His appearance was so positive that they end up telling him that he should come on the show as a special guest (as they have from time to time) for the full 2 hours of the show. Paul makes a joke in response. Check it out below.

There is also a lot more to learn about, like the suppression of the gold price.

Hope to see many attend the Constitution rEVOLution Tea Party on November 22nd at Philadelphia’s City Hall and at the FED.  I will be giving a campaign speech at the gates of the FED this time around, and you won’t want to miss it!!

For the Republic!!

Jake Towne

November 8, 2009

You should ask Congress to give you the same option for your own transactions. Otherwise, you risk losing everything you’ve worked for.

Send another letter to Congress asking them to repeal the legal tender law that forces you to do business ONLY in Federal Reserve Notes. In your personal comments use the latest news about countries dropping the dollar for oil transactions.

Here’s what I wrote in my letter to Congress . . .

Several countries are making plans to stop using Federal Reserve Notes for oil purchases. I want the same freedom for my personal transactions.

The Fed has nearly doubled the money supply since last Fall. This will cut the future value of my savings in half and send my cost of living through the roof. Add to that . . .

* The $100 trillion in unfunded liabilities for Social Security and Medicare
* Your big bailout schemes,
* Your so-called stimulus package,
* Your cap and trade boondoggle,
* Your disastrous healthcare plans, and the result is . . .

I see no hope for the dollar. You guys have ruined our currency, and I WANT OUT.

If foreigners can stop using Federal Reserve Notes, I should have the same freedom. Why should foreigners have more right to control their own economic destiny than I do?

Many in Washington claim they want to protect the Fed’s independence. What about my independence? I just want you to repeal the legal tender law so I can use forms of money other than Federal Reserve Notes (like gold and silver for instance). Doing this would also moderate the Fed’s behavior. If they want me to keep using Federal Reserve Notes then they’ll have to stop their legalized counterfeiting activities.

Please represent me. Break the Federal Reserve’s money monopoly. Give me the same right that foreigners have.

You can send your own letter to Congress using DownsizeDC.org’s Educate the Powerful System.

Jim Babka, President
DownsizeDC.org, Inc.

Resources:

* A news report on plans to stop using the dollar for oil purchases
* The Federal Reserve’s report on the expanding size of the money supply
* Brother Can You Spare a FRAUD? (Federal Reserve Accounting Unit, the Dollar)

D o w n s i z e r – D i s p a t c h
is the official email list of DownsizeDC.org, Inc.

& Downsize DC Foundation

While the hour-long presentation is of course only a snapshot, or a look at the critical pieces of puzzle, I emphasize the importance of the gold market, and view the housing crisis as merely a symptom of the causes – excess FED inflation and artificially low interest rates that were held too low for too long.  The irony is not lost that currently the FED interest rates is roughly 0.15%, far lower than previously.   In the interests of time and for simplicity, I omitted the Treasury market almost entirely – just a brief mention in the slide on the national debt.  The Treasury market is definitely also quite critical.

Jake Towne for US Congress PA-15 – The Financial Crisis (WEB) (Sept 2009)

Jake Towne for US Congress PA-15 – The Financial Crisis (WEB) (Sept 2009)

Roosevelt understood that he must apply the full force of federal power to suppress the natural desire for gold in troubled times. The Emergency Banking Act, signed into law March 9, amended the Federal Reserve Act by adding a new subsection (n), which empowered the secretary of the Treasury to demand that all Americans surrender their gold and receive paper money. The following day, Roosevelt issued Executive Order 6073, which made it illegal for Americans to take gold out of the country.

In his first “fireside chat,” delivered on March 12, Roosevelt didn’t say a word about his backstage maneuvering to seize gold. He remarked that “hoarding during the past week has become an exceedingly unfashionable pastime.”

Less than a month later, on April 5, 1933, Roosevelt issued Executive Order 6012, which expropriated privately owned gold. He ordered Americans to surrender their gold to the government by May 1, 1933. Violators would be subject to a $10,000 fine or as many as 10 years in prison.

Read the article here.

Paul specifically discusses why he doesn’t think the way to get HR1207 to a House vote is through a discharge petition. He suggests continuing to drum up grassroots support for HR1207 is the best method.

Grams allowed Ron Paul to speak until he was done on each topic. He even pointed out that his niece convinced him that Paul was a great candidate during the 2008 election.

Listen to the interview in it’s entirety below.

Download audio file (ronpaul-jasonlewis-06292009.mp3)

by Jake Towne, the Champion of the Constitution
Originally published on Sunday, June 14, 2009 at http://www.nolanchart.com/article6535.html

“When gold speaks, all tongues are silent.” – Italian proverb

This article will briefly review the history and aftermath of the infamous London Gold Pool. For those unfamiliar with monetary history, let me quickly establish the events framing the London Gold Pool.

In 1933, the FED’s monetary inflation caused the Great Depression which was also America’s first bankruptcy. FDR plundered the American people’s gold and one month later outlawed the private possession of gold, an illegal act that existed until 1975. From 1933 onwards, America was on a “gold bullion standard.” A “gold bullion standard” exists when gold coins are not minted and owned by the people, but large international transactions with foreigners are handled in gold bar. However, the FED, America’s central bank, continued inflating the monetary supply which debases the currency and likewise increases the foreigner’s redemption of gold.  (emblem)

Following the chaos of World War II, the heads of the world’s 44 industrialized nations gathered in New Hampshire, and made the Bretton Woods agreement. The Bretton Woods agreement made the dollar the world’s reserve currency, and stipulated that all member nations’ reserves had to consist of either physical gold or currency convertible into into gold (domestically the private ownership of  “monetary” gold remained a felony until 1975). These member countries then had a “gold exchange standard” and manipulated their currencies on their national level, often trying to devalue their currencies at the same or slightly higher rates than what the dollar was being devalued, or inflated, at.

