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The Golden Promotion?

Written by The Daily Bell

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Gold Will Outlive Dollar Once Slaughter Comes ... The world's monetary system is in the process of melting down ... We have entered the endgame for the dollar as the dominant reserve currency, but most investors and policy makers are unaware of the implications. The only questions are how long the denouement of the dollar reserve system will last, and how much more damage will be inflicted by new rounds of quantitative easing or more radical monetary measures to prop up the system. Whether prolonged or sudden, the transition to a stable monetary system will become possible only when the shortcomings of the status quo become unbearable. Such a transition is, by definition, nonlinear. So central-bank soothsaying based on the extrapolation of historical data and the repetition of conventional wisdom offers no guidance on what lies ahead. – Bloomberg

 


Dominant Social Theme: It's happening now. Look!

Free-Market Analysis: Is the current doom and gloom regarding the dollar (versus gold and silver) a bit ... manufactured. We only point this out because as soon as the mainstream media starts banging the drums for a given point of view, we become a bit skeptical. To find an article in Bloomberg predicting the "endgame" of the dollar as the world's dominant currency is a bit surprising from our point of view. It makes us, well, itchy.

We know the proper thing to do as an alternative, hard-money news source, of course. We should jump on the bandwagon. After all we've been predicting the unraveling of the larger Western economy for years now. That's the bottom-line thesis of the Bell. The power elite manufacturers monetary, military and scarcity promotions and the free-market eventually un-does them. Given that we are in a long term metals bull market, we've expected gold to go very high and silver to follow. Our timeline for the larger bull market silver and gold business cycle has been 15 years – and we are approximately two-thirds of the way through.

Having written that, it is obvious that reports within the alternative news community are considerably more bullish short-term. And now there is Bloomberg too. And before Bloomberg, there were stories such as the one that we reported on that you can see here: Retiring CFTC Judge: We Covered Up Market Manipulation. And we have no doubt that there will more such reports in the near future as market manipulations begin, finally, to unravel.

And yet ... one can look at this two ways. Either it is yet another elite promotion of sorts or the powers-that-be are gradually surrendering to market forces and the consequences thereof. The idea is that once the short-sellers are under pressure legally, they will not be able to continue their game and the silver market will close the gap with gold very quickly – even as gold probably moves up explosively as well. This makes a lot of sense, of course. It is fleshed out in this article from Taipan Daily, as follows:

If the crimes of the manipulators are anywhere near what they are made out to be – if only a fraction of the accusations are true – then the silver market could arguably be considered one of the greatest "short squeeze" candidates in the history of markets. As Daniel Drew liked to say (before Commodore Vanderbilt made him eat his own words): "He who sells what isn't his'n / Must buy it back or go to pris'n." If things get truly nutty as the flushed-out banks are forced to cover, there is no telling how high silver could go.

And in addition to the manipulator exposure angle, there is the little manner of China – the third largest silver producer in the world after Peru and Mexico. As Bloomberg reports, Silver exports from China, the world's largest, may drop about 40 percent this year as domestic demand from industry and investors climbs, according to Beijing Antaike Information Development Co.

"There is huge demand in China this year and that has affected exports, which were already hurt after the tax rebate was abolished," said Ng Cheng Thye, head of bullion at Standard Bank Asia. "The demand is coming from all areas, including jewelry, investment and fabrication and this has resulted in a physical market shortage in the Far East."

And then, of course, there are the dollar-destroying actions of the "bearded clam," aka Ben S. Bernanke, Chairman of the Federal Reserve. If the Fed's first "QE" installment (surely you know those initials by now) is deemed a disappointment this week, precious metals could take a hit. But if Ben delivers, or if conviction rises of a likelihood for QE episodes 3 and 4 and 5, then watch out.

We note that Bloomberg is mentioned once more in the quotation above. Bloomberg, in fact, seems all over this story and again the idea that Bloomberg is leading the pack reporting about the potential for a silver blow off is a bit strange to us. Almost everything that Bloomberg writes about hews to the larger promotional agenda of the powers-that-be in our view. Same with Murdoch's Wall Street Journal – which has also suddenly begun to cover silver market manipulation.

More and more seem certain, especially in the alternative investment community that THIS IS IT. We understand and sympathize. We commented on an article just yesterday by hard-money journalist David Bond who was making the same points. But Bond was wise enough not to put a definitive timeline on whatever is going to eventually happen to the silver market (or the gold market for that matter) and we find his approach to be a good one.

Three things come to mind regarding the elites who have organized and masterminded gold and silver manipulations over the past 30 years. First, their manipulations often suck in smaller investors who are then spat out when prices are suddenly crushed and the market momentum is momentarily broken. Second, the elites CONTROL the judicial system in our view and we have never believed that the unraveling of the metals conspiracy would come from the US court system. We always believed the market itself would make the manipulation eventually untenable, at least in the short term.

Finally, the elite, as we can see from other examples, does not surrender easily – if at all. (They may eventually take a step back as we have often predicted – but even that is a long-term project.) Even at this late date, with the Internet revealing virtually every move they make to a swelling audience of increasingly agitated and intelligent individuals, the elite continues to push ahead with what is obviously a plan to enhance global governance and strengthen a variety of one-world judicial, legislative and executive arrangements.

Conclusion: It could well be that we are looking at an imminent unraveling of the current dollar-reserve fiat money system. Since we have reported on this decline in detail over the years it would not come as any surprise to us. Logic dictates that the free-market at some point is simply going to have its way and prices may break up fast and hard. On the other hand, anyone who has covered these issues for an extended length of time knows that nothing is necessarily predictable regarding a timeline; only trends are perhaps analyzable. Are money metals going up? Most likely it seems to us they will go much higher over time. Will a significant break-out occur after the election as more and more seem to be predicting? We don't know. Do you?

 © Copyright 2008 - 2010 Appenzeller Business Press AG (ARBP). All Rights Reserved. The Daily Bell is an informative compendium of independent economic views and analysis, which is published by ARBP.

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