Gold & 2nd Term US Presidents

Sun, Aug 24, 2014 - 7:25pm

Did you know that there is an (alleged) cycle in the price of gold which approximates 8 years in length. Here it is:

Since gold is in a bear market, or recently was in a bear phase, it would appear to be prudent to look at the downwaves of this cycle in the past. Then those periods can be compared with the downwave of 2012-2014.

So for a start let's look at the 1970s 8 year cycle bottom:

Next came the 1980s bottom:

This major low came in a few months after the idealized time. It was preceded by a secondary size low which came 2 years earlier, and the rally between the lows was sharp and significant.

The next low came in the early 1990s:

Once again a low 1 and 2 years [prior to the main low. The main low came in "late".

The following low came here:

A pre-low is visible 18 months prior. Note that the absolute low this time came prior to the idealized low, and the later low was a higher retest. The higher retest set up serious bullishness following it's completion. After this low gold went into it's most recent substantial uptrend.

Whether this rise is secular or cyclic is open to conjecture, although many commentators insist the 2000s gold bull was/is a secular bull, which secular bull trend many assume may not be completed and resumption is assumed. I myself think that that particular view is bull because everything is cyclic in some way or other. To me, the gold bull of 2000-2011 was simply another 7-9 year bull cycle swing which lasts for half the cycle length and is inevitably followed by the return swing. The return swing downwards in 2008 was suppressed which raised the starting point of the following upswing out of the 2009 low. This downswing is making up for the relative shortness of the last one. The "secular bull"downswing retracement is now becoming quite mature and the rallies can be expected to show surprising liveliness, hurting late bears during the bottoming period, but failing to show prolonged follow through to further upside.

Let's get back to the bottoms of this cycle. Next wave ....

There was an 8 year cycle bottom along the way during the gold bull:

At the above bottom, the early low also appeared, but when the "main low" came later, it failed to break the "pre" low, and a series of higher bottoms formed. Following this gold began to rise in value at quite a fast rate.

However a top formed and the 8 year cycle turned down once again.

We are fishing about for an end to this major 8yr wave with it's 3-4 yr downswing at the moment. Though calls for super low swings and for super bull swings (at the same time!) are beginning to emerge as they always do from the must-make-big-name-to-achieve-breakthrough pundit business, not to mention the retail bullion sales business who are naturally hoping upon hope for an end to the bear before all their clients are gone while at the same time keeping a long term bullish face and improving terms (lower premia over spot) towards their remaining clientele. I have found that it is wise to look dispassionately at the data and close my ears to whatever conversational "rhubarb" is floating around.

Here is how it looks with this particular idealized cycle superimposed for reference:

So we can see that the habits of 2nd term Presidents are still intact so far. Being such clever people with clever advisors, they have conjured up via totally innovational concepts and practices exactly the same results as the previous clever presidents' advisors did before them ,and before them , and so on ad nauseum.

So this makes it appear that the gold low is not yet upon us, and another 12 months could be required to make ultimate low for this 8 year downswing.

But not every 8 year downswing is equal. Remember those 2nd year presidents were only "in" for some of the downwaves. Here are the late 20th century and early 21st century US Presidents:

Richard Nixon, Ronald Reagan, Bill Clinton, George W. Bush and Barack Obama have been elected president twice during the period shown in the gold price charts here. This is year 2 of the second 4 year term, or year 6 of tenure for these dual incumbents.

I leave it to readers to consider which downwaves are the important waves to focus upon based upon who was "in" and for how long. For example, in some years the pre-bottom was higher or lower than it was in other years. This also requires to be taken into account. You have the charts here so this can be readily evaluated.

If all of the 8 year cycle waves, similar and dissimilar were to be overplotted, what might it look like? Here is the chart which takes a bit of careful scrutiny to catch the times and places where they tend to do the same things, and the other times and places where they tend to "disagree" with each other:

Note that the variation between separate lows has been "normalized here by using logarithmic data for the gold price. it is essentially a percentage ratio chart of gold rather than the exact chart. Also note that, if this plays out the same again, (and for sure it won't do that so neatly) but if it ends up looking similar, there are two opportunities for the price of gold to make seriously determined attempts to test the decade trading range lower limits before setting off for the upper side of this long term trading range. "Moonshots" come after the retesting process is completed, and it is my opinion that until then, while big moves up and down will be seen, the thing that goldbugs hope for deep in their hearts will come after the bottoming process has had another low printed, whether this exceeds the low already made is of no importance, it is the need for another half yearly retest that must be satisfied.

And for the bearish of mind who latch onto the message "another low is coming!!" please look to the difference between the different historic downwaves for this cycle, and also the presence of something called "higher lows" which can satisfy a cyclic bearish period just as well when appropriate.

What I see mostly is the probability for two separate "weak periods" during which I might hedge holdings, and at the end of which I would probably buy, should they come to pass.

This leaves the issue of total aggregate global leverage, or to put it another way, maximum expected volatility for swings both upwards and downwards. Gold has certainly seen a significant downswing already, prior to the trading range of the past year or so, and if the swing gets pushed a great distance one way, the return stroke may reasonably be expected to exhibit some similar characteristics. However excluding all the other factors,of which there are undeniably a great number, the habitual behaviour of these powerful administrations is what it is, and they can be assumed to continue to indulge in modern day versions of exactly what their predecessors did before them.

Have a nice weekend everybody!

Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.

About the Author


Aug 24, 2014 - 7:44pm


Ace ! Oh hell yeah !

Aug 24, 2014 - 7:57pm

Number Two

and that's the straight poop.

Aug 24, 2014 - 8:11pm

I just edited the article

I just edited the article above for a chart which failed to come out properly. This has been rectified.

sierra skier
Aug 24, 2014 - 8:13pm

Ah yes, Gold Graphs

It is always informative to see how the graphs are interpreted.

Would have been Thurd.

Aug 24, 2014 - 8:50pm

All we need to know!!