The Bretton Woods system began to break down very quickly. In the 1950s, the United States found itself having to redeem vast sums of gold. In the recession of 1958, the FED created $2.25 billion of excess credit, which was redeemed by foreign central banks. This annual loss of 2,000 metric tons of gold still remains the largest known loss of gold in one year by any nation in history – currently, on paper the United States is still the largest official owner of gold at about 8,100 metric tons categorized as “Custodial Deep Storage Gold.” (see note 1)

By 1971, President Nixon had declared America’s second bankruptcy.  The FED had inflated the money supply by too much to fund the Vietnam War and President Johnson’s “Great Society,” and America was no longer able to redeem foreign-held dollars into gold. The world entered the twilight zone of freely floating exchange rates. In between 1958 and 1971, the several governments and central banks fiendishly created the London Gold Pool to suppress the price of gold.

THE LONDON GOLD POOL

In October of 1960, gold trading on the London gold exchange reached $40/ounce, which was $5 higher then the central bank’s target price. Rampant speculation that a Kennedy presidency would lead to more inflation, along with the building of the Berlin Wall and the U-2 spy plane incident, triggered fears about economic stability.

To curtail these fears, President Kennedy pledged in February 1961 that America would maintain the official price to our foreign creditors, and the price of gold fell to $35/ounce. Fearing a relapse, the international bankers of the BIS and the FED-US Treasury secretly formed the London Gold Pool. Each member of the Pool would pledge some of their gold to keep the London market suppressed. The Bank of England would dump their gold on the London market whenever necessary, and at the end of each month the other members would reimburse the BoE in accordance with the percentage of the pool they owned. The members were:

• 50% – United States of America with $135 million, or 120 metric tons
• 11% – Germany with $30 million, or 27 metric tons
• 9% – England with $25 million, or 22 metric tons
• 9% – Italy with $25 million, or 22 metric tons
• 9% – France with $25 million, or 22 metric tons
• 4% – Switzerland with $10 million, or 9 metric tons
• 4% – Netherlands with $10 million, or 9 metric tons
• 4% – Belgium with $10 million, or 9 metric tons  (Photo)

By acting in secret, the governments hoped to stagnate the market and keep potential buyers away. In 1962, a series of events involving Soviet sales of gold led to a change in strategy by the Pool. They found themselves able to profit off the changes in gold supply, and at one time in 1965 the Pool even reached $1.5 billion, or a five-fold increase over the initial Pool gold. However, the Vietnam War expenses after 1965 combined with the French shipping its’ $3 billion in gold from the New York FED to Paris, and leaving the Pool in 1967 led to catastrophic losses.

The FED’s meeting minutes from December 12, 1967 reveal the full extent of the central bank’s panic. Here are several excerpts:

“The announcement on Thursday, December 7, of a $475 million drop [422 metric tons - auth] in the Treasury’s gold stock seemed to have been accepted by the markets as about in line with prior expectations of the costs of the gold rush following sterling’s devaluation. What the market did not know, of course, was that only a $250 million purchase of gold from the United Kingdom saved the United States from a still larger loss in the face of some foreign central bank buying… The logistical acrobatics of providing sufficient gold in London were performed with a minimum of mishaps, although the accounting niceties were still being ironed out.

“Of greater concern, however, was the fact that the drain on the pool was accelerating again… the measures taken by the Swiss commercial banks and by some other continental banks to impede private demand for gold worked quite well, although it was clear from the start that such measures could serve only as a stop-gap until some fundamental change was agreed upon. Persistent newspaper leaks–mainly from Paris–about current discussions on this subject and their reflection in gold market activity Monday and today pointed up the need for speed in reaching a decision. ” (3-4/107) (photo of then-FED Chairman William Martin)

On page 15/107, the group then discusses placing “restraints on access to the London gold market” and it was commented that Italy and Belgium were “not prepared to stay in the gold pool indefinitely if that would mean continued substantial gold losses.” The group did agree to then implement “some program of restraints on demand, particularly in the London market, should be worked out; in the meantime, all of the participating countries were willing to stay in the pool… In particular, the British were concerned that limitations on access to the London market, by diverting demand elsewhere, would work to the detriment of that market which for the past 13 years had been the world’s principal market for gold.”

These excerpts also serve to remind us all that the central banks love their hold on the money power. However, from some of their perspectives, they may well believe they are simply doing “what’s best,” blindly disregarding the fact that all of their interventions and controls are only made necessary from their prior meddling with the free market:

“Although the German case was the most striking example of central bank operations following the meeting in Frankfurt, the availability of forward cover into guilders and Belgian francs at reasonable rates had also helped to reassure the [gold] market.” (7/107)

“Under Secretary [of Treasury] Deming, who had led the U.S. delegation to Frankfurt, made the necessary arrangements, and the group met with him in Basle yesterday. Meanwhile, representatives of the countries in the gold pool met in Washington last week to make a preliminary review of possible additional measures to keep the gold market situation under control. Not unexpectedly, the gold pool also was the main topic of conversation at the regular Basle [Switzerland, the home of the BIS - auth.] meeting on Saturday and Sunday, and it was discussed in detail by the governors on Sunday evening.” (12-13/107) (see note 2)

