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International Forecaster October, 2005 (#1) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster



THE INTERNATIONAL FORECASTER

OCTOBER 2005 (#1) Vol. 9 No. 10-1

P. O. Box 510518, Punta Gorda, FL 33951-0518

An international financial, economic, political and social commentary.

Published and Edited by: Bob Chapman

E-mail Address

[email protected]


www.theinternationalforecaster.com





US MARKETS



A report prepared by the Congressional Joint Committee on Taxation says that from 2006 to 2015, Americans will pay $1.1 trillion more under the Alternative Minimum Tax, partly as a result of Bush tax cuts. That means Americans will not receive the promised $750 billion in tax cuts. The tax cuts reduced the bill for millions of taxpayers to a level that will subject them to the AMT instead of the standard rate. Families with children who own homes will be hit the hardest by the increased alternative tax. Exotic deductions are now allowed, denying individuals their personal exemptions, deductions for state and local taxes and interest on home equity loans not used for home improvements. Some medical bills cannot be deducted under the AMT, forcing the sick or injured to pay higher income taxes as our government spends $6 billion a day in Iraq and Afghanistan. Again, the tax cuts are immensely different than promised, but then again we seldom get the truth from Congress or the White House.



Massachusetts Electric Co., the state’s largest utility, will seek to raise rates for its 1.2 million customers by 28% starting in November because of soaring energy prices. This is the biggest increase sought in 25 years. It will cost the average homeowner $17.50 a month. Recently Bay State gas utilities sought a 26% increase. There are very dramatic increases coming for total energy bills not only in Massachusetts, but also across the nation.



In the past we have expressed concern that the US government, with the assistance of the Federal Reserve, might currency block the US if the dollar plunges and America is inundated with dollars. This is what happened on a central bank to bank basis in 1971, when we closed the gold window and officially declared the dollar a fiat currency. The British did the same in the 1930s. What could happen here in the US is that under the guise of economic collapse, the government could refuse to accept foreign held dollars and freeze foreign owned dollars held in the US? They could then call in all internal currency and reissue new currency, perhaps on a one to one basis. They could do this if there were a major outflow of assets or if Americans decided to cash in their dollar assets for foreign currencies or gold and silver. We suspect all multinational corporations would be exempted thus, allowing free flow of their funds along with central banks. We don’t know that this will happen, but if the financial system breaks down it is a distinct possibility. If you have lots of money you can move it to other locals now. If you don’t, you should stick with gold and silver related assets.



We are forced to speak again of the situation of Jose Padilla and the dire consequences it holds for all Americans.



Padilla was taken into custody by federal agents on May 8, 2002, as part of the war on terrorism and held as a material witness. It is important to point out here that being held as a material witness is a ruse to incarcerate. We do not know if Mr. Padilla is innocent or guilty of anything and neither does the US government. If they had a case they’d indict and charge him. For most of his time in confinement he’s been held in a naval brig in South Carolina. He is being held indefinitely because our appeal court says our President can do this in a time of war. Mr. Padilla is an American citizen. Even though convicted of nothing he is considered an illegal combatant and so he does not have the rights and guarantees that the constitution requires the government to accord criminal defendants. That means the Pentagon can hold him forever.



Under the Magna Carta and via common law and our Bill of Rights, there are procedural rights and guarantees and these protections have been lost in the indefinite jailing of Padilla. That means our government, under the guise of terrorism, can pick up and jail anyone anywhere in the world for any reason at any time. No habeas corpus as to why someone should be detained. No legal counsel, no due process and charges. There is a right to trial by jury. There is the right to confront witnesses and there is a presumption of innocence, which entitles the accused to remain silent and requires the government to prove guilt beyond a reasonable doubt. These guarantees apply to Americans and foreigners who are accused of a federal crime.



The case of Padilla is an attempt by our government to destroy America’s federal criminal-justice system and replace it as was done in Germany under Nazism in the 1930s. Ninety-eight percent of Americans know nothing of the Padilla case and its threat to our rights and guarantees by any despot. Our government wants the authority to kidnap and punish without any federal court interference whatsoever. The concept is anyone government accuses of terrorism becomes a prisoner of war, not a criminal defendant, and this prisoner of war is not entitled to the protections of the Geneva Convention, which governs prisoners of war. These are illegal combatants because terrorism is not a lawful way to wage war and because these uncharged and un-convicted combatants are not wearing military uniforms. All this illegal activity by our government is sanctioned by and signed off by our President.

At the Supreme Court level if these powers are upheld then no one is safe from the tyranny of a corrupt, despotic government. We can guarantee you there will be thousands of cases of prosecutorial abuse in our future and they will include anyone who speaks out about our elitist government. No one will be safe and this is no exaggeration. History is replete with examples of governments that used the criminal justice system to round up, punish and execute innocent people. With today’s corporatist fascist government in America no less can be expected. If the Padilla case is not reversed by the Supreme Court anyone criticizing government will be classified as those supporting terrorists. The bang on the door will come at 3:00 a.m. Your home will be surrounded by heavily armed government employees; you’ll be picked up, tortured, abused, raped and thrown in jail indefinitely. You can do nothing to defend yourself. There is no check on the military to take anyone into custody at any time. If the Supreme Court agrees with the appeals court then that’s when they’ll start collecting people like us who speak out.



