THE INTERNATIONAL FORECASTER By Bob Chapman Wednesday, May 27 2009
GOLD, SILVER, PLATINUM AND PALLADIUM
We believe you are now looking at the last opportunity to buy cheap gold and silver. All those dimwits looking for $700 and $500 gold have been wrong again.
This time on a long-term basis we have both the fundaments and the technicals working for us. Once the options expire this week both metals should be ready to test the old highs. Accelerating inflation is again on the way, as investor demand continues to accelerate. As we mentioned in a previous recent issue, the GDP price deflator, is rising at a 2.9% rate. Foreigners have eased up on buying US Treasuries, but we as yet see no concerted move to stop buying Treasuries. As long as buyers accommodate the US Treasury we see no move to another reserve currency unit. It will come and there will be a dollar crisis this year, but it is still in the future. Other nations still have 64.5% of their foreign reserves in US dollars. They will take 50% losses from here rather then break ranks with the US. This will lead to financial and economic dislocation that in many nations of the world will end up in revolution. When that transpires gold and silver will be king.
The only way to return to sound money is to get rid of the Fed. Then we can again issue US notes backed by gold. We are probably looking at $6,000 to $7,000 an ounce, which is what real inflation has been since 1980. One of the problems here is that secretly controlled banks have sold off most of their gold in efforts to suppress the price since 1988, although most of the selling has occurred over the past ten years. There hasn’t been an audit of US gold since 1954, so we don’t know if they have any at all. We think central banks sold off most of their gold. They may have somewhere between 5,000 and 15,000 tons available. Be as it may we’ll find out in good time.
It has been a long hard road with plenty of fights along the way over the past 50 years. We won before and we will win again. That in spite of criminal conspiracy among the Fed, Treasury, bankers, Wall Street, The World Gold Council and GFMS, Gold Fields Mineral Services. They are all liars and criminals. For those who are new to this, central banks lease gold to a bullion bank like JP Morgan Chase, which sells it into the market, but the bank still carries it on the books as an asset even though it has been sold. What kind of criminal madness is that? Who in their right mind would believe that central banks continually take losses in leasing gold? That is the price they pay to suppress the gold price, so that they can print more fiat currency and keep the world in financial bondage. As we saw some central banks are sick of what is going on. Germany requested delivery of their gold from West Point and Dubai has transferred its gold out of London. It will be interesting to see if they are capable of making delivery.
That reminds us that Rep. Ron Paul has 183 co-sponsors for a House bill to conduct an independent audit of the Fed, including its claims to For Knox gold.
As we have been telling you for years that China had been accumulating gold, well China has finally admitted they bought 1,054 tons over the last six years. This holding is sure to increase. China is the world’s largest gold producer, mining 282 tons of gold in 2008. Chinese investment demand was 69 tons. India bought 660 tons last year, so you can see what China is capable of. China purchased all domestic consumption and bought through willing governments, such as Russia, South Africa and South American countries. If China is going to be playing the political game at the top level they could add another 4,000 tons easily. They certainly have the dollars to do it. What would you do with a falling dollar, horrible deficits, and climbing gold and silver prices and with a trade war in the works? If China and other nations expand money and credit in order to suppress their rising currencies they will face domestic inflation just to maintain their export trade.
Now that things are getting real serious how long do you think the Chinese and the Gulf States are going to hold up the dollar? How long do you think savers are going to bail out debtors? All creditors will continue to put pressure on the US, demand secret concessions and will enter into our political process if they haven’t done so already. China has already taken defensive action by accumulating gold and commodities. We believe within two to three years China will float a gold backed currency and that will end the dollar as a gold backed currency.
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