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Gold, Yen, Central Banks and the Endgame
Japan is frantically trying to stop its deflationary trap and its immense debt burden. The population is aging and prospects look dire. On Halloween (great timing) the Bank of Japan threw the kitchen sink at the problem by announcing that they would increase their QE from ¥60-70 trillion, to ¥80 trillion ($700 B) and would increase its purchases of ETF and REIT's. In addition, Japan's $US1.2 trillion Government Pension Investment Fund will dramatically rebalance its portfolio away from bonds and into stocks. These actions have depreciated the Yen versus the dollar by about 5% since the announcement and have created about an 8% jump in the Nikkei. If you extend the time period to the summer, the Yen is down about 13% while the Nikkei is up about 10%.
If you are a Japanese citizen, you have lost a significant amount of purchasing power unless you own a bunch of stocks (which they don't). Going back to 2012, the purchasing power loss is over 30%:
Let us be clear about Central Bank objectives:
- Ease out of or stop recessions from happening
- Keep employment strong by successfully implementing 1)
- Keep deflation at bay
- If you are in substantial debt, ease your way out of it through moderate inflation
Number 4 is the item that we will focus on.
Japan's debt to GDP is well over 200% (¥1 quadrillion!) and rising quickly. They have had a hard time getting their inflation to move upward and they have also added some taxes to try to bring their deficit down which has probably counteracted their inflation and growth targets. Inflation is the only plausible solution and depreciation of the Yen is key to Japan's predicament. The recent aggressiveness of the Bank of Japan smells more of desperation than solution.
The one thing that I can cite as factual is that the Bank of Japan often purchases equities and other assets (not just government bonds) and is not bashful about it. My summary of their actions is that anything is game. Since the Bank of Japan is purchasing all of their own debt and a good chunk of Japanese debt in existance are owned by Japanese families or Japanese entities, they have not seen the bond vigilantes who usually make governments become honest about their problems.
Without rising interest rates, Japan just needs to keep investors psychologically calm so that there is not a hyper-inflationary or crashing currency situation. One of the ways to keep investors calm is to stop gold and silver from skyrocketing in price due to a lack of faith in the currency (government) and a scramble to preserve wealth through hard assets. It just so happens that the ex-Assistant Treasurer to the Reagan administration and co-drafter of the Economic Recovery Tax Act of 1981, Paul Craig Roberts hit the idea of central banks' interaction with the gold market right on the head:
As we have demonstrated in previous articles, the bullion banks (primarily JP Morgan, HSBC, ScotiaMocatta, Barclays, UBS, and Deutsche Bank), most likely acting as agents for the Federal Reserve, have been systematically forcing down the price of gold since September 2011. Suppression of the gold price protects the US dollar against the extraordinary explosion in the growth of dollars and dollar-denominated debt.
It is possible to suppress the price of gold despite rising demand, because the price is not determined in the physical market in which gold is actually purchased and carried away. Instead, the price of gold is determined in a speculative futures market in which bets are placed on the direction of the gold price. Practically all of the bets made in the futures market are settled in cash, not in gold. Cash settlement of the contracts serves to remove price determination from the physical market.
Cash settlement makes it possible for enormous amounts of uncovered or “naked” futures contracts — paper gold — to be printed and dumped all at once for sale in the futures market at times when trading is thin. By increasing the supply of paper gold, the enormous sales drive down the futures price, and it is the futures price that determines the price at which physical quantities of bullion can be purchased.
You can read the full article here.
What I liked even more was the fact that over the last five years, when Asian physical delivery markets are open the returns are positive whereas they are negative when the London/US markets are open:
Lastly - Japan was successful in depreciating its currency starting in 2012. At the start of that slaughtering, Gold started to rally in Yen rather dramatically. By early 2013 that trend started to reverse and since mid 2013, Gold in Yen has been relatively flat even though the Yen has been continuously crucified. Is it possible that the Bank of Japan wants to keep Gold unexciting as a preservation of wealth and wants to move their citizens into stocks and "more productive" assets such as stocks?
Most interesting question is: How can record demand for physical silver occur at the same time that the price is falling like a rock? - U.S. Mint temporarily sold out of Silver Eagles amid huge demand
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I try to look at things in simple terms. Gold, silver and other PMs are finite materials with limits on production. Paper currency has no apparent limits. It seems to be a good idea to hold something which is limited rather than something that is not.
I'm positive the goal is to shutdown all the Gold and Silver mines, dealers, if they go bankrupt they'll buy them for pennies on the silver dolar.
