nuclearSubmitted by Stewart Thomson:

Gold revaluation and money printing are the nuclear weapons arsenal held by government treasury departments.

Gold is going higher, much higher.  It’s going higher because government treasury departments are moving away from quantitative easing involving bonds, and towards QE involving gold.  The gold bears will be destroyed, and everything they made you afraid of will seem ridiculous, in hindsight.  There will be no currency war, but there will be co-ordinated devaluation of all G20 currencies against gold, just like there was in the 1930s.

I consider the idea that the gold bull market is over to be “beyond ridiculous”.  I would argue that for all practical government intents and purposes, it’s barely startedBen Bernanke will soon have a hard decision to make.  He can either accelerate QE, or he can pout in a corner, while President Obama dons a gold revaluation mask.

 

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1.    Staring all day long at the supposed “super top” head and shoulders pattern in place on the HUI index is a good way to create fear, but I doubt it will create any lasting wealth.  It certainly won’t build any gold mines.

2.   Markets are ruled by fundamentals, not charts.  The largest institutional liquidity flows occur when key fundamental reports are released.

3.    Fundamentally, gold stock investors need to focus on the history of quantitative easing.

4.   As the year 1933 began, the great depression was reaching its point of maximum intensity.  To view that intensity, please click here now.

5.   Although official unemployment was approaching 25% then, the central bank of the United States was growing increasingly reluctant (much like the situation today) to accelerate quantitative easing, despite pressure from the US government.

6.   In a 1933 nutshell, the bank wanted to print less money, and the US government wanted more.

7.   By November of 1933, a frustrated central bank brought quantitative easing to a complete halt.  How did the US government respond to that?

8.   The answer is that just two months later, on January 30, 1934, it passed the Gold Reserve Act.  The US government revalued gold about 70% higher, and then continued purchasing it aggressively at that price, using printed money.

9.   The QE baton was thereby passed from the government T-bond “runner”, to gold bullion!

10.              In the mainstream media, a similar halt to quantitative easing is being widely discussed now.  You should probably view quantitative easing, targeted at corporate & government debt instruments, as the ultimate central bank conventional weapon.

11.              In contrast, gold revaluation and money printing are the nuclear weapons arsenal held by government treasury departments.

12.              In a showdown between central banks and governments, governments win.  They won in the 1930s depression, and they will win in this super-crisis.

13.              The days of Ben Bernanke demanding that President Obama “get the government’s financial house in order” before he ramps up QE more, are coming to a quick ending.  The only question is, will it be a painful ending for Chairman Bernanke?

14.              His counterpart in Japan, Governor Masaaki Shirakawa, learned the power of government, the hard way.  He resigns on March 19.  Shinzo Abe essentially slapped the Governor’s face publicly, and is now demanding “performance” from the Bank of Japan.

15.              The bank is now claiming it’s not sure what new measures it could take, to expand the balance sheet.  I assure you that Shinzo Abe is fully aware of the power he has, to order the Bank of Japan to begin significant purchases of gold with printed money.

16.              Gold is going higher, much higher.  It’s going higher because government treasury departments are moving away from quantitative easing involving bonds, and towards QE involving gold.  The gold bears will be destroyed, and everything they made you afraid of will seem ridiculous, in hindsight.  There will be no currency war, but there will be co-ordinated devaluation of all G20 currencies against gold, just like there was in the 1930s.

17.              Gold won’t be confiscated in this crisis, for two reasons.  First, the average person doesn’t own any gold, so there’s nothing to confiscate.  Second, the crisis hasn’t produced the kind of breadlines that occurred in the 1930s, because OTC derivatives were marked to model in October of 2008.  If they were marked to market, the system would soon close down, and massive breadlines would form very quickly.

18.              I consider the idea that the gold bull market is over to be “beyond ridiculous”.  I would argue that for all practical government intents and purposes, it’s barely started.