On pages 13-14, the FED also mentions the “gold certificate plan” which I personally believe is a likely prototype for the emergency fall-back position of today’s gold cartel after the price of gold spikes on the modern futures market. A particularly damning passage concerning the erosion of America’s sovereignty from Congress to the unelected Treasury Department to the cabal of international bankers is here:

“Governmental structures differed among countries, and the United States was almost unique in assigning to the Treasury sole responsibility for external matters involving gold. In many countries the central banks had primary responsibility in that area, although they often were required to consult with their governments. Moreover, central bankers commonly felt that they had greater knowledge and understanding of the practicalities of gold markets than did officials of their governments. Accordingly, it was probably the view in most countries that a meeting of central bank governors was the most appropriate forum for discussions of the type in question. The governors recognized, of course, that in the United States the Treasury had central responsibility with respect to gold, and accordingly they were willing to meet with Mr. Deming yesterday.” [Deming, of course, was quite literally a FED stooge, just like today's Timothy "Turbo Tax" Geithner, see note 2]

Following these minutes, on Sunday, March 17, 1968, the London Gold Pool collapsed and the global gold markets were closed for several weeks. The central bankers then decreed a “two-tier” gold price for “monetary” gold at $35/oz. and “non-monetary” gold. This system remains in place to this day, although it is clearly just an accounting sham. (see notes 3 and 7)

THE AFTERMATH OF THE LONDON GOLD POOL

On Monday, March 18, 1968, Congress removed the 25% gold reserve backing requirement for Federal Reserve Notes. In April, despite further panicked attempts to suppress it, the gold price reached $44/oz. The price was then kept bottled up by actions by the Swiss, American, and English central banks, including massive gold sales from the Soviets to the Swiss and gold redemptions by America.

By 1971, more than half of the gold illegally stoled by FDR from the people had been delivered overseas, mostly winding up in the vaults of European central banks. On August 15, 1971, President Nixon was forced to declare national bankruptcy and closed the Gold Window. This meant foreigners could no longer redeem dollars for gold.

The world’s central bankers and governments rushed to Washington, D.C. and made the Smithsonian Agreement, where, against all reason, all parties agreed to go on pretending as if the gold window had never been closed and merely set new fixed exchange rates. Finally, with the gold price at $90 and the turmoil resulting from the debasement of the dollar leading to a major recession, the system of fixed exchange rates completely collapsed, marking the final nail in the coffin of the Bretton Woods monetary system. From this point onward, all currencies “floated” against each other, opening wide the door to non-stop currency debasement, inflation, and FOREX market speculation. (note 4)

In 1974, New York’s COMEX futures market was opened to gold trading, paving the way to the “paper gold” derivatives and ETF’s of our modern day. In December 2008, the nominal value of all gold derivative contracts was $395 billion USD, or roughly equivalent to 15,000 metric tons of gold. In 2007, the last reported year, the LBMA, or the London gold market, exchanged over $20 Trillion USD in gold – the 2008-9 annual market turnover will likely dwarf this.

My message is a third American, possibly global, possibly even final, bankruptcy is imminent in the coming years as I first clearly denoted in this series. Similar to the closing of the gold window in 1971 being preceded by the demise of the London Gold Pool, this bankruptcy has been preceded by former Treasury Secretary and current Director of the National Economic Council Larry Summer’s gold price suppression plan enacted in the 1990s. (photo) (see note 5 and 6)

The “Summers Suppression Plan” has been bolder, more clever and more clandestine than the London Gold Pool, but may well be on its last legs. Though they may wear Brooks Brother suits and meet in corporate boardrooms and the highest political offices in the land, those who suppress gold are no different than mafia thugs in suits. For in doing so, they also suppress the free market and the prosperity it could deliver if the “money power” once more resides with We the People. More on Summers Suppression Plan in the upcoming parts of the Money Matrix series.

In the meantime, please mark my words. When gold speaks again, the Summers Suppression Plan will be no more.  As sure as night follows day, its fate is the same as that of the London Gold Pool.

Jake Towne is running for U.S. Congress in Pennsylvania’s 15th District in the 2010 election as a citizen unaffiliated with any political parties.  Jake also writes at www.LibertyMaven.com and www.CampaignForLiberty.com.  A master campaign presentation for internet viewing is available. [Reach the Author Here!]

For further reading on this subject, please see:

Lips, Ferdinand. 2001.  Gold Wars.  New York: The Foundation for the Advancement of Monetary Education.  Amazing perspective on gold from an ex-Rothschild banker.  The main source for the above information on the London Gold Pool.

Powell, Chris. “There Are No Markets Anymore; Just Interventions.” (2008) Article focused on the modern suppression of the gold market.

Gold Anti-Trust Action Committee. 2008. “A New Summary of GATA’s Work.”

Note 1 – The suspicious re-categorization of America’s gold hoard as “Custodial Gold,” then “Custodial Deep Storage Gold” is a critical topic in its own right and has been left unchallenged save for the efforts of a valiant few, Reginald Howe and the Gold Anti-Trust Action Committee (GATA). See  the US Mint’s 2008 gold audit, “Howe vs. BIS” and “The “Smoking Gun”” for more details.

Note 2 – Of course, Treasury Under-Secretary Frederick Deming was handpicked by the FED, which is similar to having NY FED President Timothy Geithner become Treasury Secretary.  In this “Memorandum for the President” from FED Chairman William Martin in 1964, Martin recommended Deming be named as a Federal Reserve Governor, but was instead assigned to the critical “gold” position in the Treasury in 1965.