I would not be surprised if they are going to re-invent the silver dollar, that's what it'll be worth.
Price in the physical markets hasn't fallen much. The spreads between spot and physical have widened. I wish I could buy physical close to spot. Two distinct prices have emerged. A 20% spread is enough to conclude that the spot price is the price of FRAUD and nothing else.
So it was the understanding of the egg-heads deep within the system long ago that keeping gold under control, demonetising it, making a barborous relic, curiosity piece even, was essential to the continued US hegemony over global monetry system (US world control).
So this is isn't about rates, inflation, confidence in the USD, it is about risk to continued US world hegemony (owning the monetry system). The desire is to trash gold into trash status. Problem is, if you want to do that it can only be done during benign economic times. When a global economic crisis is upon trying to demonetise gold is impossible.
People have nowhere to trun, nothing to trust. 0% rates, a stock market that is obviously a fantasy fabrication, TPTB destruction of personal liberties, increased control, lawlessness of Corporates unpunished......WELL what actually worked by accident is making everybody poor so they have no money to buy gold and silver.
But China, SE Asia, Russia, India, Swiss - involvement in the gold world kind of fucked up the US plans.
So the only thing they can do is short sell it......but it is self destructive solution since that concentrates more gold into opposition hands, who are believers in gold in the monetry/currency sense.
The US would have been better served just buying up all the gold....it isn't/wasnt a massive market when you have a printer....
Kina, I think this post of yours is accurate. To sum it up: gold cannot be allowed to compete with the US dollar.
So far, THEY have done a good job taking it out of contention.
Has this guy, Surly Trader, never heard of GATA?
Oye, I down voted a bunch of you cause
!. China and who ever cannot go to gold standard,their just as broke!
2. Cause most of your up votes are from gold bugs hoping the price of gold will go back up.
3. Cause you'all keep forgetting to include the most culpable group of all: You and Me!!!
Bankers , government, regulators....I'm so sick of the lack of awereness of Americans who don't accept responsibility for why we are where we are.
Pussies
The Chinese, Indian, and Russian citizens who are buying gold are not broke.
If you don't invest in what you believe in, then you might as well be a slave. And then, of course, EVERYBODY touts his book, ergo gold bugs WILL happen.
Are you and I culpable of not running for office?
I think many Americans actually believe what MSM tells them, and many other Americans realize that MSM is lieing, but are in denial, since, after all, they have to keep their jobs, and they can plainly see that their local Chamber of Commerce has got "thank you for defending America" banners up downtown and Spanish language signs in all the stores. A few Americans become whistleblowers, and some run for office, at least in local elections. All in all, about the same as Rome, I imagine.
So, what is it you want to say?
If they can make the crisis over Gold and Silver big enough, they'll be able to outlaw possession.
Wouldn't make much difference in the USA since most people don't have spare cash to buy bullion, and the ones that do are a small percentage so much so TPTB probably wouldn't worry too much aobut it.
Also, hard to do when most of the gold has fled east, try banning gold in SE Asia and India.
Listen asshat, let's be clear about the real goal of central banks/planning.
Maintain power and control over real resources and assets.
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we have possibilities enough to correct. 1ste: awareness about it.Billboard NYSE or others would do a great job.
ZH here could be in russian chinese hindi spanish (spain s- america's) Portugese (brasil) syrian a.o. languages.
Too many do not get english language in school. (...ZH would attrack new comp. for advertising)
In Germany there is kopp-online.de with excellent know-how which is not allowed to surface in Germany itself. Many of the journalist be followed- manipulated- terrorised & their wife and kids by the CIA& secr germ. 'services' too easy. Merkel all agrees as matter of fact.
Central bank is depicted in the 4 points-objectives mentioned as a support to the economy.
That is one side of their appearance behind which they can portray themselves. The&their other side is the hidden so fewer discover . See f.e. Sprot money. Between what they say in public and do behind closed doors are so opposite it is beyond comprehension.
"Japan is frantically trying to stop its deflationary trap..."
Deflation isn't a trap. It is the down phase of the inflation/deflation cycle that Kondratieff popularized by dividing it into 90 degree cycle phase seasons.
I'd LOVE some deflation. It would be SO NICE if all my bills started decreasing, instead of always increasing. Why is a steady increase in citizens' bills something that every government "has to" strive for? What book are these "economists" memorizing?
Your wage would decrease but your mortgage would stay the same. Oops.
