Darryl Robert Schoon
Posted Feb 15, 2012

Inverse Lin-omena, the inverse of the Jeremy Lin phenomena where the unknown and previously discounted suddenly rise to prominence; here, the powerful and previously secure suddenly fall.

Today, central bankers, the mandarins of capitalism, are in disarray. Their attempts to contain capitalism’s current crisis increasingly resemble the tactics of a defeated army in retreat. Like Napoleon and Hitler’s respective “Moscow moments”, the 21st century economic crisis has brought to an end the bankers’ spectacular 300 year run at the table of power and wealth.

The indebting of others as a means of accumulating wealth ends when the indebted can no longer pay what they owe. The arcane and esoteric scribblings of second generation University of Chicago trained economists cannot cover up this basic fact, i.e. that the indebted are broke; and soon, their creditors will be as well.

The bankers’ franchise of credit and debt built on a leveraged foundation of paper money fractionally backed by gold allowed the West to accumulate geopolitical power and wealth on a vast scale. That era is now over.

It ended when the gold convertibility of the US dollar was terminated in 1971 when the cost of maintaining a global military presence outstripped the ability of the US to pay in gold what it owed on paper.

It was as if someone removed a pin from the axle of international commerce when the US dollar was no longer convertible to gold. Previously, the US dollar was linked to gold, and other currencies were linked to the dollar. Everything was stable. It is no longer so. Once the pin connecting gold and paper money was removed, everything changed. The axle of international commerce began to vibrate and lately it’s been getting much worse. The fear is that the wheels are now about to come off. - Section 1, topic 3, How to Survive the Crisis and Prosper in the Process, Schoon, 2007

Today’s fragile state of the euro, a fiat currency created in a failed European attempt to compete with and/or replace an increasingly unstable US dollar, is but another indicator that the wheels are now about to come off.

After the US ended the gold convertibility of the US dollar in 1971, gold skyrocketed from $35 per ounce to $850 in 9 years, increasing almost 2,500% in value, dwarfing the later rise of the Dow (from 777 in 1983 to 11,722 in January 2000) a much smaller rise of 1,400% over almost twice the time (17 years instead of 9).

After gold’s spectacular ascent, central bankers decided the price of gold needed to be ‘managed’, as a rapidly rising price of gold signaled that something was fundamentally amiss with the bankers’ fiat paper money, a signal that central bankers did not want sent, a signal that bankers would work exceedingly hard to disguise for the next 40 years.

When stocks lose their value
That’s a terrible thing
When homes lose their value
That’s a terrible thing
But when money loses its value
That’s the most terrible thing of all
Introduction, How to Survive the Crisis and Prosper in the
Process, Schoon, 2007

CENTRAL BANKERS MANAGE THE PRICE OF GOLD

In actuality, central bankers did not work ‘exceedingly hard’ to disguise the real market demand and price for gold. Instead, bankers disguised market demand not by hard work, but by smoke and mirrors, a contrivance common to confidence men everywhere and, today, to central bankers in particular.

To suppress the price of gold, central bankers covertly supplied markets with gold bullion belonging to the nations on whose behalf they ostensibly toiled, suppressing gold’s real price with excess supply. This artifice was discovered by Frank AJ Veneroso, an extraordinary financial analyst and consultant well known only in the rarefied circles of international finance.

According to Veneroso, since the early 1980s central bank gold sales and loans comprised a significant portion of all gold sold. In 1990, Veneroso estimates that 21.5% of gold sold that year came from central bank vaults; and by 2000, central bank gold sales had increased to over a 1/3 (34.6%) of all gold sold.

Frank Veneroso’s story of central bank manipulation of gold markets is found here.

With thousands of tons of central bank gold coming onto the market, it’s clear why the price of gold declined from 1980 until 2001. What is remarkable, however, is that in the face of such overwhelming supplies, the price of gold began to rise in 2001.