Our President is masterminding this entire program with the assistance of the neocons and our congress. This is an attempt to impose military rule over America and we believe you should contact your representatives and express your dismay at their lack of interest in this most important issue.



Most experts thought that investors and central banks would be dollar sellers in 2005. The figures now tell us central banks were big buyers, not sellers. There was some diversification but by and large the plan by the major central banks was to have a dollar rally and take pressure off the euro. If you remember last we reported the IMF figures and they said that during 2004 the Fed and foreign investors absorbed $409.7 billion or about 113% of total Treasury issuance of $362.5 billion. This may work for now but its long-term bearish on the dollar and it’s very pro-inflationary. Gold is the only neutral non-fiat currency and it’s now rising against all currencies and as long as foreign central banks continue to buy dollars of decreasing value versus gold they’ll all continue downward. Gold will go up indefinitely as long as they continue to do what they are doing.



We are told that our Supreme Court Justice nominee expressed great enthusiasm for a new book by Richard Haass, a friend who runs the Council on foreign relations. The book, entitled “The Opportunity” presents the idea of how to integrate the world under a single political and economic order through a war of attrition. That would be accomplished by an end run around national sovereignty, eroding it piece by piece. “Our policies must recognize that globalization is a reality, not a choice,” says Haass in the tome that has so enchanted John Roberts. We told you in a previous issue that Roberts wouldn’t have been chosen if he wasn’t part of the elitists program. This of course proves it, so what else did you expect? Roberts agrees with Haass, “Sovereignty is conditional, even contractual, rather than absolute,” subject to revocation by the international community in the case of nations that defy its will. “The world 35 years from now will be semi-sovereign. It will reflect the need to adapt legal and political principles to the most serious challenges.” Roberts has been chosen by the Illuminati to adapt the legal system to the New World Order described in the manifesto written by his dear friend who is a top Illuminist at the Council on Foreign relations. Did you really think you were going to get someone who would look out for the interests of the American people?



A federal judge has issued a temporary restraining order on behalf of two Second Amendment rights’ groups ending the seizure of firearms from citizens in and around New Orleans. Many residents lost most everything and they were stripped of their right to self-defense. Gun seizures would have set a dangerous precedent that would have encouraged authorities in other jurisdictions to believe they also could suspend the civil rights of citizens in the event of some other emergency. Now the question is, how do the police get all those weapons back to their rightful owners?



This past weekend, instead of going to San Antonio, President Bush went to Colorado Springs to oversee a martial law takeover drill that is directly connected Operation Granite Shadow. It’s billed as a Search and Rescue Operation, when in fact it’s preparation for a martial law takeover drill. This is yet another Top Secret and compartmented operation related to the military’s extra-legal powers regarding weapons of mass destruction. It allows for emergency military operations in the US without civilian supervision or control. This may be a drill, but it is a sinister exercise to prepare for a military takeover of America. By way of justifications, and probably at the request of the White House, Texas Governor Rick Perry said that the onslaught of Hurricane Rita could provide terrorists with a chance to strike the US at its weakest point.



Although this in part is old news we have to go over it again because it affects the lives and the future of all of you. Our country is in the process of being eliminated and if we do not do something about it we will totally lose our freedom.



As a veteran we find it unbelievable that our forces in Iraq had to expend an estimated 250,000 rounds for every insurgent killed, and that American ammunition-makers cannot keep up with demand. An alternative supplier for some time has been Israel.



The authority of the EU to police its rules has been substantially weakened. Couple this with the rejection of the Constitution by the Netherlands and France, politicians in Italy are blaming their woes on the euro and saying they want to go back to the lira and 63% of Germans want to return to the D mark. We would say the EU has very serious problems. The EU leaders will meet at Henry the VIII’s Court Palace in London next month and we could see some real fireworks.



The European Central Bank has not changed interest rates in a long time, yet the money supply data shows a different story. M3 growth accelerated to a record annual rate of 8.1% in August, pushing the three-month average to 7.9%. M1 is up 11.5% with a three-month average gain of 11.2%. This is double targeted money supply and for Europe is outrageous. The statistics show inflation of 2.1%. Europe now has the US Bureau of Labor Statistics disease called hedonics or cooking the books. This major increase in money supply has resulted in a breakout of gold versus the euro and most other countries of the world. Worse yet, European central banks maintain the fiction that their gold reserves are holding their own, when in fact they are carrying leased gold on the books as still being in hand, which is subterfuge. They have sold a good part of their gold and that is why they cannot keep gold from breaking out to $512.00 an ounce.



Tony Blair and John Reid, defense secretary, have been holding secret talks with Saudi Arabia in pursuit of a huge arms deal worth up to $80 billion. The idea is for Prince Sultan to reequip his Air Force with Typhoon, the European fighter plane of which British Arms Company BAE has the lion’s share of manufacturing. In order to get the contract, the Saudis are demanding Britain expel two anti-Saudi dissidents; that British Airways should resume flights to Riyadh, currently cancelled due to terrorism fears; and that a corruption investigation implicating the Saudi ruling family and BAE should be dropped. The British call it serious fraud. We can promise you the deal will be done.