Note 3 – The FED’s reported “gold stock” of 261 million ounces is currently listed as an asset of $11 billion USD, or $42.22/oz. At current market prices, this gold would be valued at nearly $250 billion.

Note 4 – Even though the government paper of today’s fiat currencies are completely unchecked by the discipline of gold, the below quote is from the same above FED meeting minutes. Back then central bankers at least attempted to not drink from the same punch bowl they served the financial markets:

“The excessive demands for goods and services and the accompanying rise in interest rates were, once again, beginning to curtail the availability of funds for mortgage financing. The longer the excessive demands persisted, the more certain it was that a serious “credit crunch” would come. Temporarily pacifying the financial markets by rapid injections of bank reserves, bank credit, and money was no real solution. Continued provision of bank reserves at the recent rapid pace only reinforced the excessive spending and market expectations and induced even more urgent demands for credit.

“Unfortunately… vigorous fiscal action to help reduce total spending, huge credit demands, high interest rates, and inflationary pressures had not been forthcoming. Economic stabilization depended on avoiding further excessive monetary expansion. Both domestic needs and the international balance of payments position of the United States called for the same policy prescriptions. Restraint on total spending was essential to relieve financial market pressures, to foster sound economic growth, and to protect the strength of the dollar at home and abroad. Moderate monetary restraint could contribute to achievement of balanced economic expansion.” (54/107)

Note 5 – In his paper “Gibson’s Paradox and the Gold Standard” from 1988, Summers realized that when real interest rates are positive, the price of gold declines as people prefer the government’s paper currencies.  The converse is also true – when real interest rates are negative, the price of gold increases.  Therefore, when the government embarked on a lengthy period of negative interest rates, they were aware that the price of gold must be suppressed.  This isn’t exactly the work of a genius, but Summers is no dummy either.

Note 6 – In the interests of fairness, Summers claims in his June 12 address to the CFR (Council on Foreign Relations) that “we only act when necessary to avert unacceptable — and in some cases dire — outcomes… Our objective is not to supplant or replace markets.  Rather, the objective is to save them from their own excesses and improve our market-based system going forward.” in relation to his actions for the Obama administration.

Note 7 - In the March 14, 1968 FED minutes (page 3/28) “the international financial system was moving toward a crisis more dangerous than any since 1931. The hurricane of speculation that had occurred on the gold market was likely to be succeeded by a similar hurricane on the exchange markets.”  The FED then made plans to increase swap lines and ‘inject liquidity’ – or print money and extend massive amounts of credit – to continue the scheme.

_______________________________________________________________________

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Summary of Articles and Bibliography for Jake Towne, the Champion of the Constitution (6/8/2009)

by Jake Towne, the Champion of the Constitution
Originally published Sunday, May 17, 2009 at http://www.nolanchart.com/article6430.html

The following is a message from Alan Greenspan’s “vaunted Federal Reserve” to the “Average Man.”  (Hat-tip to LeMetropoleCafe.com for the lead.)  (photo)

On January 17th, 1978, Federal Reserve Chairman Arthur Burns stated from the meeting transcript (emphasis mine):

“You know, the American public, in contrast to some or many of our politicians–perhaps most of them–is very deeply concerned about inflation. People all over the country have been asking themselves the question:

“The average man is also capable of judging neighborhoods. All he has to do is get into an automobile or walk and he can locate areas where the prospect of maintaining good conditions in the neighborhood or some improvement are pretty good over the next ten years or twenty years. People can do that. And they’re doing it in increasing numbers. It’s surprising to me. I hear it from college professors; I hear it from young people; I hear it from my own children.”

“What can I do to protect my family? What can I do to protect my children, my family, and myself against the ravages of inflation? And gradually the thought has evolved and is spreading rapidly that, on the negative side, putting money in the bank or a savings and loan account is no protection.

“What will he turn to? Well, there is farm real estate, a remarkable record there. But the average man doesn’t know how to buy farm real estate. He realizes that location can make an enormous difference. But there’s one thing the average man is capable of doing. If he doesn’t have a home, he can buy a home. If he already has a home, he can buy another.

“Buying bonds, Treasury bonds or corporate bonds, is no protection. Buying common stocks is no protection. It used to be a major protection but it no longer is.

“Then what is left? Well, gold or paintings. But the average man cannot invest in gold; he doesn’t know how. It’s not something he’s accustomed to. Likewise with paintings.

Frankly speaking, Chairman Burns is either something of a simpleton or quite the deceiver, much the same as I when I proved his current successor, Ben Bernanke is a liar in “Bernanke’s Great Lie – The “Gold Standard” and the Great Depression (PART 2/2).”  Why?

Well, first please understand that our brilliant Keynesian economists created currency that is 100% pure DEBT. That’s right, the U.S. Petrodollar (and all other world currencies too!) is simply debt as I explained in gory detail here “The Money Matrix – What is a Dollar Bill Worth? (PART 2/15)“. All holders of dollars are technically debtors to the Federal Reserve, who kindly extended to you constantly depreciating currency-credit created with a pen and a flick of wrist in the form of Federal Reserve Notes.

By using these FRN’s – as is mandated by the force of decree (or by fiat) our nation’s legal tender laws – you are in debt to the Federal Reserve, which is a quasi-private banking cartel created by the bankers, for the bankers, as I describe here “The Money Matrix – Who Owns the FED (PART 7/15)“. Also, classifying the elite market of painting with gold is just plain ignorant. I do not know of a single central bank that holds “paintings” as an asset, but they ALL hold gold.