19.              Ben Bernanke will soon have a hard decision to make.  He can either accelerate QE, or he can pout in a corner, while President Obama dons a gold revaluation mask.  Ben just watched Shinzo Abe dispose of Masaaki Shirakawa, like a child disposes of a broken tinker toy.  Ben also knows what President Roosevelt did in the great depression, when the central bank played “tough guy” with government.  He knows his history very well.

20.              Ben Bernanke is pushing his luck with President Barack “the O Man” Obama, and tomorrow’s ultra-important Fed minutes report is going to tell you whether he has pushed just a little too hard, or if he’s ready to follow the orders of the President of the United States.

21.              I would argue that Chairman Bernanke is pushing President Obama deliberately, because he wants the Treasury to take QE to the next level, but he can’t say so publicly.

22.              Please click here now.  You are looking at the daily chart of the T-bond.  Note the beautiful bullish wedge that continues to form.  My unique 14,7,7 Stochastics oscillator is rising nicely.  The action of the bond suggests that Chairman Bernanke will not confront President Obama tomorrow.  If bonds move higher, gold is very likely to follow.

23.              Silver fans can click here now.  Investors should key off the gold chart for buy & sell signals, but there is no question that the 14,7,7 Stochastics oscillator suggests silver is poised to begin a nice move higher.

24.              Please click here now.  That’s the daily gold chart. After about 3 weeks of descending, my Stochastics oscillator has reached oversold status.  Oscillator enthusiasts can buy some gold and related items in the vicinity of HSR (horizontal support & resistance) at the round number of $1600.   The immediate target zone is $1625, but I’m looking for gold to rally $75 higher before the Stochastics becomes overbought.  There are probably two more cycles of the oscillator required, going from oversold to overbought and back again, before gold charges at $1800, and successfully breaks into what I call… the green zone!

Special Offer For Website Readers: Please send me an Email to freereports4@gracelandupdates.com and I’ll send you my free “Seniors  Six Pack” report.  I’ll compare each of 6 major senior gold stocks to the supposed “super top” on the HUI gold stocks index, and show you why the bears may be in for a big surprise, courtesy of the horns of the bull!

Thanks!

Cheers

St

 

Stewart Thomson

Graceland Updates

 

Written between 4am-7am.  5-6 issues per week.  Emailed at aprox 9am daily.

 

www.gracelandupdates.com

Email: stewart@gracelandupdates.com

 

 

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  1. Do we think the FED minutes is another opportunity to smash silver?
    Deciding if it’s worth holding on a day or so, as can see a $28 handle today or tomorrow. Any thoughts guys?
    Already bought yesterday, so I know BTFD.

    • I hate giving sell advice but I would say the quicker the better. I think the computers are repeating last Feb-Aug, after we crossed the DMAs and summer will be the best time to stock up.  Every day I am thankful I sold a good portion at 34, I have been slowly reaquiring at spot from weak hands and feel better than if I just watched my value drop for the past few months.  Everyone says it will be hard to get if price goes lower but I feel it is hard to get on the way up, easy to get on the way down.  Someone is always selling, old guys in my town sell each month jsut to pay bills, no matter the price.  Last summer I thought I was in heavan buy at 26 but this summer may go lower. 

    • @jiggysmb
       
      I am constantly buying and selling Silver. Its the only way to protect yourself. Buy low and sell high, as long as you keep this mantra going then you will be okay. The buy and hold guys have got great valid reasons to hold, but unless you joined the silver party before 2008 I can’t see much point in this strategy.
       
       
      I tend to buy when the markets are low and sell when and if I need to convert the Silver into Fiat to buy stuff.
       
       
      The other part to my mantra is only sell in a FIFO fashion, that way your selling the stuff you bought recently with a low profit margin, but keeping the real value stored in the Silver you bought when the market price was lower. This sounds bizarre I know for a product that is infinitely fungible but I don’t think of the silver in this fashion, I see each unit as being individually costed, that way I will only sell something on at a profit and not do absorption costing on the whole. That way I know that I am always making a profit, baring the inflation costs that need to be considered.
       