“Monetary Policy” Gone Berserk

Mark J Lundeen

August 24, 2014

One issue the financial media is willing to ignore, but has been foremost in my mind for many years is the utter recklessness of the Federal Reserve’s “monetary policy.” Below is a chart the public will never see on CNBC, or anywhere else, but I believe is vital to understand the threat that Washington and Wall Street currently present to the world at large. You’re looking at what academic-quack economists have done to the global reserve currency to save the hides of the banking elite, who for decades have acted as if Wall Street was their private fiefdom.

The FOMC calls this “monetary policy” but for me something completely different comes to mind: legalized counterfeiting. Unfortunately, for years the baby-boomer generation (and their children; the Gen-Xers) have sought pleasure in immediate consumption. It’s hard to blame them since the Fed destroyed their incentive to save by lowering the Fed Funds Rate to nearly 0% in December 2008. This rate can never be raised (despite the Fed rhetoric) without blowing up the budget deficit, sinking the economy in the process. For decades American’s, (and just about everyone else) have taken full advantage of the debt generously provided by the banking system to leverage their income, and now far too many people are hooked on cheap credit and just one paycheck away from insolvency, as are their employers.

The financial markets currently find themselves in the same perilous situation as consumers, and for the same reason; their valuations are being supported by central bank “policy.” Janet Yellen may intend to reduce QE to zero in the next few months, but when the stock and bond markets begin their long overdue corrections, she’ll be “monetizing” Treasury debt yet again to supporting financial “asset” valuations. Yellen (an inflation dove) is a typical economist of her generation; she too, prefers pleasure to pain when it comes to matters of monetary policy. I can’t see any way for the Fed to unwind (or stop expanding) their balance sheet without risking the wrath of an army of financially ruined voters in the next election cycle.

However, whether the voters are happy or not, the simple fact is that the Federal Reserve’s “monetary policy” is totally out of control. The quantity of US Treasury Debt monetized by the Fed since Alan Greenspan became Fed Chairman in 1987 is enormous as evident in the table below. Their portfolio of US T-Debt is now 77% larger than the entire US National Debt was in August 1987.

But monetizing US Treasury debt hasn’t been exclusively monopolized by Americans. Barron’salso publishes the dollar value of US T-bonds held at the Federal Reserve by foreign central banks (Blue Plot below) which have been huge purchasers of Treasury debt for decades. Once purchased, these central banks do what central banks always do, that is “inject” the resulting “liquidity” into their banking system, increasing its ability to create credit (debt). However, foreign CBs apparently reached their limit in 2011 of how much US Treasury debt (the US National Debt) they were willing to monetize, and since then the Federal Reserve (Red Plot) has picked up the slack.

Next is a Bear’s Eye View (Blue Plot / Left Scale) of the foreign central bank data above. In November 2012 there was a large (11.4%) reduction in US T-bonds held, but this decline didn’t make the news. However the 15% decline in September 1998 (due to the sharp contraction in the “Asian Tiger Economies” known as the “Asian Contagion”) was big news at the time. Alan Greenspan needed to reassure Congress and the public on TV that he had everything under control. And during this mini-panic in Asia (March 1997- September 1998) Greenspan didmaintain control over the market; 10Yr US T-Note yields declined from 6.70% to 4.90%, while the price of gold fell from 9 to 0. But then no one could execute “monetary policy” like Alan Greenspan!

In this next table we see how much US Treasury debt different countries were holding as of June 2014. Note: this data is from the US Treasury (not the Federal Reserve). I included the Federal Reserve’s T-debt holdings for comparative purposes BUT the Fed’s T-debt is NOT included in the grand total. I’m assuming that the Treasury’s data includes all holders of T-debt within a given country, not just their central banks. Also the “Max Val” column gives the maximum holdings from 2008 to present, as the “Min Val” lists the minimum. The Percentages columns give the percentage increases and declines as of June 2014.

China and Japan (#2&3) each hold more than a trillion dollars of T-debt, but combined hold only 60% of the Federal Reserve’s portfolio. Out of curiosity I checked to see how many billions of dollars these CBs held in May of 2008, at the start of my data:

  • China: $506
  • Japan: $575
  • The Fed: $478

What a difference six years and one credit crisis can make.

Germany (#21) holds only $68 billion dollars of Uncle Sams IOUs. Germany is one of the world’s largest economies, yet countries like Ireland (#16) hold more US T-debt.

A frequent theme of the US Treasury market is that should a major holder of T-debt (such as China, #3 above) decides to sell, they could trigger an economic doom’s day. So let’s have a look at this same data sorted by the Percent From / Max Val column (below). The biggest seller to date (on a percentage basis) has been the UK (#1 below) which has liquidated just over half of their T-bond portfolio. Russia (#3) has sold off 35% of their T-bonds. But so far, none of the major holders of US Treasury debt have liquidated a significant percentage of their portfolio as of the latest data. And note that the grand total (#36) is at a new all-time high.

China (#18) may sell a large percentage of their US T-bonds at some point in the future, but I don’t believe they would do so as retribution against Washington’s foreign policy. A big sell off in US Treasury Bonds would hurt more than just the Federal government. Creating a panic in the US Treasury market would greatly harm China’s trading partners as well, countries with which China wants to foster good relations.

But just because China isn’t willing to commit economic suicide doesn’t mean the US Treasury market is a healthy place to hold your wealth. Currently banks hold 58% of the US national debt. Should that be a source of comfort or concern for the owners of the other 42%? These banks are definitely not intentionally going to start a panic in the T-bond market. But the 58% of the Treasury market they currently own is also the size the entire US national debt when President Obama was first elected in 2008, and the remaining 42% was created during the first six years of the Obama Regime (chart below). Does that comfort you? It doesn’t me.

It wasn’t always like this. In the table below we see that in May 1995 private holders held 83% of the Treasury market.