Furthermore, while Burns seems to sneer at the stupidity of the “Average Man,” it does not seem that he realizes that the “Average Man” is actually quite a bit smarter than he is. For you see, people have long realized that if they leave money in the bank over the long haul, the rate of interest they earn is much less than the rate of inflation. Although savings increase in nominal dollar terms, they lose purchasing power.

Back when gold and silver were in use as lawful and honest money** one could receive interest – in gold grams or silver grams – that had real value. Since these precious metals are scarce, their purchasing power tended to grow over time as the economy became more efficient at outputting goods and services. This was literally the invention of retirement, prior to this invention you typically worked until you died or could work no longer. This greatly expanded the leisure time of a society and is also why people back in the 1800s referred to this as the “miracle” of compound interest. (photo)

For the “Average Man” there have long been two escape hatches from the Keynesian and Fabian Socialist doom-economics. These were 1) the stock market and 2) real estate.  In recent times, this got so bad that people started to referring to “saving” money in their 401k equities and pension bonds, to “investing” in a home. People are now realizing that stocks and bonds are either speculation or investing, depending on your level of knowledge. Homes are “investments” of a sort – homes really are longer-term durable goods – but far too many American have really been speculating, not investing, as we now recognize.

However, despite reports of the economy’s “green shoots” – pardon my French but replace the “oo” with another vowel to summarize my thoughts – these two escape hatches have been firmly sealed on our sinking global economic submarine piloted by the FED and the Bank of International Settlements (BIS) in Basel, Switzerland. People trying to retire have seen their “savings” disappear, but hopefully will now realize that real “savings” are held in the form of physical gold or in a bank account…. or will the banking system also give way? I made a case for this here in “Off a Cliff with No Airbags: The FED Banking System Quivers in Fright“.

After Burns’s speech, the price of gold never went lower. In January 1978, the monthly close was $175/oz. In September of 1980, the monthly close reached $670/oz.  As GATA has painstakingly made clear from its’ long list of evidence, governments and central bankers have colluded to suppress the price of gold to make their own currencies look better.  Just as the London Gold Pool experienced momentary success and then perished in 1968, gold and its holders will win this war.

These days, the “Average Man” has a new defender who will never betray them to the immoral madness of the central bankers. This is my message.

Jake Towne, the Champion of the Constitution

2010 Candidate for US Congress, PA-15th

[Reach the Author Here!] www.CampaignForLiberty.com

www.EndTheFED.us LibertyMaven.com

** Article 1, Section 10, Clause 1 still states that gold and silver coin are lawful money and that forbids the right to emit bills of credit for use as money.  Although Congress is given the right to borrow money (Art 1, Sec 8, Clause 2), money is defined as coins consisting of gold and silver.  (Art 1, Sec 8, Clause 5).

_______________________________________________________________________

“Call me blind, but I didn’t see it coming!
Everybody was running!
But I couldn’t hear nothing!..

“Who’s to blame for the lives that tragedies claim?
No matter what you say, it don’t take away the pain!
That I feel inside, I’m tired of all the lies!
Don’t nobody know why? It’s the blind leading the blind!

“I guess that’s the way the story goes, will it ever make sense?
Somebody’s got to know!
There’s got to be more to life than this!
There’s got to be more to everything I thought exists!”

- P.O.D., “The Youth of the Nation“  Physical gold and silver are the best insurance for the future.

_______________________________________________________________________

“Intelligence is quickness in seeing things as they are.” – George Santayana

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Summary of Articles and Bibliography for Jake, the Champion of the Constitution (4/8/2009)

by Jake, the Champion of the Constitution
Originally published May 5, 2009 at http://www.nolanchart.com/article6385.html

NEW YORK CITY, FEBRUARY 11, 2009 – Luo Ping, director-general at the China Banking Regulatory Commission, gave what may be a landmark quote in the years to come ahead. Besides chastising the United States for its “laissez-faire capitalism” – at which point I distinctly remember choking on my breakfast of delicious jiaozi (I was in Shanghai eating Chinese dumplings) since Ping obviously understands that corporate cronyism is NOT laissez-faire capitalism as fellow columnist Steven McDuffie recently reminds – in retrospect another part of his speech may prove to be the most prophetic. From Reuters:

“Except for US Treasuries, what can you hold? Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”

As I related in “China Nearly Doubles its Official Gold Reserves“, China revised its official gold holding from 600 tons in 2003 to 1,054 tons last month. However, the very fact that China reported no increase for 6 years and then suddenly doubled should prove one thing – the Chinese are abiding by the IMF Articles of Agreement only as it pleases them. For instance, the state-owned banks can hold as much gold as they wish without reporting, although this gold is de facto the Chinese government’s.  Please understand that subtlety, not brazen statements like Bush’s sad “Mission Accomplished” ceremony or Obama’s 100 Days congratulation party, is the Chinese way.

“US Treasuries are the safe haven… the only option.”

Really? Although March and April data are not available, you could have fooled me! For perspective, the size of the US Treasury market was $10,700,000,000,000 in December 2008. Of this, $727 billion, or 6.8%, belongs to China, and close to one-third is foreign-owned. (Although some would argue that the $4.8 Trillion owned by the Federal Reserve is foreign-owned as well, in actuality this interest is mostly returned to the Treasury as described here “The Federal Reserve – A Good Company to Work For?.”) See the chart below (source www.treas.gov).