An additional $3 billion of Venezuelan international central bank reserves has been transferred to government spending projects. $984 million will be used for transportation infrastructure projects, such as the subway system in Caracas and building a train to connect Caracas to its southern suburbs. In the first six months of the year government spending is up 38%, which has increased GDP 9.3%. Central bank reserves are $31.7 billion, up from $11 billion in January 2003. Venezuela plans to cut its total debt from 40% of GDP to 30%. The country has $43 billion in domestic and foreign debt. Venezuela will also buy $150 million in bonds from Argentina. That figure may change to $500 million in addition to the $500 million already purchased in the first half of the year.



Venezuela intends to consider the purchase of Russian Amur-Class submarines. Vice Admiral Jose Laguna, the Navy’s commander-in-chief will discuss the issue during his upcoming visit to Russia. Germany and the French-Spanish group will be bidders as well.



China announced a fresh crackdown on the Internet amid further revelations of a plan by Hu Jintao, the President, to suppress dissent. The state bans the spreading of any news with content that is against national security and the public interest. That means no free speech in a totalitarian society. The government believes that the Internet provides a new way to organize people and is therefore a mounting threat to the government. You can’t encourage economic development and at the same time strangle any political initiatives by those not benefiting from the new China. The main problem is the Internet’s exposing corruption among the ruling elite and they cannot stand it.



Foreign investment in China was a record $148 billion in 2004, up from $53 billion in 2003. US inflows were $57 billion.




GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS


We told you the professionals would get interested at about $500 per ounce gold, and they have. Here are the first mainline analysts to pop up once gold hit $479.00 in electronic trading a week ago.



Prudential technical analyst Ralph Acampora said, “Gold’s spike to 17-year highs should not deter investors from buying gold. He believes gold is headed toward $507 an ounce. Most of the technical indicators suggest that despite an accelerated trend in price, gold is not overbought. Hence, any hesitation is deemed a buying opportunity.” Acampora envisions the price rising even further in the long term as gold continues on an upward path it has followed upward for the last four years.



JP Morgan Chase‘s global strategist Jon Bergtheil sees some interruptions, but over the long term he thinks the price will move steadily higher because gold’s drivers are now a lot more secular and a lot less cyclical. “We now expect gold to breach $500 during 2006 and to hold these new higher levels through the balance of the decade.”



Citigroup analyst John Hill is also bullish for fundamental reasons. “We expect gold to work its way higher and fully expect a test of $500 an ounce in coming months. We believe supply and demand builds a base for the next round of macro/monetary and investment catalysts to enter the market at high price levels.”



Ladies and gentlemen, gold has arrived. Last week it was Citigroup that recommended gold for a move to $500. This week it’s Prudential and JP Morgan Chase. That tells us the central banks are close to being out of gold. The jig is up. That doesn’t mean the gold suppression cartel won’t attack again with derivatives, but it does mean we are on our way.



The pros are catching on. Gold is a protection against the erosion of fiat money and the rise of inflation. It also guards against a decline in stocks, bonds and real estate. 2006 will begin a new fall in the dollar, not only against other currencies, but also versus gold. That trend has already begun in gold and in the other currencies.



We, who saw what pros are beginning to see today, in 2000, have already ridden gold from $275 to almost $480 an ounce and we have made lots of money doing so.



Morgan’s Bergtheil’s comments are telling: the gold drivers are now more about the science of demand and supply than the psychology of fear and uncertainly. That means the cartel is close to being out of gold and we are still some ways away from the fear and uncertainty components.



Now that the mainstream brokerage firms have an interest in gold shares, we could see $850 an ounce for gold in 2006. We charted 62 gold shares in 1992. There are only 14 of those companies still trading. The number of gold shares of all types has shrunk appreciably, which gives the sector lots of leverage. We have a giant three years ahead of us.



It may interest you to know that gold recently hit a 17-year high versus the dollar, a 17-year high versus the euro-D-Mark; and a 9-year high versus the British pound.



Gold has not broken out versus the New Zealand dollar due to a very strong economy and in the case of Canada a strong economy and soaring commodity prices.



The breakout of gold versus most all-important currencies confirms gold’s stature as a bull market.



Under the Washington Agreement for next year only 250 tons of the 500 tons allowed for sale have been spoken for, unless France or Germany decide to sell the yearly sales will be 50% of the allotment.



The World Gold Fantasy Council is considering launching a gold-backed bond.



The WGC Chairman, Pierre Lassonde, President of Newmont Mining says, “there will probably be less central bank selling going forward, especially from Europe.” He noted that every 100 tons of additional demand for gold equates to a rise of about $10.00 an ounce in the gold price during a bull market. He believes gold will hit $525.00 an ounce by early next year.

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....our forces in Iraq had to expend an estimated 250,000 rounds for every insurgent killed ...????

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