One thing we must keep in mind is that the so called “national debt” is only the fraction of the of the Federal Government’s liabilities that trades in the bond market. It seems that no one really knows, but when one takes into consideration the future expenses for Social Security, Medicare, Federal pensions, and who know what else, I’ve seen estimates as high as of 0 trillion dollars of unfunded liabilities pending on the US Treasury in the coming decades. There is coming a day of crisis that Washington will attempt to postpone by funding these unfunded liabilities with monetary inflation.

Taking this into consideration; is it possible that there are some in the Federal Reserve Board of Governors concerned of a future shortage of US Treasury debt? I wouldn’t be surprised if there were. After all, to create the required credit and currency necessary to re-inflate the financial markets after the 2007-09 credit crisis, the Federal Reserve has been grinding up T-debt like hamburger at a sausage factory. Forget for a moment Uncle Sam’s unfunded liabilities, if Janet Yellen actually intends to taper QE to zero, and the financial markets once again begin to deflate as we saw in 2008-09, I expect that political pressure on the Federal Reserve would be impossible to resist after the a stock market decline of 30% or more. And without direct Federal Reserve intervention in the stock and bond markets, stock and bond valuations would decline to incomprehensibly low levels. To a Keynesian-macro economist, how many trillions of dollars of T-debt does the Federal Reserve require to move the economy safely into the mid-21st century?

This is interesting: since May 1995, the US national debt has increased by .75 trillion dollars,yet T-bond yields have declined to levels not seen since the 1950s.

With growth in the US national debt this grotesque over the past twenty years, how could T- bond yields possibly decline to levels not seen since 1953? It wasn’t hard, because the Federal Reserve has unlimited funds with which to execute their low interest rate policy. So, they don’t care how much they have to pay for a US T-bond, or how many trillions of dollars of T-bonds they have to purchase if “policy” dictates that bond yields must decline.

Keynesians economists still dominate the FOMC, and they believe that lower interest rates can cure all market ills, so the current absurdly low T-debt yields are to be expected. But the Keynesians are fellow travelers with big-government nanny-statists, you know, President Obama’s crowd. Since the Bolsheviks first nationalized the Soviet Union’s health care system, everything these left-wing progressives have touched eventually died, and I expect that will also prove to be the case with our current bull market in stocks and bonds. And if these people hate gold and silver, maybe that is a good reason for you to like them.


Aug 24, 2014 - 9:27pm
Aug 24, 2014 - 11:27pm

Argentus Maximus...

That chart looks very familiar!...Subliminal messaages perhaps? looks like we are both on the same chart...& we might as well ride this one out together!...

You are truly gifted Argentus!!!...

Bag Of Gold

Mr. Fix
Aug 25, 2014 - 1:34am

This might be important:


by John Galt
August 24, 2014 20:34 ET

From Bloomberg and numerous other sources, all electronic trading has been halted on the CME and GLOBEX electronic platforms.

Perhaps this is the first shot across the bow of the mighty US via the great hacker war or is it worse perhaps that the CME is trying to block trades which might profit America’s enemies?

Time will tell and we will find out more soon.

UPDATE 09:48 ET…

This story from Bloomberg appears to attempt to mollify the masses and make everyone feel better about a mysterious “glitch”….

CME Halts Electronic Trade on Futures From Oil to S&P 500


The Chicago Mercantile Exchange halted electronic futures trading due to technical issues, affecting contracts from U.S. stock-indexes to Treasuries, oil, gold and copper traded on CME Group Inc. (CME)’s Globex platform.

CME Group, the world’s largest futures market, suspended the start of trading on all of its Globex electronic-trading markets except for Malaysian equity-index derivatives, according to its website. Trading will open at 9 p.m. Chicago time, the bourse said in a later update. Dozens of commodities from corn to West Texas Intermediate crude change hands on the all-electronic Globex platform that begins on Sunday nights in the U.S., as well as contracts on interest rates and stock indexes.

“The biggest problem you might have is with some of the agricultural products because people rely on it quite heavily,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone today. “You’re taking away a risk transfer mechanism that people rely on.”

Asset classes where there is also a spot market, such as precious metals, are less affected, Barratt said. Investors can trade spot gold, silver, platinum and palladium in London while those in China, the world’s largest consumer and producer, can trade bullion on both the Shanghai Gold Exchange and Shanghai Futures Exchange.

The CME has mostly avoided the larger market structure breakdowns that plagued U.S. equity venues over the last five years, though a futures contract traded on its platform was identified by regulators as helping precipitate the flash crash in May 2010. In the stock market, U.S. Securities and Exchange Commission Chairman Mary Jo White has demanded infrastructure and procedural improvements as a way to restore investor confidence.

Funny how this happens as the pro-Russian forces appear to be ready to strike a major victory, the US appears to be ready to expand the war in the Middle East, Yemen’s government collapses in the face of Islamist rebels, and China is increasing its military stand against US Pacific forces in its region of influence. Nothing to see here, continue to hit the Wall Street Casino. Nothing could possibly go wrong like 1907, 1929, 1937, 1979, 1987, 1998, 2001, 2007-2008 now could it?

Safety Dan
Aug 25, 2014 - 2:32am
Safety Dan
Aug 25, 2014 - 2:44am

As President, John F. Kennedy

As President, John F. Kennedy understood the predatory nature of private central banking. He understood why Andrew fought so hard to end the Second Bank of the United States. So Kennedy wrote and signed Executive Order 11110 which ordered the US Treasury to issue a new public currency, the United States Note.

Kennedy's United States Note - Click for larger

Kennedy's United States Notes were not borrowed from the Federal Reserve but created by the US Government and backed by the silver stockpiles held by the US Government. It represented a return to the system of economics the United States had been founded on, and was perfectly legal for Kennedy to do. All told, some four and one half billion dollars went into public circulation, eroding interest payments to the Federal Reserve and loosening their control over the nation. Five months later John F. Kennedy was assassinated in Dallas Texas, and the United States Notes pulled from circulation and destroyed (except for samples held by collectors).