In February, the Obama stimulus plan was passed and planned to be paid – in the future – by US Treasury securities. Now, if the Chinese really believed what they said, in these troubled economic times their cash-rich hands would have been scooping up this “safe haven” like candy. However, in February the amount of US Treasuries in circulation was $11.1 Trillion, while the Chinese “only” increased their holdings by $4.6 Billion, slightly dropping their percent ownership of our country to 6.7%. Upon closer inspection, the rate of decrease in China’s Treasury purchases is alarming. From a 53% increase in 2008, the 3-month annualized ratio fell to just 9%. The 1-month non-annualized increase was a meager 0.7%.

(All data for above plots is available from treas.gov here or I can send my Excel file via email request)

As can be seen, Caribbean Banking Centers (aka “smart money”) and Oil Exporters (Saudi Arabia and the Middle East, as well as Venezuela) are actually net sellers at the moment. From the data collected, I believe it will be very wise to keep an eye on the levels reported for March and April.

However, both Congress, the FED and Treasury can view at least the March data right now.  Representative Mark Kirk (R-IL), a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, stated last week:

“It would appear, quietly and with deference and politeness, that China has canceled America’s credit card…  I’m not sure too many people on Capitol Hill realize that this is now happening.”

10-year Treasury yields yesterday hit 3.2%, a 6-month high, which is also an indicator demand may have dried up.  The FED bought $8.5 billion, and the Treasury plans to offer another $71 billion this week at auction.

“Except for US Treasuries, what can you hold? Gold?”

The answer to this question is, of course, a strong YES! As the Gold Anti-Trust Action Committee (GATA) revealed, the commonly-accepted World Gold Council and GFMS gold holding data have been proven incorrect as they have failed to track the unannounced Chinese accumulations.  Since 2003, GATA has surmised that China has been adding continuously to its holdings and offers proof that the gold price has been suppressed here.

As the integrity of the US banking system is compromised, private citizens should consider becoming their own central banks.  The days of irredeemable paper fiat currencies may be approaching its end, and there is a reason why the central banks hold gold – it is their default insurance.

Do not be fooled, the gold reserves of central banks are their actual Money.  Debt-based paper dollars, yen, pounds are all just ridiculous currencies, sad shadowy mirrors of their former selves, which is gold and silver coin.  Gold’s manipulated volatility cannot mask its >16% annualized returns versus the USD over the past 8 years.  Remember – in actuality, it is the depreciation of the world’s fiat currencies we are seeing, not the appreciation of gold itself which is itself both money and a currency as I explained here “Silver and Gold ARE Money (PART 1/2)“.

Who will win the Gold War?   The simplest answer also holds the most truth. Over the past five thousand years, the winners are those who are holding the gold at the war’s end.

The author would like to thank Mr. Wolkow of the US Department of Treasury for his prompt and accurate replies (less than 1 business day) to my email questions.

Jake Towne, the Champion of the Constitution

Candidate for US Congress, PA-15th in 2010 [Reach the Author Here!] www.CampaignForLiberty.com

www.EndTheFED.us

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We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.

Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.

Tu ne cede malis sed contra audentior ito. Do not give in to evil but proceed ever more boldly against it.

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Nolan Chart Facebook Group Page Created

Summary of Articles and Bibliography for Jake, the Champion of the Constitution (4/8/2009)

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Other Recent or Related Articles by the Author

China Nearly Doubles its Official Gold Reserves

The Zombie Bank Dance: Bank of America, Merrill Lynch, the FED, and Treasury Do a Jig

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The End for the Dollar and all Fiat Currencies (1/5)

The Money Matrix – How the FED Works (PART 6/15)

The Money Matrix – Who Owns the FED (PART 7/15)

SCANDALS – The Jane Harman, Nancy Pelosi, AIPAC, Alberto Gonzales, Power Ranger Spy Plot and the Biden Boys

Instead of answering the question directly the author analyzes the behavior of gold during times of inflation. The conclusion is that gold (at times) goes down during inflationary events:

Zoom out and the big picture gets even more interesting: The March 20, 2009 high in gold is below the February 20 high, which itself was well beneath the March 2008 all-time peak. Since then, the Fed’s campaign to breathe new life into the economy via cash infusions and credit creation has been tireless. (Last estimate: $12.8 trillion.)

In the end, the evidence speaks for itself. Gold has not fulfilled its promise as hedge against “inflation,” or an economic safe-haven. This scenario, while shocking to the bevy of gold bugs who swarmed around the metal at the onset of the Fed’s bailout binge — is no surprise to EWI subscribers.

While the stats given do not lie, I take issue with the general claim that “Gold has not fulfilled its promise as hedge[sic] against inflation or an economic safe-haven“. The author makes the mistake of assuming that “trading” in gold is the same as accumulating gold for wealth preservation. Sure, if the value of gold goes down it is worth less and those who are trying to trade gold for profit are going to be hurt. But those of us accumulating gold will just purchase more.

Why? The simple answer is, because gold always has value. It certainly has fluctuations in value, but it has always had value and it will likely always have value. No one can make that claim about fiat currencies with a straight face.

Perhaps an extreme hypothetical scenario is in order to answer the EWI article’s question effectively. Let’s say it’s 1997, you live in Zimbabwe, you have a bank account with Z$100,000,000  in it, and a safe with one ounce of gold in it. Your Z$100,000,000 would be totally worthless today. Your one ounce of gold would be worth around US$900.  Now US$900 may not seem like much, but what if we compare apples to apples and convert that to Z$  (as of 4/4/2009) using this conversion calculator:

US$900 = Z$33,711,099,300

I think that speaks for itself. Sure, these days 33+ billion Z$ are completely worthless, but 900 US$ are not.