      My goal is to buy silver and convert to gold as soon as the ratio become more favorable.

  2. Copy that Crissy.
    There was a saying from my favorite Uncle;   Uncle Joe Stalin, when asked if he feared the Pope,  replied,  “How many divisions has the Pope?” 
    When Barack Dronebama was asked if he was concerned about Ben Bernanke, he was heard to say.  “How many drones does the Fed Chairman have?”
    The fed will print because BHO says they will.   Dollar devaluation has a pretty good chance of happening.
    I don’t know what sort of mechanism will be used to do so, but its a good chance this has been computed at the highest levels. 
    Currency wars, like all wars, often come to the point when the order is given.  “Expend all ammunition”  Even if the Fed may be pretty much  out of ammo, they can probably talk us to death. 
    Jaw jaw may be worse than War war in that case

    • Obama isn’t smart enough and his handlers won’t let him stop the printing. Their goal is the US economy in pieces so they can have a fire sale on the remains.

  3. The Bennie & Barrick show may just be the last early incarnation of JaJa Binks and his genius cousin of StarWars fame.
    Check the major PM dealers for inventory position, make up  your own mind.  If we measure ONLY the prices we are provided, is it not a Case of Garbage IN, Garbage OUT, as to what we are measuring and even now that is only short term.
    LET ME BE ULTRA CLEAR HERE and GET RIGHT IN the FUNDAMENTALISTS FACES, all of them Concerning TA, and “Charts ” (only a small part of TA).
    CHARTS  REPRESENT, GRAPHICALLY, the RESULTS OF UNPUBLISHED AND NON – PUBLIC FUNDAMENTALS,to which you and I NEVER ACCESS.   As an objectivist first, which is required to be a TA guy, my “JOB” is to help ferret out what is going on that we are not told about.  Its part of evening the playing field, if done honestly, again, my “JOB”.
     
    Here is a chart you might find more interesting than all the FUD garbage floating around.
     
    visit me:http://www.denaliguidesummit.blogspot.ca/
     

  4. “Markets are ruled by fundamentals, not charts.  The largest institutional liquidity flows occur when key fundamental reports are released.”
     
    Actually, the markets WERE ruled by fundamentals.  This has changed over the past 5-10 years to “the markets are ruled by Fed and Gov policies that manipulate and distort the markets”.  QE does this.  ZIRP does this.  Spending money we do not have and either borrowing or printing money does this.  Etc.
     
    The markets are not working very well now and it is because people know FAR less than the market, so their decisions and policies do not work as well, particularly as time goes by, and the excesses that they have not only allowed but encouraged to build up in the system are not routinely purged from it.  This is akin to forcing the lid down on a pressure cooker instead of letting it vent some steam occasionally to maintain a specific and safe pressure.  If continuously increasing pressure is kept on the lid, the cooker will explode eventually because there is no other pressure-reducing option and it MUST vent at some point.
     

  5. I may have skimmed too quickly, but leads us to expect this course exact course of action from the G20?
    Wouldn’t it suffice, and be preferable to powers that be, to have the cartel and freinds go shoulder deep into longs, start demanding physical, and take over the whole market? The system would crash, and the elite would be standing there with government issued IOU’s denominated in ounces, tons, for all commodities that matter. PM, Oil, Food, in that order. They’d among themselves could freeze supply, letting actual free markets determin the price among those with a few ounces to sell. No need for governments to take the blame. Other than for not stopping the banks, again. this time, I wonder if there’s much to complain even. They’re deciding to go long, and for a change of pace, demand physical for years’ worth of metal, and oil, and corn, and wheat. Oh, it’s not in stock? We’ll take whatever you can make, 100% of your production/harvest, for years or decades to come. We’ll sell it into the market at the pace you can provide us.

  6. I believe we are reaching a critical point where the cartel can continue to hold down the prices but it’s now impacting supply.
     