Safety Dan
Aug 25, 2014 - 3:11am

Gaddafi Over in Libya,


Over in Libya, Muammar Gaddafi had instituted a state-owned central bank and a value based trade currency, the Gold Dinar.

The Gold Dinar

Gaddafi announced that Libya's oil was for sale, but only for the Gold Dinar. Other African nations, seeing the rise of the Gold Dinar and the Euro, even as the US dollar continued its inflation-driven decline, flocked to the new Libyan currency for trade. This move had the potential to seriously undermine the global hegemony of the dollar. French President Nicolas Sarkozy reportedly went so far as to call Libya a “threat” to the financial security of the world. So, the United States invaded Libya, brutally murdered Qaddafi ( the object lesson of Saddam's lynching not being enough of a message, apparently), imposed a private central bank, and returned Libya's oil output to dollars only. The gold that was to have been made into the Gold Dinars is, as of last report, unaccounted for.

gold slut
Aug 25, 2014 - 5:52am

@ Argentus

Terrific article, many thanks. You touched on this subject a while ago and this really puts the meat on the bone. Something to really get the grey matter working on a wet Bank Holiday Monday.

@ Safety Dan. Kennedy and Gaddafi (to mention just two), although I was well aware of this phenomenon (fight the Fed and get dead), it is something we should all be reminded of from time to time. Thanks!

Now, when are the POTUS elections, hmmm...

Aug 25, 2014 - 6:29am

Visualizing Copper Extraction

What All The Metal Extracted From A Single Mine Looks Like

By Kaushik Thursday, August 21, 2014 Photography 4 comments

All the metals in your life - from those in your gadgets, to the ring on your finger, to the massive steel bars encased in concrete in the pillars of the apartment you live in – have come from earth. Extracting this from rocks is a mind boggling process, a method that has been discovered thousands of years ago and refined and perfected throughout the history of mining. Typically, ores contain metals in tiny quantities, so to recover just an ounce of the metal a mountain has to be dug up. The visualization of just how much metal a mine can produce is the idea behind the project For What It's Worth.

The project was undertaken by Cape Town photographer Dillon Marsh, whose work we’ve featured once before on Amusing Planet. In For What It’s Worth, Marsh attempts to quantify mining, "an industry that has shaped the history and economy of the country so radically."

The photographer took pictures of five famous mines in South Africa, and then using data about extraction rates, calculated the size of a single, solid orb to represent the amount of metal that had been mined in total. Then using a rendering engine and some quick adjustments for scale, Marsh inserted each orb into the landscape.

"Mines speak of a combination of sacrifice and gain," he says. "Their features are crude, unsightly scars on the landscape—unlikely feats of hard labour and specialized engineering, constructed to extract value from the earth but also exacting a price."

In the first of this series, Marsh deals with copper, but he has plans to do the same for precious metal, stones, and even coal.

Nababeep South Mine, Nababeep (1882 to 2000). Over 500m deep, 302,791.65 tonnes of copper extracted


Blue Mine, Springbok (1852 to 1912). 3,535 tonnes of copper extracted


West O'okiep Mine, Okiep (1862 to the early 1970s). Over 500m deep, 284,000 tonnes of copper extracted


Tweefontein Mine, Concordia (1887 to 1904). Over 100m deep, 38,747.7 tonnes of copper extracted


Jubilee Mine, Concordia (1971 to 1973). Over 100m deep, 6,500 tonnes of copper extracted

Aug 25, 2014 - 7:07am


This excerpt from one of DayStar's Harvey Report digests from a different thread caught my eye:

"Five months after the U.S. Mint began producing coins made with platinum, sales have all but collapsed as investors continue to favor gold and silver. The Mint, which resumed production of platinum coins in March after a six-year halt, has sold 13,600 ounces this year, including zero in July. By comparison, the Mint sold 313,500 ounces of gold coins and 27.71 million ounces of silver, fueled by concern that the Federal Reserve is inflating the economy with paper money to stimulate growth. The Mint has no plans to discontinue the sale of platinum coins, "though we did not expect the response to be so weak," said Tom Jurkowsky, a spokesman for the Mint in Washington. "

From a collectibles standpoint, this looks like an interesting opportunity.

Safety Dan
Aug 25, 2014 - 8:10am

President James Garfield - Gold, Silver & Money

James A. Garfield was elected President in 1880 on a platform of government control of the money supply.

"The chief duty of the National Government in connection with the currency of the country is to coin money and declare its value. Grave doubts have been entertained whether Congress is authorized by the Constitution to make any form of paper money legal tender. The present issue of United States notes has been sustained by the necessities of war; but such paper should depend for its value and currency upon its convenience in use and its prompt redemption in coin at the will of the holder, and not upon its compulsory circulation. These notes are not money, but promises to pay money. If the holders demand it, the promise should be kept. -- James Garfield
"By the experience of commercial nations in all ages it has been found that gold and silver afford the only safe foundation for a monetary system. Confusion has recently been created by variations in the relative value of the two metals, but I confidently believe that arrangements can be made between the leading commercial nations which will secure the general use of both metals. Congress should provide that the compulsory coinage of silver now required by law may not disturb our monetary system by driving either metal out of circulation. If possible, such an adjustment should be made that the purchasing power of every coined dollar will be exactly equal to its debt-paying power in all the markets of the world. --James Garfield
"He who controls the money supply of a nation controls the nation. -- James Garfield

President James Garfield

Garfield was shot on July 2, 1881 and died of his wounds several weeks later. Chester A. Arthur succeeded Garfield as President.

Wealth Watchman
Aug 25, 2014 - 8:14am

Interesting thoughts

Thanks AM, for your unique analysis.

Also, Turdville, I've begun a new series of articles speaking to the new war that we know we're already in, but state it in a way to explain it to newbies. It is my aim to bring in fresh blood into this PM community, by expressing these thoughts in a manner that those hearing it for the first time, can hopefully understand.