The conclusion is that gold does protect wealth. It not only protects wealth but enhances wealth because it allows for flexibility. It may not always be worth US$900 but it will always be worth something. There may be better trading/investment options at any given time, but accumulating and holding gold in a portion of an investment portfolio is an insurance policy for wealth no matter what happens with inflation.

Making the decision to hoard gold for wealth preservation is akin to choosing what to do on 4th down while on your side of the field in football. Punting is hoarding gold to fight another day. “Going for it” is trading gold like a stock against all the odds. If you know football then you already know what choice the best coaches make. It is truly the difference between winning a little or losing it all.

I choose to punt. What do you choose?

(Check out The Great Credit Contraction Book for more information about our monetary system and wealth preservation. It is an excellent read. See our review here. A portion of sales go into supporting this site.)

Especially interesting was the segment with the exclusive audio of a Campaign For Liberty manager getting detained and harassed at the St. Louis airport seemingly because he had too much cash on him. You can watch that segment isolated here. It seems these guys didn’t get the word that the MIAC document was retracted. Yet more evidence that we live in the land of the unfree.

Ron Paul comes on during the final segment and discussed the G20 meetings and other topics.

Watch the entire show in the playlist below or watch it directly on youtube here.

by Jake, the Champion of the Constitution
Originally published on Sunday, March 29, 2009 at http://www.nolanchart.com/article6226.html

This article and charts is an update to an earlier article “18 Days and Counting – Silver Backwardation Persists in the London Market Place“. In “Silver and Gold ARE Money (PART 1/2)“, I charged that both silver and gold are money and shared information on the very important concept of gold’s “stocks-to-flow” ratio and the size of the LBMA markets for both metals.

[In case you do not yet understand futures markets, "backwardation" means that silver to be delivered today is now being priced higher than metal to be delivered later. This article refers to the LBMA, or London Bullion Market Association's futures market in London, England. For more details on backwardation, please refer to my five-part December series which starts here "The End for the Dollar and all Fiat Currencies (1/5)". Contango is the opposite of backwardation and exists when futures price is higher than the spot price as I explained for those new to futures terminology here "The Money Matrix - What the Heck Are Derivatives? (PART 10/15)". [As you read, please also note that I am NOT a commodities trader, I am just an engineer by trade, so feel free to help me out with my analysis or mistakes.] ( Photo) (2)

As we learned in “The Significance of Gold Backwardation Explained (4/5)“, backwardation is a sign of a very tight market, and a market that will be tight for sometime into the future either 1) current supply is very tight, 2) future supply is projected to be very tight, or 3) there is a severe distrust in counterparties that the short positions can deliver the goods on time per the contract, or vice versa that the long positions will not have the cash.

Please refer to the below graphs of LBMA’s silver mid rate, which is the midway point between the bid and offer prices. Here is what I note:

• Silver was in backwardation for the 47 trading days since January 21. On March 27, silver finally dipped out of backwardation.
• Most of this backwardation period was about three times more severe than the mild backwardation than existed from December 8 through December 24 in 2008.
• Although this backwardation was very long – most likely the longest in LBMA history – it was relatively mild. The 1-month contract was the most severe, but its average level of backwardation was only -0.20%, or about $3 USD per 1000 oz bar.
• Also, the disparity between the rates seen in 2006-2007 has largely disappeared; the market appears to be treating a trade on silver 12 months later as quite similar to a trade on silver 1 month later.

[All graphs in this article were created by me from this LBMA source and this US Mint source and my file is available by request.]

Let’s now also look at the LBMA Silver Fix price history for a 1000 troy ounce bar. Despite all of the tightness in the market as demonstrated by the SIFO chart, the Dollar price of silver is still well below the average price for 2006-2008, while the Pound is nearing a new high due to the FOREX market. The Pound price reached £995 within 5% of its March 2008 high. The current dollar price of $13.22/oz. is 37% below its $20.92/oz. high. From the chart, I speculate the Pound price may have been surreptitiously “capped” at £1000, or perhaps is a psychological barrier, similar to gold’s three recent tries at $1000/oz.

Let’s now take a quicker look at gold traded at LBMA. The GOFO, or Gold Forward Offered Rate, represents the rates at which dealers will lend gold on a swap basis against US dollars. From the below charts, I note:

• Recently, gold has only gone into minor backwardation once, in November 2008, for 3 days.
• As GOFO started its plummet in roughly September 2007, the prices began to diverge, and currently the 1-month GOFO rate is lower than the 12-month rate.
• The buckling of the British pound can be easily seen. The British pound set an all-time high of £690 per ounce of gold on February 23, 2009.
• The Euro set an all-time high of 782 Euros per ounce of gold on February 23, 2009 as well.
• Gold priced in Dollars is 10% below its 2008 high of $1,023, as of March 27.

It is simply too early to tell if we have seen the “Last Contango,” but as Dr. Fekete notes in “The Last Contango in Washington” (2006) and “Keeping Our Eyes Peeled for the Silver and Gold Basis” (2007), the consequences could be very stark for the dollar and hence all fiat currencies.