Well, I can understand if YOUR wage went down because there was less work for your employer's business, but as far as YOUR mortgage, that's why I believe in buying a SMALL affordable house, so that one does not have so much overhead. And I believe in paying that mortgage off as quickly as possible. I think a lot of people tried to "tag along" on the Great Iraq War Inflation by speculating on McMansions, but were unsuccessful, in that many of those McMansions went into foreclosure when the Great Recession followed that Great Inflation. In one's personal life, I think it is safer to be a "value investor" than to be a high-risk speculator who must count on inflation. Also, as the Great Recession is right now teaching us, inflation does not bring happiness to the general citizenry, or help citizen-capitalism.
While there is deflation year after year most people would not buy any house, big or small, as waiting would be smarter financialy. Same goes with other major purchases. Businesses would hire later than sooner, and they would make less profit as time goes on. So wages would be falling too.
Theoretically. This is what the bankers are telling us.
Is there any good historical literature on how deflation works in practice?
I know little about this, but am surprised that, with the Japanese ethics of education and hard work, Japan's high-tech products aren't being scooped up by China and Russia. That would help it increase employment and also cut the strings to the EU-USA-GB funny-money currencies, thereby protecting its citizens' savings. But maybe that's part of why EU-USA-GB corporations chose to send their factories to China, to hobble Japan until its ruling families opened the door to Rothschild rule.
"and DON'T call me SURLY!" :-)
(...a bad misquoting of a great line from the movie "Airplane")
Actually, the title is "Airplane!"
Possibly the downward gold pressure has something to do with the upcoming Swiss referendum? Should it pass would it not be advantageous to the Swiss National Bank if their purchases were at a lower price?
Yes, but another way to think of it is: strong USD and weak gold makes good look less attractive as a reserve , influencing the vote.
And on the otherside...some miners took over others, especially new ones, when gold was at a higher price.
In the Newcrest example, they took over Lihir at a very high price, this has turned out to be a massive hit to them as Lehir's mines have a production cost over $1,300/oz. In other words...they lose money for them...and it isn't a small enterprise. Lots of mines invested and started on the basis of gold 1,300+ 1400+ etc....... now sub-1200 is a nightmare.....and this is especially true for silver miners.
The criminal banksters and brokers of Wall Street and ZOG will soon own them all. Gold mines rightfully belong to the Faux-Hebrew Chosenites, they cannot be entrusted to the goyim.
If you tell a little lie and then come clean, you can usually save a relationship or friendship. If you tell another lie to keep from being found out on the first, the results get worse when you are ultimately found out. When you continually lie and build an entire false reality, the damage is catastrophic if the truth ever comes out. We have reached a critical mass of lies and deceit in the "financial markets". If the public is ever confronted with the scale and degree to which they have been played for fools. (i.e. - their pension or savings account or house value drops to near zero over night) the reaction will be monumental.
The central banks are piloting a 747 that is desperately low on fuel. Rather than bring it down when the first engine failed, they have gotten more and more creative in their efforts to keep it aloft as more and more enghines have dropped out. There is no way to bring a 747 down softly once all the engines are gone.
Some of these miners are going to go bankrupt, have hudreds of millions, billions in loans outstanding...no longer able to service with gold now below production costs in many cases.
Look at Australias large gold miner Newcrest Mining...
It going to be very embarassing for these corrupt banks and the Fed when there is a cascade of failed, mothballed and bankrupt miners all over the world - which there will be.
They would have been having a hard time with gold at 1,300 ... many expanded and put at hundreds of millions in capital development when gold was rising 1300 and beyond Now they are stuffed rabbits.
Makes me wonder if they (criminal Oligarchs) will realise they must pull back before this happen, if only to stop global production and availability drying up completely.
Mining Stock/Companies also take over other Mining Companies......
I own shares in SLW , and as a flow their the costs are already paid....It could become a BOON for SLW, and other miners that hold lots of cash. Growth going forward looks positive but as always DYODD.
It's too bad it is Not a Free Market and our Taxes rape our prfit potencials......Buggered either way. The only ones that profit are the Bankers. :0(
Could they ever been taken to task? I don't think so unless there is a Public Revolt. Too bad Occupy Wall Street Failed.