Have a great day, folks!

-Wealth Watchman

Safety Dan
Aug 25, 2014 - 8:15am

President William McKinley Government Gold Backed Currency

In 1896, William McKinley was elected President in the middle of a depression-driven debate over gold-backed government currency versus bank notes borrowed at interest from private banks. McKinley favored gold-backed currencies and a balanced government budget which would free the public from accumulating debt.

"Our financial system needs some revision; our money is all good now, but its value must not further be threatened. It should all be put upon an enduring basis, not subject to easy attack, nor its stability to doubt or dispute. Our currency should continue under the supervision of the Government. The several forms of our paper money offer, in my judgment, a constant embarrassment to the Government and a safe balance in the Treasury." -- William McKinley

President William McKinley

McKinley was shot by an out-of-work anarchist on September 14, 1901, in Buffalo, NY, succumbing to his wounds a few days later. He was suceeded in office by Theodore Roosevelt.

Safety Dan
Aug 25, 2014 - 8:22am

President Woodrow Wilson & Fed Reserve Act

1913 proved to be a transformative year for the nation's economy, first with the passage of the 16th "income tax" Amendment and the false claim that it had been ratified.

"I think if you were to go back and and try to find and review the ratification of the 16th amendment, which was the internal revenue, the income tax, I think if you went back and examined that carefully, you would find that a sufficient number of states never ratified that amendment." - U.S. District Court Judge James C. Fox, Sullivan Vs. United States, 2003.

Later that same year, and apparently unwilling to risk another questionable amendment, Congress passed the Federal Reserve Act over Christmas holiday 1913, while members of Congress opposed to the measure were at home. This was a very underhanded deal, as the Constitution explicitly vests Congress with the authority to issue the public currency, does not authorize its delegation, and thus should have required a new Amendment to transfer that authority to a private bank. But pass it Congress did, and President Woodrow Wilson signed it as he promised the bankers he would in exchange for generous campaign contributions. Wilson later regretted that decision.

News report of Wilson's signing the Federal Reserve Act. Under the Constitution, only a new Amendment could transfer the government's authority to create the currency to a private party.

President Woodrow Wilson

Woodrow Wilson later regretted that decision.

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit. We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men." -- Woodrow Wilson 1919
Safety Dan
Aug 25, 2014 - 8:26am

The Federal Reserve Neither "Federal" or Has "Reserves"

Finally, in 1913, the Private Central Bankers of Europe, in particular the Rothschilds of Great Britain and the Warburgs of Germany, met with their American financial collaborators on Jekyll Island, Georgia to form a new banking cartel with the express purpose of forming the Third Bank of the United States, with the aim of placing complete control of the United States money supply once again under the control of private bankers. Owing to hostility over the previous banks, the name was changed to "The Federal Reserve" system in order to grant the new bank a quasi-governmental image, but in fact it is a privately owned bank, no more "Federal" than Federal Express.

The Federal Reserve; it is neither "Federal" nor does it have any actual "Reserves", creating as it does money out of thin air. - Click for larger image

In 2012, the Federal Reserve attempted to rebuff a Freedom of Information Lawsuit by Bloomberg News on the grounds that as a private banking corporation and not actually a part of the government, the Freedom of Information Act did not apply to the "trade secret" operations of the Federal Reserve.

"When you or I write a check, there must be sufficient funds in our account to cover the check; but when the Federal Reserve writes a check, there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money." -- From the Boston Federal Reserve Bank pamphlet, "Putting it Simply."
"Neither paper currency nor deposits have value as commodities. Intrinsically, a 'dollar' bill is just a piece of paper. Deposits are merely book entries." -- "Modern Money Mechanics Workbook" - Federal Reserve of Chicago, 1975
"I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people." -- Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924
"States, most especially the large hegemonic ones, such as the United States and Great Britain, are controlled by the international central banking system, working through secret agreements at the Bank for International Settlements (BIS), and operating through national central banks (such as the Bank of England and the Federal Reserve)... The same international banking cartel that controls the United States today previously controlled Great Britain and held it up as the international hegemon. When the British order faded, and was replaced by the United States, the US ran the global economy. However, the same interests are served. States will be used and discarded at will by the international banking cartel; they are simply tools." -- Andrew Gavin Marshall
Safety Dan
Aug 25, 2014 - 9:02am

@AM, Thank you for the great

@AM, Thank you for the great post. I continue to learn much from you about cycles & the overlap.

Please forgive me for inserting several posts on history of Presidents & Money. I felt it applied with your 2nd term President & gold pricing post.

Currency & gold have been influenced by various Presidents and The Federal Reserve. There may be some kind of currency/gold cycle that has been created when a president is assassinated. Seems like there was a cycle of Presidents who were assassinated or attempts made on their life. Others might elaborate.

Aug 25, 2014 - 9:42am

SD : I enjoyed your president

SD : I enjoyed your president posts. And you covered the century earlier than I used in my article which was interesting.

The contributions add to the whole.

Aug 25, 2014 - 11:24am

SLV daily

Just a quick reminder of where we are on SLV trend resistance (yellow slope) and moving averages. Copper is holding strong so I don't expect much downside action. In my charting we have to decisively break through that yellow resistance line to move up and get our 100 dma/200 dma golden cross. Just touching it will only send us back down. Expect price meandering until we get close enough to breach it to the upside.

Aug 25, 2014 - 5:11pm

@Tyberious re FED balance sheet

Keep in mind that the FED balance sheet is peanuts by comparison to the fiat printing done due to fractional reserve banking. Total debt in America is 60 Trillion. All of that is currency since the US dollar is a debt instrument.

