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Market Oracle FREE Newsletter


Silver and Gold: You Have to LIE!

Commodities / Gold and Silver 2013 Mar 07, 2013 - 02:26 PM GMT

By: DeviantInvestor


“When it becomes serious, you have to lie.” That statement was made by Jean-Claude Juncker, head of the Eurozone. Let’s call this a Juncker Moment.

As per Tyler Durden, “He uttered (the above) after getting caught with a bold faced lie about the stability of the failed European project.”

He followed that statement with “My main concern is to protect people from detriment. That’s why I feel practically compelled to make sure that no dangerous rumors begin to circulate.” This sounds like code for “we certainly do not want the truth to get out – people might become worried as the financial situation is serious. Hence, when it seems serious, of course I’ll tell as many lies as needed.” He appears to be a politician following the code of politicians throughout history.

On this side of the pond, Simon Black of “Sovereign Man” writes. “I really hate to beat a dead horse, but I wouldn’t be doing my job for you if I didn’t point out some of the most intellectually dishonest, self-aggrandizing Bernanke-speak to come out of the Fed Chairman’s testimony yesterday.

(Bernanke) “[The Federal Reserve has] 25 years of success in keeping inflation low and stable, not just in the United States but around the world.”

(Black) Translation: “I have not set foot in a grocery store or gas station in decades.”

(Bernanke) “I am very much in favor of getting our fiscal house in order but I think it’s a long run issue and I would be supportive of a less front-loaded set of measures.”

(Black) Translation: “Feel free to continue kicking the can down the road.”

(Bernanke) “I don’t see any sign that that’s happening (the U.S. dollar losing status as world’s reserve currency).”

(Black) Translation: “I pay absolutely no attention to what’s going on in Russia, China, the Middle East, or the gold market.”

(Black) “I know this goes without saying, but entrusting this man with your life savings is a dangerous course of action. I strongly encourage you to consider diversifying into precious metals, productive farmland, or even a digital currency like Bitcoin.

After all, you know the old saying – it’s time to be very concerned when the politicians and bureaucrats tell you to not be concerned.”

Those answers from Mr. Bernanke seemed rather disingenuous and appeared to be a “Juncker Moment.” Other “Juncker Moments”:

  • (Bernanke) “We are not engaged in a currency war.” The Fed is printing well in excess of $1 Trillion per year of “new money” hoping to overwhelm deflationary forces, to create inflation, and drive down the relative value of the dollar. The same is occurring with the Euro and the Yen, but Mr. Bernanke claims we are not engaged in a currency war. I think this is serious and qualifies as a “Juncker Moment.”
  • (Bernanke) “My inflation record is the best of any Federal Reserve chairman in the postwar period.” Same chairman, same story, same serious situation, eventually the same result – much higher consumer price inflation. The Chairman must feel the need to assure us that future inflation will NOT become serious – hence his “Juncker Moment.”

The Fed is creating $Trillions of “new money” while, according to the World Gold Council, central bank bullion buying is at a 48 year high. The Fed is printing money and driving up consumer prices for Americans, while China, Russia, and many countries are buying gold. It would appear those other countries trust and value gold more than they trust the dollar – especially when it is being spent, borrowed, and printed in excessive quantities. People listen to political promises and the pronouncements of the Federal Reserve Chairman, but gold does NOT. Gold simply moves to where it is most respected and valued. Currently, there is a massive migration of gold bullion from the West to Eastern governments, central banks, and individuals.

Jon Corzine, former CEO of MFGlobal, after well over $1 Billion in “segregated” customer funds disappeared on his watch, testified to Congress that “I simply do not know where the money is.” Fortunately, Mr. Corzine had friends in high places, including the Department of Justice, so his “Juncker Moment” seems to have worked out well for him, but not so much for the clients of MFGlobal whose accounts were skimmed. The implications are serious – for your paper assets.