THE TURNING POINT

The turning point, however, actually occurred in 1999 and is marked by an event relatively unknown and almost tantamount to financial treason. About that event, I wrote in March 2009:

In 1999, it was rumored that investment bank Goldman Sachs had a 1,000 ton gold short position in the markets. Goldman Sachs was betting that the price of gold would continue to fall and they would be amply rewarded for their apparent “risk”.

Because of central bank manipulation, the price of gold had moved inversely to the rise of stocks for almost 20 years and bankers were making easy money on the bet gold would continue its downward spiral.

However, much to the shock of Goldman Sachs and the central bankers, in 1999 gold stopped falling; and, because Goldman Sachs’ short position was so large, Goldman possibly could suffer catastrophic losses.

This is when England’s then Chancellor of the Exchequer, Gordon Brown, on May 8, 1999 announced England would sell over 50% of its gold reserves, 415 tons of the most precious metal on earth at the very bottom of the market.

The decision to sell England’s gold thereby saved Goldman Sachs and insured the political future of Gordon Brown. Goldman Sachs’ is still in business and Gordon Brown is now [2009] the Prime Minister of England – proving that good things come to those who do the bidding of the powerful (whether either outcome was worth 415 tons of England’s gold is questionable).

Selling a nation’s gold to save the bankers’ parasitic system is now common practice as the banker’s system continues to collapse and gold continues to rise. Since Gordon Brown sold England’s gold, gold has risen from $275 dollars per ounce to its present price of over $900 despite the thousands of tons of central bank gold sold to prevent its inexorable movement higher. On 2/14/12 gold is $1,715]

CENTRAL BANK SALES AND LEASING OF GOLD HAS MADE GOLD AVAILABLE AT FAR BELOW MARKET RATES

To hide their burning house of cards, central bankers have sold thousands of tons of gold from national treasuries, mainly Switzerland, to keep the price of gold below what it would otherwise be. This is the true upside (for buyers) of the bankers’ gold suppression scheme.

While citizens cannot prevent central bankers from selling gold from their national vaults, today they are afforded the extraordinary opportunity to buy that very same gold on the open market at prices heavily discounted to their otherwise true market value.

My current estimate of today’s true market value of gold – without central bank intervention – is in excess of $10,000 dollars per ounce.

Many central banks, however, are today switching sides in the war on gold, preferring to keep their precious metals instead of selling them in an increasingly futile attempt to prevent the inevitable from happening – the collapse of the bankers’ now burning house of cards.

Today, the bankers’ fiat currencies are in a death spiral. It’s only a matter of time until the US dollar, the Japanese yen, the British pound and all paper currencies – including the Chinese yuan – come under the same pressure that now plagues the faltering euro.

Central bankers, however, will do everything in their considerable power to prevent their lucrative franchise of credit and debt based on paper money from collapsing; and, of late, they’ve discovered a new way to suppress gold and silver – the precious metal inventories of GLD and SLV, the precious metal ETFs used by investors to participate in the rising price of gold and silver.

When Europe’s debt contagion spread in the summer of 2011, the price of gold began moving rapidly higher which bankers feared could itself turn into runaway contagion. The below chart shows that GLD and SLV, the ETF funds, were used by central bankers to cap gold and silver prices in mid-August.

Source – www.gotgoldreport.com

Amid growing concerns about Europe’s debt crisis as gold rapidly rose, GLD sold 26.12 tonnes of gold and SLV sold 304 tonnes of silver, driving the price of silver down 8% although gold rose 4.9% despite GLD’s considerable efforts to the contrary.

That GLD and SLV ostensibly dedicated to profit from the rising price of gold and silver would sell their inventories in a rapidly rising market runs counter to their mandate; unless, of course, they did so knowing that central banks would soon ambush gold and silver with deeply discounted lease rates on precious metals that would cut short gold’s increasingly spectacular rise.

Jesse’s Café Americain traces the planned ambush of gold by central banks during their September take-down, read article here. Gold had risen to a record high, $1900, on September 1st and on September 2nd, central banks then took corrective action, dropping their lease rates for gold sharply lower into negative territory.