Now, of course, there are many other factors as silver guru Theodore Butler points out in “Tightening Production“. Industrial demand has been slammed by the economic fallout. However, since about 70% of all silver is typically mined as a by-product with other base metals like zinc, the supply is also greatly affected by the market conditions of zinc, copper, lead, and nickel. While the backlog in demand has greatly increased the inventories of these base metals causing a drop in their prices the inventory of silver is growing smaller while the price has increased over the past three months from $10 to $13/oz. Butler also relates that many of the base metal mines have been closing due since they are no longer profitable. At the same time, Butler reports that the American COMEX silver futures market is under investigation by the CFTC (Commodities and Futures Trading Commission) for market manipulation and price suppression. It is also possible the London market backwardation is temporary due to the severe loss of purchasing power (relative to others) of the British pound.

[For the Reader, NYMEX Gold Session Futures chart, Silver Session Futures chart. Gold spot price chart. Silver spot price chart. When the spot price is greater than the futures price, backwardation exists.]

There is some debate about whether backwardation is bullish for gold and silver. Due to the aboveground stocks-to-flow ratio of 60 years stock to 1 year of mine production, I maintain that LBMA backwardation in gold in is not only a bullish signal, but, more importantly it is blaring siren signaling trust in the Dollar is being lost. Since the aboveground stocks-to-flow ratio of silver (1.5) is more typical of other commodities and industrial metals, LBMA silver backwardation is also bullish, for the commodity but may not be as relevant to the Dollar unless the reasons for the backwardation are clearly understood. Up to roughly 12%, or 81 million troy ounces of silver are currented effected by strikes or slowdowns at Penoles, Hochschild’s, and Doe Run. As an amateur, I do not claim to know to what degree each of the aforementioned three possible causes (tight current supply, tight future supply, or counterparty distrust) effected the backwardation although the Pound’s recent relative devaluation and possible “capping” at £1000.  My educated guess is tight future supply combined with FOREX declines are the dominant factors, but I please remember I also subscribe to the price suppression theories of GATA and Ted Butler.  However we can look at what happened to the price of silver and gold during each of the three backwardation periods from 2006-2009 and we can see that backwardation has caused significant increases each time.

In addition to the annual supply-demand figures put together by the World Gold Council and the Silver Institute, another interesting item is US Mint-issued gold and silver bullion sales. As can be seen by the below, the 2008 gold demand quadrupled from its 2007 level, while silver demand doubled. In 2009 YTD, gold is on track to beat the 2008 mark, and silver demand is on track for roughly 24 million ounces, which would shatter its 2008 record level.

The inventory of SLV has leapt from 218 million ounces since January 1st, and reached 267 million ounces on March 26. This exceeds the limit of 264 Moz that the trust had set for the custodian, JP MorganChase (one of the “Pirates of the COMEX” as GATA’s Adrian Douglas recently wrote about here). In the new prospectus (pg 8/44), the text reads:

The custodian has no obligation to accept any additional delivery on behalf of the trust if, after giving effect to such delivery, the total amount of the trust’s silver held by the custodian exceeds 264,550,265 troy ounces. If this limit is exceeded, it is anticipated that the trustee, with the consent of the sponsor, will retain an additional custodian… As a result, the new agreement may differ from the current one with JPMorgan Chase Bank N.A., London branch, with respect to issues like duration, fees, maximum amount of silver that the additional custodian will hold on behalf of the trust, scope of the additional custodian’s liability and the additional custodian’s standard of care.

I have not been able to find out who SLV has named as the new custodian.  My flat-out guess is the new custodian will be HSBC since as Douglas highlights, they are the other big player in the paper gold and silver market.

For many reasons, I view SLV and GLD with distrust.  The Central Fund of Canada (third-party storage of gold and silver, CEF) and Central Gold-Trust (GTU, gold bullion only) are two ETF’s you could also check out, as well as goldmoney.com and bullionvault.com.  GTU and CEF currently traded at significant premiums compared to the spot price of the amount of bullion they store.  Physical metal can even be placed into an IRA and stored by a third party. All I can say on any of these options is to be VERY careful, there is no simply substitute for physical gold and silver in hand or even stored at a Brinks-type depository or safety deposit box. I view all of the above as simply ways to diversify storage.

As far as the immediate future, in manipulated markets it is impossible to tell.  Long-term, it is my belief the current fiat monetary system will fail, and this depression will likely not end until this occurs. Antal Fekete recently warned the quantitative easing phase of this Gold War could take quite a long time, but please prepare yourself and your family.

Let me close with a quote from Thomas Paine’s “Dissertations on Government.”

“When an assembly undertakes to issue paper as money, the whole system of safety and certainty is overturned, and property set afloat. Paper notes given and taken between individuals as a promise of payment is one thing, but paper issued by an assembly as money is another thing. It is like putting an apparition in the place of a man; it vanishes with looking at it, and nothing remains but the air.”

For the Republic,

Jake Towne, the Champion of the Constitution

[Reach the Author Here!] www.CampaignForLiberty.com (Banner courtesy Mike Burke)

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We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.

Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.

___________________________________________________________________________

Nolan Chart Facebook Group Page Created

Summary of Articles and Bibliography for Jake, the Champion of the Constitution (2/1/2009)

As a disclaimer of sorts, I am a supporter of owning physical gold, physical silver, www.gata.org and www.goldmoney.com. Any investment or financial views expressed in the article are mine and mine alone, so make your own financial decisions by educating yourself. All I am doing is sharing my views to help you decide, even if its just to become aware that you do have a decision to make. These articles reflect the my opinion and are by no means a guarantee of future economic conditions. My articles are provided for INFORMATIONAL PURPOSES ONLY and are actually NOT MEANT to provide investment advice to anyone. You can even say its a charitable but naive act, given the historical tendency of the US government to oppress and steal.