Aug 25, 2014 - 5:33pm

@ Safety Dan re Kennedy's curency

It's still a fiat debt instrument... notice how it still says "Note" on it? It's no better than the fiat crap that says Federal Reserve Note. Nowhere on that 5 dollar bill does it say anything about silver. As far as I know, all paper money in the US since 1913 has been phony garbage and all of it has said "note" on it meaning it's a debt instrument.

I'd also add that EO 11110 actually was written so they could phase out silver certificates due to the rising price of silver. All it did was authorize the Treasury Secretary to order printing of silver certificates IF needed without having to bother the President to authorize it. Kennedy was not going to issue silver certificates , he was simply allowing the FED to print smaller denomination bills while phasing out silver certificates completely.

ETA: Wilson was the 2nd worst President in US history (Lincoln was the worst). Followed closely by FDR, LBJ and Teddy Roosevelt.

transplanted baby
Aug 25, 2014 - 7:12pm

Let us not forget MOPE- alive and well in KC.

I periodically check up on the situation in Japan. Japan’s debt to GDP is higher than the US’s. Therefore to see what levels of national debt are sustainable one has to look at Japan- see what they did, and what they are doing. So it was interesting to see these comments by the Governor of the Bank of Japan made in Kansas City at a meeting of Fed banks. I have cut and pasted the middle part of his presentation here and underlined the most relevant parts. You may view the full text available in English on the Bank of Japan’s website.

“Furthermore, deflation significantly affected firms' investment behavior. The prospect of

deflation reduced the discounted present value of investment returns and lowered firms'

investment appetite. In addition, it led firms to hoard cash to prepare for potential losses

in the future. As a result, firms, which used to be net investors, turned into net savers and

have stayed in that position (Chart 6). Following the burst of the asset bubble, Japanese

firms were forced to save in order to reduce excess debt. However, they continued to save

even after the excess debt problem had been resolved in the 2000s. Particularly in recent

years, net saving in the corporate sector has become much larger than net saving in the

household sector.

This change of firms into net savers has thrown the economy into a contractionary

equilibrium through the paradox of thrift. If firms use profits obtained through wage cuts

to build up internal funds rather than for investment, aggregate demand in the economy will

shrink. And since a decline in aggregate demand will lower corporate profits, firms will

be forced to cut wages further. This is a typical example of the fallacy of composition.

The vicious cycle of declining wages and declining aggregate demand was initially set in

motion by the balance sheet adjustments following the burst of the asset bubble, but it

became entrenched due to the spread of deflationary sentiment

.II. Quantitative and Qualitative Monetary Easing and the Labor Market

Let me now turn to how Japan is in the process of escaping from this state of contractionary

equilibrium. If uncertainty and concern over the future were the cause of the decline in

wages, then for wages to rise, it is necessary that both employers and employees see

brighter prospects for the future. Therefore, the first step is to change Japan's economy

from one suffering from stagnation under deflation to one that grows sustainably under

moderate inflation. In this regard, the Bank of Japan's quantitative and qualitative

monetary easing (QQE), which I explained in detail at this symposium last year, has been

producing its intended effects. And as a result of these effects, Japan's labor market

situation has shown improvement, as mentioned earlier.“

There you have it. Since people are gloomy about prospects for the future, we have to make the future APPEAR bright- so that people will invest. We (the bankers) have to build up people’s faith in the economy; faith that everything is going to be OK.

The big question is, “Is this going to work or is “the very bad thing” going to happen?”

Aug 25, 2014 - 8:30pm
Aug 25, 2014 - 8:41pm

Obama scores a hole in one...

& so does his golfbag!!!...

Bag Of Gold

Aug 25, 2014 - 10:01pm

Harvey's Up (TFMR)

Harvey's Up!