This meant that central bankers would actually pay bullion banks to borrow their gold and sell it on the open market. The new supplies of gold capped gold’s increasingly steep seven month rise and, by the end of September, the price of gold fell back to $1600.

After Sept 2nd, gold lease rates still remained negative, insuring a continued low price for gold even as the European debt crisis accelerated and the global economy slowed. This is exactly what central bankers intended. Gold is a barometer of systemic distress and central bankers wanted to conceal the flames rising from their now burning house.

Nonetheless, even with negative lease rates, gold again began moving higher before central banks on February 2nd supplied markets with more gold with again sharply lower lease rates deep in negative territory.

As the bankers’ ponzi-scheme of credit and debt disassembles, central bankers will find it more difficult to contain the price of gold; and when gold does break out – as it will – the price of gold will exceed the $10,000 price it would now command if it were not for central bank intervention.

At $1700 gold is cheap; at $3,000 gold is cheap; at $5,000 gold is cheap; at $7,000 gold is cheap. Wait till the central bank sale ends and you will realize how cheap gold actually is.

The wheels are now coming off the bankers’ once invincible juggernaut. Whether the out-of-control bankers will crash in a (1) hyperinflationary blow-off, (2) a brutal never-ending deflationary collapse-in-demand or (3) in a fatal bursting of capitalism’s bloated colostomy bag – derivatives – cannot be known.

But what is known is that the end of the bankers’ monetary fraud is near and its demise closer than most want to believe.

 

THEY’RE NOT LAUGHING ANYMORE

A remarkable blog, www.dailystaghunt.com, reviewed recordings of Fed Open Market Committee meetings between 2000 and 2006 and, interestingly, noted the frequency of laughter during meetings, observing: The number of recorded laughs actually increased in frequency from 2000 to 2006. In 2001, the FOMC erupted into laughter 16.5 times per meeting on average. In 2003, it was over 19. In 2005, 27. And then in 2006, the FOMC burst into laughter nearly 44 times per meeting!

As the 2007/2008 financial crisis grew closer, central bankers grew increasingly relaxed and confident; believing their extremely low 1% interest rates had worked; that they had survived the collapse of the greatest speculative bubble in the US since the 1920s – the collapse of the 2000 dot.com bubble – and all was well.

But those in attendance, Greenspan, Bernanke, Fisher, Mishkin, Krozner et. al., were wrong. Their fatally flawed solution to the collapse of the dot.com bubble, low 1% interest rates, had given birth to an even more dangerous bubble, the 2002-2006 US real estate bubble, the largest speculative bubble in the world whose collapse would bring down the world economy in 2007/2008.

Of course, this wasn’t known in 2006. In 2006, central bankers were still laughing.

Frequency of laughter during FOMC meetings

Year	Average laughs per meeting
2000	16.5
2001	15.375
2002	21.625
2003	19.25
2004	23.125
2005	27.25
2006	43.875

Data on the frequency of laughter at FOMC meetings after 2006 is not yet available. But it can be assumed the frequency subsided after the massive global credit contraction in August 2007 and after the collapse of world markets in 2008.

Note: the possibility that FOMC laughter remained high or actually increased after 2006 is far too macabre to consider. We do, however, await additional data before passing judgment.

(Click on image to enlarge)

Source – www.dailystaghunt.com

Today, central bankers are no longer laughing. Their nights are considerably longer as are their weekends; their daily grocery list might now include quarts of gin and whiskey, prescription anti-depressants and extra-strength deodorant.

We are collectively in the end game, a period of great change where the present paradigm is collapsing making way for what is to come. Keep your thoughts positive and focused on what is coming, not the troubled passing of the present world. Let central bankers do that.

Note #1: I will be speaking at Professor Antal Fekete’s New School of Austrian Economics in Munich, Germany, see http://www.professorfekete.com/gsul.asp. For details, contact nasoe@kt-solutions.de

Note #2: My latest video, What and Who Do Bankers Do (or what I really think about bankers and money). Dollars & Sense show #12, youtube http://youtu.be/hazULFo3oB4

Buy gold, buy silver, have faith.