    The reality is price controls only work so long.  I think this last wave of price drops are seriously wounding the silver producers and causing many of them to start scaling back production.  Sometimes you can be too successful without realizing the consequences until its too late. 
     
     
     
     
     
     

  7. Step back guys, too much analysis.
    The QE and Gold Revaluation are more like the ticking time bomb which the Fed and Govt are strapped too than in their personal arsenal.
    These tools are being used to deflate the dollar (and make it look like Gold [and other commodities] is increasing in value) for you guys in the US, and then you have a race set up with the Euro Countries to the bottom because you are each others second biggest trading partners and you want to make your goods cheeper, WTF !!.
    This fellow is so far off the mark trying to connect the 1930′s with the situation today. Today it is the loss of manufacturing jobs to the East and the unravelling of the US dollar as the world trade unit which is the major factors of cause then the propping up of private institutions with public money during the 2008 meltdown and now the massive debt incurred by self serving bond buying being used to try and show the rest of the world the US dollar is still in demand as an investment vehicle. No-one believes it but it is creating confusion. Smoke and mirrors.
    Take a few steps back and have a good look, all the rest of this circus is just the noise of other, less important self interests trying to stay afloat. Who really gives a rats arse if the manipulation is rife, it’s great, have a look, we can buy PM’s cheeper this month than last. WOOT !
    Gold revaluation is not a tool in the arsenal for Christs sake, the owners of the Central Banks are clawing back their Gold, BRICs Countries lead by China are buying Gold hand over fist. The best the Yanks can do is invade small Middle Eastern Countries to plunder the coffers, how much is that Gold worth per ounce ?
    Charts can be manipulated to look like anything, same as the unemployment stats, the GDP stats etc etc.
    The fundamentals are – the fulltime well paid jobs are gone, the debt is here to stay. There are massive breadlines (no friggin breadlines – this guy needs a good swift boot up the strides) 48 million people on coupons, no friggin breadlines.
    Anyone who can, needs to do what the Central Banks are doing – getting rid of debt (ie dodgey US T-Bonds [US Dollars]), buy PM’s (that is put savings into something of intrinsic value).
    US citizens either need to find a new home outside the borders of the US or get used to a country where the standard of living is going to a level not far above Haiti for some time. the 1930′s depression lasted for more than 5 years but they were the hardest, no point buying MRE’s or freeze dried coz you’re just kicking the can for yourselves. You need to if you can derive a food source outside the system, ie home grown, hunted, farm shared, purchased direct from growers or worked for piecemeal.
    My old man used to say there is 3 types of people – those who make things happen – those who watch what happens and then those poor soles who wonder what happened. There seems to be alot of commentators here and there is a hell of a lot more who haven’t woken up yet too.
    Wake up ladies, keep stackin.
     

  8. Author confuses his history.  In the 1930’s we were on a gold standard.  There was no capacity to just print money.  Gold was not confiscated. It was expropriated.  Gold was purchased from the public at a bonus price.  The gov’t then repriced gold at a much higher level giving Roosevelt the capacity to print money up to the new gold value.  It was his version of QE.
     
    That will not be possible today because the globe is on a fiat system.  
     
    What likely will happen is either China or Russia (probably China) will back their currency by gold as Rickards opines in his book “Currency Wars”.  That will force the U.S. to answer.
     
    Note how the sanctions against Iran have backfired as Iran now has developed a stable gold for oil trade.  Prolonging the petrodollar is what our involvement in the Middle East is all about.

    Final note. The Exchange Stabilization Fund was created and funded out of FDR’s Gold Act. Today the ESF answers only to the Sec. of the Treasury. Not Congress. Not the President. It’s the Treasury that controls the Fed. The Fed is not in charge as they would have the world believe.

    That is why candidate Romney could not name Ron Paul as his Treasury Sec. designate. (Romney would have won easily if he had embraced Ron Paul). TPTB control both sides of the aisle and only their man controls the ESF.
     
     

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