  • GoldCore: Overnight, CME Group Inc., the world’s largest futures market, halted all of its Globex electronic trading markets, including gold and silver, for four hours due to a “technical glitch.” All other Globex electronic trading markets, including U.S. Treasury’s, oil, gold and U.S. stock indexes were affected with many markets having order routing problems. A note on the CME Group website said "CME Globex markets will Pre-open at 20:30 Central Time and Open at 21:00 Central Time. All day and session orders, including GTDs with today's trade date will be canceled. All GTCs that have been acknowledged will remain working." Earlier, trading was suspended indefinitely. Any day orders that brokerages attempted to file and any orders that were filled, dated today were canceled. The problem may be related to one of the exchange's trading engines but the exchange was still working to identify the extent of the damage according to a CME analyst. This is not the first time that this has happened. The CME halted trading for some futures contracts for more than 90 minutes on April 8 due to “technical issues.”
  • Jim Rickards: Listening to mainstream market commentary on television and reading the financial press leaves one with the impression that the economic recovery is gaining strength and that stock market indices, at or near all-time highs, will go higher still. The litany of market happy talk is impressive. The unemployment rate has dropped to 6.1%, down about 4 percentage points from its peak, and is expected to go lower in the months ahead. The economy created about 230,000 jobs per month in the first half of 2014, which brings the increase in jobs to nine million since the economic recovery began in mid-2009. Interest rates remain low, which supports high asset valuations in stocks and housing. Inflation is tame and expectations about future inflation are well anchored. To hear the stock market bulls tell the story, all is right with the world. But all is not right. In fact, the fundamentals of the U.S. economy are in awful condition and are getting worse. Almost everything about the happy talk story is superficial, and falls apart under scrutiny. There is an alternative narrative of bad news that is seldom discussed on mainstream business channels but is well known to analysts. When these adverse trends are taken into account one conclusion in inescapable. The stock market and economic fundamentals are on a collision course.
  • Jim Rogers: To put together a competing world reserve currency and develop an alternative banking system, the BRICs might consider throwing India out of the equation, Jim Rogers said. India has been said to be the stumbling block in establishing the new world bank. “India and Brazil have big (national) debts. Russia is not a big debtor and has big international reserves,” Rogers noted, pivoting to Russian advantages in the interview. “Russia has a freely convertible currency and none of the others have a freely convertible currency.” Jim Rogers thinks Russia should spend its time courting suitors in its own neighborhood, however. “If I were Russia I would be more interested in selling to Asia than South America.” The leaders of Russia, India, Brazil, China and South Africa were in meetings ending July 17 to bring together plans to create a $100 billion bank to compete with the World Bank and International Monetary Fund. The planed bank is a piece in a larger puzzle to provide a global alternative to Western dominance of the financial system. This has been a stated goal of Russia and China, both of whom have engaged in trade deals that eschew the use of the US dollar.
  • The Wealth Watchman: PSLV has certain characteristics that make it a bit unique among similar closed-ended funds, or ETFs. One such characteristic, is that the mechanism for selling your units (shares), and taking delivery of physical metal is easier compared to other products, as the minimum threshold for doing so is lower than SLV or GLD. Secondly, its selling point isn’t necessarily that it tracks the paper silver price, as SLV does. In other words, if Comex silver says the spot price is $18 per oz., you won’t likely find the price of PSLV tracking it lower, as SLV does. PSLV is an easy access point for big money positions to get into silver, as it now owns nearly 50 million oz. of it, representing one of the largest privately-owned stockpiles of silver on earth. Oftentimes(but not always) when the silver price is taken artificially lower in extreme cases, a premium above spot develops on PSLV’s shares, and starts to trend higher. The reason this is true, is that PSLV’s owners are holding onto their shares, and are inclined to add to their position on silver weakness, not sell. This ownership of “strong handed” investors, leads to a shortage in units available for sale for silver in great size, especially if silver metal is becoming harder to acquire on the open market. Which leads me to the indicator I’ve been watching for weeks: the PSLV premium. A quick look at the interactive chart, provided by their website, demonstrates that the PSLV premium has been in a slow, but steady, uptrend since the beginning of 2014. In fact, for the last several trading days, the premium in PSLV has closed above 4% each day. Think about the implications of this: the larger holders of PSLV would rather hold its units, than swap it for the instant premium, which they could exchange for other, more undervalued silver investments(like, say, mining shares, or even SLV). The unwillingness to take that easy money off the table should be speaking volumes to silver investors right now. Is Admiral Sprott(as he is fondly called by some), about to fire a giant broadside at the banks which have punished both him and his investors these past few years?
  • Michael Robinson: There's a statistic Neumeyer used to drive home why silver prices will recover from their recent lows: 90% of all the silver that's ever been mined is essentially gone for good. Silver was recently trading at $20 an ounce. For it to become efficient to recycle that silver, Neumeyer said, the price would have to jump to somewhere around $150 an ounce. Not even a silver bull like me believes that will happen any time soon...But consumption does continue to rise, and it won't take long for growing demand to push silver prices higher once again. Indeed, during the silver bull run that began in 2001, annual consumption far outstripped production. Of course, investment demand for physical silver also was rising during that time. Consider that in 2001 silver prices averaged just $4.37 per troy ounce. By 2010, the average price had zoomed to $20.19, a more than four-fold increase in less than a decade. Prices hit a high in 2011, with an average price of $35.12 an ounce. So, from the time silver entered its historic run to the top, prices shot up more than eight-fold. Since then, however, prices have dropped by more than 40%. For his part, Neumeyer thinks the industry is at or near the bottom. He's projecting that silver will sell for between $23 and $25 an ounce by the end of this year. That would be a 25% recovery at the upper end. And technology is not only a beneficiary of silver. Neumeyer says First Majestic is able to use high-tech mining equipment more and more as his industry recovers.
  • Bill Holter (Miles Franklin): My point to writing this piece is not to blow off a little steam but to point out the fact that we are breaking down in every way imaginable. The answer to "what could possibly go wrong?" is simple, EVERYTHING! Every facet of life is going to change, and change soon! What you have been watching for the last 5+ years (really 20++) and hoping was an anomaly or a passing phase is now becoming ingrained as the new normal. The U.S. is broke and losing status globally. Internally we are becoming a police state where the residents (legal and illegal) are at odds with each other and divided by race, religion, politics, ideology and wealth status. Many have nothing and have never saved anything, some have saved and believe they in fact do have something. What will happen when banks, brokers and insurance companies close? These people who believe they "have something" will be angrier than the ones who already know they have nothing, and for good reason. They worked and saved yet are having their savings "stolen" though debasement...bail ins will be the coup de grace. I do want to point out the maybe not too obvious about this, the ones who saved are also the ones who are more likely to be armed with more than just one clip of ammo and the anger level will be off the charts.
  • Raul Ilargi Meijer: Central banks exist to protect banks, and the banking system as a whole, from danger. They pretend that they protect the larger economy, and the people on Main Street, but that's just a convenient little story. Enhanced by the idea that what is good for banks is also good for you. Which is absolute baloney, but it works like a charm.
  • Andrew Hoffman (Miles Franklin): Yesterday represented the Cartel's 60th straight "Sunday Night Sentiment" attack, while today's "2:15 AM" raid was the 281st in the past 317 trading days. In both cases, the odds are not even in the realm of "sixth sigma," with the latter expected to naturally occur every quintillion trading days. And heck, if we calculated the odds of gold falling every day at the 6:00 PM EST open of the ultra-thinly traded "Globex" paper platform, for at least the past year, they would be significantly higher. The first trade after the NYSE closes - in the equally thinly-traded "aftermarket" session that lasts from 4:00 PM EST to 5:15 PM EST - has been lower 66% of the time over the past 16 months. Meanwhile, the opening trade of the Globex session has been lower 73% of the time - and during two of the last three months, more than 90% of the time. In fact, the rare times we actually do see higher prices, they are minute gains, nearly always following large losses during NYSE trading hours. In other words, the Cartel are sitting on prices more than ever, feeling the need to not only do so during trading hours, but off hours as well. Trust me, said "sentiment-crushing" machinations have a profoundly negative impact on the human psyche; but only in the near-term, as ultimately, such petty nuisances will be overcome by a wave of buying so powerful it will put 1979 and 2011 to shame.
  • SRSroccoReport: On the Shanghai Futures Exchange the majority of contracts are settled with physical metal. At the beginning of August, there were 148 metric tons of silver on warrant at the Shanghai Futures Exchange. In just three weeks, 29% of the total inventory was removed. The majority of this decline took place last week when 22 metric tons were withdrawn on Friday alone. Since the beginning of July, 131 metric tons, or 56% of total silver stocks were removed from the Shanghai Futures Exchange. At this trend, it would only take a few more months to totally wipe out the remaining inventory. There is an increasing percentage of DISILLUSIONED precious metals investors. While I can empathize with investors being frustrated that the price of silver has gone nowhere but lower over the past several years…. it doesn’t mean silver is a lousy investment. We must remember… ALL FIAT CURRENCIES ARE LIES that dry up and blow away in the end. Investors need to realize that ENERGY is the driver of the economy, not finance. Furthermore, a growing energy supply allows the global reserve fiat currency, the U.S. Dollar to survive. So, if you follow that line of reasoning, then this is also true: CHEAP OIL giveth the DOLLAR Life, and EXPENSIVE OIL will taketh away.