###

Darryl Robert Schoon
email: info@drschoon.com
website: www.drschoon.com
website: www.survivethecrisis.com
Schoon Archive

About Darryl Robert Schoon

In college, I majored in political science with a focus on East Asia (B.A. University of California at Davis, 1966). My in-depth study of economics did not occur until much later.

In the 1990s, I became curious about the Great Depression and in the course of my study, I realized that most of my preconceptions about money and the economy were just that – preconceptions. I, like most others, did not really understand the nature of money and the economy. Now, I have some insights and answers about these critical matters.

In October 2005, Marshall Thurber, a close friend from law school convened The Positive Deviant Network (the PDN), a group of individuals whom Marshall believed to be “out-of-the-box” thinkers and I was asked to join. The PDN became a major catalyst in my writings on economic issues.

When I discovered others in the PDN shared my concerns about the US economy, I began writing down my thoughts. In March 2007 I presented my findings to the Positive Deviant Network in the form of an in-depth 148-page analysis, “How to Survive the Crisis and Prosper In The Process.“

The reception to my presentation, though controversial, generated a significant amount of interest; and in May 2007, “How To Survive The Crisis And Prosper In The Process” was made available at www.survivethecrisis.com and I began writing articles on economic issues.

The interest in the book and my writings has been gratifying. During its first two months, www.survivethecrisis.com was accessed by over 10,000 viewers from 93 countries. Clearly, we had struck a chord and www.drschoon.com, has been created to address this interest.

Gold’s Blood Relatives
Stewart Thomson
email: s2p3t4@sympatico.ca
Nov 10, 2009

1. “The banks are going to close! Street violence is coming!”

2. Remember those headlines going into Dow 6500? I do. I bought the Dow into those headlines. Of course, I kept up my insurance actions, removing money regularly from the financial system on a weekly basis. Nobody knew what would happen. Would the Dow make a bottom or go into an abyss with the thundering explosion of a thousand trillion dollars of OTC derivatives blowing to smithereens? The decision was made to use fraud accounting to bury it all and attempt to print money to technically re-price assets, while actually devaluing them. That is a key concept to understand going forward as this crisis accelerates. Raising the price of an item and raising the value of it are not necessarily the same thing at all times.

3. We are at a new Dow 6500 crossroads. An even bigger crossroads. This time, it is for the US Dollar. As the world’s largest market, major action there brings the greatest debate and the most powerful players. While the global fear level is nowhere near as big as it was at Dow 6500, the dollars on the line are vastly larger.

4. Will the mighty US dollar stage a rally? Or will it melt down, possibly triggering a global paper currency crisis? Look at the indicators like MACD rolling over. This looks like the chart of an item that is preparing to crash, not rally.

5. The analysts calling for a huge dollar rally and a stock market collapse are generally quite demoralized. The fundster technicians incorrectly identified the rising technical pattern in the Dow as an actual wedge, as opposed to the wedging action, that is all it was. I highlighted this repeatedly in my videos. Few listened. I kept seeing the same wedge drawn over and over. A costly error for those who bet large money on calling the Dow top with this “wedge”. I would venture that the banksters’ kids have a joke about the fundsters with a Dow “wedgie”. My bank trader friend told me his prime broker contacts told him a literal sea of fundsters were short the Dow on huge leverage at the recent Dow lows, sure they had the top. He pulled his own short positions. Dow top call number 10 zillion bites the dust.

6. The dollar could rally here. Jim Rogers says he’s bought the dollar. My question to those selling commodities here to buy the dollar is alongside Jim “Mighty Man” Rogers is: Do you really think Jim Rogers is net long the dollar? Do you think he’s bought more dollars than the commodities he holds as a core position? The man opened up his bag of peanuts and he’s chomping on a few US dollar peanuts. That is all that he is doing. Period. Many in the gold and fund community are already trying to eat the bag, shells and all, in a gorging on the dollar. Many of these players missed the move in gold from 905 or shorted it, and they are compounding one blown trade with another even worse set of tactics, to desperately “make back” their losses.