President Obama has often spoken regarding spending cuts and deficit reduction. Of course, Congress and previous presidents also have a history of making pious pronouncements about deficit reduction while approving legislation with huge spending increases for “favored” industries. Let’s call it a history of joint President-Congressional “Juncker Moments.”

  • October 15, 2008: “What I’ve done throughout this campaign is to propose a net spending cut.”
  • February 23, 2009: “Today I’m pledging to cut the deficit we inherited by half by the end of my first term in office.”
  • September 5, 2012: “I will use the money we’re no longer spending on war to pay down our debt.”
  • State of the Union Message 2013: “Nothing I’m proposing tonight should increase our deficit by a single dime.”
  • And many more – all, I think we can safely say, were serious situations involving national insolvency, unsustainable budget deficits, supposedly necessary bond monetization (printing money by the Fed), and a sick economy overwhelmed by out-of-control government spending. Hence, a series of “Juncker Moments” were necessary to maintain the illusion that all is well.

The following are the official national debt figures from the past few years. Remember, this is just the official debt and official deficits, not the unfunded liabilities, which are MUCH larger. But, insolvent is insolvent, and what is the difference between $16 Trillion in debt and $200 Trillion in debt when neither can be repaid? The “jig is up” when the interest can’t be paid, which is why it is so important that the Federal Reserve maintain interest rates at historic lows while pumping $Trillions into the banks and the government. More “Juncker Moments” will occur when confidence drops even further.

Date Official National Debt ($Millions) Deficit (from previous year) ($Millions)
1/1/2008 $9,210,587 $530,363
1/1/2009 10,627,961 1,417,374
1/1/2010 12,290,238 1,662,277
1/1/2011 13,997,933 1,707,695
1/1/2012 15,226,217 1,228,284
1/1/2013 16,432,730 1,206,513

From 1/1/2008 – 1/1/2013, the official debt increased at 12.2% compounded annually. The unfunded liabilities for Social Security, Medicare, Medicaid, and government pensions increased substantially faster. Does this appear to be sustainable, prudent, and financially solvent? What are you doing NOW to protect your life savings, knowing that unsustainable deficits and money printing will create a weaker dollar? Why Buy Gold?

How “serious” is this massive deficit spending and the huge increase in national debt? Numbers in the Trillions are difficult to comprehend, so let’s describe it in terms of gold – the gold that the US supposedly holds. The official story is that our gold reserves total about 260,000,000 ounces, which at about $1,700 per ounce, is worth about $440 Billion. The average annual deficit for the past five years was about $1,400 Billion – over three times the value of all the gold that the US government supposedly owns. So, the US government is deficit spending and thereby increasing its national debt, on average each year, by about three times the value of the national treasure as measured in gold. Total debt is currently over 35 times the value of all the gold that supposedly is held by the US government.

Mayor Michael Bloomberg recently stated, “We are spending money we don’t have…When it comes to the United States federal government, people do seem willing to lend us an infinite amount of money…Our debt is so big and so many people own it that it’s preposterous to think that they would stop selling us more.” This looks like a confidence building “Juncker Moment” to me. The summary from Mac Slavo seems accurate and astute. He concluded, regarding the above pronouncements, that “What’s the plan from the best and brightest of our politicians, economists, and central bankers? Two words: Infinite Borrowing.”

It is your choice: Believing “Juncker Moments” or increasing your gold and silver investments? My vote is for gold and silver. And, every “Juncker Moment” from our politicians and central bankers should reinforce your belief that gold and silver are more valuable than pious pronouncements, confidence building “Juncker Moments,” and economic actions that lead us further down into the black-hole of insolvency, inflation, currency wars, and a sovereign debt crisis.

What are you doing to protect your savings and retirement funds?

Additional reading: Signs that Consumers are Running Out of Money, I Hope You Are Ready, and Ten Steps to Financial Freedom.

GE Christenson
aka Deviant Investor

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© 2013 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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