All this and more on...

The Harvey Report!


Aug 25, 2014 - 11:50pm

speaking about 2nd term Presidents.........

Thomas Jefferson was a very remarkable man who
started learning very early in life and never

At 5, began studying under his cousin's

At 9, studied Latin, Greek and

At 14, studied classical literature and
additional languages.

At 16, entered the College of William and Mary.
Also could write in Greek with one hand while writing the same in Latin with the other.

At 19, studied Law for 5 years starting under
George Wythe.

At 23, started his own law practice.

At 25, was elected to the Virginia House of

At 31, wrote the widely circulated "Summary
View of the Rights of British America"

And retired from his law practice.

At 32, was a Delegate to the Second Continental

At 33, wrote the Declaration of Independence .

At 33, took three years to revise Virginia 's
legal code and wrote a Public Education bill

and a statute for Religious Freedom.

At 36, was elected the second Governor of
Virginia succeeding Patrick Henry.

At 40, served in Congress for two years.

At 41, was the American minister to France and
negotiated commercial treaties with European nations along with Ben Franklin and John Adams..

At 46, served as the first Secretary of State
under George Washington.

At 53, served as Vice President and was elected
president of the American Philosophical

At 55, drafted the Kentucky Resolutions and
became the active head of Republican Party.

At 57, was elected the third president of the
United States .

At 60, obtained the Louisiana Purchase doubling
the nation's size..

At 61, was elected to a second term as

At 65, retired to Monticello ..

At 80, helped President Monroe shape the Monroe

At 81, almost single-handedly created the
University of Virginia and served as its first

At 83, died on the 50th anniversary of the
Signing of the Declaration of Independence

along with John Adams.

Thomas Jefferson knew because he himself
studied the previous failed attempts at government.

He understood actual history, the nature of God,

His laws and the nature of man.

That happens to be way more than what
most understand today.

Jefferson really knew his stuff.

A voice from the past to lead us in the future:

John F. Kennedy held a dinner in the white
House for a group of the brightest minds

in the nation at that time. He made this statement:

"This is perhaps the assembly

of the most intelligence ever to gather at one
time in the White House with the exception

of when Thomas Jefferson dined alone."

"When we get piled upon one another in large
cities, as in Europe, we shall become as corrupt as Europe ."
-- Thomas Jefferson

"The democracy will cease to exist when you
take away from those who are willing to work

and give to those who would not."
-- Thomas Jefferson

"It is incumbent on every generation to pay its
own debts as it goes. A principle which if acted on would save one-half the wars of the world."

-- Thomas Jefferson

"I predict future happiness for Americans if
they can prevent the government

from wasting the labors of the people

under the pretense of taking care of them."
-- Thomas Jefferson

"My reading of history convinces me that most
bad government results from too much government."
-- Thomas Jefferson

"No free man shall ever be debarred the use of arms."
-- Thomas Jefferson

"The strongest reason for the people to retain
the right to keep and bear arms is,

as a last resort, to protect themselves

against tyranny in government."
-- Thomas Jefferson

"The tree of liberty must be refreshed from
time to time with the blood of patriots and
-- Thomas Jefferson

"To compel a man to subsidize with his taxes
the propagation of ideas which he disbelieves

and abhors is sinful and tyrannical."
-- Thomas Jefferson

Thomas Jefferson said in 1802:

"I believe that banking institutions are more
dangerous to our liberties than standing armies.

If the American people ever allow private banks
to control the issue of their currency, first by
inflation, then by deflation,

the banks and corporations that will grow up

around the banks will deprive the people

of all property -

until their children wake-up homeless on
the continent their fathers conquered."

Aug 26, 2014 - 5:20am

Hole in one

Bugs Bunny briefing 'Big ears on how to get a hole in one'.

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Key Economic Events Week of 6/17

6/18 8:30 ET Housing Starts and Building Permits
6/19 2:00 ET FOMC Fedlines
6/19 2:30 ET CGP presser
6/20 8:30 ET Philly Fed
6/21 9:45 ET Markit flash June PMIs

Key Economic Events Week of 6/10

6/11 8:30 ET Producer Price Index
6/12 8:30 ET Consumer Price Index
6/13 8:30 ET Import Price Index
6/14 8:30 ET Retail Sales
6/14 9:15 ET Cap Ute and Ind Prod
6/14 10:00 ET Business Inventories

Key Economic Events Week of 6/3

6/4 All day Fed conference in Chicago
6/4 10:00 ET Factory Order
6/5 9:45 ET Markit Services PMI
6/5 10:00 ET ISM Services PMI
6/6 8:30 ET US Trace Deficit
6/7 8:30 ET BLSBS
6/7 10:00 ET Wholesale Inventories