Occupy wallstreet failed because they were going after the puppets. Wall Street are just the corrupt little minion puppets that take the money and destroy the world with it as they pilfer everything and enrich themselves. The REAL problem, the ROOT of the problem is the power that CREATES the money, the Fed and the Central Bankingn System. If the Occupy Wall Street people were in front of the Fed in DC and the NY Fed then they would have identified where the REAL problem was emenating from. Once again the real power was laughing as they watched the crowds attack their puppets. Of course all of them should be hanged for treason, Wall Street bankers and the Central Bankers along with every politician.
Yes, but the Wall Street Banks own the FED.
Ultimately, it is the Network of Global Corporate Control (NOC), that controls all.
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Can you imagine the Yen if tomorrow China talked about a gold backed Yuan....then later backed away from the statement.....just punking US and Japan.
WHAT should be happening is all these major metals miners get together and the mints...and simply state that we will not sell gold to anybody below 1400/oz ... since most would be on the verge of mothballs anyway.
@Kina - I believe you are right on the money and have been saying this for the last year or so myself. The miners own the metal, they should be setting the prices. I think all it would take would be an announcement that a dozen or so major miners were, beginning at date x, no longer going to sell their PM's at the paper price but were going to price it themselves. I like your start price of 1400 for gold, I'd say about 25 for silver. I think we'd see the paper PM markets react immediately and violently. Either that, or they would become completely irrelevant in not much time at all. Something must happen at some point - this is not sustainable.
You want industries to act as monolithic cartels that set their own price and gouge the shit out of you, the customer?
Why would you think that is a good idea?
Aren't you complaining about TPTB and TBTF and here you are advocating for a new member of the club.
The ONLY thing that needs to be, for the paper market to continue is this: physical must be supplied when demanded. If not then the market is a fraud.
Watch the available physical in GLD and SLV.
Miners that rely on financing from the TBTJ banks do not own the metal. The hand that gives is above the hand that takes, yada yada yada..
What an excellent article this.
'..War. Buffett is all about increasing income taxes for the wealthy, but you have never heard him talk about taxing the collected wealth of the wealthiest.
It is easy for him to not pay himself an income, but it is very difficult for him to hide his basket of wealth.
It appears that we are back to the imbalance that came right before the great depression...':
One difference with great depression is we are connected. During great depression only a hand full knew how it was created. And by whom it was created. If a billion know now how and who it is unlikely going to be repeated that easily.
They wanted a war in Oekrain but even in smaller european countries too many knew who wanted the war and for what reasons and purposes. So without realising we have saved human lives probably.
The price of Gold Silver is kept down by Central Banks allready for 3-4 years . At one point their methodology fails and breaks up.
Their paper mountain-pile -Gold - is allready heating up smoking inside. It is not gonna effect nor has influence on Central Banks. They are above any law and non violable non taxable a.o. mentioned.
I heard one mention that keeping the prices so low was in the ' interest of the economy'. They are allowed to lie if not they be excluded and considered not fit for the job. Lie or die is the excuse over and over.
Yeh we all now certainly understand what has been happening, but maybe not all of the why.
They are at their leisure to choose any price of bullion they want, almost, through infinite printing of invisible gold and fiat.
These people are already the criminals acting on behalf of oligarchs.. organised crime syndicates are just their tools when needed. In these instances their criminal gangs are the bullion banks, Fed and BIS.
So we all know that if left to itself in a 'free' market gold and silver would retrace pretty much to their old highs, and beyond if M2 and Yen etc printing is the metric.
The only question that requires examination - IS how long can they keep this up, will need to keep it, anything to bust their hands and so on.... WE all expect for them to trip up eventually...but how long....
The banks are part of the corruption.
The regulators are part of the corruption.
The judiciary are part of the corruption.
The Politicians are part of the corruption.
So kinda requires some destablising event to tip these forces over, or set them against each other. SE/Asian central banks won't do anything...they are enjoying cheap gold and buying as fast as they are able.
The thing that amazes me...if you were a gold and silver miner....wouldn't you be suing the arse of the CFTC? and all the other criminals??
Surely they scrape a hundred million between them all to mount a case against these scum?
Ummmm, who do you think own the big miners? Who sits on their boards? It's one big family, except in this one Daddy doesn't bring home the bacon, but rather just creates it out of thin air.
ref:
"Daddy doesn't bring home the bacon, but rather just creates it out of thin air."
Daddy doesn't bring home the bacon, but rather just steals it from everyone else on the planet.
Like Greenspan said in his '66 Gold and Economic Freedom, the value of the newly minted currency is equal to the value lost by everyone else holding that currency.