7. Play the dollar as an insurance trade or a simple counter trend play. Note the key word here is: Play. Not “sell all my gold at the market, it’s going down!”

8. The possibility of a strong US dollar rally is very high, yes, but the odds of a dollar collapse followed by a global paper currency crisis, are even higher.

9. Remember when gold moved towards the $1000 marker, towards the neckline of the massive head and shoulders continuation pattern on the gold weekly chart? I said, “There is a 51% chance we go higher. I am long with an ultimate target of $6000 and no amount of possible gold weakness will cause me to take any action on the sell side with my gold positions”.

10. When I look at the gold monthly chart, I see a stronger technical situation now than ever! Regardless of any minor trend rally (minor trends last 1-3 weeks in time), my view is the odds of a US dollar collapse are 55%. The odds of a major rally are 45%.

11. This is a time where put options on gold could be a good idea for those who are terrified of a dollar rally. You have solid profits in gold and related items, but the “will gold rise or tank” game being played out there is too much for you mentally. You could “insure” a portion of your gold portfolio for a small cost. If gold goes higher, your further gains should far outweigh the loss on the put options.

12. I personally will not be buying any put options. In fact, I’d rather buy call options here than put options if I was forced to choose one or the other. I will be buying more gold if it declines. All the way to zero in a pyramid formation. The buys growing larger as it declines.

13. There is no “gold top” and I don’t care about gold 1100.

It’s a round number marker and I sold into it with bits of my trading position. End of story. Here’s the chart. While the daily chart calls for booking modest profits, the monthly chart is on massive buy signals. Look at the TRIX configuration. That is an enormous buy signal. Gold’s major technical indicators are triggering buy signals, not sells.

While head and shoulders continuation pattern price targets are generally unreliable, this is one of the greatest examples of this pattern of all time. Targets of 1200-1400 are not unreasonable, just for the move from the head and shoulders. This pattern to me looks like price could soar far beyond that target. What happens now is not so important as insuring that you are in the gold rocket when it parks at moon $1400, on the way to mars $3000.

14. If a substantial decline of size were to commence in gold, well, I would suggest we are nowhere near that point yet. But if it did occur, you have to buy, not sell. We have the banksters, the fundsters, and now the Gold Topsters. My message to the topsters is this: Stop picking your gold nose. Or you will arrive at gold moon 1400 with bits of gold, if any.

15. My suggestion to those looking for real world tactics to manage your emotions and money on the gold rocket right now if you are feeling overwhelmed by both bull and bear pulls, is to focus on what I term “Gold’s Blood Relatives”.

16. I spoke about corn at length over the week-end. I don’t view corn as better than oil or wheat, but I like to talk about one thing at a time so investors understand it, rather than just blabbing, ‘oh yeah, corn is the big one, go go go!” But you tell me, what makes more sense, a madman play to load up on dollars when there is a 55% chance of a global paper currency crisis, or to buy items like corn, one of the world’s lowest risk investments, with a near-infinitely smaller chance of going off the board than the dollar? To repeat, I don’t favour corn over any other gold-related item. Notice the Bloomberg headline that came out yesterday, right after my write ups. That Bloomberg story shows a stunning picture of what is going on in the Chinese corn market.

17. About 55% of all farms in China are about 3 acres in size. Or less. The six dollar a bushel marker is the corn market line in the sand. If Chinese farmers get less than $6 a bushel, the revenues needed to survive on a farm that is less than 3 acres in size just don’t exist at less than 6 dollars a bushel. Chinese farming is not about profit margins. It’s about revenues. The Gman is subsidizing the farmers, because the farmers are pouring out of the farms and into the cities.

18. Jim Rogers himself has stated while he doesn’t think it will happen, he is clear that the risk is very real: water shortages could lay an unimaginable beating on the industrial revolution in China. No water equals: Starvation. The world bank notes the following about China:

With 20% of the world’s population but only 7% of global water resources, China meets with a severe challenge.

