzing the best investment opportunities in the energy and precious metals fields... and reporting his discoveries in The S&A Resource Report. Over the past few years, Matt‘s helped his readers cash in on many great opportunities in the energy and mining fields, which are seldom covered by mainstream news sources. For example... Jinshan Gold Mines 339% Rainy River 161% Northern Dynasty Minerals 322% Mag Silver 156% Silvercorp Metals 270% Petrobras 166% Veritas 101% ATAC Resources 598% Southern Copper 119%
Of course, anyone can cherry pick a few big winners. What I‘m most proud of is the fact that as of the publication of Matt‘s May 2011 issue, he has 33 recommendations in his portfolio. 26 of them are making money, with gains as big as 147%, 81%, 79% and 78%. Why are Matt‘s stocks booming? These stocks have been doing well – in part because of fears about the future value of the U.S. dollar. I believe Matt‘s portfolio will continue to lead our group in the months ahead as the dollar suffers its inevitable decline. To claim your free copies of The Gold–Savers Manual: How to Protect and Store Your Wealth with Gold and The Only Gold Stocks You Need to BUY Right Now the only thing I ask is that you take a no–risk trial subscription to Matt‘s resource and energy advisory, The S&A Resource Report. Of course, I can‘t say for sure if The S&A Resource Report is right for you. But to help you decide, here‘s what I propose... Try The S&A Resource Report for the next 4 months and make a decision whenever you are ready. Here‘s what I mean... Simply start your trial subscription today, and you‘ll have instant access to:
Research Report #1 – The Gold–Savers Manual: How to Protect and Store Your Wealth with Gold Research Report #2 – The Only Gold Stocks You Need to BUY Right Now
Plus, every month you‘ll receive Matt‘s Resource Report advisory letter, delivered to you on the second Tuesday of each month, first by e–mail, then by regular mail too. You‘ll also receive our daily market reports, sent by e–mail, also at no extra charge. Over the next four months, take your time and decide if The S&A Resource Report is right for you. If not, I‘ll send you a FULL refund, and you can keep everything you‘ve received up until that point. How much does The S&A Resource Report cost? I think it‘s ridiculously cheap, especially considering all you receive, and the time, money, and effort we put into this work. The truth is, just one of the investment ideas we‘ll share with you could help you make many times the subscription price. And it‘s not just me saying this... Thanks to the S&A Resource Report I’m way ahead of the game... I’m up $31,552 for the year. Jim M., California “I have bought stock in the four companies you mentioned and as of today my profits are in excess of $4,000. Far better results and profits than any previous service.” Jared P., Washington “I am up a little more than $1,500 on Royal Gold. That’s more than paid for my subscription!” Chip H., Seattle
“Matt, I have used your advisories a lot. On Northern Dynasty Minerals I made 167% and on Parker Drilling Company 161%.” Karl B., Austin “The S&A Resource Report’s value is unmatched, especially in our current environment. Matt’s research consistently deals a winning hand. I would not hesitate to mention the Resource Report to any friend or colleague in search of reliable, robust returns on minimal investment.” Greg M., Utah Before I give you the details on how to get started, however, I‘d like to tell you about another way to make a lot of money as the dollar crashes...
One more thing you can do...
There‘s one more thing you can do to prosper in the coming months and years... And that‘s to do the exact same thing with silver stocks as we recommend you do with gold stocks. In short, you want to own the producers with the most silver in the ground – verified by an independent, certified mining auditor – who can produce silver at the cheapest possible price. Silver, as you may already know, is rising higher and faster than gold right now. It‘s up more than 100% since September 2010. And the best silver producers are absolutely exploding. One of these companies, for example, has a PROVEN 17.1 million ounces of silver, which has been independently reviewed and verified by a third party agency. But here‘s the best part... The company produces this silver at – get this – a cash cost of negative $7.13 per ounce. This negative cost is possible because of the profits it generates from its other mining operations. There are very few companies like this right now. As a result, this company‘s performance has nearly DOUBLED the silver price over the past 2 years.
Matt‘s been recommending this company since 2009. In fact, he still thinks it‘s an incredible company today. That‘s why we‘ve put together a special report called The Only Silver Stocks You Need to BUY Right Now which details the best low–cost silver companies you can buy right now. #1 on the list is the company I just described. And you‘ll have access to it, free of charge, as soon as you agree to take a trial subscription to Matt Badiali‘s monthly Resource Report advisory. So how can you get started?
The price of The S&A Resource Report is normally $99 per year. But today I‘d like to offer you the chance to try Matt‘s research for HALF OFF the regular price. You‘ll pay just $49.50 for an entire year of his work, including: 12 Issues of Matt‘s monthly investment advisory newsletter, The S&A Resource Report, delivered on the first Tuesday of each month. Research Report #1: The Gold–Savers Manual: How to Protect and Store Your Wealth with Gold Research Report #2 – The Only Gold Stocks You Need to BUY Right Now Research Report #3: The Only Silver Stocks You Need to BUY Right Now Why so cheap? Well, I figure the best advertising for our research is to let you see the actual work and the results for yourself. And to encourage you to give it a try, I‘d like to give you the opportunity to review The S&A Resource Report at one of the cheapest prices we‘ve ever offered. And remember: You‘ll have the next four (4) months to make up your mind. In other words, you are only agreeing to try Matt‘s work to see if you like it. If not, no problem. Just let me know and I‘ll send you a full refund – 100%. Everything you receive between now and then is yours to keep, our compliments. To get started right away, Subscribe Now Good Investing,
Porter Stansberry Founder, Stansberry & Associates
P.S. I think what the government is doing right now is so dangerous, that I‘d like to do something I‘ve never done before in the history of my business. In short, when you try a subscription to The Resource Report, I‘d also I‘d like to offer you one year of my own investment advisory letter called Stansberry’s Investment Advisory (SIA), absolutely free of charge. I‘ve covered a lot of very important ideas in recent months, including assets you can own that you don‘t have to report to the government... how to safely make a lot of money in the currency markets... and the #1 investment asset you must own in a time of crisis (it has nothing to do with precious metals). I want you to have access to these ideas right away, and at no extra charge. A year of my letter normally costs $99, but if you sign up through this special offer it‘s yours for free. See the order form for complete details. P.P.S. In investigating the Federal Reserve‘s role in the gold and silver markets we went right to the experts... the top names in resources... analysts who‘ve spent years studying the Fed and its apparent manipulation of the gold markets. During these interviews we learned stunning insights, details, and facts – from some of the most knowledgeable people on the subject. We simply didn‘t have the time to discuss these details in this letter. Subscribe today and we‘ll include the full transcripts of these conversations, called The Fed Transcripts, absolutely free of charge. These transcripts have never been viewed by anyone outside of S&A and are only available to those who take advantage of this offer. To claim your copy and get started as a subscriber, click here.
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