It will collapse when:
China / Russia reprices gold or demands payment in gold or put their currency on a gold standard
The bankers run out of physical to sell east
Absolutely correct. IMO China is playing a big part in the unraveling of TPTB (OWO) a piece at a time. For the past 7 years this war has been going on full tilt. Some of it we see in articles and most we don't see at all.
China can and will reset the price of Gold and Silver. That will be the move that throughly and permanently decouples the pervo-dollar from being a factor in the future.
Get ready....
"It is possible to suppress the price of gold despite rising demand, because the price is not determined in the physical market in which gold is actually purchased and carried away. Instead, the price of gold is determined in a speculative futures market in which bets are placed on the direction of the gold price. Practically all of the bets made in the futures market are settled in cash, not in gold. Cash settlement of the contracts serves to remove price determination from the physical market."
Amen
To suppress the price of gold in this extremes is not only cause of cash settlement of contracts and derivatives.
To remove the pricing it is used of course and as well in silver and others....
Actually many commodities could & are being used to have cash settlements to remove the price in the real every day market. Notice the prices and trades there.But f.e. with coffee or wheat there is not that kind of a distance between these two. Demand <> Price
Many of the non-taxed use cash settlements on Gold to have money being washed colour white f.e. Who controles and does a accountantscheck....( Sec or...?) Colour white is to be understood as more f.e. being where it is not its best position so to get somewhere else in the books.. move it .
It represents a money Layer on top of what we can read --coming to us- by Reuters Rotschilds owned -many say-.
IMF BIS Central Banks use this to have gold removed from Eu- countries. Gold is real money and can cover-ground sustain debts. GOV. debts.
All Eu countries have lost lot of their Gold to IMF BIS since 2002. Even Oekrain lost all its Gold while not even in the Eu itself. So they start with offloading very very early.
EU is made for this. Oekrain is such an easy victim. People there do not know any of what is written here.
Now their natural resources on gas is going to Biden&Sons. Their wheat is not theirs. All ready now in 2014. Biden &Sons are non taxed as well so not any american profits in any way. Actually the opposite happens.They all loose and not a little...
So the price of GOld if at all any is paid - not by the IMF - should be as low as possible.
And it will stay low for more years cause the underlying reason- to do- is not completed.
So if you make money cause of this = Their strategy well. You can keep doing it for time coming.
IMF BIS CB &IMF only need-can misuse countries with trillions of debts be it - JApan - Eu-countries.
NO Gold = have to obey- submit- comply- to Banks Banking Elites Multinationals. Whatever social program they come up with a country has to follow. Rockefeller used Elites he did not dare to use Ubermenschen but these are same.
-See articles on jobs and job losses and how they are lost and whom have greatest - Social aspects are very handy for them Ubermenschen. Loss of Job means poverty. Poverty is useful for Them as well. Poverty means mostly dumbed down citizens. And poverty is early dying reduced lifespan> So new births meaning f.e. vaccinations starting after a few days. which results in having to go to their pills early in life. Sales volumes goes up and up and up.
Ubermenschen Bis ImF Fed Banking Elites Corporates are no human beings. Although a lot is done to have them painted in the media as sympathetic - kind-grandma-like.> yellen. Or use a woman as politician merkel
For Japan- they are made an example of how to go and to be ridiculed laughed at so to say-into the scenario's of deflation debts a.o. and not to be underestimated the travelling compagnion - revenge for starting WWII to the US-.
If analised JApan is loaded...as Gold is. Japanese are made very scared-afraid seems so they even not open a mouth. It is imcomprehensive why Japanese & economy have them bend like a jacknife.
You deal with Elites-Ubermenschen who laugh about having a clear consciousness (christian belief) so ruthlessness is part of.
The two biggest problems with a collapse today are two-fold:
1. The loss of confidence would be monumentally devestating as our whole westrern system functions on confidence.
2. The other problem is that we are such a complex society, especially in the cities, that it does not take much to throw us into a tailspin as opposed to how things would be if we lived in the countryside or some very small town that is close to sources of production.
If water supply, electricity supply and sewage services break down in any way for a prolonged period, then we are history.
"...The loss of confidence would be monumentally devestating as our whole westrern system functions on confidence..."
Loss of confidence? How is that even possible? [facepalm] Uh oh...
"If you're in the con game and you don't know who the mark is … you're the mark."
I suppose they should have thought about that earlier...
Instead of QE.....Money should have been put into Infrastucture...........America's Loss.
The private federal reserve is America's loss, created to protect and enrich the banksters at America's expense. End the fed and save America!