.  More than half of China’s 660 cities suffer from water shortages, affecting 160 million people.
.  The per capita water volume in China is one fourth of the world average.
.  90% of cities’ groundwater and 75% of rivers and lakes are polluted.
.  As a result of widespread water pollution, 700 million people drink contaminated water every day.

19. Some cyclical forecasters believe an actual “dust bowl” type of event could occur in the 2011-2012 period. My suggestion is: If you are feeling like you can’t go on in the gold market at this point in time, rather than trying to be king of the dollar bugs, simply shave off a FEW gold profits, and grab a nice piece of corn on the price weakness cob. Take a bite out of that, not US dollars, to kill your thoughts of gold suicide.

20. If gold goes to $3000, where will the dollar be? Focus on Gold’s blood family, not gold’s enemies. I would suggest you also consider the “cost of farming floor” with agricultural items like corn. It’s not impenetrable by any means, but there is a price point below which the farmer throws in the towel. The odds of price going below there and staying there are small, never mind the odds of it going to a real price of zero. The deflationists haven’t factored starvation into their pipedream. There is much more Deflation of value coming to the world’s economy, but there will be Inflation of Price. Earth to price deflationists on Mars: There can’t be any deflation of price because we’ll all starve to death. The global farming industry will collapse and we’ll all die. The gold relatives advice applies to gold price chasers as well. Some have the thought, “I’m missing out, I just gotta buy, gold will be at 1200 and I’ll have too little!” If gold soars higher, do you think items like oil, food, and other hardcore commodities are going to tank? Not likely. But you can buy them without the adrenaline gusher that is present in the gold market right now. “I don’t buy anything that just went to an all-time high” -Jim Rogers. Maybe you are smarter than he is. I doubt it. There are many items, like food and energy that are trading at low prices.

21. My most important point today is this: Many gold stocks haven’t joined bullion yet. Those that have risen have done so modestly in most cases. Do not dump them to chase the bullion rocket. That borders on insanity. Gold stocks should be bought aggressively into any and all weakness. If you think you are missing out on bullion now, magnify that by 100, and you’ll have the picture of how twisted your emotions will be when the gold stocks join the party and you sold out to chase a $100 move in bullion.

22. The Dow is beginning to hyperinflate, as major institutional players sense a US dollar meltdown is very near at hand. Rising bullion prices coupled with a soaring Dow put you, the gold stock owner, in what I term “The Ultimate Driver’s Seat”. There is no better place to be invested right here, right now. My suggestion is you scan the gold stocks horizon and buy what you can that is weak. Don’t walk to those stocks. Run. Notice I said “hurry”. Not: “back up the truck”. You don’t need much fuel in a toy rocket to shoot it 500 feet in the air. That is the gold stocks market. But do not waste time. Time is of the essence. The gold juniors rocket is on the launchpad in a situation in time comparable to when gold bullion was at $960 as it moved towards the triangle breakout.

23. The pros are moving onto the gold stocks rocket and preparing for liftoff, while the gold topsters are jumping out of the rocket onto the US dollar cement below. The banksters are transporting their broken bodies to the US dollar oven and preparing for final roasting. Do I have a few longside US dollar peanuts in my bag like Jim Rogers does? Sure I do. I’ve bought the dollar into this weakness. With the peanut capital it deserves. So far, while I’ve banged about 10 or 15 USD pucks into the net on strength out of the hole from the recent low, overall it tastes like bits of USD shell mixed with USD peanuts. Those who sell gold stock in major size here and buy the dollar in size, are going to find they have a mouth full, not of shells, but of poison. It will be a mouthful far worse than the poisoning they got shorting the Dow into 6500. Gold’s blood relatives versus USD paper bills in the oven. Not such a tough choice. Is it?

Nov 10, 2009
Stewart Thomson
Graceland Updates
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an invetor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially.

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